Which of the following is a most likely consequence of implementing the 'Unified Payments Interface (UPI)' ?
- A.Mobile wallets will not be necessary for online payments.
- B.Digital currency will totally replace the physical currency in about two decades.
- C.FDI inflows will drastically increase.
- D.Direct transfer of subsidies to poor people will become very effective.
Correct answer
Explanation
The correct answer is A, Mobile wallets will not be necessary for online payments. UPI moves money straight from one bank account to another through a phone, so there is no need to load money into a separate wallet first.
UPI was launched in 2016 by the National Payments Corporation of India (NPCI), the umbrella body for retail payments set up under the guidance of the RBI and the Indian Banks' Association. A user links a bank account to a UPI app, gets a virtual payment address such as name@bank, and can pay or collect money instantly, round the clock, with a PIN. Because payments come directly from the bank account, the older model of topping up a prepaid mobile wallet became unnecessary.
B is wrong because UPI makes digital payments easier but does not mean cash will vanish; currency in circulation has kept growing. C is wrong because foreign direct investment depends on wider economic factors, not on a payment interface. D is wrong because subsidy transfers run through Direct Benefit Transfer, Aadhaar and Jan Dhan accounts.
Exam tip: UPI = NPCI, 2016, account-to-account instant payments; DBT runs on the JAM trinity.
Practice Questions
View allConsider the following statements :
1. In terms of short-term credit delivery to the agriculture sector, District Central Cooperative Banks (DCCBs) deliver more credit in comparison to Scheduled Commercial Banks and Regional Rural Banks.
2. One of the most important functions of DCCBs is to provide funds to the Primary Agricultural Credit Societies.
Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
Show answer
DCCBs are the middle tier that funds the Primary Agricultural Credit Societies, but the commercial banks, not the DCCBs, give the largest share of short-term farm credit.
Read the full explanation →What is/are the purpose/purposes of the 'Marginal Cost of Funds based Lending Rate (MCLR)' announced by RBI?
1. These guidelines help improve the transparency in the methodology followed by banks for determining the interest rates on advances.
2. These guidelines help ensure availability of bank credit at interest rates which are fair to the borrowers as well as the banks.
Select the correct answer using the code given below.
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
Show answer
The RBI brought in MCLR to make banks' loan pricing more transparent and to give borrowers rates that are fair to both sides.
Read the full explanation →Consider the following statements in respect of the digital rupee:
1. It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.
2. It appears as a liability on the RBI's balance sheet.
3. It is insured against inflation by its very design.
4. It is freely convertible against commercial bank money and cash.
Which of the statements given above are correct?
- A.1 and 2 only
- B.1 and 3 only
- C.2 and 4 only
- D.1, 2 and 4
Show answer
The digital rupee is RBI-issued sovereign money, sits as a liability of the RBI like notes do, and can be exchanged one-to-one for cash and bank deposits.
Read the full explanation →Consider the following statements:
Statement-I: Syndicated lending spreads the risk of borrower default across multiple lenders.
Statement-II: The syndicated loan can be a fixed amount/lump sum of funds, but cannot be a credit line.
Which one of the following is correct in respect of the above statements?
- A.Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- B.Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- C.Statement-I is correct, but Statement-II is incorrect
- D.Statement-I is incorrect, but Statement-II is correct
Show answer
A syndicate shares the default risk, and a syndicated facility can be either a term loan or a credit line.
Read the full explanation →With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements : 1. There is no minimum capital requirement for wholly owned banking subsidiaries in India. 2. For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals. Which of the statements given above is/are correct ?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
Show answer
RBI does set a minimum capital for a foreign bank's wholly owned subsidiary, and it requires at least half the board to be Indian nationals.
Read the full explanation →