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IDBI Bank ESO practice questions

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Question 1General Awareness (banking, economy and current affairs)

Which institution in India is responsible for issuing currency notes, with the exception of one-rupee notes and coins?

  1. Ministry of Finance
  2. Reserve Bank of India Correct answer.
  3. State Bank of India
  4. NITI Aayog

Explanation

The Reserve Bank of India holds the sole right to issue banknotes in denominations of two rupees and above, under the RBI Act, 1934. One-rupee notes and all coins are issued by the Government of India, which is why the RBI is described as the note-issuing authority with that carve-out.

Question 2General Awareness (banking, economy and current affairs)

The rate at which the Reserve Bank of India lends short-term funds to commercial banks against government securities is known as which rate?

  1. Repo rate Correct answer.
  2. Marginal standing facility rate
  3. Reverse repo rate
  4. Bank rate

Explanation

The repo rate is the policy rate at which banks borrow overnight funds from the RBI by pledging government securities, and it is the principal signal of the monetary policy stance. The reverse repo is the absorbing facility, the bank rate applies to long-term lending without collateral, and the MSF is a penal window above the repo rate.

Question 3General Awareness (banking, economy and current affairs)

Under the Insolvency and Bankruptcy Code, 2016, which body adjudicates corporate insolvency resolution processes?

  1. National Company Law Tribunal Correct answer.
  2. Competition Commission of India
  3. Securities Appellate Tribunal
  4. Debt Recovery Tribunal

Explanation

The IBC routes corporate insolvency cases to the National Company Law Tribunal, with appeals going to the National Company Law Appellate Tribunal. Individual and partnership insolvency falls to the Debt Recovery Tribunal, which is why that option is a distractor here.

Question 4General Awareness (banking, economy and current affairs)

Which of the following is the primary objective of the Pradhan Mantri Jan Dhan Yojana launched in 2014?

  1. Financial inclusion through universal access to bank accounts Correct answer.
  2. Crop insurance for small and marginal farmers
  3. Pension for workers in the unorganised sector
  4. Affordable housing finance for urban poor

Explanation

PMJDY aims at financial inclusion by ensuring every household has a bank account, with a RuPay card, overdraft facility and accident cover attached. Crop insurance is PMFBY, unorganised-sector pensions come under PM-SYM, and housing credit is covered by the PMAY scheme.

Question 5General Awareness (banking, economy and current affairs)

Which regulator supervises mutual funds and stock exchanges in India?

  1. Reserve Bank of India
  2. Pension Fund Regulatory and Development Authority
  3. Securities and Exchange Board of India Correct answer.
  4. Insurance Regulatory and Development Authority of India

Explanation

SEBI is the statutory regulator for the securities market, covering stock exchanges, intermediaries and mutual funds. The RBI regulates banks and payment systems, IRDAI regulates insurers, and PFRDA oversees the National Pension System.

Question 6General Awareness (banking, economy and current affairs)

In banking terminology, what does 'CRR' stand for?

  1. Credit Risk Rating
  2. Capital Reserve Requirement
  3. Current Repo Rate
  4. Cash Reserve Ratio Correct answer.

Explanation

The Cash Reserve Ratio is the share of net demand and time liabilities that a bank must hold as cash with the RBI, earning no interest. It is a monetary policy tool used to influence liquidity in the banking system.

Question 7General Awareness (banking, economy and current affairs)

Which of the following institutions regulates the insurance sector in India?

  1. IRDAI Correct answer.
  2. RBI
  3. SEBI
  4. IBBI

Explanation

The Insurance Regulatory and Development Authority of India, established under the IRDA Act, 1999, licenses insurers and protects policyholders. SEBI covers securities, the RBI covers banking and currency, and IBBI administers insolvency professionals.

Question 8General Awareness (banking, economy and current affairs)

The term 'priority sector lending' in Indian banking refers to which of the following?

  1. Lending to foreign banks operating in India
  2. Loans given only to government departments
  3. Preferential lending to large corporate borrowers
  4. Mandatory lending targets to specified sectors such as agriculture and MSMEs Correct answer.

Explanation

Priority sector lending obliges banks to direct a specified share of credit to sectors such as agriculture, micro and small enterprises, education and housing for weaker sections. The RBI sets these targets to channel formal credit to segments that face difficulty in accessing it.

Question 9General Awareness (banking, economy and current affairs)

A bank customer wants to check her credit score before applying for a home loan. Which institution is the primary regulator of credit information companies in India?

  1. SEBI
  2. Ministry of Corporate Affairs
  3. Reserve Bank of India Correct answer.
  4. NPCI

Explanation

Credit information companies such as CIBIL, Experian, Equifax and CRIF High Mark are licensed and regulated by the RBI under the Credit Information Companies Regulation Act, 2005. NPCI, by contrast, operates retail payment systems like UPI and IMPS.

Question 10General Awareness (banking, economy and current affairs)

If the RBI raises the cash reserve ratio while keeping other rates unchanged, what is the most likely immediate effect on the banking system?

  1. Increase in the money supply
  2. Fall in the policy repo rate
  3. Rise in banks' net interest margin
  4. Reduction in lendable resources with banks Correct answer.

Explanation

A higher CRR locks up a larger share of each bank's net demand and time liabilities with the RBI, leaving less for lending and thus tightening liquidity. It does not itself change the repo rate, and it typically compresses rather than expands bank margins.

Question 11General Awareness (banking, economy and current affairs)

Which of the following best describes a 'non-performing asset' in Indian banking?

  1. A loan sanctioned but not yet disbursed
  2. A loan that has been fully repaid before maturity
  3. A loan secured against immovable property
  4. A loan on which principal or interest is overdue for more than 90 days Correct answer.

Explanation

An asset becomes non-performing when interest or principal remains overdue for more than 90 days, as per RBI income recognition norms. Secured or unsecured status and sanction-versus-disbursement are separate matters and do not determine NPA classification.

Question 12General Awareness (banking, economy and current affairs)

A small trader wants to open a zero-balance savings account under a financial inclusion programme. Which type of account best fits this requirement?

  1. Current account
  2. Non-resident external account
  3. Basic Savings Bank Deposit Account Correct answer.
  4. Recurring deposit account

Explanation

The Basic Savings Bank Deposit Account offers zero minimum balance and basic banking facilities, and is the standard vehicle for financial inclusion. Current accounts are for businesses with transaction needs, NRE accounts are for non-resident Indians, and recurring deposits require periodic deposits.

Question 13General Awareness (banking, economy and current affairs)

Which of the following is the correct expansion of the term 'MSME' in the context of Indian banking?

  1. Medium Scale Manufacturing Enterprises
  2. Micro Sector Manufacturing Entities
  3. Multi-Sector Marketing Enterprises
  4. Micro, Small and Medium Enterprises Correct answer.

Explanation

MSME stands for Micro, Small and Medium Enterprises, classified under the MSMED Act, 2006, with revised thresholds linked to investment and turnover. They form a priority sector category and are served by dedicated schemes and lending targets.

Question 14General Awareness (banking, economy and current affairs)

The Monetary Policy Committee of India is mandated to maintain inflation at which target, measured by the Consumer Price Index?

  1. 5 per cent with no tolerance band
  2. 6 per cent with a tolerance band of plus or minus 3 per cent
  3. 2 per cent with a tolerance band of plus or minus 1 per cent
  4. 4 per cent with a tolerance band of plus or minus 2 per cent Correct answer.

Explanation

The flexible inflation targeting framework, adopted in 2016, sets a CPI inflation target of 4 per cent with a tolerance band of 2 to 6 per cent. The MPC is accountable to the government if inflation stays outside this band for three consecutive quarters.

Question 15General Awareness (banking, economy and current affairs)

A customer receives a fraudulent call asking for an OTP to reverse a supposed wrong transfer. What is the most appropriate immediate action under RBI's customer protection guidance?

  1. Wait for 24 hours to see if the transfer is reversed automatically
  2. Share the OTP to reverse the transfer and then inform the bank
  3. Report the incident to the bank and the cybercrime helpline 1930 without sharing the OTP Correct answer.
  4. Close the account without informing anyone

Explanation

Banks and the RBI repeatedly caution that OTPs must never be shared, and fraud should be reported immediately to the bank and to the national cybercrime helpline 1930 to improve the chances of freezing the funds. Delays and disclosure of the OTP only aid the fraudster.

Question 16General Awareness (banking, economy and current affairs)

Which of the following best explains the term 'financial inclusion' as used in Indian policy documents?

  1. Increasing the number of bank branches in metropolitan cities
  2. Attracting foreign direct investment into the banking sector
  3. Ensuring access to affordable financial services for all segments of society Correct answer.
  4. Reducing the number of non-performing assets in public sector banks

Explanation

Financial inclusion means ensuring timely and adequate access to financial products and services such as savings, credit, insurance and payments at affordable cost, especially for excluded groups. Branch expansion, NPA reduction and FDI are related but distinct policy objectives.

Question 17General Awareness (banking, economy and current affairs)

In the context of India's external sector, what does a current account deficit indicate?

  1. The country has defaulted on its external debt
  2. The government's fiscal deficit has exceeded its target
  3. The country's foreign exchange reserves have fallen to zero
  4. The country's imports of goods, services and transfers exceed its exports Correct answer.

Explanation

The current account records trade in goods and services plus primary and secondary income; a deficit means outflows on these items exceed inflows. It is financed by capital inflows or reserve drawdown, and it is distinct from the fiscal deficit and from debt default.

Question 18General Awareness (banking, economy and current affairs)

Which of the following instruments is used by the RBI to absorb liquidity from the banking system on a durable basis?

  1. Reduction in the SLR
  2. Sale of government securities under Open Market Operations Correct answer.
  3. Issuance of fresh currency notes
  4. Increase in the bank rate

Explanation

When the RBI sells government securities in open market operations, it takes cash out of the banking system, thereby absorbing durable liquidity. A cut in SLR frees resources, the bank rate affects lending costs rather than liquidity directly, and currency issuance is demand-driven.

Question 19General Awareness (banking, economy and current affairs)

The term 'Basel III norms' in Indian banking primarily relates to which of the following?

  1. Customer grievance redressal timelines
  2. Interest rates on small savings schemes
  3. Priority sector lending targets
  4. Capital adequacy, leverage and liquidity standards for banks Correct answer.

Explanation

Basel III is a global regulatory framework that strengthens bank capital requirements, introduces a leverage ratio and liquidity coverage standards. Indian banks implement it through RBI master directions on capital adequacy, which is why it is not about PSL, grievance redressal or small savings rates.

Question 20General Awareness (banking, economy and current affairs)

A firm with a high debt-to-equity ratio seeks a bank loan. Which risk is the bank primarily assessing when it examines this ratio?

  1. Foreign exchange convertibility risk
  2. Financial leverage and repayment capacity risk Correct answer.
  3. Operational risk from employee fraud
  4. Regulatory risk from changes in tax law

Explanation

The debt-to-equity ratio measures how much a firm relies on borrowed funds relative to owners' capital, which directly bears on its ability to service additional debt. FX, operational and regulatory risks are assessed through separate credit appraisal parameters.

Question 21General Awareness (banking, economy and current affairs)

Which of the following statements about Unified Payments Interface is correct?

  1. It enables instant interbank transfers using a virtual payment address operated by NPCI Correct answer.
  2. It is available only for corporate customers
  3. It requires the sender and receiver to hold accounts in the same bank
  4. It is a card network owned by the RBI

Explanation

UPI is a real-time payment system run by NPCI that lets users transfer funds between bank accounts using virtual payment addresses, without needing the beneficiary's account details. It works across banks and is available to retail as well as business users.

Question 22General Awareness (banking, economy and current affairs)

If the RBI conducts a variable rate reverse repo auction, what is it seeking to do?

  1. Inject durable liquidity into banks at a fixed rate
  2. Provide emergency credit to a distressed bank
  3. Reduce the statutory liquidity ratio for banks
  4. Absorb surplus liquidity from banks at rates determined by auction Correct answer.

Explanation

A variable rate reverse repo auction is a liquidity absorption operation in which banks park surplus funds with the RBI and the rate is discovered through bidding. It is distinct from variable rate repo operations, which inject liquidity, and from emergency assistance to individual banks.

Question 23General Awareness (banking, economy and current affairs)

A bank's credit-deposit ratio is very high relative to peers. What does this most likely imply for the bank's funding profile?

  1. It has excess liquidity that can be invested in government securities
  2. It is deploying a large share of deposits as loans and may face liquidity strain Correct answer.
  3. It is exempt from maintaining the cash reserve ratio
  4. It has no need to raise additional deposits

Explanation

The credit-deposit ratio compares loans outstanding with deposits; a high ratio means the bank has lent most of its deposit base and has limited cushion for unexpected withdrawals. Such banks typically need to raise deposits or borrow to sustain growth, and no bank is exempt from CRR.

Question 24General Awareness (banking, economy and current affairs)

Which of the following correctly describes the role of the Financial Stability and Development Council in India?

  1. It is a high-level body chaired by the Union Finance Minister to coordinate financial sector regulation Correct answer.
  2. It adjudicates insolvency disputes between banks and borrowers
  3. It licenses new private sector banks
  4. It sets the repo rate for the banking system

Explanation

The FSDC, chaired by the Finance Minister with regulators as members, coordinates on financial stability, financial sector development and inter-regulator issues. Monetary policy rates are set by the MPC, insolvency disputes go to NCLT, and bank licensing is done by the RBI.

Question 25General Awareness (banking, economy and current affairs)

In the context of India's fiscal policy, what does 'revenue deficit' measure?

  1. The gap between revenue expenditure and revenue receipts Correct answer.
  2. The gap between tax and non-tax receipts
  3. The gap between exports and imports
  4. The gap between total expenditure and total receipts

Explanation

The revenue deficit is the excess of revenue expenditure over revenue receipts and indicates that the government is borrowing to meet consumption-type spending. The fiscal deficit covers the total gap including capital expenditure, and the trade deficit is an external sector concept.

Question 26General Awareness (banking, economy and current affairs)

Which institution in India is responsible for regulating and supervising banks, and for issuing bank licences under the Banking Regulation Act, 1949?

  1. Securities and Exchange Board of India
  2. Insurance Regulatory and Development Authority of India
  3. National Bank for Agriculture and Rural Development
  4. Reserve Bank of India Correct answer.

Explanation

The Reserve Bank of India is the apex banking regulator and derives its power to licence and supervise banks from the Banking Regulation Act, 1949 and the RBI Act, 1934. SEBI handles securities markets, NABARD supports rural credit, and IRDAI regulates insurance.

Question 27General Awareness (banking, economy and current affairs)

Under the RBI's guidelines on small finance banks, which of the following is a core requirement for an entity seeking such a licence?

  1. It must operate only in metropolitan centres
  2. It must be wholly owned by the central government
  3. It must be sponsored by an existing scheduled commercial bank
  4. It must have a minimum paid-up voting equity capital of Rs 200 crore Correct answer.

Explanation

The RBI's small finance bank licensing norms require a minimum paid-up voting equity capital of Rs 200 crore, with a promoter holding of at least 40 per cent initially. They are meant to serve small business units, small farmers and unorganised sector entities, not to be bank subsidiaries.

Question 28General Awareness (banking, economy and current affairs)

A customer wants to remit funds to a beneficiary's UPI handle without sharing bank account details. Which statement about the Unified Payments Interface is accurate?

  1. UPI transfers are settled only at the end of each business day
  2. UPI transactions require the beneficiary's IFSC code to be entered each time
  3. A UPI ID is a virtual address mapped to a bank account that can be used for instant transfers Correct answer.
  4. UPI can be used only for merchant payments and not for person-to-person transfers

Explanation

A UPI ID (virtual payment address) is mapped to a bank account, allowing instant person-to-person and person-to-merchant transfers without revealing account numbers or IFSC codes. UPI is operated by NPCI and settles in near real time.

Question 29General Awareness (banking, economy and current affairs)

Which of the following best describes a 'current account' maintained with a bank?

  1. It is meant for salaried individuals to save regularly and earn interest
  2. It is a deposit account for businesses that allows frequent withdrawals and does not pay interest Correct answer.
  3. It is a fixed-term deposit that attracts a penalty on premature withdrawal
  4. It is a government scheme account opened only through post offices

Explanation

Current accounts are designed for businesses and traders who need frequent transactions; banks pay no interest on them and normally require no minimum lock-in. Savings accounts, by contrast, are for individuals and earn interest.

Question 30General Awareness (banking, economy and current affairs)

The term 'GIFT City' frequently appears in news about Indian financial markets. What is it?

  1. A foreign currency loan window operated by the RBI
  2. A deposit insurance scheme for cooperative banks
  3. A new stock exchange set up in Mumbai to trade only government securities
  4. A special economic zone in Gujarat hosting India's international financial services centre Correct answer.

Explanation

GIFT City is Gujarat International Finance Tec-City, located near Gandhinagar, and houses India's IFSC, regulated by the IFSCA. It hosts banking units and exchanges that deal in foreign currency and offshore financial products.

Question 31General Awareness (banking, economy and current affairs)

Which of the following is the correct expansion of 'NPA' as used in Indian banking regulation?

  1. Non-Performing Asset Correct answer.
  2. Net Payable Amount
  3. Nominal Principal Advance
  4. National Payment Authority

Explanation

A Non-Performing Asset is a loan or advance on which principal or interest has remained overdue for more than 90 days. Such assets must be classified as substandard, doubtful or loss assets under RBI norms.

Question 32General Awareness (banking, economy and current affairs)

The SARFAESI Act gives secured creditors certain powers. Which of the following actions can a bank take under this Act without approaching a court?

  1. Declare the borrower personally bankrupt
  2. Arrest the defaulting promoter
  3. Freeze the borrower's salary account indefinitely
  4. Take possession of the secured asset after giving the prescribed notice Correct answer.

Explanation

SARFAESI allows secured creditors to enforce their security interest by taking possession of the secured asset and selling it, after issuing a demand notice of 60 days. Arrest, indefinite account freezing and bankruptcy declarations fall outside the Act.

Question 33General Awareness (banking, economy and current affairs)

What is the main function of the Insolvency and Bankruptcy Board of India?

  1. It provides bailout loans to distressed companies
  2. It adjudicates all insolvency disputes directly
  3. It insures deposits of bank customers
  4. It regulates insolvency professionals, agencies and information utilities Correct answer.

Explanation

The IBBI is the regulator under the Insolvency and Bankruptcy Code, 2016, and oversees insolvency professionals, insolvency professional agencies, information utilities and the conduct of the process. Adjudication lies with the NCLT and NCLAT.

Question 34General Awareness (banking, economy and current affairs)

A bank depositor holds Rs 5 lakh across savings and fixed deposits in the same bank. If the bank fails, what protection does deposit insurance currently offer?

  1. The full amount is insured without limit
  2. Up to Rs 5 lakh per depositor per bank is insured Correct answer.
  3. Only savings bank balances are insured
  4. No deposit insurance exists for private banks

Explanation

The DICGC insures deposits up to Rs 5 lakh per depositor per bank, covering principal and interest across all deposits in that bank. This limit was raised from Rs 1 lakh in 2020.

Question 35General Awareness (banking, economy and current affairs)

Which of the following best describes 'repo rate'?

  1. The rate at which banks lend to their most creditworthy customers
  2. The rate at which the RBI lends short-term funds to banks against government securities Correct answer.
  3. The rate at which banks lend to each other overnight without collateral
  4. The interest paid by the RBI on long-term government bonds

Explanation

The repo rate is the policy rate at which the RBI supplies short-term liquidity to banks against the collateral of government securities. Changes in it transmit to lending and deposit rates across the system.

Question 36General Awareness (banking, economy and current affairs)

The RBI announces a reduction in the repo rate while inflation is already above the upper tolerance band. Which policy concern does this combination most directly raise?

  1. Loss of deposit insurance cover
  2. Automatic widening of the fiscal deficit
  3. Excessive rupee appreciation
  4. Risk of further inflationary pressure Correct answer.

Explanation

A rate cut makes credit cheaper and stimulates demand, which can add to price pressure when inflation is already above the 6 per cent upper tolerance limit. This is why the MPC weighs growth against inflation before easing.

Question 37General Awareness (banking, economy and current affairs)

What is the 'Statutory Liquidity Ratio' that banks in India must maintain?

  1. The share of deposits kept as cash in the bank's own vault
  2. The minimum percentage of net demand and time liabilities held in cash, gold or approved securities Correct answer.
  3. The proportion of loans that must go to the priority sector
  4. The capital that promoters must bring in at the time of licensing

Explanation

SLR is the minimum proportion of net demand and time liabilities that a bank must hold in cash, gold or unencumbered approved securities such as government bonds. It is distinct from CRR, which is held as cash with the RBI.

Question 38General Awareness (banking, economy and current affairs)

A bank wants to raise funds by issuing a debt instrument with a maturity of one year. Which instrument is appropriate?

  1. Perpetual bonds
  2. Equity shares
  3. Commercial paper
  4. Certificate of deposit Correct answer.

Explanation

Certificates of deposit are short-term debt instruments issued by banks with maturities typically up to one year. Commercial paper is issued by corporates, while equity and perpetual bonds are long-term or permanent capital.

Question 39General Awareness (banking, economy and current affairs)

Which of the following instruments is a derivative contract that gives the holder the right, but not the obligation, to buy an asset at a fixed price on a future date?

  1. Call option Correct answer.
  2. Forward contract
  3. Interest rate swap
  4. Commercial paper

Explanation

A call option confers a right without an obligation to buy at a specified strike price, in return for a premium. A forward contract, by contrast, obliges both parties to perform.

Question 40General Awareness (banking, economy and current affairs)

A bank's gross advances are Rs 10,000 crore and its gross NPAs are Rs 500 crore. What is the gross NPA ratio?

  1. 50 per cent
  2. 5 per cent Correct answer.
  3. 20 per cent
  4. 0.05 per cent

Explanation

The gross NPA ratio is gross NPAs divided by gross advances, expressed as a percentage. Here 500 divided by 10,000 equals 0.05, or 5 per cent.

Question 41General Awareness (banking, economy and current affairs)

Which of the following is the correct description of the 'marginal standing facility' offered by the RBI?

  1. A deposit scheme for non-resident Indians
  2. A scheme under which banks lend to exporters at concessional rates
  3. A window allowing banks to borrow overnight against excess government securities, above the repo rate Correct answer.
  4. A facility through which the RBI lends to farmers at subsidised rates

Explanation

The MSF lets banks borrow overnight from the RBI by dipping into their SLR holdings, at a rate above the repo rate. It acts as a safety valve when interbank liquidity is tight.

Question 42General Awareness (banking, economy and current affairs)

The 'priority sector lending certificates' mechanism allows banks to do which of the following?

  1. Transfer their NPAs to the government
  2. Sell their excess priority sector achievement to other banks that fall short Correct answer.
  3. Borrow from the RBI at a rate below the repo rate
  4. Convert priority sector loans into equity

Explanation

PSLCs are tradable certificates that let a bank with a surplus in priority sector lending sell that achievement to a bank with a shortfall. They help banks meet the prescribed targets without altering the underlying loan book.

Question 43General Awareness (banking, economy and current affairs)

What does the 'LCR' requirement under Basel III oblige a bank to maintain?

  1. A cap on the interest rate charged to small borrowers
  2. A minimum capital of 9 per cent of risk-weighted assets
  3. A limit on large exposures to a single borrower
  4. A buffer of high-quality liquid assets sufficient to cover net cash outflows for 30 days Correct answer.

Explanation

The Liquidity Coverage Ratio requires banks to hold high-quality liquid assets that can cover net cash outflows under a stressed scenario for 30 days. It addresses short-term liquidity risk, complementing the capital adequacy framework.

Question 44General Awareness (banking, economy and current affairs)

Which of the following is the main purpose of the Pradhan Mantri Jan Dhan Yojana?

  1. Opening basic savings bank accounts with overdraft facility for the unbanked Correct answer.
  2. Providing subsidised crop insurance to farmers
  3. Financing affordable housing in urban areas
  4. Offering pension to organised sector employees

Explanation

PMJDY, launched in 2014, aims to bring the unbanked into the formal banking system through basic savings accounts with RuPay cards and an overdraft facility. It is a financial inclusion programme rather than an insurance or pension scheme.

Question 45General Awareness (banking, economy and current affairs)

Which of the following is the correct expansion of 'PMAY' in the context of central government schemes?

  1. Pradhan Mantri Aushadhi Yojana
  2. Pradhan Mantri Awas Yojana Correct answer.
  3. Pradhan Mantri Aadhaar Yojana
  4. Pradhan Mantri Annadata Yojana

Explanation

PMAY is the Pradhan Mantri Awas Yojana, a housing-for-all mission with urban and rural components. It provides interest subsidy and assistance for house construction to eligible beneficiaries.

Question 46General Awareness (banking, economy and current affairs)

The term 'fiscal consolidation' in Indian budget documents refers to which of the following?

  1. Increasing government borrowing to fund consumption
  2. Reducing the fiscal deficit relative to GDP over time Correct answer.
  3. Expanding the money supply through open market operations
  4. Raising tariffs on imported goods

Explanation

Fiscal consolidation means a planned reduction in the fiscal deficit as a proportion of GDP, usually through higher revenue and restrained expenditure. It is a stated objective of the FRBM framework.

Question 47General Awareness (banking, economy and current affairs)

A government's total expenditure is Rs 40 lakh crore, revenue receipts are Rs 25 lakh crore and interest payments are Rs 8 lakh crore. What is the revenue deficit?

  1. Rs 40 lakh crore
  2. Rs 23 lakh crore
  3. Rs 15 lakh crore Correct answer.
  4. Rs 8 lakh crore

Explanation

Revenue deficit is revenue expenditure minus revenue receipts. Since total expenditure of Rs 40 lakh crore includes Rs 8 lakh crore of interest, revenue expenditure is Rs 40 lakh crore and the deficit is 40 minus 25, or Rs 15 lakh crore.

Question 48General Awareness (banking, economy and current affairs)

In the Union Budget, which of the following is classified as a capital receipt?

  1. Dividends from public sector undertakings
  2. Income tax collections
  3. Borrowings through the issue of government securities Correct answer.
  4. Fees charged for government services

Explanation

Capital receipts either create a liability, such as government borrowing, or reduce an asset, such as disinvestment proceeds. Tax and non-tax revenues like dividends and fees are revenue receipts.

Question 49General Awareness (banking, economy and current affairs)

India's foreign exchange reserves are published by the RBI. Which of the following is not a component of these reserves?

  1. Gold
  2. Foreign currency assets
  3. Special Drawing Rights
  4. Foreign direct investment inflows Correct answer.

Explanation

Foreign exchange reserves comprise foreign currency assets, gold, SDRs and the reserve tranche position with the IMF. FDI inflows add to the balance of payments but do not form part of the reserves stock.

Question 50General Awareness (banking, economy and current affairs)

What is the primary role of the National Payments Corporation of India?

  1. It operates retail payment systems such as UPI, IMPS and RuPay Correct answer.
  2. It manages the government's market borrowing programme
  3. It supervises the functioning of cooperative banks
  4. It sets the policy interest rate for the banking system

Explanation

NPCI is an umbrella organisation that operates retail payment and settlement systems, including UPI, IMPS, NACH and the RuPay card network. Policy rates and bank supervision remain with the RBI.