Banking & Financial Awareness Mixed Quiz: Set 20

The correct answer is C, Pension Fund Regulatory and Development Authority. The Atal Pension Yojana is administered by the PFRDA through the architecture of the National Pension System, and it guarantees a monthly pension of one thousand to five thousand rupees from the age of sixty to subscribers who join between the ages of eighteen and forty. Option A is wrong because the Reserve Bank regulates banks and the payment system and only directs banks to enrol customers; it does not run the pension scheme. Option B is wrong because the IRDAI regulates insurers and therefore oversees the insurance companies behind PMJJBY and PMSBY, not the pension scheme. Option D is wrong because SEBI regulates the securities market, mutual funds and stock exchanges, and has no role in any of the three Jan Suraksha schemes.

The correct answer is C, 1 June 2000. FEMA was passed as Act 42 of 1999 and received the assent of the President on 29 December 1999, but it was brought into force only on 1 June 2000, on which date the Foreign Exchange Regulation Act of 1973 stood repealed. Option A is wrong because 29 December 1999 is the date of the President's assent, and a question that asks for commencement is testing exactly this distinction. Option B is wrong because 1 April 2000 is the beginning of a financial year and has no connection with the Act; it is offered because candidates expect a tax-style date. Option D is wrong because by 1 January 2001 the Act had already been in force for seven months. Remember the pair: assent in 1999, commencement in 2000.

The correct answer is C, 182 days. FEMA defines a person resident in India by a stay of more than one hundred and eighty-two days in the preceding financial year, with exceptions for a person who has gone abroad for employment, for business or for an uncertain period, and for a person who has come to India on those terms. Residence under the Act therefore depends on days present and not on citizenship. Option A is wrong because ninety days appears in other statutes but not in this definition. Option B is wrong because one hundred and twenty days is a threshold found in the residence rules of the Income-tax Act for certain Indian citizens, which is why it is a tempting distractor. Option D is wrong because two hundred and forty days has no place in the FEMA definition at all.

The correct answer is B, SBI. Ecowrap is the research report of the State Bank of India, brought out by its economic research department.

Ecowrap is written by the team of the group chief economic adviser at SBI and comments on growth, inflation, bank credit, government finances and the state of households. It is widely quoted in the press because it often carries an early estimate of GDP growth or of the fiscal position before the official figures appear. The edition of May 2020 studied the damage the Covid-19 lockdown was doing to incomes and to economic activity. SBI is the country's largest commercial bank, with its headquarters in Mumbai.

A is wrong: the Reserve Bank publishes its own Monetary Policy Report, Financial Stability Report and Annual Report, not Ecowrap. C is wrong: HDFC Bank brings out no report of this name. D is wrong: nor does ICICI Bank.

Exam tip: Ecowrap belongs to SBI Research, while the best known Reserve Bank reports are the Financial Stability Report and the Monetary Policy Report.

The correct answer is B, Above Rupees 50,000 and up to Rupees 5 lakh. MUDRA loans are classified purely by size, and Kishore is the middle rung meant for an enterprise that is already working and needs working capital or a modest expansion. Option A is wrong because loans up to fifty thousand rupees fall under Shishu, the first rung, meant for very small or early-stage activity. Option C is wrong because loans above five lakh and up to ten lakh rupees fall under Tarun, for an enterprise scaling up its operations or buying equipment. Option D is wrong because loans above ten lakh and up to twenty lakh rupees fall under Tarun Plus, the category created after the ceiling was raised in the Union Budget of 2024-25, and it is open only to borrowers who have already taken and repaid a Tarun loan.

The correct answer is C, defence production. The Directions list eight categories: agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure, renewable energy and others. Defence production is not among them, however large the industry is, because the priority sector exists for borrowers who are starved of institutional credit, and defence firms borrow against government orders. Option A is wrong because export credit is the third listed category, kept there to help exporters who need working capital for short periods. Option B is wrong because social infrastructure is a category in its own right and carries loans for schools, drinking water, sanitation and health care facilities in smaller centres. Option D is wrong because renewable energy was added as a separate category, with a ceiling for a borrower and a smaller one for an individual household.

The correct answer is C, USD 2,50,000. Under the Liberalised Remittance Scheme every resident individual, including a minor, may freely remit up to two lakh fifty thousand United States dollars in a financial year running from April to March, for any permitted current or capital account transaction or a combination of the two. The scheme is not available to companies, partnership firms, Hindu undivided families or trusts, and the Permanent Account Number must be quoted. Option A is wrong because twenty-five thousand dollars was the limit when the scheme began in 2004 and has been raised several times since. Option B is wrong because one lakh dollars is one of those intermediate limits and is now out of date. Option D is wrong because ten lakh dollars is the annual ceiling for repatriation from an NRO account, a different rule.

The correct answer is D, Large amounts of loan. Microfinance means small loans to poor households that banks treat as too risky, so a large loan is the opposite of the idea. The Reserve Bank defines a microfinance loan as a collateral-free loan given to a household below a set annual income, and the whole model rests on small, frequent repayments rather than big sums. Option A is a real principle, because the borrower has no land or gold to pledge and the group's promise takes the place of security. Option B is a real principle: members of a joint liability group watch each other's repayment, and this peer pressure is why recovery rates stay high. Option C is a real principle, since self-help groups are built mainly around women, who save and repay more regularly and spend more on the family. NABARD's SHG-Bank Linkage Programme of 1992 carried this model across India. Exam tip: microfinance — small, collateral-free, group-guaranteed loans, mostly to women.

The correct answer is B, Rupees 10 lakh to Rupees 1 crore. Stand Up India, launched on 5 April 2016, asks every bank branch to finance at least one Scheduled Caste or Scheduled Tribe borrower and at least one woman borrower with a loan between ten lakh rupees and one crore rupees for a greenfield enterprise, that is a first-time venture by that borrower, in manufacturing, services, trading or allied agricultural activities. Option A is wrong because fifty thousand rupees to ten lakh rupees describes the original MUDRA ladder, not Stand Up India. Option C is wrong because one crore rupees is the upper limit of this scheme and not its lower limit. Option D is wrong because the scheme's floor is ten lakh rupees and its ceiling is one crore rupees, so neither end of this range matches.

The correct answer is C, grant loans and issue credit cards. A payments bank is a differentiated bank licensed on the lines suggested by the Nachiket Mor Committee to carry payments and small savings to people the branch network had not reached. It is deliberately kept out of lending, so it takes no credit risk and must invest its deposits in safe government securities and bank deposits.

Option A is allowed, subject to a ceiling on the balance per customer that the Reserve Bank fixes. Option B is allowed, and a payments bank may issue debit or ATM cards although not credit cards. Option D is its core business, since remittances and payments are the purpose for which the class was created. India Post Payments Bank, which began on 1 September 2018, is the best known example. A small finance bank, by contrast, is allowed to lend and must direct most of its lending to small borrowers.

The correct answer is C, Section 6. Section 6 governs capital account transactions, which are those that alter the assets or liabilities of a person outside India or in India, such as foreign direct investment, investment in overseas securities, borrowing abroad or buying immovable property abroad. They are permissible only to the extent allowed, and the Reserve Bank frames the regulations while the Central Government makes rules for debt instruments. Option A is wrong because Section 3 is the prohibition on dealing in foreign exchange except through an authorised person. Option B is wrong because Section 5 covers current account transactions, which are ordinarily free subject to reasonable restrictions by the Government. Option D is wrong because Section 10 deals with authorised persons, that is authorised dealers, money changers and offshore banking units.

The correct answer is B, 1 January 1949. The Reserve Bank of India began as a shareholders' institution in 1935 and was taken into full government ownership from 1 January 1949 under the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. From that date the entire share capital of the central bank has been held by the Union government.

Option A, 1 April 1935, is the day the Reserve Bank began operations under the RBI Act, 1934, following the recommendation of the Hilton Young Commission, but it was then privately held. Option C, 1 July 1955, is the day the Imperial Bank became the State Bank of India. Option D, 19 July 1969, is the date of the first round of commercial bank nationalisation. All four dates belong to this topic, which is why the question is set as a list of them.

The correct answer is C, Rupees 10,000. A Jan Dhan account carries an overdraft facility of up to ten thousand rupees, which lets the holder draw a small amount beyond the balance in the account and is in effect an unsecured consumption loan from the bank. Option A is wrong because two thousand rupees has never been the overdraft limit under this scheme. Option B is wrong because five thousand rupees was the original limit at launch in 2014; it was doubled to ten thousand rupees when the mission was made open-ended in 2018, so five thousand is the outdated figure that many older notes still print. Option D is wrong because twenty-five thousand rupees is well beyond the limit; the facility is deliberately small because it is granted without security to an account that may have little transaction history.

The correct answer is A, once in two years. Banks classify customers as low, medium or high risk when the account is opened, on the basis of identity, social and financial standing and the nature of the expected business. Periodic updation of records is then tied to that classification: once in two years for high risk customers, once in eight years for medium risk and once in ten years for low risk. Updation does not mean opening a new account; the customer confirms or corrects the existing details.

Option B, five years, is not a period used in the Direction at all. Option C, eight years, is the interval for medium risk customers, and option D, ten years, is the interval for low risk customers, so both are real numbers placed against the wrong category, which is the standard way this question is set. Remember the sequence two, eight and ten in rising order of safety.

The correct answer is C, Thrice the sum involved. Section 13 provides that a person contravening the Act is liable to a penalty of up to three times the sum involved where that sum is quantifiable, and up to two lakh rupees where it is not quantifiable, and a continuing contravention attracts a further five thousand rupees for every day it continues. Option A is wrong because a penalty equal to the sum involved is only the floor of what may be imposed, not the ceiling fixed by the section. Option B is wrong because twice the sum appears in some other revenue statutes and not here. Option D is wrong because five times the sum involved is not the FEMA limit; candidates often confuse it with higher multiples found in tax penalty provisions, so the figure to remember for FEMA is three.

The correct answer is B, Anyonya Cooperative Bank of Vadodara in Gujarat, begun in 1889 as a mutual aid society among government servants and generally counted as the first urban cooperative bank in India, older even than the Cooperative Credit Societies Act of 1904. Option A is wrong because Saraswat Cooperative Bank of Mumbai, founded in 1918, is among the largest urban cooperative banks but not the first. Option C is wrong; Cosmos Cooperative Bank of Pune dates from 1906 and is therefore later than Anyonya. Option D is wrong because Abhyudaya Cooperative Bank of Mumbai is a twentieth century institution. The point worth carrying from this question is that cooperative banking in India is older than both the Reserve Bank and the first cooperative statute, which is why its law grew in pieces.

The correct answer is A, Nil. The Basic Savings Bank Deposit Account, introduced by the Reserve Bank in 2012 in place of the earlier no-frills account, carries no minimum balance requirement whatsoever, and that is its defining feature. The holder also gets a free debit card, free deposits of any number, and a set number of free withdrawals every month, and the bank cannot levy a charge for not maintaining a balance. Option B is wrong because five hundred rupees is a common minimum for an ordinary savings account in some banks, not for a BSBDA. Option C is wrong for the same reason, as one thousand rupees is a typical urban branch minimum for a regular savings account. Option D is wrong because five thousand rupees is a metro branch minimum in some banks and has nothing to do with this account.

The correct answer is B, Tarapore Committee. The committee chaired by S. S. Tarapore examined capital account convertibility for the Reserve Bank and set out the preconditions and a phased road map; the rupee remains fully convertible on the current account but only partly on the capital account. Option A is wrong because the Narasimham Committee reported on banking sector reforms, giving the recommendations on prudential norms, capital adequacy and the tiered banking structure. Option C is wrong because C. Rangarajan chaired the committee on financial inclusion of 2008 and later chaired work on poverty estimation, not on convertibility. Option D is wrong because the Chakravarty Committee of the mid-1980s reviewed the working of the monetary system and is remembered for its recommendations on monetary targeting.

The correct answer is A, PM SVANidhi. The PM Street Vendor's AtmaNirbhar Nidhi, launched on 1 June 2020 by the Ministry of Housing and Urban Affairs, is meant only for street vendors. It gives a first collateral-free working capital loan of ten thousand rupees, larger tranches on timely repayment, and an interest subsidy of seven per cent credited to the borrower's account. Option B is wrong because Stand Up India finances greenfield enterprises of Scheduled Caste, Scheduled Tribe and women borrowers between ten lakh rupees and one crore rupees, a far larger scale. Option C is wrong because MUDRA covers non-farm micro and small enterprises generally and is not confined to vendors, although a vendor may also borrow under it. Option D is wrong because the Atal Pension Yojana is a pension scheme and lends nothing at all.

The correct answer is C, FCNR (B) account. A Foreign Currency Non-Resident Bank account is a term deposit held in a permitted foreign currency, so the depositor runs no exchange risk on the rupee, and both principal and interest are freely repatriable. Option A is wrong because a Non-Resident External account is kept in Indian rupees, although it is funded from income earned abroad and is freely repatriable; the exchange risk there falls on the depositor. Option B is wrong because a Non-Resident Ordinary account is also kept in rupees, is meant for income arising in India such as rent, dividend or pension, and allows repatriation only within an annual limit. Option D is wrong because the Basic Savings Bank Deposit Account is a resident financial inclusion account and is not for non-residents.