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BBM PRO Final Version 2026

The document provides a comprehensive overview of the Indian banking system, covering various types of banks, their regulations, and functions. It includes detailed sections on commercial banks, cooperative banks, development banks, and the role of the Reserve Bank of India. Additionally, it addresses recent developments, regulatory frameworks, and key banking concepts relevant for banking and insurance exams.

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100% found this document useful (1 vote)

161 views356 pages

BBM PRO Final Version 2026

Uploaded by

ranvirsingh101969

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Available Formats

Download as PDF, TXT or read online on Scribd

9610520326

[DOCUMENT TITLE]
[Document subtitle]

[DATE]
[COMPANY NAME]
[Company address]
BBM Pro 9610520326

SBI | IBPS | RBI | LIC | All Other Bank & Insurance Exams

Contents
1. Indian Banking System : Structure ................................................................................................................. 3
2. NBFCs in India : the Complete Guide ........................................................................................................... 21
3. Development Banks and AIFIs : The Big Boys ......................................................................................... 31
4. Deposits and Types of Deposits in Banking .............................................................................................. 36
5. DEAF/IEPF and UDGAM/MITRA Portal : Unclaimed Menace ............................................................. 47
6. Loans and Types of Loans in Banking ( Including Gold Loans/Silver Loans) ............................... 54
7. Mortgages and Types of Mortgages in Banking....................................................................................... 60
8. Priority Sector Lending and Current Changes : Welfare Banking .................................................... 63
9. Negotiable Instruments : a Complete Guide ............................................................................................. 70
10. RBI and Its Functions ( excluding Monetary Policy Review) .............................................................. 79
11. Monetary Policy Review 2025 : Including SDF, LTRO, Incremental CRR ....................................... 83
12. RBI Integrated Ombudsman Report : Current Scenario ...................................................................... 91
13. RBI Forward Looking Surveys, Digital Payment Index, Financial Inclusion Index, All Indian
House Price Index, Hackathon & Regulatory Sandbox ......................................................................... 98
14. Important Highlights of Banking Regulation Act 1949 & RBI Act 1934 ....................................... 103
15. NPA Its Origin/Reforms and Current Scenario In India ..................................................................... 108
16. RBI’s Regulatory Sandbox, EASE Reforms 4.0, NDS-OM, E-Kuber ................................................... 113
17. Schemes related to RBI - Sovereign Gold Bond Scheme, Gold Monetisation scheme, Pradhan
MantrI Garib Kalyan Deposit Scheme ....................................................................................................... 118
18. FAQs on KYC : The Complete Discussion.................................................................................................. 122
19. Digital Banking : The Introduction Volume 1 : PSS Act, 2007, Types of ATMs, NEFT, RTGS,
IMPS ...................................................................................................................................................................... 126
20. Digital Banking : The Intermission Volume 2 : Card Transactions, Types of Cards, Device
Based Tokenisation, Prepaid Payment Instruments .......................................................................... 140
21. Digital Banking : Present Day Volume 3 : UPI and Products, TReDs, NFC, Cheque Truncation
System .................................................................................................................................................................. 144
22. Government Securities Market : a Primer .............................................................................................. 149
23. Forex Exchange Market : Forex Market, SVRA, FEMA Act Rules, LRS, ECB, FDI Limits, Foreign
Codes : LEI, SWIFT, Alert List of Forex Platforms ................................................................................. 156
24. Currency in Focus : Indian Currency, CBDC, E-rupi and Legal Tender .......................................... 168
25. Capital Market : The Evolution, Vol 1 : SEBI, Primary Market, New Issues in Primary Market
................................................................................................................................................................................ 174
26. Capital Market : The Change : Stock Market, Stock Market Terms and Current Scenario ..... 179
27. Capital Market : Present Day : MF, Derivatives, Commodities and others .................................. 181
28. Basel Norms ....................................................................................................................................................... 188
29. International Economic Organisations and India ................................................................................ 192
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30. Jan Samarth Portal and its Schemes .......................................................................................................... 201

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31. Flagship Schemes and Small Savings Schemes ...................................................................................... 214

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32. Non-Banking/Economic Government Schemes .................................................................................... 223

33. Insurance : Introduction : History of Insurance in India ................................................................... 237
34. Types of Insurance in India .......................................................................................................................... 241
35. Principles of Insurance .................................................................................................................................. 245
36. Insurance Terms .............................................................................................................................................. 246
37. Practice Questions ........................................................................................................................................... 246

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BBM PRO The Foundation Course for Beginners

Indian Banking System : Structure Chapter - 1

What is Bank?
A Financial Organisation which is involved in Banking as per the Banking Regulation Act, 1949.

What is Banking?
The Process of Accepting deposits from public, with the faciilty to withdraw on demand, payable through
cheque* and providing loans to the public is called as Banking.

Important Points
Madras Bank
It was India’s First Bank established in 1683 and was later merged into Bank of Madras and eventually SBI
Grindlays Bank
Comptoir national d'escompte de Paris was the first foreign bank in India established in 1860
Oudh Commercial Bank
Oudh Commercial bank was India’s first Joint Stock Bank established in Faizabad, Uttar Pradesh
Central Bank of India
It was the first commercial Indian bank completely owned and managed by Indians “Swadeshi”

Types of Banks:

INDIAN BANKING SYSTEM

INDIAN BANKING IS REGULATED AND MANAGED BY THE RESERVE BANK OF INDIA :
Scheduled Banks
Non-Scheduled Banks
R-NBFCs and Housing Finance Companies
Neo Banks and Payment Aggregators
Scheduled Banks
3

These banks refer to those banks which have been included in the Second Schedule of Reserve Bank of India
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Act, 1934

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Scheduled Commercial Banks and Scheduled Co-operative Banks

Facilities
It becomes eligible for debts/loans at the bank rate from the RBI
it automatically acquires the membership of clearing house.

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Reserve Bank of India (RBI)

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The Reserve Bank of India (RBI) is the Central Bank of India, meaning that it is the apex body in the Banking
System in India.
It is owned by the Union Ministry of Finance.
It acts as a regulatory body, responsible for the regulation of the Indian banking system as well as the
control, issuing, and maintaining money supply in the Indian economy.

Commercial Banks
Commercial Banks refer to those banks under the Banking System in India that run on a commercial basis.
It means that they operate and offer services to earn a profit.
They are regulated under the Banking Regulation Act, 1949.

Scheduled Commercial Banks (SCBs) in India (Classification based on data of the Department of Financial
Services – DFS)

1. Public Sector Banks (PSBs)

Public Sector Banks are constituted under:
State Bank of India Act, 1955
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980

2. Private Sector Banks

These are banking companies licensed to operate under the Banking Regulation Act, 1949.
Ownership and management are in private hands.

3. Foreign Banks (Private Sector – Foreign Origin)

These banks have their headquarters outside India.
They must comply with:
Regulations of the Reserve Bank of India (RBI)
Rules and policies of their parent bank abroad

4. Regional Rural Banks (RRBs)

Origin: Established on the recommendations of the Narasimham Working Group (1975).
Legal Basis: Established under the Regional Rural Banks Act, 1976.

5. Small Finance Banks (SFBs)

Licensing: Licensed under the Banking Regulation Act, 1949.
Target Groups:
Small business units
Small and marginal farmers
Micro and Small Enterprises (MSEs)
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Unserved and underserved sections of society

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Primarily undertake basic banking activities.

6. Payments Banks
Structured as Public Limited Companies.
Licensed under: Banking Regulation Act, 1949.
Key Restrictions: Can accept demand deposits only (no lending).

Private Sector Banks

At present, India has 21 private sector banks recognized by the RBI. Some of the most prominent ones
include:
HDFC Bank: India’s largest private sector bank known for innovation and retail lending
ICICI Bank: Pioneered digital banking services and diversified financial products
Axis Bank: Known for its strong corporate banking operations
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Domestic Systemically Important Banks (D-SIBs)

Domestic Systemically Important Banks (D-SIBs) under the Banking System in India refer to those banks
that are ‘Too Big to Fail (TBTF)’.
Due to this perception, these banks enjoy certain advantages in the funding markets.
D-SIBs in India are recognized by the RBI under its framework issued in 2014.
Usually, the banks whose assets exceed 2% of the GDP of India are considered as D-SIBs.
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As of now, the State Bank of India (SBI), ICICI Bank, and HDFC Bank have been identified as D-SIBs by the
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RBI.

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Foreign investment in public sector banks is capped at 20%, while private banks allow up to 74% under
existing regulations.
Can foreign banks have operations in India?
Yes. Foreign banks can either operate through branch presence or through 100% wholly owned subsidiary
(WOS).

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Regional Rural Bank

Recent Development
Department of Financial Services (DFS) notified
amalgamation of 26 RRBs.
Based on the principle: “One State, One RRB”.
Legal Basis
Done by the Central Government under powers of the
Regional Rural Banks Act, 1976.
Post-Amalgamation Status
This is the 4th phase of amalgamation.
Number of RRBs reduced from 43 to 28.
Coverage: 26 States + 2 Union Territories.
Regional Rural Bank
Authorised capital: ₹2,000 crore, divided into 200
crore fully paid shares of ₹10 each.
Subscribed capital: Equal to the combined subscribed
capital of transferor RRBs, which is deemed
transferred to the transferee RRB.
The entire share capital and share capital deposit of the transferee Regional Rural Bank shall be as under:

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PSL Targets for Banks:

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Main Categories

1. Urban Cooperative Banks (UCBs)

Operate in urban and semi-urban areas.
Provide housing loans, personal loans, MSME credit, and deposits.
Over 1,500 UCBs in India; 90%+ on Core Banking Solutions (CBS) (2024–25).
Types:
Scheduled UCBs – Listed in Second Schedule of the RBI Act, 1934.
Non-Scheduled UCBs – Not listed but regulated by Reserve Bank of India.

2. Rural Cooperative Banks (RCBs)

Serve agriculture and rural areas.
(a) Short-Term Cooperative Credit Structure (3-Tier)
State Cooperative Banks (SCBs) – Apex at state level.
District Cooperative Central Banks (DCCBs) – District level; finance PACS.
Primary Agricultural Credit Societies (PACS) – Village level; short-term loans (1–3 years).
(b) Long-Term Cooperative Credit Structure (2-Tier)
State Cooperative Agriculture and Rural Development Banks (SCARDBs) – Long-term credit (up to 25 years).
Primary Cooperative Agriculture and Rural Development Banks (PCARDBs) – Medium and long-term loans
to farmers and rural artisans.

Cooperative Banks Regulation

Cooperative banks are regulated by multiple authorities, depending on their type and jurisdiction.
RBI: Oversees banking operations under the Banking Regulation Act, 1949.
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NABARD: Supervises rural cooperative banks and provides refinance support.

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Registrar of Cooperative Societies (RCS): Handles registration and administrative control at the state level.

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Ministry of Cooperation (Government of India): Formed in 2021 to strengthen cooperative institutions

across India.
Amendment to the Banking Regulation Act, 2020: Empowered RBI to exercise control over both urban and
multi-state cooperative banks.
Digitization Drive (NABARD, 2024): All cooperative banks to be fully digitized by March 2025, including
PACS under Core Banking Solution (CBS). (Source: Business Standard, Nov 2024)
Cooperative Policy Framework (2023): Proposed to streamline governance and accountability in
cooperatives under a single code.

Development Banks
Development Banks are also known as Term-Lending Institutions (TLIs) or Development Finance
Institutions (DFIs).
They are specialized financial institutions under the Banking System in India that provide long-term finance
and support to the sectors of the Indian economy which possess higher risks and cannot have access to
adequate loans from Commercial Banks.

NATIONALISATION OF BANKS
Tier 1 with all unit UCBs and salary earner’s UCBs (irrespective of deposit
size) and all other UCBs having deposits up to Rs 100 crore.
Tier 2 with UCBs of deposits between Rs 100 crore and Rs 1,000 crore.
Tier 3 with UCBs of deposits between Rs 1,000 crore and Rs 10,000 crore.
Tier 4 with UCBs of deposits more than Rs 10,000 crore.
Tier 1 UCBs shall maintain a minimum CAR of 9 per cent of risk-weighted
assets (RWAs) on an ongoing basis. Tier 2 to tier 4 UCBs shall maintain a
minimum CAR of 12 per cent of RWAs

PSL Targets for Urban Cooperative Banks (UCBs): Revised PSL target for UCBs reduced to 60% (from 75%)
of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever
is higher.
Note: ANBC is the total net bank credit after making necessary deductions and adjustments, and CEOBE is
the amount representing the credit risk exposure of off-balance sheet items such as guarantees and letters of
credit.
PSL Targets of Urban Co-operative Banks
Evolution of PSL: Gadgil Committee (1969) proposed the 'Area Approach', leading to the Lead Bank Scheme
(LBS) for regional credit planning.
The Nariman Committee (1969) supported the Gadgil Committee's recommendations and recommended
that each Public Sector Bank should adopt certain districts as 'Lead Banks' to boost PSL.
PSL was formalized in 1972 based on the RBI’s Informal Study Group’s report (1971). Initially, no targets
were set, but in 1974, banks were advised to raise PSL to 33.3% by 1979.
Krishnaswamy Committee (1980) recommended a 40% PSL target by 1985, with sub-targets for agriculture
and weaker sections.
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Usha Thorat Committee (2009) endorsed the continuation of the LBS for its role in the expansion of PSL.
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Revised Priority Sector Lending (PSL) Guidelines, 2025

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Objective: Enhance financial inclusion, support education, renewable energy, housing, and rationalise targets
for Urban Cooperative Banks (UCBs).
1. Higher Loan Limit for Education
Earlier limit: ₹20 lakh per individual (Revised limit: ₹25 lakh per individual)
Coverage: Loans for higher education, including overseas studies
2. Renewable Energy Loans
a. Project Loans
Earlier limit: ₹30 crore per borrower (Revised limit: ₹35 crore per borrower)
Eligible projects: Solar power, Biomass energy, Micro-hydel power plants
b. Individual Household Loans
Limit unchanged: ₹10 lakh per borrower
Purpose: Rooftop solar systems and small renewable installations
3. Housing Sector – Enhanced Loan Limits
Loan limits increased to promote affordable housing
Special focus: Tier-III to Tier-VI cities
Objective: Reduce urban housing shortage, Support inclusive urbanisation

Differentiated Banks
Differentiated Banks under the Indian Banking System refer to those banks that cater
to a specific segment of customers.
The concept of Differentiated Banks was introduced in the Banking System in India by
the RBI based on the recommendations of the Nachiket Mor Committee in 2013 in
order to offer specialized services or unique products designed specifically to suit a
particular sector.
Nachiket Mor Committee (2013)
The concept of Differentiated Banking was introduced in 2013 based on the
recommendations of the Nachiket Mor Committee.
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Objective:
To promote financial inclusion by creating specialised banks catering to specific customer segments.
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Key Outcome:
Introduction of Small Finance Banks (SFBs) and Payments Banks.

Small Finance Banks (SFBs)

Origin and Legal Framework
Established on the recommendations of the Nachiket Mor Committee.
Licensed by: Reserve Bank of India (RBI)
Governing Laws:
Banking Regulation Act, 1949
Reserve Bank of India Act, 1934
Eligible Promoters
Individuals
Corporate entities
Trusts and societies
Non-Banking Financial Companies (NBFCs)
Micro Finance Institutions (MFIs)
Local Area Banks (LABs)
Regulatory Requirements
Priority Sector Lending (PSL): Minimum 75% of Adjusted Net Bank Credit (ANBC) to priority sectors.
Small Loan Focus: At least 50% of loans and advances must be of size up to ₹25 lakh.

Payments Banks
Origin and Legal Framework
Established on the recommendations of the Nachiket Mor committee.
Licensed under: Banking Regulation Act, 1949
Frequently asked in UPSC (2016) and other competitive exams.
Capital and Ownership
Minimum paid-up capital: ₹100 crore
Promoter shareholding: At least 40% to be maintained for the first five years.
Eligible Promoters
Existing Prepaid Payment Instrument (PPI) issuers
Mobile telephone companies
Micro Finance Institutions (MFIs)
Small Finance Banks (SFBs)
Permitted Activities
Can provide: Savings accounts and Current accounts
Allowed to issue: ATM cards, Debit cards,
Can distribute third-party products: Mutual funds, Insurance, Third-party loans
Foreign Direct Investment (FDI) is allowed in Payments Banks.
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Can accept demand deposits only: Maximum ₹2 lakh per individual customer
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Not allowed to accept: Time deposits, Non-Resident Indian (NRI) deposits, Cannot set up subsidiaries for
non-banking activities.
Conversion Option
Payments Banks can apply for conversion into Small Finance Banks (SFBs) after five years of operations,
subject to RBI approval.

SMALL FINANCE BANKS

provide financial services to the unserved and unbanked region of the country.
They are registered as a public limited company under the Companies Act, 2013.
SFBs will be given scheduled bank status once they commence their operations, and found suitable as per
Section 42 of the Reserve Bank of India Act, 1934.
They work as Differentiated banks and do not possess Universal Bank license.

PAYMENT BANKS
A payments bank is like any other bank, but operating on a smaller scale
without involving any credit risk.
It can accept demand deposits (up to Rs 2 lakh), offer remittance services,
mobile payments/transfers/purchases and other banking services like
ATM/debit cards, net banking and third-party fund transfers.
It does not issue loans and credit cards
widen the spread of payment and financial services to small business, low-
income households, migrant labour workforce in secured technology-driven
environment.

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Universal bank criteria

RBI's 2024 Guidelines for Converting SFBs into Universal Banks
Eligible Applicants: Only listed Small Finance Banks (SFBs) are eligible to apply for conversion into a
Universal Bank.
Financial Requirements: Must have a minimum net worth of Rs 1,000 crore, scheduled bank status, and a
profitable operational record for at least five years.
Asset Quality Criteria: Must maintain gross NPAs below 3% and net NPAs below 1% consistently for the
previous two years.

Other types of banks

Microfinance Institutions (MFIs)
Definition: Specialised financial institutions providing:
Micro-loans
Micro-savings
Micro-insurance
to low-income individuals and groups at relatively lower interest rates.
Microloan limit (India): Loans below ₹1 lakh are considered microloans
Objective: Financial inclusion of economically weaker sections.
Regulated indirectly through NBFC-MFIs by the Reserve Bank of India (RBI).

Neo Banks
Definition:
Fully digital banking platforms
No physical branches
Operate by partnering with licensed banks.
Examples: YONO by State Bank of India, RazorpayX
Key Point:
Neo banks are not banks themselves
They do not have independent banking licences.

Lead Bank Scheme (LBS)

Concept: Assignment of a lead role to a specific bank for each district.
Coverage: Both Public Sector Banks (PSBs) and Private Sector Banks.
Objective: Improve district-level credit planning, financial inclusion and banking outreach.
Origin:
Introduced by Reserve Bank of India
Based on recommendations of:
Gadgil Study Group
17

Banker’s Committee
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Nidhi Companies
Nature: Included in the definition of Non-Banking Financial Companies (NBFCs).
Registration: Under the Companies Act, 1956.
Regulator: Ministry of Corporate Affairs (MCA) (not RBI).
Operations:
Accept deposits only from members
Lend only to members
Objective: Mutual benefit of members through savings and lending.

Chit Funds
Definition:
A rotating savings and credit scheme.
Fixed number of subscribers contribute installments over a fixed period.
Constitutional Status: Included in the Concurrent List.
Regulation: Not regulated by RBI and Excluded from the SEBI Act
Governing Law: Central Chit Funds Act, 1982
Rules framed by State Governments
Regulator: State Governments.

Ponzi Schemes
Fraudulent investment schemes promising high returns with little or no risk.
Mechanism: Returns to old investors are paid using money from new investors.
Nature: Unsustainable and illegal
Famous Example: Saradha Scam

Shadow Banking:
It is a set of activities or institutions that operate partially outside the traditional commercial banks.
They are not fully regulated by the RBI.
They are not under Banking Regulations Act, 1950.

Core Investment Company:

Specialized Non-Banking Financial Companies (NBFCs).
A Core Investment Company registered with the RBI has an asset size of above ₹ 100 crore.
Their main business is acquisition of shares and securities with certain conditions.

What is the ‘.[Link]’ Domain and Why Are Banks Migrating to It?
The ‘.[Link]’ domain is a secure web domain mandated by the RBI and managed by IDRBT, exclusively for
verified Indian banks. Unlike generic domains like “.com” or “.org,” only verified banks can register under
“.[Link]”.
18

This ensures authenticity and reduces the risk of customers falling prey to fraudulent or spoofed banking
websites.
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Migration to this domain enhances credibility, makes websites easier to verify, and aligns with globally
accepted banking cybersecurity practices.

Operating Models
Non-licensed FinTech (Financial Technology) firms that collaborate with conventional banks
Traditional banks that are undertaking their digital initiatives.
Licensed neobanks (usually with digital banking licences in those countries that allow it).

Digital Bank
Digital banks are often the online-only subsidiary of an established and regulated player in the banking
sector, a neobank, on the other hand, exists solely online without any physical branches and independently
or in partnership with traditional banks.

Differentiated Banking Landscape in India

Development Financial Institutions (DFIs)
Development Financial Institutions (DFIs) are specialised financial entities that provide long-term finance,
mainly to sectors critical for economic growth, infrastructure development, agriculture, MSMEs and exports.
They complement commercial banks by addressing long-gestation financing needs.

1. National Bank for Agriculture and Rural Development (NABARD)

Established: 1982
Based on: Recommendations of the B. Sivaraman Committee
Ownership: 100% owned by Government of India (GOI)
Role:
Apex institution for agriculture and rural development finance
Refinancing, supervision and development of cooperative banks and Regional Rural Banks (RRBs)
Entity: NABARD

2. Small Industries Development Bank of India (SIDBI)

Established: 1990
Ownership: Government of India
Role:
Principal financial institution for Micro, Small and Medium Enterprises (MSMEs)
Refinancing, direct lending, and promotion of MSME ecosystem
Entity: Small Industries Development Bank of India

3. Export–Import Bank of India (EXIM Bank)

Established: 1982
Ownership: Wholly owned by the Central Government
19

Role:
Financing, facilitation and promotion of India’s international trade
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Provides buyer’s credit, supplier’s credit and export finance

Entity: Export-Import Bank of India

4. National Housing Bank (NHB)

Instituted: 1988
Legal Basis: National Housing Bank Act, 1987
Ownership: Wholly owned by Government of India (GOI)
Role:
Apex institution for housing finance
Regulation and supervision of Housing Finance Companies (HFCs)
Entity: National Housing Bank

5. Micro Units Development and Refinance Agency (MUDRA Bank)

Set up under: Pradhan Mantri MUDRA Yojana (PMMY)
Role:
Provides refinance and low-interest funding to:
Micro Finance Institutions (MFIs)
Non-Banking Financial Companies (NBFCs)
Supports loans to micro and small enterprises (Shishu, Kishor, Tarun categories)
Entity: MUDRA Bank

6. National Bank for Financing Infrastructure and Development (NaBFID)

Established: 2021
Legal Basis: National Bank for Financing Infrastructure and Development Act, 2021
Role:
India’s new dedicated DFI for infrastructure financing
Focus on long-term financing of roads, railways, ports, power and urban infrastructure
Entity: National Bank for Financing Infrastructure and Development

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NBFCs in India : the Complete Guide Chapter - 2

What is a Non-Banking Financial Company (NBFC)?

Company registered under the Companies Act, 1956 or Companies Act, 2013
Institutions whose principal business is:
Agricultural activity
Industrial activity
Purchase or sale of goods (other than securities)
Provision of services
Sale, purchase, or construction of immovable property
Such entities are not classified as NBFCs.
Financial activities as its principal business
Providing loans and advances
Acquisition of shares, stocks, bonds, debentures, or other marketable securities
Leasing and hire-purchase activities

Key Differences Between NBFCs and Banks

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Generally every NBFC must be registered with the Reserve Bank of India (RBI) to commence or carry on the
business of a non-banking financial institution.
As per Section 45-IA of the RBI Act, 1934:
No NBFC can start or continue business without obtaining a Certificate of Registration (CoR) from the
Reserve Bank of India.
An NBFC must also maintain minimum Net Owned Funds (NOF) of ₹10 crore.
NOF Requirement (Effective from October 01, 2022):
New NBFCs seeking registration must have ₹10 crore NOF ab initio.
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NBFCs Exempted from RBI Registration

To avoid dual regulation, certain categories of NBFCs regulated by other authorities are exempted from RBI
registration, such as:
Alternative Investment Funds (AIFs) regulated by SEBI
Merchant Banking Companies registered with SEBI
Stock Broking Companies registered with SEBI
Insurance Companies holding a valid Certificate of Registration from IRDAI
Nidhi Companies notified under Section 620A of the Companies Act, 1956
Chit Companies conducting chit business under the Chit Funds Act, 1982
Stock Exchanges
Mutual Benefit Companies, etc.

Requirements for Registration with the Reserve Bank of India (RBI)

A company intending to commence the business of a Non-Banking Financial Institution under Section 45-I(a)
of the RBI Act, 1934 must comply with the following conditions:
1. Incorporation Requirement
The applicant must be a company incorporated:
Under Section 3 of the Companies Act, 1956, or
Under the corresponding provisions of the Companies Act, 2013.

2. Minimum Net Owned Fund (NOF) Requirement

The company must have a minimum Net Owned Fund (NOF) of ₹10 crore.
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3. Higher NOF Requirements for Specialised NBFCs

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Certain categories of NBFCs are required to maintain higher minimum NOF, as prescribed by the Reserve
Bank of India:
NBFC–Infrastructure Finance Company (NBFC-IFC): ₹300 crore
Infrastructure Debt Fund–NBFC (IDF-NBFC): ₹300 crore
Mortgage Guarantee Company (MGC): ₹100 crore
Housing Finance Company (HFC): ₹20 crore
Standalone Primary Dealers (SPDs):
Core activities only: ₹150 crore
Core + non-core activities: ₹250 crore
NBFC–Account Aggregator (NBFC-AA): ₹2 crore
NBFC–Peer to Peer (NBFC-P2P): ₹2 crore

Categories of NBFCs Registered with the Reserve Bank of India

Based on Type of Liabilities
Deposit-accepting NBFCs (NBFC-D)
Non-deposit accepting NBFCs (NBFC-ND)
Based on Regulatory Structure
NBFC – Base Layer (NBFC-BL)
NBFC – Middle Layer (NBFC-ML)
NBFC – Upper Layer (NBFC-UL)
NBFC – Top Layer (NBFC-TL)
(Top Layer is empty as of now; populated only if RBI identifies systemically risky NBFCs)

Based on Nature of Activities Performed

1. Investment and Credit Company (ICC)
2. Housing Finance Company (HFC)
3. Infrastructure Finance Company (IFC)
4. Infrastructure Debt Fund – NBFC (IDF-NBFC)
5. Core Investment Company (CIC)
6. NBFC – Micro Finance Institution (NBFC-MFI)
7. NBFC – Factors
8. Mortgage Guarantee Company (MGC)
9. Standalone Primary Dealers (SPDs)
10. Non-Operative Financial Holding Company (NOFHC)
11. NBFC – Account Aggregator (NBFC-AA)
12. NBFC – Peer-to-Peer Lending Platform (NBFC-P2P)

1. Investment and Credit Company (ICC)

Engaged primarily in:
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Asset finance
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Loans and advances for activities other than own business

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Acquisition of securities
Residual category for NBFCs not classified elsewhere.

2. Housing Finance Company (HFC)

At least 60% of total assets in housing finance.
At least 50% of total assets in individual housing loans.
Governed under RBI Housing Finance Company Directions, 2021.

3. Infrastructure Finance Company (IFC)

Deploys minimum 75% of total assets in infrastructure lending.

4. Infrastructure Debt Fund – NBFC (IDF-NBFC)

A non-deposit taking NBFC.
Permitted to:
Refinance post-COD infrastructure projects with at least 1 year of satisfactory operations.
Finance Toll-Operate-Transfer (TOT) projects as direct lender.

5. Core Investment Company (CIC)

A CIC must satisfy all of the following:
At least 90% of net assets invested in group companies.
At least 60% of net assets in equity instruments of group companies.
No trading in group investments (except block sale).
Does not carry other financial activities except:
Investment in bank deposits, money market instruments, G-Secs.
Loans and guarantees to group companies.
Asset size ≥ ₹100 crore.
Accepts public funds.

6. NBFC – Micro Finance Institution (NBFC-MFI)

At least 75% of total assets in microfinance loans.
Microfinance loan:
Collateral-free loan.
To households with annual income ≤ ₹3 lakh.
No lien on borrower’s deposit.
Flexible repayment with board-approved policy.

7. NBFC – Factors
Principal business is factoring.
At least:
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50% of total assets in factoring.

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50% of gross income from factoring business.

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8. Mortgage Guarantee Company (MGC)

Provides guarantee for housing loans.
Considered primarily engaged if:
90% of turnover, or
90% of gross income
is from mortgage guarantee business.

9. Standalone Primary Dealers (SPDs)

Authorised to undertake Primary Dealer activities in Government Securities.
Support G-Sec market through:
Participation in primary auctions.
Market-making in G-Secs.
Minimum secondary market turnover.
Categorised as:
SPDs with only core activities.
SPDs with core + non-core activities.

10. Non-Operative Financial Holding Company (NOFHC)

A non-deposit taking NBFC.
Holds:
Shares of a banking company, and
Shares of other financial services entities in the group.
As per Guidelines for Licensing of New Banks in the Private Sector (2013).

11. NBFC – Account Aggregator (NBFC-AA)

Undertakes account aggregation business.
Collects, consolidates, and presents financial information of customers.
Financial data:
Remains property of the customer.
Cannot be used for any other purpose.

12. NBFC – Peer-to-Peer Lending Platform (NBFC-P2P)

Acts as an intermediary between lenders and borrowers.
Facilitates loans through online platforms.
Does not lend on its own balance sheet.

Salient Features of NBFC Regulations for Depositors

1. Period of Deposit
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NBFCs are permitted to accept or renew public deposits only if they are:
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Repayable after a minimum of 12 months, and

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Not later than 60 months.

NBFCs cannot accept deposits repayable on demand.

2. Ceiling on Interest Rate

NBFCs cannot offer interest rates higher than the ceiling prescribed by the Reserve Bank of India from time
to time.
Current ceiling rate: 12.5% per annum.
Interest:
May be paid or compounded.
Compounding frequency cannot be shorter than monthly rests.

3. Credit Rating Requirement

NBFCs accepting public deposits must have a minimum investment-grade credit rating of ‘BBB–’.
The rating must be obtained from a SEBI-registered Credit Rating Agency.
Credit rating must be reviewed at least once every year.

4. No Deposit Insurance
Deposits with NBFCs are not insured.
Unlike bank deposits, NBFC deposits are not covered under any deposit insurance scheme.

5. No RBI Guarantee
The repayment of deposits is not guaranteed by the Reserve Bank of India.
Depositors bear the credit risk of the NBFC.

6. Mandatory Disclosures
NBFCs must make certain mandatory disclosures in the application form used for soliciting deposits.
These disclosures relate to:
Financial position of the company
Credit rating
Other material information relevant to depositors
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Salient Features of NBFC Regulations for Depositors

What are systemically important NBFCs?
NBFCs whose asset size is ₹ 500 crore or more as per the last audited balance sheet are considered
systemically important NBFCs.
The rationale for such classification is that the activities of such NBFCs will have a bearing on the financial
stability of the overall economy.
Pointers
First level: Internal grievance mechanism of NBFC
Second level: RBI Integrated Ombudsman Scheme, 2021
Time limit: 1 month for NBFC to resolve complaint
Asset size threshold: ₹100 crore
HFCs excluded from RBI Ombudsman Scheme

RBI new risk-weight rules for NBFC infra loans from April 1: Key takeaways
RBI Revises Risk-Weight Framework for NBFCs’ Infrastructure Lending
On January 1, the Reserve Bank of India issued amendment directions revising the risk-weighting
framework for NBFCs’ exposure to infrastructure projects.
Objective:
To align capital requirements more closely with the actual risk profile of operational infrastructure projects.
To promote better risk assessment, efficient capital allocation, and financial stability.
Background
The amendments follow stakeholder feedback on the draft directions issued on October 24, 2025.
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RBI reviewed responses and incorporated suitable changes into the final directions.
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Amendment Directions Notified

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Reserve Bank of India (NBFC – Prudential Norms on Capital Adequacy) Amendment Directions, 2026
Reserve Bank of India (NBFC – Concentration Risk Management) Amendment Directions, 2026

RBI lowers qualifying asset criteria for NBFC-MFIs to 60% from 75%
The Reserve Bank of India (RBI) has reduced the qualifying asset threshold for NBFC-MFIs (Non-Banking
Financial Company – Microfinance Institutions) from 75% to 60% of total assets (net of intangible assets).
Key Highlights:
New Threshold: Qualifying assets must now constitute minimum 60% of total assets (net of intangible
assets) — reduced from 75%.
Ongoing Compliance: Must be maintained on an ongoing basis.
Non-Compliance Clause: If the threshold is not maintained for 4 consecutive quarters, the NBFC-MFI must
submit a remediation plan to RBI for review.
Definition of Qualifying Asset:
Aligned with ‘microfinance loan’ definition:
Collateral-free
Given to a household with annual income ≤ ₹3 lakh
Household = husband, wife, and unmarried children

RBI Cuts Capital Requirements for NBFCs Lending to Proven Infrastructure Projects
RBI has eased prudential capital adequacy norms for NBFCs lending to high-quality infrastructure projects.
Changes notified under:
Reserve Bank of India (Non-Banking Financial Companies – Prudential Norms on Capital Adequacy)
Amendment Directions, 2026.
Objective:
Align risk-weights with actual risk profile of operational infrastructure projects.
Improve capital allocation while providing strong lender protection.
Key Change: Revised Risk-Weights
Risk-weight = capital NBFC must set aside for a loan
(Higher risk-weight → higher capital requirement)
New Final Norms
75% risk-weight
When borrower has repaid ≥ 2% of sanctioned project debt.
50% risk-weight
When borrower has repaid ≥ 5% of sanctioned project debt.
Draft vs Final (Comparison)
Draft proposal required:
5–10% repayment for 75% risk-weight
≥10% repayment for 50% risk-weight
Final norms are more liberal, encouraging NBFC participation.
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What qualifies as a “High-Quality Infrastructure Project”

A project must satisfy all key conditions:
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Operational Track Record

Completed at least 1 year of operations after Commercial Operations Date (COD).
No breach of material lender covenants.
Exposure classified as ‘Standard’ in NBFC books.
Implementation Timeline
Effective from: 1 April 2026
Or earlier, if NBFC adopts the directions in full.

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Development Banks and AIFIs : The Big Boys Chapter - 3

What is a All India Financial Institutions (AIFIs)

All India Financial Institutions (AIFIs) comprise Development Financial Institutions (DFIs) and Investment
Institutions.
They provide long-term finance, especially for infrastructure and industrial development.
In the Indian context, AIFIs are regulated mainly by the Reserve Bank of India (RBI) and function as an
integral part of the organised financial system.

Role of AIFIs in the Banking System

All India Financial Institutions (AIFIs) act as complements, not competitors, to commercial banks.
They support banks by handling functions banks face difficulty with.
AIFIs provide long-term and project-based finance.
Commercial banks are constrained due to asset–liability mismatch, making AIFIs crucial for such lending.
AIFIs supply refinance to banks and other financial institutions.
Enables onward lending to priority sectors without stressing banks’ balance sheets.

What are Development Banks?

Development Banks are also known as:
Term-Lending Institutions (TLIs)
Development Financial Institutions (DFIs)

Sources of Funds
Share capital from owners/promoters
Issue of debentures.
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Capital and refinance support from

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Reserve Bank of India (RBI)

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National Bank for Agriculture and Rural Development (NABARD)

Other banks
Central and State Governments

Purpose
Support sectors with
High risk
Long gestation periods
These sectors generally cannot access adequate finance from commercial banks due to risk and maturity
constraints

Mode of Establishment
DFIs may be:
Established by Statutes / Acts of Parliament, or
Set up by the Government of India, or
Licensed as DFIs by the Reserve Bank of India (RBI) under Section 29 of the National Bank for Financing
Infrastructure and Development Act, 2021.

Objectives of Development Banks in India

Promoting Economic Growth
Facilitating Infrastructure Development
Supporting Strategic Sectors
Encouraging Entrepreneurship and SMEs
Balanced Regional Development

Types of Finances:
Medium (1-5 years).
Long term (>5 years).

Difference between Commercial Banks and Development Banks

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Industrial Development Banks (IDBs)

Industrial Finance Corporation of India (IFCI)

Set up in 1948 as a Statutory Corporation
Aim: To provide medium and long-term finance to industry.
The primary business of IFCI is to provide medium to long-term financial assistance to the manufacturing,
services, and infrastructure sectors.
Ownership of Ministry of Finance, Government of India.
In 2015 IFCI was fully owned by the Government of India.
In 1955, the World Bank prompted the Industrial Credit and Investment Corporation of India (ICICI) — the
parent of the largest private commercial bank in India today, ICICI Bank — as a collaborative effort between
the government with majority equity holding and India’s leading industrialists with nominal equity
ownership to finance modern and relatively large private corporate enterprises.

Industrial Development Bank of India (IDBI)

Set up in 1964 as a subsidiary of the Reserve Bank of India (RBI)
Aim: To provide credit and other financial facilities for the development of the Indian industry.
At present, it’s a full-service commercial bank under the Banking System in India that supports industrial
growth.

Small Industries Development Bank of India (SIDBI)

Set up in 1990 as an independent financial institution under the Banking System in India
Aim: To aid the growth and development of Micro, Small and Medium Enterprises (MSMEs) in India.
It acts as the principal financial institution for the promotion, financing, and development of the MSME
sector in India, as well as for coordinating the functions of institutions engaged in similar activities.

Sector-Specific Banks
Micro Units Development & Refinance Agency (MUDRA)
Set up as a refinance agency for developing and refinancing all micro-enterprises engaged in manufacturing,
trading and service activities.
Aims to provide financial support to those banks and micro finance institutions which are engaged in
lending to the micro-enterprises.
Hence, MUDRA is a refinancing Institution.
MUDRA does not lend directly to the micro entrepreneurs / individuals.
It has been set up as a subsidiary of SIDBI.
Gives loans up to Rs 10 lakh while loans of higher amount are given by SIDBI.
Mudra Loans are available for non-agricultural activities up to Rs. 10 lakh and activities allied to agriculture
such as Dairy, Poultry, Bee Keeping etc., are also covered.
Mudra issues a Mudra Card which permits access to Working Capital through ATMs and Card Machines.
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There are three types of loans under PM Mudra Yojana:

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Shishu (up to Rs.50,000)

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Kishore (from Rs.50,001 to Rs.5 lakh)

Tarun (from Rs.500,001 to Rs.10,00,000)

National Bank for Financing Infrastructure and Development (NaBFID)

Established as an infrastructure focused development financial institution (DFI) under the National Bank for
Financing Infrastructure and Development Act, 2021
Aim: To support the development of long-term non-recourse infrastructure financing in India including
development of bonds and derivatives markets necessary for infrastructure financing and to carry on the
business of financing infrastructure.

Power Finance Corporation (PFC)

Power Finance Corporation (PFC) provides financial assistance to power sector projects.

Rural Electrification Corporation (REC)

Rural Electrification Corporation (REC) focuses on financing projects aimed at rural electrification.

Telecommunications Consultants India Ltd. (TCIL)

Although primarily a consultancy organization, Telecommunications Consultants India Ltd. (TCIL) also plays
a role in financing telecommunications projects.

Agricultural Development Banks (ADBs)

National Bank for Agriculture and Rural Development (NABARD)
Established on the recommendations of the B. Srivaraman Committee in 1982
Primary responsibility of matters concerning policy, planning, and operations in the field of credit for
agriculture and other economic activities in the rural areas of India.
Main agency for implementing the Rural Infrastructure Development Fund (RIDF) scheme.
Refinance Function:
Provides refinance to institutions financing the rural sector, including:
State Cooperative Agriculture and Rural Development Banks (SCARDBs)
State Cooperative Banks (SCBs)
Regional Rural Banks (RRBs)
Commercial Banks
Other institutions approved by the Reserve Bank of India (RBI)
RBI has divested its share in NABARD in two phases, one in 2010 and one recently in April 2019.
With this the central government now holds 100% stake in NABARD.
NABARD consists of seven subsidiaries such as
NABKISAN
NABSAMRUDDHI
NABFINS
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NABFOUNDATION
NABCONS
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NABVENTURES

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NABSanrakshan

Export – Import Development Banks

Specialized financial institutions under the Banking System in India, that facilitate and promote the country’s
international trade by providing financial assistance to exporters and importers.
Major Export-Import Banks in India are:
Export-Import Bank of India (EXIM Bank):
Set up in 1982 to take over the operations of the international financing wing of the IDBI.
It provides Indian exporters with financial assistance, overseas investment credit, and technology and
import finance, among other services.

Infrastructure Development Banks (IDBs)

National Housing Bank (NHB)
State-owned bank and regulator that supports housing finance institutions and promotes housing finance
schemes in India.
The High-level group under the Chairmanship of Dr. C. Rangarajan, the former Governor of RBI has
recommended the proposal for setting up of National Housing Bank as an autonomous Housing Finance
Institution.
NHB is regulated by the RBI.
Established under National Housing Policy, 1987.
Previously, it was a wholly owned subsidiary of RBI.
In 2019, RBI divested its stake in NHB, and thus currently central government holds 100% stake in NHB.
It aims at extending financial assistance to housing sector by way of both refinance and direct finance.
Note: The NBH publishes the RESIDEX to track the movement in the housing Prices.

India Infrastructure Finance Company Limited (IIFCL)

Provides long-term finance to viable infrastructure projects in broad sectors of transportation, energy,
water, sanitation, communication, and social and commercial infrastructure.

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Deposits and Types of Deposits in Banking Chapter - 4

What is Bank?
A bank is a financial institution that provides financial products and services to individuals, businesses, and
governments.
It offers services such as savings accounts, current accounts, loans, credit cards, and investment services.
Banks are legally authorised to accept deposits from the public.
They use deposited funds to provide loans and advances.
Banks earn income mainly through interest charged on loans.
Fees and service charges collected for banking services are another major source of income.

Primary Function of Banks

Primary functions are the main and essential activities performed by every bank. These include:
(a) Accepting Deposits
Banks accept money from the public in the form of deposits and pay interest on them.
Key points:
Banks ensure the safety and security of deposited money.
Customers can withdraw money whenever required, subject to account conditions.
Common types of deposits include Savings Deposit, Current Deposit, Fixed Deposit, and Recurring Deposit.

(b) Granting Loans and Advances

Banks use the deposited money to provide loans and advances to individuals, businesses, and institutions.
Key points:
Banks charge interest on loans, which is usually higher than the interest paid on deposits.
Loans and advances are provided in different forms such as:
Bank Overdraft
Cash Credit
Short-term, Medium-term, and Long-term Loans
Discounting of Bills

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Secondary Functions
(a) Agency Functions
Under agency functions, a bank acts as an agent of its customers and performs services on their behalf.
Examples include:
Transfer of funds from one account to another or from one branch to another.
Collection of periodic payments such as salary, pension, dividend, and interest.
Making regular payments like rent, electricity bills, insurance premiums, etc.
Collection of cheques and other negotiable instruments.
Purchase and sale of shares and securities on behalf of customers.
Banks charge commission or service fees for these services.

(b) Utility Functions

Utility functions are additional services provided by banks for customer convenience. These include:
Issuing Letters of Credit
Providing Locker Facilities for safe custody of valuables like jewellery and important documents
Assisting in foreign exchange transactions
Underwriting of shares and debentures
Providing credit cards, debit cards, internet banking, and mobile banking services

Types of Bank Accounts

Saving Account
A Savings Account is usually the first bank account opened by individuals, often during school or college.
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It provides the first banking experience for most people.

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Traditionally, it served two main purposes:

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Safety of deposits
Earning interest on savings
Features of a Savings Account
1. Online banking facilities
2. Innovative Schemes
Sweep facility
Discounts and cashback offers
Attractive locker facilities
Zero-balance savings accounts
Annual fee waivers
3. Quick Services
4. Higher Interest Rates
Private sector banks generally offer higher interest rates than public sector banks on savings accounts
Main Benefits of a Savings Account
1. Sweep Facility: Excess balance is automatically transferred to a higher interest slab.
2. Discount Benefits
3. Locker Facility
4. International Debit Cards
5. Automated Bill Payments
You can now have up to four nominees for a single bank account, a change effective November 1, 2025,
under India's Banking Laws Amendment Act, allowing for simultaneous (shared percentages) or successive
(priority order) nominations to simplify fund transfer after death, reducing unclaimed deposits and disputes.

BSBDA/PMJDY
Basic Savings Bank Deposit Account
Launched in 2014.
Largest financial inclusion initiative
Features of
No requirement to maintain a minimum balance in PMJDY accounts;
Accident insurance cover of Rs 100,000 (increased to Rs 200,000 for new accounts opened after August 28,
2018) with the RuPay card;
Overdraft facility of up to Rs 10,000 for eligible account holders;

RBI Amendment Directions on BSBD Accounts (2025)

The Reserve Bank of India (RBI) has issued Amendment Directions to update the Responsible Business
Conduct Directions, 2025.
These amendments revise the framework for Basic Savings Bank Deposit (BSBD) accounts offered by
commercial banks.
Objective of the Amendments
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To expand minimum facilities available under BSBD accounts.

To improve ease of use, accessibility, and inclusion for low-value deposit holders.
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Minimum Facilities under Revised BSBD Norms

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Unlimited monthly deposits allowed.

Free ATM / Debit Card:
No issuance fee
No renewal fee
Cheque book facility with at least 25 cheque leaves per year.
Access to Internet Banking and Mobile Banking.
Provision of either:
A passbook, or
A monthly account statement.
Withdrawal Rules
Minimum of four free withdrawals per month, including:
ATM withdrawals
Inter-bank ATM withdrawals
Digital transactions such as UPI, IMPS, NEFT and RTGS:
Not counted as withdrawals
Ensures customers are not discouraged from digital payments.
Applicability to Existing and New Customers
Existing BSBD account holders can request the newly introduced facilities.
Regular savings account holders may convert their account into a BSBD account, provided:
They do not already hold a BSBD account with another bank.

Current Account
A current account is mainly meant for businesses and commercial activities.
It is used by businessmen, professionals, firms, companies, trusts, and institutions.
Features of a Current Account
1. No Interest Earned
2. Flexible Deposits and Withdrawals
3. Unlimited Transactions
Benefits of a Current Account
1. Convenient Withdrawals Anytime
2. Easy Deposits Across Branches
3. Overdraft Facility
4. Customised Account Variants
5. Monthly Cheque Allowance
6. Phone and SMS Banking

Difference Between Saving and Current Account

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TIME DEPOSITS
Time Deposits
Time Deposits are also known as Term Deposits.
Term deposit can be paid prematurely at the request of the customer.

Fixed Deposit
Duration : 7 Days - 10 years.
Minimum Deposit : 1000 rupees.
Loan can be availed against the Fixed Deposit.

Recurring Deposit
Account holder needs to deposit a fixed amount every month until it reaches the fixed maturity date.

Callable/Non-Callable FD
The fixed deposit which allows premature withdrawal is known as callable fixed deposit.

Fixed Deposit Rules Revised: Key Changes

The Reserve Bank of India (RBI) has issued new guidelines to help NBFC depositors facing urgent financial
needs.
Key Provisions of the New Guidelines
Premature repayment within three months is permitted without payment of interest in emergency
situations such as:
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Medical emergencies
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Natural disasters notified by the concerned government or authority

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Tiny deposits (up to ₹10,000) can be fully repaid at the depositor’s request.
For other public deposits, premature withdrawal is allowed up to:
50% of the deposit amount, or
₹5 lakh,
whichever is lower.
In cases of critical illness, depositors are allowed to withdraw 100% of the principal amount prematurely,
without interest.

DEMAT Account
A DEMAT (Dematerialised) Account is used to hold shares and securities in electronic form instead of
physical certificates.
It enables investors to buy, sell, and hold securities digitally, making trading safe and convenient.
In India, DEMAT accounts are managed by only two depository organisations:
National Securities Depository Limited (NSDL)
Central Depository Services Limited (CDSL)
KYC (Know Your Customer) compliance is mandatory for opening a DEMAT account.
Transaction costs are reduced due to electronic processing and minimal paperwork.
Traders and investors can operate from anywhere using online platforms.
Transfer of securities becomes faster with significantly reduced paperwork.
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EXCHANGE EARNERS FOREIGN CURRENCY ACCOUNT

It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their
foreign exchange earnings to the account, so that the account holders do not have to convert foreign
exchange into Rupees and vice versa, thereby minimizing the transaction costs
All categories of foreign exchange earners, such as individuals, companies, etc., who are resident in India,
may open EEFC accounts.
An EEFC account can be held only in the form of a current account. No interest is payable on EEFC accounts.

ESCROW ACCOUNT
An escrow account is a third party account where funds are kept before they are transferred to the ultimate
party.
It provides security against scams and frauds.
On successful completion of a transaction, this temporary account closes, and funds get transferred to the
seller's account.

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NOSTRO ACCOUNT
Nostro is Latin word means “Ours”.
When a domestic bank holds an account with foreign bank in their currency is called NOSTRO account.
It allows the customers to deposit money in the bank's account in another bank.
It is often used if a bank has no branches in a foreign country.

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VOSTRO ACCOUNT

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Vostro is Italian word means “Yours”.

A VOSTRO account is one which is maintained in India by a foreign bank with their corresponding bank.

What are NRI Accounts?

Banks in India provide special bank accounts for Non-Resident Indians (NRIs) and Persons of Indian Origin
(PIOs) living abroad.
These accounts help NRIs manage income earned in India and abroad as per Indian banking and tax rules.
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Types of NRI Accounts

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1. Non-Resident Ordinary (NRO) Account

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Can be opened as a Savings Account or Fixed Deposit Account.

Used to deposit income earned in India (rent, pension, dividends, etc.).
Deposits made in foreign currency are converted into INR at the prevailing exchange rate.
Interest earned is taxable in India.
Repatriation is allowed subject to limits and RBI guidelines.

2. Non-Resident External (NRE) Account

Can be opened as a Savings Account or Fixed Deposit Account.
Only income earned abroad can be deposited.
Deposits are converted into INR at the prevailing exchange rate.
Interest earned is completely tax-free in India.
Both principal and interest are fully repatriable.

3. Foreign Currency Non-Resident (FCNR) Account

Opened only as a Fixed Deposit Account.
Maintained in foreign currency (not converted into INR).
Protects depositors from exchange rate fluctuations.
Both principal and interest are fully repatriable.
Interest earned is not taxable in India.

In Short
NRO Account → Indian income, taxable
NRE Account → Foreign income, tax-free
FCNR Account → Foreign currency deposit, tax-free and exchange-risk free

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DEAF/IEPF and UDGAM/MITRA Portal : Unclaimed Menace Chapter - 5

What is unclaimed deposits?

Savings / Current Accounts: No customer-initiated operation for 10 years.
Term (Fixed) Deposits: ot claimed within 10 years from the date of maturity.
Such balances are classified as Unclaimed Deposits.

Where are Unclaimed Deposits Transferred?

Banks transfer these amounts to the Depositor Education and Awareness Fund (DEA Fund).
The DEA Fund is maintained by the Reserve Bank of India (RBI).

Can Depositors Still Claim the Money?: Yes.

Depositors, nominees, or legal heirs can claim the deposit anytime from the concerned bank.
Payment includes interest, as applicable, even after transfer to the DEA Fund.
Why Are Unclaimed Deposits Increasing?
Non-closure of inactive savings/current accounts.
Depositors not claiming matured fixed deposits.
Accounts of deceased depositors where:
Nominees or legal heirs do not approach banks.
Lack of awareness or forgotten accounts, despite RBI and bank campaigns.

Steps Taken to Help Claim Deposits

Banks publish lists of unclaimed deposits on their websites.
Lists contain limited identifiable details (to protect privacy).
Public is encouraged to:
Check bank websites
Identify unclaimed deposits
Approach the concerned bank with valid documents

Depositor Education and Awareness (DEA) Fund Scheme, 2014

The DEA Fund Scheme, 2014 was formulated by the Reserve Bank of India (RBI).
It was created under Section 26A of the Banking Regulation Act, 1949.
Under this provision, RBI established the Depositor Education and Awareness Fund (DEA Fund).
Effective date: 24 May 2014
This is the date on which the Scheme was notified in the Official Gazette of India.
What is the purpose of the DEA Fund?
To park unclaimed deposits transferred by banks.
To promote depositor education and awareness.
To strengthen financial consumer protection, while ensuring that depositors’ rights remain intact.
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Which amounts are credited to the DEA Fund?

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Amounts lying unclaimed or inoperative for 10 years or more with banks (Commercial Banks and Co-
operative Banks) are transferred to the DEA Fund. These include:
Deposit Accounts
Savings bank deposit accounts
Fixed or term deposit accounts
Cumulative / recurring deposit accounts
Current deposit accounts
Any other deposit accounts (by any name)
Other Bank Balances
Cash credit accounts
Loan accounts (after due appropriation by banks)
Margin money against Letters of Credit (LCs), Guarantees, or security deposits

Payment & Transitory Accounts

Outstanding:
Telegraphic Transfers (TTs)
Mail Transfers (MTs)
Demand Drafts (DDs)
Pay Orders
Banker’s Cheques
Sundry deposit accounts
Vostro accounts
Inter-bank clearing adjustments
Unadjusted NEFT (National Electronic Funds Transfer) credit balances
Unreconciled ATM transaction credit balances

Cards & Foreign Currency Related

Undrawn balances in prepaid cards issued by banks
(Excludes traveller’s cheques and similar instruments with no maturity)
Rupee proceeds of foreign currency deposits after conversion as per foreign exchange regulations
Any Other Amounts
Any other amounts specified by RBI from time to time.

Can a customer/depositor claim a refund of unclaimed amounts?

Yes.
A customer/depositor or legal heirs (in case of deceased depositor) can claim the unclaimed amount from
the concerned bank.
How the refund process works
The customer/depositor or legal heir submits a claim to the bank where the deposit was held.
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The bank pays the amount to the claimant:

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Along with interest, only for interest-bearing deposit accounts.

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After making the payment, the bank claims an equivalent amount from the DEA Fund maintained by the
Reserve Bank of India (RBI).
The Depositor Education and Awareness (DEA) Fund Scheme, 2014 does not prescribe any time limit for
claiming unclaimed deposits.
Depositors or legal heirs can claim the amount at any time.

Claiming Unclaimed Deposits from the DEA Fund when a Bank is under Liquidation
The depositor / legal heir must approach the Liquidator of the bank under liquidation (not the bank branch).

Scenario 1: Deposits covered by DICGC

Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance applies up to ₹5 lakh per depositor
(including accrued interest), in the same right and capacity.
The Liquidator raises the claim with the DEA Fund (maintained by the Reserve Bank of India).
Case A: Deposit ≤ ₹5 lakh
Procedure
Depositor/legal heir files claim with the Liquidator.
Liquidator submits an equivalent claim to the DEA Fund with documents.
DEA Fund pays the insured amount to the Liquidator.
Liquidator pays the depositor.
Illustration
Deposit claim: ₹4 lakh
DEA Fund pays ₹4 lakh → Liquidator pays ₹4 lakh to depositor.

Case B: Deposit > ₹5 lakh

Procedure
Depositor/legal heir files claim with the Liquidator.
Liquidator claims the full amount from DEA Fund.
DEA Fund pays ₹5 lakh (insured portion).
Liquidator pays the depositor:
₹5 lakh (insured) +
Balance amount (after meeting requirements).
Liquidator then seeks reimbursement from the DEA Fund for the balance paid.
Illustration
Deposit claim: ₹6 lakh
DEA Fund pays ₹5 lakh (insured).
Liquidator pays remaining ₹1 lakh to depositor, then claims ₹1 lakh from DEA Fund as reimbursement

Scenario 2: Deposits NOT covered by DICGC

If the deposit was not insured by DICGC at the time of transfer to the DEA Fund:
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DEA Fund payment is only on a reimbursement basis.

Procedure
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Depositor/legal heir files claim with the Liquidator.

Liquidator first pays the depositor (subject to requirements).
Liquidator then claims reimbursement of the paid amount from the DEA Fund.

Investor Education and Protection Fund Authority

It was established in 2016 under the Companies Act, 2013.
Purpose: It is dedicated to promoting investor awareness and protection through sustained outreach,
education, and strategic collaborations.

Functions
It manages the Investor Education and Protection Fund (IEPF) and promotes investor awareness and
financial protection.
It makes refunds of shares, unclaimed dividends, matured deposits/debentures etc. to investors and
promotes awareness among investors.
It is dedicated to safeguarding investor interests by facilitating the return of unclaimed shares and dividends
and advancing financial literacy nationwide

Nodal Ministry: Ministry of Corporate Affairs

Initiatives: Through flagship initiatives such as Niveshak Didi, Niveshak Panchayat, and Niveshak Shivir,
IEPFA empowers individuals to make informed financial choices and fosters a financially aware citizenry.
The IEPF consists of amounts that remained unclaimed for 7 years, including:
Unpaid dividends,
Application money is due for refund,
Matured deposits and debentures,
Interest on investments from the fund,
Grants or donations received from the government or other entities.

Can shareholders claim a refund from IEPF?

Yes.
Any shareholder whose amount has been transferred to IEPF can claim a refund under:
Section 125(3)(a), Companies Act, 2013
Rule 7(1) of the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016

What is UDGAM?
UDGAM = Unclaimed Deposits – Gateway to Access inforMation.
An online portal developed by the Reserve Bank of India (RBI).
Purpose: Enable users to search unclaimed deposits/accounts across multiple banks at one place in a
centralised manner.

Coverage of UDGAM
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As on 4 March 2024:
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30 banks are onboarded on the portal.

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These banks cover around 90% (by value) of unclaimed deposits in the Depositor Education and Awareness
Fund (DEA Fund).
Remaining banks are in the process of onboarding.
All unclaimed deposits/accounts transferred to DEA Fund can be searched through UDGAM.

Registration Requirement
User must register on the portal by providing:
Name
Mobile number
A User Manual is available on the portal explaining registration and usage.

Can deposits be claimed through UDGAM?

No.
UDGAM only provides:
Search facility for unclaimed deposits
Information on claim/settlement process of the concerned bank
Actual claim must be made directly with the respective bank.

What is UDRN?
UDRN = Unclaimed Deposit Reference Number.
Generated by banks through their Core Banking Solution (CBS).
Assigned to each unclaimed account/deposit transferred to DEA Fund.
Purpose of UDRN
Protects privacy (account holder/bank branch cannot be identified by third parties).
Helps bank branches seamlessly process and settle claims after a successful UDGAM search.
All 30 onboarded banks have enabled UDRN generation.

Digital Platforms for Tracing Unclaimed Assets

Bima Bharosa Portal – Unclaimed Insurance Proceeds

Bima Bharosa is an online portal that helps individuals trace unclaimed insurance policy proceeds.
It enables policyholders, nominees, and legal heirs to check whether any insurance amount is due to them.
The portal provides links to enquiry pages of insurers for initiating claims.
An insurance amount is considered unclaimed if it remains unpaid for more than 12 months from the due
date.
Insurance proceeds unclaimed for more than 10 years are transferred to the Senior Citizens’ Welfare Fund
(SCWF).
SCWF is maintained by the Government of India.
Important Clarification
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Transfer to SCWF does not affect ownership rights.

Beneficiaries can claim the amount up to 25 years from the date of transfer.
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Preventive Measures Encouraged

To avoid insurance proceeds becoming unclaimed:
Update contact details with insurers.
Register and update nominations regularly.
Inform family members about insurance policies.
Maintain physical or digital records of policy documents.
Store documents on DigiLocker.
Link insurance policies with Aadhaar and PAN for easier identification.

MITRA Portal – Unclaimed & Inactive Mutual Fund Investments

MITRA = Mutual Fund Investment Tracing and Retrieval Assistant.
An online facility hosted on MF Central.
Purpose: Help investors trace unclaimed and inactive mutual fund investments across fund houses.
A folio number is a unique identification number allotted by a mutual fund to an investor.
It is used to track investments and unit balances in a particular scheme.
Mutual fund amounts are treated as unclaimed when:
Redemption / maturity proceeds / dividends are not credited to the investor’s bank account due to:
Change or closure of bank account
Incomplete investor records
Outdated contact details
Pending KYC (Know Your Customer) compliance
Important
The money is not lost.
On the due date, it is transferred to designated unclaimed schemes and remains there until claimed.
What is an Inactive Folio?
A mutual fund folio is treated as inactive if:
No transaction is done for 10 years, and
Unit balance is still available in the folio.
Role of the MITRA Portal
Enables investors to identify unclaimed or inactive mutual fund investments using prescribed search
parameters.
Helps locate the mutual fund / AMC where the investment exists.
After identification, investors must approach the concerned AMC or RTA to initiate the claim process.
Claim Process
MITRA is only a tracing and identification tool.
Claims are settled by:
Asset Management Company (AMC), or
Registrar and Transfer Agent (RTA)
Preventive Measures Suggested
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Keep KYC details updated.

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Update bank account and contact information.

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Regularly review mutual fund account statements.

Track folios to avoid investments becoming unclaimed or inactive.

RBI Launches One-Year Scheme to Facilitate Payout of Inoperative Accounts and Unclaimed Deposits
Announced by the Reserve Bank of India (RBI).
Name: Facilitating Accelerated Payout – Inoperative Accounts and Unclaimed Deposits.
Tenure: 1 year
Start: Today
End: 30 September 2026
Key Objectives
Encourage the public to:
Reactivate inoperative bank accounts.
Claim unclaimed deposits from banks.
Motivate banks to proactively:
Contact customers/depositors.
Facilitate faster settlement of claims.
Focus Areas
Reduction of:
Existing stock of unclaimed deposits.
Fresh accretion of unclaimed amounts to the Depositor Education and Awareness (DEA) Fund.
Improve customer outreach and awareness.
Speed up reactivation and payout processes.

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Loans and Types of Loans in Banking (Including Gold Loans/Silver Loans)

Chapter – 6

What is Loan?
A Loan is an amount of money borrowed by an individual, business, or organization from a bank or financial
institution to meet financial needs.
It is a credit instrument under which the borrower receives money with an obligation to repay the principal
amount along with interest within a specified time period.
Components of a Loan
1. Principal
The original amount of money borrowed by the borrower.
Interest is calculated on this amount.
2. Term (Tenure)
The time period within which the loan must be repaid.
Can range from short-term to long-term depending on the loan type.
3. Rate of Interest
The Annual Percentage Rate (APR) charged by the lender.
Represents the cost of borrowing and determines how much extra the borrower pays over time.
4. Loan Repayment
The regular amount paid by the borrower (monthly/weekly).
Depends on:
Principal amount
Loan tenure
Rate of interest

Types of Loans in India

1. Secured Loans
These loans are backed by collateral. If the borrower defaults, the lender can recover money by selling the
asset.
Loan against Fixed Deposit (FD) – Borrowing against existing fixed deposits
Home Loan – For purchase or construction of residential property
Gold Loan – Loan against gold jewellery or ornaments
Loan against Property (LAP) – Loan against residential or commercial property
2. Unsecured Loans
These loans do not require collateral and are sanctioned based on creditworthiness.
Personal Loan – For personal needs such as medical, travel, marriage
Short-term Business Loan – For working capital or business expansion
Vehicle Loan – For purchase of personal or commercial vehicles
Education Loan – To finance higher education expenses
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3. Demand Loans
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Loans that are repayable on demand

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The lender can recall the loan at any time without prior notice
4. Subsidized Loans
Loans provided at lower interest rates with government support
Targeted at specific groups such as:
Farmers
Students
Economically weaker sections
5. Concessional Loans
Loans offered at concessional (reduced) interest rates
Aim to promote priority sectors such as:
Agriculture
Small businesses
MSMEs
Other Important Types of Loans
Term Loan – Loan with a fixed tenure and structured repayment schedule
Bank Overdraft Facility – Allows withdrawal beyond account balance up to a sanctioned limit
Letter of Credit (LC) – Bank’s assurance of payment to a seller on behalf of a buyer
Bank Guarantee (BG) – Bank’s guarantee to a third party for customer obligations
Lease Finance – Asset acquisition through periodic lease payments
SME Collateral-Free Loan – Loans to small and medium enterprises without collateral
Construction Equipment Loan – Loan to purchase heavy construction machinery
SME Credit Card – Credit facility designed specifically for MSMEs

Secured Loans
Secured Loans are loans backed by collateral (asset/security).
If the borrower fails to repay, the lender has the legal right to sell the pledged asset to recover the loan
amount.
Key Features of Secured Loans
Generally used for asset creation, especially property
Collateral required (property, gold, FD, etc.)
Lower interest rates compared to unsecured loans
Higher loan amount due to security cover
In some cases, interest paid is tax deductible (for example, home loans)
1. Home Loan
A secured loan used to purchase or construct a residential house
Property purchased acts as collateral
Interest rate depends on the borrower’s credit score
Long repayment tenure, usually 20–30 years
2. Loan Against Property (LAP)
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Loan taken by pledging residential, commercial, or industrial property

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Loan amount is a percentage of the market value of the property

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Used for business expansion, education, or personal needs

3. Gold Loan
Borrower pledges gold jewellery or coins as security
Loan amount depends on the value of gold
Mostly used for short-term financial needs
Faster processing compared to other secured loans
4. Loan Against Fixed Deposit (FD)
Fixed deposit is pledged as collateral
Loan amount is usually 70–90% of FD value
Loan tenure cannot exceed FD maturity period
Interest rate is generally slightly higher than FD interest rate
Unsecured Loans
Unsecured Loans are loans that are not backed by any collateral.
They are granted mainly on the basis of the borrower’s income, credit score, and repayment capacity.
Key Features of Unsecured Loans
No collateral required
Provided by banks, NBFCs, and private lenders
Higher interest rates than secured loans
Higher risk for lenders, as recovery depends only on borrower credibility
In case of bankruptcy, unsecured lenders are not given priority
1. Personal Loan
Available to individuals with stable income and good credit score
Generally offered at competitive but higher interest rates
Common uses:
Family wedding expenses
Vacations
Home renovation
Children’s higher education
2. Short-Term Business Loan
Mainly for small enterprises, MSMEs, and startups
Used to meet daily operational and working capital needs
Covers:
MSME loans
Machinery and equipment finance
Loans for traders
Loans for women entrepreneurs
3. Education Loan
Taken mainly for higher education
Covers:
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Tuition fees
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Hostel fees

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Examination and other academic expenses

Student is the primary borrower
Parents, siblings, or spouse act as co-applicants/guarantors
Applicable for:
Graduation and post-graduation
Professional courses (medicine, engineering, management, etc.)
Full-time, part-time, or vocational courses
4. Vehicle Loan
Used for purchasing new or used vehicles
Often treated as unsecured or semi-secured in banking exams
Banks assess:
Credit score
Repayment history
Loan tenure
5. Demand Loan
Short-term loan with no fixed repayment schedule
Repayable on demand by the lender
Usually carries a floating interest rate
Can be secured or unsecured
6. Subsidized Loan
Loan in which the interest burden is reduced through government subsidy
Commonly provided for education purposes
In some cases, the government pays the full interest during the study period
7. Concessional Loan
Also known as Soft Loan
Offered at:
Below-market interest rates, or
With grace periods, or both
Often provided by developed countries to developing countries
Aimed at developmental and social objectives
Loans in Banking Sector – Types of Loans
1. Term Loan
A term loan is granted mainly for business requirements
Must be repaid within a specified time period
Generally has:
Fixed interest rate
Monthly or quarterly repayment schedule
Definite maturity date
Can be secured or unsecured
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Secured term loans carry lower interest rates

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Classification of Term Loans

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Short-term loan: Less than 1 year

Medium-term loan: 1 to 3 years
Long-term loan: More than 3 years
2. Bank Overdraft Facility
Allows customers (mainly businesses) to withdraw more than the available balance in their current account
Limit and interest rate are decided at the time of sanction
Considered a short-term source of finance
Usually adjusted with future deposits
3. Letter of Credit (LC)
A written assurance by a bank to make payment to the seller
Payment is made on submission of specified documents
Protects the seller against payment risk
Widely used in domestic and international trade
Common when:
Buyer and seller are in different countries
Trading parties are unknown to each other
4. Lease Finance
A method of financing where assets are used in return for periodic lease payments
Lessor (bank/finance company) purchases and legally owns the asset
Lessee uses the asset for medium or long term
Ownership options:
Pay final installment
Negotiate a purchase value at the end of lease
5. SME Collateral-Free Loan
Loans provided to Small and Medium Enterprises (SMEs) without collateral
Available to:
Startup entrepreneurs
Existing SMEs
Used for:
Working capital needs
Business expansion
Purchase of machinery and equipment
6. Construction Equipment Loan
Provided for purchase of new or used construction machinery
Examples:
Excavators
Cranes
Backhoe loaders
Loan tenure: Generally 12 to 60 months
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Usually a secured loan

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The equipment itself acts as collateral

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7. SME Credit Card

Credit facility offered to SMEs in the form of:
Cash credit, or
Term loan
Credit limit: Up to ₹10 lakh
Eligible borrowers:
Small retail traders
Small industrial units
Small business enterprises
Transport operators
Repayment period:
Term loan: Up to 5 years
Cash credit: Up to 3 years

OTB:
RBI circulars on loans and advances: The Reserve Bank of India (Pre-payment Charges on Loans) Directions,
2025 prohibit lenders from levying prepayment penalties on floating-rate loans to individuals and MSMEs,
effective for loans sanctioned or renewed from January 1, 2026. RBI also proposed revised norms on related
party lending (October 2025), tightening restrictions on loans to directors and entities, set to take effect
April 1, 2026, with transitional provisions for existing exposures.
Prepayment Charges Ban: This directive applies to commercial banks, co-operative banks, NBFCs, and All
India Financial Institutions, covering full or partial prepayments from any source without penalties on
floating-rate term or working capital loans. Fixed-rate loans or business-purpose loans to non-
individuals/large enterprises may still impose charges, but these must be transparently disclosed in loan
agreements and Key Facts Statements (KFS). The aim is to curb restrictive clauses that deter borrowers from
switching lenders for better terms.
Related Party Lending Updates: Proposed Directions (October 2025) revise the Master Circular on Loans and
Advances – Statutory Restrictions, restricting renewals or enhancements of non-compliant exposures and
mandating compliance within one year or maturity. It builds on Section 20/20A of the Banking Regulation
Act, prohibiting unsecured loans to directors/relatives beyond approved limits. Existing loans get
grandfathering till run-off or one year post-issuance.
Other 2025-26 Developments: Urban Co-operative Banks' Master Circular (December 2025) mandates 50%
of advances as small-value loans by March 2026 and reinforces director lending curbs. Interest Rate on
Advances Directions were amended (RBI/2025-26/83, September 2025) to allow earlier spread reductions
on floating-rate loans. These align with broader priority sector lending tweaks for MSMEs and regional
credit balance.
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Mortgages and Types of Mortgages in Banking Chapter - 7

What is the meaning of a mortgage?

A mortgage is a legal agreement between a borrower and a lender in which the borrower pledges an
immovable property (such as a house, flat, land, or commercial space) as security to obtain a loan.

Key Points to Understand a Mortgage

The property remains with the borrower, but the lender gets a legal right over it until the loan is fully repaid.
If the borrower fails to repay, the lender can sell the mortgaged property to recover the outstanding amount.
A mortgage is a secured loan, so it generally carries a lower interest rate than unsecured loans.
Mortgage loans usually allow higher loan amounts and longer repayment tenures.
Having home insurance can sometimes help in availing a higher loan amount or better terms.

Key Components of a Mortgage

From a banking lens, a mortgage consists of several critical elements:
Principal: The original amount borrowed by the customer.
Interest: The cost of borrowing, typically expressed as an annual percentage rate (APR). It can be fixed or
floating.
Tenure: The duration of the loan, often ranging from 10 to 30 years.
EMI (Equated Monthly Instalment): A fixed monthly payment that includes both principal and interest.
Collateral: The property being financed, which secures the loan.
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Credit Appraisal and Risk Assessment

Before sanctioning a mortgage, banks conduct a thorough credit appraisal:
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Credit Score: Indicates the borrower’s creditworthiness.

Income Verification: Ensures repayment capacity.
Debt-to-Income Ratio (DTI): Measures financial leverage.
Property Valuation: Determines the loan-to-value (LTV) ratio.
Legal Due Diligence: Confirms ownership and title clarity.

Mortgage lending in India operates within a well-defined regulatory structure to ensure financial stability,
borrower protection, and risk control.
Reserve Bank of India (RBI)
Acts as the apex monetary and banking authority.
Issues guidelines on interest rate policies, loan-to-value (LTV) ratios, provisioning norms, and risk weights
for mortgage loans.
Ensures that banks follow prudent lending and risk management practices.
National Housing Bank (NHB)
Regulates and supervises Housing Finance Companies (HFCs).
Promotes affordable housing finance and ensures sound functioning of housing finance institutions.
SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002)
Empowers banks and financial institutions to recover loan dues without court intervention.
Allows lenders to seize and sell mortgaged property in case of default, subject to prescribed procedures.

Different Types of Mortgage Loans in India

In India, mortgage loans are mainly classified based on the contract between the borrower (debtor) and the
lender (creditor).
1. Usufructuary Mortgage
In this type, the borrower hands over possession of the property to the lender.
The lender is allowed to earn income from the property by renting or leasing it.
The income earned is adjusted against the loan amount or interest.
Ownership remains with the borrower, but possession lies with the lender until repayment.
2. Simple Mortgage
This is the most common and widely used mortgage in India.
The borrower retains ownership and possession of the property.
The lender gets the right to sell the property if the borrower defaults.
No income from the property is enjoyed by the lender during the loan period.
3. Subprime Mortgage
These mortgages are offered to borrowers with low credit scores or weak credit history.
They usually come with a higher interest rate due to higher risk.
Terms and conditions may be less strict, but the cost of borrowing is higher.
Risk for both borrower and lender is relatively high.
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4. English Mortgage
In this type, the ownership of the property is temporarily transferred to the lender.
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The borrower promises to repay the loan on a specific date.

Once the loan is fully repaid, ownership is transferred back to the borrower.
English mortgages generally carry a lower rate of interest.

Types of Mortgage Loans Based on the Interest Rate Levied by the Lender

1. Fixed-Rate Mortgage
The interest rate remains constant throughout the entire loan tenure.
EMIs (Equated Monthly Installments) stay the same, making financial planning easier.
Borrowers can clearly estimate their total repayment liability in advance.
Suitable for people who prefer stability and predictability in repayments.
2. Variable-Rate (Floating-Rate) Mortgage
The interest rate changes over time, depending on the repo rate set by the Reserve Bank of India (RBI).
Rates are influenced by the overall economy and financial markets.
In a growing economy, interest rates may fall, reducing EMIs or loan tenure.
However, EMIs can increase if interest rates rise.
3. Adjustable-Rate Mortgage (ARM)
These loans start with a fixed interest rate for an initial period.
After the fixed period, the rate becomes variable, linked to economic conditions.
Lenders may offer a discounted initial rate to attract borrowers.
Generally involve higher processing fees and carry some interest-rate risk in later years.

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Priority Sector Lending and Current Changes : Welfare Banking Chapter - 8

What is PSL?
Full form: Priority Sector Lending (PSL)
RBI-mandated requirement for banks to allocate a set portion of their loans to key priority sectors that face
credit shortages but are crucial for inclusive economic growth.
Priority Sector Lending Certificates (PSLCs) are tradable certificates issued against priority sector loans.

Historical Background:
1969 – Gadgil Committee:
Recommended the Area Approach, leading to the adoption of the Lead Bank Scheme.
1972 – Formalization of PSL:
Aimed to ensure credit flow to sectors that were creditworthy but lacked access to institutional finance.
1980 - Krishnaswamy Committee:
Recommended revising the target to 40% of ANBC by 1985, with sub-targets for agriculture and weaker
sections.
1982 – Ghosh Committee:
Recommended revision and reclassification of priority sector categories.
2009 - Usha Thorat Committee:
Supported the continuation of the Lead Bank Scheme, recognizing its importance in expanding PSL coverage

What are the key sectors covered under PSL?

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Agriculture

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Micro, Small and Medium Enterprises(MSME)

Export Credit
Education
Housing
Social Infrastructure
Renewable Energy
Others

Targets/Sub-targets for Priority sector

The priority sector lending targets for UCBs shall be as follows:

ELIGIBLE CATEGORIES UNDER PRIORITY SECTOR

Agriculture – Priority Sector Lending (PSL):
Lending to the Agriculture Sector under PSL includes:
Farm Credit (Agriculture and Allied Activities)
Agriculture Infrastructure
9.1 Farm Credit
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A. Farm Credit – Individual Farmers

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Includes loans to:

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Individual farmers
Self Help Groups (SHGs) – Self Help Groups
Joint Liability Groups (JLGs) – Joint Liability Groups
Proprietorship firms of farmers
(Banks must maintain disaggregated data)
Eligible loans:
Crop loans (traditional and non-traditional plantations, horticulture, allied activities)
Medium and long-term loans
(agricultural implements, machinery, allied activities)
Pre- and post-harvest loans
(spraying, harvesting, grading, transporting own produce)
Loans to distressed farmers indebted to non-institutional lenders
Kisan Credit Card (KCC) loans
Loans to Small and Marginal Farmers (SMFs) for land purchase
Loans against pledge/hypothecation of agricultural produce (up to 12 months):
Up to ₹90 lakh against NWRs/eNWRs
(Negotiable Warehouse Receipt / Electronic Negotiable Warehouse Receipt)
Up to ₹60 lakh against other warehouse receipts
Loans for solar agriculture pumps (stand-alone and solarisation of grid-connected pumps)
Loans for solar power plants on barren/fallow land or stilt-based on farm land
B. Farm Credit – Corporate Farmers / FPOs / FPCs / Partnerships / Co-operatives
Includes:
Corporate farmers
FPOs – Farmer Producer Organisations
FPCs – Farmer Producer Companies
Partnership firms and co-operatives of farmers
(a) Loans up to ₹4 crore per borrowing entity
Crop loans (including plantations, horticulture, allied activities)
Medium and long-term agriculture loans
Pre- and post-harvest activities for own produce
(b) Produce-backed loans (up to 12 months)
Up to ₹4 crore against NWRs/eNWRs
Up to ₹2.5 crore against other warehouse receipts
(c) Loans up to ₹10 crore
To FPOs/FPCs undertaking farming with assured marketing at pre-determined prices
(d) Loans up to ₹10 crore
For purchase of produce of farmer members
Note:
Urban Co-operative Banks (UCBs) are not permitted to lend to co-operatives of farmers.
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9.2 Agriculture Infrastructure

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Loans for agriculture infrastructure

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Aggregate sanctioned limit: ₹100 crore per borrower from the banking system
9.3 Ancillary Services
Eligible loans include:
Start-ups engaged in agriculture and allied services: up to ₹50 crore
Food and Agro-processing: up to ₹100 crore per borrower
Export credit to agriculture
(pre-shipment and post-shipment; excluding off-balance sheet items)
Outstanding deposits under:
RIDF – Rural Infrastructure Development Fund
Other eligible funds with National Bank for Agriculture and Rural Development (NABARD)
on account of PSL shortfall
9.4 Small and Marginal Farmers (SMFs) – Eligibility
For sub-target computation, SMFs include:
Marginal Farmers: landholding up to 1 hectare
Small Farmers: landholding >1 hectare and up to 2 hectares
Landless agricultural labourers, tenant farmers, oral lessees, share-croppers
(within SMF land limits)
SHGs/JLGs of individual SMFs (with disaggregated data)
Loans up to ₹2.5 lakh to individuals solely in allied activities (no land criterion)
Loans to FPOs/FPCs and co-operatives of farmers where:
SMF landholding ≥ 75%
Subject to limits under para 9.1 (B)
Note: UCBs are not permitted to lend to co-operatives of farmers.
9.5 Lending to NBFCs and MFIs for On-lending
Bank credit to NBFC-MFIs and other Microfinance Institutions (MFIs)
(members of RBI-recognised SROs) for on-lending:
Eligible as PSL under agriculture categories
Bank credit to NBFCs (non-MFIs) for agriculture term lending:
Eligible up to ₹10 lakh per borrower
Not applicable to:
RRBs – Regional Rural Banks
UCBs – Urban Co-operative Banks
SFBs – Small Finance Banks
LABs – Local Area Banks

Education
Loans to individuals for educational purposes, including vocational courses, not exceeding ₹25 lakh will be
considered as eligible for priority sector classification.
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Housing
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Bank loans to Housing sector as per limits prescribed below are eligible for priority sector classification:

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Loans to individuals for purchase/construction of a dwelling unit per family subject to the following limits:

Housing loans to banks’ own employees will not be eligible for classification under the priority sector.
Housing loans which are backed by long term bonds shall not be classified under priority sector, as they are
exempted from inclusion in ANBC.
Investments made by UCBs in bonds issued by NHB/HUDCO on or after April 1, 2007 shall not be eligible for
classification under priority sector.

Loans for repairs to damaged dwelling units shall be eligible for priority sector classification subject to the
following limits:

Bank loans to any governmental agency for construction of dwelling units or for slum clearance and
rehabilitation of slum dwellers subject to dwelling units with carpet area of not more than 60 sq.m.
Bank loans for affordable housing projects using at least 50% of FAR/FSI for dwelling units with carpet area
of not more than 60 sq.m.
Outstanding deposits with NHB on account of priority sector shortfall

Social Infrastructure
Bank loans to social infrastructure sector as per limits prescribed below are eligible for priority sector
classification.
Loans up to a limit of ₹8 crore per borrower for setting up schools, drinking water facilities and sanitation
facilities including construction/refurbishment of household toilets and water improvements at household
level, etc.
Loans up to a limit of ₹12 crore per borrower for building health care facilities in Tier II to Tier VI centres. In
case of UCBs, the equivalent centres are those in Category ‘D’5.
Loans (other than by RRBs, UCBs and SFBs) to MFIs extended for on-lending to individuals and also to
members of SHGs/JLGs for water and sanitation facilities subject to the criteria

Renewable Energy
Bank loans up to a limit of ₹35 crore to borrowers for renewable energy-based power generators and for
renewable energy based public utilities, viz., street lighting systems, remote village electrification etc., will be
eligible for priority sector classification. For individual households, the loan limit will be ₹10 lakh per
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borrower.
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Others
The following loans up to the prescribed limits are eligible for priority sector classification:
Loans provided directly by banks to individuals and individual members of SHGs/JLGs satisfying the criteria.
Loans not exceeding ₹2.00 lakh provided by banks to SHG/JLG for activities other than agriculture or MSME,
viz., loans for meeting social needs, construction or repair of house, construction of toilets or any viable
common activity started by SHGs
Loans to distressed persons [other than distressed farmers indebted to non-institutional lenders] not
exceeding ₹1.00 lakh per borrower to prepay their debt to non-institutional lenders
Loans sanctioned to State Sponsored Organisations for Scheduled Castes/ Scheduled Tribes for the specific
purpose of purchase and supply of inputs and/or the marketing of the outputs of the beneficiaries of these
organisations
Loans up to ₹50 crore to Start-ups, that are engaged in activities other than agriculture or MSME

Weaker Sections:
Priority sector loans to the following borrowers will be considered as lending to Weaker Sections
(overlapping category):
(i) Small and Marginal Farmers
(ii) Artisans, village and cottage industries where individual credit limits do not exceed ₹2 lakh
(iii) Beneficiaries under Government Sponsored Schemes such as National Rural Livelihood Mission (NRLM),
National Urban Livelihood Mission (NULM) and Self Employment Scheme for Rehabilitation of Manual
Scavengers (SRMS)
(iv) Scheduled Castes and Scheduled Tribes
(v) Beneficiaries of Differential Rate of Interest (DRI) scheme
(vi) Self Help Groups/Joint Liability Groups
(vii) Individuals and individual members of SHGs/JLGs
(viii) Individual women beneficiaries up to ₹2 lakh per borrower (the limit of ‘₹2 lakh per borrower’ is not
applicable to UCBs)
(ix) Distressed farmers indebted to non-institutional lenders
(x) Distressed persons other than farmers, with loan amount not exceeding ₹1 lakh per borrower to prepay
their debt to non-institutional lenders
(xi) Persons with disabilities
(xii) Transgenders
(xiii) Minority communities as may be notified by Government of India from time to time.
Overdraft availed by PMJDY account holders as per limits and conditions prescribed by Department of
Financial Services, Ministry of Finance from time to time may be classified under loans to Weaker Sections.
In States, where one of the minority communities notified is, in fact, in majority, item (xiii) will cover only
the other notified minorities. These States/Union Territories are Punjab, Meghalaya, Mizoram, Nagaland,
Lakshadweep and Jammu & Kashmir.
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Negotiable Instruments : a Complete Guide Chapter - 9

THE NEGOTIABLE INSTRUMENTS ACT, 1881

Negotiable Instruments help in easy and safe transfer of money from one place to another.
The law governing negotiable instruments in India is the Negotiable Instruments Act, 1881.
Definition (Section 13)
Negotiable Instrument means:
Promissory Note
Bill of Exchange
Cheque
These instruments must be payable to order or to bearer, whether or not the words “order” or “bearer” are
expressly mentioned.
Meaning (Justice Willis)
A negotiable instrument is one:
Whose ownership (property) can be acquired by a person
Who takes it bona fide (in good faith) and for value
Even if the previous holder had defective title
Essence of a Negotiable Instrument
It is a written document
It creates a right to receive money
It is freely transferable
The holder can recover money in his/her own name
Other Instruments as Negotiable Instruments
Even if not mentioned in the Act, an instrument can be treated as negotiable if both conditions are satisfied:
Free Transferability
Transferable by delivery, or
By endorsement and delivery
As per custom of trade
Good Faith and Value
The transferee must:
Obtain it in good faith
Give value (consideration)
Get it free from all defects
Be entitled to recover money in his/her own name

Characteristics of Negotiable Instruments

1. Easy Transferability
Ownership (property) in a negotiable instrument can be transferred easily:
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Bearer instrument: By mere delivery

Order instrument: By endorsement and delivery
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2. Transferee’s Title Free from All Defects

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A person who takes the instrument:

Bona fide (in good faith)
For value (consideration)
Before maturity
Such a person is called a Holder in Due Course (HDC).
He/she gets a good title, even if the transferor’s title was defective.
3. Transferee Can Sue in His/Her Own Name
On dishonour of the instrument, the transferee can:
File a suit in his/her own name
Without depending on the previous holder
4. Prompt Payment
Negotiable instruments ensure prompt payment because:
Dishonour affects the credit and reputation of all parties involved
Hence, parties try to honour the instrument on time
5. Notice of Transfer Not Necessary
The transferee:
Is not required to give notice of transfer
To the person who is liable to pay the amount
6. Presumptions under the Negotiable Instruments Act, 1881 (Sections 118 and 119)
The Court presumes the following unless proved otherwise:
(a) Consideration: Every negotiable instrument is presumed to be: Made, drawn, accepted, or endorsed for
consideration
(b) Date The instrument is presumed to have been: Made or drawn on the date it bears
(c) Time of Acceptance: Every accepted bill is presumed to have been:
Accepted within a reasonable time
After issue and before maturity
(d) Time of Transfer: Every transfer is presumed to have been: Made before maturity
(e) Order of Endorsements: Endorsements are presumed to have been:
Made in the order in which they appear on the instrument
(f) Stamp
If an instrument is lost, it is presumed that:
It was duly stamped
(g) Holder in Due Course
Every holder is presumed to be:
A Holder in Due Course
(h) Proof of Protest (Section 119)
In a suit for dishonour:
On proof of protest, the Court presumes:
The fact of dishonour
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Unless the contrary is proved

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Promissory Note
Definition (Section 4)
A Promissory Note is:
An instrument in writing
Not being a bank-note or currency note
Containing an unconditional undertaking
Signed by the maker
To pay a certain sum of money
To, or to the order of, a certain person, or to the bearer of the instrument
Parties to a Promissory Note
Maker:
The person who makes the note
Promises to pay the amount
Payee
The person to whom the amount is payable
Essential Elements of a Promissory Note
In Writing:
Express Promise to Pay
Unconditional Promise
Signed by the Maker
Certainty of the Maker
Certainty of the Payee
Promise to Pay Money Only
Certain Amount
Other Formalities (Not Essential in Law)
Date, place, number, and consideration:
Commonly mentioned
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Not mandatory for validity

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Bill of Exchange
Definition (Section 5)
A Bill of Exchange is:
An instrument in writing
Containing an unconditional order
Signed by the drawer
Directing a certain person
To pay a certain sum of money only
To, or to the order of, a certain person, or to the bearer of the instrument
Parties to a Bill of Exchange
Drawer: The maker of the bill of exchange
Drawee: The person directed to pay the money by the drawer
Acceptor
When the drawee signs his/her assent on the bill
The drawee then becomes the acceptor
Payee: The person to whom the money is payable

Essential conditions of a bill of exchange

(1) It must be in writing.
(2) It must be signed by the drawer.
(3) The drawer, drawee and payee must be certain.
(4) The sum payable must also be certain.
(5) It should be properly stamped.
(6) It must contain an express order to pay money and money alone.
(7) The order must be unconditional.
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Key Difference
Promissory Note → Contains a promise to pay
Bill of Exchange → Contains an order to pay

Cheque
Definition (Section 6)
A Cheque is:
A Bill of Exchange
Drawn on a specified banker
Not expressed to be payable otherwise than on demand
Special Features of a Cheque
A cheque is a bill of exchange with two additional qualifications:
It is always drawn on a specified banker
It is always payable on demand
Conclusion:
All cheques are bills of exchange
All bills of exchange are not cheques
Parties to a Cheque
Drawer: The person who draws the cheque
Drawee:
The banker of the drawer
On whom the cheque is drawn
Payee: The person entitled to receive payment of the cheque

Types of Cheques
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(a) Open Cheque

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An Open Cheque is payable:

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At the counter of the bank

On which it is drawn
Types of Open Cheque
1. Bearer Cheque:
Payable to the bearer
Payment is made to: The person who presents the cheque
Transfer: By mere delivery
Risk: High risk of misuse
Example: “Pay A or bearer”
2. Order Cheque
Payable to: A specific person named in the cheque
Or to his/her order
Transfer: By endorsement and delivery
Risk: Less than bearer cheque
Example: “Pay A or order”

(b) Crossed Cheque

Used to reduce the risk involved in open cheques
Identified by:
Two parallel transverse lines
Drawn across the top left of the cheque
With or without the words:
“& Co.”
“Not Negotiable”
“A/c Payee”
Features of a Crossed Cheque
Cannot be encashed at the bank counter
Payment is made:
Only through a collecting banker
Ensures:
Greater safety
Traceability of payment

MODES OF CROSSING
(1) General Crossing – In general crossing, simply two parallel transverse lines at the left hand
side of its top corner with or without words such as 'and company' or 'not negotiable' may be
drawn.
Effect - Payment can be made through bank account only, and not at the counter.
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(2) Special Crossing - When a cheque bears the name of the bank in between the two parallel lines, with or
without the words 'not negotiable' is called Special Crossing.
Effect - The bank will pay to the banker whose name is written in between the crossed lines.

(3) Restrictive Crossing - In this, crossing of cheques is done by writing Account Payee or Account Payee
only in between the crossing lines.
Effect - Payment will be credited to the account of payee named in the cheque.

(4) Not negotiable Crossing - A person taking a cheque crossed generally or specially, bearing in either case
the words 'not negotiable' shall not be able to give a better title to the holder than that of the transferor.
Effect - The cheque can be transferred but the transferee will not acquire a better title to the cheque. Thus a
cheque is deprived of its essential feature of negotiability.

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DISHONOUR OF NEGOTIABLE INSTRUMENTS

A negotiable instrument is dishohoured by non-payment. While a bill of exchange can be dishohoured, in
addition, by non-acceptance also. When a negotiable instrument is dishonoured, the holder must give a
notice of dishonour to all the previous parties in order to make them liable.

(a) Dishonour by non-acceptance (Section 91)

A bill of exchange can be dishonoured by non-acceptance in the following ways :
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1. When the bill is duly presented and the drawee does not accept the bill within 48 hours of presentment.
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2. When there are several drawees who are not partners, and any of them doesnot accept the bill within 48
hours of presentment.
3. When the drawee is a fictitious person.
4. When the drawee after reasonable search, cannot be found.
5. When the drawee is incompetent to contract.
6. When the acceptance is qualified.
7. When presentment for acceptance is excused and the bill is not accepted.

(b) Dishonour by non-payment (Section 92):

A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker of
the note, acceptor of the bill, drawee of the cheque or drawee in case of need, if there is any, does not pay the
amount upon being duly required to pay the same. An instrument is also dishonoured by non-payment when
presentment for payment is excused and the instrument after maturity remains unpaid (Sec 76).

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RBI and Its Functions ( excluding Monetary Policy Review) Chapter - 10

About RBI:
RBI is the Central Bank of India, meaning it is the apex body in the Indian financial system.
It is owned by the Union Ministry of Finance.
It acts as a regulatory body, responsible for the regulation of the Indian banking system as well as the
control, issuing, and maintaining money supply in the Indian economy.
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve
Bank of India Act, 1934.
The Central Office of the Reserve Bank was initially established in Kolkata but was permanently moved to
Mumbai in 1937.
The Central Office is where the Governor sits and where policies are formulated.
Though originally privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the
Government of India.

OBJECTIVES
To Control the Supply of Money by controlling rate of Inflation
FOREX RESERVES: Maintain reserves with a view to securing monetary stability
PRICE STABILITY: Price stability while keeping in mind the objective of growth.
ISSUER OF CURRENCY: Operate the credit and currency system of the country to its advantage.

HISTORY OF RBI
1926: Royal Commission on Indian Currency and Finance
1934: Reserve Bank of India Act, 1934
1935: RBI was established
1937: RBI was permanently moved from Calcutta to Mumbai,
1949: RBI, which was held by private stakeholders till now, was nationalized.
Nationalisation: Government of India passed the Reserve Bank of India (Transfer to Public Ownership) Act,
1948.

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BRANCHES OF RBI
Central Office
The Central Office of the Reserve Bank of India is the main office and headquarters of the RBI.

Zonal Offices
Kolkata – represents the East Region
Mumbai – represents the West Region
Delhi – represents the North Region
Chennai – represents the South Region

Regional Offices
Reserve Bank of India (RBI) has about 22 regional offices,
In total RBI has 33 Offices across the country
Training institutes : RBI Academy, College of Agricultural Banking, Reserve Bank of India Staff College and
College of Supervisors are part of the Reserve Bank.
Other autonomous, such as, Institute for Development and Research in Banking Technology (IDRBT)

Regulator and Supervisor of Payment and Settlement Systems:

Introduces and upgrades safe and efficient modes of payment systems in the country to meet the
requirements of the public at large.
Objective: maintain public confidence in payment and settlement system
Banker to the Government: performs merchant banking function for the central and the state governments;
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also acts as their banker.

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Banker to banks: maintains banking accounts of all scheduled banks.

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Subsidiaries of the Reserve Bank of India (RBI):

Fully owned: Deposit Insurance and Credit Guarantee Corporation of India (DICGC),
Deposit Insurance and Credit Guarantee Corporation
1978
Head : Swaminathan J, Deputy Governor of RBI
DICGC insures the principal and interest of deposits up to ₹5 lakh per depositor
Banks covered under DICGC
All commercial banks including the branches of foreign banks functioning in India, Local Area Banks and
Regional Rural Banks.
Co-operative Banks - All eligible co-operative banks as defined in Section 2(gg) of the DICGC Act are covered
by the Deposit Insurance Scheme.
DICGC insures all bank deposits, such as saving, fixed, current, recurring, etc. except the following types of
deposits.
Deposits of foreign Governments;
Deposits of Central/State Governments;
Inter-bank deposits
Deposits of the State Land Development Banks with the State co-operative banks;
Any amount due on account of and deposit received outside India
Any amount which has been specifically exempted by the corporation with the previous approval of the RBI.
Banks have to pay a premium to provide insurance.
The Corporation has revised the premium further to 12 paise per 100 of assessable deposits per annum
Under Section 15A of the DICGC Act, the Corporation has the power to cancel the registration of an insured
bank if it fails to pay the premium for three consecutive half-year periods.

Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL),

Bharatiya Reserve Bank Note Mudran Private Limited
3rd February 1995
Bengaluru
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The company manages 2 Presses one at Mysore in Karnataka and the other at Salboni in West Bengal
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Reserve Bank Information Technology Private Limited (ReBIT),

Reserve Bank Information Technology Pvt. Ltd.
2016
HQ : Mumbai

Indian Financial Technology and Allied Services (IFTAS),

Indian Financial Technology & Allied Services
IFTAS was established in 2014
HQ : Mumbai

Reserve Bank Innovation Hub (RBIH)

Reserve Bank Innovation Hub
2022
HQ : Bengaluru
It would create internal capabilities by building applied research and expertise in the latest technology.
CEO: Senapathy Gopalakrishnan

Key Functions as a Regulator

Licensing: The RBI grants licenses to banks and financial institutions, ensuring they meet the necessary
criteria for operation.
Prudential Norms: It sets prudential norms for capital adequacy, asset classification, and provisioning to
maintain the health of the banking sector.
Inspections and Audits: Regular inspections and audits are conducted by the RBI to monitor compliance with
regulatory guidelines.
Consumer Protection: The RBI has established mechanisms to address consumer grievances and ensure fair
treatment of customers by banks.
The Central Board of Directors is the main committee of the Reserve Bank of India, responsible for its overall
control and direction. It is a 21-member body, comprising the following members:
Official Directors – They include:
The Governor of the Reserve Bank of India.
Not more than 4 Deputy Governors (for a tenure of not more than 5 years)
Non-Official Directors – They include
10 Directors from various fields, nominated by the Government of India (for a tenure of 4 years)
4 Directors representing the 4 Local Boards of the Reserve Bank of India (1 Director nominated by each of
the 4 Local Boards – Mumbai, Kolkata, Chennai, and Delhi)
2 Government officials nominated by the Government of India
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Monetary Policy Review 2025 : Including SDF, LTRO, Incremental CRR

Chapter – 11

What is Monetary Policy?

Macroeconomic policy tool
Used by the Central Bank
Reason: To influence the money supply in the economy to achieve certain macroeconomic goals.

Expansionary Monetary Policy:

Aim: To increase the money supply in the economy
through measures such as:
Decreasing interest rates
Lowering reserve requirements for banks
Purchasing government securities by central banks

Contractionary Monetary Policy:

It is used to decrease the amount of money supply in the economy through measures such as:
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Raising interest rates

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Increasing the reserve requirements for banks

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Selling government bonds

What are Long term repo operations?

LTRO is a tool that allows banks to borrow one to three years of funds from the Central Bank at the Repo
rate.
It is called ‘Targeted’ LTRO if the Central Bank wants banks opting for funds under this option to be
specifically invested in investment-grade corporate debt.
LTRO was first introduced by the European Central Bank (ECB) during its sovereign debt crisis that began in
2008.
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Standing Deposit Facility :

In 2018, the amended Section 17 of the RBI Act empowered the Reserve Bank to introduce the SDF – an
additional tool for absorbing liquidity without any collateral.
The SDF will replace the fixed rate reverse repo (FRRR) as the floor of the liquidity adjustment facility
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corridor.
Both the standing facilities — the MSF (marginal standing facility) and the SDF will be available on all days of
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the week

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The SDF rate will be 25 bps below the policy rate (Repo rate)

Inflation Target:
Under Section 45ZA, the Central Government, in consultation with the RBI, determines the inflation target in
terms of the Consumer Price Index (CPI), once in five years and notifies it in the Official Gazette.
Accordingly, on August 5, 2016, the Central Government notified in the Official Gazette 4% Consumer Price
Index (CPI) inflation as the target for the period from August 5, 2016 to March 31, 2021 with the upper
tolerance limit of 6% and the lower tolerance limit of 2%.
On March 31, 2021, the Central Government retained the inflation target and the tolerance band for the next
5-year period – April 1, 2021 to March 31, 2026.
The Monetary Policy Committee
Section 45ZB of the amended RBI Act, 1934 provides for an empowered six-member monetary policy
committee (MPC) to be constituted by the Central Government by notification in the Official Gazette.
The first such MPC was constituted on September 29, 2016.

Composition
The MPC is made up of the RBI Governor, the Deputy Governor in charge of monetary policy, an RBI officer
nominated by the Central Board, and three people appointed by the central government.

Meetings: The MPC meets at least four times a year, and publishes its decisions after each meeting.

Frequency: The RBI holds six bi-monthly MPC meetings annually

Meeting Notice:
Minimum 15 days’ notice is ordinarily given to members.
In case of an emergency meeting, 24 hours’ notice is sufficient, with technology-enabled arrangements for
shorter notice periods if required.

Meeting Duration:
Duration is decided by the Committee.
The policy resolution is released publicly after the meeting, considering financial market timings.

Role of Monetary Policy Department (MPD):

Assists the MPC in formulating policy.
Provides analysis on:
Consumer confidence and inflation expectations,
Corporate performance, credit conditions, and sectoral outlook,
Professional forecasters’ projections,
Staff’s macroeconomic projections and risk scenarios.
MPC discusses these inputs to decide the policy stance and repo rate.
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MPC Resolution: Published after every meeting, detailing the decision on the policy repo rate and policy
stance.

Minutes of MPC Meeting:

Published on the 14th day after the meeting (by 5 PM).
Includes:
The resolution adopted,
Voting record of each member, and
Short written statements explaining individual votes (as per Section 45ZL of the RBI Act).

Monetary Policy Report (MPR):

Published once every six months by the RBI.
Contains:
Explanation of recent inflation trends and near-term outlook.
Projections for inflation, growth, and associated risks.
Assessment of the overall economy – real sector, financial markets, fiscal and external sectors.
Review of the monetary policy operating procedure.
Evaluation of the accuracy of past projections.

Monetary Policy Statement 2025–26 (December 2025)

Issued by: Reserve Bank of India
Body: Monetary Policy Committee
Meeting: 58th MPC Meeting
Dates: December 3–5, 2025
Chairman: Shri Sanjay Malhotra (Governor, RBI)

Rationale for Rate Cut

Headline inflation declined sharply due to exceptionally benign food prices

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Inflation outlook revised downwards

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Core inflation eased and expected to remain anchored

Growth remains resilient but expected to moderate
Growth–inflation balance provides policy space to support growth
Growth Outlook (Real GDP Growth)
2025–26: 7.3%
Q3: 7.0%
Q4: 6.5%
2026–27:
Q1: 6.7%
Q2: 6.8%
Risk Assessment: Risks evenly balanced
Inflation Outlook (CPI Inflation)
2025–26: 2.0%
Q3: 0.6%
Q4: 2.9%
2026–27:
Q1: 3.9%
Q2: 4.0%
Core inflation (excluding food & fuel) moderated; excluding gold: 2.6% (October 2025)
Precious metals contributed around 50 basis points to inflation
Domestic Economic Conditions
GDP Growth: 8.2% in Q2:2025–26 (six-quarter high)
Drivers of Growth:
Strong domestic demand
GST (Goods and Services Tax) rationalisation
Softer crude oil prices
Front-loaded government capital expenditure
Healthy private investment and bank credit growth
Sectoral Trends:
Agriculture supported by good kharif output and rabi sowing
Manufacturing improving
Services sector steady
External Sector:
Services exports resilient
Merchandise exports facing headwinds
Global Economic Context
Global growth holding up better than expected
Inflation above targets in major advanced economies
US dollar strengthened due to safe-haven demand
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Equity markets volatile due to valuation concerns and policy uncertainty

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RBI Integrated Ombudsman Report : Current Scenario Chapter - 12

Kush sir paid : Telegram channel

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Annual Report of Ombudsman Scheme, 2024-25

Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021
Launched on: 12 November 2021
Launched by: Reserve Bank of India
Objective: To provide one-nation-one-ombudsman framework for speedy, cost-free and transparent
grievance redressal for customers of regulated entities.
Integration under RB-IOS, 2021
The Scheme merged three earlier Ombudsman schemes:
Banking Ombudsman Scheme (BOS), 2006
Ombudsman Scheme for Non-Banking Financial Companies (OSNBFC), 2018
Ombudsman Scheme for Digital Transactions (OSDT), 2019
Administrative Structure
Administered by: Consumer Education and Protection Department (CEPD), RBI
Operational Offices: 24 Ombudsman offices across India
Approach: Institution-neutral and function-based
Regulated Entities Covered under RB-IOS
1. Banks & Co-operative Banks
Commercial Banks
Regional Rural Banks (RRBs)
Scheduled Primary (Urban) Co-operative Banks
Non-Scheduled Primary (Urban) Co-operative Banks
Condition:
Deposit size of ₹50 crore or more as per audited balance sheet of the previous financial year
2. Non-Banking Financial Companies (NBFCs)
Excluded: Housing Finance Companies (HFCs)
Covered NBFCs must satisfy either of the following:
Authorised to accept deposits, or
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Have customer interface and asset size of ₹100 crore or more

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Asset size considered as per audited balance sheet of the previous financial year

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3. Payment System Participants (PSPs)

Entities involved in payment systems such as cards, wallets, UPI, etc.
4. Credit Information Companies (CICs)
Companies engaged in collection and processing of credit information

Complaint Receipt & Disposal – ORBIOs (FY 2024–25)

Complaints Handled
FY 2024–25: 2,96,321 complaints
FY 2023–24: 2,93,924 complaints
Change: 0.82% increase year-on-year
Indicates marginal rise in workload at Ombudsman offices.
Complaints per Lakh Bank Accounts
FY 2023–24: 8.9
FY 2024–25: 7.7
Trend: Decline despite higher absolute complaints
Inference: Growth in bank accounts and improved internal grievance handling by Regulated Entities.
Disposal Performance
Total complaints disposed: 2.90 lakh
Disposal rate: 93.07%
Reflects high efficiency and timely grievance redressal by ORBIOs.
Geographic Distribution of Complaints (ORBIOs)
Highest Complaints per Lakh Accounts
The following States / UTs were the top five contributors in terms of complaints per lakh accounts:
Chandigarh
Delhi
Gujarat
Maharashtra
Rajasthan
Lowest Complaints per Lakh Accounts
The lowest complaint intensity was reported from:
Mizoram
Nagaland
Ladakh
Manipur
Meghalaya
Centre-wise Distribution of Complaints (FY 2024–25)
Metropolitan Centres: 45.86%
Urban Centres: 25.64%
Semi-Urban Centres: 18.46%
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Rural Centres: 10.40%

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Mode of Complaint Filing (ORBIOs)

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Digital mode (CMS portal / Email):

FY 2024–25: 91.22%
FY 2023–24: 88.77%
Trend: Continued shift towards end-to-end digital grievance redressal.

Complaint Composition – RB-IOS (FY 2024–25)

Entity-wise Distribution of Complaints (ORBIOs)
Banks: 81.53% of total complaints
Non-Banking Financial Companies (NBFCs): 14.80%
Confirms that banks remain the dominant source of consumer grievances.
Bank-wise Break-up
Private Sector Banks: 37.53% (highest share)
Public Sector Banks (PSBs): 34.80%
State-owned banks:
Complaints declined by 8.45%, indicating improved internal grievance handling.
Small Finance Banks (SFBs):
Complaints increased by 42%, though from a lower base, reflecting rapid expansion and customer
onboarding challenges.
Complaint Categories (Nature of Complaints)
Loans & Advances: 29.25% (largest category)
Includes issues related to interest rates, recovery practices, and loan servicing.
Credit Cards:
Complaints rose by 20.04%
Became the second-highest contributor, reflecting increased card usage and billing disputes.
Mobile / Electronic Banking:
Complaints declined by 12.74% (Y-o-Y)
Suggests greater system stability and user familiarity.
ATMs & Debit Cards:
Share declined from 14.56% (FY23) to 7.47% (FY25)
Indicates a structural shift from cash-based to digital payments.
Cost of Complaint Handling (Efficiency Indicator)
FY 2024–25: ₹1,582 per complaint
FY 2023–24: ₹1,732 per complaint
Trend: Decline in cost reflects:
Increased digital processing
Better workflow efficiency at ORBIOs

RBI Complaint Reception and Support Facilities

Centralised Receipt and Processing Centre (CRPC)
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Set up by: Reserve Bank of India

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Location: Chandigarh

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Primary Function:
Centralised receipt of all physical and email complaints
Digitisation and initial scrutiny of complaints
Uploading and processing complaints on the Complaint Management System (CMS) portal
Significance:
Ensures uniformity, efficiency and faster turnaround time
Acts as the single entry point for non-digital complaints under RB-IOS

Contact Centre (CC)

Type: Toll-free public facilitation service
Helpline Number: 14448
Key Functions:
Provides information and clarifications on RBI’s AGR (Alternate Grievance Redressal) mechanism
Guides complainants on how to file complaints under RB-IOS
Offers status updates on registered complaints
Role in Consumer Protection:
Enhances accessibility and inclusiveness
Reduces procedural barriers for first-time complainants

Reserve Bank of India (Internal Ombudsman) Directions, 2026

Issued by: Reserve Bank of India
Effective from: June 30, 2026
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RBI issued revised Directions to strengthen the internal grievance redressal mechanism within regulated
entities (REs).
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Focus on independent review of partially resolved or rejected complaints before they reach RBI
Ombudsman.
Regulated Entities Covered
Directions apply to:
Commercial Banks
Small Finance Banks
Payments Banks
Non-Banking Financial Companies (NBFCs)
Non-bank Prepaid Payment Instrument (PPI) Issuers
Credit Information Companies (CICs)

Appointment of Internal Ombudsman (IO)

Eligibility
Retired or serving officer:
Rank equivalent to General Manager
From:
Regulated Entity under IO framework, or
Financial Sector Regulatory Body
Minimum experience: 7 years
Age limit: Shall not be above 70 years before completion of tenure

Appointment of Deputy Internal Ombudsman (Dy. IO)

Eligibility
Retired or serving officer:
Rank equivalent to Deputy General Manager
From RE under IO framework or Financial Sector Regulatory Body
Minimum experience: 5 years
Age limit: Shall not be above 70 years before completion of tenure

Number of IO / Dy. IO
Minimum: Every bank must appoint at least one IO
Determination:
Customer Service Committee of the Board
To review and decide number of IOs/Dy. IOs at least once every year

Tenure of IO / Dy. IO
Appointment shall be contractual
Minimum tenure: 3 years
Maximum total tenure (including extension/reappointment): 5 years
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Temporary arrangement:
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In rare cases (IOs & Dy. IOs absent):

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Serving officer of GM-equivalent rank

Maximum period: 1 month
Requires approval of Customer Service Committee of the Board
Vacancy handling:
RBI to be informed within 10 working days
New IO / Dy. IO to be appointed promptly

Procedural Guidelines for Banks

Complaint Management System (CMS)
Banks must implement a fully automated CMS
Access to CMS mandatory for IO / Dy. IO
Auto-Escalation of Complaints
Complaints:
Partially resolved, or
Wholly rejected
Shall be auto-escalated to IO for independent review

Timelines for Complaint Review

RBI / NPCI / Card Network Prescribed Timelines
Complaints to be escalated sufficiently in advance
IO / Dy. IO must get at least 10 days for review
Other Complaints
IO / Dy. IO review to be completed within 20 days
Final Communication
Bank must communicate final decision within 30 days
From date of receipt of complaint by the bank

Repeal Clause
Master Direction – RBI (Internal Ombudsman for Regulated Entities) Directions, 2023
Dated: December 29, 2023
Stands repealed with effect from June 30, 2026

Centralised Receipt and Processing Centre (CRPC)

RBI to establish CRPC at one or more locations
Online complaints:
Registered on CMS portal: [Link]
Email / Physical complaints:
To be forwarded to the Centralised Receipt and Processing Centre of RBI
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Powers and Functions of RBI Ombudsman

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No limit on the amount involved in dispute

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Compensation powers:
Up to ₹30 lakh for consequential financial loss
Up to ₹3 lakh for:
Loss of time
Expenses incurred
Harassment / mental anguish

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RBI Forward Looking Surveys, Digital Payment Index, Financial Inclusion

Index, All Indian House Price Index, Hackathon & Regulatory Sandbox
Chapter - 13

RBI Forward Looking Surveys

The Reserve Bank of India (RBI) conducts several Forward Looking Surveys to assess expectations,
confidence and outlook of different economic agents.
Urban Consumer Confidence Survey (UCCS) – September 2025
Inflation Expectations Survey of Households (IESH) – September 2025
Rural Consumer Confidence Survey (RCCS) – September 2025
OBICUS Survey on manufacturing sector – Q1:2025-26
Industrial Outlook Survey of the Manufacturing Sector for Q2:2025-26
Survey of Professional Forecasters on Macroeconomic Indicators – Round1 96th
Bank Lending Survey for Q2:2025-26
Services and Infrastructure Outlook Survey for Q2:2025-26

Urban Consumer Confidence Survey (UCCS) – September 2025

The Reserve Bank of India (RBI) released the results of the September 2025 round of its bi-monthly Urban
Consumer Confidence Survey (UCCS).
Survey Details
Period: 28 August – 6 September 2025
Coverage: 19 major cities
Sample size: 6,068 respondents
Tracks:
General economic situation
Employment
Price situation
Income
Spending behaviour
Key Indices
1. Current Situation Index (CSI)
September 2025: 96.9
Change: ↑ 0.4 points
Meaning: Shows a marginal improvement in present consumer sentiment, though still below the neutral
level of 100.
2. Future Expectations Index (FEI)
September 2025: 125.0
Change: ↑ 0.3 points
Meaning: Indicates consumers remain strongly optimistic about the future.
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Households expect decline in price and inflationary pressures in the coming year, though pessimism about
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current prices increased slightly.

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Current income/earning sentiment has improved for the fourth consecutive round.
Future income expectations remain stable with a gradual upward trend.

Households’ Inflation Expectations Survey

Current median inflation perception increased by 20 bps to 7.4%.
Three-month ahead inflation expectation declined by 20 bps to 8.1%.
One-year ahead inflation expectation declined by 30 bps to 8.7%.
Share of households expecting rise in prices and inflation decreased for both short-term and one-year
horizons.
Households reported easing of inflationary pressures in:
Food products
Non-food products
Housing
Services costs

Rural Consumer Confidence Survey

Current Situation Index (CSI) improved marginally and moved further into the optimistic zone, reflecting
better current rural sentiment.
Future Expectations Index (FEI) continued to rise, indicating strong confidence about the year ahead.
Share of households expecting rise in prices and inflation declined over the one-year horizon.
Current inflation perception increased slightly by 10 bps to 5.9%.
One-year ahead inflation expectation moderated by 30 bps to 7.6%.

Order Books, Inventories and Capacity Utilisation Survey on the Manufacturing sector for Q1:2025-26
Capacity Utilisation (CU) declined seasonally to 74.1% from 77.7% in the previous quarter.
Seasonally Adjusted Capacity Utilisation (CU-SA) increased by 30 basis points to 75.8%.
Both CU and CU-SA are higher compared to Q1 of the previous year, indicating stronger manufacturing
activity on a year-on-year basis.

Industrial Outlook Survey of the Manufacturing Sector for Q2:2025-26

A. Assessment for Q2: 2025–26
Manufacturers reported moderation in demand conditions, reflected in lower production, order books and
capacity utilisation.
Cost pressures eased in:
Raw materials
Financing costs
Salary outgo
Growth in selling prices and profit margins moderated.
Business Assessment Index increased, indicating overall improvement in business sentiment.
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B. Expectations for Q3: 2025–26

Manufacturers remain positive on demand outlook, though with signs of moderation.
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Cost pressures from raw materials and salaries are expected to ease further.
Selling price growth likely to increase.
Business Expectations Index remained stable, reflecting continued confidence.

Survey of Professional Forecasters on Macroeconomic Indicators – Results of the 96th Round

Output (GDP Growth)
Real GDP growth (median forecast):
2025–26: 6.7%
2026–27: 6.5%
Forecast range:
2025–26: 5.5% – 7.4%
2026–27: 5.9% – 7.3%
Most probable growth band:
6.5% – 6.9% for both 2025–26 and 2026–27.

Digital Payments Index (RBI-DPI)

The Reserve Bank of India (RBI) has recently released a composite Reserve Bank of India – Digital Payments
Index (RBI-DPI).
The index for March 2025 stands at 493.22 as against 465.33 for September 2024.
About Digital Payments Index
It has been constructed by the Reserve Bank of India to measure the extent of digitisation of payments
across the country.
It was first launched in January 2021.
It is based on multiple parameters and reflects the expansion of various digital payment modes accurately.
It is a first-of-its kind index to measure the spread of digital payments across the country.
Base Year: It has been constructed with March 2018 as the base period, i.e., the DPI score for March 2018 is
set at 100.
The DPI index comprises five broad parameters that enable the measurement of deepening and penetration
of digital payments in the country over different time periods.
The parameters include:
Payment enablers (25 per cent weightage in the index)
Demand-side and supply-side payment infrastructure factors (10 per cent each)
Payment performance (45 per cent)
Consumer centricity (5 per cent)
Each of the parameters has sub-parameters, which, in turn, consist of various measurable indicators.

Financial Inclusion Index (FI Index)

The Reserve Bank of India (RBI) reported that India’s Financial Inclusion Index (FI-Index) increased to 67 in
FY25, up from 64.2 in FY24, indicating steady progress in financial inclusion.
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Growth Across Sub-Indices

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Improvement was recorded in all three components:

Access – availability of financial services
Usage – actual use of financial products
Quality – adequacy, reliability and customer
protection
Reasons for Improvement
According to RBI, the rise in FI-Index is mainly due to:
Increased usage and trust in financial services
Sustained efforts in financial literacy
Expansion of digital and formal financial channels
Significance
Reflects a shift from just opening accounts to active usage.
Indicates deeper integration of underserved communities into the formal financial system.
Shows progress towards inclusive and equitable economic growth.
About Financial Inclusion Index (FI-Index)
Introduced: August 2021 (Base year: FY21)
Range: 0 to 100
0 → complete exclusion
100 → full inclusion
Sectors Covered
Banking
Investments
Insurance
Postal services
Pension sector

All-India House Price Index (HPI) – Q2: 2025–26

Released by: Reserve Bank of India (RBI)
Measures: Movement in residential property prices
Frequency: Quarterly
Data source: Transaction-level data from registration authorities
Coverage: 18 major cities
The 18 cities covered by the RBI are Mumbai, Delhi, Chennai, Kolkata, Bangalore, Lucknow, Ahmedabad,
Jaipur, Kanpur, Kochi, Hyderabad, Thiruvananthapuram, Pune, Ghaziabad, Thane, Gautam Buddha Nagar,
Chandigarh and Nagpur.
New base year: 2022–23 (earlier: 2010–11)
Key Findings (Q2: 2025–26)
Annual Change
Year-on-year growth: 2.2%
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Previous year (Q2: 2024–25): 7%

→ Indicates slowdown in housing price growth
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Quarterly Change
Quarter-on-quarter change: –0.6%
HPI value:
Q1: 113.4
Q2: 112.7
City-wise Impact
Cities contributing to rise
Nagpur
Ghaziabad
Chandigarh
Cities contributing to fall
Kolkata
Chennai
Lucknow
Hyderabad

Hackathon & Regulatory Sandbox

Reserve Bank is organising its fourth global hackathon – ‘HaRBInger 2025 – Innovation for Transformation’.
The participants are invited to develop solutions using technology and innovative approaches under the
following theme and problem statements:
Theme: “Secure Banking: Powered by Identity, Integrity and Inclusivity”
Problem Statement 1: Tokenised KYC
Problem Statement 2: Offline CBDC (e₹)
Problem Statement 3: Enhancing trust
Being part of HaRBInger 2025 gives an opportunity to the participants to get mentored by industry experts,
exhibit their innovative solutions before an eminent jury and win exciting prizes under each problem
statement.

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Important Highlights of Banking Regulation Act 1949 & RBI Act 1934 Chapter 14

RBI Act 1934:

Section 3: Establishment of RBI

A bank called the Reserve Bank of India (RBI) shall be established.
RBI is constituted to:
Take over currency management from the Central Government.
Carry on the business of banking as per provisions of the RBI Act.
Legal Status of RBI
RBI is a body corporate, which means:
Has perpetual succession (continues to exist irrespective of members).
Has a common seal.
Can sue and be sued in its own name.

Central Board of Directors (CBD) – Section 8 (RBI Act, 1934)

A) About Central Board of Directors
The Central Board of Directors (CBD) is the highest decision-making body of the Reserve Bank of India (RBI).
The affairs of RBI are governed by the Central Board.
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Members are appointed by the Government of India under the RBI Act, 1934.
B) Composition of Central Board of Directors
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The Central Board consists of:

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Governor – Chairman of the Board

Four Deputy Governors
Four Directors – to represent local boards
Ten Directors – nominated by the Central Government
Two Government Officials – from Ministry of Finance (ex-officio)

Tenure: All directors (except Governor & Deputy Governors) hold office for 4 years.

Section 7: Central Government may from time to time give directions to the RBI if it is a matter of public
interest after consulting with the RBI Governor.

Local Boards - Section 9

Section 17: Mentions the functions of RBI

Section 18 : Mentions the emergency provisions that RBI can take for the purpose of regulating credit in the
interests of Indian trade, commerce, industry, and agriculture.
Section 21: It entrusts the RBI with the management of the public debt and with the issue of loans to the
Central government.
Section 22: It gives the RBI the sole right to issue bank notes in the country.
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Section 24 : It mentions the denominations of the notes that can be in circulation. On the recommendation of
the RBI, the Central Government can direct the discontinuance of the issue of any particular bank notes.
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Section 28 : It empowers the RBI to form laws to deal with lost, stolen, mutilated, or imperfect currency
notes of the Government of India.
Section 31 : Empowers RBI and the Central government to issue demand bills and promissory notes
Section 42 : This section mentions the cash reserves that the scheduled banks have to keep with the RBI.
Section 45 : Mentions the powers of RBI to collect credit information from financial institutions, determine
policy and issue directions, constitute Monetary Policy Committee and target inflation
Section 46 : Mentions the Reserve funds that Central Government needs to maintain with the RBI
Section 58 : Gives the power to make regulations to the RBI board

Second schedules of RBI Act, 1934

In the RBI Act, 1934, schedule banks are the banks that are listened to in the second schedule.
Under this schedule, the banks should raise at least Rs 5 lakhs and capital.
The banks added in the second schedule are known as scheduled banks, and these banks include scheduled
cooperative banks and scheduled commercial banks.
Scheduled banks comprise five non-similar groups, and scheduled commercial banks are urban cooperative
banks and state cooperative banks.

Banking Regulation Act, 1949

Name: Banking Regulation Act, 1949
Long Title: An Act to consolidate and amend the law relating to banking
Enacted: 16 March 1949
Earlier Name: Banking Companies Act, 1949
Renamed: 1 March 1966
Applicability: Entire India (including Jammu & Kashmir since 1956)
Purpose of the Act
The Act provides a legal framework for regulation, supervision and governance of banks in India.
It empowers the Reserve Bank of India (RBI) to:
License banks
Regulate management
Supervise operations
Protect depositors
Maintain financial stability
Scope of the Act
Covers:
Commercial banks (public, private, foreign)
Cooperative banks (since 1965 amendment)
Main Objectives
Ensure sound banking system
Protect depositors’ interests
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Prevent bank failures and mismanagement

Strengthen RBI’s supervisory powers
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Promote financial stability

Key Provisions
1. Licensing: No bank can operate without RBI licence.
2. Management Regulation
RBI controls:
Appointment and removal of directors and Chief Executive Officers (CEOs).
3. Capital & Reserves
Banks must maintain:
Minimum capital
Reserves
Liquidity ratios (as prescribed by RBI).
4. Audit & Inspection
RBI can:
Inspect bank accounts
Conduct audits
Examine internal controls.
5. Shareholding Control
Limits voting rights to prevent concentration of ownership.
6. Mergers & Liquidation
RBI can:
Order merger
Reconstruction
Moratorium
Liquidation of banks.
7. Cooperative Banks
Section 56 extends RBI powers to cooperative banks.
Important Amendments
1965 Amendment: Brought cooperative banks under RBI regulation.
2020 Amendment: Covered:
1,482 urban cooperative banks
58 multi-state cooperative banks.
Banking Laws (Amendment) Act, 2025
(Effective from 1 August 2025)
Key changes:
Substantial interest threshold: ₹5 lakh → ₹2 crore
Director tenure in cooperative banks: 8 years → 10 years
Public Sector Banks (PSBs) allowed to transfer unclaimed funds to IEPF (Investor Education and Protection
Fund)
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PSBs allowed to pay statutory auditors

Strengthened RBI powers for:
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Mergers

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Reconstruction
Moratoriums

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NPA Its Origin/Reforms and Current Scenario In India Chapter - 15

What are Non-Performing Assets (NPA)?

A Non-Performing Asset (NPA) is a loan or advance where the interest and/or principal remains overdue for
more than 90 days.
Key Features
Interest or principal overdue for more than 90 days
No income generation for the lender
Indicates credit risk and asset quality of banks
Background
The 90-day norm was introduced by RBI in 2004
Objective: Align Indian banking system with international standards
Importance
Helps banks assess financial health
Guides provisioning and capital adequacy
Supports early corrective action by regulators
How Do Non-Performing Assets Work?
Loan Becomes Overdue
When a borrower fails to pay interest or principal for more than 90 days, the loan is classified as an NPA.
Loss of Income for Banks
NPAs stop generating interest income.
Banks must make provisions, reducing profitability.
Impact on Bank’s Financial Health
Higher NPA ratio indicates poor asset quality.
Leads to:
Reduced lending capacity
Higher credit risk
Pressure on capital adequacy
Types of Non-Performing Assets (NPA)
Systemic Risks
Increased probability of loan defaults
Possibility of write-offs, affecting public funds (especially in PSBs – Public Sector Banks)
Policy Measures to Address NPAs
Loan restructuring (rescheduling repayments)
Recovery mechanisms (SARFAESI Act – Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act)
Asset Reconstruction Companies (ARCs) to manage and recover bad loans
RBI’s prudential norms and resolution frameworks
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Sub-standard assets:
Loans classified as NPAs for less than 12 months fall under this category.
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These assets carry a higher risk of default and require strict monitoring.

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Doubtful assets:
If a loan remains an NPA for over 12 months, it becomes a doubtful asset.
Banks find it challenging to recover such loans, impacting their financial stability.
Loss assets:
A loss asset is a loan where the bank or auditors believe that the recovery of funds is highly unlikely.
These loans are often written off as bad debts.
Other Classification of Loan Accounts

Special Mention Account

SMA are those accounts that show symptoms of bad asset quality once the account is overdue or before its
being identified as NPA.
Three Types of SMA: The Special Mention Accounts are usually categorized in terms of duration as follows:

GNPA and NNPA: Understanding Key Ratios

Gross Non-Performing Assets (GNPA): GNPA refers to the total value of non-performing loans before any
provisions are made. It provides an absolute measure of the bank’s bad loans.
Net Non-Performing Assets (NNPA): NNPA is calculated by deducting provisions from the GNPA. This figure
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represents the actual risk that remains after the bank has set aside funds to cover potential losses.
Measures for NPA resolution
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3R Framework for Revitalizing Stressed Assets

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Rectification: Conducting Asset Quality Review (AQR)

Restructuring: Strategic Debt Restructuring, Scheme for Sustainable Structuring of Stressed Assets (S4A),
Joint Lenders Forum.
Recovery: SARFAESI Act, 2002 and Insolvency and Bankruptcy Code, 2016
Sustainable Structuring of Stressed Assets (S4A)
It is an optional framework for the resolution of largely stressed accounts and a tool for financial
restructuring.
Bank hires an independent agency to evaluate how much of the stressed asset is sustainable and how much
is unsustainable – it will convert the unsustainable debt into equity – no change of ownership of the
company, unlike in strategic debt restructuring – helps in financial restructuring.
Bad Banks
Objective: A bad bank is a set up to buy the bad loans and other illiquid holdings of another financial
institution and do the loan restructuring and absorb losses.
Economic Survey 2016 – 17 suggested Public Sector Asset Rehabilitation Agency (PARA) to resolve the twin
problems of ‘balance sheet syndrome’ (of the banks as well as the corporate sector).
PARA is a proposed Bad Bank that will buy bad loans from public sector banks.
Prompt Corrective Action (PCA):
The framework considers banks as risky if they fall below certain norms on three parameters i.e. Capital
ratios, Asset quality and Profitability.
Certain restrictions such as halting branch expansion and stopping dividend payment, restrictions in branch
expansion, higher provisions etc are put in place.
Asset Reconstruction Companies (ARC):
Narasimham Committee (1998) recommended setting up an ARC.
It is a specialized financial institution that buys the Non Performing Assets (NPAs) or bad assets from banks
and financial institutions so that the latter can clean up their balance sheets.
SARFAESI Act
The SARFAESI Act stands for the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act.
It is a legal framework enacted by the Indian government to tackle non-performing assets (NPAs) and
facilitate asset reconstruction.
History of SARFAESI Act, 2002
In 1991, Narasimham Committee – I (Committee on the Financial System) observed that borrowers obtain
stay orders from ordinary courts, so banks and financial institutions face difficulty while recovering Non-
Performing Assets(NPAs).
Hence, to strengthen this process, Debt Recovery Tribunals were set up in 1993, and the loan recovery
process was made beyond the jurisdiction of ordinary courts.
In 1998, Narasimham Committee – II (Committee on Banking Sector Reforms) observed that Debt Recovery
Tribunals (DRTs) need to be strengthened with a law, So, Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest (SARFAESI) Act enacted in the 2002.
Objectives of SARFAESI Act, 2002
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Some of the major objectives of the SARFAESI Act are as follows:

To provide a mechanism for banks and other financial institutions to recover secured assets. This is done in
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a more efficient and effective manner.

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To reduce the time and cost of recovery of secured assets.

To protect the interests of borrowers and depositors.
To promote financial stability.
Important Provisions of the SARFAESI Act 2002
The first Asset Reconstruction Company (ARC) of India, ARCIL, was set up under this act in 2002 by four
banks: SBI, ICICI Bank, PNB and IDBI Bank.
Under this act, secured creditors (banks or financial institutions) have the right to enforce security interest
under section 13 of the SARFAESI Act, 2002.
Type of lenders covered under the SARFAESI Act :
All types of Banks (Public Sector Banks, Private Banks, Foreign Banks, Co-operative Banks, etc.)
Housing Finance Companies (Ex. – Dewan Housing Finance Corporation Ltd.)
Securitization of Financial Assets (Section 9)
Creation of Asset Reconstruction Companies (ARCs) (Section 3)
Auction of Secured Assets (Section 13(4))
Right to Recover Debt (Section 13(2))
Debt Recovery Tribunal (DRT) (Section 17)
Power to Issue Certificates of Recovery (Section 19)
Right to Remove the Borrower’s Management (Section 15)
Sale of Financial Assets (Section 5)
Recovery by Private Agencies (Section 14)

Debt Recovery Tribunal (DRT): Lenders can recover their dues by approaching a DRT and get a recovery
certificate.
It allows lenders to take possession of properties of borrowers anywhere in the country and sell them to
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recover dues.
Appeals against orders passed by DRTs lie before Debts Recovery Appellate Tribunal (DRAT).
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It can go beyond the Civil procedure Code.

e-Bkray Portal: It was launched to enable online auction by banks of attached assets transparently and
cleanly for the improved realization of value.
Capital Adequacy Ratio
CAR/Capital to Risk-Weighted Assets Ratio (CRAR) is the ratio of a bank’s capital to its risk.
The higher the CRAR of a bank the better capitalized it is.
National Financial Reporting Authority
Independent regulator to oversee the auditing profession and accounting standards in India under
Companies Act 2013;
Came into existence in October 2018.
Composition: A chairperson who will be appointed by the Central Government and a maximum of 15
members.
Powers
Can probe listed companies and those unlisted public companies having paid-up capital of no less than Rs
500 crore or annual turnover of no less than Rs 1,000 crore.
Can investigate professional misconduct committed by members of the Institute of Chartered Accountants of
India (ICAI) for prescribed classes of body corporate or persons.
Insolvency and Bankruptcy Code
For reorganization and insolvency resolution of corporate persons, partnership firms and individuals.
Minimum default of Rs 1 crore is needed to trigger IBC.
Time Bound Process: 180 days, some cases 270 days maximum.
No Deadlock: If resolution is not done, assets are to be sold to pay debtors.
It is not applicable for Willful Defaulters.
IBC proposes a new institutional setup comprising the following four critical pillars:
The National Company Law Tribunal (NCLT) as the adjudicating authority.
Insolvency professionals (IPs) to manage the insolvency and bankruptcy cases.
Overall Assessment
The Reserve Bank of India (RBI) has projected a further improvement in asset quality of the banking system
over the next two years based on stress tests of major Scheduled Commercial Banks (SCBs).
Gross Non-Performing Assets (GNPA) Outlook
Baseline Scenario
GNPA ratio expected to improve from:
2.1% (September 2025) → 1.9% (March 2027)
Asset quality already at a multi-decade low by September 2025.
Adverse Scenarios
Under economic stress:
Medium stress: GNPA may rise to 3.2%
Severe stress: GNPA may rise to 4.2%
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RBI’s Regulatory Sandbox, EASE Reforms 4.0, NDS-OM, E-Kuber Chapter - 16

Inter-operable Regulatory Sandbox (IoRS)

A Regulatory Sandbox (RS) refers to live testing of new products or services in a controlled regulatory
environment, where regulators may allow temporary regulatory relaxations for experimentation.
Purpose
Promote financial innovation
Test products in real market conditions
Ensure consumer protection + systemic stability
Regulators with Regulatory Sandbox in India
Financial sector regulators having their own RS:
RBI – Reserve Bank of India (Banking, Payments)
SEBI – Securities and Exchange Board of India (Capital Markets)
IRDAI – Insurance Regulatory and Development Authority of India (Insurance)
IFSCA – International Financial Services Centres Authority (GIFT IFSC)
Note:
PFRDA – Pension Fund Regulatory and Development Authority does not have its own sandbox.

Genesis of Inter-operable Regulatory Sandbox (IoRS)

Background
An Inter-Regulatory Technical Group on FinTech (IRTG on FinTech) was set up under FSDC-SC.
FSDC-SC – Financial Stability and Development Council Sub-Committee
Objective
To handle hybrid financial products falling under multiple regulators and to frame Standard Operating
Procedure (SOP) for IoRS.
Members
RBI, SEBI, IRDAI, IFSCA, PFRDA
DEA – Department of Economic Affairs
MeITY – Ministry of Electronics and Information Technology

Inter-operable Regulatory Sandbox (IoRS)

Definition: IoRS provides a single window for testing cross-sectoral financial products/services regulated by
more than one regulator.
Core Idea: “One product – One application – Multiple regulators”

IoRS vs Individual Regulatory Sandbox

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Regulators in IoRS
RBI – Banking, Payments
SEBI – Securities
IRDAI – Insurance
PFRDA – Pension (only AR)
IFSCA – GIFT IFSC

Who Can Participate?

Banks and Financial Institutions
FinTech companies
RegTech and SupTech firms
Start-ups and Innovators
Eligibility governed by Principal Regulator’s RS framework.

Products Eligible under IoRS

Hybrid products such as:
InsurTech – Insurance linked with banking
WealthTech – Investment platforms
RegTech & SupTech – Compliance tech
Digital Payments
Cross-border payment systems

EASE 4.0:
EASE Reform Agenda is a common agenda for governance reforms in banks in India.
It is aimed at institutionalising CLEAN and SMART banking.
It was launched in January 2018.
It was commissioned through the Indian Banks’ Association and authored by Boston Consulting Group.
It was launched in 4 stages, the latest one being EASE 4.0.
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EASE 1.0
The EASE 1.0 report showed significant improvement in PSB performance in resolution of Non-Performing
Assets (NPAs) transparently.
EASE 2.0
EASE 2.0 was built on the foundation of EASE 1.0 and introduced new reform Action Points across six
themes to including responsible Banking; Customer Responsiveness; Credit Off-take, PSBs as UdyamiMitra
(SIDBI portal for credit management of MSMEs); Financial Inclusion & Digitalisation.
EASE 3.0
EASE 3.0 seeks to enhance ease of banking in all customer experiences, using technology viz. Dial-a-loan and
[Link], Partnerships with FinTechs and E-commerce companies, Credit@click, Tech-
enabled agriculture lending, EASE Banking Outlets etc.

EASE 4.0
EASE 4.0 commits the Public Sector Banks (PSBs) to ensure tech-enabled, simplified and collaborative
banking to further the agenda of customer-centric digital transformation.
The themes in EASE 4.0 include 24×7 Banking, Focus on North-East, Leveraging Fintech Sector, Export
Promotion, Digital Loans to Agricultural Sector etc.

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Negotiated Dealing System-Order Matching (NDS-OM) Platform

Full Form: NDS-OM – Negotiated Dealing System – Order Matching
Definition: NDS-OM is an electronic trading platform operated by the Reserve Bank of India (RBI) for
secondary market trading in Government Securities (G-Secs).
Background
Introduced in August 2005
Replaced telephone-based manual trading system
Objective: Improve efficiency, transparency, and price discovery
Key Features
1. Electronic Order Matching
Members place bids and offers anonymously
Automatic matching of orders
Enhances market transparency and fairness
2. Secondary Market Focus
Used for trading in:
Government bonds
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Treasury Bills (T-Bills)

State Development Loans (SDLs)
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Membership and Participation

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Earlier Members
Banks
Primary Dealers (PDs – Primary Dealers)
Insurance companies
Mutual Funds
Requirement: Must maintain SGL – Subsidiary General Ledger account with RBI

e-Kuber
e-Kuber is a core banking solution (CBS – Core Banking Solution) developed by the Reserve Bank of India
(RBI) to manage government and inter-bank transactions.
Purpose
e-Kuber facilitates electronic settlement of payments between:
Government departments
Banks
RBI
Key Functions
1. Fund Management: Handles receipts and payments of the Government of India.
2. Real-Time Settlement: Enables fast, secure, and accurate fund transfers.
3. Reduction in Errors: Minimises manual intervention, reducing delays and mismatches.
New Rule on e-Kuber Usage (Government Payments)
What Is the New Rule?
From 16 July, all payments made by Central Government Departments exceeding ₹75 crore must be routed
through the e-Kuber system of the Reserve Bank of India (RBI).
Earlier rule:
Mandatory only for payments above ₹500 crore
Revised thresholds:
General category: ₹75 crore
Certain categories: ₹100 crore
Proposed future target: ₹50 crore

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Schemes related to RBI - Sovereign Gold Bond Scheme, Gold Monetisation

scheme, Pradhan MantrI Garib Kalyan Deposit Scheme
Chapter - 17

What is SGB?
Sovereign Gold Bond (SGB) is a government security denominated in grams of gold, issued by the Reserve
Bank of India (RBI) on behalf of the Government of India (GoI).
It is a substitute for physical gold.
Introduced: October–November 2015
Objective:
Reduce demand for physical gold
Shift savings into financial assets
Issuance
Issued under: Government Securities (GS) Act, 2006
Issuer: RBI on behalf of GoI

Eligibility
Available to resident Indian entities only:
Individuals
Hindu Undivided Family (HUF)
Trusts
Universities
Charitable institutions
(Not allowed for NRIs)

Key Features
Denomination
In grams of gold
Minimum: 1 gram
Issue Price
Based on 999 purity (24 carat) gold price
Published by India Bullion and Jewellers Association (IBJA), Mumbai
Investment Limit (per financial year)
Individuals: 4 kg
HUF: 4 kg
Trusts: 20 kg

Tenure (Maturity)
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8 years
Exit option after 5th, 6th and 7th year (on interest dates)
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Interest

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2.5% per annum

Paid semi-annually
Taxable as per Income Tax Act, 1961
Tax Benefits
Capital Gains Tax on redemption: Exempt for individuals
Interest income: Taxable

Benefits
No storage or purity risk
Earn interest + gold price appreciation
Can be used as collateral for loans
Tradable on stock exchanges
Backed by sovereign guarantee

Disadvantages
Long-term lock-in (8 years)
Low liquidity in secondary market
Exit before maturity may be difficul

Where to Buy?
Through:
Scheduled Commercial Banks
Designated Post Offices
Stock Holding Corporation of India Limited (SHCIL)
National Stock Exchange (NSE)
Bombay Stock Exchange (BSE)

Gold Monetisation Scheme

What is GMS?
Gold Monetisation Scheme (GMS) is a scheme to mobilise idle gold held by individuals and institutions and
bring it into the formal financial system.
Launch Year: November 2015
Earlier Scheme: Gold Deposit Scheme, 1999
Implemented by:
Ministry of Finance
Reserve Bank of India (RBI)
Scheduled Commercial Banks
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Objective
Reduce gold imports
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Curb Current Account Deficit (CAD)

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Monetise household and institutional gold

Key Features
Minimum deposit: 10 grams of gold
No maximum limit on deposit
Gold accepted:
Bars
Coins
Jewellery (without stones or other metals)
Interest paid in gold (grams), not rupees
Purity tested at CPTCs (Collection & Purity Testing Centres)
Interest is tax-free under Income Tax Act
Protects against currency risk

Recent Changes (Effective 26 March 2025)

MTGD and LTGD discontinued
Only STBD (1–3 years) continues
Banks may offer STBD at their discretion
No new deposits or renewals allowed
Existing deposits will continue till maturity

Pradhan MantrI Garib Kalyan Deposit Scheme

What is PMGKY?
Pradhan Mantri Garib Kalyan Yojana (PMGKY) is a welfare scheme of the Government of India to provide
financial and social support to economically weaker sections during times of crisis.
Basic Details
Launch Date: 17 December 2016
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Concerned Ministry: Ministry of Finance

Full Form: Pradhan Mantri Garib Kalyan Yojana
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Objectives:

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Support poor and vulnerable sections of society.

Reduce income inequality and poverty.
Initially aimed at curbing black money by allowing voluntary declaration of unaccounted income.
Extended in 2020 during COVID-19 to provide relief through food, cash, insurance and employment support.
Eligibility
Below Poverty Line (BPL) families
Antyodaya Anna Yojana (AAY) households
Priority Households (PHH) identified by States/UTs
Key Features
Free food grains:
5 kg wheat/rice per person per month
1 kg chana per family
Covers 80+ crore beneficiaries
Free LPG cylinders for BPL families
Employment support: ₹50,000 crore for livelihood generation
Health insurance: ₹50 lakh insurance for frontline workers (22 lakh beneficiaries)
Black money declaration (2016):
50% tax on disclosed income
25% invested mandatorily for 4 years (interest-free)
Benefits
Ensures food security and nutrition.
Provides income support during distress.
Improves health access and insurance coverage.
Strengthens social protection for migrants, workers, farmers.
Promotes economic stability in crises (like COVID-19).

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FAQs on KYC : The Complete Discussion Chapter - 18

Know Your Customer (KYC):

It is a mandatory regulatory process through which a Regulated Entity (RE) such as a bank, financial
institution, or NBFC:
Collects information about a customer’s identity and address
Understands the nature of business and financial status of the customer
Verifies the submitted information using reliable documents or data

Purpose of KYC:
The main objective of KYC is to ensure that the institution knows who it is dealing with and to prevent the
misuse of financial services for:
Money Laundering (ML)
Terrorist Financing (TF)
Proliferation Financing (PF)
In simple terms, KYC helps maintain the integrity and security of the financial system by ensuring
transparency and accountability of customers.

Is KYC mandatory? When a RE is required to carry out KYC?

Yes, KYC is mandatorily required to be carried out:
at the time of commencement of an account-based relationship, i.e., opening any type of account with the RE;
or
when a walk-in-customer carries out occasional transaction of an amount equal to or exceeding ₹50,000
(whether conducted as a single transaction or several transactions that appear to be connected); or
when a walk-in-customer carries out any international money transfer operations; or
when the RE has a doubt about the authenticity or adequacy of the customer identification data it has
obtained; or
when the RE sells its own products or third party products as an agent; payment of dues of credit cards/ sale
and reloading of prepaid/ travel cards and any other product for more than ₹50,000.

Does a customer have to furnish KYC documents for each account he opens with the same RE?
No, if an existing KYC compliant customer of an RE desires to open another account or avail any other
product/ service from the same RE, he is not required to submit any KYC document unless there is a change
in the information with respect to his identity and/ or address.

What are the documents required for opening a bank account by an individual?
(a) any one of the following Officially Valid Documents (OVDs) or the equivalent e-document thereof,
containing details of his name and address, viz.,
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the passport,
the driving licence,
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proof of possession of Aadhaar number,

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the Voter's Identity Card issued by the Election Commission of India,

the job card issued by NREGA duly signed by an officer of the State Government, and
the letter issued by the National Population Register.
(b) the Permanent Account Number (PAN) or the equivalent e-document, thereof, or Form No. 60 as defined
in Income-tax Rules, 1962; and
(c) other documents in respect of the nature of business and financial status of the customer, or the
equivalent e-documents thereof, as may be required by the RE.

What is a ‘Small Account’?

A Small Account is a simplified bank account that can be opened by a person who does not possess OVDs,
under relaxed Know Your Customer (KYC) norms.
Opening Requirements
If a customer does not have OVDs, the bank can open a Small Account by obtaining:
Self-attested photograph of the customer
Certification by a designated bank officer that:
The customer has signed or given thumb impression
This was done in the officer’s presence
Validity
Initially operational for 12 months
Can be extended if:
The customer submits proof that they have applied for OVDs

What are deemed OVDs for the purpose of proof of address?

If the Officially Valid Document (OVD) submitted by a customer does not contain current address, the
customer can submit any one of the following documents (or their e-documents). These are treated as OVDs
only for address proof:
Accepted Documents
Utility Bill (not older than 2 months)
Property Tax / Municipal Tax Receipt
Pension / Family Pension Payment Order (PPO)
Employer Allotment Letter / Leave & Licence Agreement
Mandatory Condition
The customer must submit a fresh OVD with current address within 3 months of submitting the above
documents.

Is Aadhaar number mandatory for purposes of KYC?

No. However, in case the customer is desirous of receiving any benefit or subsidy under any scheme notified
under section 7 of the Aadhaar (Targeted Delivery of Financial and Other subsidies, Benefits and Services)
Act, 2016 (18 of 2016), the customer shall provide the Aadhaar number. In other cases, the Aadhaar number
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may be provided voluntarily by the customers.

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What are the different modes for onboarding individual customers by the RE?

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(a) Face-to-face onboarding:

Visit to the branch/ office of the RE;
using e-KYC authentication (OTP as well as biometric based authentication); undertaking offline verification
of proof of possession of Aadhaar Number; obtaining certified copy of the OVD or equivalent e-document
thereof; undertaking ‘Digital KYC Process’, as per paragraph 16 of the MD on KYC.
Video based Customer Identification Process (V-CIP) complying with prescribed standards and procedures.
(b) Non-face-to-face onboarding:
using Aadhaar OTP based e-KYC authentication;
using digital channels such as CKYCR, DigiLocker, equivalent e-document, etc., and non-digital modes such as
obtaining copy of OVD certified by additional certifying authorities as allowed for NRIs and PIOs.

What is a KYC Identifier? How is it useful for a customer?

KYC Identifier means the unique number or code assigned to a customer of an RE by the Central KYC
Records Registry (CKYCR).
If the customer approaches an RE for opening an account, he can provide his KYC Identifier and give consent
to the RE to download the valid KYC data from CKYCR.
This can obviate the need for the customer to submit KYC documents again while opening an account with
another RE.

How can a customer obtain his KYC Identifier issued by CKYCR?

A customer can obtain his KYC Identifier through the following ways:
In the process of opening an account, once the customer’s KYC Identifier is generated by CKYCR and
provided to the RE, the latter shall share the same with the concerned customer.
The customer can also access his KYC Identifier on CKYCR Portal ([Link]).

What is Video-based Customer Identification Process (V-CIP)?

V-CIP is an alternate method of customer identification with facial recognition and customer due diligence
that allows REs to obtain and verify a customer’s identity information through a digital, secure, live,
informed and consent-based and live audio-visual interaction between an authorised RE official and the
customer to obtain identification information required for CDD purpose.
V-CIP eliminates the need for physical visit to a branch of the RE but is treated on par with face-to-face CIP.
Assisted V-CIP is also permitted when banks take help of Business Correspondents (BCs) facilitating the
process only at the customer end.

Why does an RE periodically ask for KYC documents from the customer when the customer has already
submitted the same during opening of account?
RE is required to update the customers’ KYC records as part of ongoing due diligence process to ensure that
the information or data collected under CDD is kept up to date and relevant.
The periodicity of such updation depends on the risk categorisation of the customer by the RE and such
periodic updation of KYC records (at times referred to as re-KYC) shall be carried out at least once in every
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two years for high-risk, eight years for medium risk and ten years for low-risk customers.
However, RE may adopt any additional and exceptional measures as per its internal KYC policy which inter
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alia may require physical presence of the customer, periodic updation of KYC only in the branch of the RE

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where account is maintained, a more frequent periodicity of KYC updation than the minimum specified
periodicity, etc.

Can a person purchase a Demand Draft/ Payment Order/ Travellers Cheque against cash?
Demand Draft/ Payment Order/ Travellers Cheques for amount less than ₹50,000 can be purchased against
cash.
However, such instrument for ₹50,000 and above can be issued only by way of debiting the customer’s
account or against cheques.

What is the period of presenting payment instruments including cheques/ drafts/ pay orders/ banker’s
cheques?
Payment of cheque/ draft/ pay order/ banker’s cheque, if presented beyond the period of three months from
the date of issuance of such instrument, shall not be made by RE.

What is an inoperative account? What is the procedure for reactivating an inoperative account?
Inoperative Account is a savings/ current account wherein no ‘customer induced transactions’ has taken
place for a period of over two years.
For activation of inoperative accounts, the customer can update his/ her KYC information/ data at home/
non-home branch of the RE, and also through V-CIP, subject to the facility of V-CIP being provided by the
bank.

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Digital Banking : The Introduction Volume 1 : PSS Act, 2007, Types of ATMs,
NEFT, RTGS, IMPS
Chapter - 19

Digital Banking
● Move to online banking where services are delivered over the internet with high process automation and
web-based services. APIs enable cross-institutional service composition.
● Advantages for Banks & Customers:
● Convenience & Speed – 24×7 access
● Business Efficiency & Cost Savings
● Increased Accuracy & Enhanced Security
● Improved Competitiveness & Greater Agility
● Access Channels: Desktop, Mobile, ATMs.
● Examples of Companies:
● TagPay – Developed a digital banking system
● Stripe – Online payments for individuals
● Adyen – E-commerce payment gateway for digital companies (e.g. Facebook)
● Emerging Forms
● BaaS (Banking as a Service): Third-party integration of banking capabilities.
● BaaP (Banking as a Platform): Integration of core banking with external software.
● Cloud-based Infrastructure: Reduces reliance on internal IT staff.
● White Label Banking: Banks allow branding by other companies (e.g., co-branded credit cards).
2. Mobile Banking
● Importance:
● Mobile phones’ ubiquity and network reach make them a vital medium for extending banking, especially
to the unbanked.
● Example: IMPS (Immediate Payment Service).
● Definition:
● Banking transactions via mobile phones involving account access, credit or debit.
● Regulatory Framework:
● Governed by RBI Guidelines issued under Section 18 of the Payment & Settlement Systems Act, 2007.
● Applicable to all commercial banks, RRBs, Urban & State Co-op Banks, District Central Co-op Banks.
● Banks must obtain permission from RBI’s Department of Payment & Settlement Systems.
● KYC, AML, CFT norms apply; Suspicious Transaction Reports (STR) must be filed to FIU-IND.
● MPIN Generation Methods
● Banks may enable customers to generate/change their Mobile Personal Identification Number (MPIN)
through:
● ATM channels (own & inter-operable networks)
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● USSD menu options (own or interoperable platform)

● Internet banking website with safeguards
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● MPIN mailers

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● Industry-wide common website

● Transaction Limits & Security
● Up to ₹5000/- without end-to-end encryption, with adequate risk measures.
● No daily cap on purchase of goods/services, but per-transaction limits can be set by banks.
● Standard message format: ISO 8583 (with modifications).
3. POS (Point-of-Sale)
● Definition: Place/time where a retail transaction is completed.
● After receiving payment, merchant issues a receipt (printed or electronic).
● Modes of Payment: Cash, Debit/Credit cards, Mobile payments, Bitcoin, etc.
● Pay Bills Online
● Definition & Purpose:
● Technology designed to minimize paper usage and promote a green, cashless economy by enabling
payment of utility and service bills (electricity, gas, phone, DTH recharge, etc.) via internet or wire
transfers.
● Key Features & Benefits
● Track Accounts: Monitor monthly spending and analyze budgets.
● Plan Savings: Evaluate investment options online.
● Convenience: Payments can be made 24×7 without physical visits.
CORE (Centralized Online Real-time Exchange) Banking
● Meaning:
● Allows anywhere, anytime banking within the same bank regardless of branch location.
● How It Works:
● Banking software + network technology centralize record keeping.
● Real-time processing—no need to send cheques outstation for clearing.
● Example:
● Customer of ABCD Bank Ltd. can transact from any branch nationwide, irrespective of where the account
was opened.
● Benefits:
● Saves time and cost of physical cheque clearing.
● Uniform service across all branches.
Near Field Communication (NFC)
● Definition:
● Short-range wireless link based on Radio-Frequency Identification (RFID) that transfers small amounts of
data between devices held very close.
● Banking Use:
● SIM card acts as a Secure Element storing payment card details.
● Apps like Google Wallet or Apple Pay enable tap-and-pay.
● Real-World Presence:
● Access cards (hotel/office), metro cards, e-tickets, smart car keys.
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● Advantages:
● Contactless, fast payments—no queues or counting cash.
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● Security: Money protected even if phone is lost (tokenization & authentication).

● Minimal transaction errors.
● Requirements:
● NFC-enabled phone + compatible app linked to bank/credit/debit/prepaid account.
4. Plastic Money
● Definition:
● Generic term for cards used as a substitute for cash. Includes debit cards, credit cards, ATM cards, and
prepaid cards.
● Types & Features
● Debit Cards:
● Linked directly to user’s bank account.
● Money deducted immediately upon transaction.
● Uses: shopping, fuel, groceries, ATM withdrawals.
● Credit Cards:
● Issued by banks/approved entities (as per RBI).
● Money is borrowed, to be repaid later.
● Uses: POS purchases, e-commerce, IVR, recurring payments, Mail Order/Telephone Order (MOTO).
● Advantages of Plastic Money:
● Convenience, speed, reduced need for carrying cash.
● Global acceptance for both online and offline transactions.
Automated Teller Machine (ATM)
● Definition:
● An electronic telecommunication device that allows customers to carry out financial transactions—cash
withdrawal, deposits, fund transfer, balance inquiry—without interacting with bank staff.
● Key Facts:
● State with highest number of ATMs: Maharashtra
● India’s first talking ATM: Ahmedabad, Gujarat
Types of ATMs
● Onsite ATM: Inside the bank branch premises.
● Offsite ATM: Located outside bank premises (malls, airports, etc.).
● White Label ATM: Set up and operated by Non-Banking Financial Companies (NBFCs); no bank branding.
● Green Label ATM: For agricultural transactions.
● Pink Label ATM: Specially for women banking (launched by SBI).
● Worksite ATM: Installed within a company/organisation for its employees.
● Orange Label ATM: For share transactions.
● Yellow Label ATM: For e-commerce transactions.
● Brown Label ATM: Hardware leased/owned by service provider; cash management & network
connectivity handled by a sponsor bank.
● Cash Dispenser (CD): Only cash withdrawals, balance enquiry, mini statements.
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● Mobile ATM: ATM on wheels, moves to various areas.

● Failed ATM Transaction – Customer Compensation
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● Resolution time: Within 7 working days of receiving the complaint.

● Compensation: Bank must pay ₹100 per day for delay beyond 7 working days.
Prepaid Cards
● Definition:
● Cards issued by banks or authorised non-banks against value paid in advance, storing that value
electronically.
● Key Features:
● Maximum stored value: ₹50,000 at any time.
● Bank-issued open system cards:
● Can be used for ATM cash withdrawal, POS, e-commerce purchases, domestic fund transfers.
● Non-bank semi-closed cards:
● Only for POS/e-commerce purchases and domestic fund transfer, no ATM withdrawals.
● Domestic use only.
Types within Prepaid Cards:
● Prepaid Debit Card: Uses PIN for verification; debits an associated account.
● Prepaid Credit Card: Uses signature for verification; funds preloaded.
● Stored-Value Card: Monetary value recorded on the card itself; usable even without online account access.
● Other Important Cards
● a) Smart Card
● Contains an electronic chip storing cash.
● No signature or identification required; amount automatically deducted by smart card reader.
● b) Co-Branded Card
● Jointly sponsored by a bank and a retail merchant.
● Offers incentives like discounts, rebates, reward points.
● c) Rupay Card
● Indian alternative to Visa/MasterCard, launched by NPCI (National Payments Corporation of India).
● Benefits:
● Lower transaction cost & processing fee.
● Instant transaction alerts.
● d) Kisan Credit Card (KCC)
● Provides timely and flexible credit to farmers for production and ancillary needs.
● Offers Cash Credit (short-term) and Term Credit (long-term).
Legal & Regulatory Framework
● Payment and Settlement Systems Act, 2007 (PSS Act) – enacted Dec 2007.
● Regulator: Reserve Bank of India (RBI) and Board for Regulation and Supervision of Payment and
Settlement Systems (BPSS).
● Major Payment & Settlement Systems
Real Time Gross Settlement (RTGS)
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● Type: Gross, real-time settlement; meant for large-value payments.

● Minimum: ₹2 lakh; No upper limit.
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● Credit timeline: Beneficiary bank must credit within 30 minutes.

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● Charges:
● Inward – Free.
● Outward – ₹2–5 lakh: ≤ ₹30; Above ₹5 lakh: ≤ ₹55.
National Electronic Funds Transfer (NEFT)
● Type: Deferred Net Settlement (DNS), batch-wise.
● Limit: No min/max for account holders.
● Cash deposit without a/c: Allowed, ₹50,000 cap per transaction.
● Indo-Nepal remittance: Max ₹50,000.
● Charges (Outward):
● Up to ₹10k: ₹2.50 + GST
● ₹10k–1 lakh: ₹5 + GST
● ₹1–2 lakh: ₹15 + GST
● Above ₹2 lakh: ₹25 + GST
● Inward: Free.
What is UPI?
● Full form: Unified Payments Interface (UPI)
● It is a system that powers multiple bank accounts into a single mobile application (of any participating
bank), merging several banking features, seamless fund routing & merchant payments into one hood.
● It also caters to the “Peer to Peer” collect request which can be scheduled and paid as per requirement and
convenience.
● Launched on: 11th April 2016
● Launched by: Dr. Raghuram G Rajan, Governor, RBI
● Launched at: Mumbai, Maharashtra
● Banks have started to upload their UPI enabled Apps on Google Play store from 25th August, 2016
onwards.
● NPCI conducted a pilot launch with 21 member banks

UPI: Participants
● Participants in UPI
○ Payer PSP
○ Payee PSP
○ Remitter Bank
○ Beneficiary Bank
○ NPCI
○ Bank Account holders
○ Merchants
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Limit of fund transfer using UPI

UPI LITE X
● UPI LITE X, launched back in September’23, allows offline payments without internet connectivity,
enhancing the existing UPI LITE functionalities in a much more effective manner.
are the Limits for offline payments?
● Per transaction: ₹500
● Cumulative per day: ₹4,000
● Maximum available in LITE X: ₹2,000
● Minimum top-up: ₹1
UPI Lite: New Updates
● The Reserve Bank of India (RBI) has proposed to increase the maximum transaction limit of UPI Lite from
Rs 500 to Rs 1,000.
● Additionally, it has also increased the UPI Lite wallet limit from Rs 2,000 to Rs 5,[Link] & UPI Lite:
Difference
What is UPI?
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○ UPI is a 24X7 instant payment system that allows you to transfer money in real time between two bank
accounts.
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● What is UPI Lite?

○ UPI Lite is an on-device wallet feature that allows users to make real-time small-value payments.I 123
What is UPI 123Pay ?
● UPI 123Pay is a Suite of solutions developed for Non Smart phone / feature phone users to use the UPI
without internet connectivity
● Per transaction limit is Rs 5000
● Per day transactions limit is Rs 1,00,000

NPCI (National Payments Corporation of India)

● Nature: Not-for-profit, Sec 8 Co. under Companies Act 2013.
● It was set up in December 2008 with the guidance and support of the Reserve Bank of India (RBI) and
Indian Banks’ Association (IBA).
● Set up: Dec 2008, HQ: Mumbai.
● Promoters (10 banks): SBI, PNB, Canara, BoB, Union Bank, Bank of India, ICICI, HDFC, Citibank, HSBC.
● Current MD & CEO: Dilip Asbe.
Major NPCI Products / Platforms
● National Financial Switch (NFS) – Largest ATM network interconnect.
● IMPS – Instant interbank transfers.
● UPI – Unified mobile-based payments.
● NACH – Centralised ECS for bulk credit/debit.
● *USSD 99# – Mobile banking on feature phones; supports 10 regional languages + Hindi & English.
● AEPS – Aadhaar-based banking (cash in/out, balance enquiry, fund transfer).
● Limit: ₹50,000/day/account; simplified KYC conditions.
● Uses Issuer Identification Number (IIN) – 6 digits.
● Aadhaar Payment Bridge (APB) – Direct Benefit Transfer platform.
● Bharat Bill Payment System (BBPS) – Integrated utility bill payment.
● RuPay – Domestic card scheme (Debit/Credit/Prepaid).
● Cheque Truncation System (CTS) – Image-based cheque clearing (CTS-2010 standards).
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● BHIM App – NPCI’s UPI-based mobile application.

● Limit: ₹20k per transaction, ₹1 lakh/day, max 20 transactions/day.
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Other Important Points

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● Settlement Agency for AEPS: Clearing Corporation of India Ltd (CCIL) on behalf of NPCI.
● BHIM Languages: 13 (including English).
● *99# Launch: Dedicated nationally on 28 Aug 2014 as part of Pradhan Mantri Jan Dhan Yojana.
Important Identification Numbers & Codes
1. Universal Account Number (UAN)
● Purpose: Single umbrella for multiple EPF Member IDs across jobs.
● Digits: 12 (e.g., 111222333444).
● Authority: Employees’ Provident Fund Organisation (EPFO).
● Key Point: Remains same for lifetime of employee, irrespective of job changes.
2. International Securities Identification Number (ISIN)
● Purpose: Unique ID for securities (equity, debt, etc.) for global trading & settlement.
● Standard: ISO 6166.
● Digits: 12-character alphanumeric.
● Format:
● First 2 = Country code (letters)
● Next 9 = Security identifier (numbers/letters)
● Last 1 = Check digit.
● Example: US0004026250.
● Note: US/Canada also use CUSIP.
3. Permanent Retirement Account Number (PRAN)
● Purpose: Mandatory unique ID for subscribers of National Pension System (NPS).
● Digits: 12.
● Issuer/CRA: National Securities Depository Ltd. (NSDL).
● Accounts:
● Tier I: Non-withdrawable, retirement savings, tax benefit.
● Tier II: Voluntary savings, free withdrawals, no tax benefit.
4. Permanent Account Number (PAN)
● Purpose: Unique tax ID for individuals, families, corporates (Indian & foreign).
● Digits: 10-character alphanumeric (e.g., AAAPL1234C).
● Law: Section 139A, Income Tax Act, 1961.
● Issuer: Income Tax Dept., CBDT.
● Structure:
● First 5 letters
● Next 4 digits
● Last letter.
● Usage: Income tax filing, financial transactions, ID proof.
● Tax Deduction & Collection Account Number (TAN)
● Purpose: For entities deducting/collecting TDS/TCS.
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● Digits: 10 (e.g., DELA99999B).

● Structure:
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● First 3 letters = City/State code

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● 4th letter = First character of deductor’s name

● Next 5 = Numbers
● Last = Letter.
● Law: Income Tax Act, 1961.
● Penalty: ₹10,000 for failure to obtain/quote TAN.
● Legal Entity Identifier (LEI)
● Purpose: Global identification of parties to financial transactions for risk management (post-2008 crisis).
● Digits: 20-character alphanumeric.
● Issued Under:
● Section 21 & 35(A), Banking Regulation Act, 1949 (for RBI directions in India).
● Use Cases: OTC derivatives, large corporate borrowings, cross-border deals.

EMV (Europay–Mastercard–Visa) Standards

● Definition
● Global specifications for chip-based payment cards and acceptance devices (POS, ATMs) to ensure
interoperability and security.
● Background
● Created in 1993 by Europay, MasterCard, Visa.
● Now managed by EMVCo (owned by American Express, JCB, MasterCard, Visa).
● Objectives
● Card & terminal communicate to find common applications.
● Enforce risk control & security for global transactions.
● Based on ISO standards for integrated circuit (chip) cards.
● Versions
● EMV ’96 (v3.1.1) – 1998
● EMV 2000 (v4.2) – current major release.
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● Fraud Liability Shift

● Liability for certain frauds moves to the party (issuer/acquirer) not supporting EMV chip/PIN.
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● Data Authentication

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● Offline (card validated at terminal)

● SDA: Static Data Authentication – protects against basic counterfeits.
● DDA: Dynamic Data Authentication – uses transaction-specific digital signature; protects against
skimming.
● CDA: Combined DDA + Application Cryptogram – strongest offline method.
● Online
● Issuer confirms the card is genuine during the transaction.
● Card Security & RBI Directions
● EMV Chip & PIN cards mandated for international usage; existing mag-stripe cards used abroad to be
upgraded.
● Three options considered:
● Magnetic Stripe + PIN (short-term fix, 12–18 months rollout).
● EMV Chip + PIN (long-term, protects against skimming & stolen card fraud; ~5 years migration).
● Magnetic Stripe + Biometric (Aadhaar fingerprint) (strong two-factor but cost & operational hurdles).
● Internet Banking
● Meaning
● Electronic banking via a bank’s website integrated with core banking.
● Security Features
● PIN/TAN system (one-time passwords).
● Two-factor authentication using security tokens.
● SSL (≥128-bit) encryption and client certificates; disable unnecessary server services.
● Services
● Transactional: funds transfer, bill payment, loan applications.
● Non-Transactional: request cheque book, stop-payment, update contact details.
● Advantages: 24×7 global access; time-saving; instant and accurate transfers; secure with proper
precautions.
● Disadvantages Needs internet; risk of hacking/phishing; server downtime; beginners may find it complex.
Digital Marketing (Banking Context)
● Definition
● Promotion of products/services through digital channels—Internet, mobile, display ads, etc.
● Key Techniques
● SEO: Boost unpaid (organic) search ranking.
● SEM: Paid advertising for higher search visibility.
● Content Marketing: Blogs, videos, infographics to attract and retain customers.
● Influencer Marketing: Use trusted personalities or industry voices.
● Content Automation: Tools to create & distribute content across platforms.
● Strategies for Banks & Financial Services
● Strong SEO to appear in searches for loans, accounts, mortgages.
● Consistent content marketing (guides, tips, announcements).
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● Targeted digital advertising with measurable ROI.

● Email newsletters to maintain engagement.
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● Mobile-friendly, user-centric websites to enhance customer experience.

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Digital Banking : The Intermission Volume 2 : Card Transactions, Types of Cards,

Device Based Tokenisation, Prepaid Payment Instruments
Chapter - 20

AUTOMATED TELLER MACHINES

● As of March 2025, India has over 251,000 ATMs, with a high concentration in urban areas
● An ATM is a computerised machine that provides customers of banks the facility of accessing their accounts
for dispensing cash and to carry out other financial & non-financial transactions without the need to visit the
bank branch.
History of ATMs
● First ATM in the World
● Installed in 1967
● Location: Barclays Bank, London
● Inventor: John Shepherd-Barron
ATMs in India
● First ATM installed in 1987
● Bank: HSBC
● Location: Mumbai
Types of ATMs
● On-Site ATM
● Off-Site ATM
● Bank Label
● Brown Label
● White Label
● Green Label
● Orange Label
● Pink Label
● Worksite ATM
● Contactless ATM
● Micro ATM
What is an On-Us and Off-Us transaction?
● A transaction carried out at an ATM of the card issuing bank is called an On-Us transaction. A transaction
carried out at any other ATM is called an Off-Us transaction.
● For instance, if a card issued by bank A is used at an ATM of bank A then it is an On-Us transaction; if the card
is used at a WLA or at an ATM of any other bank, the transaction is Off-Us.
Are customers entitled to any free transactions at ATMs?
● Ans. Yes, a bank must offer to its savings bank account holders a minimum number of free transactions at ATMs
as under:
● Transactions at a bank’s own ATM (On-Us transactions) at any location: Banks should offer their savings bank
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account holders a minimum of five free financial transactions in a month, irrespective of the location of ATMs.
Any number of non-cash withdrawal transactions will be provided free.
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● Transactions at any other banks’ ATM (Off-Us transactions) at Metro locations:

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○ In case of ATMs located in six metro locations, viz. Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New
Delhi, banks shall offer their savings bank account holders a minimum of three free transactions (including
financial and non-financial transactions) in a month.
● Transactions at any other banks’ ATM (Off-Us transactions) at non-Metro locations:
○ At any location, other than the six metro locations as above, banks must offer its savings bank account holders
a minimum of five free transactions (including financial and non-financial transactions) at other bank ATMs in
a month.

Is there any time limit for the card issuing bank to recredit the customer’s account for a failed ATM /
WLA transaction indicated under?
● Ans. In the case of a failed ATM transaction, the banks have been mandated to re-credit the customer’s account
within a maximum of T+5 calendar days (where ‘T’ is the day of transaction).

Are the customers eligible for compensation for delays beyond days of a failed transaction?
● Ans. Yes, the card issuing bank has to pay compensation of Rs. 100/- per day for delay in re-crediting the
customer’s amount beyond 5 calendar days from the date of the failed ATM transaction.
● The compensation has to be credited to the account of the customer without any claim being made by the
customer.

What are Magnetic Stripe cards and EMV Chip & PIN cards?
● Ans. The Magnetic Stripe card stores card data on the magnetic stripe present on the card while the data in an
EMV Chip & PIN card is stored in a chip.
● Effective May 1, 2025, the RBI has authorized banks to charge a maximum of ₹23 (plus taxes) per transaction
for cash withdrawals exceeding the free monthly limit

Interchange Fees:
● Banks pay each other an interchange fee of ₹17 per financial transaction and ₹6 per non-financial transaction
when customers use "off-us" (other bank) ATMs.
● Cardless Withdrawals: UPI-ATM (Interoperable Cardless Cash Withdrawal) services typically allow up to
₹10,000 per transaction

Mandatory Low-Denomination Targets (2025–2026)

● 75% Compliance (September 30, 2025): At least 75% of a bank's ATM network was required to dispense either
₹100 or ₹200 notes from at least one cassette.
● 90% Compliance (March 31, 2026): By this upcoming deadline, 90% of all ATMs must routinely dispense ₹100
or ₹200 banknotes.

NPCI & Products:

NPCI
● NPCI – National Payments Corporation of India
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● Established: 2008
● Operational since: 2009
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● Promoted by:

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● Reserve Bank of India

● Indian Banks' Association
● Headquarters: Mumbai, Maharashtra
● NPCI Subsidiaries
● NPCI International Payments Limited (NIPL), NPCI Bharat BillPay Limited (NBBL), NPCI BHIM Services Limited
(NBSL),

Bharat Connect
● Rebranding: BBPS was officially rebranded as Bharat Connect at the Global Fintech Fest (GFF) in August 2024.
● Former Name: Bharat Bill Payment System (BBPS).
● Operating Subsidiary: NPCI Bharat BillPay Limited (NBBL).
● CEO of NBBL: Ms. Noopur Chaturvedi (appointed in 2021).
● Bharat Bill Payment Central Unit (BBPCU): A single authorized entity (NPCI/NBBL) that sets standards, rules,
and procedures.
● Bharat Bill Payment Operating Units (BBPOUs): RBI-authorized operational entities (Banks or Non-banks

NACH
● Inception: Launched in May 2013 to consolidate multiple ECS (Electronic Clearing Service) systems across
India.
● Purpose: High-volume, repetitive interbank transactions (Salaries, Pensions, Subsidies vs. SIPs, EMI,
Insurance).
● Aadhaar Bridge (APBS): A unique sub-system of NACH used specifically for Government Direct Benefit
Transfers (DBT). It uses the Aadhaar number as the central key for credit, rather than the IFSC/Account
number.
● individual banks may set lower internal limits for security.
● Mandate Duration: While mandates can be "Until Cancelled," the maximum technical validity for a mandate is
30 years.
● NTSL Integration: As of 2026, NACH settlement reports are part of the NTSL (Net Terminal Settlement Limit)
reporting cycles. It now follows 12 settlement cycles per day
● The "U" in UMRN: Every NACH transaction requires a UMRN (Unique Mandate Reference Number). It is an 18-
digit alphanumeric code generated by the NACH system for every new mandate.
● Negative List (R-Block): Banks use a "R-Block" list in NACH to automatically reject transactions from
blacklisted accounts or frozen entities before they even hit the core banking system.

AePs
● Launch Date: Officially launched on March 26, 2010, by the National Payments Corporation of India (NPCI)
● Purpose: To empower bank customers to access their Aadhaar-linked bank accounts through a Business
Correspondent (BC) using biometric authentication.
● Standard Daily Limit: Generally capped at ₹10,000 per transaction by most banks to mitigate fraud risk.
● Monthly Limit: Most public sector banks (like SBI) limit AePS withdrawals to ₹50,000 per month or a specific
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number of transactions (usually 4-5).

● To perform an AePS transaction, the user must provide the Issuer Identification Number (IIN). This is a 6-digit
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number that identifies the customer's bank.

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● Sub-AUA vs. AUA: In the backend, entities providing AePS are called AUAs (Authentication User Agencies).
Smaller fintechs that use a larger bank’s gateway are called Sub-AUAs.

Card On File Tokenisation

● Card-on-File Tokenisation (CoFT)
● The process of replacing sensitive 16-digit Primary Account Number (PAN) details with a unique alternate
code called a "Token".
● The mandatory requirement for merchants to purge actual card data and adopt CoFT went into effect on
October 1, 2022.
● Additional Factor of Authentication (AFA): Tokenisation is not automatic. It requires explicit customer consent
via AFA (usually an OTP).
● RBI has mandated a new compliance deadline of April 1, 2026, for the entire ecosystem to implement tightened
Two-Factor Authentication (2FA) for digital payments.

RuPay
● Developer: Developed by the National Payments Corporation of India (NPCI) in 2012 to fulfil the RBI's vision
of a domestic, open-loop, multilateral system of payments.
● For the 2026-27 fiscal year, the government has allocated ₹2,000 crore to incentivise and subsidise
transactions on the RuPay and BHIM-UPI platforms to promote digital adoption.

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Digital Banking : Present Day Volume 3 : UPI and Products, TReDs, NFC, Cheque
Truncation System
Chapter - 21

Prepaid Payment Instruments

● Prepaid Payment Instruments (PPIs) are instruments that store monetary value in advance and are used for
purchase of goods/services, funds transfer or cash withdrawal.
● Examples:
● Mobile Wallets
● Gift Cards
● Metro Cards
● Prepaid Cards
● Closed System PPIs
○ Used only at issuing entity.
○ No RBI approval required.
○ No cash withdrawal.
○ Example: Amazon Gift Card, Metro Card.
● Open PPIs
○ Issued only by banks.
○ Can be used anywhere.
○ Cash withdrawal allowed.
○ Examples:
○ Prepaid Debit Cards
RBI Classification Based on KYC - Small PPIs
● Features:
● Limit:
● Maximum balance = ₹10,000
● Rules:
● Only purchase allowed
● No cash withdrawal
● No fund transfer
RBI Classification Based on KYC - Full-KYC PPIs
● Maximum balance = ₹2,00,000
● Facilities:
● Purchase
● Fund Transfer
● Cash withdrawal
● UPI:
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● Can be linked with UPI apps

Special Types of PPIs
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● Gift PPIs

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○ Non-reloadable
○ Limit = ₹10,000
● PPI-MTS (Mass Transit System) ⭐
● Used for Metro/Bus
● Limit = ₹3,000

Important Regulations & Updates

● Internal Ombudsman (2026): New directions require non-bank PPI issuers to appoint an Internal Ombudsman,
with full compliance mandated by June 30, 2026.
● UPI Transactions: Full-KYC PPIs (wallets) are authorized to conduct UPI transactions through third-party apps.
● Cash Loading Expiry: If a Small PPI (cash-loading) is not converted to Full-KYC within 24 months, no further
credits are allowed, though existing balances can still be used.
● Issuance Eligibility: Banks and non-bank companies (incorporated in India with a minimum paid-up capital of
₹5 crore) can issue PPIs after RBI authorization.
TReDS: Trade Receivables Discounting System
TReDS is an institutional mechanism set up by the RBI to facilitate the discounting of trade receivables of
MSMEs from corporate and other buyers, including Government Departments and Public Sector Undertakings
(PSUs).
● Participants: There are three parties involved:
● Sellers: Only MSMEs.
● Buyers: Corporates, Government Departments, and PSUs.
● Financiers: Banks, NBFC-Factors, and other financial institutions as permitted by RBI.
● The Process:
● MSME uploads an invoice.
● Buyer accepts the invoice.
● Financiers bid on the invoice.
● MSME accepts the best bid and receives funds immediately (less the discount).
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● RXIL (Receivables Exchange of India Ltd): Promoted by SIDBI and NSE.

● M1xchange (Mynd Solutions): Connects MSMEs with multiple financiers.
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● Invoicemart (A. TReDS Ltd): Promoted by Axis Bank and mjunction services.

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● C2FO (C2treds): A global, on-demand working capital platform.

● KredX (Domestic Trade Exchange - DTX): Authorized as the fifth TReDS operator
● Compulsory Registration: The Ministry of MSME has mandated that all companies with a turnover of more than
₹500 Crore must register on a TReDS platform.
● GeM Integration: TReDS is integrated with the Government e-Marketplace (GeM) to facilitate "GeM Sahay,"
allowing MSMEs to get credit against orders placed on the GeM portal.
● Compulsory Registration: The Ministry of MSME has mandated that all companies with a turnover of more than
₹500 Crore must register on a TReDS platform.
● GeM Integration: TReDS is integrated with the Government e-Marketplace (GeM) to facilitate "GeM Sahay,"
allowing MSMEs to get credit against orders placed on the GeM portal.
2026 Budgetary & Regulatory Reform
● Mandatory CPSE Settlement: All Central Public Sector Enterprises (CPSEs) and government departments are
now mandated to settle MSME invoices specifically through TReDS platforms.
● CGTMSE Credit Guarantee: A new mechanism through the Credit Guarantee Fund Trust for Micro and Small
Enterprises (CGTMSE) provides a backstop for invoice discounting on TReDS, reducing the risk for banks and
lowering interest rates for small players.

Other Relevant Data

● Insurance as the "Fourth Participant": While TReDS originally had three parties (Buyer, Seller, Financier),
Insurance companies are now permitted as a fourth participant to provide trade credit insurance to financiers,
further de-risking the auction.
● Automated NACH Mandate: Settlements are handled through the National Automated Clearing House (NACH).
Buyers must provide a pre-approved auto-debit mandate, which ensures the financier is paid automatically on
the due date.

Cheque Truncation System

● Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point by the
presenting bank. Instead of the physical paper, an electronic image is transmitted to the paying branch.
● Governing Act: Legalized under the Negotiable Instruments (NI) Act, 1881 (specifically Section 6 and Section
81A).
● Standardization: All cheques must follow CTS-2010 Standards (features like watermark, 'CTS INDIA', VOID
pantograph, and specific ink).
● MICR Code: A 9-digit code.
● First 3 digits: City code.
● Middle 3 digits: Bank code.
● Last 3 digits: Branch code.
● Implementation Agency: Managed by the National Payments Corporation of India (NPCI).
● 2008 (Pilot Launch): RBI launched the first CTS pilot project in the National Capital Region (NCR), New Delhi.
● 2011–2013 (Grid Implementation): The system moved to a "Grid-based" approach. India was divided into
three regional grids:
● Northern Grid (New Delhi)
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● Western Grid (Mumbai)

● Southern Grid (Chennai)
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● 2020 (Positive Pay System): Introduced to prevent fraud. For cheques above ₹50,000, customers must re-
confirm key details (date, amount, payee) to their bank electronically.

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Government Securities Market : a Primer Chapter -22

G-Secs market has witnessed significant changes during the past decade.
Introduction of an electronic screen-based trading system, dematerialized holding, straight through
processing, establishment of the Clearing Corporation of India Ltd. (CCIL) as the Central Counter Party
(CCP) for guaranteed settlement, new instruments, and changes in the legal environment are some of the
major aspects that have contributed to the rapid development of the G-Sec market.

• What is a Bond?
• A bond is a debt instrument in which:
• An investor lends money to an entity.
• The entity can be:
• Government
• Company (corporate)
• Municipality / State
• In return, the issuer promises to:
• Pay interest (coupon) periodically.
• Repay the principal amount on a fixed future date
• Key Features of a Bond
• Issuer
• The borrower:
• Government (e.g., Treasury bonds)
• Company (corporate bonds)
• Investor
• The lender: Becomes a creditor, not an owner.
• Interest Rate (Coupon)
• Can be:
• Fixed (same throughout)
• Variable/Floating (changes with market rates)
• Maturity: The time period after which the principal is repaid.
• Principal: The original amount invested.

• What is a Government Security (G-Sec)?

• A Government Security (G-Sec) is a tradable debt instrument issued by:
• Central Government, or
• State Governments
• It represents the Government’s borrowing from the public.
• Short-Term G-Secs (Treasury Bills) Called T-Bills
• Original maturity: Less than 1 year
• Issued only by: Central Government
• Examples:
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• 91-day T-bill
• 182-day T-bill
• 364-day T-bill
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• Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the
Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day.
• Treasury bills are zero coupon securities and pay no interest. Instead, they are issued at a discount and
redeemed at the face value at maturity.
• For example, a 91 day Treasury bill of ₹100/- (face value) may be issued at say ₹98.20, that is, at a discount of
say, ₹1.80 and would be redeemed at the face value of ₹100/-
• Long-Term G-Secs (Government Bonds / Dated Securities)
• Original maturity: 1 year or more
• Issued by:
• Central Government → Government Bonds
• State Governments → State Development Loans (SDLs)
• (B) Cash Management Bills (CMBs)
• Introduced in 2010.
• Maturity: < 91 days.
• Used for temporary cash needs of Govt.

• Nomenclature of G-Securities

• (C) Dated G-Secs (Government Bonds)

• Long-term securities.
• Maturity: 1–40 years.
• Pay interest half-yearly.
• Registry maintained by Public Debt Office (PDO), RBI.

• Types of Government Bonds

150

• Fixed Rate Bonds

• Coupon fixed for full life.
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• Most common type.

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• Floating Rate Bonds (FRBs)

• Coupon changes periodically.
• Linked to: T-Bill yields + fixed spread.
• Zero Coupon Bonds
• No interest.
• Issued at discount.
• Last issued by GoI in 1996.
• Capital Indexed Bonds
• Principal linked to inflation index.
• Protects real value of investment.
• Inflation Indexed Bonds (IIBs)
• Both principal & interest protected from inflation.
• Linked to: WPI or CPI.
• Bonds with Call / Put Options
• Call option: Govt can buy back.
• Put option: Investor can sell back.
• Special Securities
• Issued to compensate:
• Oil companies
• Fertiliser companies
• FCI
• STRIPS
• (Separate Trading of Registered Interest and Principal)
• Breaks one bond into:
• Many small zero-coupon securities.
• Each coupon & principal traded separately.
• Useful for:
• Yield curve
• Asset-Liability Management.

• State Development Loans

• Dated government securities issued by State Governments to raise funds from the market.
• They are the state-level equivalent of Central Government bonds.
• Special SDLs – UDAY Scheme
• Under Ujjwal Discom Assurance Yojana (UDAY):
• States issued special SDL bonds.
• Purpose:
• To take over debt of power distribution companies (DISCOMs).
• Introduced in 2015 by Ministry of Power.
• Objective: Financial turnaround of state DISCOMs.

• Statutory Importance of G-Secs

151

o Urban Co-operative Banks (UCBs)

• Must maintain SLR under:
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• Banking Regulation Act, 1949.

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• SLR assets include:

• Cash
• Gold
• G-Secs
o Rural Co-operative Banks
• (State Co-op Banks & DCCBs)
• Required to maintain SLR in:
• G-Secs
• Cash / gold
• DCCBs may hold SLR via:
• State Co-op Banks.
o Regional Rural Banks (RRBs)
• Since 2002:
• Entire SLR must be in G-Secs.
o Provident Funds & Pension Funds
• Must invest:
• 45%–50% in:
• Central & State G-Secs
• Gilt mutual funds
• To ensure:
• Safety of retirement money.

• How are the G-Secs issued?

• Issuing Authority
• G-Secs are issued by the Reserve Bank of India (RBI) on behalf of the Government of India.
• Issuance is done through electronic auctions.

• Auction Platform – E-Kuber

• Auctions are conducted on E-Kuber, RBI’s Core Banking Solution (CBS).
• It is an online electronic bidding system.
• Who can bid directly on E-Kuber?
• Entities having:
• Funds Account (Current Account) with RBI
• SGL Account (Subsidiary General Ledger) with RBI
• These include:
• Commercial banks
• Scheduled Urban Co-operative Banks (UCBs)
• Primary Dealers (PDs)
• Insurance companies
• Provident funds

• How Others Participate (Non-E-Kuber Members)

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• Entities like:
• Non-scheduled UCBs
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• Small institutions

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• Participate through:
• Primary Members (PMs)
• (Scheduled banks or PDs)
• They open:
• Gilt Account (Demat account for G-Secs)

• Types of Auctions in Government Securities (G-Secs) & Switch/Conversion

• Types of Auctions Based on Bidding Style

o Yield-Based Auction
• Used when new G-Sec is issued.
• How it works:
• Investors quote yield (e.g. 7.12%, 7.20%).
• Bids arranged in ascending order of yield.
• The yield at which total demand = notified amount becomes cut-off yield.
• Cut-off yield becomes the coupon rate.
• Successful bidders:
• Those who bid at or below cut-off yield.
o Price-Based Auction
• Used when existing G-Sec is re-issued.
• How it works:
• Investors quote price per ₹100 face value.
• Bids arranged in descending order of price.
• The price at which supply matches demand is cut-off price.
• Successful bidders:
• Those who bid at or above cut-off price.

• Types of Auctions Based on Allotment Method

o Uniform Price Auction
• All successful bidders get securities at same price/yield.
• That is the cut-off price/yield.
o Multiple Price Auction
• Each successful bidder pays his own quoted price/yield.
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• Types of Bidding
o Competitive Bidding
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• Used by:

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• Banks
• Primary Dealers
• Mutual funds
• Insurance companies
• Features:
• Investors quote exact price/yield.
• Multiple bids allowed.
• Minimum bid: ₹10,000.
o Non-Competitive Bidding (NCB) For:
• Retail investors
• Individuals
• Provident funds
• Trusts
• RRBs & Co-operative banks
• Key Features:
• Only one bid allowed.
• Bid through Aggregator/Facilitator (banks/PDs/stock exchanges).
• Allotment at weighted average price/yield of auction.
• Reserved portion:
• 5% for G-Secs
• 10% for SDLs
• Retail Limit: Max ₹2 crore per auction (G-Secs).

• NCB in State Development Loans (SDLs)

• Introduced in 2009.
• Reserved amount: 10% of issue size.
• Single investor limit: 1% of issue size.

• Settlement of G-Secs
o Primary Market Settlement
• After auction allotment, investors are informed of amount payable.
• Settlement cycle: T+1 (next working day).
• On settlement day:
• Investor’s fund account is debited.
• Investor’s SGL account is credited with securities.
o Secondary Market Settlement
• All secondary trades are settled through:
• RBI accounts
• Under DvP-III (net settlement) system.
• CCIL acts as Central Counter Party (CCP) and guarantees settlement.
• Settlement cycle:
• Outright trades → T+1
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• Repo trades → T+0 or T+1

• FPIs → T+1 or T+2
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• Shut Period

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• Period during which trading is not allowed.

• Purpose:
• To finalize redemption and interest payments.
• Current shut period:
• 1 day before maturity (for SGL securities).
• Functions:
• Acts as Central Counter Party (CCP).
• Becomes: Buyer to seller/ Seller to buyer
• Netting of:
• Securities
• Funds
• Maintains:
• Settlement Guarantee Fund
• If any participant defaults:
• CCIL ensures successful settlement.

What is Delivery versus Payment (DVP) Settlement?

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Forex Exchange Market : Forex Market, SVRA, FEMA Act Rules, LRS, ECB, FDI
Limits, Foreign Codes : LEI, SWIFT, Alert List of Forex Platforms
Chapter - 23

What is a Foreign Exchange Market?

The Foreign Exchange Market, commonly known as the Forex market or the currencies market, is a global
marketplace where currencies are traded.
The value of currencies around the world is determined by the foreign exchange market.

The foreign exchange market is a digital system that does not have a physical location.
In the foreign exchange market, currency trading is always done in pairs, therefore the value of one of the
currencies in the pair is related to the value of the others.

This global market is divided into two levels: interbank and over-the-counter.
It helps to provide international liquidity as well as relative, desired stability.

The Reserve Bank of India approved intra-day foreign exchange trading in 1978, and banks were required to
maintain a "square" or "near square" position only at the end of business hours each day.
The rupee's exchange rate was officially determined by the Reserve Bank in terms of a weighted basket of
currencies of India's major trading partners during this time, and the exchange rate regime was characterized by
the Reserve Bank's daily announcement of its buying and selling rates to Authorised Dealers (ADs) for merchant
transactions.

In 1981, the 'Guidelines for Internal Control over Foreign Exchange Business' were drafted for banks to adopt.
However, until the early 1990s, India's foreign exchange market was heavily regulated, with limitations on external
transactions, entrance barriers, poor liquidity, and high transaction costs.

During this time, the exchange rate was mostly maintained to facilitate India's imports.
The Foreign Exchange Regulations Act (FERA) imposed severe controls on foreign exchange transactions, resulting
in one of the world's largest and most efficient alternative foreign exchange markets, the hawala (unofficial)
market.
156

The fundamental foundation for external sector changes was spelled forth in the Report of the High-Level
Committee on Balance of Payments after the Gulf crisis in 1990-91. (Chairman: Dr. C. Rangarajan).
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The Liberalised Exchange Rate Management System (LERMS) was implemented in March 1992, originally with a
dual exchange rate system, in response to the Committee's recommendations to move toward a market-
determined exchange rate.

All foreign exchange receipts on current account transactions (exports, remittances, and so on) have to be
surrendered in full to Authorised Dealers (ADs) under the LERMS.
The LERMS was essentially a transitional mechanism, with the official exchange rate being adjusted downward in
early December 1992 and the ultimate convergence of the dual rates taking effect on March 1, 1993, leading to the
adoption of a market-determined exchange rate regime.

In March 1993, the dual exchange rate system was replaced by a single exchange rate system, allowing all foreign
exchange receipts to be converted at market-determined exchange rates.
All foreign exchange receipts on current account transactions (exports, remittances, and so on) have to be
surrendered in full to Authorised Dealers (ADs) under the LERMS.

The LERMS was essentially a transitional mechanism, with the official exchange rate being adjusted downward in
early December 1992 and the ultimate convergence of the dual rates taking effect on March 1, 1993, leading to the
adoption of a market-determined exchange rate regime.

In March 1993, the dual exchange rate system was replaced by a single exchange rate system, allowing all foreign
exchange receipts to be converted at market-determined exchange rates.

FEMA (Foreign Exchange Management Act)

The Foreign Exchange Management Act was enacted by the Indian Central Government to facilitate external
payments and cross-border trade in India.
FEMA (Foreign Exchange Management Act) was established in 1999 to replace FERA (Foreign Exchange Regulation
Act).

FEMA was created to address all of the flaws and shortcomings of FERA (Foreign Exchange Regulation Act), and as
a result, it enacted a number of economic reforms (major reforms).
FEMA was created primarily to de-regulate and liberalize India's economy.
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158

Spot Market
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● On the spot market, transactions involving currency pairs take to occur.

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● It happens promptly and without a hitch.

● The transactions need rapid payment at the spot rate, which is the current exchange rate.

Future Market
● Futures market transactions need payment and distribution in the future at a previously agreed-upon
exchange rate, referred to as the future rate.
● The transaction or agreement is more formal in nature, guaranteeing that the transaction's conditions are set
in stone and cannot be altered.

Forward market
● Forward market trades are comparable to future market transactions.
● In this situation, the parties will negotiate the transaction's conditions, and the parties' agreed-upon terms can
be modified and updated as needed.
● The forward market has more flexibility than the futures market.

Swap Market
● When two investors borrow and lend two distinct types of currencies at the same time, this is known as a swap
transaction.
● In this scenario, one investor borrows a currency and pays the other in a different currency.

Option Market
● The investor agrees on the currency of exchange from one denomination to another at a specified rate and on
a specific date in the options market.
● The investor has the option to convert the currency at a later time but is not obligated to do so.
● Call and put options are the two types of options available. A put option gives you the choice to sell, whereas a
call option gives you the opportunity to buy.

Foreign Exchange Market – Benefits

● Increased Leverage
● Low-Cost Transactions
● Exceptionally Transparent
● Accessibility of the FOREX Market
● High Liquidity
• Special Rupee Vostro Accounts (SRVAs)
• About: SRVAs are accounts opened by foreign entities with Indian banks. They facilitate settlement of
international trade transactions in Indian Rupees.
• SRVAs introduced in 2022, the mechanism allows exporters and importers to invoice and settle trade
directly in rupees.
• RBI Measures to Promote Rupee through SRVAs: Non-resident entities with SRVAs can now invest their
rupee surplus balances in Central government securities (G-secs) and Treasury Bills.
159

• Earlier authorised dealer (AD) banks required RBI’s prior approval before opening SRVAs for overseas
correspondent banks. Now AD banks can open SRVAs independently without seeking RBI permission.
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• This aims to quicken the operationalisation of rupee-based trade settlements.

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• Foreign Exchange Management (Guarantees) Regulations 2026

• The Reserve Bank of India has notified the Foreign Exchange Management (Guarantees) Regulations,
2026 under the Foreign Exchange Management Act, 1999.
• These regulations create a comprehensive regulatory framework for guarantees involving persons
resident outside India.
• Objective of the New Regulations
• Unified Regulatory Framework
• Strengthening Compliance
• What is a Guarantee under FEMA?
• A guarantee is a financial commitment where one party undertakes to fulfil payment or performance
obligations of another party in case of default.
160

• Common FEMA-linked contexts

• Cross-border trade transactions
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• Foreign Direct Investment (FDI)

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• External Commercial Borrowings (ECBs)

• About Foreign Exchange Management Act (FEMA), 1999
• Purpose
• Regulates foreign exchange transactions.
• Facilitates external trade and payments.
• Promotes orderly development and maintenance of India’s foreign exchange market.
• Historical Context
• Replaced Foreign Exchange Regulation Act (FERA), 1973.
• Marked a shift from restrictive control to a management-oriented and liberalised regime.
• Objectives of FEMA, 1999
• Facilitation of External Trade: Simplifies foreign trade and cross-border payments.
• Orderly Forex Market Development: Ensures stability and systematic growth.
• Balance of Payments Stability: Regulates capital flows and forex reserves.
• Key Features of FEMA, 1999
• Civil Law Framework
• Violations treated as civil offences.
• No criminal liability (unlike FERA).
• Current Account Convertibility
• Current account transactions are generally free, subject to reasonable government restrictions.
• Capital Account Regulation
• Capital account transactions allowed only to the extent permitted by RBI.
• Institutional Framework
• Reserve Bank of India
• Primary authority for implementation of FEMA.
• Frames regulations and directions.
• Central Government
• Frames rules related to current account transactions.
• Enforcement Directorate (ED)
• Investigates and adjudicates FEMA violations.
• Enforcement and Violations under FEMA
• Penalties
• Monetary penalty up to three times the amount involved or ₹2 lakh, whichever is higher.
• Continuing Offences
• Additional penalty of ₹5,000 per day for ongoing contraventions.
• Seizure of Assets
• In serious violations, properties and assets linked to offences may be seized.

• Liberalised Remittance Scheme

• Introduced in 2004 by the Reserve Bank of India.
• Initial limit: USD 25,000 per financial year.
• Present limit: USD 250,000 per financial year, per resident individual.
• Covers approved current account and capital account transactions.
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• Eligibility
• Only resident individuals are eligible.
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• Not permitted for:

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• Corporates
• Hindu Undivided Family (HUF)
• Partnership firms
• Trusts
• Permissible Uses (Illustrative)
• Education abroad
• Medical treatment overseas
• Travel and maintenance of close relatives
• Purchase of shares, bonds, property abroad
• Setting up Wholly Owned Subsidiaries (WOS) or Joint Ventures (JV) abroad (within limits)
• Prohibited Transactions
• Purchase of lottery tickets, sweepstakes, or banned magazines
• Remittances to FATF non-compliant countries
• Gifting foreign currency to another Indian resident’s foreign account
• Any activity prohibited under FEMA or RBI guidelines
• Key Restriction
• No foreign currency accounts in India:
• Resident individuals cannot open or maintain foreign currency accounts in India under LRS.
• Foreign currency accounts can be opened only outside India, subject to conditions.

• What is External Commercial Borrowing (ECB)?

• External Commercial Borrowing (ECB) refers to loans or financial assistance raised by Indian entities
from non-resident sources in the form of:
• Bank loans
• Bonds
• Debentures
• Other recognised debt instruments
• These borrowings are governed by the Reserve Bank of India under the framework of Foreign Exchange
Management Act, 1999.
• Purpose of ECB
• ECBs are primarily used for:
• Expansion and modernisation of business
• Infrastructure development
• Acquisition of capital assets
• Import of machinery and equipment
• Refinancing or repayment of existing debt (subject to conditions)
• Sources of ECB
• Indian entities may raise ECBs from:
• Foreign commercial banks
• International financial institutions
• Export credit agencies
• International capital markets
162

• Foreign equity holders or overseas subsidiaries of Indian companies

• Forms of ECB
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• Foreign currency-denominated ECB

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• Repayment in foreign currency

• Rupee-denominated ECB (Masala Bonds / INR loans)
• Repayment in Indian Rupees
• Exchange rate risk borne by lender
• Regulatory Framework
• ECBs are regulated under:
• RBI Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations
• FEMA, 1999
• Key regulatory parameters include:
• Minimum Average Maturity Period (MAMP)
• Maximum all-in-cost ceiling
• Permitted and prohibited end-uses
• Borrowing limits
• Routes for Raising ECB
• Automatic Route
• No prior approval from RBI required
• Applicable if borrower satisfies prescribed conditions related to:
• Eligible borrower
• Amount
• End-use
• Maturity period
• Most ECBs are raised through this route
• Approval Route
• Prior approval of RBI or Government required
• Applicable to:
• Specified sectors
• Non-standard end-uses
• Borrowings beyond automatic route limits

• What is FDI?
• Foreign Direct Investment (FDI) refers to an investment made by a person or company of one country
into business interests located in another country, with the intention of long-term ownership, control,
and management.
• In India, an investment is treated as FDI if it involves 10% or more of the post-issue paid-up equity capital
of an Indian company.
• FDI differs from Foreign Portfolio Investment (FPI) as it implies managerial control, not merely trading in
securities.
• Types of FDI
• Horizontal FDI
• Investor sets up the same line of business abroad as in the home country.
• Example: McDonald's opening outlets in Europe.
• Vertical FDI
163

• Investment in a complementary stage of the production chain.

• Example: BMW investing in auto-component manufacturing abroad.
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• Conglomerate FDI

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• Investment in a completely unrelated business sector.

• Example: Apple investing in a foreign fashion or lifestyle brand.
• Legal & Institutional Framework
• Governed by Foreign Exchange Management Act
• Administered by the Reserve Bank of India
• Policy framed by Department for Promotion of Industry and Internal Trade under Ministry of Commerce
and Industry
• FDI Routes in India
• Automatic Route
• No prior government or RBI approval required
• Allowed in most sectors, subject to conditions
• Government Route
• Prior approval required
• Applies to sensitive sectors like defence, media, telecom, etc.

What is LEI?
Legal Entity Identifier (LEI) is a 20-digit alphanumeric code.
It uniquely identifies legal entities (non-individuals) participating in financial transactions globally.
Developed in response to the Global Financial Crisis (2008) to improve transparency.
164

Objective of LEI
Improve quality, accuracy, and consistency of financial data.
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Enable better risk assessment and monitoring.

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Enhance systemic stability in financial markets.

Help regulators identify counterparty exposure.
RBI has been implementing LEI requirements gradually, covering:
Participants in Over-the-Counter (OTC) derivative markets
Participants in non-derivative markets
Large corporate borrowers
Now extended to large-value payment transactions
Who Issues LEI in India?
LEI in India is issued by Legal Entity Identifier India Ltd. (LEIL).
LEIL is recognised by RBI under the Payment and Settlement Systems Act, 2007.

What is SWIFT?
SWIFT is a global financial messaging network used by banks and financial institutions.
It enables secure, fast, and standardised exchange of financial transaction information.
SWIFT does NOT transfer money or hold accounts—it only transmits messages.
Key Features
Founded in 1973 by 239 banks from 15 countries
Headquarters: Belgium
SWIFT Code (BIC): 8 or 11 characters
Replaced the Telex system, which was slower and error-prone
Ensures accuracy, speed, and reliability in cross-border banking communication
Governance & Control
Controlled by G-10 central banks, the European Central Bank, and the National Bank of Belgium
Major oversight role played by central banks of:
Belgium, Canada, France, Germany, Italy, Japan
Netherlands, United Kingdom, United States
Switzerland, Sweden
SWIFTNet
A private, global IP-based network
Used for secure banking communications
Owned and managed by SWIFT
SWIFT Oversight Forum
Established in 2012
Includes central banks from:
Australia, China, Hong Kong, India
Korea, Russia, Saudi Arabia
Singapore, South Africa, Turkey
Purpose: Global regulatory coordination and oversight
SWIFT in India – SWIFT India Domestic Services
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About
Known as SWIFT India
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Launched in 2014
Headquarters: Mumbai
Member-owned cooperative of Indian banks
Features
Includes major public and private sector banks
Focuses on domestic market requirements
Brings global standards and best practices to Indian banking
Alternatives to SWIFT
Russia
SPFS (System for Transfer of Financial Messages)
FMS (Financial Messaging System) of the Bank of Russia
China
CIPS (Cross-Border Interbank Payment System)
Unlike SWIFT, CIPS handles both messaging AND settlement
India
Rupee–Rial trade mechanism (Iran)
Rupee–Rouble trade arrangement (Russia)

RBI Alert List for Unauthorised Forex Entities & ETPs

The Alert List is published by the Reserve Bank of India to caution the public against unauthorised entities and
platforms dealing in foreign exchange (forex).
Who is Included in the Alert List?
The list contains names of entities that are:
1. Not authorised under FEMA
Not permitted to deal in foreign exchange under the Foreign Exchange Management Act, 1999.
2. Not authorised as Electronic Trading Platforms (ETPs)
Not authorised under the RBI Master Direction – Electronic Trading Platforms Directions, 2025 (dated 16 June
2025).
3. Promoters of unauthorised activity
Platforms, websites, or entities that:
Advertise unauthorised forex dealers/ETPs
Claim to provide training, advisory, or signal services for such unauthorised entities
Why did RBI issue the Alert List?
Rising cases of:
Online forex trading scams
Illegal margin trading platforms
Misleading advertisements promising high returns
To protect:
Retail investors
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Financial system integrity

Forex market stability
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Currency in Focus : Indian Currency, CBDC, E-rupi and Legal Tender Chapter - 24

Indian Currency

• Currency name: Indian Rupee (INR)

• Symbol: ₹
• Subdivision: 1 Rupee = 100 Paise
• Symbol design: Combines Devanagari “र” and Roman “R” with two horizontal lines
• 2. Legal Tender
• Legal tender means money that must be accepted in payment of a debt.
• Coins
• Issued by Government of India under Coinage Act, 2011
• Conditions:
• Coin must not be defaced or underweight
• ₹1 and above: legal tender up to ₹1000 per transaction
• 50 paise: legal tender up to ₹10
• Voluntary acceptance beyond limits is allowed
• Banknotes
• Issued by Reserve Bank of India under RBI Act, 1934
• Guaranteed by Central Government
• Legal tender across India unless withdrawn
• ₹500 & ₹1000 (pre-2016) demonetised on 8 Nov 2016
• ₹2000 notes continue to be legal tender
• 3. Printing & Minting
• Banknote Printing Presses
• SPMCIL (Govt owned):
• Nashik (Maharashtra)
• Dewas (Madhya Pradesh)
• BRBNMPL (RBI subsidiary):
• Mysuru (Karnataka)
• Salboni (West Bengal)
• Coin Mints (SPMCIL)
• Mumbai
• Hyderabad
• Kolkata
• Noida
• Coins are issued into circulation only through RBI.
• 4. Currency Chest
• Storehouses authorised by RBI in scheduled banks
• Hold banknotes & rupee coins on behalf of RBI
• Supply currency to nearby bank branches
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• As on Feb 28, 2025: 2691 currency chests

• 5. Small Coin Depot
• Stores coins below ₹1
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• Supplies coins to bank branches

• As on Feb 28, 2025: 2299 depots
• 6. Role of RBI in Currency Management
• Sole authority to issue banknotes (Section 22, RBI Act)
• Estimates denomination-wise currency demand
• Ensures circulation of clean notes (Clean Note Policy)
• Withdraws and destroys soiled/unfit notes
• Coins: RBI only distributes; GoI designs & mints
• 7. Distribution of Currency
• RBI operates through 19 Issue Offices across India
• Currency flow:
• Presses → RBI Issue Offices → Currency Chests → Bank Branches → Public
• Coins supplied via Mint-Linked RBI Offices
• 8. “I Promise to Pay” Clause
• Printed on banknotes
• Indicates RBI’s obligation to pay the bearer
• Based on Section 26 of RBI Act, 1934
• 9. Denominations of Banknotes
• Currently Issued
• ₹10, ₹20, ₹50, ₹100, ₹200, ₹500, ₹2000
• Discontinued but Legal Tender
• ₹2, ₹5 banknotes (now coinised)
• ₹1 notes issued by GoI
• Highest Denomination Ever
• ₹10,000 (issued in 1938 & 1954; demonetised in 1946 & 1978)
• 10. Paper & Languages
• Banknote paper: 100% cotton
• Languages:
• Hindi (front)
• English (reverse)
• 15 languages in language panel
• 11. Types of Indian Banknotes
• Ashoka Pillar Series
• Post-Independence
• Lion Capital watermark
• “Satyameva Jayate” added in 1970
• Mahatma Gandhi Series (1996)
• Gandhi portrait on front
• Used till 2005
• MG Series 2005
• Enhanced security features
• ₹500 & ₹1000 withdrawn in 2016
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• Mahatma Gandhi (New) Series – 2016

• Smaller size, vivid colours
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• Themes of heritage & science

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• Introduced ₹2000 (Mangalyaan theme)

• 14. Soiled, Mutilated & Imperfect Notes
• Soiled: dirty due to normal use
• Mutilated: portion missing
• Imperfect: washed, altered, indecipherable
• Exchange
• All banks must accept & exchange
• Based on Note Refund Rules, 2009 (amended 2018)
• Non-payable notes are destroyed by RBI
• 15. Counterfeit Notes
• Fake notes lacking genuine security features
• Offences under Bhartiya Nyaya Sanhita, 2023
• Punishment: 7 years to life imprisonment
• Mere possession is not punishable unless intent to use is proved
• Central Bank Digital Currency of India

• What is Digital Rupee (e₹)?

• Digital Rupee (e₹) is India’s Central Bank Digital Currency (CBDC)
• Issued by Reserve Bank of India
• Digital form of physical Indian currency (₹)
• At par with cash and guaranteed by the Central Government
• Tagline: Cash but Digital
• Stored in e₹ wallet
• Has cash-like features:
• Finality of settlement
• RBI guarantee
• Legal tender
• No interest

• 2. Types of CBDC in India

• India is testing CBDC under pilot mode in two segments:
• Retail CBDC (e₹-R)
• Used by general public and merchants
• For daily transactions (P2P, P2M)
• Wholesale CBDC (e₹-W)
• Used by banks and financial institutions
• For large-value and interbank settlements
• Retail CBDC (e₹-R)
• 3. How e₹ can be held and used
• Held in e₹ wallets provided by banks / non-banks
• Used for:
• Person-to-Person (P2P)
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• Person-to-Merchant (P2M)
• Payments via:
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• CBDC QR code

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• UPI QR code
• 4. e₹ Wallet
• Digital wallet on mobile device
• Stores e₹ like a physical wallet stores cash
• Available on:
• Android
• iOS
• Wallet is recoverable even if phone is lost (using same SIM)
• 5. Safety of e₹ Wallet
• Strong cyber-security framework
• e₹ remains safe even if device is lost
• Wallet can be restored on a new device
• 6. Creation & Issuance of e₹
• RBI creates and issues e₹ digitally
• Issued to banks and non-banks
• Banks/non-banks onboard users and provide wallets
• Retail e₹ pilot live since: 1 December 2022
• Pilot Banks Offering e₹ Wallets
• Total: 19 banks
• Includes:
• SBI
• HDFC Bank
• ICICI Bank
• Axis Bank
• PNB
• Bank of Baroda
• Union Bank of India
• IDBI Bank
• Bank of India
• Canara Bank
• And others
• Wholesale CBDC (e₹-W)
• What is Wholesale CBDC (e₹-W)?
• CBDC meant for financial institutions
• Used for:
• Inter-bank settlements
• Large-value transactions
• Operates in restricted ecosystem
• Takeaways
• e₹ is legal tender
• Issued by RBI, not private entities
• e₹ ≠ cryptocurrency
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• e₹-R → public use

• e₹-W → institutional use
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• No interest on e₹

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• Pilot launched in Dec 2022

• What is e-RUPI?
• e-RUPI is a cashless, contactless, prepaid digital voucher
• Delivered to the beneficiary as:
• SMS, or
• QR code (on feature phone or smartphone)
• It is person-specific and purpose-specific
• Can be redeemed only once at authorised service providers
• Important: e-RUPI is not a digital currency and not a CBDC

• 2. How does e-RUPI work?

• Sponsor (Government / organisation) decides:
• Beneficiary
• Purpose
• Amount
• Partner bank issues an e-RUPI voucher
• Beneficiary receives:
• SMS or QR code on mobile
• Beneficiary goes to:
• Specified service provider (e.g. hospital)
• Voucher is scanned and redeemed
• Service provider receives real-time payment

• 3. Key Features of e-RUPI

• One-time use voucher
• Cashless and contactless
• No card, no app, no internet banking required
• Works on basic phones
• No internet connection required at beneficiary end
• Ensures targeted delivery of benefits

• Who developed e-RUPI?

• Developed by National Payments Corporation of India
• In collaboration with:
• Department of Financial Services
• Ministry of Health & Family Welfare
• National Health Authority

• NPCI has partnered with 11 banks:

• Axis Bank
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• Bank of Baroda
• Canara Bank
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• HDFC Bank

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• ICICI Bank
• Indian Bank
• IndusInd Bank
• Kotak Mahindra Bank
• Punjab National Bank
• State Bank of India
• Union Bank of India

• Legal Tender
• It is a type of currency or medium of exchange.
• It is money that is valid and acceptable for the settlement of debts which must be recognized when issued.
• Almost every country uses its national currency as legal tender.
• Creditors are lawfully responsible for accepting legal tender for the repayment of debt that they have availed.
• Legal tender is constitutioned by a law that specifies the object to be utilised as legal tender and the
organisation that is commissioned to create and issue the same to the public such as the Reserve Bank of
India.
• In India, the authentic legal tender of the Reserve Bank of India consists of coins and notes. The creditors are
supposed to accept them as a payment towards the debt.

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Capital Market : The Evolution, Vol 1 : SEBI, Primary Market, New Issues in
Primary Market Chapter - 25

What is Capital Market

Capital market transfers funds from savers to entities needing capital.
Channels resources into productive investments.
Promotes economic growth.
Supports industrial development.
Contributes to financial stability.

Types of Capital Market

Capital Market Instruments

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Capital Market Functions

Capital Mobilization
Investment Opportunities
Liquidity Provision
Price Determination
Risk Management
Efficient Allocation of Resources
Wealth Generation
Corporate Governance
Capital Market of India Historical Background
1875:
Bombay Stock Exchange (BSE) established – India’s first stock exchange.
1988:
Securities and Exchange Board of India (SEBI) created as a regulatory body.
1992:
National Stock Exchange of India (NSE) launched; SEBI granted statutory powers and electronic trading
introduced.
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1996:
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Depositories Act, 1996 enacted, leading to the creation of National Securities Depository Limited (NSDL) and
Central Depository Services Limited (CDSL) and enabling dematerialisation.
2000s onwards:
Trading reforms liberalised, online trading introduced, and foreign institutional investors integrated.
SEBI
Securities and Exchange Board of India (SEBI) is the regulatory authority of the securities market in India.
Established in 1988; given statutory powers under the SEBI Act, 1992.
Objective: Protect investors, regulate the securities market, and promote its development.
Historical Background
Before SEBI, the market was regulated by the Controller of Capital Issues (CCI) under the Capital Issues (Control)
Act, 1947.
Rapid market growth and rising malpractices led to SEBI’s creation in 1988.
The Harshad Mehta Scam 1992 exposed regulatory loopholes, leading to statutory powers for SEBI in 1992.
Organisational Structure
SEBI Board consists of:
Chairman nominated by the Union Government.
2 members from the Union Ministry of Finance.
1 member from the Reserve Bank of India (RBI).
5 members nominated by the Union Government (at least 3 full-time members).
Powers of SEBI
Powers similar to a civil court under the Code of Civil Procedure, 1908.
Can summon individuals and examine them under oath.
Inspect books, registers, and documents of market participants.
Suspend trading of securities on stock exchanges.
Restrict individuals/entities from accessing the securities market.
Impound proceeds or securities related to suspicious transactions.
Securities Appellate Tribunal (SAT)
Securities Appellate Tribunal (SAT) established under Section 15K of the SEBI Act.
Hears appeals against SEBI’s orders.
Presiding officer: Supreme Court judge / Chief Justice / High Court judge with ≥7 years service.
Further appeal can be made to the Supreme Court of India within 60 days.
Primary Market
Market where securities are issued for the first time to investors.
Used by companies and government to raise capital.
Securities issued through IPO (Initial Public Offering) via stock exchanges.
Main participants: Company (issuer), Investors, Underwriters.
Underwriters decide issue price and facilitate the offering.
Regulated by the Securities and Exchange Board of India (SEBI).
Examples of securities: Shares, Government Bonds, Corporate Bonds, Notes, Bills.
176

Functions of Primary Market

The functions of such a market are manifold –
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New Issue Offer

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Underwriting Services
Distribution of New Issue
Types of Primary Market Issuance
1. Public Issue
Securities offered to the general public through Initial Public Offering (IPO).
Converts a private company into a public company.
Shares are listed on stock exchanges for trading.
Regulated by Securities and Exchange Board of India (SEBI).
Used for business expansion, infrastructure improvement, and debt repayment.
2. Private Placement
Securities offered to a small group of selected investors.
Investors may include institutions, banks, or High Net Worth Individuals (HNIs).
Less regulation, lower cost, and faster than IPO.
Commonly used by start-ups and early-stage companies.
3. Preferential Issue
Shares or convertible securities issued to a selected group of investors.
Faster method of raising capital for listed and unlisted companies.
Preference shareholders receive dividends before ordinary shareholders.
4. Qualified Institutional Placement (QIP)
Securities issued by listed companies to Qualified Institutional Buyers (QIBs).
QIBs include Mutual Funds, Banks, Insurance Companies, Pension Funds, FIIs, AIFs.
Simpler and quicker than other issue methods.
5. Rights Issue
Company offers additional shares to existing shareholders at a discounted price.
Shareholders get the right to buy shares within a specified period.
Helps maintain ownership control of existing shareholders.
6. Bonus Issue
Company issues free additional shares to existing shareholders.
Given as a reward from accumulated reserves.
Does not bring fresh capital into the company.
Primary Market Reforms In India
Abolition of Controller of Capital Issues (CCI)
Capital Issues (Control) Act, 1947 regulated capital issues in India.
Implemented by the Controller of Capital Issues (CCI).
Narasimham Committee (1991) recommended abolishing CCI.
Regulatory powers transferred to Securities and Exchange Board of India (SEBI).
Government abolished CCI and repealed the Act.
Companies can now raise capital from the market without prior government approval, subject to SEBI clearance
of offer documents.
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FIIs Permitted to Operate in the Indian Market

Accessing Global Funds Market
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Intermediaries under the Purview of SEBI

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Credit Rating Agencies

Various credit rating agencies such as Credit Rating Information Services of India Ltd. (CRISIL – 1988),
Investment Information and Credit Rating Agency of India Ltd. (ICRA – 1991), Cost Analysis and Research Ltd.
(CARE – 1993) and so on were set up to meet the emerging needs of capital market.
Methods of Floatation in Primary Market
1. Public Issue
Securities offered to the general public.
Helps companies raise capital from a large number of investors.
Types
Initial Public Offering (IPO): First time an unlisted company offers shares to the public.
Further Public Offering (FPO): Listed company issues additional shares to raise more capital.
2. Private Placement
Securities issued to a selected group of investors (≤50 people or as prescribed).
Faster and less regulated than public issue.
Types
Preferential Allotment: Shares issued to a specific group of investors.
Qualified Institutional Placement (QIP): Shares issued only to institutional investors.
3. Rights Issue
Shares offered only to existing shareholders in a fixed proportion.
Usually offered at a discounted price.
4. Bonus Issue
Free shares issued to existing shareholders from company reserves.
No new capital is raised.
5. ESOP
Employee Stock Option Plan (ESOP) allows employees to buy company shares at a predetermined price.
Used to reward and retain employees.

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Capital Market : The Change : Stock Market, Stock Market Terms and Current
Scenario Chapter - 26
PREFERENTIAL ISSUE
Preference Shares give their holders only a share in the earnings/profits of the company, but no voting rights.
The dividends paid to the holders of preference shares are fixed.
Preference Shares are named so because in case the company is winding up, these shares have the preferential
right to get back the capital paid, before Equity Shareholders.
Types:
Cumulative Preference Shares
Non-Cumulative Preference Shares
Participatory Preference Shares
Convertible Preference Shares
RIGHT ISSUES
A rights issue is a mechanism by which companies can raise additional capital from existing shareholders.
It is different from public issue (Initial Public Offer) and private placement.
QUALIFIED iNSTITUTIONAL PLACEMENT
Shares offered tospecific category of investors who are deemed to be financially sophisticated and capable of
making informed investment decisions.
QIB : Mutual funds, Venture capital funds,Foreign institutional investors registered with SEBI, Insurance
companies, Banks, Provident funds, Pension funds
Shares offered tospecific category of investors who are deemed to be financially sophisticated and capable of
making informed investment decisions.
QIB : Mutual funds, Venture capital funds,Foreign institutional investors registered with SEBI, Insurance
companies, Banks, Provident funds, Pension funds
SECONDARY MARKET
The secondary market is where investors buy and sell securities.
Trades take place on the secondary market between other investors and traders rather than from the companies
that issue the securities.
STOCK EXCHANGE
Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.
India has two stock exchanges – the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
SEBI is the regulator of the securities market in India.
securities are bought and sold by investors among one another on the secondary market after they are first sold
on the primary market.
As such, most people call the secondary market the stock market.
NSE
It was setup in 1992.
Committee : M.J. Ferwani Committee
India’s first demutualised stock exchange.
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Benchmark : NIFTY 50
It became a national level stock exchange in 2002.
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Almost 75% of the stocks traded in India are in BSE

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FOUR INDEXES : Sensex, BSE 200, BSE 500, National Index, IndoNext
OTCEI
It was setup in 1989
India’s first fully computerised stock exchange.
Companies with a paid up capital of 30 lakhs to 5 crores trade here.
Important terms in Stock Market
Bear and Bull
Book Building
Badla and Undha Badla
Depositories
Kerb Dealings
Greenshoe Option
Circuit Breaker
Insider Trading
Delisting
EBITDA : Earnings Before Interest & Taxes
Share at Par/Premium/Discount
Upper & lower circuit
Short selling
Scrip and Sweat Share

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Capital Market : Present Day : MF, Derivatives, Commodities and others

Chapter - 27

SEBI Mutual Fund Reforms 2026

What is MF?
A Mutual Fund (MF) is a collective investment vehicle that pools money from many investors and invests it in a
diversified portfolio of assets such as equities (shares), bonds, and money market instruments.
It is managed by professional fund managers who invest the pooled funds to generate returns for investors.
Key Features
Diversification – Investment spread across multiple securities.
Professional Management – Managed by experienced portfolio managers.
Liquidity – Investors can buy or redeem units easily (in most funds).
Affordability – Allows small investors to access diversified investments.
Transparency – Regular disclosure of portfolio and performance.

Types of Mutual Funds Based on Asset Class

1. Equity Funds
Invest primarily in shares of companies.
Aim for capital appreciation.
Higher risk but higher return potential.
Types:
Large Cap Funds – Invest in well-established large companies.
Mid Cap Funds – Invest in medium-sized companies.
Small Cap Funds – Invest in smaller companies with high growth potential.
2. Debt Funds
Invest in fixed-income securities like bonds and treasury bills.
Provide stable income with lower risk.
Examples:
Government Bond Funds
Corporate Bond Funds
Treasury Bill Funds
3. Hybrid Funds
Invest in both equity and debt instruments.
Aim to provide growth with stability.
Example:
Balanced Funds
Types of Mutual Funds Based on Investment Goals
1. Growth Funds
Focus on capital appreciation.
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Invest mainly in high-growth companies.

Suitable for long-term investors.
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2. Income Funds
Aim to provide regular income.
Invest in bonds and dividend-paying stocks.
3. Liquid Funds
Invest in short-term debt instruments.
Provide high liquidity and low risk.
Suitable for short-term parking of funds.
4. Tax Saving Funds (ELSS)
ELSS – Equity Linked Savings Scheme
Offers tax deduction under Section 80C of the Income Tax Act, 1961.
Invest mainly in equities.
Lock-in period: 3 years.
5. Pension Funds
Designed for retirement planning.
Invest in a mix of equity and debt instruments.
Build a retirement corpus.
Types of Mutual Funds Based on Structure
1. Open-ended Funds
Investors can buy or redeem units anytime.
No fixed maturity period.
Highly liquid.
2. Closed-ended Funds
Have a fixed maturity period.
Units are available only during the New Fund Offer (NFO).
Usually traded on stock exchanges.
3. Interval Funds
Combination of open-ended and closed-ended funds.
Investors can buy or redeem units only during specific intervals.
SEBI Changes Mutual Fund Categorisation Norms (2026)
On 26 February 2026, the Securities and Exchange Board of India announced major revisions in mutual fund
categorisation norms to provide greater flexibility to fund houses, improve transparency, and streamline scheme
structures.
Key Highlights of the Revised Framework
1. Equity Funds Allowed 35% Allocation to Other Assets
Equity mutual funds can now allocate up to 35% of their non-core portion to:
Gold and Silver
InvITs (Infrastructure Investment Trusts)
Debt instruments
Earlier, non-core allocation was mostly restricted to debt instruments.
182

This change allows greater diversification within equity schemes.

2. Portfolio Overlap Limit for Sectoral/Thematic Funds
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Sectoral and thematic equity schemes must ensure that portfolio overlap with other equity schemes does not
exceed 50%.
Exception: Large-cap schemes are exempt from this rule.
Existing schemes have been given 3 years to comply.
Additional requirement:
Mutual funds must disclose monthly portfolio overlap data for:
Equity funds
Debt funds
Hybrid funds
Purpose:
Increase transparency and differentiation among schemes.
3. Value and Contra Funds Allowed Together
Asset Management Companies (AMCs) can now launch both Value Funds and Contra Funds simultaneously.
However, portfolio overlap between the two must remain below 50%.
This ensures clear distinction between the investment strategies.
4. Solution-Oriented Schemes Discontinued
The earlier solution-oriented category has been removed.
Schemes affected:
Retirement Funds
Children’s Funds
These schemes will now:
Be merged with other schemes having similar asset allocation and risk profiles.
5. Introduction of Life Cycle Funds
A new category called Life Cycle Funds has been introduced.
Key features:
Minimum tenure: 5 years
Maximum tenure: 30 years
Tenure must be in multiples of 5 years (5, 10, 15, 20, 25, 30).
A mutual fund house can offer up to 6 life cycle schemes at a time.
Purpose: Provide long-term investment options with structured timelines.
6. Introduction of Sectoral Debt Funds
A new fixed-income category called Sectoral Debt Funds has been introduced.
These funds will invest in debt instruments of specific sectors, such as:
Financial services
Energy
Infrastructure
Housing
Real estate
Purpose:
183

Allow targeted exposure to specific sectors in the debt market.

About Derivatives
Page

Financial contracts whose value depends on an underlying asset, index, or rate.

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Used for hedging risks, speculation, and portfolio diversification.

Common underlying assets: Stocks, bonds, commodities, currencies, interest rates, and market indexes.
Types of Derivatives

Commodity Derivatives
1. Meaning of Commodity
Commodities are basic tangible goods used for daily consumption or industrial purposes.
Examples:
Agricultural products – wheat, rice, pulses
Metals – gold, copper
Energy – crude oil, natural gas
These goods are traded in commodity markets.
Commodity Market
Commodity markets are regulated platforms where buyers and sellers trade commodities.
Main functions:
Facilitate buying and selling of commodities
Enable price discovery
Help market participants manage price risks
Commodity Derivatives
Meaning
A Commodity Derivative is a derivative contract where the underlying asset is a commodity.
It allows traders to:
Trade price movements of commodities
Manage price risk
Avoid physical handling of commodities
Under the Securities Contracts (Regulation) Act, 1956, derivatives trading is permitted for 91 commodities in
India.
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Types of Commodity Derivatives (Based on Commodity Category)

1. Agricultural Commodity Derivatives
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Derived from agricultural products.

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Examples:
Cereals – Wheat, Rice
Pulses – Chana, Tur
Spices – Pepper, Jeera
Oilseeds – Soybean, Castor
2. Non-Agricultural Commodity Derivatives
Derived from non-agricultural goods.
Examples:
Bullion and gems – Gold, Silver
Energy – Crude oil, Natural gas
Metals – Copper, Aluminium
Other metals – Lead, Zinc, Nickel
Trading of Commodity Derivatives in India
Commodity derivatives are traded on recognised exchanges through electronic platforms.
Major exchanges:
Multi Commodity Exchange of India
National Commodity and Derivatives Exchange
Steps to trade:
Open a trading account with a SEBI-registered broker.
Deposit initial margin.
Access exchange trading platforms.
Buy or sell futures or options contracts.
Regulatory Framework of Commodity Derivatives Market
The system works under a three-tier regulatory structure.
1. Central Government
Functions:
Determines commodities eligible for trading
Frames market policies
Can suspend exchange operations
Can prohibit undesirable speculation
Authority derived from:
Securities Contracts (Regulation) Act, 1956
2. SEBI
Role:
Regulates commodity derivative markets
Protects investor interests
Supervises market intermediaries
Enforces disclosure requirements
3. Commodity Exchanges
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Role:
Provide trading platforms
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Ensure compliance with SEBI regulations

Maintain market integrity

SEBI Eases Capacity Norms for Commodity Derivatives Segment

The Securities and Exchange Board of India has relaxed capacity planning requirements for stock exchanges and
clearing corporations in the commodity derivatives segment.
The objective is to align infrastructure requirements with actual system demand while maintaining market
stability and investor protection.
1. Reduction in Installed Capacity Requirement
Earlier Rule:
Trading systems had to maintain installed capacity at least 4 times the peak order load.
Revised Rule:
Exchanges and clearing corporations must now maintain installed capacity at least 2 times the projected peak
load.
Significance:
Reduces the infrastructure burden on Market Infrastructure Institutions (MIIs).
Reflects lower utilisation levels in the commodity derivatives segment.
Improves operational efficiency without compromising stability
2. 75% Utilisation Trigger Retained
Although the baseline capacity requirement has been reduced, SEBI retained a performance-based safeguard.
Rule:
If system utilisation exceeds 75% of installed capacity, immediate corrective measures must be taken.
Possible corrective actions:
Optimising system resources
Fine-tuning applications
Increasing system capacity
Oversight:
These measures must be implemented under supervision of the Standing Committee on Technology (SCOT).
3. Mandatory Policy Integration
SEBI has directed MIIs to formally incorporate the 75% utilisation trigger into their:
Capacity Planning Policy
Real-Time Performance Monitoring Policy
Purpose:
Ensure structured and proactive monitoring of system performance.
Enable timely intervention before system overload occurs.
4. Extension of Framework to Commodity Derivatives Segment
The regulator has extended the existing framework on capacity planning and real-time monitoring to the
commodity derivatives market with two main modifications:
Installed capacity requirement reduced to 2× projected peak load
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75% utilisation trigger retained

5. Implementation Timeline
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Stock exchanges and clearing corporations must submit their policies to SEBI within 3 months.

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Policies must be approved by:

Standing Committee on Technology (SCOT)
Governing Board of the MII
Effective Date:
The revised framework will come into effect on 11 May 2026.

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Basel Norms Chapter - 28

Basel Norms
Basel Norms (Basel Accords) are international banking regulations issued by the Basel Committee on Banking
Supervision to strengthen the global banking system.
These norms aim to:
Ensure capital adequacy of banks
Improve risk management
Maintain financial stability
They coordinate banking regulations across countries to reduce the risk of bank failures and financial crises.
Basel Committee on Banking Supervision (BCBS)
The BCBS is the main global standard-setting body for banking regulation.
Key facts:
Established in 1974 by the Central Bank Governors of G10 countries
Operates under the Bank for International Settlements
Headquarters: Basel, Switzerland
Current membership: 45 members from 28 jurisdictions
Functions:
Develops global banking regulatory standards
Promotes cooperation among banking supervisors
Improves quality of banking supervision worldwide
Why Basel Norms Were Introduced
Banks lend money to different borrowers and face risk of default.
Sources of bank funds:
Public deposits
Market borrowings (equity and debt)
Because loans may not always be repaid, banks must maintain capital reserves to absorb potential losses.
Basel norms require banks to maintain minimum capital against risks to ensure stability of the financial system.
Why the Name “Basel”
The norms are named after Basel, a city in Switzerland.
Basel is the headquarters of the Bank for International Settlements, which hosts the Basel Committee.
The BIS was established in 1930 to promote cooperation among central banks.

Basel I (1988)
Basel I focused mainly on credit risk.
Credit Risk
The risk that a borrower fails to repay a loan or interest.
Main Features
Introduced Capital Adequacy Ratio (CAR)
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Minimum CAR requirement: 8% of Risk Weighted Assets (RWA)

Risk Weighted Assets (RWA)
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Assets are assigned risk weights depending on their risk level.

Example:
Secured loan → Lower risk
Personal loan → Higher risk
India implemented Basel I in 1999.

Basel II (2004)
Basel II expanded risk management and introduced three pillars.
Pillar 1 – Capital Adequacy
Banks must maintain minimum capital of 8% of Risk Weighted Assets.
Pillar 2 – Supervisory Review
Banks must adopt advanced systems to monitor three major risks:
Credit Risk
Market Risk
Operational Risk
Pillar 3 – Market Discipline
Banks must disclose important information such as:
Capital adequacy ratio
Risk exposure
Financial position
Purpose: Improve transparency and accountability.

Basel III (2010)

Basel III was introduced after the 2008 global financial crisis to strengthen the banking system.
It focuses on capital strength, leverage control, and liquidity management.
Key Components of Basel III
1. Capital Requirements
Total capital requirement increased to 12.9% of Risk Weighted Assets.
Break-up:
Tier 1 Capital: 10.5%
Tier 2 Capital: 2%
Additional buffers:
Capital Conservation Buffer (CCB): 2.5%
Countercyclical Capital Buffer (CCCB): 0–2.5%
2. Leverage Ratio
Minimum Leverage Ratio = 3%
Formula:
Leverage Ratio = Tier 1 Capital / Total Consolidated Assets
Purpose: Prevent excessive borrowing by banks.
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3. Liquidity Standards
Basel III introduced two liquidity ratios.
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Liquidity Coverage Ratio (LCR)

Banks must maintain enough high-quality liquid assets to survive 30 days of financial stress.
Purpose: Prevent bank runs.
Net Stable Funding Ratio (NSFR)
Banks must maintain stable funding sources for at least one year.
Minimum requirement:
NSFR = 100%
Difference:
LCR → short-term liquidity (30 days)
NSFR → medium-term stability (1 year)
Implementation of Basel III in India
Basel III implementation in India was scheduled for March 2019, later extended to March 2020.
Due to the COVID-19 pandemic, the Reserve Bank of India extended the implementation timeline.
Important Concepts
Bank Run
A bank run occurs when many depositors withdraw money simultaneously due to fear that the bank may
collapse.
This can lead to bank insolvency.
Countercyclical Capital Buffer (CCCB)
CCCB requires banks to maintain extra capital during economic growth periods.
Purpose:
Build capital buffers during good times
Use them during economic downturns
Although proposed by RBI in 2015, the CCCB requirement for Indian banks has remained at 0% so far.
Tier 1 Capital (Core Capital)
Includes:
Features:
Highest quality capital
Absorbs losses during financial stress
Tier 2 Capital (Supplementary Capital)
Includes:
Undisclosed reserves
Subordinated debt
Hybrid capital instruments
Features:
Less reliable than Tier 1 capital
Used as additional loss-absorbing capital.

RBI's Basel III norms to lower banks' capital requirement from 2027
190

The Reserve Bank of India has announced that revised Basel III capital adequacy norms for commercial banks
will be implemented from 1 April 2027.
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The new framework is expected to reduce capital requirements for certain sectors and improve banks’ capital
efficiency.
Key Highlights
Implementation Timeline
Revised Basel III capital adequacy norms will come into effect from 1 April 2027.
The RBI will soon release a draft on the Standardised Approach for Credit Risk.
Lower Risk Weights for Key Sectors
Under the proposed norms, risk weights on certain loan segments may be reduced, particularly:
MSME loans
Residential real estate / housing loans
Lower risk weights mean banks will need to keep less capital for these loans, improving capital utilisation.
Impact on Capital Adequacy
Analysts estimate that the reforms could lead to 10–50 basis points (bps) improvement in Common Equity Tier 1
(CET1) capital across banks.
What is CET1?
Common Equity Tier 1 (CET1) is the highest quality capital of a bank, consisting mainly of:
Equity capital
Retained earnings
Other disclosed reserves
It is a key measure used under Basel III to assess a bank’s financial strength.
Effect on Banks
Improved Capital Efficiency
Lower risk weights will reduce the capital banks must set aside for loans, allowing them to lend more while
maintaining regulatory requirements.

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International Economic Organisations and India Chapter - 29

International Economic Organizations (IEOs) are institutions formed by multiple countries to manage and
coordinate global economic activities.
Purpose
Promote international economic cooperation.
Facilitate global trade and investment.
Support economic development and financial stability.
Set rules, standards and policies for the global economy.
Objectives
Encourage sustainable economic growth.
Provide financial assistance to countries.
Promote regional and global economic development.
Address global economic challenges.
Major International Economic Organizations
Bretton Woods Institutions
World Bank Group (WBG)
International Monetary Fund (IMF)
Other Important Institutions
New Development Bank (NDB) – BRICS Bank
Asian Development Bank (ADB)
Asian Infrastructure Investment Bank (AIIB)
Bretton Woods Institutions
Established in 1944 at the United Nations Monetary and Financial Conference.
Conference held at Bretton Woods, New Hampshire (USA).
Delegates from 43 countries participated.
Purpose
Rebuild the global economy after World War II.
Promote international economic cooperation.
Create a stable international monetary system.
Prevent competitive currency devaluations.
Promote global economic growth and financial stability.
Major Outcome
Creation of two key institutions:
IMF – International Monetary Fund
World Bank (initially IBRD – International Bank for Reconstruction and Development)
Bretton Woods Twins: IMF and World Bank together are called Bretton Woods Institutions or Bretton Woods
Twins.
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INTERNATIONAL MONETARY FUND (IMF)

It was created in 1945.
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It is a specialized agency of the United Nations.

191 countries.
India is a founder member of IMF
HQ: Washington, D.C.

Primary Aims (IMF / Bretton Woods System) – Promote international monetary cooperation.
Facilitate expansion and balanced growth of international trade.
Promote exchange rate stability.
Establish a multilateral system of international payments.
Provide financial assistance to member countries facing Balance of Payments (BoP) problems.
IMF Quotas
Quotas are the capital contributions made by member countries to the IMF.
They reflect a country’s relative position in the global economy.
Quota Calculation Formula
Based on weighted average of:
GDP – 50%
Openness – 30%
Economic Variability – 15%
International Reserves – 5%
Quota Contribution
25% paid in SDRs (Special Drawing Rights) or widely accepted currencies
US Dollar, Euro, Yen, Pound Sterling.
75% paid in member country’s own currency.
Quota Review
Conducted by Board of Governors.
Reviews held at least once every 5 years.
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Quota Change Rules

Requires 85% majority of total voting power.
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A country’s quota cannot be changed without its consent.

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Voting Power
A country’s voting power in IMF depends on its quota.
Vote Share (Approx.)
United States: ~16.52%
China: ~6%
India: ~2.6%
Special Drawing Rights (SDR)
SDR – Special Drawing Rights is an international reserve asset created by the IMF in 1969.
Used to supplement the official reserves of member countries.
Nature
Interest-bearing reserve asset.
Can be exchanged for freely usable currencies among IMF members.
Allocation: SDRs are allocated to countries in proportion to their IMF quota.
Value of SDR
Based on a basket of five major currencies: US Dollar, Euro, Chinese Renminbi (Yuan), Japanese Yen, British
Pound Sterling
Criteria for Inclusion in SDR Basket
Country must be among the top global exporters.
Currency must be “freely usable” as determined by the IMF.

IMF Lending
Amount a country can borrow from IMF depends on its quota.
Reserve Tranche (Gold Tranche)
First 25% of a member country’s quota.
Can be withdrawn easily to address Balance of Payments (BoP) problems.
Key Features
No conditions attached.
No interest charged on the first credit tranche.
Repayment period: about 3–5 years.
Beyond Reserve Tranche
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Additional borrowing available in credit tranches.

Requires IMF approval.
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Subject to limits and policy conditions.

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World Bank
Founded in 1944 as International Bank for Reconstruction and Development (IBRD).
Soon became popularly known as the World Bank.
Later expanded into 5 institutions, together called the World Bank Group (WBG).
Headquarters: Washington D.C., United States.
The term World Bank mainly refers to IBRD and IDA
Institutions of the World Bank Group

International Bank for Reconstruction and Development (IBRD)

Members: 189
Provides loans to middle-income and creditworthy poor countries.
Initially focused on reconstruction of Europe after World War II.
Works as the main lending arm of the World Bank.

International Development Association (IDA)

Founded in 1960.
Members: 173
Provides support to the poorest countries.
Loans are given as credits (interest-free or very low interest).

International Finance Corporation (IFC)

Founded in 1956.
Members: 185
Promotes private sector investment in developing countries.
Invests in capital markets and supports privatization of public enterprises.
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Multilateral Investment Guarantee Agency (MIGA)

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Members: 182

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Provides political risk insurance for investments in developing countries.

Protects investors from risks like political instability or conflict.

International Centre for Settlement of Investment Disputes (ICSID)

Members: 155
Resolves disputes between foreign investors and host countries.
India is not a member.
Membership Rules
A country must first join the International Monetary Fund (IMF) to join the World Bank.
Membership in IDA, IFC, and MIGA requires membership in IBRD.
Governance
Governed by Board of Governors and Board of Executive Directors.
President of the World Bank traditionally comes from the United States, the largest shareholder.

Asian Development Bank (ADB)

Established in 1966.
Aim: Promote economic growth and regional cooperation in Asia and the Far East.
Members: 68 countries.
49 members from the Asia–Pacific region.
Headquarters: Manila, Philippines.
Status: Official Observer at the United Nations (UN).

New Development Bank (NDB)

A multilateral development bank established by BRICS countries (Brazil, Russia, India, China, South Africa).
Created to mobilize funds for infrastructure and sustainable development in emerging economies.
Considered an alternative to Western-dominated institutions like the World Bank and IMF.
Establishment
Agreement signed: 15 July 2014 at BRICS Fortaleza Summit.
Officially established: 21 July 2015.
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Headquarters: Shanghai, China.

Regional Offices: South Africa and Brazil.
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Membership

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Founding Members: Brazil, Russia, India, China, South Africa.

New Members: Bangladesh, UAE, Egypt, Uruguay, Algeria (2025).
Membership open to all UN member states, but BRICS must hold at least 55% shareholding.
Governance Structure
Board of Governors: Finance Ministers of member countries.
Board of Directors: Handles strategic decisions and operations.
President: Rotates among BRICS countries.
Current President: Dilma Rousseff (Brazil).
Voting power: Based on equity contribution.
Capital Structure
Authorized capital: USD 100 billion.
Initial subscribed capital: USD 50 billion.

Asian Infrastructure Investment Bank (AIIB)

A multilateral development bank focused on infrastructure development in Asia.
Has members from across the world, not only Asia.
Established through the AIIB Articles of Agreement.
Members: 97 countries.
India is a founding member of the Asian Infrastructure Investment Bank (AIIB), having joined in 2016.
Headquarters: Beijing, China.
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African Development Bank (AfDB)

A multilateral development bank that provides finance to African governments and private companies investing
in member countries.
Aim: Promote economic development and social progress in Africa.
Key Facts
Founded: 1964.
Members: 81 countries.
India: Member.
Headquarters: Abidjan, Côte d’Ivoire.

European Bank for Reconstruction and Development (EBRD)

Initially created to support transition of former Eastern Bloc countries to market economies.
Later expanded to support 30+ countries from Central Europe to Central Asia.
Key Facts
Founded: 1991.
Members: 69 countries.
India: Joined as the 69th member in 2018.
Headquarters: London, United Kingdom.

Islamic Development Bank Group (IsDB)

A multilateral development bank based on Islamic finance principles.
Provides funding for development projects in member countries.
Key Facts
Founded: 1975.
Members: 57 countries.
Largest shareholder: Saudi Arabia.
India: Not a member.
Headquarters: Jeddah, Saudi Arabia.
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Development Bank of Latin America (CAF)

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Also called Corporación Andina de Fomento – Banco de Desarrollo de América Latina.

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Supports economic development and regional integration in Latin America.

Key Facts
Founded: 1968.
Members: 17 countries.
India: Not a member.
Headquarters: Caracas, Venezuela.

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Jan Samarth Portal and its Schemes Chapter - 30

What is Jan Samarth Portal ?

A one-stop digital portal for government credit-linked schemes (loan schemes).
Launch Date: 6 June 2022
Launched by: Ministry of Finance
Main Purpose:
Connect beneficiaries directly with banks/lenders
Make loan process simple, fast and transparent
Key Features:
Single platform for loan application + processing
Covers multiple government schemes (10+ schemes)
Digital system → reduces paperwork and delays

Who benefits?
Students (education loans)
Farmers (agriculture loans)
Businessmen & MSMEs (Micro, Small and Medium Enterprises)
Start-ups & entrepreneurs
Importance:
Promotes financial inclusion
Supports economic growth
Helps in easy access to credit for all sectors
Overall Idea: “One Nation – One Platform for Government Loans”
Credit Guarantee Scheme for Exporters (CGSE)
Ministry: Ministry of Finance (Department of Financial Services)
Implemented by: NCGTC (National Credit Guarantee Trustee Company Ltd.)

What is CGSE?
Government scheme providing 100% guarantee on loans given to exporters
Helps exporters get easy and cheaper credit
Focus on MSMEs (Micro, Small and Medium Enterprises)
Purpose
Reduce risk for banks/lenders
Ensure more loans (liquidity) for exporters
Support exporters facing global trade challenges
Duration
Till ₹20,000 crore loans are guaranteed OR
31 March 2026 (whichever is earlier)
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Eligible Applicants
1. Direct Exporters
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MSMEs: At least 5% turnover from exports

Non-MSMEs: At least 20% turnover from exports
Must have active export loan account
Account should be standard (not NPA)
2. Indirect Exporters
MSMEs supplying 30%+ goods to exporters
Must have domestic working capital loan
Other Conditions
MSMEs must have Udyam Registration
Account should not be NPA
Key Features
Loan Support: Up to 20% of working capital limit
Maximum Loan: ₹50 crore per borrower
Tenure: 4 years (including 1-year moratorium)
Interest Rate:
1% lower than normal rate
Max: 10% (Banks/FIs), 14% (NBFCs)
Guarantee Cover: 100% (full guarantee)
Fees:
Processing Fee: Nil
Guarantee Fee: Nil
Collateral:
No extra collateral required
No new personal/corporate guarantee
Eligible Lenders
Banks (SCBs)
Urban Cooperative Banks (SUCBs)
All India Financial Institutions (AIFIs)
NBFCs (Non-Banking Financial Companies)
Claim Settlement
75% amount: Paid within 30 days after NPA
Remaining 25%: After recovery
In OTS (One Time Settlement): Guarantee reduces to 90%
Exclusions
Not allowed if:
Already covered under another scheme/insurance
Not following RBI/Government rules
e-NWR Financing (e-Kisan Upaj Nidhi)
Farmers can take loans using stored crops as security
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Based on e-NWR (electronic Negotiable Warehouse Receipt)

What is e-NWR?
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A digital receipt for crops stored in a warehouse

Issued by WDRA (Warehousing Development and Regulatory Authority) registered warehouses
Works like a proof of ownership of stored goods
Purpose
Provide easy credit to farmers
Avoid distress sale of crops
Ensure better price realization
Eligibility
Farmers storing crops in WDRA-approved warehouses
Must have a valid e-NWR
e-NWR issued by:
NERL (National E-Repository Ltd.)
CCRL (Central Registry of Receipts Ltd.)
Key Features
Loan Type: Secured loan against stored crops
Lenders: Banks / Financial Institutions
Loan Tenure:
Based on shelf life of crop
Maximum 12 months
Margin Requirement:
25% margin (farmer contributes part value)
Validity of e-NWR:
Valid till commodity exists in warehouse
Expires after withdrawal of goods
Home Loan Scheme (EWS, LIG, MIG – Urban Areas)
Ministry: Ministry of Housing and Urban Affairs
Launched: November 2025
Initiative by: Department of Financial Services (DFS)

What is the Scheme?

Provides home loans to urban families
Covers even people with low or no formal income proof
Uses digital footprints (bank/UPI transactions)
Main Objective
Ensure every urban family gets a “Pucca House”
House with basic facilities: water, toilet, electricity
Income Categories
EWS (Economically Weaker Section): up to ₹3 lakh/year
LIG (Lower Income Group): ₹3–6 lakh/year
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MIG (Middle Income Group): ₹6–9 lakh/year

Overall Income Limit: up to ₹9 lakh/year
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Eligibility
Must live in urban area
Should not own a house (or own only one)
Includes:
Small traders, shopkeepers
Workers in unorganized sector
SHG members
Beneficiaries of schemes like PM SVANidhi, MUDRA, etc.
Must have bank/UPI transaction history:
Normally 24 months (can be reduced to 12 months)
Loan Details
For New House
Metro Cities:
Loan up to ₹35 lakh
Max project cost: ₹45 lakh
Other Cities:
Loan up to ₹25 lakh
Max project cost: ₹30 lakh
For Repair/Renovation
Metro: ₹10 lakh
Other areas: ₹6 lakh
Key Features
Credit Guarantee:
70% guarantee by NCGTC
Applicable for loans up to ₹20 lakh (EWS & LIG)
Repayment Period:
Maximum 25 years
Must finish before borrower turns 70 years
Co-applicants Allowed:
Spouse + earning children (max 4)
Kisan Credit Card (KCC) Scheme
Ministry: Ministry of Agriculture & Farmers’ Welfare
Partners: NABARD (National Bank for Agriculture and Rural Development) & MANAGE

What is KCC?
A scheme providing easy and timely loans to farmers
Helps farmers meet agriculture and related expenses
Loan can be taken whenever needed
Eligibility
204

Farmers (owner cultivators)

Key Features
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Loan Amount:
Based on cropping pattern, land size (acreage), Scale of Finance (SOF)
Interest Benefit:
Interest subvention (lower interest) for timely repayment
Validity: 5 years (with yearly review)
Annual Review:
Can lead to:
Continuation
Increase in limit
Cancellation (if performance is poor)
Collateral Rules
Up to ₹2 lakh:
No collateral required
No margin
Above ₹2 lakh:
Collateral may be required

Agri-Clinic & Agribusiness Centres Scheme (ACABC)

Ministry: Ministry of Agriculture & Farmers’ Welfare
Partners: NABARD & MANAGE (National Institute of Agricultural Extension Management)

What is ACABC?
A scheme to promote agri-entrepreneurship
Provides training + subsidy + loans to agriculture graduates
Helps set up Agri-Clinics & Agri-Business Centres
Types of Centres
1. Agri-Clinics
Provide expert advice to farmers on:
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Soil health
Cropping practices
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Plant protection
Crop insurance
Post-harvest technology
Animal care, fodder, market prices
2. Agri-Business Centres
Provide services & business support like:
Sale of seeds, fertilizers, inputs
Farm equipment hiring
Agriculture-related services
Subsidy
44% subsidy: Women, SC/ST, NE & Hill states
36% subsidy: All other categories
Eligibility
Must complete training from MANAGE
Eligible candidates include:
Agriculture graduates
Graduates in allied fields (horticulture, dairy, veterinary, etc.)
Postgraduates in agriculture
Diploma/Degree holders (with agriculture content)
12th (with agriculture, 55% marks)
Note: Retired officials → No subsidy (but can start business with own funds)
Key Features
Free Training: For agriculture graduates
Training Agency: MANAGE through Nodal Training Institutes (NTIs)
Project Cost Limit (for subsidy):
Individual: ₹20 lakh (up to ₹25 lakh in special cases)
Group Project: ₹100 lakh (minimum 5 persons)
Agriculture Infrastructure Fund (AIF
Ministry/Department: Department of Agriculture, Cooperation & Farmers’ Welfare

What is AIF?
A scheme providing long-term loans
For building post-harvest infrastructure in agriculture
Main Objective
Reduce post-harvest losses
Improve storage, transport & marketing
Help farmers get better prices
Examples of Infrastructure
Warehouses & cold storage
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Supply chain & logistics

Processing units
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Grading & packaging units

Eligible Applicants
PACS (Primary Agricultural Credit Societies)
FPOs (Farmer Producer Organizations)
Farmers
SHGs (Self Help Groups)
JLGs (Joint Liability Groups)
Cooperative societies
Agri-entrepreneurs & Startups
Government/PPP projects
Key Features
Interest Subvention:
3% interest subsidy
On loans up to ₹2 crore
Duration of Benefit: Up to 7 years
Loan Limit:
Subsidy only applicable up to ₹2 crore
Above that → no extra subsidy
Credit Guarantee:
Available under CGTMSE scheme
For loans up to ₹2 crore
Prime Minister’s Employment Generation Programme (PMEGP)
Type: Central Sector Scheme
Ministry: Ministry of Micro, Small & Medium Enterprises (MSME)
Nodal Agency: KVIC (Khadi and Village Industries Commission)
What is PMEGP?
A scheme to provide loans + subsidy
For setting up new micro-enterprises (non-farm sector)
Main Objective
Generate employment in rural & urban areas
Promote self-employment
Reduce migration from villages to cities
Key Benefits
Bank Loan + Subsidy (Margin Money)
Subsidy Rate:
15% to 35% of project cost
Project Cost Limit:
Manufacturing: up to ₹50 lakh
Service: up to ₹20 lakh
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Special Categories (SC/ST/Women/Minorities etc.):

35% (rural), 25% (urban) subsidy
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Eligibility
Any individual above 18 years
No income limit
Education Requirement
Not required for:
Manufacturing projects up to ₹10 lakh
Service projects up to ₹5 lakh
Minimum 8th pass required for higher project cost
Other Eligible Groups
Self Help Groups (SHGs)
Registered societies
Cooperative societies
Charitable trusts
Not Eligible
Existing units already taking government subsidy
Units under PMRY / REGP or other schemes
Implementation Agencies
KVIC (National level)
KVIB, DICs, Coir Board (State/District level)
Weavers Mudra Scheme (WMS)
Ministry: Ministry of Textiles
Type: Business Loan Scheme for handloom sector
What is Weaver MUDRA Scheme?
Provides financial assistance (loans) to handloom weavers
Given through:
Weaver Credit Card
Term Loan
Purpose
Support weavers with easy credit
Help in buying tools, raw materials & equipment
Improve weaving business and income
Uses of Loan
Working capital (day-to-day expenses)
Purchase of tools & equipment
Investment in plant & machinery
Eligible Applicants
Handloom weavers
Weaver entrepreneurs
Self Help Groups (SHGs)
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Joint Liability Groups (JLGs)

Handloom cooperative societies
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Producer companies/consortia of weavers

Key Features
Margin Support:
Govt provides 20% of project cost
Maximum ₹25,000
Remaining margin by borrower
Interest Rate:
Around 6% loan interest
Interest subsidy up to 7%
Collateral:
Covered under CGTMSE/CGFMU guarantee schemes
Assets are hypothecated (kept as security)
Pradhan Mantri Mudra Yojana
Pradhan Mantri Mudra Yojana (PMMY)
Launched on 8 April 2015.
Implemented by Department of Financial Services (DFS), Ministry of Finance.
Objective
Provide collateral-free loans to micro and small enterprises.
Promote self-employment and entrepreneurship.
Loan Limit
Loans up to ₹20 lakh through:
SCBs – Scheduled Commercial Banks
NBFCs – Non-Banking Financial Companies
MFIs – Micro Finance Institutions
Eligible Activities
Manufacturing sector
Trading sector
Service sector
Agriculture-allied activities
Small businesses and traditional enterprises
Loan Categories
Shishu: up to ₹50,000
Kishor: above ₹50,000 to ₹5 lakh
Tarun: above ₹5 lakh to ₹10 lakh
Tarun Plus: above ₹10 lakh to ₹20 lakh
Tarun Plus Category
Introduced in 2024-25.
For borrowers who have successfully repaid Tarun category loans.
Provides collateral-free loans up to ₹20 lakh.
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Benefits
Supports small entrepreneurs, artisans and micro businesses.
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Helps women entrepreneurs who often lack collateral or credit history.

Digital Support
Jan Samarth Portal allows applicants to apply for 15 credit-linked schemes through self or assisted mode.
PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi)
Ministry: Ministry of Housing & Urban Affairs
Type: Micro-credit (small loan) scheme
What is PM SVANidhi?
A scheme to provide small loans to street vendors
Helps them restart or expand their business after COVID-19
Main Objective
Provide affordable working capital loans
Promote self-reliance (AtmaNirbhar)
Encourage digital transaction
Key Features
Loan Amount (1st Tranche):
Up to ₹10,000 (1-year tenure)
No Collateral:
Collateral-free loan
Interest Subsidy:
7% subsidy on timely repayment
Digital Incentive:
Cashback up to ₹100/month for digital payments
Higher Loan on Repayment:
2nd loan: ₹20,000
3rd loan: ₹50,000
Eligibility
Street vendors with:
Certificate of Vending / ID card from ULB
Also eligible:
Vendors identified in survey but no ID
Vendors with Letter of Recommendation (LoR)
Vendors in peri-urban/rural areas within ULB limits
National Action for Mechanized Sanitation Ecosystem (NAMASTE)
Type: Central Sector Scheme
Ministries:
Ministry of Social Justice & Empowerment (MoSJE)
Ministry of Housing & Urban Affairs (MoHUA)

What is NAMASTE?
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A scheme to end unsafe manual sanitation work

Promotes mechanized cleaning of sewers & septic tanks
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Focus on safety, dignity & rehabilitation of workers

Eligible Beneficiaries
Manual scavengers

Septic tank & sewer workers (SSWs)

Workers in unsafe sanitation conditions
Family members/dependents (for training & support)
Identified through ULB surveys and given Occupational ID Cards
Key Benefits
1. Rehabilitation Support
One-time grant per family
2. Skill Development
Training for new jobs
₹3,000/month stipend during training
3. Subsidy for Self-Employment
For Individuals
Up to ₹5 lakh → 50% subsidy
₹5–15 lakh → ₹2.5 lakh + 25% of remaining cost
For Group Projects
Up to ₹50 lakh (max ₹10 lakh per person)
Subsidy similar to individuals
Max ₹3.75 lakh per person
4. Interest Rates
Up to ₹1 lakh → 5% (4% for women)
Above ₹1 lakh → 6%
Extra interest subsidy if bank charges higher rate
5. Repayment Period
Up to ₹5 lakh → 5 years
Up to ₹15 lakh → 7 years
Includes moratorium up to 6 months

Loan for Startups (START)

Scheme Name: START (Loan for Startups)
Under: Start-up India initiative
Target: DPIIT-recognized Startups

What is START Scheme?

Provides financial support (loans) to startups
Helps in innovation, business expansion & job creation
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Main Objective
Promote entrepreneurship & innovation
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Support scaling of startups

Boost employment & economic growth
Eligibility
Must be a DPIIT-recognized Startup
Type of Entities
Private Limited Company
LLP (Limited Liability Partnership)
Registered Partnership Firm
Conditions
Startup age ≤ 10 years
Turnover ≤ ₹100 crore
Not Eligible
HUFs
Reconstructed/split businesses
NPA/default startups
Loan Support (Nature of Assistance)
Term Loan
Working Capital (WC)
Non-fund based limits (like guarantees)
Forex hedging facilities
Key Features
Maximum Loan: Up to ₹20 crore
Credit Guarantee: Covered under CGSS (Credit Guarantee Scheme for Startups)
Margin Requirement: Minimum 25%
Pan India Scheme

Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM)

Type: Centrally Sponsored Scheme
Ministry: Ministry of Rural Development
What is DAY-NRLM?
A scheme to reduce rural poverty
Focus on forming and supporting Self Help Groups (SHGs)
Main Objective
Organize 8–10 crore rural poor households into SHGs
Provide financial & livelihood support
Improve income and quality of life
Eligible Applicants
Self Help Groups (SHGs)
Conditions
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Active for at least 6 months

Follow Panchasutras:
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Regular meetings
Regular savings
Inter-loaning
Timely repayment
Proper accounts
Must meet NABARD grading norms
Revived SHGs also eligible (active for 3 months)
Key Features
1. Financial Support
Revolving Fund
Community Investment Fund (CIF)
→ Helps SHGs build credit history
2. Loan & Interest Benefits
In 250 backward districts:
Loan up to ₹3 lakh
Interest rate: 7%
Prompt repayment benefit:
Extra 3% subsidy → effective 4% interest
In other districts:
Interest reduced to 7% through subsidy
3. Collateral Rules
No collateral or margin required up to ₹10 lakh

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Flagship Schemes and Small Savings Schemes Chapter - 31

Pradhan Mantri Jan Dhan Yojana (PMJDY)

Launched on 28 August 2014
Full Form: Pradhan Mantri Jan Dhan Yojana
Mission: National Mission for Financial Inclusion (NMFI)
Ministry: Ministry of Finance
Objective
Promote financial inclusion
Provide affordable access to:
Banking / Savings Accounts
Remittance services
Credit
Insurance
Pension
Eligibility
Must be an Indian citizen
Age:
18–59 years (for full benefits like overdraft & insurance)
Minors (10+ years) can open accounts with guardian support
Jan Dhan Account (BSBD Account)
Full Form: Basic Savings Bank Deposit (BSBD) Account
Can be opened at:
Bank branch
Bank Mitra (Business Correspondent - BC)
Zero balance account
Cheque book requires maintaining minimum balance
Key Features / Scheme Highlights
Zero Balance Account
No minimum balance required
RuPay Debit Card
Free card
Usable at ATMs
Includes accident insurance
Insurance Benefits
Accident Insurance: Up to ₹2 lakh
Life Insurance: ₹30,000 (for eligible early account holders)
Overdraft Facility
Up to ₹10,000
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Available after satisfactory operation

Earlier provision: ₹5,000 (important for prelims traps)
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Financial Inclusion Reach

66.6% accounts in rural & semi-urban areas
55.6% account holders are women
Banking Accessibility: 99.95% villages have banking within 5 km radius

Pradhan Mantri Suraksha Bima Yojana (PMSBY)

Launched in 2015
Full Form: Pradhan Mantri Suraksha Bima Yojana
Type: One-year Personal Accident Insurance Scheme
Renewable: Every year
Implemented through:
Public Sector General Insurance Companies (PSGICs)
Other approved insurers
Banks & Post Offices
Eligibility
Age: 18–70 years
Must have:
Active bank/post office account
Conditions:
Auto-debit consent mandatory
Only one account per person
Renewable every year
Coverage / Benefits
Accidental Death: ₹2 lakh paid to nominee
Total Permanent Disability: ₹2 lakh
Examples:
Loss of both eyes / both hands / both feet
One eye + one limb
Partial Permanent Disability
₹1 lakh
Example:
Loss of one eye / one hand / one foot
Natural Calamities Covered
Floods, earthquakes, storms etc.
Premium: ₹20 per year (auto-debit)
No additional charges
Coverage Period: 1 June – 31 May (1 year)
Termination Conditions
Age exceeds 70 years
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Bank account closed

Insufficient balance for premium
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Auto-debit failure

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

Launched in May 2015
Full Form: Pradhan Mantri Jeevan Jyoti Bima Yojana
Ministry: Ministry of Finance
Type: Life Insurance Scheme
Linked with Savings Bank Account
Renewable: Every year
Eligibility
Age: 18–50 years
Coverage continues up to 55 years (with annual renewal)
Must have:
Savings bank account
Auto-debit consent
Key Features
Life Insurance Cover: ₹2 lakh on death (any cause)
Risk Coverage
Covers:
Natural death
Accidental death
Premium: ₹436 per year
Auto-debited from bank account
Coverage Period: 1 June – 31 May
Implementation Through:
Public & Private Life Insurance Companies
In tie-up with banks
Enrollment
Voluntary scheme
Simple process (bank + Aadhaar linkage)

Atal Pension yojana (APY)

Launched in 2015
Full Form: Atal Pension Yojana
Regulator: PFRDA (Pension Fund Regulatory and Development Authority)
Type: Pension Scheme
Target Group: Unorganised sector workers
Eligibility
Age: 18–40 years
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Must be an Indian citizen

Must have:
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Savings bank account

Auto-debit facility
Key Features
Guaranteed Pension: ₹1,000 to ₹5,000 per month
Starts at age 60 years
Contribution: Monthly contribution (depends on age & pension chosen)
Auto-debited from bank account
Government Co-Contribution
Applicable for early subscribers: Period: 1 June 2015 – 31 March 2016
Contribution: 50% of subscriber contribution or ₹1,000/year (whichever lower)
For 5 years
Tax Benefits: Under Section 80C of Income Tax Act
Account remains active even after:
Change of job, Change of location, Nominee Facility, Nominee receives benefits after subscriber’s death

Stand Up India Scheme (SUPI)

Launched on 5 April 2016
Full Form: Stand Up India Scheme
Type: Entrepreneurship Promotion Scheme
Target Group:
SC/ST (Scheduled Castes / Scheduled Tribes)
Women entrepreneurs
Key Features
Loan Amount: ₹10 lakh to ₹1 crore
Composite loan (covers term loan + working capital)
Eligibility
Age: 18 years and above
Target:
SC/ST
Women entrepreneurs
Type of Projects
Only for Greenfield projects (first-time ventures)
Sectors:
Manufacturing
Services
Trading
Allied agriculture
Loan & Repayment
Repayment period: Up to 7 years
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Moratorium: Up to 18 months
Margin Money
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Up to 15% support (via convergence with govt schemes)

Borrower must contribute:
Minimum 10% of project cost
Implementation Through:
Scheduled Commercial Banks (SCBs)
Support Mechanism
Portal:
Stand-Up Mitra Portal ([Link])
Also linked with: JanSamarth Portal

Public Provident Fund (PPF) Scheme

Introduced in 1968
Launched by: Ministry of Finance
Through National Savings Institute (NSI)
Type: Long-term small savings scheme
Backed by Government of India (sovereign guarantee)
Objective
Encourage small savings
Provide safe investment with assured returns
Promote long-term financial security
Key Features
Tenure: 15 years
Extendable in blocks of 5 years
Interest Rate
Currently 7.1% per annum (subject to periodic revision)
Investment Limits
Minimum: ₹500 per year
Maximum: ₹1.5 lakh per year
Safety
Fully government-backed
Considered one of the safest investment options
Eligibility: Any Indian citizen
Rules:
Only one account per person
Joint accounts not allowed
Nomination facility available
Tax Benefits
Covered under:
Section 80C of Income Tax Act (ITA)
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Tax treatment:
EEE (Exempt–Exempt–Exempt)
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Investment: Tax-free
Interest: Tax-free
Maturity: Tax-free

Sukanya Samriddhi Yojana (SSY)

Launched on 22 January 2015
Part of Beti Bachao Beti Padhao (BBBP) initiative
Type: Small Savings Scheme for Girl Child
Implemented through:
Post Offices
Authorised Banks
Objective
Promote:
Welfare of girl child
Education & financial security
Address issues like:
Gender discrimination
Low participation of girls
Eligibility
Account can be opened:
In the name of a girl child
Up to 10 years of age
Only one account per girl child
Parent/guardian operates the account
Key Features
Deposit Limits
Minimum: ₹250 per year
Maximum: ₹1.5 lakh per year
Tenure
Matures after 21 years from account opening
Withdrawal Allowed for:
Higher education expenses
Partial withdrawal permitted after certain age (important concept)
Premature Closure
Allowed in case of:
Marriage after 18 years
Transfer Facility
Can be transferred anywhere in India
Tax Benefits Under:
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Section 80C of Income Tax Act

Interest:
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Tax-free (Section 10)

Status:
EEE (Exempt–Exempt–Exempt)

National Savings Certificate

Type: Fixed-income savings scheme
Launched by: Government of India
Available at: Post Offices
Target Group: Low & middle-income investors
Objective
Promote:
Savings habit
Tax saving investments
Provide safe and assured returns
Key Features
Interest Rate
Fixed interest (revised quarterly by Government)
Compounded annually
Maturity Period: 5 years
Investment Limit
No maximum limit
Minimum investment applicable (important concept)
Tax Benefits
Principal eligible under:
Section 80C (up to ₹1.5 lakh)
Interest (reinvested) also qualifies for deduction (except final year)
Premature Withdrawal
Generally not allowed
Allowed only in cases of:
Death of investor
Court order
Forfeiture by pledgee (Gazetted Officer)
Eligibility
Only Resident Indian individuals
Not eligible:
NRIs (Non-Resident Indians)
HUFs (Hindu Undivided Families)
Trusts / Companies
No age limit
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NPS Vatsalya Scheme

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Full Form: National Pension System (NPS) Vatsalya Scheme

Regulator: PFRDA (Pension Fund Regulatory and Development Authority)
Type: Contributory pension / long-term savings scheme
Target: Minors (below 18 years)
Latest Update: Guidelines issued in 2025
Objective
Promote early financial planning
Provide long-term financial security for children
Encourage retirement savings habit from an early age
Eligibility Open to:
All Indian citizens
NRI (Non-Resident Indian) / OCI (Overseas Citizen of India)
Age: Below 18 years
Account Operation
Account opened in the name of the minor
Operated by: Parent / Legal Guardian
Key Features
Contribution: Minimum: ₹250 per year and No maximum limit
Contributions can be:
Made by guardian, Gifted by relatives/friends, Pension Fund Choice
Guardian can select: Any Pension Fund registered with PFRDA
Partial Withdrawal
Allowed after 3 years
Limit: Up to 25% of own contribution (excluding returns)
Purpose: Education, Medical treatment, Disability-related needs, Withdrawal Frequency
Allowed:
Twice before 18 years
Twice between 18–21 years (subject to conditions)

Senior Citizens’ Savings Scheme

To provide senior citizens in the country a regular source of income after they turn 60 years old.
Eligibility -
Indian citizens above 60 years of age
Retirees in the age of 55-60 years who have opted for a Voluntary Retirement Scheme (VRS) or Superannuation
Retired defense personnel between 50-60 years of age.
Maturity period of five years, which can be extended for another three years.
Minimum deposit - Rs. 1,000; Maximum deposit limit increased to Rs. 30 lakhs in the Union Budget 2023-24.
Premature withdrawal is allowed after one year of opening the account.
Deposits in SCSS also qualify for deduction under Section 80-C of the Income Tax Act.
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Kisan Vikas Patra (KVP)

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Governed by the Government Savings Certificates Act 1959 (an SSI offered by India Post).
Originally launched in 1988 and relaunched in 2014.
Available to resident Indians and trusts.
Tenure - 124 months, but not fixed.
Minimum investment amount - Rs. 1,000; No upper limit.
Interest rate reviewed by the government every quarter.
Mahlia Samman Savings Certificate
A one-time new small savings scheme for women or girls
Available for a two-year period up to March 2025
Deposit facility up to Rs 2 lakh (fixed interest rate of 7.5%)
Partial withdrawal option

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Non-Banking/Economic Government Schemes Chapter - 32

Pradhan Mantri Ujjwala Yojana

Pradhan Mantri Ujjwala Yojana (PMUY) – 9 Years of Clean Energy Empowerment
Launched: May 2016
Completion of 9 Years: 1st May 2025
Objective:
To provide deposit-free LPG connections to adult women from poor households.
Replace traditional cooking fuels (e.g., firewood, cow-dung cakes) with clean LPG, promoting:
Health
Environmental sustainability
Women empowerment
Ujjwala 2.0 – Expanding the Reach
Launched: August 2021
Aim: To cover remaining poor households not covered under the original PMUY.
Key Milestones:
Target: 1 crore additional PMUY connections
Achieved: January 2022
Special Provision:
For migrant families:
Can avail new LPG connection via self-declaration,
No need for Proof of Address or Ration Card
As on 1st March 2025, the total number of active domestic LPG consumers in India stands at 32.94
crore, including 10.33 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY).
Support for Marginalized Individuals for Livelihood and Enterprise
SMILE Scheme
(Support for Marginalized Individuals for Livelihood and Enterprise)
Launched by: Ministry of Social Justice and Empowerment
Launch Date: 12 February 2022
The Ministry has allocated Rs. 365 Crore for the scheme from 2021-22 to 2025-26.
Objective:
To provide comprehensive rehabilitation and welfare support for:
Transgender persons
Persons engaged in the act of begging
Sub-Schemes under SMILE:
Central Sector Scheme for Comprehensive Rehabilitation for Welfare of Transgender Persons
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Central Sector Scheme for Comprehensive Rehabilitation of Persons Engaged in the Act of Begging
Key Features:
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Focus on rehabilitation, medical facilities, counseling, education, skill development, and economic
empowerment
Implementation with support from:
State Governments/UTs
Local Urban Bodies
Voluntary Organizations
Community Based Organizations (CBOs)
Other relevant institutions
Goal: To ensure social inclusion, dignified life, and sustainable livelihood for marginalized groups.

UDAN Scheme
UDAN Scheme – "Ude Desh ka Aam Nagrik"
Launched on: October 21, 2016
First Flight: April 27, 2017 (Shimla to Delhi)
8 Years Completed: April 27, 2025
Implemented by: Ministry of Civil Aviation
Part of: National Civil Aviation Policy (NCAP) 2016
Objective:
Make air travel affordable and accessible for the common citizen
Enhance regional air connectivity, especially in Tier-2 and Tier-3 cities
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Fulfill the vision: “Even a person wearing slippers should be able to fly”
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SVAMITVA
SVAMITVA:
Survey of Villages and Mapping with Improvised Technology in Village Areas (SVAMITVA)
Central sector scheme
Launched in 2020
It was launched with a vision to enhance the economic progress of rural India by providing ‘Record of
Rights’ to households possessing houses in inhabited areas in villages through the latest surveying
drone technology.
The Ministry of Panchayati Raj (MoPR) is the Nodal Ministry for implementation of the scheme.

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Sugamya Bharat Abhiyan

Sugamya Bharat Abhiyan, also known as the Accessible India Campaign, is celebrating its 9th
anniversary 3rd December 2024
It is a transformative initiative aimed at creating an accessible and inclusive India for persons with
disabilities.
This campaign focuses on improving infrastructure, transportation, and public spaces to make them
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more accessible
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All 35 international airports and 55 out of 69 domestic airports are equipped with ramps, accessible
toilets, helpdesks, lifts with Braille and auditory systems, along with aerobridges at international and
customs airports.

Beti Bachao Beti Padhao (BBBP)

Ministry: Ministry of Women & Child Development implements BBBP
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It was launched in Panipat, Haryana (2015).

BBBP is a centrally sponsored scheme with 100% funding from the central government under the
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Sambal vertical of Mission Shakti

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Aim: Improve SRB, eliminate gender-biased sex selection, and empower girls.

Pradhan Mantri Poshan Shakti Nirman (PM POSHAN)

PM Poshan Shakti Nirman Scheme
Earlier known as: Mid-Day Meal Scheme
Type: Centrally Sponsored Scheme
Implemented by Ministry of Education
Coverage
Provides one hot cooked meal per school day
Beneficiaries:
Balvatika (pre-primary)
Classes 1 to 8
Covers:
Government schools
Government-aided schools
No discrimination:
Gender
Social class
Nutritional Norms
Balvatika & Primary
Pulses: 20g
Vegetables: 50g
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Oil: 5g
Upper Primary
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Pulses: 30g
Vegetables: 75g
Oil: 7.5g
Price & Inflation Tracking
Done by Labour Bureau
Uses:
CPI-RL (Consumer Price Index for Rural Labourers)
Data collected from:
600 villages in 20 states
Funding Pattern
60:40 → Centre : States/UTs (with legislature)
90:10 → North-East & Himalayan states
100% → UTs (without legislature)

UJALA
UJALA Scheme – Unnat Jyoti by Affordable LEDs for All
Launched On: 5th January 2015
Launched By: Prime Minister Narendra Modi
Original Name: Domestic Efficient Lighting Programme (DELP)
Rebranded As: UJALA
Implementing Bodies
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Energy Efficiency Services Limited (EESL)

DISCOMs
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Under the Ministry of Power

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Key Objectives
Promote energy-efficient lighting solutions (LED bulbs, tube lights, fans).
Make affordable energy-saving technologies accessible to Indian households.
Reduce high electrification costs.
Cut down carbon emissions.
Smart Cities Mission
Smart Cities Mission (SCM)
Launched On: 25th June 2015
Launched By: Prime Minister Narendra Modi
Coverage: 100 cities selected across India
Mission Objectives
Enhance quality of life in cities through:
Smart, sustainable, and inclusive solutions
Efficient services and robust infrastructure
Economic growth, social development, and environmental sustainability
Transform urban spaces into adaptable, model cities addressing:
Housing, Transport, Education, Healthcare, Recreation
Pradhan Mantri Matru Vandana Yojana
Pradhan Mantri Matru Vandana Yojana (PMMVY)
Launch & Implementation
Launched: 1st January 2017.
Nodal Ministry: Ministry of Women and Child Development.
Part of Mission Shakti (umbrella programme for women’s empowerment).
Aim of the Scheme
Provide maternity benefit to improve maternal and child health outcomes.
Ensure women get financial support during pregnancy & post-delivery, allowing:
Better nutrition.
Proper rest.
Time for exclusive breastfeeding during first 6 months.
Umbrella & Sub-Scheme
Part of Mission Shakti (Government of India’s umbrella programme for women’s empowerment).
Comes under the Samarthya sub-scheme → focuses on economic empowerment & holistic development
of women.
Legal Backing: Provides benefits to pregnant and lactating women under the National Food Security Act
(NFSA), 2013.
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Evolution of the Scheme

PMMVY 1.0 (2017)
Launched: 1 January 2017.
Target group: Pregnant women & lactating mothers for their first living child.
Cash incentive: ₹5,000 in 3 instalments (linked with antenatal care, institutional delivery, and child
immunization).
PMMVY 2.0 (April 2022 onwards)
Extended coverage to:
First living child (as before).
Second living child, if girl → to promote girl child & improve Sex Ratio at Birth (SRB).
Strengthens linkages with Mission Shakti institutional mechanisms at national, state & district levels.

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PM Viksit Bharat Rozgar Yojana (PM-VBRY)’

PM Viksit Bharat Rozgar Yojana (PM-VBRY)
Launch Date: Comes into effect from 1st August 2025
Formerly Known As: Employment Linked Incentive (ELI) Scheme
Objective: Promote inclusive and sustainable employment under the Viksit Bharat initiative
Scheme Overview
Total Outlay: ₹99,446 crore
Job Creation Target: 3.5 crore jobs over 2 years (Aug 2025 – July 2027)
Includes 1.92 crore first-time employees
Eligible Period for Job Creation: 1st August 2025 – 31st July 2027
Scheme Structure
Part A – Incentive to First-Time Employees
Target Group: First-time EPFO-registered employees
Eligibility: Salary up to ₹1 lakh/month
Benefit: One-month EPF wage (up to ₹15,000), in two installments
1st installment: After 6 months of continuous service
2nd installment: After 12 months of service and completion of a financial literacy program
Mode of Payment: DBT via Aadhar Bridge Payment System (ABPS)
Part B – Support to Employers
Target Group: Employers hiring additional employees
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Eligibility Criteria:
Salary cap: ₹1 lakh/month
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Minimum hiring requirement:

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At least 2 additional employees (for firms with < 50 workers)

At least 5 additional employees (for firms with ≥ 50 workers)
Employment must be sustained for at least 6 months
Incentive: Up to ₹3,000/month per employee for 2 years
For manufacturing sector, incentives will also be extended for 3rd and 4th years
Mode of Payment: Direct credit to PAN-linked bank accounts of employers
Startup India
Startup India – 9 Years (2016–2025)
Observed as: National Startup Day – January 16, 2025
Marks 9 years of the Startup India initiative launched in 2016

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Insurance : Introduction : History of Insurance in India Chapter - 33

Introduction to Insurance
Definition: Insurance is a promise of compensation for specific future potential losses in exchange for a
periodic payment (premium).
Purpose: Protects the financial well-being of individuals, companies, or entities against unexpected
losses.

History of Insurance in India

1818 – Oriental Life Insurance Company established in Calcutta (first life insurance company in India).
1829 – Madras Equitable began life insurance business in Madras Presidency.
1850 – Triton Insurance Company Ltd (first general insurance company) established in Calcutta.
1870 – British Insurance Act enacted.
Bombay Mutual (1871), Oriental (1874), Empire of India (1897) established in Bombay Presidency.
1907 – Indian Mercantile Insurance Ltd set up (first to transact all classes of general insurance).
1912 – Indian Life Assurance Companies Act (first statutory measure regulating life insurance).
1928 – Indian Insurance Companies Act enacted (collection of statistics on life & non-life business of
Indian and foreign insurers).
1938 – Insurance Act amended with comprehensive provisions for protecting policyholders and
controlling insurers.
1956 – Life insurance sector nationalised.
1957 – General Insurance Council framed a code of conduct for fair business practices.
1968 – Insurance Act amended (investment regulations, minimum solvency margins, Tariff Advisory
Committee set up).
Insurance Reforms
1993 – Government set up RN Malhotra Committee (former RBI Governor as Chairman) to recommend
reforms.
1994 – Committee submitted its report with key suggestions:
Private sector to be allowed entry.
Foreign companies may enter via joint ventures with Indian partners.
1999 – Insurance Regulatory and Development Authority (IRDA) constituted as an autonomous body to
regulate and develop the industry.

IRDAI
Nature: Independent and autonomous statutory body.
Incorporated: April 2000.
Constituted under: Insurance Regulatory and Development Authority Act, 1999.
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Jurisdiction: Regulates the insurance industry in India.

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Foreign investment: Permitted up to 49% in insurance companies.

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Regulatory Power: Can frame regulations under Section 114A of the Insurance Act, 1938.
Since 2000, has issued regulations on:
Registration of companies,
Protection of policyholders’ interests,
Conduct of insurance business.
Functions of IRDAI (Section 14, IRDAI Act, 1999)
Registration & Licensing
Issue, renew, modify, suspend, withdraw or cancel certificates of registration.
Policyholder Protection
Safeguard policyholders’ interests in:
Assignment of policy,
Nomination,
Settlement of claims,
Surrender value,
Other contract terms.
Inspection & Regulation
Call for information,
Conduct inspections, audits, enquiries & investigations of insurers and intermediaries.
Regulation of General Insurance
Control & regulate rates, terms and conditions of general insurance (except where Tariff Advisory
Committee regulates).
Qualification & Training
Specify qualifications, code of conduct, training requirements for agents and intermediaries.
Financial Regulation
Regulate investment of funds by insurers.
Maintain solvency margins of companies.
Supervision: Supervise the Tariff Advisory Committee.
Dispute Resolution: Adjudicate disputes between insurers and intermediaries.
Promotion of Professional Bodies: Specify % of premium income to fund professional insurance
organisations.
Rural & Social Sector Obligations: Specify % of life and general insurance business to be undertaken in
rural/social sector.

Life Insurance Company (Public Sector)

Establishment:
Only public sector life insurance company in India.
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Parliament of India passed the Life Insurance Corporation Act on 19 June 1956.
LIC was created on 1 September 1956.
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Initial capital contribution: ₹5 Crore from the Government of India.

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Objectives
To spread life insurance widely, especially in rural areas.
To cover all insurable persons in the country.
To provide adequate financial cover at a reasonable cost.
Organisational Setup (in 1956)
8 Zonal Offices
113 Divisional Offices
General Insurance (Public Sector) in India
General Insurance (Public Sector) in India
Nationalisation of General Insurance
General Insurance Business (Nationalisation) Act, 1972 (GIBNA) → Nationalised the general insurance
business in India.
General Insurance Corporation of India (GIC):
Formed under Section 9(1) of GIBNA.
Incorporated on 22 November 1972 under the Companies Act, 1956.
Established to superintend, control, and carry on general insurance business.
After a process of mergers among Indian insurance companies, four companies were left as fully owned
subsidiary companies of GIC:
National Insurance Company Ltd.
New India Assurance Company Ltd.
Oriental Insurance Company Ltd.
United India Insurance Company Ltd.
In 2000, IRDA Act amendments ended GIC’s supervisory role → GIC became the Indian Reinsurer.
GIC Subsidiary
GIC Re South Africa Ltd – First 100% owned subsidiary, operational from 1 Jan 2015 in Johannesburg.
Public Sector General Insurance Companies

1. Oriental Insurance Company Ltd.

Incorporated: 12 September 1947 in Bombay.
Initially a wholly owned subsidiary of Oriental Government Security Life Assurance Co. Ltd.
Specialises in large projects insurance: power, petrochemical, steel, chemical plants.
Network: 31 Regional Offices + overseas operations in Nepal, Kuwait, Dubai.

2. United India Insurance Company Ltd.

Incorporated: 18 February 1938.
After nationalisation: 12 Indian companies + 4 cooperative societies + 5 foreign insurers (Indian
239

operations) + LIC’s southern general insurance operations merged with it.

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3. New India Assurance Company Ltd.

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Founded: 1919 by Sir Dorabji Tata.

First overseas office: 1920 in London.
Overseas presence: Representative office in Yangon (Myanmar).
Co-promoter of:
Agricultural Insurance Company of India
GIC Housing Finance Ltd.
Health India TPA Insurance Services Ltd. (with other PSUs).

4. National Insurance Company Ltd. (NIC)

Oldest general insurance company in India.
Incorporated: 5 December 1906.
First Indian insurer to form strategic alliances with major auto companies like Maruti & Hero MotoCorp.
Agriculture Insurance Company of India Ltd. (AICIL)
Incorporated: 20 December 2002, operations from 1 April 2003.
Authorised Share Capital: ₹1500 Crores
Paid-up Share Capital: ₹200 Crores
Shareholding Structure:
GIC – 35%
NABARD – 30%
NIC, New India Assurance, Oriental Insurance, United India Insurance – 8.75% each.

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Types of Insurance in India Chapter - 34

1. Life Insurance
Definition: A contract promising lump sum payment to nominees on the death of the policyholder.
Exclusions: Death due to alcohol/drug abuse, war, terrorism, suicide, gross negligence.

2. General Insurance
Covers all losses except death.
Examples: house, car, health, travel.

3. Health Insurance
Definition: Covers medical/surgical expenses due to illness or injury; offers cashless treatment or
reimbursement.
Types:
Individual Health Insurance – covers one person.
Family Health Insurance – covers all family members under one policy.
Senior Citizen Health Insurance – for age 60–65 years.
Exclusions: War, terminal illnesses, cosmetic surgery, dental/eye surgery, pre-existing conditions during waiting
period, non-allopathic therapies, unconfirmed diagnostic charges.

4. Motor Insurance
Mandatory in India for vehicles.
Types:
Car Insurance – covers accidental loss/damage to own car/third party.
Comprehensive Car Insurance – covers all damages and liabilities.
Third Party Insurance – covers only third-party damages/injuries.
Covered Risks: Riot, strike, fire, burglary, terrorism, earthquake, landslide, flood, storm, cyclone.
Exclusions: Driving under influence, illegal activities, invalid license, damage outside India.

5. Travel Insurance
Covers financial losses due to medical/non-medical emergencies during travel.
Types:
Single Trip – covers a trip under 180 days.
Annual Multi-Trip – covers multiple trips in a year.
Covered Risks: Loss of baggage, medical emergencies, passport loss, hijacking, delayed flights, trip cancellation.
Exclusions: Travel against physician advice, baggage delay <24 hours, psychological illness, war, hazardous
sports.

6. Home Insurance
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Covers damage to home due to natural/man-made risks.

Types:
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Standard Fire & Special Perils Policy – natural and man-made disasters.

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Home Structure Insurance – protects structure and permanent fixtures.

Public Liability Coverage – compensates damage to others’ property.
Content Insurance – covers household contents.
Exclusions: Wilful demolition, wear & tear, nuclear war, cash loss, electronic equipment damage due to overuse.

7. Fire Insurance
Covers damage to property/goods due to fire.
Types: Valued, Floating, Comprehensive, Specific, Valuable policies.
Covered Risks: Lightning, explosion, aircraft damage, terrorism, riot, natural disasters, water tank overflow.

8. Marine Insurance
Covers cargo, ships, terminals, and transport during transit.
Types:
Cargo Insurance – freight loss/damage.
Hull Insurance – damage to boats/ships.
Liability Insurance – legal claims from injuries/damage.
Policy Forms: Time Insurance, Voyage Policy, Valued Policy, Mixed Policy, Port Risk Policy, Wager Policy.

9. Critical Illness Insurance

Provides lump sum payment on diagnosis of critical illnesses (cancer, heart attack, paralysis, etc.).

10. Trade Credit Insurance

Covers payment risk from delivery of goods/services due to insolvency, political risks, or default.

11. Flood Insurance

Covers water damage due to flooding.
May require separate rider for sewer backup.

12. Personal Accident Insurance

Covers medical costs, accidental death, permanent/temporary disablement.
Includes: hospital cash, ambulance, repatriation, broken bones, burns, family transport, education/loan
protection, adaptation allowance.

13. Crop Insurance

Covers loss of crop yield or revenue.
Types:
Crop Yield Insurance – protects expected harvest volume.
Crop Revenue Insurance – protects expected revenue due to market price fluctuations
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Types of Life Insurance Plans

1. Term Life Insurance Policy
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Provides death risk cover for a specified period.

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Pay-out: Lump sum to nominee if life assured dies during policy term.
No pay-out if life assured survives the term (except TROPS – Term Plan with Return of Premium).
Types:
Level Term – Constant premium & death benefit.
Decreasing Term – Premium constant, death benefit decreases (e.g., mortgage redemption).
Increasing Term – Coverage & premium increase over time.
Benefits: High coverage at low premium, optional rider benefits, flexible payout, tax benefits under Section
80C.

2. Endowment Policy
Dual benefit: Life coverage + maturity benefit if insured survives.
Rider benefits: Critical illness, accidental death, waiver of premium.
Bonus: Terminal bonus and reversionary bonus.
Tax benefit: Section 80C.

3. Money Back Policy

Pays periodic survival benefits during policy tenure.
Remaining sum assured + bonuses on maturity.

4. Retirement Plan
Combines investment + insurance.
Regular contributions accumulate over tenure.
Benefits: Tax deduction up to ₹1.5 Lakh under 80C, monthly pension after vesting age.

5. Unit Linked Insurance Plan (ULIP)

Insurance + investment: Cash value varies with net asset value (NAV) of chosen funds.
Types based on risk:
Equity Funds – High risk
Income/Bond Funds – Medium risk
Cash Funds – Low risk
Balanced Funds – Mix of equity & fixed-income
Types based on death benefit:
Type I – Higher of sum assured or fund value
Type II – Sum assured + fund value
Benefits: Fund switching, partial withdrawals (after 5 years), tax benefits, minimum mortality & health
cover.
ULIP Charges: Premium allocation, mortality, fund management (max 1.35% p.a.), policy administration,
partial withdrawal, fund switching, premium redirection, surrender charges.
Loans: Max 40–50% of net asset value depending on equity/debt ratio.
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6. Whole Life Insurance Policy

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Life coverage until death (maturity age usually 100).

Pay-out: Sum assured to nominee if death occurs before maturity.
Tax benefits and loans available.

7. Child Plan
Insurance + investment to build corpus for child’s education/marriage.
Provides sum assured to child if insured dies.

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Principles of Insurance Chapter - 35

1. Principle of Utmost Good Faith (Uberrimae Fidei)

Both parties (insurer and insured) must disclose all material facts, whether asked or not.
No fraud, non-disclosure, or misrepresentation is allowed.

2. Principle of Indemnity
The insured is compensated for the actual loss, not exceeding the policy amount.
Ensures the insured is restored financially, but cannot profit from insurance.

3. Principle of Insurable Interest

The insured must benefit from the existence of the subject matter.
There is loss if death or damage occurs to the insured subject.

4. Principle of Causa Proxima (Proximate Cause)

The insurer is liable only for loss caused directly by the peril insured against.
The proximate cause is the main, natural, unbroken cause of the loss.

5. Principle of Mitigation of Loss

The insured must take all reasonable steps to minimize loss, even if the property is insured.

6. Principle of Subrogation
After compensation, the right to the damaged property passes to the insurer.
Applied mainly in fire and marine insurance.
Derived from the principle of indemnity.

7. Principle of Contribution
If multiple insurers cover the same risk, each insurer pays proportionally to the insured sum.
If one insurer pays the full loss, they can claim contribution from others.
Also derived from the principle of indemnity.
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Insurance Terms

• Accidental Death Benefit & Dismemberment – Additional payout if policyholder dies or loses
limb/sight due to accident.
• Actuaries – Experts in economics, statistics, and mathematics who assess risk and calculate
premiums.
• Actual Cash Value – Market value of damaged property immediately before loss.
• Affirmative Warranty – Statement by insured verifying certain facts relevant to policy issuance.
• Annualized Premium Equivalent (APE) – Sum of annualized regular premiums + 10% of first
single premiums.
• Arbitration – Settlement of a claim dispute by a third-party agreement.
• Assignor & Assignment – Assignor transfers contract rights to an assignee; assignment can be
conditional or absolute.
• Bancassurance – Selling insurance products through banks in partnership with insurers.
• Business Insurance – Covers loss to a business due to key employee disability or death.
• Capital Asset Pricing Model (CAPM) – Model describing relationship between expected risk and
return for assets.
• Coinsurance – Percentage of claim the insured must pay after meeting deductible (e.g., insurer
pays 80%, insured 20%).
• Collision Coverage – Pays for vehicle damages from collisions with another vehicle/object.
• Concealment – Hiding material facts from the insurer, intentionally or unintentionally.
• Contingent Beneficiary – Receives policy proceeds if the primary beneficiary dies
simultaneously with insured.
• Credit Wrap – Financial guarantee insurance covering a specific debt or financial transaction.
• Defeasance – Extent of bondholder risk; fully defeased → full risk of principal & interest.
• Deferment Period – Period between subscription and first pension installment in insurance-
cum-pension plan.
• Embezzlement – Fraudulent taking of property/money entrusted to one’s care.
• Estoppel – Legal principle preventing a party from contradicting prior actions if relied upon by
others.
• Franchise Insurance – Individual policies for employees/members under collective
arrangement.
• Facultative Reinsurance – Reinsurer can accept or reject individual risks offered by insurer.
• Grace Period – Extra time after premium due date to pay without policy lapse.
• Indemnity – Compensation for loss suffered by insured.
• Keyman Insurance – Life insurance on a key employee critical to a business.
• Lapsed Policy – Policy terminated due to non-payment of premiums.
• Life Annuity – Insurance product providing lifetime payments after retirement.
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• Mutual Fund – Investment company pooling funds to buy securities.

• Moral Hazard – Risk factors affecting insurer’s decision to accept risk.
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• Occurrence Policy – Covers claims for incidents occurring during policy period, irrespective of
claim timing.
• Perils – Specific risks causing loss (fire, theft, flood).
• Penetration Rate – Ratio of total insurance premiums to GDP; indicates sector development.
• Policyholder – Purchaser and owner of policy; may not be the insured.
• Reinstatement – Restoration of lapsed policy by paying overdue premiums.
• Reinsurance – Insurance for insurers; reinsurer takes on part/all of insurer’s risk for a
premium.
• Retention Limit – Maximum risk retained by insurer; excess ceded to reinsurer.
• Surrender Value – Amount paid to policyholder if policy is terminated before maturity.
• Survival Benefit – Instalments paid to policyholder under a money-back policy.
• Subrogation – Insurer’s right to claim against third parties after compensating insured.
• Unearned Premiums – Premium collected for future coverage not yet provided.
• Usual, Reasonable & Customary (URC) – Maximum amount insurer will pay for covered medical
expenses.
• Vesting Age – Age at which pension payments begin in insurance-cum-pension plan.
• Whole Life Coverage – Coverage lasting for insured’s entire life, given all premiums are paid.

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Practice Questions
1. The Imperial Bank of India came into existence ● In the first phase of bank nationalisation in
in 1920 by merging which of the following India, fourteen major commercial banks were
institutions? nationalised in July 1969.
निम्ननिखित में से निस संस्था िे नििय से 1920 में इं पीररयि ● This policy decision was taken by the
बैंि ऑफ इं निया अखित्व में आया? Government of India to align banking
operations with national priorities such as
(a) Bank of Bengal, Bank of Bombay and Bank of
agricultural development, small industry
Madras
growth, and financial inclusion.
(b) Punjab National Bank, Allahabad Bank and
● The nationalised banks were selected based on
Bank of Baroda
having deposits exceeding ₹50 crore.
(c) Reserve Bank of India and Presidency Banks
● Nationalisation expanded branch networks in
(d) State Bank of India and Associate Banks
rural areas, increased credit flow to priority
(e) Central Bank of India and Bank of India sectors, reduced concentration of economic
Answer: A power, and strengthened public sector
Explanation dominance in the Indian banking system
● The Imperial Bank of India was formed in during the post-independence era.
1921 through the amalgamation of the three 3. Which expert panel, constituted in the backdrop
Presidency Banks, namely the Bank of of the 1991 economic reforms, laid the foundation
Bengal, the Bank of Bombay, and the Bank for liberalisation and structural restructuring of
of Madras. India’s banking system through its
● These banks had been established during recommendations?
British rule to serve regional commercial 1991 िे आनथिि सुधार ं िी पृष्ठभूनम में गनित निस निशेषज्ञ
interests in their respective presidencies. पैिि िे अपिी नसफाररश ं िे माध्यम से भारत िी बैंनिंग
● Their merger created a large, centralized प्रणािी िे उदारीिरण और संरचिात्मि पुिगििि िी िींि
banking institution with nationwide presence.
रिी?
● The Imperial Bank performed key functions
(a) Bimal Jalan Committee
such as commercial banking, government
(b) Urjit Patel Committee
banking, and limited central banking roles until
(c) M. Narasimham Committee
1955, when it was reconstituted as the State
(d) Vaghul Committee
Bank of India Act.
(e) Rangarajan Committee
2. How many commercial banks were nationalized
Answer: C
in the first phase of bank nationalization in 1969?
Explanation
1969 में बैंि राष्ट्रीयिरण िे पहिे चरण में नितिे
● The M. Narasimham Committee, set up in
िानणखिि बैंि ं िा राष्ट्रीयिरण निया गया था? 1991 against the backdrop of India’s economic
(a) 10 reforms, played a pivotal role in shaping the
(b) 12 liberalisation and structural restructuring of
(c) 14 the Indian banking system.
(d) 16 ● Headed by former RBI Governor M.
(e) 20 Narasimham, the committee examined the
Answer: C weaknesses of the existing banking framework
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Explanation and recommended wide-ranging reforms.

● Its suggestions included reducing statutory
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pre-emptions, improving asset quality through

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prudential norms, strengthening capital निणिय—निसे आि क्षेत्रीय ग्रामीण बैंि िे रूप में िािा िाता
adequacy, enhancing operational autonomy of है —निस िषि में िागू निया गया था?
banks, and promoting competition.
(a) 1969
● These recommendations laid the foundation (b) 1971
for a more efficient, resilient, and market- (c) 1975
oriented banking system in India. (d) 1980
4. Which among the following banks holds the (e) 1991
historic distinction of being the first banking Answer: C
institution in India to be established and
Explanation
administered exclusively by Indians, without
● Regional Rural Banks (RRBs) were introduced
European management influence?
in India to strengthen the institutional credit
निम्ननिखित में से निस बैंि ि यह ऐनतहानसि गौरि प्राप्त framework in rural and semi-urban areas.
है नि िह भारत िा पहिा बैंनिंग संस्थाि है निसिी स्थापिा ● Conceptualised following banking reform
और प्रशासि पूरी तरह से भारतीय ं द्वारा निया गया था, और recommendations, the first RRB, Prathama
निसमें यूर पीय प्रबंधि िा ि ई प्रभाि िहीं था? Bank, commenced operations on 2 October
(a) Allahabad Bank 1975.
(b) Bank of India ● RRBs were later governed under the Regional
(c) Central Bank of India Rural Banks Act, 1976. These banks are
(d) Punjab National Bank jointly owned by the Central Government, State
(e) Canara Bank Governments, and sponsoring commercial
Answer: D banks.
Explanation ● Their primary objective is to extend affordable
● Punjab National Bank (PNB) holds the banking, credit, and financial services to small
historic distinction of being the first banking farmers, artisans, rural entrepreneurs, and
institution in India established and weaker sections, thereby reducing regional and
managed entirely by Indians, without any social financial imbalances.
European control or management involvement. 6. Which of the following entities would NOT
● Founded in 1894 in Lahore, PNB was a qualify as a Non-Banking Financial Company
milestone in the development of indigenous (NBFC) even if it is registered under the
banking. Companies Act, 2013?
● It symbolised economic self-reliance during the निम्ननिखित में से िौि सी एं नििी िॉि-बैंनिंग फाइिेंनशयि
colonial period and played a crucial role in िंपिी (NBFC) िे तौर पर य ग्य िहीं ह गी, भिे ही िह
mobilising Indian capital and supporting िंपिी एक्ट, 2013 िे तहत रनिस्टिि ह ?
Indian enterprise, distinguishing it from earlier (a) A company primarily engaged in providing
banks that operated under significant loans and advances
European influence. (b) A company mainly involved in leasing and hire-
5. The policy decision to create a distinct category purchase activities
of banks aimed at strengthening institutional (c) A company whose principal business is the
credit delivery in rural India—known today as purchase and sale of government securities
Regional Rural Banks—was implemented in which (d) A company primarily engaged in agricultural
year? activities
252

ग्रामीण भारत में संस्थागत ऋण नितरण ि मिबूत िरिे िे (e) A company acquiring shares and debentures as
उद्दे श्य से बैंि ं िी एि अिग श्रेणी बिािे िा िीनतगत its core business
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Answer: D

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Explanation ● Emergence of NBFCs in India: NBFCs began

A Non-Banking Financial Company (NBFC) is a operating as financial intermediaries before a
company registered under the Companies Act, formal regulatory framework was in place.
1956 or 2013 that carries out financial activities ● Inclusion of NBFCs under the RBI Act, 1934:
as its principal business, such as: NBFCs were brought under RBI’s regulatory
● Providing loans and advances purview through amendments, strengthening
● Acquisition of shares, stocks, bonds, supervision.
debentures, or other marketable securities ● Recommendation of uniform chit fund
● Leasing and hire-purchase operations legislation: To address risks and
inconsistencies in the chit fund sector, uniform
However, even if registered under the Companies
legislation was recommended.
Act, a company is not classified as an NBFC if its
principal business is: ● Chakravarty Committee: Evaluation of
banking–NBFC interlinkages
● Agricultural activities
8. Despite being regulated by the Reserve Bank of
● Industrial activities
India, Non-Banking Financial Companies (NBFCs)
● Purchase or sale of goods (other than
are not accorded bank status primarily due to
securities)
which of the following operational limitations?
● Provision of non-financial services
ररज़िि बैंि ऑफ़ इं निया द्वारा रे गुिेि निए िािे िे बाििूद,
● Sale, purchase, or construction of immovable
िॉि-बैंनिंग फाइिेंनशयि िंपनिय ं (NBFCs) ि मुख्य रूप
property
से इिमें से निस ऑपरे शिि निनमिे शि िी ििह से बैंि िा
7. Arrange the following developments in the
correct chronological order: दिाि िहीं नदया िाता है ?
1. Emergence of NBFCs in India (a) Absence of RBI regulation
(b) Inability to issue cheques drawn on themselves
2. Recommendation of uniform chit fund
(c) Charging relatively higher interest rates on
legislation
loans
3. Inclusion of NBFCs under the RBI Act, 1934
(d) Concentration on niche customer segments
4. Chakravarty Committee (e) Offering a comparatively narrower range of
Select the correct answer using the code below: financial products
निम्ननिखित घििाओं ि सही िािािुक्रनमि क्रम में Answer: B
व्यिखस्थत िरें : Explanation
1. भारत में एिबीएफसी िा उदय Although NBFCs are regulated by the RBI under
2. यूनिफॉमि नचि फंि िािूि िी नसफाररश the RBI Act, 1934, they are not granted bank
status because they cannot accept demand
3. एिबीएफसी ि भारतीय ररििि बैंि एक्ट, 1934 िे
deposits and are excluded from the payment
तहत शानमि िरिा and settlement system. A direct consequence of
4. चक्रिती सनमनत this exclusion is their inability to issue cheques
िीचे नदए गए ि ि िा उपय ग िरिे सही उत्तर चुिें: drawn on themselves, which is a core banking
function governed by the Banking Regulation Act,
(a) 1 – 2 – 3 – 4
1949.
(b) 1 – 3 – 2 – 4
(c) 2 – 1 – 3 – 4 This operational limitation prevents NBFCs from
(d) 1 – 2 – 4 – 3 acting as payment intermediaries, clearly
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(e) 3 – 1 – 2 – 4 distinguishing them from banks, which facilitate

cheque-based transactions and allow deposits
Answer: B
withdrawable on demand.
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Explanation

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9. A company registered as an NBFC extends credit (c) Nature of deposits mobilised by the entity
for education, housing and working capital, but (d) Sectoral distribution of its loan portfolio
does not mainly invest in securities or finance (e) Registration status with the Reserve Bank of
specific asset purchases. It will be categorised as: India
एि िंपिी ि NBFC िे तौर पर रनिस्टिि है , िह नशक्षा, Answer: A
हाउनसंग और िनििंग िैनपिि िे निए क्रेनिि दे ती है , िेनिि Explanation
मुख्य रूप से नसक्य ररिीि में नििेश िहीं िरती या िास Under RBI regulations, a Non-Banking Financial
एसेि िरीदिे िे निए फाइिेंस िहीं िरती। इसे इस िैिे गरी Company is classified as Systemically Important
में रिा िाएगा: mainly on the basis of its asset size, as reflected in
its latest audited balance sheet.
(a) Asset Finance Company
Non-deposit taking NBFCs with total assets of
(b) Investment Company
₹500 crore or more are designated as NBFC-ND-
(c) Loan Company
SI, since their scale of operations can pose
(d) Core Investment Company
systemic risks to the financial system.
(e) Infrastructure Finance Company
● This classification is not based on the nature of
Answer: C
deposits, type of activity, sectoral loan
Explanation exposure, or mere registration status.
NBFCs are classified by the RBI based on their ● NBFCs below this asset threshold are treated
principal business activity. as Non-Systemically Important and are
A company that provides general-purpose subject to relatively lighter regulatory norms.
credit—such as education loans, housing loans,
11. Which of the following categories is exempted
and working capital finance—without primarily
from compulsory registration as an NBFC with RBI
financing specific physical assets or investing in
due to regulation under the securities market
securities is categorised as a Loan Company.
framework?
● Loan Company (LC): At least 50% of assets
निम्ननिखित में से िौि सी िैिे गरी नसक्य ररिीज़ मािेि
and income are from loans and advances not
linked to the acquisition of specific assets. फ्रेमििि िे तहत रे गुिेशि िे िारण RBI िे साथ NBFC िे
● Asset Finance Company: Focuses on financing तौर पर अनििायि रनिस्टर े शि से छूि प्राप्त है ?
tangible assets like machinery or vehicles (not (a) Core Investment Companies
applicable here). (b) Infrastructure Finance Companies
● Investment Company / Core Investment (c) Alternative Investment Funds
Company: Primarily invest in shares and (d) Housing Finance Companies
securities (excluded). (e) NBFC–Micro Finance Institutions
● Infrastructure Finance Company: Specialised Answer: C
lending to infrastructure projects only. Explanation
10. The classification of a Non-Banking Financial Alternative Investment Funds (AIFs) are exempted
Company (NBFC) as Systemically Important under from compulsory registration as NBFCs with the
RBI regulations is determined mainly with RBI because they are regulated under the
reference to which of the following criteria? securities market framework by SEBI. AIFs are
RBI रे गुिेशि िे तहत निसी िॉि-बैंनिंग फाइिेंनशयि registered and governed under the SEBI
(Alternative Investment Funds) Regulations,
िंपिी (NBFC) ि नसस्टमेनिििी इम्प िें ि िे तौर पर
2012, which provide a comprehensive regulatory
क्लानसफाई िरिा मुख्य रूप से िीचे नदए गए निि
254

structure covering registration, operations,

क्राइिे ररया िे आधार पर तय निया िाता है ? disclosures, and investor protection. To avoid dual
(a) Asset size of the NBFC regulation, the proviso to Section 45-IA of the
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(b) Type of financial functions undertaken

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RBI Act, 1934, read with relevant RBI (a) 10% per annum
notifications, exempts SEBI-regulated entities such (b) 11.5% per annum
as AIFs (Categories I, II, and III) from NBFC (c) 15% per annum
registration requirements. (d) 12.5% per annum
12. For a company seeking registration with the (e) 13% per annum
Reserve Bank of India as a Non-Banking Financial Answer: D
Company (NBFC) under the RBI Act, 1934, what is Explanation
the minimum Net Owned Fund (NOF) that must be Under the RBI’s Master Directions governing
maintained at the time of registration? acceptance of public deposits by NBFCs, the
ि िंपिी ररज़िि बैंि ऑफ़ इं निया एक्ट, 1934 िे तहत maximum permissible rate of interest that
िॉि-बैंनिंग फाइिेंनशयि िंपिी (NBFC) िे तौर पर ररज़िि deposit-taking NBFCs (NBFC-D) can offer is
बैंि ऑफ़ इं निया से रनिस्टर े शि िरिािा चाहती है , उसे 12.5% per annum. This ceiling applies uniformly
रनिस्टर े शि िे समय िम से िम नितिा िेि ओन्ड फंि across tenures and credit ratings and is
prescribed under Chapter III-B of the RBI Act,
(NOF) बिाए रििा ह गा?
1934 to contain excessive risk-taking and protect
(a) ₹2 crore depositors.
(b) ₹10 crore
14. Under the Reserve Bank of India’s regulatory
(c) ₹20 crore
framework, certain NBFCs are classified as
(d) ₹50 crore
Systemically Important because of the potential
(e) ₹100 crore
systemic risk arising from their size. Which of the
Answer: B following NBFCs would be placed in this category?
Explanation
ररज़िि बैंि ऑफ़ इं निया िे रे गुिेिरी फ्रेमििि िे तहत, िुछ
As per the RBI’s Scale-Based Regulation (SBR)
NBFCs ि उििे साइज़ से ह िे िािे संभानित नसस्टनमि
framework, 2021, a standard NBFC must have a
ररस्क िी ििह से नसस्टमैनिििी इम्प िें ि िे तौर पर
minimum Net Owned Fund (NOF) of ₹10 crore
to obtain registration from the Reserve Bank of क्लानसफाई निया गया है । इिमें से िौि सी NBFCs इस
India. This requirement applies at the time of िैिे गरी में आएं गी?
application and is verified through the latest (a) An NBFC having a net owned fund of ₹100
audited balance sheet, in accordance with crore
Section 45-IA of the RBI Act, 1934. (b) A deposit-taking NBFC irrespective of asset size
While existing NBFCs are permitted a glide path (c) An NBFC whose total assets are ₹500 crore or
to comply with the enhanced NOF requirement, more as per its latest audited balance sheet
new applicants must meet the ₹10 crore (d) An NBFC engaged exclusively in infrastructure
threshold upfront. Therefore, the correct answer lending
is ₹10 crore. (e) Any NBFC registered under Section 45-IA of the
13. Under the Reserve Bank of India’s regulations RBI Act, 1934
governing acceptance of public deposits by Non- Answer: C
Banking Financial Companies (NBFCs), what is the Explanation
maximum permissible rate of interest that such Under the RBI’s regulatory framework, non-
companies are currently allowed to offer to deposit taking NBFCs (NBFC-ND) are classified as
depositors? Systemically Important (NBFC-ND-SI) when
भारतीय ररज़िि बैंि िे िॉि-बैंनिंग फाइिेंनशयि िंपनिय ं their total assets are ₹500 crore or more, based
255

(NBFCs) द्वारा पखिि निपॉनज़ि स्वीिार िरिे से िुडे on the latest audited balance sheet. This
नियम ं िे तहत, ऐसी िंपनियााँ अभी निपॉनज़िसि ि ज़्यादा classification is driven purely by size, as large
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से ज़्यादा नितिा ब्याज़ दर दे सिती हैं ?

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NBFCs can pose systemic and contagion risks to िमनशियि बैंि ं िा िॉन्ग-िमि, प्र िेक्ट-बेस्ि फाइिेंस में
the financial system. तेज़ी से शानमि ि ह पािा, बैिेंस-शीि िी निस बात से
Such NBFCs are subject to enhanced prudential सबसे अच्छी तरह समझाया िा सिता है , निसे
norms, including stricter capital adequacy, एआईएफआई स्टर क्चर िे नहसाब से बेहतर तरीिे से संभाि
leverage, and governance requirements. The
सिते हैं ?
classification is not dependent on net owned
fund, activity type, or mere registration, making (a) Asset–liability maturity mismatch
asset size the decisive criterion. (b) Credit concentration norms
15. The Reserve Bank of India in June 2025 revised (c) Capital adequacy volatility
the qualifying asset requirement for NBFC–Micro (d) Priority sector sub-target rigidity
Finance Institutions (NBFC-MFIs). What is the new (e) Refinancing dependency
minimum threshold prescribed? Answer: A
ररज़िि बैंि ऑफ़ इं निया िे हाि ही में NBFC–माइक्र Explanation
फाइिेंस इं स्टीट्यूशंस (NBFC-MFIs) िे निए क्वानिफाइं ग Commercial banks predominantly fund their
एसेि िी ज़रूरत ि ररिाइि निया है । िई तय िी गई balance sheets through short-term deposits,
न्यूितम सीमा क्या है ? while long-term, project-based loans have
(a) 40% of total assets extended and inflexible repayment horizons. This
(b) 50% of total assets creates a pronounced asset–liability maturity
(c) 55% of total assets mismatch, exposing banks to liquidity stress,
(d) 60% of total assets interest rate risk, and ALM imbalances, thereby
(e) 90% of total assets constraining aggressive long-tenor lending.
Answer: D In contrast, All India Financial Institutions
(AIFIs) are structurally designed for long-term
Explanation
finance and raise resources through long-
The Reserve Bank of India revised the qualifying
maturity bonds, government-backed funding,
asset requirement for NBFC–Micro Finance
and multilateral borrowings. This enables
Institutions (NBFC-MFIs) by reducing the
superior maturity alignment between assets and
threshold from 75% to 60% of total assets (net
liabilities, making AIFIs better suited for
of intangible assets). This change was notified
infrastructure and development finance
through RBI Circular dated June 6, 2025 and
compared to deposit-funded commercial banks.
applies on an ongoing basis. The revision aims to
[Link] of the following pairs is incorrectly
provide NBFC-MFIs greater portfolio
matched with its institutional classification as per
diversification flexibility while retaining their
the organizational structure?
core microfinance character. Qualifying assets are
aligned with RBI’s definition of microfinance loans. संगििात्मि संरचिा िे अिुसार निम्ननिखित में से िौि सा
Failure to maintain the 60% threshold for four ि डा अपिे संस्थागत िगीिरण से गित तरीिे से मेि िाता
consecutive quarters requires submission of a है ?
remediation plan to RBI. (a) EXIM Bank — Specialized Financial Institution
16. The inability of commercial banks to (b) LIC — Investment Institution
aggressively engage in long-term, project-based (c) NABARD — Refinance Institution
finance is best explained by which balance-sheet
(d) SIDBI — Investment Institution
consideration that All India Financial Institutions
(e) NHB — Refinance Institution
(AIFIs) are structurally better positioned to
256

handle? Answer: D
Explanation
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EXIM Bank is classified as a Specialized Financial fund mobilization and investment, justifying
Institution, focusing on export-import financing their common classification.
under RBI oversight. LIC operates as an Investment 19. A financial institution not created through a
Institution via its long-term insurance fund Parliamentary statute and not directly set up by
deployments. NABARD and NHB function as the Government of India can still be classified as a
Refinance Institutions, providing wholesale Development Financial Institution provided it is:
refinancing to banks for agriculture and housing. एि फाइिेंनशयि संस्था ि पानिियामेंि िे िािूि से िहीं
SIDBI, however, is a Development Financial
बिी है और निसे सीधे भारत सरिार िे स्थानपत िहीं निया
Institution dedicated to MSME credit and
promotion, not primarily an Investment Institution है , उसे भी िे ििपमेंि फाइिेंनशयि संस्था िे तौर पर
like mutual funds or LIC. क्लानसफाई निया िा सिता है , बशते िह ये शतें पूरी िरती
18. Which shared functional characteristic explains ह:
why UTI (1964), LIC (1956) and GIC along with its (a) Licensed by RBI under Section 29 of the
subsidiaries (1972) are classified together under NaBFID Act, 2021
the same institutional category in the financial (b) Registered under the Companies Act
system framework? (c) Recognised by SEBI as a market intermediary
िह िौि सी साझा फंक्शिि निशेषता है ि यह बताती है नि (d) Refinance-supported by NABARD
UTI (1964), LIC (1956) और GIC ि उसिी (e) Categorised as a systemically important NBFC
सखिनियरी िंपनिय ं (1972) िे साथ फाइिेंनशयि नसस्टम Answer: A
फ्रेमििि में एि ही इं स्टीट्यूशिि िैिे गरी में क्य ं रिा गया Explanation
है ? A financial institution need not be established
(a) Engagement in long-term industrial lending through a Parliamentary enactment or directly
(b) Refinancing of banks and NBFCs promoted by the Government of India to qualify
(c) State-level operational jurisdiction as a Development Financial Institution (DFI).
Under the NaBFID Act, 2021, entities may be
(d) Mobilization and investment of long-term
designated as DFIs if they are licensed by the
contractual savings
Reserve Bank of India under Section 29 of the
(e) Export-oriented financing
Act.
Answer: D
This provision enables private or non-statutory
Explanation institutions to operate as DFIs, subject to RBI
UTI (1964), LIC (1956), and GIC with its supervision, prudential norms, and a long-term
subsidiaries (1972) are grouped together as development finance mandate. Mere registration
Investment Institutions within India’s financial under the Companies Act, SEBI recognition,
system. Their unifying characteristic is the refinance access, or NBFC systemic importance
mobilisation of long-term contractual savings— does not confer DFI status.
such as insurance premia in the case of LIC and 20. The Industrial Finance Corporation of India
GIC, and unit-based investments in UTI—which (IFCI), established in 1948, is institutionally
are then deployed into long-term assets including distinguished from later development institutions
government securities, bonds, equities, and primarily because it was:
infrastructure projects.
इं िखस्टर यि फाइिेंस िॉपोरे शि ऑफ़ इं निया (IFCI),
They do not primarily undertake industrial
निसिी स्थापिा 1948 में हुई थी, बाद िे िे ििपमेंि
lending, refinancing activities, or export finance,
संस्थाि ं से संस्थागत रूप से अिग है , मुख्य रूप से क्य नं ि
257

nor are they confined to state-level operations.

Their role is fundamentally centered on long-term यह था:
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(a) Set up as a non-statutory government company

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(b) Established as a statutory corporation to is specifically designed to aid the expansion and
provide term finance growth of established micro-enterprises.
(c) Created as a World Bank–assisted private Loan Amount: Above ₹10 lakh and up to ₹20 lakh.
institution Eligibility: This loan is exclusively for
(d) Licensed by RBI as a DFI entrepreneurs who have already availed and
(e) Initially owned by private industrialists successfully repaid previous loans under the
Answer: B "Tarun" category (which was up to ₹10 lakh).
Explanation 22. Shishu Loan (Up to ₹50,000)
The Industrial Finance Corporation of India 23. Kishore Loan (₹50,000 to ₹5 lakh)
(IFCI), set up in 1948, is institutionally distinct 24. Tarun Loan (₹5 lakh to ₹10 lakh)
from later development institutions because it was 25. Tarun Plus Category (₹10 lakh to ₹20 lakh)
established through a Parliamentary statute— 26. A loan of ₹7 lakh for a non-agricultural micro-
the IFCI Act, 1948—as a statutory corporation. enterprise would fall under which Pradhan Mantri
Its primary mandate was to extend medium- and MUDRA Yojana (PMMY) category?
long-term finance to the industrial sector, एि गैर-िृनष माइक्र -एं िरप्राइि िे निए ₹7 िाि िा ि ि
marking India’s first development financial
PM मुद्रा य ििा िी निस िैिे गरी में आएगा?
institution.
(a) Tarun
Subsequent DFIs were often created as companies
under the Companies Act, restructured entities, (b) Kishore
or institutions licensed under newer regulatory (c) Shishu
frameworks. Hence, IFCI’s statutory origin and (d) Composite MSME loan
term-lending mandate set it apart historically (e) SIDBI-assisted loan
and institutionally. Answer: A
21. The Tarun Plus category under the Pradhan Explanation
Mantri Mudra Yojana (PMMY) enhanced loan Under Pradhan Mantri Mudra Yojana (PMMY),
offering introduced following the Union Budget loans to non-farm micro-enterprises are
2024-25, increasing the maximum Mudra loan classified strictly by sanctioned amount and
limit from ₹_______ lakh to ₹__________ lakh. business stage: Shishu (up to ₹50,000), Kishore
िेंद्रीय बिि 2024-25 िे बाद प्रधािमंत्री मुद्रा य ििा (₹50,001–₹5 lakh), and Tarun (₹5–₹10 lakh). A ₹7
(PMMY) िे तहत तरुण प्लस श्रेणी में ि ि िी पेशिश ि lakh loan clearly exceeds the upper limit of
बढाया गया है , निससे मुद्रा ि ि िी अनधितम सीमा Kishore and falls within the Tarun bracket, which
₹_______ िाि से बढिर ₹__________ िाि ह गई है । is intended for established micro units seeking
expansion capital. Categories such as Composite
(a) 5,10
MSME loans are outside PMMY’s framework, while
(b) 10,15
SIDBI-assisted loans relate to refinancing or
(c) 15,20 institutional support, not Mudra classification.
(d) 10,20 [Link] establishment of The National Bank for
(e) 20,30 Financing Infrastructure and Development
Answer: D (NaBFID) under the National Bank for Financing
Explanation Infrastructure and Development Act, 2021
The Tarun Plus category under the Pradhan Mantri primarily signifies that it is:
िेशिि बैंि फॉर फाइिेंनसंग इं फ्रास्टर क्चर एं ि िे ििपमेंि
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Mudra Yojana (PMMY) is a new, enhanced loan

offering introduced following the Union Budget एक्ट, 2021 िे तहत NaBFID िी स्थापिा िा मुख्य मतिब
2024-25, which increases the maximum Mudra यह है नि यह:
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loan limit from ₹10 lakh to ₹20 lakh. This category

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(a) A universal commercial bank with Sivaraman Committee as the apex institution
infrastructure focus for rural credit in India.
(b) A refinance institution for banks and NBFCs The establishment was based on the
(c) An infrastructure-focused Development recommendations of the Committee to Review
Financial Institution Arrangements for Institutional Credit for
Agriculture and Rural Development (CRAFICARD).
(d) A statutory regulator of infrastructure finance
It was established to know the credit needs of
(e) A specialised investment intermediary
rural areas and to contribute to broader
Answer: C development initiatives in the rural economy.
Explanation Its primary role was not limited to direct lending
The National Bank for Financing Infrastructure or agricultural production finance, but to provide
and Development (NaBFID) was established policy formulation, planning, supervision, and
under the NaBFID Act, 2021 as a statutory operational guidance for the entire rural and
Development Financial Institution (DFI) with a agricultural credit system, including
core mandate to finance long-term cooperative banks and regional rural banks.
infrastructure projects. Its creation reflects the Regulatory functions, payment systems
revival of the DFI model to address India’s management, and direct farmer lending are either
infrastructure financing gap, especially for shared or secondary, whereas system-level
projects requiring long-tenor funding beyond the oversight of rural credit defines NABARD’s apex
risk appetite of commercial banks. mandate.
NaBFID is neither a universal bank nor a regulator. 29. Which of the following is NOT one of the
While it may undertake refinancing and market subsidiary of NABARD (National Bank for
development, its primary identity is that of an Agriculture and Rural Development)?
infrastructure-focused DFI, distinct from
(a) NABKISAN Finance Limited (NABKISAN)
investment intermediaries or deposit-taking banks.
(b) NABFINS Limited (NABFINS)
28. Based on the recommendations of the
(c) NABARD Consultancy Services (NABCONS)
Committee to Review Arrangements for
Institutional Credit for Agriculture and Rural (d) NABARD Agro (NABAGRO)
Development (CRAFICARD), under ______________, (e) NABSAMRUDDHI Finance Limited (NSFL)
NABARD was established. Answer: D
िृनष और ग्रामीण नििास िे निए संस्थागत ऋण िी व्यिस्था Explanation
िी समीक्षा िरिे िािी सनमनत (क्राफीिािि ) िी नसफाररश ं • NABARD Subsidiaries
िे आधार पर, ______________ िे तहत, िाबािि िी स्थापिा To augment its reach and impact, NABARD has set
िी गई थी। up a number of subsidiaries that focus on various
(a) Y.K Alagh aspects of rural development:

(b) B. Sivaraman • NABKISAN Finance Limited (NABKISAN)

(c) Y V Reddy It offers credit for the development, diversification
and commercialization of enterprises in
(d) C. Rangarajan
agriculture, allied and rural non-farm activities. It
(e) Bimal Jalan
has extended financial support for and to
Answer: B numerous Farmer Producer Organisations (FPOs)
Explanation across several states.
259

The National Bank for Agriculture and Rural • NABSAMRUDDHI Finance Limited (NSFL)
Development (NABARD) was established in 1982 It provides credit facilitation to legal entities for
based on the recommendations of the B.
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modernization of activities undertaken in non- control, no longer RBI-owned, not jointly held
farm activities in microfinance, MSME, housing, with States, and not privately owned.
education, and transport sectors. 31. The year 1982 marks a structural shift in
• NABFINS Limited (NABFINS) India’s trade-finance architecture with the setting
NABFINS is a subsidiary of NABARD engaged in up of EXIM Bank mainly to:
providing Microfinance services to self-help groups िषि 1982 में भारत िे व्यापार-नित्त ढां चे में एि संरचिात्मि
(SHGs) and small borrowers. The institution's goal बदिाि आया, निसमें मुख्य रूप से एखिम बैंि िी स्थापिा
is to provide affordable credit to underserved िी गई:
communities, fostering financial inclusion.
(a) Act as a refinancing arm of RBI
• NABARD Consultancy Services (NABCONS)
(b) Replace commercial banks in trade finance
NABCONS is a wholly owned subsidiary providing
(c) Take over the international financing
high-quality consultancy services in agriculture,
operations of IDBI
rural development and infrastructure. It advises a
(d) Regulate export credit agencies
range of governments, banks, and international
institutions in areas such as rural finance, project (e) Finance only overseas subsidiaries of Indian
management, and policy development. firms
30. After the reorganization of NABARD’s Answer: C
shareholding was fully effected by 2019, which Explanation
option correctly captures NABARD’s ownership The establishment of the Export–Import Bank of
position within India’s financial institutional India (EXIM Bank) in 1982 represented a major
structure? institutional shift in India’s trade and export
2019 ति िाबािि िी शेयरह खडं ग िा रीऑगेिाइज़ेशि पूरी finance framework. EXIM Bank was created
तरह से ह िािे िे बाद, िौि सा ऑप्शि भारत िे primarily to take over the international and
export–import financing functions of IDBI,
फाइिेंनशयि इं स्टीट्यूशिि स्टर क्चर में िाबािि िी ओिरनशप
thereby providing a dedicated, specialised
प िीशि ि सही ढं ग से नदिाता है ? institution for handling overseas lending,
(a) NABARD operates independently of buyer’s and supplier’s credit, and export credit
government control support. It did not replace commercial banks in
(b) NABARD is wholly owned by the Central trade finance, function as an RBI refinance arm, act
Government as a regulator, or restrict itself only to overseas
(c) NABARD functions as an RBI-owned institution subsidiaries of Indian firms.
(d) NABARD is jointly owned by Centre and States 32. The recommendation to establish NHB as an
(e) NABARD is privately held autonomous housing finance institution was made
Answer: B by a high-level group chaired by:
Explanation एिएचबी ि एि ऑि िॉमस हाउनसंग फाइिेंस
By 2019, the reorganisation of NABARD’s इं स्टीट्यूशि िे तौर पर बिािे िी नसफाररश एि हाई-िेिि
shareholding was fully completed, with the ग्रुप िे िी थी, निसिे चेयरमैि थे:
Reserve Bank of India transferring its entire (a) C. Rangarajan
stake to the Government of India. Consequently, (b) Bimal Jalan
NABARD became a 100% Central Government– (c) Raghuram Rajan
owned institution, strengthening its position as
(d) Urjit Patel
the apex development bank for agriculture and
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(e) Y. V. Reddy
rural development under sovereign ownership. It
is therefore not independent of government Answer: A
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The recommendation to establish the National payment services, investment options, and
Housing Bank (NHB) as an autonomous housing advisory functions, these are ancillary. The
finance institution was made by a high-level deposit–credit linkage remains the core
group chaired by C. Rangarajan. Acting on this economic function separating banks from other
recommendation, NHB was subsequently set up in financial institutions.
1988 under the NHB Act, 1987 as the apex 34. Which of the following lending instruments
institution for housing finance in India, with allows a borrower to withdraw funds in excess of
responsibilities covering regulation, refinancing, the account balance up to a sanctioned limit?
and development of the housing finance निम्ननिखित में से िौि सा िेंनिं ग इं स्टूमेंि निसी उधारिताि
system.
ि अिाउं ि बैिेंस से ज़्यादा, एि तय निनमि ति पैसे
The other listed economists and former RBI
नििाििे िी अिुमनत दे ता है ?
Governors were associated with later monetary
and financial sector reforms, not with the original (a) Discounting of bills
proposal leading to NHB’s establishment. (b) Fixed deposit loan
(c) Bank overdraft
33. In the context of banking institutions, which of
(d) Long-term loan
the following most accurately captures the core
(e) Recurring deposit advance
economic function that differentiates a bank from
other financial intermediaries? Answer: C
Explanation
बैंनिंग संस्थाि ं िे संदभि में, निम्ननिखित में से िौि सा बैंि
A bank overdraft is a lending facility that allows a
िे मुख्य आनथिि िायि ि सबसे सिीि रूप से बताता है ि
borrower to withdraw funds beyond the
एि बैंि ि दू सरे फाइिेंनशयि इं िरमीनियरी से अिग
available account balance, up to a pre-
िरता है ? sanctioned limit approved by the bank. It is
(a) Offering advisory and portfolio management commonly linked to a current account and is
services meant to meet short-term liquidity needs.
(b) Accepting public deposits and transforming Interest is charged only on the amount actually
them into loans overdrawn, not on the entire sanctioned limit.
(c) Facilitating only payment and settlement Other options like discounting of bills, fixed
systems deposit loans, or recurring deposit advances are
(d) Providing insurance and risk mitigation secured against specific instruments and do not
products permit unrestricted excess withdrawals from an
(e) Acting solely as an investment mobilisation account.
agency 35. Which feature most clearly establishes PMJDY-
Answer: B linked BSBDA accounts as a financial inclusion tool
Explanation rather than a profit-oriented deposit product?
A bank is fundamentally distinguished by its legal िौि सी िानसयत पीएमिेिीिाई -निंक्ि बुनियादी बचत
authority to accept deposits from the public and बैंि िमा िाता(BSBDA) अिाउं ि्स ि प्रॉनफि-ओररएं िे ि
deploy these funds as loans and advances. This निपॉनिि प्र िक्ट िे बिाय फाइिेंनशयि इिक्लूिि िू ि िे
financial intermediation role enables banks to
तौर पर सबसे साफ तौर पर नदिाती है ?
convert idle savings into productive capital,
supporting economic activity. Unlike NBFCs or (a) Availability of RuPay debit card
investment firms, banks can create credit based on (b) Provision of accident insurance cover
deposits, making deposit acceptance the defining (c) Absence of minimum balance requirement
261

feature. Income is primarily generated through (d) Access to overdraft facility

interest charged on loans, reflecting this (e) Nationwide bank branch connectivity
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transformation process. While banks also provide Answer: C

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Explanation account helps reduce transaction costs for

The absence of a minimum balance exporters and other foreign exchange earners?
requirement is the defining feature that positions िौि सा फ़ीचर सबसे सीधे तौर पर बताता है नि एक्सचेंि
BSBDA under PMJDY as a financial inclusion अििसि फॉरे ि िरें सी (EEFC) अिाउं ि एक्सप िि सि और दू सरे
instrument. This provision allows economically फॉरे ि एक्सचेंि िमािे िाि ं िे निए िर ां िैक्शि िॉस्ट िम
weaker sections to access formal banking without
िरिे में िैसे मदद िरता है ?
the fear of penalties or account closure due to low
balances. While facilities like RuPay cards, (a) Mandatory conversion of 50% foreign earnings
insurance cover, and overdraft enhance usability, into INR
they are supplementary benefits. Removing the (b) Credit of 100% foreign exchange earnings with
minimum balance barrier ensures universal repeated INR conversion
accessibility, especially for first-time account (c) Credit of 100% foreign exchange earnings
holders. This feature directly supports the core without conversion into INR
objective of bringing the unbanked population (d) Interest payment on foreign currency balances
into the formal financial system, making banking (e) Fixed-tenure deposit in foreign currency
affordable, inclusive, and sustainable. Answer: C
36. Which of the following combinations accurately Explanation
aligns the launch year and maximum overdraft An EEFC account permits 100% of foreign
ceiling applicable to PMJDY-linked BSBDA exchange earnings to be credited and retained in
accounts? foreign currency, eliminating the need to convert
निम्ननिखित में से िौि सा िॉखििेशि PMJDY से िुडे funds into Indian Rupees and back again. This
directly reduces transaction and conversion
बुनियादी बचत बैंि िमा िात ं पर िागू िॉन्च िषि और
costs, including exchange margins and bank
अनधितम ओिरिर ाफ्ट निनमि ि सही ढं ग से नदिाता है ?
charges. Exporters and other foreign exchange
(a) Launched in 2012; overdraft ₹5,000 earners often make repeated foreign payments,
(b) Launched in 2014; overdraft up to ₹10,000 and retaining funds in the same currency improves
(c) Launched in 2016; overdraft ₹20,000 operational efficiency. Although the account does
(d) Launched in 2014; overdraft ₹5,000 not pay interest, the cost savings achieved through
(e) Launched in 2018; overdraft ₹2,000 avoided currency conversion make the EEFC
Answer: B account a practical cash-management tool for
Explanation resident foreign exchange earners.
The Pradhan Mantri Jan Dhan Yojana (PMJDY) 38. In the context of deposit accounts, which
was launched in 2014 as India’s largest financial parameter creates the clearest functional
inclusion initiative. Accounts opened under separation between saving accounts and current
PMJDY are Basic Savings Bank Deposit Accounts accounts?
(BSBDA), which require no minimum balance, निपॉनिि अिाउं ि्स िे मामिे में, िौि सा पैरामीिर सेनिंग
ensuring universal accessibility. A key credit अिाउं ि्स और िरं ि अिाउं ि्स िे बीच सबसे साफ़
inclusion feature is the overdraft facility of up to
फंक्शिि अंतर पैदा िरता है ?
₹10,000, available to eligible account holders.
This combination of zero-balance access, a clearly (a) Transaction convenience
defined overdraft ceiling, and a specific launch (b) Withdrawal flexibility
year reflects PMJDY’s objective of integrating low- (c) Interest applicability
income households into the formal banking system (d) Branch accessibility
262

while also offering limited credit support. (e) Account variants

37. Which feature most directly explains how an Answer: C
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Exchange Earners’ Foreign Currency (EEFC) Explanation

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The clearest differentiating feature between a (a) 1 day – 5 years

saving account and a current account is the (b) 7 days – 10 years
payment of interest. Saving accounts are (c) 30 days – 15 years
designed to encourage individuals to save a (d) 1 year – 20 years
portion of their income, and therefore banks pay (e) 14 days – 7 years
interest on the balance maintained, even though Answer: B
the rate is usually low. In contrast, current Explanation
accounts are meant for business and commercial
Under standard banking norms, a Fixed Deposit
transactions, where funds are frequently
(FD) can be opened for a minimum tenure of 7
deposited and withdrawn; hence no interest is
days and a maximum tenure of 10 years.
paid. Other features such as cheque facilities,
Deposits for periods shorter than 7 days are
digital banking, or branch access may be common
generally not accepted, while tenures beyond 10
to both, but interest applicability creates the
years are not permitted under prevailing deposit
most fundamental distinction.
regulations. This defined range allows banks to
39. Which deposit product requires the account manage liquidity and interest rate risk effectively,
holder to make regular monthly contributions until while providing depositors with flexibility to
a predetermined maturity date? choose short-term or long-term investment
निस निपॉनज़ि प्र िक्ट में अिाउं ि ह डर ि पहिे से तय horizons. Hence, the tenure span of 7 days to 10
मैच्य ररिी िे ि ति रे गुिर मंथिी िंिर ीब्यूशि िरिा ह ता है ? years correctly represents the permissible
(a) Fixed Deposit duration for bank Fixed Deposits.
(b) Callable Fixed Deposit 41. According to the RBI’s revised fixed deposit
(c) Demand Deposit norms for NBFCs, what is the maximum amount
(d) Recurring Deposit permitted for premature withdrawal for public
(e) Non-Callable Fixed Deposit deposits other than tiny deposits and critical
Answer: D illness cases?
Explanation भारतीय ररििि बैंि िे एिबीएफसीिे निए ररिाइज्ड नफक्स्ड
A Recurring Deposit (RD) is designed to promote निपॉनज़ि नियम ं िे अिुसार, छ िे निपॉनज़ि और गंभीर
systematic and disciplined savings by requiring बीमारी िे मामि ं ि छ डिर, पखिि निपॉनज़ि िे निए
the depositor to contribute a fixed amount every समय से पहिे पैसे नििाििे िी ज़्यादा से ज़्यादा नितिी
month until a predetermined maturity date. रिम िी अिुमनत है ?
Unlike Fixed Deposits, which involve a lump-sum
(a) 25% of deposit or ₹2 lakh, whichever is lower
investment, RDs cater to individuals with regular
(b) 50% of deposit or ₹10 lakh, whichever is lower
income but limited surplus. The compulsory
monthly contribution ensures consistency in (c) 100% of principal without interest
saving behaviour. Interest is accumulated over the (d) 50% of deposit or ₹5 lakh, whichever is lower
tenure, making RDs suitable for goal-oriented (e) ₹10,000 only
savings. This structure differentiates RDs from Answer: D
callable or non-callable FDs, which focus on capital According to the RBI’s revised norms for NBFCs
parking rather than periodic accumulation. effective from Jan 1, 2025, for individual public
40. With reference to bank Fixed Deposits, which deposits other than tiny deposits and critical
option accurately states the tenure span permitted illness cases, the maximum amount permitted for
under standard deposit norms? premature withdrawal within three months is
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बैंि नफक्स्ड निपॉनज़ि िे संबंध में, िौि सा ऑप्शि स्टैं ििि 50% of the principal amount or ₹5 lakh,
निपॉनज़ि नियम ं िे तहत अिुमत अिनध ि सही ढं ग से whichever is lower. No interest is accrued on this
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बताता है ?

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premature withdrawal. (b) It is held as a current account without interest

(c) It is a term deposit in foreign currency
42. Which aspect best explains why NSDL is (d) It is a recurring deposit with flexible tenure
regarded as a landmark institution in the evolution (e) It is a demand deposit with interest payable
of India’s securities market infrastructure? Answer: B
िौि सा पहिू सबसे अच्छे से बताता है नि एिएसिीएि ि Explanation
भारत िे नसक्य ररिीज़ मािेि इं फ्रास्टर क्चर िे नििास में एि An EEFC account can be maintained only in the
िैंिमािि संस्था क्य ं मािा िाता है ? form of a current account, and no interest is
payable on the balances held. This structure aligns
(a) It allows holding of securities in certificated
with the account’s purpose of facilitating frequent
form
foreign currency transactions rather than
(b) It was the first electronic securities depository
savings or investment. Since funds may be used
with nationwide coverage
regularly for imports, payments, or other trade-
(c) It facilitates trading through stock exchanges
related needs, interest payment is not permitted.
(d) It operates as a clearing corporation
The account focuses on liquidity and operational
(e) It was established after liberalisation of capital
convenience, not returns. Therefore, the EEFC
markets
account combines the transactional flexibility of a
Answer: B
current account with foreign currency retention,
Explanation reinforcing its role as a trade-supporting banking
National Securities Depository Limited (NSDL) facility.
holds landmark importance because it was the 44. When an Indian bank maintains an account
first electronic securities depository in India, with a foreign bank in the foreign country’s
established on 8 November 1996. It introduced currency, the account is classified as:
the dematerialisation system with nationwide
िब ि ई भारतीय बैंि निसी निदे शी बैंि में उस निदे शी दे श
coverage, fundamentally transforming the
securities settlement process. Prior to NSDL, िी िरें सी में अिाउं ि रिता है , त उस अिाउं ि ि इस
trading relied heavily on physical certificates, तरह क्लानसफाई निया िाता है :
which involved risks like delay, forgery, and loss. (a) Vostro account
By enabling electronic holding and transfer of (b) Loro account
securities, NSDL strengthened market efficiency (c) Current account
and investor confidence. Its establishment on the (d) Nostro account
recommendation of a national economic (e) Escrow account
development institution underscores its strategic Answer: D
role. Thus, NSDL laid the foundation for a modern, Explanation
transparent, and secure capital market system
A Nostro account, derived from the Latin word
in India.
“Nostro” meaning “Ours”, refers to an account
43. Which option correctly captures the maintained by a domestic bank with a foreign
permissible form of operation and earnings bank in the foreign bank’s currency. This
characteristic of an Exchange Earners’ Foreign arrangement is commonly used when the domestic
Currency (EEFC) account? bank does not have a branch in that foreign
िौि सा ऑप्शि एक्सचेंि अििसि फॉरे ि िरें सी (EEFC) country. Nostro accounts facilitate international
अिाउं ि िे ऑपरे शि और िमाई िी अिुमत फॉमि ि trade settlements, foreign currency
सही ढं ग से बताता है ? transactions, and cross-border payments. From
264

the domestic bank’s perspective, the funds held

(a) It is maintained as a savings account with
abroad belong to “us,” hence the term Nostro. Such
interest
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accounts enable smoother international banking

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operations by allowing customers to deposit and (d) NRO Account

transfer money internationally without physical (e) RFC Account
presence. Answer: D
45. Which of the following sequences most Explanation
accurately represents the operational flow of funds The most appropriate account is the Non-Resident
in an escrow account arrangement? Ordinary (NRO) Account because it is specifically
निम्ननिखित में से िौि सा सीक्वेंस एस्क्र अिाउं ि अरें िमेंि designed to manage income earned in India by
में फंि िे ऑपरे शिि फ्ल ि सबसे सही तरीिे से नदिाता NRIs, such as rent, pension, dividends, and
है ? interest. Funds deposited in an NRO account may
originate in foreign currency, but they are
(a) Seller receives funds → buyer confirms delivery
converted into INR at the prevailing exchange
(b) Buyer deposits funds → escrow holds → seller
rate. The interest earned is taxable in India, in
receives funds
line with domestic tax laws. Repatriation is
(c) Escrow credits interest → buyer withdraws
permitted but subject to limits and RBI
funds
guidelines, making it suitable where outward
(d) Seller deposits funds → escrow refunds buyer
remittance is restricted.
(e) Buyer and seller jointly operate the account
47. Under banking regulations, a term (fixed)
Answer: B
deposit is categorised as an unclaimed deposit
Explanation
when the matured amount remains unclaimed for
The functional sequence of an escrow account which of the following durations?
begins when the buyer deposits funds into the
बैंनिंग नियम ं िे तहत, एि िमि (नफक्स्ड) निपॉनज़ि ि तब
escrow account. These funds are then held
securely by the escrow agent, ensuring neither अिक्लेम्ि निपॉनज़ि मािा िाता है िब मैच्य ररिी िी रिम
party can misuse them. Once the seller fulfills the निम्ननिखित में से निस अिनध ति क्लेम िहीं िी िाती है ?
agreed conditions—such as delivering goods or (a) 5 years from the date of opening
completing services—the escrow agent transfers (b) 7 years from the date of maturity
the funds to the seller’s account. This structured (c) 10 years from the date of opening
flow ensures fairness, transparency, and security. (d) 10 years from the date of maturity
The buyer gains confidence that payment is (e) 12 years from the date of renewal
conditional, while the seller is assured of payment Answer: D
upon compliance. Thus, the buyer–escrow–seller Explanation
flow accurately represents the operational logic
A term or fixed deposit is classified as an
of escrow accounts.
unclaimed deposit when the depositor fails to
46. An NRI wishes to deposit rent and dividend claim the matured amount for a continuous period
income earned in India, with limited repatriation of ten years from the date of maturity. The critical
and applicable Indian taxes. Which account is most reference point is the maturity date, not the date of
appropriate? opening or renewal of the deposit. Even if the
एि एिआरआई भारत में िमाए गए निराए और निनििें ि deposit stops earning interest or reminders are
िी इििम ि , सीनमत ररपेनिर एशि और िागू इं नियि िै क्स issued by the bank, non-claim for ten years leads to
िे साथ िमा िरिा चाहता है । िौि सा अिाउं ि सबसे सही this classification. This rule applies uniformly
रहे गा? across banks under Reserve Bank of India
guidelines. Once categorised as unclaimed, the
(a) NRE Savings Account
amount is transferred to the Depositor Education
265

(b) FCNR Fixed Deposit

and Awareness Fund, though the depositor,
(c) EEFC Account
nominee, or legal heir retains the right to claim the
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deposit from the bank at any time.

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48. Once bank deposits are moved to the Depositor ● The recommendation was made in 1926 by
Education and Awareness (DEA) Fund after the Royal Commission on Indian
remaining unclaimed, which of the following Currency and Finance.
correctly identifies the persons eligible to recover ● The Commission is popularly known as the
the amount from the concerned bank? Hilton Young Commission (named after
एि बार िब बैंि निपॉनिि नबिा क्लेम निए रहिे िे बाद its Chairman, Lord Hilton Young).
निपॉनििर एिुिेशि एं ि अिेयरिेस (DEA) फंि में ● It was constituted by the British
िर ां सफर िर नदए िाते हैं , त इिमें से िौि सा नििल्प उि Government to examine India’s currency
ि ग ं िी सही पहचाि िरता है ि संबंनधत बैंि से रिम and financial system.

िापस पािे िे हिदार हैं ? ● The Commission strongly recommended

the establishment of a Central Bank for
(a) Only the original depositor
India to regulate currency and credit.
(b) Only nominees registered at account opening
● It observed that currency management by
(c) Only legal heirs through court orders the Government lacked institutional
(d) Depositors, nominees, or legal heirs autonomy and required a specialized
(e) Only RBI through authorised channels authority.
Answer: D ● The recommendation laid the foundation
Explanation for the eventual enactment of the RBI Act,
Unclaimed deposits transferred to the DEA Fund 1934.
do not extinguish the rights of depositors. ● Based on these recommendations, a bill
Depositors, nominees, or legal heirs can claim the was introduced in 1927, though it was
amount at any time from the concerned bank, even initially withdrawn due to lack of
after transfer to the DEA Fund. The bank makes consensus.
payment to the claimant and later seeks ● The recommendation ultimately led to the
reimbursement from the DEA Fund maintained by establishment of the Reserve Bank of
the RBI. Importantly, interest is also paid, India on 1 April 1935.
wherever applicable, on interest-bearing deposits. 50. Which of the following correctly states the time
This mechanism ensures depositor protection limit for claiming unclaimed deposits under the
while allowing RBI to centralise dormant funds Depositor Education and Awareness (DEA) Fund
without depriving rightful claimants of their Scheme, 2014?
money.
निम्ननिखित में से िौि सा निपॉनज़िर एिुिेशि एं ि
[Link] recommendation for the establishment of a
अिेयरिेस (DEA) फंि स्कीम, 2014 िे तहत नबिा क्लेम
Central Bank for India was formally made by which
निए गए निपॉनज़ि िा क्लेम िरिे िी समय सीमा ि सही
of the following in 1926?
बताता है ?
भारत िे निए सेंिरि बैंि बिािे िी नसफाररश 1926 में
(a) 5 years
फॉमििी निसिे िी थी?
(b) 7 years
(a) Indian Statutory Commission (c) 10 years
(b) Royal Commission on Indian Currency and (d) 12 years
Finance (e) No time limit
(c) Hilton Young Commission on Trade
Answer: E
(d) Central Banking Enquiry Committee
Explanation
(e) White Paper on Indian Constitutional Reforms
266

The Depositor Education and Awareness Fund

Answer: B
Scheme, 2014 does not prescribe any time limit for
Explanation
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claiming unclaimed deposits. Depositors or their

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legal heirs can submit a claim to the concerned (c) Companies Act, 1956
bank at any time, irrespective of how long the (d) Companies Act, 2013
amount has remained unclaimed. This open-ended (e) Securities Contracts (Regulation) Act, 1956
claimability reinforces depositor protection and Answer: D
prevents permanent loss of customer funds. Even
Explanation
after transfer to the DEA Fund, ownership rights
The Investor Education and Protection Fund
remain unaffected. Banks are obligated to process
Authority was established in 2016 under the
valid claims and make payments accordingly. The
Companies Act, 2013, which provides the statutory
absence of a limitation period reflects RBI’s intent
framework for corporate governance and investor
to prioritise depositor rights over administrative
protection in India. The Act mandates the creation
convenience or regulatory timelines.
of mechanisms to safeguard investor interests and
51. What is the maximum deposit insurance
handle unclaimed corporate funds. Under this
coverage provided by DICGC per depositor
legislation, the IEPFA was constituted to
(including accrued interest) in the same right and
administer the Investor Education and Protection
capacity?
Fund, ensure refunds of unclaimed dividends,
िमा बीमा और क्रेनिि गारं िी निगम द्वारा प्रनत िमािताि shares, and matured deposits, and promote
(िमा हुए ब्याि सनहत) एि ही अनधिार और क्षमता में दी investor awareness. The Companies Act, 2013
िािे िािी अनधितम िमा बीमा ििरे ि नितिी है ? replaced the earlier Companies Act, 1956, and
(a) ₹1 lakh strengthened regulatory oversight. Hence, the legal
(b) ₹2 lakh foundation of IEPFA is firmly rooted in the
(c) ₹3 lakh Companies Act, 2013.
(d) ₹5 lakh 53. Amounts are credited to the Investor Education
(e) ₹10 lakh and Protection Fund (IEPF) when they remain
Answer: D unclaimed for a minimum period of:
Explanation इन्वेस्टर एिुिेशि एं ि प्र िे क्शि फंि (IEPF) में रिम तब
Under the Deposit Insurance and Credit Guarantee िमा िी िाती है , िब िह िम से िम इतिे समय ति नबिा
Corporation (DICGC) framework, deposits are क्लेम िे रहती है :
insured up to a maximum of ₹5 lakh per depositor, (a) 5 years
including accrued interest, in the same right and (b) 6 years
capacity. This insurance limit applies uniformly (c) 7 years
even when the bank is under liquidation. For (d) 10 years
unclaimed deposits transferred to the DEA Fund, (e) 12 years
the insured portion continues to be governed by Answer: C
this ₹5 lakh cap. Any claim settlement through the
Explanation
Liquidator first considers this insurance ceiling
Amounts such as unpaid dividends, matured
before addressing any excess amount.
deposits, matured debentures, and application
52. The Investor Education and Protection Fund
money due for refund are transferred to the
Authority (IEPFA) was established in 2016 under
Investor Education and Protection Fund after
which Act?
remaining unclaimed for a continuous period of
इन्वेस्टर एिुिेशि एं ि प्र िे क्शि फंि अथॉररिी (IEPFA) seven years. This seven-year threshold is
िी स्थापिा 2016 में निस एक्ट िे तहत िी गई थी? prescribed under the Companies Act, 2013 and
related rules. The intent is to provide companies
267

(a) RBI Act, 1934

(b) SEBI Act, 1992 sufficient time to trace investors and settle claims
before transferring funds. Once transferred,
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investors can still claim refunds through IEPFA by

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following prescribed procedures. The seven-year अिक्लेम्ि निपॉनज़ि िे निए एि यूनिफाइि सचि सुनिधा दे िे
period balances administrative efficiency with िे मिसद से बिाया गया उद्गम प िि ि, इिमें से निस
investor rights. It ensures that long-unclaimed संस्थाि िे िे ििप और िॉन्च निया है ?
corporate funds are centrally managed while
(a) Ministry of Finance
preserving investors’ entitlement to reclaim them
(b) Indian Banks’ Association
at any time.
(c) Ministry of Corporate Affairs
54. The portal designed to provide a unified
(d) Deposit Insurance and Credit Guarantee
gateway for accessing information on unclaimed
Corporation
bank deposits is known by the acronym UDGAM,
(e) Reserve Bank of India
which expands to:
Answer: E
अिक्लेम्ि बैंि निपॉनिि् स िे बारे में िाििारी एक्सेस
Explanation
िरिे िे निए एि यूनिफाइि गेििे दे िे िे निए निज़ाइि
The UDGAM portal has been developed and
निए गए प िि ि ि उद्गम (UDGAM)िाम से िािा िाता है , launched by the Reserve Bank of India to address
निसिा फुि फॉमि है : the long-standing issue of fragmented information
(a) Unified Deposits Gateway for Account on unclaimed deposits across banks. RBI, as the
Monitoring central banking authority and regulator of the
(b) Unclaimed Deposits – Gateway to Access banking system, is best positioned to create a
inforMation centralised platform aggregating data from
(c) Universal Deposits Grievance and Monitoring multiple banks. The objective of UDGAM is not
(d) Unified Digital Gateway for Account claim settlement but enabling depositors,
Management nominees, or legal heirs to easily search unclaimed
(e) Unidentified Deposits Grievance Access deposits at one place. Neither the Ministry of
Mechanism Finance nor the Indian Banks’ Association
Answer: B performs this regulatory and technological
Explanation coordination role. Hence, the Reserve Bank of India
is the institution responsible for conceptualising,
The correct expansion of the acronym UDGAM is
developing, and operationalising the UDGAM
Unclaimed Deposits – Gateway to Access
portal nationwide.
inforMation. The name reflects the core objective
of the portal, which is to act as a single, unified 56. The Unclaimed Deposit Reference Number
gateway for accessing information related to (UDRN), assigned to each unclaimed account or
unclaimed bank deposits. The emphasis is on deposit, is generated by banks through which of
information access rather than direct claim the following systems?
settlement or grievance handling. Other options हर अिक्लेम्ि अिाउं ि या निपॉनज़ि ि नदया िािे िािा
suggest monitoring, grievance redressal, or अिक्लेम्ि निपॉनज़ि रे फरें स िंबर (UDRN), बैंि इिमें से
account management functions, which are not the निस नसस्टम िे ज़ररए िेिरे ि िरते हैं ?
primary purpose of UDGAM. By focusing on access
(a) RBI reporting portal
to information, the portal helps depositors,
(b) UDGAM platform
nominees, and legal heirs identify unclaimed
(c) Core Banking Solution (CBS)
deposits across banks in a centralised manner.
(d) DICGC system
55. The UDGAM portal, aimed at providing a (e) SEBI depository framework
unified search facility for unclaimed deposits, has
Answer: C
been developed and launched by which of the
268

Explanation
following institutions?
The Unclaimed Deposit Reference Number is
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generated by banks through their Core Banking

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Solution systems. The Core Banking Solution is the one year and is scheduled to conclude on which of
centralised technology platform used by banks to the following dates?
manage customer accounts, transactions, and भारतीय ररििि बैंि िी "फैनसनििे निं ग एक्सेिरे िे ि पेआउि
internal records. Since unclaimed deposits – इिऑपरे निि अिाउं ि्स और अिक्लेम्ि निपॉनिि् स"
originate from banks’ own account databases, CBS
िाम िी स्कीम एि साि िी अिनध िे निए चािू रहे गी और
is the most appropriate system for generating and
यह निम्ननिखित में से निस तारीि ि ित्म ह िे िािी है ?
maintaining unique reference numbers such as
UDRN. This ensures accuracy, traceability, and (a) 31 March 2026
uniformity across branches. Neither the UDGAM (b) 30 June 2026
portal nor external institutions generate UDRNs; (c) 30 September 2026
they only use the reference number for search and (d) 31 December 2026
identification. (e) 31 March 2027
57. The MITRA portal, which facilitates Answer: C
identification of unclaimed and inactive mutual Explanation
fund investments, is hosted on which of the The RBI’s scheme Facilitating Accelerated Payout –
following platforms? Inoperative Accounts and Unclaimed Deposits has
नमत्रा प िि ि, ि नबिा क्लेम िािे और इिएखक्टि म्यूचुअि a fixed tenure of one year and is scheduled to
फंि इन्वेस्टमेंि िी पहचाि िरिे में मदद िरता है , conclude on 30 September 2026. The scheme
starts from the date of its announcement and is
निम्ननिखित में से निस प्लेिफॉमि पर ह स्ट निया गया है ?
designed as a time-bound initiative to encourage
(a) SEBI SCORES
reactivation of inoperative accounts and
(b) NSDL
settlement of unclaimed deposits. By clearly
(c) AMFI Portal
defining the end date, RBI aims to create urgency
(d) MF Central
among banks and depositors to complete pending
(e) CAMS Online
claims within the stipulated period. Therefore,
Answer: D combining both duration and timeline, the correct
Explanation end date of the one-year scheme is 30 September
The MITRA portal is hosted on MF Central, which 2026.
serves as a unified digital platform for mutual fund 59. In the context of banking and financial systems,
investors. MF Central integrates services provided which of the following best explains the concept of
by Registrars and Transfer Agents and enables a loan?
investors to access consolidated information बैंनिंग और फाइिेंनशयि नसस्टम िे संदभि में, निम्ननिखित में
across fund houses. Hosting MITRA on MF Central
से िौि सा ि ि िे िॉन्सेप्ट ि सबसे अच्छी तरह समझाता
allows investors to trace unclaimed and inactive
mutual fund investments efficiently using है ?
standardised search parameters. Other platforms (a) A non-repayable financial grant
such as SEBI SCORES, NSDL, AMFI, or CAMS Online (b) Money received without any obligation
serve different regulatory or service functions and (c) Funds borrowed with obligation to repay
are not designed for centralised tracing of principal with interest
unclaimed mutual fund investments. Therefore, MF (d) Amount received only for investment purposes
Central is the appropriate and designated platform (e) Deposit accepted by banks from customers
for hosting the MITRA portal.
Answer: C
58. The RBI’s scheme titled Facilitating Accelerated
269

Explanation
Payout – Inoperative Accounts and Unclaimed
A loan refers to funds borrowed by an individual,
Deposits will remain operational for a period of
business, or organisation from a bank or financial
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institution with a clear and legally enforceable (d) Original amount borrowed on which interest is
obligation to repay the amount. The borrower is calculated
required to return the principal along with interest (e) Processing fee charged by the lender
as per agreed terms and within a specified time Answer: D
period. Unlike grants or deposits, a loan creates a Explanation
debtor–creditor relationship and represents a
In banking and financial terminology, principal
credit exposure for the lender. The purpose of the
refers to the original amount of money borrowed
loan may vary, but repayment remains mandatory
by the borrower from the lender under a loan
irrespective of usage.
agreement. It is the base amount on which interest
60. A loan granted by a bank to an individual or is calculated throughout the loan tenure. The
business is classified under which category in principal does not include interest, processing fees,
banking terminology? or any other charges levied by the bank. Monthly
बैंनिंग शब्दाििी में निसी बैंि द्वारा निसी व्यखि या instalments consist of both principal and interest
नबज़िेस ि नदए गए ि ि ि निस िैिे गरी में क्लानसफाई components, but they are not the principal itself.
निया िाता है ? Since interest calculations and repayment
schedules are derived from this base amount,
(a) Deposit liability
identifying the principal is essential in
(b) Credit instrument
understanding loan cost and structure.
(c) Investment security
(d) Payment obligation 62. Which of the following sets of loans are secured
(e) Off-balance-sheet item loans, as they are backed by collateral?
Answer: B निम्ननिखित में से िौि से ि ि नसक्य िि ि ि हैं , क्य नं ि िे
Explanation ि िैिरि द्वारा समनथित हैं ?
A loan granted by a bank to an individual or (a) Personal loan, education loan, credit card loan
business is classified as a credit instrument in (b) Home loan, gold loan, loan against property,
banking terminology. This is because the bank loan against fixed deposit
extends credit to the borrower with a legally (c) Consumer durable loan, payday loan,
enforceable obligation to repay the principal along microfinance loan
with interest within an agreed time period. Such (d) Education loan, personal loan, unsecured
transactions create a debtor–creditor relationship business loan
between the bank and the borrower. Loans form a (e) Credit card loan, overdraft, clean loan
major component of a bank’s assets and generate Answer: B
interest income for the bank. They are distinct Explanation
from deposits, which are liabilities, and from Secured loans are those loans that are backed by
investment securities, which involve ownership collateral, which the lender can legally seize and
claims. sell in case the borrower fails to repay. In India,
61. In banking and financial terminology, principal common examples of secured loans include home
in a loan agreement refers to which of the loans, gold loans, loans against property, and loans
following components? against fixed deposits. In each case, a tangible asset
बैंनिंग और फाइिेंनशयि शब्दाििी में, ि ि एग्रीमेंि में such as property, gold jewellery, or an existing
नप्रंनसपि िा मतिब निम्ननिखित में से निस िॉम्प िेंि से fixed deposit is pledged as security. The presence
ह ता है ? of collateral reduces the credit risk for banks and
generally allows borrowers to access funds at
270

(a) Total repayment amount including interest

lower interest rates compared to unsecured loans.
(b) Interest charged over the loan period
(c) Monthly instalment paid by the borrower
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63. Which of the following features most distinctly affordable credit for sectors that are vital for
differentiates a demand loan from a term loan in employment generation and inclusive growth.
banking practice? Unlike commercial loans, concessional loans are
बैंनिंग प्रैखक्टस में निम्ननिखित में से िौि सी निशेषता निमां ि not aimed at maximising bank profitability or
ि ि ि िमि ि ि से सबसे अिग िरती है ? financing speculative activities. Instead, they align
with policy goals and development priorities. By
(a) Presence of collateral
lowering the cost of borrowing, such loans help
(b) Lower interest rate
strengthen priority sectors and contribute to
(c) Fixed repayment tenure
sustainable economic growth.
(d) Government interest subsidy
65. Which of the following combinations correctly
(e) Repayable on demand without prior notice
matches the secured loan with its defining
Answer: E
characteristic?
Explanation
निम्ननिखित में से िौि सा िॉखििेशि नसक्य िि ि ि ि
A demand loan is distinctly different from a term
उसिी िास निशेषता िे साथ सही ढं ग से मैच िरता है ?
loan primarily because it is repayable on demand
without prior notice. In a demand loan, the lender (a) Home Loan – Repayable on demand without
has the right to recall the loan at any time, and the fixed tenure
borrower must repay the outstanding amount (b) Gold Loan – Short-term loan secured by easily
immediately upon demand. In contrast, term loans liquidated collateral
have a fixed repayment schedule with a defined (c) Loan Against Property – Unsecured loan for
tenure and instalment structure. Factors such as consumption purposes
collateral, interest rate, or government subsidy (d) Loan Against Fixed Deposit – Loan exceeding
may vary across both types of loans and are not the value of the deposit
defining features. (e) Home Loan – Loan without any asset backing
64. Concessional loans are generally offered at Answer: B
reduced interest rates with the primary objective Explanation
of promoting which of the following? In banking practice, gold loans are backed by
ररयायती ि ि आम तौर पर िम ब्याि दर ं पर नदए िाते हैं , pledged gold jewellery or coins, whose value can
निििा मुख्य उद्दे श्य निम्ननिखित में से निसे बढािा दे िा be quickly assessed and realised by the lender.
This high liquidity enables faster sanction, minimal
ह ता है ?
documentation, and relatively short tenures
(a) Short-term speculative activities compared to home loans or loans against property.
(b) Maximisation of bank profitability Home loans have long, fixed repayment tenures
(c) High-value consumer spending and are backed by residential property, not
(d) Inter-bank liquidity management repayable on demand. Loans against property are
(e) Priority and development sectors such as secured, not unsecured, while loans against fixed
agriculture and MSMEs deposits are limited to a percentage of deposit
Answer: E value.
Explanation 66. In the context of banking and finance,
Concessional loans are offered at reduced interest unsecured loans are fundamentally different from
rates primarily to promote priority and secured loans mainly because they:
development sectors such as agriculture, small बैंनिंग और फाइिेंस िे मामिे में, अिनसक्य िि ि ि
businesses, and micro, small and medium
नसक्य िि ि ि से नबल्कुि अिग ह ते हैं , मुख्य रूप से
271

enterprises. The objective of concessional lending

इसनिए क्य नं ि िे:
is to support economic development, encourage
(a) They generally have shorter repayment tenures
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(b) They are offered exclusively by NBFCs facility is provided as cash credit, it is meant for
(c) They are invariably supported by government short-term working capital needs and therefore
subsidies carries a shorter maximum repayment period of
(d) They do not involve interest payments three years. This differentiation reflects the nature
of usage and risk profile of each component. Other
(e) They are sanctioned without collateral and
options are incorrect because they either reverse
depend entirely on borrower creditworthiness
the tenures, prescribe unrealistic durations, or
Answer: E
ignore clearly defined limits.
Explanation
68. As per the Reserve Bank of India (Pre-payment
Unsecured loans are fundamentally different from Charges on Loans) Directions, 2025, which of the
secured loans because they are sanctioned following loans cannot attract prepayment
without any collateral and rely entirely on the penalties if sanctioned or renewed?
borrower’s creditworthiness. In such loans,
ररज़िि बैंि ऑफ़ इं निया (ि ि पर प्री-पेमेंि चािेस) निदे श,
banks and financial institutions assess factors like
income stability, credit score, repayment history, 2025 िे अिुसार, अगर मंज़ूर या ररन्यू निए गए ह ,ं त इिमें
and overall financial capacity before approval. से निस ि ि पर प्री-पेमेंि पेिल्टी िहीं िग सिती?
Since no tangible asset is pledged as security, the (a) Fixed-rate loans to corporates
lender bears higher credit risk compared to (b) Floating-rate loans to individuals and MSMEs
secured loans, where recovery can be made (c) Business loans to large enterprises
through sale of collateral. As a result, unsecured (d) Term loans to non-individual borrowers
loans generally carry higher interest rates. They (e) Fixed-rate working capital loans
are not limited to NBFCs, are not subsidy-driven by Answer: B
default, and always involve interest payments. Explanation
67. With reference to the SME Credit Card scheme, The Reserve Bank of India (Pre-payment Charges
which of the following correctly specifies the on Loans) Directions, 2025, prohibit prepayment
maximum repayment periods applicable to the penalties on floating-rate loans granted to
term loan and cash credit components? individuals (for business or non-business
एसएमई क्रेनिि िािि स्कीम िे संबंध में, निम्ननिखित में से purposes) and Micro, Small, and Medium
िौि सा िमि ि ि और िैश क्रेनिि िंप िेंि पर िागू ह िे Enterprises (MSMEs), regardless of co-obligants or
िािी अनधितम रीपेमेंि अिनध ि सही ढं ग से बताता है ? repayment source, when sanctioned or renewed on
or after January 1, 2026.
(a) Term loan up to 3 years; cash credit up to 5
years This applies specifically to lenders like scheduled
(b) Term loan up to 5 years; cash credit up to 3 commercial banks (excluding Small Finance Banks,
years RRBs, LABs), Tier 4 Primary (Urban) Co-operative
(c) Both term loan and cash credit up to 1 year Banks, NBFC-Upper Layer, and All India Financial
(d) Term loan up to 10 years Institutions.
(e) No fixed repayment period is prescribed 69. As per the December 2025 Master Circular for
Answer: B Urban Co-operative Banks, at least what
percentage of advances must be small-value loans
Explanation
by March 2026?
Under the SME Credit Card scheme, the maximum
repayment period differs by facility type. When the अबिि ि ऑपरे निि बैंि ं िे निए नदसंबर 2025 िे मास्टर
credit is structured as a term loan, repayment is सिुििर िे अिुसार, माचि 2026 ति िम से िम नितिे
272

permitted for a longer horizon, extending up to five प्रनतशत एििां स छ िे -िैल्यू िािे ि ि ह िे चानहए?
years, allowing small enterprises to spread (a) 30%
instalments comfortably. In contrast, when the
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(c) 50% remove restrictive clauses that discourage

(d) 60% refinancing or lender switching.
(e) 75% 71. Priority Sector Lending (PSL) is fundamentally
Answer: C different from other forms of directed credit
Explanation because it:
As per the December 2025 Master Circular issued प्राय ररिी सेक्टर िेंनिं ग (PSL) िायरे क्टे ि क्रेनिि िे दू सरे
for Urban Co-operative Banks, at least 50% of रूप ं से मौनिि रूप से अिग है क्य नं ि यह:
total advances must consist of small-value loans (a) Fixes interest rates by RBI
by March 2026. This requirement has been (b) Mandates credit allocation irrespective of
introduced to encourage greater focus on retail borrower risk
and small borrowers and to reduce excessive (c) Targets structurally credit-deficient but
concentration of credit. By mandating a higher development-critical sectors
share of small-value loans, the Reserve Bank of (d) Is financed through government guarantees
India aims to strengthen financial inclusion, (e) Applies only to public sector banks
improve risk diversification, and align Urban Co-
Answer: C
operative Banks more closely with their
Explanation
community-based banking role. The directive also
reinforces prudent lending practices while Priority Sector Lending is distinct from other forms
supporting priority segments of the economy. of directed credit because it focuses on addressing
structural gaps in access to institutional finance
70. Which of the following entities are covered
rather than imposing rigid administrative controls.
under the RBI ban on pre-payment charges for
PSL channels bank credit towards sectors that are
eligible floating-rate loans?
development-critical but historically underserved,
य ग्य फ्ल निं ग-रे ि ि ि पर प्री-पेमेंि चािि पर RBI िे बैि िे such as agriculture, MSMEs, education, housing,
तहत इिमें से िौि सी एं नििीज़ ििर ह ती हैं ? and social infrastructure. It does not involve
(a) Scheduled Commercial Banks fixation of interest rates by RBI, nor does it compel
(b) NBFCs and Housing Finance Companies banks to ignore credit risk or depend on
(c) Co-operative banks and Regional Rural Banks government guarantees. PSL applies across bank
(d) Commercial banks, co-operative banks, NBFCs categories and seeks inclusive growth while
and All India Financial Institutions preserving commercial decision-making.
(e) Only lenders regulated under the Banking 72. The Rural Infrastructure Development Fund
Regulation Act (RIDF), linked with Priority Sector Lending
Answer: D shortfalls, is operated by:
Explanation प्राय ररिी सेक्टर िेंनिं ग िी िनमय ं से िुडा रूरि
The RBI ban on pre-payment charges for eligible इं फ्रास्टर क्चर िे ििपमेंि फंि (RIDF) निसिे द्वारा चिाया
floating-rate loans applies broadly across the िाता है :
regulated lending ecosystem. It covers Scheduled
(a) NABARD
Commercial Banks, co-operative banks, Non-
(b) Ministry of Finance
Banking Financial Companies (NBFCs), and All
(c) Reserve Bank of India
India Financial Institutions. The wide coverage
(d) SIDBI
ensures uniform borrower protection and prevents
(e) State Governments
regulatory arbitrage across different lender
Answer: A
categories. By extending the prohibition beyond
273

banks to NBFCs and AIFIs, RBI aims to promote fair Explanation

competition, enhance borrower mobility, and The Rural Infrastructure Development Fund
Page

(RIDF), which is linked to Priority Sector Lending

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shortfalls, is operated by the National Bank for (a) NPAs earn no interest
Agriculture and Rural Development (NABARD). (b) NPAs represent non-recoverable credit
RIDF was created to channel funds from banks that exposure
fail to meet their PSL targets into rural (c) NPAs are government-guaranteed
infrastructure projects such as irrigation, roads, (d) NPAs are already refinanced
and social infrastructure. NABARD manages these (e) NPAs belong to priority sector only
funds and deploys them through loans to state Answer: B
governments and state-owned corporations, Explanation
thereby ensuring that unmet priority sector
Non-Performing Assets are excluded while
obligations are redirected toward rural
computing Adjusted Net Bank Credit (ANBC)
development objectives.
because they represent credit exposure that is no
73. In the framework of Priority Sector Lending, longer productive or recoverable in normal
which institution serves as the principal agency for course. Since NPAs do not generate effective credit
financing and development of Micro, Small and flow to the economy, including them would
Medium Enterprises (MSMEs)? overstate a bank’s actual lending capacity.
प्राय ररिी सेक्टर िेंनिं ग िे फ्रेमििि में, माइक्र , स्मॉि और Excluding NPAs ensures that Priority Sector
मीनियम एं िरप्राइिेि (MSMEs) िी फाइिेंनसंग और Lending targets are calculated on the basis of
िे ििपमेंि िे निए िौि सी संस्था मुख्य एिेंसी िे तौर पर performing, usable credit, thereby reflecting the
िाम िरती है ? true ability of banks to support priority and
development-oriented sectors.
(a) NABARD
75. As per the new rule effective from 16 July
(b) RIDF
2025(recent update), all Central Government
(c) SIDBI
Department payments exceeding ________ must be
(d) AIF
routed through e-Kuber:
(e) SDF
Answer: C 16 िुिाई से िागू िए नियम (हानिया अपिे ि) िे अिुसार,
Explanation िेंद्र सरिार िे सभी निपािि मेंि में ________ से ज़्यादा िे
The institution most closely associated with Micro, पेमेंि ई-िुबेर िे ज़ररए ही निए िािे चानहए:
Small and Medium Enterprise (MSME) (a) ₹50 crore
financing under the Priority Sector Lending (b) ₹75 crore
framework is SIDBI. The Small Industries (c) ₹100 crore
Development Bank of India (SIDBI) is the apex (d) ₹500 crore
financial institution dedicated to the promotion,
(e) ₹1,000 crore
financing, and development of MSMEs. It provides
Answer: B
direct credit, refinancing to banks and NBFCs, and
developmental support to strengthen MSME credit Explanation
flow. In contrast, NABARD focuses on agriculture ● New rule (from 16 July 2025 recent
and rural development, while RIDF, AIF, and SDF update): > ₹75 crore mandatory via e-
serve different policy objectives. Kuber.
74. Which of the following best explains why Non- ● Applies to all Central Government
Performing Assets (NPAs) are excluded while Department payments.
computing Adjusted Net Bank Credit? ● Earlier threshold was ₹500 crore.
निम्ननिखित में से िौि सा सबसे अच्छी तरह बताता है नि ● Aims to reduce manual intervention for
274

एििस्टे ि िेि बैंि क्रेनिि िी गणिा िरते समय िॉि- high-value transactions.
परफॉनमिंग एसेि्स (NPA) ि क्य ं बाहर रिा िाता है ? ● Certain categories have ₹100 crore
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● Future target proposed even lower (₹50 MSMEs, education, housing, and social
crore). infrastructure.
76. Which of the following is NOT a key sector 78. Which category of banks has a Priority Sector
covered under Priority Sector Lending (PSL)? Lending target of 75% of ANBC, making it the
निम्ननिखित में से िौि सा प्राय ररिी सेक्टर िेंनिं ग (PSL) िे highest among all bank types?
तहत ििर निया गया मुख्य से क्टर िहीं है ? निस िैिे गरी िे बैंि ं िा प्राय ररिी सेक्टर िेंनिं ग िारगेि
(a) Agriculture एएिबीसी िा 75% है , ि सभी तरह िे बैंि ं में सबसे
(b) Micro, Small and Medium Enterprises (MSME) ज़्यादा है ?
(c) Education (a) Foreign Banks with more than 20 branches
(d) Capital Market Investments (b) Foreign Banks with less than 20 branches
(e) Renewable Energy (c) Domestic Commercial Banks
Answer: D (d) Regional Rural Banks
Explanation (e) Payments Banks
The sector not covered under Priority Sector Answer: D
Lending is Capital Market Investments. PSL Explanation
focuses on directing institutional credit to The bank category with the highest Priority
development-oriented and underserved sectors Sector Lending target of 75% of ANBC is
such as agriculture, MSMEs, education, and Regional Rural Banks (RRBs). RRBs are
renewable energy. Capital market investments are specifically designed to serve rural and semi-urban
speculative and market-driven in nature, aimed at areas, with a strong mandate to support
wealth creation rather than inclusive development, agriculture, MSMEs, and weaker sections. To
and therefore fall outside the scope of Priority reflect their developmental role and local focus,
Sector Lending. RBI prescribes a substantially higher PSL target for
77. For Domestic Commercial Banks (excluding RRBs compared to domestic commercial banks and
RRBs and SFBs), the overall Priority Sector foreign banks.
Lending target is fixed at: 79. A loan becomes a Non-Performing Asset (NPA)
घरे िू िमनशियि बैंि ं (RRB और SFB ि छ डिर) िे when interest and/or principal remains overdue
निए, िुि प्राय ररिी सेक्टर िेंनिं ग िारगेि तय निया गया है : for more than:
(a) 32% of ANBC ि ई ि ि िॉि-परफॉनमिंग एसेि (NPA) तब बि िाता है िब
(b) 40% of ANBC or CEOBSE, whichever is higher ब्याि और/या मूिधि इससे ज़्यादा समय ति बिाया रहता
(c) 75% of ANBC or CEOBSE, whichever is higher है :
(d) 18% of ANBC (a) 30 days
(e) 12% of ANBC (b) 60 days
Answer: B (c) 75 days
Explanation (d) 90 days
For Domestic Commercial Banks (excluding (e) 120 days
Regional Rural Banks and Small Finance Banks), Answer: D
the overall Priority Sector Lending (PSL) target Explanation
is fixed at 40% of Adjusted Net Bank Credit ● A loan is treated as a Non-Performing Asset
(ANBC) or Credit Equivalent of Off-Balance when scheduled repayments are not made on
Sheet Exposure (CEOBSE), whichever is higher. time.
275

This benchmark ensures that a substantial portion ● The RBI has prescribed a specific time limit to
of bank credit is directed towards priority and identify persistent default.
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development-oriented sectors such as agriculture,

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● If interest and/or principal remains unpaid 81. Under Priority Sector Lending, the overall
beyond 90 days, the account is classified as agriculture lending target for applicable banks is
NPA. fixed at:
● Short-term delays like 30 or 60 days fall under प्राय ररिी सेक्टर िेंनिं ग िे तहत, िागू बैंि ं िे निए िुि
stress categories, not NPA. िृनष िेंनिं ग िारगेि तय निया गया है :
● The 90-day norm ensures uniform asset (a) 12% of ANBC
classification across banks. (b) 15% of ANBC
80. The establishment of the first Asset (c) 18% of ANBC
Reconstruction Company (ARC) in India under the (d) 20% of ANBC
SARFAESI Act was based on the recommendations (e) 25% of ANBC
of which committee, and which entity became that Answer: C
first ARC?
Explanation
सरफेसी एक्ट िे तहत भारत में पहिी एसेि ररिंस्टर क्शि Under Priority Sector Lending, the overall
िंपिी (ARC) िी स्थापिा निस िनमिी िी नसफाररश ं पर agriculture lending target for applicable banks is
आधाररत थी, और िौि सी एं नििी िह पहिी एसेि fixed at 18% of Adjusted Net Bank Credit
ररिंस्टर क्शि िंपिी (ARC) बिी? (ANBC). This target is intended to ensure adequate
(a) Rangarajan Committee – NARCL flow of institutional credit to agriculture and allied
(b) Kelkar Committee – PARA activities, which remain critical for rural
(c) Malegam Committee – IDRCL livelihoods and economic stability. Within this
(d) Narasimham Committee – ARCIL overall target, specific sub-targets—such as
(e) Urjit Patel Committee – SBI ARC lending to Small and Marginal Farmers—further
strengthen inclusiveness and balanced agricultural
Answer: D
credit distribution.
Explanation
82. Under Agriculture Infrastructure within
● Asset Reconstruction Companies (ARCs) were
Priority Sector Lending, the maximum aggregate
conceptualised to tackle the growing problem
exposure per borrower permitted from the
of Non-Performing Assets (NPAs) in the
banking system is:
banking system.
प्राय ररिी सेक्टर िेंनिं ग िे तहत एग्रीिल्चर इं फ्रास्टर क्चर में,
● The Narasimham Committee (1998) on
Banking Sector Reforms recommended the बैंनिंग नसस्टम से प्रनत उधारिताि अनधितम िुि एक्सप ज़र
creation of ARCs. िी अिुमनत है :
● The objective was to allow banks and financial (a) ₹50 crore
institutions to transfer bad loans and clean up (b) ₹75 crore
their balance sheets. (c) ₹90 crore
● This recommendation was implemented (d) ₹100 crore
through the SARFAESI Act, 2002, which (e) No prescribed ceiling
provided a legal framework for ARCs. Answer: D
● Under the SARFAESI Act, the first ARC in India Explanation
was set up in 2002. Under Agriculture Infrastructure within the
● The first ARC was Asset Reconstruction Priority Sector Lending framework, the maximum
Company (India) Limited (ARCIL). aggregate exposure per borrower permitted
● ARCIL was promoted jointly by State Bank of from the banking system is ₹100 crore. This
276

India (SBI), ICICI Bank, Punjab National relatively higher ceiling is intended to support
Bank (PNB), and IDBI Bank. capital-intensive investments in agricultural
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infrastructure such as warehouses, cold storage,

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logistics, and processing facilities, which are Explanation

essential for strengthening the agricultural value Under Priority Sector Lending norms, education
chain and reducing post-harvest losses. loans eligible for PSL classification are
[Link] Priority Sector Lending, Farm Credit to restricted to a maximum amount of ₹25 lakh.
Corporate Farmers / FPOs / FPCs / partnerships / This cap applies to loans granted to individuals for
co-operatives is eligible subject to which maximum educational purposes, including vocational and
loan limit per borrowing entity? professional courses, whether pursued in India or
प्राय ररिी सेक्टर िेंनिं ग िे तहत, िॉपोरे ि निसाि ं / FPOs abroad. The limit ensures that priority sector
/ FPCs / पािि िरनशप / ि -ऑपरे निव्स ि फामि क्रेनिि benefits are targeted toward students from
middle- and lower-income backgrounds who face
नदया िा सिता है , निसिे निए प्रनत उधार िेिे िािी इिाई
constraints in accessing institutional finance. By
अनधितम ि ि निनमि नितिी है ?
prescribing a clear ceiling, RBI balances the
(a) ₹2.5 crore objective of promoting human capital formation
(b) ₹4 crore with prudent credit allocation, preventing high-
(c) ₹7.5 crore value education loans from diluting the
(d) ₹10 crore developmental intent of PSL.
(e) No upper limit 85. For repairs to damaged dwelling units located
Answer: B in centres with population of 50 lakh and above,
Explanation the maximum PSL-eligible loan amount is:
Under Priority Sector Lending, Farm Credit to 50 िाि और उससे ज़्यादा आबादी िािे शहर ं में िराब हुए
Corporate Farmers, FPOs, FPCs, partnership घर ं िी मरम्मत िे निए, ज़्यादा से ज़्यादा पीएसएि-य ग्य
firms, and co-operatives of farmers is eligible
ि ि िी रिम यह है :
subject to a maximum loan limit of ₹4 crore per
(a) ₹10 lakh
borrowing entity. This ceiling ensures that
(b) ₹12 lakh
priority sector benefits remain focused on
(c) ₹15 lakh
supporting agricultural production, pre- and post-
(d) ₹50 lakh
harvest activities, and allied operations of farmer-
(e) ₹63 lakh
based collectives, rather than large commercial
agribusinesses. The limit helps balance the Answer: C
objective of scaling farm operations through Explanation
collective entities while preserving the For repairs to damaged dwelling units located in
developmental and inclusive intent of agricultural centres with a population of 50 lakh and above,
credit under the PSL framework. the maximum PSL-eligible loan amount is ₹15
84. Under Priority Sector Lending norms, lakh. This limit ensures that priority sector
education loans eligible for classification are housing support in large metropolitan areas
restricted to a maximum amount of: remains focused on essential repairs and
प्राय ररिी सेक्टर िेंनिं ग नियम ं िे तहत, क्लानसनफिेशि िे improvements rather than extensive renovation or
luxury upgrades. Along with population-based
निए एनिनिबि एिुिेशि ि ि िी अनधितम रानश सीनमत
thresholds, this ceiling helps RBI align repair loans
है : with the objective of affordable housing and basic
(a) ₹10 lakh living conditions, while preventing misuse of
(b) ₹15 lakh Priority Sector Lending benefits in high-value
(c) ₹20 lakh urban real estate markets.
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(d) ₹25 lakh 86. Loans extended by banks to government

(e) No upper limit agencies for construction of dwelling units or slum
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Answer: D clearance and rehabilitation qualify under PSL only

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when the carpet area per dwelling unit does not not applicable, reflecting a differentiated
exceed: regulatory treatment aligned with their
सरिारी एिेंनसय ं ि बैंि ं द्वारा घर बिािे या झुग्गी-झ पडी cooperative structure and localised operations.
हिािे और पुििाि स िे निए नदए गए ि ि PSL िे तहत तभी The general ₹2 lakh cap ensures that weaker
section benefits remain focused on small-value,
मािे िाएं गे, िब प्रनत घर िा िारपेि एररया इससे ज़्यादा ि
inclusion-oriented lending. This provision
ह:
strengthens gender-focused financial inclusion
(a) 75 sq. m while allowing UCBs greater flexibility in
(b) 60 sq. m supporting women borrowers within their specific
(c) 50 sq. m regulatory framework.
(d) 45 sq. m 88. Which of the following best describes the
(e) No limit institutional position of the Reserve Bank of India
Answer: B in the Indian financial system?
Explanation निम्ननिखित में से िौि सा भारतीय नित्तीय प्रणािी में ररज़िि
Loans extended by banks to government agencies बैंि ऑफ़ इं निया िी संस्थागत खस्थनत िा सबसे अच्छा िणिि
for construction of dwelling units or slum
िरता है ?
clearance and rehabilitation qualify under
(a) A commercial bank owned by the Government
Priority Sector Lending only when the carpet
(b) A statutory regulatory authority under SEBI
area per dwelling unit does not exceed 60
(c) The apex monetary authority and central bank
square metres. This condition ensures that such
of India
lending supports affordable housing and
(d) A development finance institution
rehabilitation of economically weaker sections
(e) An autonomous cooperative body
rather than larger or premium housing units. By
prescribing a carpet area ceiling, RBI aligns PSL Answer: C
housing benefits with social welfare objectives and Explanation
prevents misuse of priority sector classification for The Reserve Bank of India occupies the position of
non-inclusive urban housing projects. the apex monetary authority and central bank
87. Loans to individual women beneficiaries of the Indian financial system. Unlike commercial
qualify under Weaker Sections up to ₹2 lakh per banks, it does not accept public deposits or lend for
borrower, except when extended by: profit. Instead, RBI is responsible for formulating
व्यखिगत मनहिा िाभानथिय ं ि नदए गए ि ि, प्रनत and implementing monetary policy, regulating
and supervising banks, managing currency
उधारिताि ₹2 िाि ति िीिर सेक्शि िे तहत आते हैं ,
issuance, and maintaining overall financial
नसिाय िब िे इििे द्वारा नदए गए ह :ं stability. It controls money supply and credit
(a) Public Sector Banks conditions to achieve macroeconomic objectives
(b) Private Sector Banks such as price stability and growth. RBI also
(c) Regional Rural Banks manages foreign exchange reserves and oversees
(d) Small Finance Banks payment and settlement systems. Hence, its
(e) Urban Co-operative Banks institutional role is that of a central bank, not a
Answer: E development finance institution, cooperative body,
Explanation or regulator under SEBI.
Loans to individual women beneficiaries qualify 89. The statutory provision for the establishment
under the Weaker Sections category of Priority of the Reserve Bank of India was made under
278

Sector Lending up to ₹2 lakh per borrower, which of the following Acts?

except when extended by Urban Co-operative
Page

Banks (UCBs). For UCBs, this monetary ceiling is

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ररज़िि बैंि ऑफ़ इं निया िी स्थापिा िे निए िैधानिि core central banking roles such as currency
प्रािधाि निम्ननिखित में से निस अनधनियम िे तहत निया issuance, banker to government, and regulation of
गया था? the banking system from this date. Other dates like
1947 and 1950 relate to Independence and the
(a) Banking Regulation Act, 1949
Constitution, while 1949 marks nationalisation.
(b) Reserve Bank of India Act, 1934
Hence, 1 April 1935 is the correct operational
(c) Reserve Bank of India Act, 1935
commencement date.
(d) Government of India Act, 1935
91. By operating the credit and currency system of
(e) Companies Act, 1932
the country to its advantage, the Reserve Bank of
Answer: B
India primarily seeks to:
Explanation
दे श िे क्रेनिि और िरें सी नसस्टम ि अपिे फायदे िे निए
The statutory basis for the establishment of the
ऑपरे ि िरिे, ररज़िि बैंि ऑफ़ इं निया मुख्य रूप से ये
Reserve Bank of India is provided under the
Reserve Bank of India Act, 1934. This Act laid चाहता है :
down the legal framework for setting up India’s (a) Promote private sector lending
central bank, defining its objectives, functions, (b) Eliminate foreign exchange risk
governance structure, and powers. Although RBI (c) Maximise government profits
commenced operations in 1935, the enabling (d) Achieve monetary and financial stability
legislation was enacted a year earlier. Other Acts (e) Regulate capital markets
such as the Banking Regulation Act, 1949 deal with Answer: D
commercial banks, while the Government of India Explanation
Act, 1935 addressed constitutional governance. By operating the credit and currency system of the
Therefore, the RBI Act, 1934 remains the country, the Reserve Bank of India primarily aims
foundational law governing the creation and to achieve monetary and financial stability. RBI
functioning of the Reserve Bank of India. regulates the supply of money and credit to ensure
90. On which of the following dates did the Reserve that economic growth is not accompanied by
Bank of India commence its operations as India’s excessive inflation or instability. A stable credit
central banking institution? and currency system supports confidence in the
निम्ननिखित में से निस तारीि ि ररज़िि बैंि ऑफ़ इं निया िे financial system, ensures smooth functioning of
भारत िे सेंिरि बैंनिंग संस्थाि िे तौर पर अपिा िाम शुरू banks, and promotes sustainable growth. The
निया था? objective is not to maximise profits or regulate
capital markets directly, which fall under other
(a) 1 April 1935
authorities like SEBI. Thus, managing currency
(b) 1 January 1934
issuance and credit flow helps RBI maintain
(c) 15 August 1947
stability across the financial and economic system.
(d) 1 January 1949
92. The establishment of the Reserve Bank of India
(e) 26 January 1950
was preceded by the recommendations of which of
Answer: A
the following bodies?
Explanation
भारतीय ररज़िि बैंि िी स्थापिा से पहिे निम्ननिखित में से
The Reserve Bank of India commenced its
निस संस्था िी नसफाररशें िी गई थीं?
operations on 1 April 1935, marking the
beginning of central banking in India. Although the (a) Radcliffe Committee
RBI Act was passed in 1934, the institution became (b) Royal Commission on Indian Currency and
279

operational a year later. This date is significant as Finance

it distinguishes the enactment of legislation from (c) Banking Commission of India
Page

the start of functioning. RBI began performing

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(d) Narasimham Committee forex markets, and banker to government involves

(e) Chamberlain Commission maintaining government accounts.
Answer: B [Link] the Reserve Bank of India commenced its
Explanation operations, the office of the Governor was first held
The establishment of the Reserve Bank of India by __________, while the distinction of being the first
was preceded by the recommendations of the Indian Governor of the RBI belongs to __________.
Royal Commission on Indian Currency and िब ररज़िि बैंि ऑफ़ इं निया िे अपिा िाम शुरू निया, त
Finance, constituted in 1926. This commission गिििर िा पद सबसे पहिे __________ िे संभािा था, िबनि
examined India’s monetary system and highlighted भारतीय ररििि बैंि िे पहिे भारतीय गिििर ह िे िा गौरि
the need for a central banking institution to __________ ि नमिा।
regulate currency and credit. Based on its
(a) James Taylor; Raghuram Rajan
recommendations, the Reserve Bank of India Act,
(b) James Taylor; C. D. Deshmukh
1934 was enacted, leading to the establishment of
(c) Osborne Smith; Bimal Jalan
RBI in 1935. Other commissions listed either dealt
(d) Osborne Smith; C. D. Deshmukh
with constitutional or administrative reforms or
(e) Raghuram Rajan; Urjit Patel
came later. Hence, the Royal Commission on Indian
Currency and Finance played the most crucial role Answer: D
in laying the foundation for India’s central bank. Explanation
93. Which of the following role–function pairings When the Reserve Bank of India commenced
of a central bank is incorrectly matched? operations in 1935, Osborne Smith was appointed
as its first Governor, reflecting the colonial
सेंिरि बैंि िे निम्ननिखित र ि-फंक्शि पेयररं ग में से िौि सा
administrative structure of that period. He was a
गित तरीिे से मैच निया गया है ?
British banker and served during the early
(a) Monetary Authority – Price stability formative years of RBI. The distinction of being the
(b) Financial Supervision – Depositor protection first Indian Governor of the RBI belongs to C. D.
(c) Foreign Exchange Management – Orderly Deshmukh, who assumed office in 1943. His
foreign exchange markets appointment marked an important transition
(d) Currency & Payment Systems – Fiscal policy toward Indian leadership in key financial
formulation institutions before Independence. Options
(e) Banker to Government – Maintenance of mentioning later governors or incorrect
government accounts personalities are factually wrong. Hence, the
Answer: D correct pairing is Osborne Smith as the first
Explanation Governor and C. D. Deshmukh as the first Indian
The incorrectly matched role–function pairing is Governor.
Currency & Payment Systems – Fiscal policy 95. The Reserve Bank of India has four zonal
formulation. Fiscal policy formulation is the offices representing different regions of the
responsibility of the government, not the central country. Which of the following correctly lists
bank. The central bank’s role in currency and these offices?
payment systems involves issuing currency, भारतीय ररज़िि बैंि िे दे श िे अिग-अिग क्षेत्र ं ि ररप्रेिेंि
ensuring adequate supply of clean notes, and िरिे िािे चार ज़ िि ऑनफस हैं । इिमें से िौि सा ऑप्शि
maintaining secure and efficient payment
इि ऑनफस ं िी सही निस्ट बताता है ?
mechanisms. Other pairs are correctly matched:
monetary authority focuses on price stability, (a) Delhi, Chennai, Mumbai, Kolkata
280

financial supervision aims at depositor protection, (b) Mumbai, Kolkata, Hyderabad, Delhi
foreign exchange management ensures orderly (c) Chennai, Bengaluru, Delhi, Mumbai
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(d) Kolkata, Mumbai, Jaipur, Chennai money supply and must be repaid within a short
(e) Delhi, Mumbai, Pune, Kolkata period, maintaining fiscal and monetary discipline.
Answer: A 97. The Repo Rate is best defined as the rate at
Explanation which the Reserve Bank of India:
The Reserve Bank of India has four zonal offices रे प रे ि ि सबसे अच्छे तरीिे से इस तरह से समझा िा
to administer and supervise its functions across सिता है नि यह िह रे ि है निस पर भारतीय ररज़िि बैंि:
different regions of the country. These are located (a) Borrows funds from commercial banks by
at Kolkata (East), Mumbai (West), Delhi selling government securities
(North), and Chennai (South). This zonal (b) Lends short-term funds to commercial banks
structure helps RBI decentralise operations while against government securities under a repurchase
maintaining effective regional oversight. Other agreement
options incorrectly include cities such as (c) Provides long-term credit to financial
Hyderabad, Bengaluru, Jaipur, or Pune, which are institutions for development purposes
not zonal headquarters. (d) Accepts deposits from banks to absorb excess
[Link] and Means Advances (WMA) provided by liquidity
the Reserve Bank of India to the Central and State (e) Fixes interest rates for government borrowings
Governments are best described as: Answer: B
ररज़िि बैंि ऑफ़ इं निया द्वारा िेंद्र और राि सरिार ं ि Explanation
नदए िािे िािे िेज़ एं ि मीन्स एििां सेज़ (WMA) ि सबसे The Repo Rate is the interest rate at which the
अच्छे तरीिे से इस तरह बताया िा सिता है : Reserve Bank of India lends short-term funds
(a) Long-term loans for financing fiscal deficit to commercial banks against government
(b) Permanent monetisation of government securities under a repurchase agreement. In this
expenditure arrangement, banks sell government securities to
(c) Market borrowings raised through treasury the RBI with an agreement to repurchase them at a
bills predetermined price on a future date. The repo
(d) Grants given to governments without rate is a crucial monetary policy tool used to
repayment obligation regulate liquidity and control inflation. When the
(e) Temporary advances to bridge short-term repo rate is lowered, borrowing becomes cheaper
mismatches in receipts and payments for banks, leading to lower lending rates and EMIs.
Answer: E Conversely, an increase in repo rate tightens
liquidity and curbs inflationary pressures in the
Explanation
economy.
Ways and Means Advances (WMA) are temporary
[Link] Central Board of Directors of the Reserve
advances extended by the Reserve Bank of India
Bank of India is appointed or nominated by which
to the Central and State Governments to bridge
authority?
short-term mismatches between receipts and
expenditures. These advances are meant to ररज़िि बैंि ऑफ़ इं निया िे सेंिरि ब िि ऑफ़ िायरे क्टसि ि
ensure smooth government cash management and निस अथॉररिी द्वारा नियुि या िॉनमिेि निया िाता है ?
avoid payment disruptions. WMAs are short-term (a) Parliament of India
in nature, generally repayable within three (b) Reserve Bank of India
months, and are provided within prescribed limits (c) Ministry of Corporate Affairs
at interest rates linked to the repo rate. They (d) Government of India
replaced the earlier system of ad-hoc treasury bills. (e) President of India independently
281

Importantly, WMAs are not instruments of deficit Answer: D

financing, as they do not permanently increase
Explanation
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The Central Board of Directors of the Reserve providing deposit insurance to bank depositors, is
Bank of India is appointed or nominated by the headed by which of the following authorities?
Government of India, in accordance with the निपॉनिि इं श्य रें स एं ि क्रेनिि गारं िी िॉपोरे शि (DICGC),
provisions of the Reserve Bank of India Act. This ि बैंि िमािताि ओं ि निपॉनिि इं श्य रें स दे िे िे निए
ensures public accountability and alignment of the
भारतीय ररज़िि बैंि िी पूरी तरह से स्वानमत्व िािी सहायि
central bank’s governance with national economic
िंपिी िे रूप में िाम िरता है , उसिा प्रमुि इिमें से िौि
objectives. While RBI functions independently in
monetary policy matters, the appointment power सा अनधिारी ह ता है ?
rests with the government to maintain institutional (a) Governor of the Reserve Bank of India
oversight. Parliament, RBI itself, or individual (b) Finance Secretary, Government of India
constitutional authorities like the President do not (c) Deputy Governor of the Reserve Bank of India
independently appoint the board. The board (d) Chairman nominated by the Parliament
comprises official directors, non-official directors (e) Chief Executive Officer of a public sector bank
nominated by the government, and representatives Answer: C
from local boards, reflecting a structured and Explanation
statutory governance framework. The Deposit Insurance and Credit Guarantee
99. Members of the Central Board of Directors of Corporation (DICGC) is a wholly owned
the Reserve Bank of India are appointed or subsidiary of the Reserve Bank of India (RBI)
nominated by the Government of India for a tenure and plays a crucial role in protecting bank
of: depositors by providing deposit insurance
ररज़िि बैंि ऑफ़ इं निया िे सेंिरि ब िि ऑफ़ िायरे क्टसि िे coverage. The head of the DICGC is a Deputy
सदस् ं ि भारत सरिार द्वारा इतिे समय िे निए नियुि Governor of the Reserve Bank of India, who
या िॉनमिेि निया िाता है : functions as its Chairperson. This arrangement
ensures close coordination between the RBI and
(a) 2 years
DICGC in matters relating to banking stability and
(b) 3 years
depositor protection. The Governor of RBI does not
(c) 4 years
directly head the corporation, nor is it led by the
(d) 5 years
Finance Secretary, Parliament-nominated
(e) 6 years
chairman, or a public sector bank executive.
Answer: C
101. Under the Deposit Insurance and Credit
Explanation
Guarantee Corporation (DICGC) scheme, the
Members of the Central Board of Directors of the maximum amount insured per depositor
Reserve Bank of India are appointed or nominated (including principal and interest) is:
by the Government of India for a tenure of four
निपॉनिि इं श्य रें स एं ि क्रेनिि गारं िी िॉपोरे शि (DICGC)
years. This fixed tenure provides continuity and
स्कीम िे तहत, प्रनत िमािताि (मूिधि और ब्याि सनहत)
stability in the governance of the central bank
while allowing periodic renewal of leadership and अनधितम बीनमत रानश है :
expertise. The tenure applies to both official and (a) ₹2 lakh
non-official directors, subject to provisions of the (b) ₹2.5 lakh
RBI Act. A four-year term strikes a balance (c) ₹3 lakh
between independence and accountability, (d) ₹5 lakh
ensuring that policy decisions are not influenced (e) ₹10 lakh
by frequent changes in leadership. Answer: D
282

100. The Deposit Insurance and Credit Guarantee Explanation

Corporation (DICGC), which functions as a wholly Under the Deposit Insurance and Credit
Page

owned subsidiary of the Reserve Bank of India for Guarantee Corporation (DICGC) scheme, the

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maximum amount insured per depositor is ₹5 103. The Reserve Bank Innovation Hub (RBIH),
lakh, which includes both principal and accrued established to strengthen innovation and
interest. This insurance limit applies per technological expertise within the RBI ecosystem,
depositor per bank, irrespective of the number of is headquartered at:
deposit accounts held in the same bank. The ररज़िि बैंि इि नसस्टम में इि िेशि और िे क्न िॉनििि
objective of this coverage is to protect small and निशेषज्ञता ि मज़बूत िरिे िे निए स्थानपत ररज़िि बैंि
retail depositors and maintain public confidence in
इि िेशि हब (RBIH) िा मुख्यािय यहााँ है :
the banking system. The insurance becomes
payable in case a bank fails or is liquidated. Earlier, (a) Mumbai
the coverage limit was ₹1 lakh, which was (b) Hyderabad
enhanced to ₹5 lakh to strengthen depositor (c) Bengaluru
protection. (d) Chennai
(e) Pune
102. With reference to the Deposit Insurance
coverage provided by the Deposit Insurance and Answer: C
Credit Guarantee Corporation (DICGC), which of Explanation
the following categories of banks does NOT fall The Reserve Bank Innovation Hub (RBIH) was
within the scope of insured banks, as per the established by the Reserve Bank of India in 2022
provisions of the DICGC Act? to promote innovation, foster applied research,
निपॉनिि इं श्य रें स एं ि क्रेनिि गारं िी िॉपोरे शि (DICGC) and build advanced technological capabilities
within the RBI ecosystem. The hub plays a key role
द्वारा नदए गए निपॉनिि इं श्य रें स ििरे ि िे संबंध में,
in supporting fintech innovation, digital public
निपॉनिि इं श्य रें स एं ि क्रेनिि गारं िी िॉपोरे शि (DICGC)
infrastructure, and technology-driven solutions for
एक्ट िे प्रािधाि ं िे अिुसार, बैंि ं िी इिमें से िौि सी the financial sector. The headquarters of RBIH is
िैिे गरी इं श्य िि बैंि ं िे दायरे में िहीं आती है ? located in Bengaluru, a city widely recognised as
(a) Commercial banks India’s technology and innovation hub. Locating
(b) Regional Rural Banks RBIH in Bengaluru enables close collaboration with
(c) Local Area Banks technology firms, startups, and research
institutions.
(d) Eligible cooperative banks
104. The Unified Lending Interface (ULI)
(e) State Land Development Banks
introduced by the Reserve Bank of India is best
Answer: E
described as a:
Explanation
भारतीय ररज़िि बैंि द्वारा पेश निए गए यूनिफाइि िेंनिं ग
Under the Deposit Insurance and Credit
इं िरफ़ेस (ULI) ि सबसे अच्छे तरीिे से इस तरह बताया
Guarantee Corporation (DICGC) Act, deposit
insurance coverage is extended to commercial िा सिता है :
banks, Regional Rural Banks (RRBs), Local Area (a) Digital public infrastructure for facilitating
Banks, and eligible cooperative banks operating credit delivery
in India. However, State Land Development (b) Supervisory technology platform for banks
Banks (SLDBs) do not fall within the scope of (c) Digital payment settlement system
insured banks under the DICGC framework. (d) Core banking replacement framework
Deposits of SLDBs, particularly those maintained (e) Credit guarantee mechanism for MSMEs
with State cooperative banks, are specifically Answer: A
excluded from insurance coverage. This exclusion Explanation
283

is based on the specialised nature and operational The Unified Lending Interface (ULI) introduced
structure of these institutions. by the Reserve Bank of India is best described as
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a digital public infrastructure designed to

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facilitate seamless credit delivery. Its primary (d) ReBIT and IFTAS
objective is to enable frictionless and secure flow (e) BRBNMPL and ReBIT
of borrower data among lenders, service Answer: D
providers, and data sources, thereby improving Explanation
credit access, especially for farmers and MSMEs.
Among the subsidiaries of the Reserve Bank of
ULI does not function as a payment system,
India (RBI), both Reserve Bank Information
supervisory tool, core banking platform, or credit
Technology Private Limited (ReBIT) and Indian
guarantee mechanism. Instead, it acts as a common
Financial Technology and Allied Services
technological framework that reduces information
(IFTAS) are headquartered in Mumbai. ReBIT,
asymmetry, lowers transaction costs, and speeds
established in 2016, provides IT and cybersecurity
up loan processing.
support to the RBI and the broader financial
105. Bharatiya Reserve Bank Note Mudran Private system, while IFTAS, set up in 2014, delivers
Limited (BRBNMPL) manages currency note technology and allied services to RBI and its
printing presses at which of the following regulated entities. In contrast, Bharatiya Reserve
locations? Bank Note Mudran Private Limited (BRBNMPL)
भारतीय ररज़िि बैंि ि ि मुद्रण प्राइिेि निनमिे ि is headquartered in Bengaluru, not Mumbai.
(BRBNMPL) इिमें से निि िगह ं पर िरें सी ि ि नप्रंनिं ग 107. Which of the following options correctly
प्रेस िा मैिेिमेंि िरती है ? differentiates the Security Printing and Minting
(a) Nashik and Dewas Corporation of India Limited (SPMCIL) from
(b) Salboni and Dewas Bharatiya Reserve Bank Note Mudran Private
(c) Mysore and Salboni Limited (BRBNMPL)?
(d) Nashik and Mysore निम्ननिखित में से िौि सा ऑप्शि नसक्य ररिी नप्रंनिं ग एं ि
(e) Dewas and Mysore नमंनिं ग िॉपोरे शि ऑफ इं निया निनमिे ि (SPMCIL) और
Answer: C भारतीय ररज़िि बैंि ि ि मुद्रण प्राइिेि निनमिे ि
Explanation (BRBNMPL) िे बीच सही अंतर बताता है ?
Bharatiya Reserve Bank Note Mudran Private (a) Both are subsidiaries of the Reserve Bank of
Limited (BRBNMPL) is a wholly owned subsidiary India
of the Reserve Bank of India responsible for (b) SPMCIL functions under the Ministry of
printing Indian currency notes. To carry out this Finance, while BRBNMPL is under the Reserve
function, BRBNMPL operates two currency note Bank of India
printing presses, one located at Mysore in
(c) SPMCIL is under the Department of Financial
Karnataka and the other at Salboni in West
Services, while BRBNMPL is under the Department
Bengal. These presses were established to
of Economic Affairs
augment the currency printing capacity of the
(d) Both are under the Coin and Currency Division
country and reduce dependence on older
of the Ministry of Finance
government presses.
(e) BRBNMPL is a Government of India PSU, while
106. Which of the following subsidiaries of the
SPMCIL is an RBI subsidiary
Reserve Bank of India are headquartered in
Mumbai? Answer: B
Explanation
ररज़िि बैंि ऑफ़ इं निया िी इिमें से निि सखिनियरी
The Security Printing and Minting Corporation
िंपनिय ं िा हे िक्वािि र मुंबई में है ?
of India Limited (SPMCIL) and Bharatiya
284

(a) BRBNMPL only

Reserve Bank Note Mudran Private Limited
(b) ReBIT only
(BRBNMPL) differ mainly in terms of ownership
(c) IFTAS only
Page

and administrative control. SPMCIL is a

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Government of India public sector undertaking ह िे िािे िागज़ िे प्र िक्शि िे निए अपिी नसक्य ररिी
functioning under the Ministry of Finance, पेपर नमि चिाता है ?
specifically the Coin and Currency Division of the
(a) Dewas, Madhya Pradesh
Department of Economic Affairs, and is
(b) Salboni, West Bengal
responsible for printing and minting activities for
(c) Mysuru, Karnataka
the Government of India. In contrast, BRBNMPL is
(d) Narmadapuram, Madhya Pradesh
a wholly owned subsidiary of the Reserve Bank
(e) Nashik, Maharashtra
of India, established to print banknotes on behalf
Answer: D
of the RBI.
Explanation
108. Which of the following sets of locations
correctly identifies the four mints operated under The Security Printing and Minting Corporation
the Security Printing and Minting Corporation of of India Limited (SPMCIL) operates a Security
India Limited (SPMCIL)? Paper Mill at Narmadapuram in Madhya
Pradesh. This facility plays a critical role in India’s
निम्ननिखित में से िौि सा ि िेशि िा सेि नसक्य ररिी
currency and security printing ecosystem by
नप्रंनिं ग एं ि नमंनिं ग िॉपोरे शि ऑफ इं निया निनमिे ि producing security-grade paper used for
(SPMCIL) िे तहत चिाए िा रहे चार नमंि्स िी सही banknotes, non-judicial stamp papers, and
पहचाि िरता है ? passport documents. Established in 1968, the
(a) Mumbai, Kolkata, Hyderabad and Noida mill ensures a secure and reliable supply of
(b) Mumbai, Chennai, Hyderabad and Noida specialised paper required for sensitive
(c) Kolkata, Chennai, Hyderabad and Bengaluru government documents. Locations such as Dewas,
(d) Mumbai, Kolkata, Noida and Bengaluru Salboni, Mysuru, and Nashik are associated with
(e) Delhi, Kolkata, Hyderabad and Noida other printing presses or mints, not the security
Answer: A paper mill.
Explanation 110. Which of the following correctly differentiates
the authority responsible for issuing coins from
The Security Printing and Minting Corporation
that issuing banknotes in India?
of India Limited (SPMCIL) operates four mints
that are responsible for the production of coins for निम्ननिखित में से िौि भारत में नसक्के िारी िरिे िािी
circulation in India. These mints are strategically अथॉररिी ि बैंिि ि िारी िरिे िािी अथॉररिी से सही ढं ग
located to ensure efficient coin distribution across से अिग िरता है ?
the country. The four operational mints of SPMCIL (a) Both coins and banknotes are issued by RBI
are situated at Mumbai (Maharashtra), Kolkata (b) Coins are issued by RBI, banknotes by
(West Bengal), Hyderabad (Telangana), and Government of India
Noida (Uttar Pradesh). These facilities function (c) Coins are issued by Government of India,
under the administrative control of the Ministry of banknotes by RBI
Finance, Government of India, and play a crucial (d) Both coins and banknotes are issued by
role in meeting the nation’s coinage requirements. Government of India
109. At which of the following locations does the (e) Coins are issued by SPMCIL, banknotes by RBI
Security Printing and Minting Corporation of India Answer: C
Limited (SPMCIL) operate its security paper mill
Explanation
for the production of paper used in banknotes,
In India, the authority responsible for issuing
non-judicial stamps, and passports?
coins is different from that issuing banknotes,
निम्ननिखित में से निस िगह पर नसक्य ररिी नप्रंनिं ग एं ि
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as defined under separate legal provisions. Coins

नमंनिं ग िॉपोरे शि ऑफ इं निया निनमिे ि (SPMCIL) are issued by the Government of India under the
बैंिि ि, िॉि-िूनिनशयि स्टै म्प और पासप िि में इिेमाि Coinage Act, 2011, which empowers the Central
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Government to mint and declare coins as legal Answer: C

tender. On the other hand, banknotes are issued Explanation
exclusively by the Reserve Bank of India (RBI) Small Coin Depots authorised by the Reserve
under Section 22 of the RBI Act, 1934, giving RBI Bank of India (RBI) are established to ensure the
the sole right to issue currency notes in the adequate availability and smooth distribution of
country. This clear division ensures institutional small-denomination coins across the banking
clarity in currency management. system. These depots primarily handle coins of
111. According to the Reserve Bank of India, the value below one rupee, such as 50 paise and
total number of currency chests authorised for other sub-rupee denominations. The coins stocked
stocking and distribution of banknotes and rupee in these depots are distributed to bank branches
coins was __________ as on February 28, 2025. within their area of operation to meet day-to-day
भारतीय ररज़िि बैंि िे अिुसार, 28 फरिरी, 2025 ति transactional requirements of the public. Small
बैंिि ि और रुपये िे नसक्क ं ि स्टॉि िरिे और बां ििे िे Coin Depots do not deal with higher-denomination
निए अनधिृत िरें सी चेस्ट िी िुि संख्या __________ थी। coins, commemorative coins, foreign coins, or coins
withdrawn from circulation.
(a) 2,450
113. The provision relating to the approval of the
(b) 2,575
design, form, and material of banknotes is
(c) 2,691 contained in which section of the RBI Act, 1934?
(d) 2,750
बैंिि ि िे निज़ाइि, रूप और मिीररयि िी मंज़ूरी से िुडा
(e) 2,825
प्रािधाि RBI एक्ट, 1934 िी निस धारा में नदया गया है ?
Answer: C
(a) Section 22
Explanation (b) Section 23
According to the Reserve Bank of India, the total (c) Section 24
number of currency chests authorised for the (d) Section 25
stocking and distribution of banknotes and (e) Section 26
rupee coins stood at 2,691 as on February 28, Answer: D
2025. Currency chests are established by selected
Explanation
scheduled banks and function as storehouses of
The approval of the design, form, and material
RBI currency, facilitating efficient distribution of
of banknotes issued in India is governed by
cash to bank branches within their operational
Section 25 of the Reserve Bank of India Act,
areas. They play a vital role in ensuring adequate
1934. This section provides that the Central
availability of clean and genuine currency across
Government approves the design, form, and
the country. The figure reflects RBI’s extensive
material of banknotes after considering the
cash management infrastructure aimed at
recommendations made by the Central Board
maintaining smooth currency circulation.
of the Reserve Bank of India. While Section 22
112. Small Coin Depots authorised by the Reserve
deals with the RBI’s sole right to issue banknotes
Bank of India primarily deal with which category of
and Section 24 specifies the denominations of
coins?
banknotes, Section 25 exclusively addresses their
ररज़िि बैंि ऑफ़ इं निया द्वारा अनधिृत छ िे नसक्का निप physical characteristics.
मुख्य रूप से निस श्रेणी िे नसक्क ं िा िेि-दे ि िरते हैं ? 114. Which authority is responsible for
(a) Coins of ₹1 and above formulating and implementing Monetary Policy in
(b) Commemorative coins only India?
286

(c) Coins of value below ₹1 भारत में मॉिेिरी पॉनिसी बिािे और िागू िरिे िे निए
(d) Coins withdrawn from circulation
िौि सी अथॉररिी नज़म्मेदार है?
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(e) Foreign coins

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(a) Reserve Bank of India rather to restrain inflation and ensure long-term
(b) NITI Aayog economic stability.
(c) Ministry of Finance 116. The purchase of government securities by the
(d) Securities and Exchange Board of India central bank in the open market is primarily
(e) Planning Commission associated with:
Answer: A ओपि मािेि में सेंिरि बैंि द्वारा सरिारी नसक्य ररिीि िी
Explanation िरीद मुख्य रूप से इससे िुडी है :
In India, the Reserve Bank of India (RBI) is the (a) Neutral monetary policy
authority responsible for formulating and (b) Contractionary monetary policy
implementing Monetary Policy. The RBI (c) Expansionary monetary policy
regulates the supply of money and credit in the (d) Fiscal consolidation
economy to achieve macroeconomic objectives (e) Exchange rate management
such as price stability, economic growth, and
Answer: C
financial stability. While bodies like the Ministry
Explanation
of Finance, NITI Aayog, or SEBI have important
roles in fiscal policy, planning, and capital market The purchase of government securities by the
regulation, they do not frame or execute Monetary central bank in the open market is a key
Policy. instrument of Expansionary Monetary Policy.
When the central bank buys government bonds, it
115. Contractionary Monetary Policy is generally
injects liquidity into the banking system by paying
adopted by the Central Bank with the objective of:
banks and financial institutions for these
संिुचििारी मौनद्रि िीनत आम तौर पर सेंिरि बैंि द्वारा इस securities. This increases the availability of funds
उद्दे श्य से अपिाई िाती है : with banks, enhances their lending capacity, and
(a) Expanding credit during economic slowdown lowers interest rates in the economy. As credit
(b) Controlling inflation by reducing excess becomes cheaper and more accessible, investment
liquidity and consumption tend to rise, supporting
(c) Lowering the cost of borrowing in the economy economic growth, especially during periods of
slowdown or recession. Such operations are part of
(d) Encouraging higher bank lending
Open Market Operations (OMO) and are not
(e) Promoting investment through easy money
related to fiscal consolidation or exchange rate
Answer: B management.
Explanation 117. Which of the following can be considered
Contractionary Monetary Policy is adopted by the ultimate objectives of monetary policy?
Central Bank when inflationary pressures emerge 1. Price stability
due to excess money supply in the economy. The
2. Full employment
primary objective is to reduce surplus liquidity
3. Exchange rate stability
so that rising prices can be controlled and
macroeconomic stability is maintained. This is 4. Fiscal deficit reduction
achieved through measures such as increasing निम्ननिखित में से निसे मौनद्रि िीनत िे अंनतम उद्दे श्य मािा
policy interest rates, raising reserve requirements, िा सिता है ?
and selling government securities. These actions 1. िीमत ं में खस्थरता
make borrowing costlier, discourage excessive
credit growth, and slow down demand. Unlike 2. पूणि र ज़गार
287

expansionary policy, it is not intended to promote 3. निनिमय दर में खस्थरता

easy credit, investment, or higher lending, but 4. रािि षीय घािे में िमी
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(a) 1 and 2 only selective regulation and guidance rather than

(b) 1 and 4 only overall monetary expansion or contraction.
(c) 2 and 4 only 119. djusting the margin of loans and regulating
(d) 1, 2 and 3 only the rate on consumption loans fall under:
(e) 1, 2, 3 and 4 ि ि िे मानििि ि एििस्ट िरिा और िंिम्पशि ि ि पर
Answer: D रे ि ि रे गुिेि िरिा इसिे अंतगित आता है :
Explanation
(a) Quantitative Credit Control
The ultimate objectives of Monetary Policy (b) Fiscal Policy tools
relate to achieving overall macroeconomic stability (c) Qualitative Credit Control
in an economy. Price stability is a core objective, (d) Open Market Operations
as controlling inflation helps preserve purchasing (e) Liquidity Adjustment Facility
power and ensures economic certainty. Full
Answer: C
employment is another key goal, since stable
Explanation
monetary conditions support sustainable growth
and job creation. Exchange rate stability is also Adjusting the margin of loans and regulating
considered an important objective because it interest rates on consumption loans are classified
promotes external sector stability and balanced under Qualitative Credit Control measures.
trade. However, fiscal deficit reduction is not an These tools are used by the Central Bank to
objective of Monetary Policy; it falls under the selectively regulate the flow of credit to specific
domain of fiscal policy and government budgeting. sectors or uses rather than influencing the total
volume of credit in the economy. By changing
[Link] of the following is a Quantitative Credit
margin requirements, the central bank can control
Control instrument used by the Central Bank?
speculative activities, while regulating
निम्ननिखित में से िौि सा सेंिरि बैंि द्वारा इिेमाि निया consumption loan rates helps curb excessive
िािे िािा एि क्वां नििे निि क्रेनिि िंिर ि इं स्टूमेंि है ? consumer spending. Unlike quantitative tools such
(a) Moral suasion as CRR or Open Market Operations, qualitative
(b) Direct action credit controls focus on the direction and
(c) Rationing of credit purpose of credit allocation, ensuring that credit
(d) Publicity supports productive and priority sectors of the
(e) Open Market Operations economy and contributes to financial stability.
Answer: E 120. Under the Liquidity Adjustment Facility (LAF),
Explanation the Central Bank manages liquidity primarily
Open Market Operations (OMO) are a key through which of the following instruments?
Quantitative Credit Control instrument used by निनक्वनििी एििस्टमेंि फैनसनििी (LAF) िे तहत, सेंिरि
the Central Bank to regulate the overall money बैंि मुख्य रूप से इिमें से निस इं स्टूमेंि िे ज़ररए
supply and liquidity in the economy. Through the निनक्वनििी ि मैिेि िरता है?
purchase and sale of government securities in the
(a) Bank Rate and Cash Reserve Ratio
open market, the Central Bank can either inject
(b) Repo and Reverse Repo operations
liquidity (by buying securities) or absorb excess
(c) Open Market Operations and Moral Suasion
funds (by selling securities). This tool has a broad,
(d) Statutory Liquidity Ratio and Marginal
economy-wide impact and directly influences
Standing Facility
interest rates and credit conditions. In contrast,
(e) Direct Action and Rationing of Credit
measures like moral suasion, direct action,
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Answer: B
rationing of credit, and publicity are qualitative
credit control instruments, as they focus on Explanation
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Under the Liquidity Adjustment Facility (LAF), 122. Injection of funds by the Central Bank through
the Central Bank manages short-term liquidity quantitative monetary policy instruments
conditions in the banking system primarily generally leads to which of the following
through Repo and Reverse Repo operations. outcomes?
Repo operations involve the injection of liquidity सेंिरि बैंि द्वारा क्वां नििे निि मॉिेिरी पॉनिसी इं स्टूमेंि्स िे
by lending funds to banks against government ज़ररए फंि िाििे से आमतौर पर इिमें से िौि से ितीिे
securities, while reverse repo operations absorb
निििते हैं ?
excess liquidity by allowing banks to park surplus
funds with the Central Bank. These instruments (a) Decrease in money supply
help the Central Bank steer overnight interest rates (b) Absorption of surplus liquidity
and ensure smooth monetary policy transmission. (c) Increase in liquidity in the banking system
LAF is a flexible and market-based tool used for (d) Increase in reserve requirements
day-to-day liquidity management. Other (e) Restriction on bank lending
instruments like CRR, SLR, or moral suasion are Answer: C
not part of the LAF framework, making repo and Explanation
reverse repo the correct choice. Injection of funds by the Central Bank through
121. Cash Reserve Ratio (CRR) and Statutory quantitative monetary policy instruments leads
Liquidity Ratio (SLR) are referred to as statutory to an increase in liquidity in the banking
reserve requirements because they are mandated system. When the central bank injects money—
under: through tools such as open market purchases of
िैश ररज़िि रे नशय (CRR) और स्टै च्यूिरी निनक्वनििी रे नशय government securities, repo operations, or
reduction in reserve requirements—banks receive
(SLR) ि स्टै च्यूिरी ररज़िि ररक्वायरमेंि िहा िाता है क्य नं ि
additional funds. This enhances their capacity to
ये इििे तहत अनििायि हैं :
extend credit, lowers borrowing costs, and
(a) RBI Act, 1934 and Banking Regulation Act, supports higher levels of investment and
1949 consumption in the economy. Such measures are
(b) Negotiable Instruments Act typically adopted under an expansionary
(c) RBI’s discretionary powers monetary policy stance, especially during periods
(d) Companies Act of economic slowdown. The objective is not to
(e) Fiscal Responsibility and Budget Management absorb liquidity or restrict lending, but to ensure
Act adequate money supply and smooth functioning of
Answer: A the financial system.
Explanation 123. In the context of monetary policy instruments,
Cash Reserve Ratio (CRR) and Statutory Liquidity Net Demand and Time Liabilities (NDTL) of a bank
Ratio (SLR) are called statutory reserve refers to:
requirements because banks are legally required मॉिेिरी पॉनिसी इं स्टूमेंि्स िे संदभि में, निसी बैंि िी िेि
to maintain them under specific laws. CRR is निमां ि और िाइम िायनबनििीज़ (NDTL) िा मतिब है :
mandated under the Reserve Bank of India Act,
(a) Total assets minus total liabilities
1934, which empowers the RBI to prescribe the
(b) Deposits minus withdrawals
minimum cash reserves that banks must keep with
(c) Deposits plus capital funds
it. SLR, on the other hand, is governed by the
(d) Loans and advances outstanding
Banking Regulation Act, 1949, requiring banks to
(e) Currency in circulation plus reserves
hold a certain portion of their net demand and time
289

liabilities in liquid assets such as cash, gold, or Answer: B

approved securities. Since both requirements are Explanation
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fixed by law, they are termed statutory in nature.

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In the context of monetary policy instruments, Net (c) Persuasion and informal requests to banks
Demand and Time Liabilities (NDTL) of a bank (d) Sale of government securities
refer to its deposit liabilities, which broadly (e) Increasing reserve requirements
include demand deposits and time deposits, Answer: C
adjusted for certain inter-bank items as per RBI Explanation
guidelines. NDTL forms the base on which
Moral suasion is a qualitative tool of monetary
statutory reserve requirements such as Cash
policy used by the central bank to influence the
Reserve Ratio (CRR) and Statutory Liquidity
behaviour of banks through persuasion rather
Ratio (SLR) are calculated. It does not represent
than coercion. Under this approach, the central
assets, loans, capital funds, or currency in
bank issues informal requests, advisories, or
circulation.
guidance to commercial banks, urging them to
124. According to the prevailing monetary policy align their lending and investment decisions with
rates, what is the current Policy Repo Rate fixed by broader policy objectives. Unlike direct action,
the Reserve Bank of India? moral suasion does not involve legal compulsion or
मौिूदा मॉिेिरी पॉनिसी रे ि् स िे अिुसार, ररज़िि बैंि ऑफ़ penalties. It relies on the credibility, authority,
इं निया द्वारा तय निया गया मौिूदा पॉनिसी रे प रे ि क्या है ? and relationship of the central bank with financial
(a) 5.00% institutions to ensure cooperation in maintaining
(b) 5.25% monetary stability and orderly credit growth.
(c) 5.50% 126. Which of the following correctly distinguishes
(d) 5.75% Cash Reserve Ratio (CRR) from Statutory Liquidity
(e) 6.00% Ratio (SLR)?
Answer: B निम्ननिखित में से िौि सा िैश ररज़िि रे नशय (CRR) और
Explanation स्टै च्यूिरी निनक्वनििी रे नशय (SLR) िे बीच सही अंतर
The current Policy Repo Rate fixed by the Reserve बताता है ?
Bank of India stands at 5.25 per cent, as per the (a) CRR and SLR are both maintained only in cash
prevailing monetary policy rates. The repo rate is with RBI
the key policy instrument through which the RBI (b) CRR is maintained in cash, while SLR is
lends short-term funds to commercial banks maintained in cash, gold or approved securities
against approved securities. Changes in the repo (c) CRR is maintained in government securities,
rate influence overall liquidity, borrowing costs, while SLR is maintained in cash
and credit conditions in the economy. By adjusting (d) Both CRR and SLR can be maintained in gold
this rate, the RBI seeks to manage inflation while (e) CRR applies only to foreign banks, while SLR
supporting economic growth and ensuring applies to domestic banks
financial stability. A repo rate of 5.25 per cent Answer: B
reflects the RBI’s calibrated approach to balancing
Explanation
growth and inflation objectives.
Cash Reserve Ratio (CRR) and Statutory Liquidity
125. Moral suasion, as a qualitative credit control
Ratio (SLR) are key quantitative tools of
tool of the Central Bank, primarily refers to which
monetary policy used by the Reserve Bank of
of the following actions?
India. CRR refers to the proportion of a bank’s net
सेंिरि बैंि िे एि क्वानििे निि क्रेनिि िंिर ि िू ि िे तौर पर, demand and time liabilities that must be
म रि सुएशि िा मुख्य रूप से मतिब इिमें से निस एक्शि maintained only in cash with the RBI, primarily
से है ? to control liquidity in the economy. In contrast,
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(a) Statutory enforcement through penalties SLR requires banks to maintain a specified portion
(b) Fixing credit ceilings for banks of their liabilities in the form of cash, gold, or
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approved government securities. While CRR

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directly reduces banks’ lendable funds, SLR also cost of borrowing and credit conditions in the
ensures solvency and the ability to meet economy. Changes in the bank rate signal the RBI’s
withdrawal demands. policy stance and affect lending rates of banks over
127. An increase in the Cash Reserve Ratio (CRR) is the longer term. Unlike short-term liquidity
most likely to result in which of the following facilities such as the repo or MSF, the bank rate is
outcomes in the banking system? not meant for overnight funding and is not linked
िैश ररज़िि रे नशय (CRR) में बढ तरी से बैंनिंग नसस्टम में to day-to-day liquidity management operations.

इिमें से िौि सा ितीिा ह िे िी सबसे ज़्यादा संभाििा है ? 129. The Marginal Standing Facility (MSF) rate
refers to the rate at which:
(a) Decrease in the amount of money available for
lending मानिििि स्टैं निं ग फैनसनििी (MSF) दर उस दर ि िहते हैं
(b) Increase in the lending capacity of banks निस पर:
(c) Fall in interest rates (a) RBI provides long-term funding support to
banks
(d) Increase in bank profitability
(b) RBI rediscounts commercial bills
(e) Expansionary monetary policy
(c) Banks access liquidity through repo auctions
Answer: A
(d) Scheduled commercial banks borrow overnight
Explanation
funds from the RBI
An increase in the Cash Reserve Ratio (CRR)
(e) RBI lends to non-banking financial companies
requires banks to keep a higher proportion of their
deposits as cash with the Reserve Bank of India, Answer: D
leaving them with fewer funds available for Explanation
lending. This directly reduces liquidity in the The Marginal Standing Facility (MSF) rate is the
banking system and curtails the ability of banks to rate at which scheduled commercial banks
extend credit. As a result, lending becomes tighter borrow overnight funds from the Reserve Bank
and interest rates may harden rather than fall. The of India to meet short-term liquidity mismatches.
measure is typically used as part of a This facility is available against the pledge of
contractionary monetary policy to control approved government securities, including those
excess liquidity and inflation, rather than to held under the SLR, within prescribed limits. The
expand credit or improve bank profitability. MSF acts as a last-resort liquidity window for
[Link] Bank Rate is defined as the rate at which banks and forms the upper bound of the policy rate
the Reserve Bank of India: corridor. Since it is priced higher than the repo
बैंि रे ि ि िह रे ि मािा िाता है निस पर ररज़िि बैंि ऑफ़ rate, it discourages frequent use and promotes
इं निया: disciplined liquidity management in the banking
system.
(a) Provides overnight liquidity to banks
[Link] reference to liquidity operations
(b) Accepts deposits from commercial banks
conducted by the RBI, which of the following
(c) Extends long-term loans to commercial banks correctly states the minimum bidding amount
(d) Conducts open market operations under LAF and MSF respectively?
(e) Supplies liquidity against SLR securities भारतीय ररििि बैंि द्वारा निए गए निनक्वनििी ऑपरे शंस िे
Answer: C संबंध में, निम्ननिखित में से िौि सा तरिता समाय िि
Explanation सुनिधा (LAF) और मानिििि स्टैं निं ग फैनसनििी (MSF) िे
The Bank Rate is the rate at which the Reserve तहत न्यूितम नबनिं ग रानश ि सही ढं ग से बताता है ?
291

Bank of India extends long-term loans to

(a) ₹1 crore under LAF and ₹5 crore under MSF
commercial banks. It is a traditional instrument
(b) ₹5 crore under LAF and ₹1 crore under MSF
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of monetary policy used to influence the overall

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(d) ₹1 crore under both LAF and MSF to borrow overnight funds, subject to prescribed
(e) No minimum bidding amount is prescribed limits. This makes MSF a last-resort liquidity
Answer: B window, designed to address acute short-term
Explanation liquidity stress when other avenues are
unavailable.
Under the Reserve Bank of India’s liquidity
operations, different minimum bidding [Link] of the following correctly describes the
requirements apply to the Liquidity Adjustment composition of the Monetary Policy Committee
Facility (LAF) and the Marginal Standing Facility (MPC)?
(MSF). Under the LAF, which is used for regular निम्ननिखित में से िौि मॉिेिरी पॉनिसी िमेिी (MPC) िी
short-term liquidity management through repo संरचिा िा सही िणिि िरता है ?
and reverse repo auctions, the minimum bidding (a) All members nominated by RBI
amount is ₹5 crore. In contrast, the MSF, designed (b) All members appointed by the Central
as an emergency overnight liquidity window for Government
scheduled commercial banks, allows borrowing (c) RBI Governor, Deputy Governor (Monetary
with a lower minimum amount of ₹1 crore. This Policy), one RBI nominee, and three Government
distinction reflects the MSF’s role as a last-resort nominees
facility, providing flexibility during acute liquidity (d) RBI Governor and five Deputy Governors
stress. (e) Only external experts
131. Which of the following statements best Answer: C
explains a key operational distinction between the
Explanation
Liquidity Adjustment Facility (LAF) and the
The Monetary Policy Committee (MPC) is
Marginal Standing Facility (MSF)?
constituted under the amended RBI Act, 1934 to
निम्ननिखित में से िौि सा स्टे िमेंि निनक्वनििी एििस्टमेंि ensure balanced and credible monetary policy
फैनसनििी (LAF) और मानिििि स्टैं निं ग फैनसनििी (MSF) decision-making. Its composition reflects a mix of
िे बीच एि मुख्य ऑपरे शिि अंतर ि सबसे अच्छी तरह internal and external representation. The MPC
समझाता है ? consists of six members: the RBI Governor
(a) Banks can use SLR securities under MSF but not (Chairperson), the Deputy Governor in charge of
under LAF monetary policy, one officer of the RBI
nominated by the Central Board, and three
(b) Banks cannot use SLR securities under either
external members nominated by the Central
facility
Government. This structure ensures institutional
(c) Banks can use SLR securities under both LAF
expertise from the RBI along with independent
and MSF
perspectives, promoting transparency,
(d) Banks can use SLR securities only under LAF accountability, and balanced policy decisions in
(e) SLR securities are irrelevant for both facilities managing inflation and growth.
Answer: A 133. As per the existing framework of the
Explanation Monetary Policy Committee (MPC), how often does
The Liquidity Adjustment Facility (LAF) and the the Reserve Bank of India conduct MPC meetings in
Marginal Standing Facility (MSF) differ mainly in a year?
their treatment of Statutory Liquidity Ratio मॉिेिरी पॉनिसी िनमिी (MPC) िे मौिूदा फ्रेमििि िे
(SLR) securities. Under the LAF, banks can अिुसार, ररज़िि बैंि ऑफ़ इं निया एि साि में नितिी बार
borrow or park funds with the RBI but cannot use
MPC िी मीनिं ग िरता है ?
292

government securities that are part of their SLR

(a) At least four times
holdings as collateral. In contrast, the MSF allows
(b) Quarterly
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scheduled commercial banks to use SLR securities

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(c) Five times 135. Which of the following correctly defines a

(d) Once every month mortgage in banking and finance?
(e) Six bi-monthly meetings बैंनिंग और फाइिेंस में निम्ननिखित में से िौि मॉगेि ि
Answer: E सही ढं ग से पररभानषत िरता है ?
Explanation (a) A short-term unsecured loan given to
As per the existing monetary policy framework, the individuals
Reserve Bank of India conducts six meetings of (b) A legal agreement where movable property is
the Monetary Policy Committee (MPC) each pledged as security
year, scheduled on a bi-monthly basis. These (c) A legal agreement in which an immovable
meetings are held roughly once every two months property is pledged as security to obtain a loan
to review macroeconomic conditions, assess (d) A loan granted only for agricultural purposes
inflation and growth trends, and decide the policy
(e) An agreement involving only commercial banks
repo rate and stance. The fixed frequency ensures
and governments
predictability, transparency, and timely policy
Answer: C
responses to evolving economic conditions. In
exceptional circumstances, the RBI may convene Explanation
additional meetings, but under the normal A mortgage is a formal legal arrangement between
framework, six bi-monthly MPC meetings form a borrower and a lender in which an immovable
the standard annual cycle. property—such as a house, land, or commercial
134. The policy rate corridor under the current building—is offered as security to obtain a loan.
monetary framework is defined by which of the While ownership of the property generally remains
following rates? with the borrower, the lender acquires a legal
interest until the loan is fully repaid. In case of
मौिूदा मॉिेिरी फ्रेमििि िे तहत पॉनिसी रे ि िॉररि र ि
default, the lender has the right to recover dues by
निम्ननिखित में से निस रे ि से पररभानषत निया िाता है ? enforcing the security. Mortgages are secured
(a) Repo Rate and Bank Rate loans and therefore usually carry lower interest
(b) Fixed Reverse Repo Rate and Repo Rate rates compared to unsecured loans.
(c) Standing Deposit Facility (SDF) and Marginal 136. Which of the following statements correctly
Standing Facility (MSF) distinguishes a mortgage loan from an unsecured
(d) CRR and SLR loan?
(e) Bank Rate and Reverse Repo Rate
निम्ननिखित में से िौि सा िथि मॉगेि ि ि और
Answer: C
अिनसक्य िि ि ि िे बीच सही अंतर बताता है ?
Explanation
(a) Mortgage loans generally offer lower interest
The policy rate corridor under the current
rates
monetary policy framework of the Reserve Bank
(b) Mortgage loans require no documentation
of India is defined by the Standing Deposit
(c) Mortgage loans are riskier for lenders
Facility (SDF) as the lower bound and the
(d) Mortgage loans have shorter tenures
Marginal Standing Facility (MSF) as the upper
(e) Mortgage loans are available only to
bound. The repo rate operates within this
individuals
corridor as the central policy rate. The SDF allows
Answer: A
the RBI to absorb surplus liquidity without
collateral, while the MSF provides overnight Explanation
liquidity to banks against government securities at A mortgage loan is secured by an immovable
293

a penal rate. This corridor helps guide short-term property, such as a house or land, which
money market rates and ensures effective significantly reduces the credit risk faced by the
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transmission of monetary policy signals. lender. Because the lender has a tangible asset as

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collateral and a legal right to recover dues in case The SARFAESI Act, 2002 empowers banks and
of default, mortgage loans are considered safer financial institutions to recover non-performing
compared to unsecured loans. This lower risk assets (NPAs) without the need for court
allows lenders to charge lower interest rates and intervention. Under this Act, lenders can enforce
offer longer repayment tenures. In contrast, security interests by taking possession of secured
unsecured loans lack collateral, carry higher assets, managing them, or selling them to recover
default risk, and therefore usually attract higher outstanding dues. The objective is to improve the
interest rates to compensate for that risk. health of the banking system by enabling faster
137. The typical loan tenure offered under a recovery of bad loans and reducing delays
mortgage arrangement generally extends between: associated with judicial proceedings. The Act
मॉिि गेि अरें िमेंि िे तहत दी िािे िािी आम ि ि अिनध applies mainly to secured loans and strengthens
creditor rights in India.
आमतौर पर इििे बीच ह ती है :
139. Which of the following statements correctly
(a) 1 to 5 years
distinguishes an Adjustable-Rate Mortgage from a
(b) 5 to 10 years
fixed-rate mortgage?
(c) 10 to 30 years
(d) 30 to 50 years निम्ननिखित में से िौि सा िथि एििस्टे बि-रे ि मॉगेि ि
(e) Less than 1 year नफक्स्ड-रे ि मॉगेि से सही ढं ग से अिग िरता है ?
Answer: C (a) ARM interest rates remain constant throughout
Explanation the loan
(b) Fixed-rate mortgages are linked to RBI’s repo
The statement “Mortgage loans have shorter
rate
tenures” is incorrect. Mortgage loans are secured
(c) Fixed-rate loans have no EMIs
loans backed by immovable property and therefore
(d) ARM interest rates vary with changes in
usually have longer repayment tenures,
benchmark rates
commonly ranging from 10 to 30 years. The
(e) ARM loans are unsecured
extended tenure helps borrowers manage large
loan amounts through affordable EMIs. In contrast, Answer: D
unsecured loans such as personal loans typically Explanation
have much shorter tenures, often between 1 to 5 An Adjustable-Rate Mortgage (ARM) is
years, due to higher risk for lenders. The secured distinguished from a fixed-rate mortgage by the
nature of mortgage loans allows lenders to offer variability of its interest rate. In an ARM, the
longer repayment periods along with lower interest rate is periodically adjusted based on
interest rates. changes in an underlying benchmark or reference
138. The SARFAESI Act, 2002 primarily empowers rate, such as a policy or market-linked rate. As a
banks and financial institutions to: result, the borrower’s EMI may increase or
सरफेसी(SARFAESI) एक्ट, 2002 मुख्य रूप से बैंि ं और decrease over time. In contrast, a fixed-rate
mortgage carries a constant interest rate
फाइिेंनशयि संस्थाि ं ि ये अनधिार दे ता है :
throughout the loan tenure, offering stability and
(a) Waive housing loan interest predictability in repayments.
(b) Convert secured loans into unsecured loans
140. Which of the following Ombudsman schemes
(c) Recover loan dues without court intervention
were merged to form the RB-Integrated
(d) Issue housing bonds
Ombudsman Scheme, 2021?
(e) Regulate real estate prices
1. Banking Ombudsman Scheme, 2006
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Answer: C
2. Ombudsman Scheme for NBFCs, 2018
Explanation
3. Ombudsman Scheme for Digital Transactions,
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2019

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Select the correct answer using the code below: निम्ननिखित में से िौि सी संस्थाएं RBI (इं िरिि
निम्ननिखित में से िौि सी ओिि् समैि य ििाओं ि ओिि् समैि) निदे श, 2026 िे तहत आती हैं ?
नमिािर RB-एिीिृत ओिि् समैि य ििा, 2021 बिाई 1. िमनशियि बैंि
गई? 2. स्मॉि फाइिेंस बैंि
1. बैंनिंग ओिि् समैि य ििा, 2006 3. पेमेंि बैंि
2. एिबीएफसी िे निए ओिि् समैि य ििा, 2018 4. गैर-बैंनिंग‍नित्तीय िंपनियााँ
3. निनििि िेिदे ि िे निए ओिि् समैि य ििा, 2019 5. िॉि-बैंि पीपीआई िारी िरिे िािे
िीचे नदए गए ि ि िा उपय ग िरिे सही उत्तर चुिें: 6. क्रेनिि इन्फॉमेशि िंपनियां
(a) 1 and 2 only ि ि:
(b) 2 and 3 only
(a) 2, 3 and 5 only
(c) 1 and 3 only
(b) 1, 4, 5 and 6 only
(d) 1 only
(c) 1, 3, 4 and 6 only
(e) 1, 2 and 3
(d) 5 and 6 only
Answer: E
(e) All of the above
Explanation
Answer: E
● The Reserve Bank – Integrated Ombudsman
Explanation
Scheme (RB-IOS), 2021 was introduced to
● The RBI (Internal Ombudsman)
create a single, unified grievance redressal
Directions, 2026 apply to a wide range of
framework.
regulated entities to strengthen internal
● Under this scheme, the Banking Ombudsman
grievance redressal mechanisms.
Scheme, 2006 was merged to cover
● The coverage includes Commercial Banks,
complaints against banks.
Small Finance Banks, and Payment
● The Ombudsman Scheme for Non-Banking
Banks, reflecting the core banking system.
Financial Companies (NBFCs), 2018 was also
● It also extends to Non-Banking Financial
integrated to address grievances related to
Companies (NBFCs), which have
NBFCs.
significant customer interaction.
● Additionally, the Ombudsman Scheme for
● Non-bank Prepaid Payment Instrument
Digital Transactions, 2019 was subsumed to
(PPI) Issuers are covered due to their role
handle complaints arising from digital payment
in digital payments.
systems.
● Credit Information Companies (CICs) are
● The merger eliminated sector-wise silos and
included because of their impact on credit
ensured an institution-neutral approach.
access and consumer rights.
141. Which of the following entities are covered
142. Which of the following entity–criterion pair is
under the RBI (Internal Ombudsman) Directions,
correctly matched in the context of coverage under
2026?
the RBI–Integrated Ombudsman Scheme (RB-IOS)?
1. Commercial Banks
आरबीआई–इं िीग्रेिेि ओिि् समैि स्कीम (RB-IOS) िे
2. Small Finance Banks
तहत ििरे ि िे संदभि में निम्ननिखित में से िौि सा एं नििी-
3. Payment Banks
क्राइिे ररयि ि डा सही ढं ग से मेि िाता है ?
4. NBFCs
(a) Regional Rural Banks – Covered only if asset
5. Non-bank PPI Issuers
295

size exceeds ₹100 crore

6. Credit Information Companies
(b) Housing Finance Companies – Covered if
Codes:
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(c) Payment System Participants – Covered ● The eligible person should be a retired or
irrespective of deposit size or asset size serving officer from a regulated entity or a
(d) Credit Information Companies – Covered only financial sector regulatory body.
if classified as systemically important ● A minimum professional experience of 7
(e) Non-Banking Financial Companies – Covered years is mandatory to ensure adequate
only if listed on stock exchanges domain expertise.
Answer: C ● The Directions also prescribe that the
Explanation individual shall not be above 70 years of
● Under the RBI–Integrated Ombudsman age before completion of tenure.
Scheme (RB-IOS), 2021, Payment System ● These conditions aim to balance
Participants (PSPs) are covered based on experience, independence, and
their functional role, not financial size. functional effectiveness of the IO.
● PSPs include entities involved in cards, 144. As per the proposed future direction under
wallets, UPI, and other payment systems the revised e-Kuber usage guidelines for Central
regulated by RBI. Government payments, the targeted lower
● Their coverage is irrespective of deposit threshold for mandatory routing through the e-
size or asset size, unlike banks and NBFCs Kuber system is:
which have threshold conditions. िेंद्र सरिार िे पेमेंि िे निए ररिाइज़्ि ई-िुबेर इिेमाि
● This is because PSPs handle high-volume िी गाइििाइं स िे तहत आगे िे प्रिानित िायरे क्शि िे
customer transactions and are prone to अिुसार, ई-िुबेर नसस्टम िे ज़ररए ज़रूरी रूनिं ग िे निए
payment-related grievances.
िारगेिेि ि अर थ्रेशह ड यह है :
● Other options are incorrect as RRBs are not
(a) ₹50 crore
asset-size based, HFCs are excluded, CICs
(b) ₹65 crore
are covered without such classification, and
NBFCs are not required to be listed. (c) ₹75 crore
143. An individual appointed as an Internal (d) ₹100 crore
Ombudsman (IO) under the RBI (Internal (e) ₹500 crore
Ombudsman) Directions, 2026 must have: Answer: A
भारतीय ररििि बैंि (इं िरिि ओिुि्समैि) िायरे क्शंस, Explanation
2026 िे तहत इं िरिि ओिुि्समैि (IO) िे तौर पर ● Proposed future target: lower threshold to
नियुि व्यखि िे पास ये ह िा चानहए: ₹50 crore.
(a) 5 years’ experience; age ≤65 ● Current general threshold is ₹75 crore
(b) 7 years’ experience; age ≤70 (post-July change).
(c) 10 years’ experience; age ≤68 ● Earlier was ₹500 crore; gradual reduction
(d) 7 years’ experience; age ≤72 planned.
(e) 6 years’ experience; age ≤70 ● Aims for almost all significant government
Answer: B payments via e-Kuber.
Explanation ● ₹35 crore not mentioned; ₹100 crore is for
● As per the RBI (Internal Ombudsman) certain categories now.
Directions, 2026, an individual appointed ● ₹500 crore is the old (superseded) level.
as an Internal Ombudsman (IO) must 145. In the context of structural reforms in India’s
296

satisfy specific experience and age Government Securities (G-Sec) market over the
criteria. past decade, which of the following entities was
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designated as the Central Counter Party (CCP) to (d) Hybrid instrument with voting rights
guarantee settlement of trades? (e) Contingent liability of the government
नपछिे दशि में भारत िे गिििमेंि नसक्य ररिीि (G-Sec) Answer: C
मािेि में स्टर क्चरि सुधार ं िे संदभि में, िर े ि्स िे सेििमेंि Explanation
िी गारं िी िे निए इिमें से निस एं नििी ि सेंिरि िाउं िर A bond is a debt instrument through which an
पािी (CCP) िे रूप में िानमत निया गया था? investor lends money to the issuer (government or
corporation).
(a) National Payments Corporation of India (NPCI)
(b) Securities and Exchange Board of India (SEBI) The issuer has a legal obligation to repay the
(c) Clearing Corporation of India Ltd. (CCIL) principal (face value) at maturity.
(d) National Securities Depository Ltd. (NSDL) Bonds usually carry a fixed or floating coupon
(e) Reserve Bank of India (RBI) rate, paid periodically (generally half-yearly in
Answer: C India for G-Secs).
Explanation Bondholders are creditors, not owners — hence
they do not get voting rights (unlike equity
● CCIL was set up in 2001 to provide
shareholders).
clearing and settlement infrastructure for
Government Securities, forex and money In case of liquidation, bondholders have priority
market segments. over equity shareholders in repayment.
● It functions as a Central Counter Party Bonds are issued in both primary markets
(CCP) in the G-Sec market. (auctions/private placement) and traded in
secondary markets.
● As CCP, CCIL becomes the buyer to every
seller and seller to every buyer, Government bonds are considered sovereign-
eliminating counterparty credit risk. backed with negligible default risk (gilt-edged
securities).
● It guarantees settlement through the
Delivery versus Payment (DvP) From a balance sheet perspective, bonds appear as
mechanism. liabilities for the issuer and financial assets for
the investor.
● CCIL maintains a Settlement Guarantee
Fund (SGF) to manage default risk. 147. In India, which of the following instruments
issued by the State Governments are classified as
● Operates platforms like NDS-OM
Government Securities (G-Secs)?
(Negotiated Dealing System–Order
Matching) for secondary market trading. भारत में, राि सरिार ं द्वारा िारी निए गए इिमें से िौि से
● Strengthens financial stability and इं स्टूमेंि्स ि गिििमेंि नसक्य ररिीज़ (G-Secs) िे तौर पर
systemic risk management in India’s debt क्लानसफ़ाई निया िाता है ?
market. (a) Treasury Bills only
● Works under the regulatory oversight of (b) State Development Loans (SDLs)
the Reserve Bank of India (RBI). (c) Ways and Means Advances
146. A bond is best described as which of the (d) Cash Management Bills
following financial instruments? (e) Municipal Bonds
बॉन्ड ि इिमें से निस फाइिेंनशयि इं स्टूमेंि िे तौर पर Answer: B
सबसे अच्छे से बताया गया है ? Explanation
(a) Equity instrument giving ownership rights State Development Loans (SDLs) are dated
securities issued by State Governments to raise
297

(b) Derivative contract based on an underlying

asset funds from the market.
(c) Debt instrument representing a loan to the
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SDLs are treated as Government Securities (G- Unlike dated G-Secs, they do not carry periodic
Secs) at the state level, similar to Central interest payments.
Government dated securities. 149. In India, the market borrowing programme of
They are issued through RBI auctions on behalf of the Central Government through issuance of
State Governments. Government Securities is managed by:
SDLs generally carry maturity of one year or भारत में, गिििमेंि नसक्य ररिीज़ िारी िरिे िेंद्र सरिार
more and pay half-yearly coupons. िा मािेि बॉर इं ग प्र ग्राम मैिेि निया िाता है :
They qualify for Statutory Liquidity Ratio (SLR) (a) Reserve Bank of India
investment for banks. (b) Securities and Exchange Board of India
SDL yields are typically higher than Central G- (c) Ministry of Finance
Secs due to marginally higher perceived risk. (d) Clearing Corporation of India Ltd.
Treasury Bills and Cash Management Bills are (e) Public Debt Management Agency
issued by the Central Government, not States. Answer: A
Ways and Means Advances (WMA) are short- Explanation
term credit facilities from RBI to States, not The Reserve Bank of India (RBI) manages the
marketable securities. market borrowing programme of the Central
148. Treasury Bills (T-Bills) issued by the Central Government.
Government are classified as short-term securities RBI acts as the Banker and Debt Manager to the
because their original maturity is: Government of India under the RBI Act, 1934.
िेंद्र सरिार द्वारा िारी िर े िरी नबि (T-Bills) ि शॉिि -िमि It conducts auctions of Treasury Bills and Dated
नसक्य ररिीज़ िे रूप में क्लानसफ़ाई निया िाता है क्य नं ि Government Securities through the e-Kuber
उििी ओररनििि मैच्य ररिी है : platform.
(a) Less than 30 days RBI prepares and executes the annual borrowing
(b) Less than 91 days calendar in consultation with the Ministry of
(c) Less than 182 days Finance.
(d) Less than one year It also undertakes switch auctions, buybacks,
(e) Exactly one year and debt consolidation operations.
Answer: D Settlement of primary issuance is handled via RBI’s
Explanation Public Debt Office (PDO).
Treasury Bills (T-Bills) are short-term debt Though a Public Debt Management Agency
instruments issued by the Government of India. (PDMA) has been proposed, public debt
They are classified as Money Market instruments management is presently with RBI.
because their original maturity is less than one SEBI regulates capital markets, and CCIL provides
year. clearing & settlement, but neither manages
In India, T-Bills are currently issued in 91-day, government borrowing.
182-day, and 364-day tenors. 150. Treasury Bills (T-Bills) issued by the
They are zero-coupon securities, issued at a Government of India are currently available in
discount and redeemed at face value. which of the following maturity combinations?
Since maturity is below one year, they help the भारत सरिार द्वारा िारी िर े िरी नबि (T-Bills) अभी इिमें से
Government manage short-term liquidity निस मैच्य ररिी िॉखििेशि में उपिब्ध हैं ?
mismatches. (a) 30, 90 and 180 days
298

T-Bills are eligible for SLR investment by banks. (b) 91, 182 and 364 days
They are auctioned by RBI through the e-Kuber (c) 90, 180 and 365 days
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(d) 60, 182 and 364 days T-Bills are zero-coupon securities, issued at
(e) 91, 180 and 365 days discount and redeemed at face value.
Answer: B Auctions are conducted weekly by RBI via the e-
Explanation Kuber platform.
Treasury Bills (T-Bills) are short-term debt 91-day T-Bills are typically auctioned every week,
instruments issued by the Government of India. while 182-day and 364-day T-Bills follow a notified
Currently, they are issued in three standard schedule.
maturities: 91-day, 182-day, and 364-day. They are eligible investments for SLR compliance
These maturities ensure that T-Bills qualify as by banks.
money market instruments (less than one Maturities such as 90, 180, or 365 days are
year). commonly confused but are not officially used
T-Bills are zero-coupon securities, issued at tenors.
discount and redeemed at face value. 152. In India, market borrowings of the
Auctions are conducted weekly by RBI via the e- Government through issuance of Treasury Bills
Kuber platform. and Dated Government Securities are conducted by
the RBI in its capacity as:
91-day T-Bills are typically auctioned every week,
while 182-day and 364-day T-Bills follow a notified भारत में, िर े िरी नबि और िे िेि गिििमेंि नसक्य ररिीज़ िारी
schedule. िरिे सरिार िे मािेि ि ि RBI अपिी िैपेनसिी में इस
They are eligible investments for SLR compliance तरह से िेता है :
by banks. (a) Monetary Policy Authority
Maturities such as 90, 180, or 365 days are (b) Banker to Banks
commonly confused but are not officially used (c) Banker and Debt Manager to Government of
tenors. India
151. Which of the following correctly distinguishes (d) Regulator of Capital Markets
Cash Management Bills (CMBs) from Treasury Bills (e) Custodian of Foreign Exchange
(T-Bills)? Answer: C
इिमें से िौि सा िैश मैिेिमेंि नबि (CMBs) ि िर े िरी Explanation
नबि (T-Bills) से सही ढं ग से अिग िरता है ? RBI conducts issuance of Treasury Bills and
(a) CMBs carry coupon; T-Bills are zero-coupon Dated Government Securities on behalf of the
(b) CMBs are non-marketable instruments Government of India.
(c) CMBs are long-term instruments up to 5 years It performs this function in its capacity as Banker
(d) CMBs are issued only by State Governments and Public Debt Manager to the Government
(e) CMBs are issued for maturities less than 91 under the RBI Act, 1934.
days RBI prepares the annual borrowing calendar in
Answer: E consultation with the Ministry of Finance.
Explanation It conducts auctions through the e-Kuber
Treasury Bills (T-Bills) are short-term debt electronic platform.
instruments issued by the Government of India. RBI also undertakes debt management
Currently, they are issued in three standard operations such as switch auctions and buybacks.
maturities: 91-day, 182-day, and 364-day. This role is distinct from its function as Monetary
These maturities ensure that T-Bills qualify as Policy Authority (repo rate, CRR, SLR decisions).
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money market instruments (less than one RBI is not the capital market regulator — that role
year). belongs to SEBI.
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The proposed Public Debt Management Agency (c) Issue at premium with periodic interest
(PDMA) has not replaced RBI; debt management (d) Half-yearly coupon payments
remains with RBI. (e) Mandatory conversion into equity
153. In the case of Floating Rate Bonds (FRBs) Answer: A
issued by the Government of India, the coupon rate Explanation
is typically linked to: Zero Coupon Bonds (ZCBs) do not carry any
भारत सरिार द्वारा िारी फ्ल निं ग रे ि बॉन्ड (FRBs) िे periodic interest (coupon) payments during their
मामिे में, िूपि रे ि आम तौर पर इससे िुडा ह ता है : tenure.
(a) CPI inflation only They are issued at a discount to their face (par)
(b) Policy repo rate only value and redeemed at full face value on maturity.
(c) Call money rate without spread The investor’s return is the difference between
(d) T-Bill yields plus a fixed spread issue price and redemption value.
(e) G-Sec 10-year yield only Since there are no interim cash flows, ZCBs have
Answer: D higher duration and greater interest rate
Explanation sensitivity.
Floating Rate Bonds (FRBs) issued by the In Government Securities, instruments created
Government of India have a coupon that resets under STRIPS operate as zero-coupon securities.
periodically. ZCBs are suitable for investors seeking a lump-
The coupon is typically linked to a benchmark sum payment at a specific future date.
Treasury Bill (T-Bill) yield (commonly 182-day For the issuer, ZCBs defer interest payment burden
T-Bill). until maturity.
A fixed spread (margin) is added over the They are classified as debt instruments, not
benchmark yield, determined at the time of equity or hybrid securities.
issuance. 155. Inflation Indexed Bonds in India are generally
The reset generally happens half-yearly, aligning linked to which of the following price indices?
with coupon payment frequency. भारत में इन्फ्लेशि इं िेक्स्ड बॉन्ड आमतौर पर इिमें से निस
This structure protects investors from interest प्राइस इं िेक्स से िुडे ह ते हैं ?
rate risk compared to fixed-rate bonds.
(a) GDP Deflator
FRBs are part of the Government’s strategy to (b) CPI or WPI
diversify debt instruments and manage interest (c) Core inflation
cost risk. (d) Wholesale fuel index
Unlike Inflation-Indexed Bonds, FRBs are not (e) Repo rate
directly linked to CPI/WPI. Answer: B
FRBs are eligible for SLR investment by banks, Explanation
similar to other G-Secs.
Inflation Indexed Bonds (IIBs) are designed to
154. Which of the following features most protect investors against inflation risk.
accurately defines Zero Coupon Bonds issued by
In India, they have been linked to Wholesale Price
the Government in the context of interest payment
Index (WPI) earlier and later to Consumer Price
and issuance structure?
Index (CPI).
इिमें से िौि सी िानसयत सरिार द्वारा िारी निए गए ज़ीर The inflation indexation ensures that principal
िूपि बॉन्ड ि ब्याि पेमेंि और िारी िरिे िे स्टर क्चर िे and/or coupon payments adjust with inflation.
300

मामिे में सबसे सही तरीिे से बताती है ? CPI-based IIBs were introduced to provide better
(a) No periodic interest and issue at discount inflation protection aligned with retail inflation.
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(b) Floating coupon reset mechanism

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These bonds help investors preserve the real payments and principal under the STRIPS facility.
value of their investment. The acronym STRIPS stand for:
IIBs are part of the Government’s market गिििमेंि नसक्य ररिीज़ मािेि में, एि िे िेि गिििमेंि
borrowing programme and issued through RBI नसक्य ररिी ि STRIPS फैनसनििी िे तहत उसिे िूपि
auctions. पेमेंि और नप्रंनसपि ि अिग िरिे िई ज़ीर -िूपि
They differ from Floating Rate Bonds, which are इं स्टूमेंि्स में त डा िा सिता है । STRIPS िा मतिब है :
linked to T-Bill yields, not inflation.
(a) Securities Trading in Registered Institutional
GDP Deflator, core inflation, and repo rate are not
Portfolios
directly used as index benchmarks for IIBs.
(b) Separate Trading of Registered Interest and
156. In Government bonds with embedded call and Principal of Securities
put options, a “call option” implies that: (c) Standardized Transfer of Retail Investment in
एिेिेि िॉि और पुि ऑप्शि िािे सरिारी बॉन्ड में, “िॉि Public Securities
ऑप्शि” िा मतिब है नि: (d) Special Treasury Registered Investment
(a) Investor can demand early repayment Programme Scheme
(b) RBI can alter coupon rate (e) Structured Trading of Repo-Indexed Public
(c) Bond must be traded on exchange Securities
(d) Investor can convert bond into equity Answer: B
(e) Government can repurchase the bond before Explanation
maturity STRIPS stands for Separate Trading of
Answer: E Registered Interest and Principal of Securities.
Explanation Under STRIPS, a dated Government Security is
A call option in a Government bond gives the split into individual components — each coupon
issuer (Government) the right to redeem or payment and the principal.
repurchase the bond before its scheduled maturity. Each separated component becomes an
This option is typically exercised when market independent zero-coupon security.
interest rates decline, allowing the issuer to These securities are issued at a discount and
refinance at a lower cost. redeemed at face value, similar to zero-coupon
The call option date(s) and terms are specified at bonds.
the time of issuance. STRIPS help in yield curve construction and
Upon exercise, investors receive the face value (or precise cash flow matching for institutional
pre-specified call price). investors.
It introduces reinvestment risk for investors, as They are useful for Asset-Liability Management
funds may need to be reinvested at lower yields. (ALM) by banks, insurance companies, and
A call option is different from a put option, where pension funds.
the investor has the right to seek early redemption. STRIPS increase liquidity and flexibility in the
Callable bonds generally offer slightly higher Government Securities market.
coupon rates to compensate investors for call risk. In India, STRIPS are facilitated by RBI under the G-
Such bonds are part of active public debt Sec framework.
management strategy to manage interest burden 158. Under the Ujwal DISCOM Assurance Yojana
and maturity profile. (UDAY), States issued special SDL bonds primarily
157. In the Government Securities market, a dated to:
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Government Security can be broken into multiple उज्ज्वि निस्कॉम एश्य रें स य ििा (UDAY) िे तहत, राि ं
zero-coupon instruments by separating its coupon िे िास तौर पर इििे निए स्पेशि SDL बॉन्ड िारी निए:
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(a) Finance infrastructure projects maintain Statutory Liquidity Ratio (SLR) under
(b) Fund agricultural subsidies the Banking Regulation Act, 1949 (as applicable
(c) Provide liquidity to public sector banks to co-operatives).
(d) Meet fiscal deficit targets SLR must be maintained in the form of Cash, Gold,
(e) Take over debt of power distribution and unencumbered Government Securities (G-
companies (DISCOMs) Secs).
Answer: E G-Secs include both Central Government and
Explanation State Development Loans (SDLs).
UDAY (Ujwal DISCOM Assurance Yojana) was These assets must be maintained as a percentage
launched in 2015 to improve the financial health of Net Demand and Time Liabilities (NDTL).
of State-owned power distribution companies SLR ensures liquidity and solvency buffer in the
(DISCOMs). banking system.
Under the scheme, State Governments took over Corporate debentures and municipal bonds are
75% of the outstanding debt of DISCOMs (as per not eligible primary SLR assets unless
scheme design). specifically notified.
To finance this takeover, States issued special Repo transactions are liquidity operations, not
State Development Loans (SDLs) in the market. standalone SLR-qualifying assets.
These SDLs were treated as Government Maintenance of SLR strengthens systemic stability
Securities (G-Secs) and were eligible for SLR and supports government borrowing
investment. programmes.
The objective was to reduce the interest burden 160. Provident Funds and Pension Funds are
on DISCOMs and improve operational efficiency. generally mandated to invest approximately what
Debt restructuring aimed to restore financial proportion of their corpus in Central and State
sustainability in the power sector. Government Securities / Gilt instruments?
The scheme linked financial restructuring with प्र नििें ि फंि और पेंशि फंि ि आम तौर पर अपिे फंि
operational reforms and efficiency targets. िा िगभग नितिा नहस्सा सेंिरि और स्टे ि गिििमेंि
UDAY bonds increased States’ reported debt but नसक्य ररिीि / नगल्ट इं स्टूमेंि्स में इन्वेस्ट िरिा ह ता है ?
aimed at improving the long-term viability of
(a) 10%–20%
DISCOMs.
(b) 20%–30%
159. Rural Co-operative Banks (State Co-op Banks (c) 30%–40%
& DCCBs) are required to maintain SLR primarily (d) 45%–50%
in: (e) 60%–70%
ग्रामीण ि -ऑपरे निि बैंि ं (स्टे ि ि -ऑप बैंि और DCCB) Answer: D
ि मुख्य रूप से एसएिआर बिाए रििा ज़रूरी है : Explanation
(a) Corporate debentures only Provident Funds and Pension Funds are required
(b) G-Secs, Cash and Gold to invest a significant portion of their corpus in
(c) Foreign Currency Assets Government Securities (G-Secs) to ensure capital
(d) Municipal Bonds only safety.
(e) Repo transactions only As per investment guidelines (e.g., EPFO norms),
Answer: B around 45%–50% of the corpus is typically
Explanation allocated to Central and State Government
302

Rural Co-operative Banks, including State Co- securities and gilt instruments.
operative Banks (StCBs) and District Central Co- These investments are considered low-risk due to
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operative Banks (DCCBs), are required to sovereign backing.

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The mandate ensures protection of retirement G-Secs under SLR are eligible investments and also
savings from excessive market volatility. support the Government’s borrowing
G-Secs provide stable and predictable returns, programme.
aligning with long-term liability structures of CRR directly impacts banking system liquidity, as
pension funds. funds parked with RBI earn no interest (currently).
Such mandatory investments create steady SLR can earn returns (via G-Secs), while CRR does
demand for Government borrowing not generate income for banks.
instruments. 162. In the Government Securities market, CCIL
It supports financial stability and prudent asset acts as a Central Counter Party (CCP), which
allocation for social security funds. implies that it:
Higher exposure to equities is capped to balance गिििमेंि नसक्य ररिीज़ मािेि में, सीसीआईएि एि सेंिरि
risk-return objectives. िाउं िर पािी (CCP) िे तौर पर िाम िरता है , निसिा
161. Which of the following correctly distinguishes मतिब है नि यह:
the Statutory Liquidity Ratio (SLR) from the Cash
(a) Acts as buyer to every seller and seller to every
Reserve Ratio (CRR) in terms of how it is
buyer
maintained by banks?
(b) Conducts primary auctions on behalf of RBI
इिमें से िौि सा िथि स्टै च्युिरी निनक्वनििी रे श्य (SLR) (c) Fixes coupon rates of G-Secs
ि िैश ररज़िि रे श्य (CRR) से इस मामिे में सही ढं ग से (d) Maintains CRR balances
अिग िरता है नि बैंि इसे िैसे मेंिेि िरते हैं ? (e) Regulates stock exchanges
(a) Maintained as cash balances with the Reserve Answer: A
Bank of India Explanation
(b) Maintained in the form of foreign exchange CCIL (Clearing Corporation of India Ltd.)
reserves functions as a Central Counter Party (CCP) in the
(c) Maintained solely in Treasury Bills Government Securities market.
(d) Maintained as margin deposits with CCIL As CCP, CCIL interposes itself between
(e) Maintained by banks in the form of cash, gold counterparties — becoming the buyer to every
and Government Securities seller and the seller to every buyer.
Answer: E This mechanism eliminates counterparty credit
Explanation risk in secondary market trades.
SLR (Statutory Liquidity Ratio) is maintained by CCIL guarantees settlement through the Delivery
banks in the form of cash, gold, and versus Payment (DvP) system.
unencumbered Government Securities (G- It maintains a Settlement Guarantee Fund (SGF)
Secs). to manage default risk.
It is kept with the banks themselves, not with CCIL does not conduct primary auctions —
RBI. auctions are conducted by RBI.
CRR (Cash Reserve Ratio), in contrast, is It does not fix coupon rates, regulate stock
maintained as cash balance with the RBI. exchanges, or maintain CRR balances.
Both are calculated as a percentage of Net CCIL plays a crucial role in enhancing financial
Demand and Time Liabilities (NDTL). stability and systemic risk management.
SLR ensures banks maintain a liquidity buffer 163. The minimum bid amount under Competitive
Bidding in G-Sec auctions is generally:
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and solvency safeguard.

सरिारी प्रनतभूनतयााँ ऑक्शि में िॉखम्पनिनिि नबनिं ग िे
तहत नमनिमम नबि अमाउं ि आम तौर पर ह ता है :
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(a) ₹1,000 NCB allows retail participants to invest in G-Secs

(b) ₹5,000 without quoting yield or price.
(c) ₹10,000 Allocation is done at the weighted average
(d) ₹50,000 yield/price determined in the auction.
(e) ₹1,00,000 A certain portion (generally 5% for Central G-
Answer: C Secs) is reserved for NCB participants.
Explanation The scheme promotes retail participation in
Under Competitive Bidding in G-Sec auctions, the Government borrowing.
minimum bid amount is generally ₹10,000 (face Applications can be made through RBI Retail
value). Direct (RDG account) or via banks/Primary
Bids must be placed in multiples of ₹10,000 Dealers.
thereafter. The ₹2 crore cap applies per security per auction,
Competitive bidding requires participants to quote not cumulatively across all auctions.
the yield or price at which they are willing to This limit ensures wider retail distribution while
subscribe. preventing excessive concentration.
It is primarily used by banks, Primary Dealers, 165. The Reserve Bank of India recently
insurance companies, and large institutional announced a switch auction of Government
investors. Securities amounting to:
Unlike Non-Competitive Bidding (NCB), allocation भारतीय ररज़िि बैंि िे हाि ही में सरिारी नसक्य ररिीज़ िे
depends on the price/yield quoted. खस्वच ऑक्शि िी घ षणा िी है , निसिी रिम है :
Competitive bidders may submit multiple bids in
(a) ₹10,000 crore
a single auction.
(b) ₹15,000 crore
Auctions are conducted electronically via the RBI’s (c) ₹20,000 crore
e-Kuber platform. (d) ₹25,000 crore
The ₹10,000 denomination is a common exam (e) ₹30,000 crore
point and often confused with ₹1,000 (used in Answer: D
retail platforms).
Explanation
164. The maximum amount that a retail investor
RBI recently announced a switch auction of
can apply for per auction under the Non-
₹25,000 crore worth of Government Securities.
Competitive Bidding scheme in G-Secs is:
A switch auction involves exchanging short-term
सरिारी प्रनतभूनतयााँ में िॉि-िॉखम्पनिनिि नबनिं ग स्कीम िे securities nearing maturity with longer-term
तहत एि ररिे ि इन्वेस्टर हर िीिामी िे निए ज़्यादा से securities.
ज़्यादा नितिी रिम िे निए अप्लाई िर सिता है : The primary objective is to smoothen the
(a) ₹50 lakh redemption profile and reduce bunching of
(b) ₹2 crore maturities.
(c) ₹5 crore It helps in managing redemption pressure in
(d) ₹10 crore upcoming financial years.
(e) No upper limit Such operations are part of active public debt
Answer: B management strategy.
Explanation Switch auctions do not increase net borrowing;
Under the Non-Competitive Bidding (NCB) they restructure existing debt.
304

scheme, retail investors can apply up to a These operations are conducted by RBI in its role
maximum of ₹2 crore (face value) per auction. as Debt Manager to the Government of India.
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They support fiscal stability by managing the Explanation

maturity structure and refinancing risk. Under the RBI Retail Direct Scheme (launched in
166. Government Securities (G-Secs) auctions in 2021), individuals can open a Retail Direct Gilt
India are conducted on which RBI-operated (RDG) Account with RBI.
platform? The RDG account allows retail investors to invest
भारत में गिििमेंि नसक्य ररिीज़ (G-Secs) िी िीिामी directly in Treasury Bills, Dated G-Secs, SDLs,
भारतीय ररज़िि बैंि द्वारा चिाए िािे िािे निस प्लेिफॉमि and Sovereign Gold Bonds.
पर िी िाती है ? The account is opened and maintained free of cost
through the RBI Retail Direct portal.
(a) e-Kuber
(b) NDS-OM Investors do not require a demat account with
(c) CCIL CROMS NSDL/CDSL for investing through RDG.
(d) NSE EBP The RDG account functions similar to a securities
(e) INFINET account held directly with RBI.
Answer: A It enables participation in both primary auctions
Explanation (via Non-Competitive Bidding) and secondary
market trading.
e-Kuber is RBI’s Core Banking Solution (CBS)-
based electronic platform used for conducting G- The scheme enhances retail participation in
Sec auctions. Government borrowing programmes.
All primary auctions of Treasury Bills, Dated G- It promotes financial inclusion and direct access
Secs, and SDLs are conducted through e-Kuber. to sovereign-backed securities.
It facilitates electronic submission of bids by 168. In the context of public debt management
eligible participants. operations, a switch auction conducted by the
Government generally involves replacing which of
Settlement of successful bids is also processed
the following types of securities?
through RBI’s accounts via e-Kuber.
Participants must maintain a Current Account पखिि िे ब्ि मैिेिमेंि ऑपरे शन्स िे संदभि में, सरिार द्वारा
and SGL account with RBI to bid directly. निए िािे िािे खस्वच ऑक्शि में आम तौर पर िीचे नदए गए
NDS-OM is used for secondary market trading, में से निस तरह िी नसक्य ररिीज़ ि बदििा शानमि ह ता
not primary auctions. है ?
CCIL CROMS is a repo order matching platform. (a) Long-term bonds with Treasury Bills
e-Kuber enhances transparency, efficiency, and (b) Floating rate bonds with zero-coupon bonds
secure auction processing. (c) Short-term bonds nearing maturity with long-
167. Under the RBI Retail Direct Scheme, term bonds
individual investors can open which type of (d) SDLs with corporate debentures
account to invest in Government Securities? (e) Repo agreements with outright trades

भारतीय ररज़िि बैंि ररिे ि िायरे क्ट स्कीम िे तहत, Answer: C

Explanation
इं निनििुअि इन्वेस्टर गिििमेंि नसक्य ररिीि में इन्वेस्ट िरिे
िे निए निस तरह िा अिाउं ि ि ि सिते हैं ? A switch auction is a debt management operation
conducted by RBI on behalf of the Government.
(a) Demat Account with NSDL
It involves exchanging short-term G-Secs
(b) Current Account with RBI
approaching maturity with longer-term
(c) Treasury Bill Savings Account
securities.
305

(d) SGL Account directly

(e) Retail Direct Gilt (RDG) Account The objective is to smoothen the redemption
profile and avoid bunching of maturities in a
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Answer: E
particular year.

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It helps reduce refinancing risk and redemption They are distinct from selective credit controls,
pressure. which target specific sectors.
Switch operations do not increase net market 170. In the Indian monetary system, the term legal
borrowing; they only restructure existing debt. tender refers to money that must be accepted if
This tool supports better maturity distribution offered for which of the following purposes?
and cash flow management. भारतीय मॉिेिरी नसस्टम में, िीगि िें िर शब्द िा मतिब
It may also help in managing the interest cost उस पैसे से है निसे िीचे नदए गए निस मिसद िे निए नदया
over time. िाए त उसे स्वीिार िरिा ह गा?
Switch auctions are part of active public debt (a) Payment of government taxes only
management strategy. (b) Payment of a debt or financial obligation
169. In the framework of RBI’s monetary policy (c) International trade settlements
tools, Cash Reserve Ratio (CRR) and Statutory (d) Purchase of securities in stock markets
Liquidity Ratio (SLR) are classified under which (e) Deposits in scheduled commercial banks
category of instruments? Answer: B
भारतीय ररििि बैंि िे मॉिेिरी पॉनिसी िू ल्स िे फ्रेमििि में, Explanation
िैश ररज़िि रे श्य (CRR) और स्टै च्युिरी निनक्वनििी रे श्य Digital Rupee (e₹) is India’s Central Bank Digital
(SLR) ि निस िैिे गरी िे इं स्टूमेंि्स में क्लानसफाई निया Currency (CBDC) introduced by the Reserve
गया है ? Bank of India (RBI).
(a) Market-based instruments It represents the digital form of the Indian
(b) Open market instruments Rupee, similar in value to physical currency.
(c) Selective credit controls The e₹ is issued and regulated solely by the RBI,
(d) Statutory pre-emptions / Direct instruments ensuring sovereign backing and trust.
(e) External sector tools It functions as legal tender, meaning it can be
Answer: D used for payments and settlements like cash.
Explanation Unlike cryptocurrencies, the Digital Rupee is not
CRR and SLR are classified as quantitative privately issued and is fully regulated by the
monetary policy tools under direct/statutory central bank.
instruments. It aims to enhance payment efficiency, reduce
They are called statutory pre-emptions because cash handling costs, and support digital
banks are legally required to maintain a prescribed transactions.
percentage of their NDTL. The system is being implemented through Retail
CRR is maintained as cash balances with the RBI. CBDC (for public use) and Wholesale CBDC (for
financial institutions).
SLR is maintained by banks in the form of cash,
gold, and unencumbered Government 171. Under the legal tender rules for coins in India,
Securities. coins of ₹1 and above are legal tender for
transactions up to what maximum limit per
These tools directly affect the lendable resources
transaction?
of banks.
Unlike Open Market Operations (OMOs), CRR भारत में नसक्क ं िे निए िीगि िें िर नियम ं िे तहत, ₹1
and SLR do not involve buying or selling securities और उससे ज़्यादा िे नसक्के हर िर ां ज़ैक्शि िे निए नितिी
in the market. मैखक्समम निनमि ति िीगि िें िर हैं ?
306

An increase in CRR/SLR typically leads to liquidity (a) ₹100

contraction in the banking system. (b) ₹500
(c) ₹1000
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(d) ₹2000 Because of this backing, Indian banknotes are

(e) ₹5000 accepted as legal tender across the country.
Answer: C The guarantee means the government stands
Explanation behind the value printed on the note.
● Digital Rupee (e₹) is India’s Central Bank This arrangement strengthens confidence in
Digital Currency (CBDC) introduced by India’s monetary system.
the Reserve Bank of India (RBI). 173. In India, some banknotes are printed by
● It is the digital form of the Indian Rupee, presses owned by the Government of India through
having the same value as physical cash. the Security Printing and Minting Corporation of
● The currency is issued and regulated by India Limited (SPMCIL). Which of the following
the RBI, ensuring sovereign backing. locations host such banknote printing presses?
● The e₹ functions as legal tender and can भारत में, िुछ बैंिि ि नसक्य ररिी नप्रंनिं ग एं ि नमंनिं ग
be used for payments and settlements. िॉपोरे शि ऑफ़ इं निया निनमिे ि (SPMCIL) िे ज़ररए
● Unlike cryptocurrencies, it is not privately भारत सरिार िे मानििािा हि िािे प्रेस में छापे िाते हैं ।
issued and is fully regulated by the िीचे दी गई िगह ं में से िौि सी ऐसी बैंिि ि नप्रंनिं ग प्रेस हैं ?
central bank. (a) Nashik and Dewas
● It aims to improve payment efficiency (b) Mysuru and Salboni
and support the digital economy. (c) Mumbai and Hyderabad
● It operates through Retail CBDC (for (d) Noida and Kolkata
public use) and Wholesale CBDC (for (e) Chennai and Bengaluru
financial institutions). Answer: A
172. Banknotes issued in India derive their Explanation
credibility and acceptance partly because they are In India, some banknotes are printed by presses
backed by which of the following authorities? operated by the Security Printing and Minting
भारत में िारी बैंिि ि् स ि उििी क्रेनिनबनििी और Corporation of India Limited (SPMCIL).
एक्सेप्टेंस िुछ हद ति इसनिए नमिती है क्य नं ि उन्हें इिमें SPMCIL is a Government of India-owned
से निस अथॉररिी िा सप िि है ? company responsible for printing currency,
(a) Reserve Bank Board minting coins, and producing security documents.
(b) Securities and Exchange Board of India The two banknote printing presses under
(c) Ministry of Commerce SPMCIL are located at Nashik (Maharashtra) and
(d) Central Government of India Dewas (Madhya Pradesh).
(e) Finance Commission These presses print various denominations of
Answer: D Indian currency notes as required for circulation.
Explanation Apart from these, additional banknotes are printed
Banknotes in India are issued by the Reserve by presses of the Reserve Bank of India’s
Bank of India (RBI) under the RBI Act, 1934. subsidiary, BRBNMPL located at Mysuru and
Salboni.
However, the value of these banknotes is
guaranteed by the Central Government of India. The production of currency notes in India is
therefore shared between government presses
This government guarantee ensures public trust
and RBI-owned presses.
and credibility in the currency.
This system ensures efficient supply and
307

The “I Promise to Pay the Bearer…” clause on

management of banknotes across the country.
banknotes reflects this guarantee.
174. Currency chests located in scheduled
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following functions in India’s currency distribution Small Coin Depots (SCDs) are facilities
mechanism? established to ensure the adequate supply of
शेड्यूड िमनशियि बैंि ं में मौिूद िरें सी चेस्ट भारत िे small denomination coins in the banking system.
िरें सी निस्टर ीब्यूशि नसस्टम में मुख्य रूप से इिमें से िौि These depots are generally maintained by
सा िाम िरते हैं ? selected bank branches on behalf of the
Reserve Bank of India.
(a) Issue government bonds to the public
Their main function is to store and distribute
(b) Hold foreign exchange reserves
small denomination coins to bank branches
(c) Store banknotes and rupee coins on behalf of
and the public.
the RBI
(d) Print currency notes for circulation They help address the shortage of coins used for
(e) Regulate interest rates in the banking system everyday retail transactions.
Answer: C Small Coin Depots operate as part of the currency
distribution framework managed by the RBI.
Explanation
As per available data, India had around 2,299
Currency chests are storage facilities maintained
Small Coin Depots as of 28 February 2025.
by scheduled commercial banks on behalf of the
Reserve Bank of India (RBI). These depots support the smooth circulation and
availability of coins across the country.
They are used to store banknotes and coins
before they are distributed into circulation. 176. Which of the following correctly represents
the flow of currency distribution in India?
These chests function as extensions of the RBI for
currency management. इिमें से िौि सा भारत में िरें सी निस्टर ीब्यूशि िे फ्ल ि
Banks withdraw currency from these chests to सही तरह से नदिाता है ?
meet the cash requirements of their branches (a) RBI → Presses → Currency Chests → Banks →
and customers. Public
They also collect surplus cash from bank (b) Currency Chests → RBI → Banks → Public
branches and return it to the chest. (c) Presses → Bank Branches → RBI Issue Offices
This system helps the RBI maintain smooth and → Public
efficient currency distribution across the (d) RBI → Currency Chests → Presses → Public
country. (e) Presses → RBI Issue Offices → Currency Chests
→ Bank Branches → Public
Currency chests therefore play a key role in
managing the supply and circulation of physical Answer: E
currency in India. Explanation
175. According to the available data, the total Currency notes in India are printed at specialised
number of Small Coin Depots in India as of 28 security presses located in different parts of the
February 2025 was approximately: country.
उपिब्ध िे िा िे अिुसार, 28 फरिरी 2025 ति भारत में After printing, the notes are sent to Issue Offices
छ िे नसक्क ं िे निप िी िुि संख्या िगभग थी: of the Reserve Bank of India (RBI).
The RBI then transfers currency to Currency
(a) 1890
Chests, which are maintained by selected
(b) 2299
commercial banks on behalf of the RBI.
(c) 2691
(d) 3105 These currency chests act as storage and
(e) 3500 distribution centres for banknotes and coins.
308

Answer: B Bank branches withdraw currency from

currency chests to meet public demand.
Explanation
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Finally, the currency reaches the general public Explanation

through bank branches and ATMs. The phrase “I Promise to Pay the Bearer the Sum
This structured flow ensures efficient of … Rupees” appears on Indian banknotes issued
distribution and smooth circulation of currency by the Reserve Bank of India.
across the country. This statement represents the legal assurance of
177. Reserve Bank of India operates through how payment by the RBI to the holder of the note.
many Issue Offices across the country? The legal foundation for this promise comes from
भारतीय ररज़िि बैंि दे श भर में नितिे इश्यू ऑनफस िे Section 26 of the Reserve Bank of India Act,
ज़ररए िाम िरता है ? 1934.
(a) 19 According to this provision, every banknote
(b) 21 issued by the RBI is guaranteed by the Central
(c) 23 Government.
(d) 29 The clause ensures that banknotes function as
(e) 31 legal tender across the country.
Answer: A It also reflects the credibility and sovereign
Explanation backing of Indian currency.
The Reserve Bank of India manages currency Therefore, the promise printed on the note
issuance and distribution in the country. symbolises RBI’s commitment to honour the
value printed on the currency.
For this purpose, the RBI operates Issue Offices
across India as part of its currency management 179. Which of the following denominations of
system. banknotes have been discontinued but remain
legal tender, although they are now issued mainly
These offices are responsible for the issue and
as coins?
distribution of banknotes and coins.
Issue Offices receive newly printed currency from िीचे नदए गए बैंिि ि् स में से िौि से मूल्यिगि िे बैंिि ि
printing presses and mints. बंद िर नदए गए हैं , िेनिि िे िीगि िें िर बिे हुए हैं ,
They then supply currency to currency chests हािां नि अब िे मुख्य रूप से नसक्क ं िे रूप में िारी निए
maintained by commercial banks. िाते हैं ?
Through this network, the RBI ensures smooth (a) ₹1 and ₹2
circulation and adequate supply of currency (b) ₹2 and ₹5
nationwide. (c) ₹5 and ₹10
Currently, the RBI operates 19 Issue Offices (d) ₹10 and ₹20
across the country. (e) ₹20 and ₹50
178. The “I Promise to Pay” clause printed on Answer: B
Indian currency notes derives its legal basis from Explanation
which provision of law? The ₹2 and ₹5 banknotes were earlier part of
इं नियि िरें सी ि ि पर छपा “मैं पेमेंि िरिे िा िादा िरता India’s regular currency circulation.
हाँ ” क्लॉज़, िािूि िे निस नियम से निया गया है ? Over time, the printing of these banknotes was
(a) Section 22 of the RBI Act, 1934 discontinued due to durability and cost
(b) Section 24 of the RBI Act, 1934 considerations.
(c) Section 26 of the RBI Act, 1934 Instead, the denominations are now mainly issued
(d) Section 42 of the RBI Act, 1934 in the form of coins.
309

(e) Section 45 of the RBI Act, 1934 However, the previously issued ₹2 and ₹5
Answer: C banknotes continue to remain legal tender.
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This means they are still legally valid for (a) 1985
transactions if found in circulation. (b) 1991
The shift to coins helps increase lifespan and (c) 1996
reduce replacement costs for lower (d) 2005
denominations. (e) 2010
Such changes are part of the currency Answer: C
management strategy of the Reserve Bank of Explanation
India. The Mahatma Gandhi Series of Indian banknotes
180. In addition to Hindi and English, the language was introduced in 1996.
panel on Indian banknotes contains how many These notes feature the portrait of Mahatma
other Indian languages? Gandhi on the front side, replacing earlier designs.
भारतीय बैंि ि ि ं पर नहं दी और अंग्रेिी िे अिािा, भाषा The series replaced the earlier Ashoka Pillar
पैिि में और नितिी भारतीय भाषाएं शानमि हैं ? series of banknotes.
(a) 10 It was introduced to modernize the design and
(b) 12 enhance security features in Indian currency.
(c) 15 The notes also include improved anti-
(d) 18 counterfeiting measures such as watermarks,
(e) 22 security threads, and micro-lettering.
Answer: C This series has undergone further upgrades,
Explanation including the MG Series 2005 with additional
Indian banknotes contain text in Hindi and security enhancements.
English on the front side. The design reflects India’s national identity by
In addition, a language panel appears on the honouring Mahatma Gandhi’s legacy on its
reverse side of the note. currency.
This panel includes 15 other Indian languages, 182. In the context of Indian currency, counterfeit
representing India’s linguistic diversity. notes are best described as:
These languages are selected from the languages भारतीय िरें सी िे संदभि में, िििी ि ि ं ि सबसे अच्छे
listed in the Eighth Schedule of the Constitution तरीिे से इस तरह बताया िा सिता है :
of India. (a) Old banknotes withdrawn from circulation
The inclusion of multiple languages helps make (b) Banknotes printed with damaged paper
currency understandable across different (c) Banknotes issued before Independence
regions of the country. (d) Fake currency notes lacking genuine security
Thus, Indian banknotes display 17 languages in features
total — Hindi, English, and 15 additional (e) Notes printed by private banks
regional languages. Answer: D
This feature reflects India’s multicultural and Explanation
multilingual identity in its currency design. Counterfeit notes are fake currency notes that
181. The Mahatma Gandhi Series of banknotes, imitate genuine banknotes.
featuring the portrait of Mahatma Gandhi on the These notes are not issued by the Reserve Bank
front side, was first introduced in India in which of India and therefore have no legal validity.
year? They usually lack authentic security features
310

महात्मा गां धी सीरीज़ िे बैंिि ि, निसिे सामिे िी तरफ such as watermarks, security threads, micro-
महात्मा गां धी िा नचत्र ह ता है , भारत में पहिी बार निस lettering, and latent images.
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Counterfeit notes are often produced illegally to भारत िे ररिे ि सेंिरि बैंि निनििि िरें सी (e₹-R) नसस्टम
deceive people and circulate fake money in the में, निनििि रुपया मुख्य रूप से यूज़सि द्वारा इिमें से निस
economy. रूप में रिा िाता है ?
Such activities are considered serious financial
(a) Bank savings accounts
crimes under Indian law.
(b) RBI reserve accounts
The presence of counterfeit currency can (c) Government treasury wallets
undermine trust in the monetary system. (d) Stock trading accounts
To combat this, authorities regularly upgrade (e) e₹ wallets provided by banks or authorised
security features in banknotes and strengthen non-banks
detection mechanisms. Answer: E
183. The Digital Rupee (e₹) introduced in India is Explanation
classified as which of the following forms of
In the Retail Central Bank Digital Currency (e₹-
currency?
R) system, users hold the digital rupee in special
भारत में शुरू निया गया निनििि रुपया (e₹) इिमें से निस digital wallets.
तरह िी िरें सी है ? These wallets are provided by authorised banks
(a) Central Bank Digital Currency issued by the or approved non-bank entities.
Reserve Bank of India The e₹ wallet allows users to store, send, and
(b) Cryptocurrency issued by private institutions receive digital rupees similar to physical cash.
(c) Digital token issued by commercial banks It operates under the framework designed by the
(d) Virtual currency regulated by SEBI Reserve Bank of India.
(e) Blockchain-based foreign exchange reserve
Users can make Person-to-Person (P2P) and
Answer: A Person-to-Merchant (P2M) payments through
Explanation these wallets.
The Digital Rupee (e₹) is India’s Central Bank Transactions can be completed using QR codes or
Digital Currency (CBDC). digital payment interfaces.
It is issued and regulated by the Reserve Bank This system supports secure and efficient digital
of India. payments while maintaining central bank
The e₹ represents the digital form of the Indian control over currency issuance.
Rupee, similar in value to physical cash. 185. In India’s Central Bank Digital Currency
It functions as legal tender, meaning it can be framework, which institution is responsible for the
used for payments and settlements. creation and issuance of the Digital Rupee (e₹)?
Unlike cryptocurrencies, it is not privately issued भारत िे सेंिरि बैंि निनििि िरें सी फ्रेमििि में, निनििि
and is fully controlled by the central bank. रुपया (e₹) बिािे और िारी िरिे िे निए िौि सी संस्था
The Digital Rupee aims to improve payment नज़म्मेदार है ?
efficiency and strengthen India’s digital
(a) Ministry of Finance
payment ecosystem.
(b) Securities and Exchange Board of India
It is being implemented through Retail CBDC (for (c) National Payments Corporation of India
public use) and Wholesale CBDC (for financial (d) Reserve Bank of India
institutions). (e) State Bank of India
184. In India’s Retail Central Bank Digital Currency Answer: D
(e₹-R) system, the digital rupee is primarily held in
311

Explanation
which of the following forms by users?
The Digital Rupee (e₹) is India’s Central Bank
Digital Currency (CBDC).
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It is created and issued by the Reserve Bank of The policy encourages the public to handle
India, which is the country’s central monetary currency carefully and avoid writing or stapling
authority. notes.
The RBI has the exclusive authority to issue It helps reduce the circulation of dirty and
currency in India, including its digital form. damaged currency in the economy.
The Digital Rupee represents the electronic Overall, the initiative supports efficient currency
version of the Indian Rupee with the same management and better public confidence in
value as physical cash. physical cash.
It is introduced to enhance payment efficiency 187. Which of the following banks is NOT listed
and support the digital financial ecosystem. among the partner banks associated with the e-
The system operates under two forms: Retail RUPI system?
CBDC (for public use) and Wholesale CBDC (for इिमें से िौि सा बैंि ई-रुपया नसस्टम से िुडे पािि िर बैंि ं
financial institutions). में निस्टे ि िहीं है ?
Through CBDC, the RBI aims to modernize India’s (a) State Bank of India
currency system while maintaining regulatory (b) ICICI Bank
control. (c) HDFC Bank
186. As part of its currency management (d) Bank of Baroda
responsibilities, the Reserve Bank of India ensures (e) IDFC First Bank
the circulation of clean and quality banknotes in Answer: E
the economy through which of the following
Explanation
initiatives?
e-RUPI is a cashless and contactless digital
अपिी िरें सी मैिेिमेंि नज़म्मेदाररय ं िे नहस्से िे तौर पर, voucher system developed by the National
ररज़िि बैंि ऑफ़ इं निया इिमें से निस पहि िे ज़ररए Payments Corporation of India (NPCI).
इिॉिमी में साफ़ और अच्छी क्वानििी िािे बैंिि ि् स िा It was launched to enable targeted delivery of
सिुििेशि पक्का िरता है ? benefits and services without physical cash.
(a) Clean Note Policy Several banks act as partner banks for issuing
(b) Monetary Policy Framework and redeeming e-RUPI vouchers.
(c) Financial Inclusion Mission Major partner banks include State Bank of India,
(d) Currency Stabilisation Scheme ICICI Bank, HDFC Bank, and Bank of Baroda.
(e) National Payment Policy These banks help generate and distribute e-RUPI
Answer: A vouchers to beneficiaries.
Explanation IDFC First Bank is not listed among the partner
The Clean Note Policy is an initiative of the banks associated with the e-RUPI system in the
Reserve Bank of India aimed at maintaining the given list.
quality of banknotes in circulation. 188. In the e-RUPI voucher system, the voucher is
It was introduced to ensure that the public delivered to the beneficiary through which of the
receives clean and good-quality currency notes. following modes?
Under this policy, banks are instructed to ई-रुपया िाउचर नसस्टम में, िाउचर बेनिनफनशयरी ति
withdraw soiled and damaged notes from इिमें से निस तरीिे से पहुं चाया िाता है ?
circulation.
(a) Email or debit card
Banks also provide facilities for exchanging (b) SMS or QR code
312

mutilated or soiled notes. (c) ATM receipt or bank passbook

(d) UPI ID or cheque
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Answer: B Each mint produces various denominations of

Explanation coins required for circulation in the country.
e-RUPI is a cashless and contactless digital After minting, the coins are distributed through
voucher system developed by the National the Reserve Bank of India and the banking
Payments Corporation of India (NPCI). system.
Under this system, the voucher is sent directly to These mints play a key role in ensuring an
the beneficiary’s mobile phone. adequate supply of coins across India.
The voucher is delivered in the form of an SMS 190. As of March 2025, the approximate number of
containing a QR code or a unique voucher code. Automated Teller Machines (ATMs) operational in
The beneficiary can redeem the voucher at the India is:
designated service provider or merchant. माचि 2025 ति, भारत में चािू ऑि मेिेि िे िर मशीि
The system ensures secure and targeted delivery (ATM) िी अिुमानित संख्या है :
of benefits without requiring physical cash or (a) 1.75 lakh
cards. (b) 2.00 lakh
It is person-specific and purpose-specific, (c) 2.25 lakh
meaning it can only be used by the intended (d) 2.51 lakh
beneficiary for a particular service. (e) 3.00 lakh
This mechanism supports efficient and Answer: D
transparent delivery of government welfare Explanation
benefits and services. As of March 2025, India has over 2.51 lakh ATMs
189. Which of the following correctly lists all the operational.
cities where coin mints in India are located? The network includes onsite, offsite, white label
इिमें से िौि सा शहर भारत में उि सभी शहर ं िी सही and brown label ATMs.
निस्ट दे ता है िहां नसक्का ििसाि मौिूद हैं ? ATMs are regulated by the Reserve Bank of India
(a) Mumbai, Hyderabad, Kolkata, Noida (RBI).
(b) Chennai, Pune, Hyderabad, Delhi Majority of ATMs are concentrated in urban areas.
(c) Mumbai, Nashik, Mysuru, Kolkata The expansion supports financial inclusion and
(d) Hyderabad, Bengaluru, Kolkata, Patna 24×7 banking access.
(e) Noida, Jaipur, Mumbai, Chennai 191. The world’s first Automated Teller Machine
Answer: A (ATM) was installed in which year and at which
Explanation bank?
Coins in India are minted at four official दु निया िी पहिी ऑि मेिेि िे िर मशीि (ATM) निस साि
government mints located in different cities. और निस बैंि में िगाई गई थी?
These mints are situated in Mumbai (a) 1965 – HSBC, London
(Maharashtra), Hyderabad (Telangana), (b) 1967 – Barclays Bank, London
Kolkata (West Bengal), and Noida (Uttar (c) 1970 – Citibank, New York
Pradesh). (d) 1969 – Bank of America, California
All four mints operate under the Security Printing (e) 1968 – Lloyds Bank, London
and Minting Corporation of India Limited Answer: B
(SPMCIL).
Explanation
SPMCIL is a Government of India enterprise
313

The world’s first Automated Teller Machine

responsible for minting coins and printing
(ATM) was installed in 1967.
security documents.
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The inventor of the ATM was John Shepherd- Answer: E

Barron. Explanation
The first transaction took place on 27 June 1967. An On-Us transaction takes place when a
It was introduced to enable cash withdrawals customer uses a debit card at the ATM of the same
outside normal banking hours. bank that issued the card.
The early ATM used paper vouchers and PIN- In such cases, both the card issuer and ATM
based authentication. operator are the same bank.
This innovation marked the beginning of self- The transaction is processed within the bank’s own
service and automated banking worldwide. network.
192. ATMs specifically designated for stock market No interbank settlement or interchange fee is
or share-related transactions are termed as: involved.
स्टॉि मािेि या शेयर से िुडे िर ां ज़ैक्शि िे निए िास तौर Customers are typically entitled to a higher
पर बिाए गए एिीएम ि क्या िहा िाता है : number of free transactions under On-Us usage.
(a) Yellow Label ATMs It differs from an Off-Us transaction, where
(b) Green Label ATMs another bank’s ATM is used.
(c) Pink Label ATMs 194. As per RBI guidelines, the minimum number
(d) Orange Label ATMs of free Off-Us ATM transactions permitted per
(e) Brown Label ATMs month in the six metro cities (Bengaluru, Chennai,
Answer: D Hyderabad, Kolkata, Mumbai and New Delhi) is:
Explanation भारतीय ररििि बैंि िी गाइििाइं स िे मुतानबि, छह मेिर
Orange Label ATMs are designated for stock शहर ं (बेंगिुरु, चेन्नई, है दराबाद, ि ििाता, मुंबई और िई
market or share-related transactions. नदल्ली) में हर महीिे िम से िम नितिे फ्री Off-Us
These ATMs facilitate services linked to demat एिीएमिर ां ज़ैक्शि िी इिाज़त है :
and trading accounts. (a) Two
They are introduced to support capital market (b) Three
participants. (c) Four
Part of specialized ATM categorization based on (d) Five
service focus. (e) Seven
Different from Green Label ATMs (agriculture- Answer: B
focused). Explanation
Different from Pink Label ATMs (women-focused As per RBI guidelines, Off-Us transactions refer to
banking). use of another bank’s ATM.
193. A transaction carried out using a debit card at In the six metro cities—Bengaluru, Chennai,
the ATM of the same bank that issued the card is Hyderabad, Kolkata, Mumbai and New Delhi—a
classified as: separate limit applies.
िे नबि िािि िा इिेमाि िरिे उसी बैंि िे एिीएम पर Savings bank account holders are entitled to a
निया गया िर ां ज़ैक्शि, निसिे िािि िारी निया है , उसे इस minimum of 3 free transactions per month.
तरह क्लानसफ़ाई निया िाता है : The limit includes both financial and non-
financial transactions.
(a) Off-Us transaction
(b) Interbank transaction After exceeding the free limit, banks may levy
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(c) Sponsor bank transaction charges as per RBI-prescribed caps.

(d) Brown Label transaction The differentiation between metro and non-metro
aims to balance infrastructure usage and cost.
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(e) On-Us transaction

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195. In non-metro locations, the minimum number If the amount is not credited within this period,
of free Off-Us ATM transactions allowed per month compensation becomes payable.
to savings bank account holders is: The issuing bank must pay ₹100 per day for each
िॉि-मेिर िगह ं पर, सेनिंग्स बैंि अिाउं ि ह डसि ि हर day of delay beyond T+5.
महीिे िम से िम फ्री ऑफ-अस एिीएम िर ां ज़ैक्शि िी Compensation is calculated from the 6th calendar
इिाज़त है : day onwards.
(a) Three The amount must be credited automatically,
(b) Four without requiring a customer claim.
(c) Five This rule applies to both ATM and White Label
(d) Seven ATM (WLA) transactions.
(e) Ten 197. What fundamentally distinguishes a Magnetic
Answer: C Stripe card from an EMV Chip & PIN card in terms
Explanation of data storage technology?
In non-metro centres, Off-Us transactions mean िे िा स्ट रे ि िे क्न िॉिी िे मामिे में मैग्नेनिि स्टर ाइप िािि
use of ATMs of other banks. और ईएमिी नचप और नपि िािि में क्या अंतर है ?
RBI provides a relatively higher free limit in non- (a) Magnetic stripe data storage vs Embedded chip
metro areas. data storage
Savings bank account holders are entitled to a (b) Chip data storage vs Stripe storage
minimum of 5 free Off-Us transactions per (c) Biometric authentication vs PIN
month. (d) Server-based storage vs Card-based storage
The count includes both financial and non- (e) PIN-less vs PIN-based
financial transactions.
Answer: A
The policy ensures better customer convenience
Explanation
where ATM networks are less dense.
A Magnetic Stripe card stores cardholder data on
Charges may be levied only after the free
a magnetic strip embedded on the back of the card.
transaction threshold is crossed.
An EMV Chip & PIN card stores data in an
196. If a failed ATM transaction is not re-credited
embedded microprocessor chip.
within the prescribed T+5 calendar days, the
Magnetic stripe data is static and more vulnerable
issuing bank must pay compensation at the rate of:
to cloning or skimming.
अगर ि ई फेि एिीएम िर ां ज़ैक्शि तय T+5 िैिेंिर नदि ं िे
EMV chip generates dynamic authentication data
अंदर री-क्रेनिि िहीं ह ता है , त िारी िरिे िािे बैंि ि for each transaction.
इस रे ि पर मुआिज़ा दे िा ह गा: EMV technology significantly enhances transaction
(a) ₹250 per day security.
(b) ₹200 per day Chip & PIN cards are globally adopted to reduce
(c) ₹150 per day card-present fraud.
(d) ₹100 per day
198. Effective May 1, 2025, the maximum charge
(e) ₹70 per day
that banks are authorised to levy per cash
Answer: D withdrawal transaction beyond the free monthly
Explanation limit is:
RBI mandates that failed ATM transactions must be 1 मई, 2025 से, बैंि ं ि हर महीिे िी फ्री निनमि से ज़्यादा
315

re-credited within T+5 calendar days (T = date of िैश नििाििे पर ज़्यादा से ज़्यादा इतिा चािि िगािे िा
transaction).
अनधिार है :
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(a) ₹20 + taxes Non-cash withdrawal transactions at own ATMs

(b) ₹21 + taxes are generally unlimited and free.
(c) ₹22 + taxes Charges apply only after exceeding the prescribed
(d) ₹23 + taxes free limit.
(e) ₹25 + taxes 200. When a customer uses an Off-Us ATM (other
Answer: D bank’s ATM), the interchange fee payable between
Explanation banks per financial transaction is:
Effective May 1, 2025, RBI authorised banks to िब ि ई िस्टमर ऑफ-अस एिीएम(दू सरे बैंि िा
revise ATM withdrawal charges. एिीएम) इिेमाि िरता है , त हर फाइिेंनशयि िर ां ज़ैक्शि
The charge applies only after the free monthly पर बैंि ं िे बीच इं िरचेंि फीस दे िी ह ती है :
transaction limit is exceeded.
(a) ₹25
The maximum permissible fee per cash withdrawal (b) ₹23
is ₹23 plus applicable taxes. (c) ₹21
This cap applies to both On-Us and Off-Us (d) ₹20
transactions beyond free limits. (e) ₹19
The revision reflects increasing ATM operational Answer: E
and interchange costs. Explanation
Banks cannot exceed the RBI-prescribed ceiling An Off-Us transaction occurs when a customer
amount. uses another bank’s ATM.
199. As per RBI guidelines, banks must provide In such cases, the issuing bank pays an
savings bank account holders a minimum of how interchange fee to the acquiring bank.
many free financial transactions per month at their
The interchange fee per financial transaction is
own ATMs (On-Us), irrespective of location?
₹19.
भारतीय ररििि बैंि िी गाइििाइं स िे अिुसार, बैंि ं ि This fee is settled between banks through the
सेनिंग्स बैंि अिाउं ि ह डसि ि अपिे एिीएम (On-Us) payment network.
पर हर महीिे िम से िम नितिे फ्री फाइिेंनशयि िर ां िैक्शि It is different from the customer charge levied after
िी सुनिधा दे िी चानहए, चाहे िे िहीं भी ह ?ं exceeding free limits.
(a) Three The interchange mechanism ensures cost-sharing
(b) Four for ATM infrastructure usage.
(c) Five 201. Under UPI-ATM (Interoperable Cardless Cash
(d) Seven Withdrawal) services, the usual maximum
(e) Ten withdrawal limit per transaction is:
Answer: C यूपीआई-एिीएम (इं िरऑपरे बि िािि िेस िैश नििर ॉि)
Explanation सनििस िे तहत, हर िर ां ज़ैक्शि पर आम तौर पर ज़्यादा से
RBI mandates a minimum number of free ज़्यादा नििर ॉि निनमि यह है :
transactions at a bank’s own ATMs (On-Us).
(a) ₹3,000
The rule applies to savings bank account (b) ₹5,000
holders. (c) ₹8,000
Customers are entitled to at least 5 free financial (d) ₹10,000
transactions per month. (e) ₹20,000
316

The limit is applicable irrespective of ATM Answer: D

location (metro or non-metro). Explanation
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UPI-ATM enables interoperable cardless cash Answer: E

withdrawal using UPI authentication. Explanation
Customers can withdraw cash without using a Bharat Connect is the rebranded name of the
physical debit card. Bharat Bill Payment System (BBPS).
The usual maximum withdrawal limit per It operates as India’s unified and interoperable bill
transaction is ₹10,000. payment platform.
The limit is prescribed to manage operational and The system functions under the overall framework
fraud risks. of the NPCI group.
Transactions are authenticated through UPI PIN on The operational responsibility lies with NPCI
the customer’s mobile device. Bharat BillPay Limited (NBBL), a wholly owned
The facility enhances convenience and reduces subsidiary of NPCI.
dependency on physical cards. NPCI acts as the parent organisation overseeing
202. NPCI (National Payments Corporation of governance and policy alignment.
India) was established in the year ______ and is The platform standardises bill payment services
headquartered at ______. across banks and authorised non-bank entities.
NPCI (िेशिि पेमेंि्स िॉपोरे शि ऑफ़ इं निया) िी स्थापिा It promotes transparency, operational efficiency
िषि ______ में हुई थी और इसिा हे िक्वािि र ______ में है । and nationwide access to utility payments.
(a) 2007 – New Delhi 204. As per the latest integration, NACH settlement
(b) 2008 – Mumbai reports are now part of which reporting
(c) 2009 – Bengaluru framework?
(d) 2008 – Hyderabad िेिेस्ट इं िीग्रेशि िे अिुसार, िच (NACH) सेििमेंि ररप िि
(e) 2010 – Chennai अब निस ररप नििं ग फ्रेमििि िा नहस्सा हैं ?
Answer: B (a) RTGS reporting cycle
Explanation (b) NEFT batch reporting
NPCI was established in 2008. (c) NTSL reporting cycles
It was set up under the guidance of RBI and IBA. (d) CCIL clearing reports
NPCI is incorporated as a Section 8 (not-for- (e) BBPS settlement module
profit) company. Answer: C
The headquarters of NPCI is located in Mumbai. Explanation
It operates key platforms like UPI, IMPS, RuPay and NACH is a centralised bulk payment system
AEPS. operated by NPCI.
NPCI plays a central role in India’s retail payment It facilitates recurring debit and credit transactions
infrastructure. such as salary, EMI and subsidy payments.
203. Bharat Connect (earlier BBPS) is operated by As per the latest integration update, NACH
which of the following entities within the NPCI settlement reports are aligned with NTSL
group? reporting cycles.
भारत ििेक्ट (पहिे BBPS) ि एिपीसीआई ग्रुप में इिमें से This integration improves reconciliation and
िौि सी एं नििी चिाती है ? reporting efficiency.
It ensures standardisation of settlement timelines
(a) NIPL
across payment systems.
(b) CCIL
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(c) NBSL The move strengthens operational transparency in

(d) NPCI (parent entity) bulk clearing processes.
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(e) NBBL

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205. Which of the following correctly expands the Some banks may also restrict the number of
term “UMRN” used in the NACH mandate system? transactions (around 4–5 per month).
इिमें से िौि सा शब्द िच(NACH) मैंिेि नसस्टम में The limit is imposed to mitigate fraud and manage
इिेमाि ह िे िािे शब्द “UMRN” ि सही तरह से नदिाता operational risk.
है ? AEPS transactions are routed through NPCI
infrastructure.
(a) Unique Mandate Reference Number
(b) Unified Mandate Registration Number 207. As per RBI’s latest compliance direction, the
(c) Universal Money Routing Number deadline for implementing strengthened Two-
(d) Unified Monthly Remittance Note Factor Authentication (2FA) for digital payments
(e) User Managed Reference Number across the ecosystem is:
Answer: A भारतीय ररििि बैंि िे िए िंप्लायंस िायरे क्शि िे अिुसार,
Explanation पूरे इि नसस्टम में निनििि पेमेंि िे निए मज़बूत िू -फैक्टर
UMRN is a key identifier used in the NACH ऑथेंनििेशि (2FA) िागू िरिे िी िे ििाइि है :
mandate framework. (a) October 1, 2024
It stands for Unique Mandate Reference (b) January 1, 2025
Number. (c) April 1, 2026
Generated for every new NACH debit mandate (d) June 1, 2026
registered. (e) December 31, 2026
It is an 18-digit alphanumeric reference Answer: C
number. Explanation
Ensures uniqueness and traceability of recurring RBI issued updated compliance directions to
transactions. strengthen digital payment security.
Used for mandate tracking, modification, or The focus is on enhanced Two-Factor
cancellation. Authentication (2FA) mechanisms.
206. With reference to AEPS withdrawals, most The directive applies across the entire digital
public sector banks (including SBI) generally payments ecosystem.
prescribe what approximate monthly ceiling? The implementation deadline prescribed is April
एईपीएस नििर ॉि िे मामिे में, ज़्यादातर पखिि सेक्टर बैंि 1, 2026.
(SBI समेत) आम तौर पर िगभग हर महीिे नितिी निनमि The move aims to reduce fraud and improve
तय िरते हैं ? customer protection.
Entities must upgrade systems to ensure secure
(a) ₹10,000 per month
authentication standards.
(b) ₹25,000 per month
(c) ₹40,000 per month 208. Under the Aadhaar Enabled Payment System
(d) ₹50,000 per month (AePS), the Issuer Identification Number (IIN)
(e) No monthly limit required to authenticate a transaction consists of
how many digits?
Answer: D
Explanation आधार इिेबड पेमेंि नसस्टम (AePS) िे तहत, निसी
AEPS (Aadhaar Enabled Payment System) िर ां ज़ैक्शि ि ऑथेंनििेि िरिे िे निए ज़रूरी इश्यूअर
allows cash withdrawals using Aadhaar आइिें निनफिेशि िंबर (IIN) में नितिे निनिि ह ते हैं ?
authentication. (a) 4 digits
318

Most public sector banks, including SBI, prescribe a (b) 6 digits

monthly withdrawal ceiling. (c) 8 digits
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The commonly applied cap is ₹50,000 per month.

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(d) 11 digits प्रीपेि पेमेंि इं स्टूमेंि्स (PPIs) मुख्य रूप से इिमें से निस
(e) 12 digits मिसद ि पूरा िरिे िे निए हैं ?
Answer: B (a) Provide post-paid credit facilities
Explanation (b) Store monetary value in advance for
Under AePS, the Issuer Identification Number (IIN) subsequent transactions
identifies the customer’s bank. (c) Facilitate only international remittances
It is required along with Aadhaar number and (d) Replace core banking systems
biometric authentication. (e) Act as interbank settlement mechanisms
The IIN consists of 6 digits. Answer: B
It ensures correct routing of transactions to the Explanation
respective bank. PPIs are instruments that store monetary value
The IIN is distinct from IFSC and other banking in advance before usage.
codes. They enable purchase of goods and services,
Used within NPCI’s AEPS framework for fund transfers, or cash withdrawal (as permitted).
transaction processing. The value is pre-loaded, unlike credit cards which
209. In the Union Budget 2026–27, the government offer post-paid credit.
allocated ₹2,000 crore to incentivise transactions Operate under RBI’s Master Directions on PPIs.
on which platforms? Can be issued by banks and RBI-authorised non-
यूनियि बिि 2026-27 में, सरिार िे निि प्लेिफॉमि पर bank entities.
िर ां ज़ैक्शि ि बढािा दे िे िे निए ₹2,000 िर ड नदए? Examples include mobile wallets, prepaid cards,
(a) RuPay and BHIM-UPI gift cards, metro cards.
(b) IMPS and AEPS Classified into Closed, Semi-Closed, and Open
PPIs based on usage and features.
(c) NEFT and RTGS
211. Which of the following instruments is
(d) NACH and BBPS
categorised as a Semi-Closed Prepaid Payment
(e) CTS and NFS
Instrument (PPI) under RBI guidelines?
Answer: A
इिमें से िौि सा इं स्टूमेंि भारतीय ररििि बैंि िी
Explanation
गाइििाइं स िे तहत सेमी-क्ल ज्ड प्रीपेि पेमेंि इं स्टूमेंि
In the Union Budget 2026–27, the Government
(PPI) िे तौर पर िैिे गरी में आता है ?
announced financial support to promote digital
payments. (a) Amazon Gift Card
(b) Metro Smart Card
An allocation of ₹2,000 crore was made for
(c) Prepaid Debit Card issued by a bank
incentivising specific platforms.
(d) Paytm Wallet
The incentive targets transactions carried out on
(e) Demand Draft
RuPay cards and BHIM-UPI.
Answer: D
The objective is to encourage low-cost, domestic
Explanation
payment networks.
Can be used at multiple merchants having
It supports the government’s push toward a less-
agreement with the issuer.
cash economy.
Issued by RBI-authorised banks or non-bank
The measure strengthens India’s digital payments
entities.
infrastructure.
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Cash withdrawal is generally not permitted

210. Prepaid Payment Instruments (PPIs) are
(except in Full-KYC PPIs as allowed).
mainly intended to serve which of the following
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Allows purchase of goods/services and fund (d) ₹50,000

transfers (subject to KYC norms). (e) ₹2,00,000
Cannot be used for withdrawal of cash from ATMs Answer: B
(in normal cases). Explanation
Example: Paytm Wallet, PhonePe Wallet. Maximum outstanding balance permitted is
Distinct from Closed PPIs (single-entity use) and ₹10,000 at any time.
Open PPIs (bank-issued with ATM access). Designed for low-value transactions with
212. Closed System PPIs do not require approval simplified KYC norms.
from which of the following authorities? Only purchase of goods/services is allowed.
क्ल ज्ड नसस्टम पीपीआई ि इिमें से निस अथॉररिी से No cash withdrawal facility permitted.
अप्रूिि िी ज़रूरत िहीं ह ती है ? No fund transfer to other wallets or bank
(a) RBI accounts.
(b) SEBI Monthly loading is restricted as per RBI guidelines.
(c) IRDAI If not upgraded to Full-KYC within 24 months,
(d) PFRDA further credits are blocked (existing balance
(e) Ministry of Finance usable).
Answer: A 214. Which of the following facilities is available
Explanation under Full-KYC PPIs but not under Small PPIs?
Closed PPIs are usable only at the issuing entity इिमें से िौि सी सुनिधा फुि-िेिाईसी पीपीआई िे तहत
(single merchant). उपिब्ध है , िेनिि स्मॉि पीपीआई िे तहत िहीं?
They do not require RBI authorisation, unlike (a) Purchase of goods
Semi-Closed or Open PPIs. (b) Merchant payments
Cannot be used for cash withdrawal or fund (c) Prepaid recharge
transfer. (d) Balance enquiry
Typically used for purchase of goods/services (e) Fund transfer and cash withdrawal
within the issuer’s ecosystem. Answer: E
Examples include Amazon Gift Cards and Store Explanation
Cards. Full-KYC PPIs allow fund transfer to bank
Since funds do not circulate across multiple accounts and other PPIs.
entities, RBI approval is not mandated. They also permit cash withdrawal (as per RBI
Regulated indirectly under general commercial norms).
and consumer laws, not as payment system Maximum balance permitted is ₹2,00,000.
operators.
Can be linked to UPI applications for
213. Under RBI’s KYC-based classification of transactions.
Prepaid Payment Instruments, the maximum
Interoperability is mandatory for Full-KYC PPIs.
balance permitted in a Small PPI is:
Small PPIs are restricted to purchase of
भारतीय ररििि बैंि िे िेिाईसी-बेस्ि प्रीपेि पेमेंि इं स्टूमेंि्स goods/services only.
िे क्लानसनफिेशि िे तहत, एि छ िे PPI में मैखक्समम Small PPIs do not allow cash withdrawal or fund
बैिेंस िी इिाज़त है : transfer.
(a) ₹5,000 215. As per RBI’s regulatory framework on Prepaid
320

(b) ₹10,000 Payment Instruments, what is the maximum

MTS (Mass Transit System) instrument?

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प्रीपेि पेमेंि इं स्टूमेंि्स पर RBI िे रे गुिेिरी फ्रेमििि िे Applies specifically to non-bank PPI issuers
अिुसार, पीपीआई–एमिीएस (मास िर ां निि नसस्टम) इं स्टूमेंि authorised by RBI.
पर ि ि निया िा सििे िािा मैखक्समम बैिेंस नितिा है ? Enhances transparency, accountability, and
consumer protection in digital payments.
(a) ₹1,000
(b) ₹2,000 Aligns PPI issuers with grievance standards
(c) ₹3,000 applicable to banks and NBFCs.
(d) ₹5,000 217. Under the updated UPI framework, which
(e) ₹10,000 category of PPIs is authorised to conduct UPI
Answer: C transactions through third-party applications?
Explanation अपिे िेि यूपीआई फ्रेमििि िे तहत, पीपीआई िी निस
PPI–MTS instruments are designed for metro, bus, िैिे गरी ि थिि -पािी एखप्लिेशि िे ज़ररए यूपीआई
and transit-related payments. िर ां ज़ैक्शि िरिे िी इिाज़त है?
The maximum permissible balance is ₹3,000 at (a) Closed PPIs
any time. (b) Small PPIs
Primarily meant for low-value transportation (c) Semi-closed PPIs (minimum KYC)
transactions. (d) Full-KYC PPIs
Generally issued with minimal KYC (e) PPI–MTS instruments
requirements. Answer: D
Not intended for general-purpose merchant Explanation
transactions. Only Full-KYC PPIs are authorised to undertake
Cash withdrawal facility is not permitted. UPI transactions via third-party apps.
Regulated under RBI’s Master Directions on PPIs. The provision allows interoperability across UPI-
216. As per the latest regulatory directions, non- enabled platforms.
bank PPI issuers must appoint an __________, with These wallets can be linked to popular UPI apps for
full compliance required by __________. seamless payments.
िए रे गुिेिरी निदे श ं िे अिुसार, िॉि-बैंि पीपीआई िारी Full-KYC compliance ensures higher regulatory
िरिे िाि ं ि एि __________ नियुि िरिा ह गा, निसिा oversight and risk control.

__________ द्वारा पूरा पािि ज़रूरी है । Such PPIs permit fund transfers and cash
withdrawals, unlike Small PPIs.
(a) Statutory Auditor – March 31, 2026
The framework strengthens digital payment
(b) Internal Ombudsman – June 30, 2026
integration under RBI supervision.
(c) Chief Risk Officer – April 1, 2026
(d) Banking Ombudsman – December 31, 2026 Closed, Small, and PPI–MTS instruments are not
(e) Compliance Officer – September 30, 2026 eligible for third-party UPI linkage.
Answer: B 218. If a Small PPI (cash-loading) is not converted
into a Full-KYC PPI within ______ months, no further
Explanation
credits are permitted, though the existing balance
RBI has mandated non-bank PPI issuers to
may continue to be used.
appoint an Internal Ombudsman (IO).
अगर एि स्मॉि पीपीआई (िैश-ि निं ग) ि ______ महीि ं
The direction aims to strengthen customer
grievance redressal mechanisms. िे अंदर फुि-KYC PPI में िन्विि िहीं निया िाता है , त
Full compliance is required by June 30, 2026. आगे ि ई क्रेनिि अिाउि िहीं है , हािां नि मौिूदा बैिेंस
321

The IO acts as an independent review authority िा इिेमाि िारी रिा िा सिता है ।

within the entity. (a) 12 months
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(b) 18 months

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(c) 24 months Aimed at maintaining integrity and trust in the

(d) 36 months digital payments ecosystem.
(e) 48 months 220. TReDS was instituted by the Reserve Bank of
Answer: C India mainly to provide a structured platform for:
Explanation िीआरईिीएस(TReDS) ि भारतीय ररज़िि बैंि िे मुख्य
A Small PPI must be converted to Full-KYC within रूप से एि स्टर क्चिि प्लेिफ़ॉमि दे िे िे निए शुरू निया था:
24 months from issuance. (a) Discounting of MSME trade receivables
If not upgraded within this period, no further (b) Long-term infrastructure financing
credits or reloads are allowed. (c) Interbank liquidity adjustment
The existing balance can still be used for (d) Foreign exchange settlements
permitted transactions. (e) Equity listing of MSMEs
The rule applies specifically to cash-loaded Small Answer: A
PPIs. Explanation
Designed to ensure enhanced KYC compliance TReDS stands for Trade Receivables Discounting
and fraud prevention. System.
Encourages migration to Full-KYC PPIs with Instituted by the Reserve Bank of India (RBI).
broader transaction facilities. Provides an electronic platform for discounting
Prescribed under RBI’s Master Directions on invoices of MSMEs.
Prepaid Payment Instruments (PPIs). Sellers: Only MSMEs.
219. The minimum paid-up capital requirement for Buyers: Corporates, Government Departments,
a non-bank entity to issue PPIs in India is: PSUs.
भारत में पीपीआई िारी िरिे िे निए निसी िॉि-बैंि एं नििी Financiers: Banks, NBFC-Factors, RBI-permitted
िे निए नमनिमम पेि-अप िैनपिि िी ज़रूरत है : institutions.
(a) ₹1 crore Objective: Improve liquidity and working capital
(b) ₹2 crore access for MSMEs.
(c) ₹3 crore 221. Under the TReDS framework, which of the
(d) ₹5 crore following categories of institutions are permitted
(e) ₹10 crore to participate as financiers?
Answer: D िीआरईिीएस(TReDS) फ्रेमििि िे तहत, िीचे दी गई
Explanation िैिे गरी में से निस इं स्टीट्यूशि ि फाइिेंसर िे तौर पर
Non-bank companies must have a minimum paid- नहस्सा िेिे िी इिाज़त है ?
up capital of ₹5 crore to issue PPIs.
(a) RBI and other RBI-permitted financial
Applicable to entities incorporated in India seeking institutions
RBI authorisation. (b) Banks, NBFC-Factors and other RBI-permitted
Requirement ensures financial soundness and financial institutions
operational stability. (c) Cooperative societies
Issuance of PPIs is subject to RBI approval under (d) Corporate buyers
the Payment and Settlement Systems Act, 2007. (e) Only MSMEs
Capital requirement acts as a safeguard against Answer: B
systemic and customer risk. Explanation
322

Entities must also comply with net-worth and TReDS allows Banks to finance MSME receivables.
prudential norms as prescribed by RBI. NBFC-Factors are also eligible to participate as
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financiers.

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Other RBI-permitted financial institutions may (a) UPI

join as financiers. (b) BBPS
RBI itself does not act as a financier on the (c) GSTN Portal
platform. (d) MCA21
Corporate buyers and MSMEs cannot act as (e) Government e-Marketplace
financiers. Answer: E
The financing is done through discounting of Explanation
approved invoices. TReDS is integrated with the Government e-
Objective: Ensure competitive bidding and better Marketplace (GeM).
credit access for MSMEs. The integration enables the “GeM Sahay” credit
222. Which of the following Trade Receivables facility.
Discounting System (TReDS) platforms has been Allows MSMEs to obtain credit against purchase
jointly promoted by SIDBI and NSE? orders placed on GeM.
इिमें से निस िर े ि ररसीिेबल्स निस्काउं निं ग नसस्टम Strengthens working capital access for MSME
(TReDS) प्लेिफॉमि ि नसिबी और एिएसई िे नमििर suppliers to government buyers.
प्रम ि निया है ? Facilitates faster invoice financing through
authorised TReDS platforms.
(a) M1xchange
(b) KREDX Enhances transparency and digital processing in
(c) Invoicemart public procurement payments.
(d) RXIL Supports government’s objective of improving
(e) C2TREDS MSME liquidity.
Answer: D 224. Under the mandate issued by the Ministry of
Explanation MSME, companies having an annual turnover
exceeding ₹_____ are required to onboard a TReDS
RXIL stands for Receivables Exchange of India
platform.
Ltd.
It is jointly promoted by SIDBI and NSE. एमएसएमई मंत्रािय द्वारा िारी आदे श िे अिुसार, निि
Operates as an authorised TReDS platform under िंपनिय ं िा सािािा िििओिर ₹_____ से ज़्यादा है , उन्हें िर े ि
RBI approval. ररसीिेबल्स निस्काउं निं ग नसस्टम (TReDS) प्लेिफॉमि पर
Facilitates electronic discounting of MSME trade आिा ज़रूरी है ।
receivables. (a) ₹100 crore
Enables competitive financing through multiple (b) ₹250 crore
financiers. (c) ₹500 crore
Supports improved liquidity for MSMEs dealing (d) ₹750 crore
with corporates and PSUs. (e) ₹1,000 crore
One of the early operational TReDS platforms in Answer: C
India. Explanation
223. TReDS has been linked with which of the ● The Ministry of MSME mandated
following government platforms to facilitate the compulsory onboarding on TReDS for
“GeM Sahay” credit facility? certain companies.
“िीईएम सहाय” क्रेनिि सुनिधा ि आसाि बिािे िे निए ● Initially, the threshold was set at ₹500
crore annual turnover.
323

िर े ि ररसीिेबल्स निस्काउं निं ग नसस्टम (TReDS) ि इिमें से

निस सरिारी प्लेिफॉमि से ि डा गया है ? ● Companies exceeding this turnover were
required to register on a TReDS platform.
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● Objective: Ensure timely payment to MSME िंपनिय ं िे निए ज़रूरी िििओिर निनमि ि घिािर िर
suppliers. नदया गया है :
● Applies to corporates dealing with MSMEs (a) ₹100 crore
for goods and services. (b) ₹200 crore
● Strengthens invoice discounting ecosystem (c) ₹250 crore
and liquidity access. (d) ₹500 crore
● Later, the threshold was revised downward (e) ₹750 crore
(to ₹250 crore) under updated reforms. Answer: C
225. As per the 2026 reform measures, CPSEs and Explanation
Government Departments are now mandated to Under the 2026 reforms, the turnover threshold
settle MSME invoices through: was reduced from ₹500 crore to ₹250 crore.
2026 िे सुधार उपाय ं िे अिुसार, सीपीएसई और सरिारी Companies with annual turnover exceeding ₹250
निभाग ं ि अब एमएसएमई इििॉइस िा निपिाि इििे crore must register on a TReDS platform.
ज़ररए िरिा ह गा: The move expands coverage to include more large
(a) NEFT only buyers dealing with MSMEs.
(b) RTGS only Objective: Ensure timely settlement of MSME
(c) BBPS platform dues.
(d) TReDS platforms Strengthens liquidity support through structured
(e) GeM portal directly invoice discounting.
Answer: D Enhances compliance and transparency in
Explanation corporate–MSME transactions.
Under the 2026 Budgetary & Regulatory Part of broader reforms to improve MSME access
reforms, CPSEs and Government Departments to working capital.
must settle MSME invoices through TReDS 227. The Cheque Truncation System (CTS) in India
platforms. is managed by which institution and has been
Makes invoice discounting and payment legally recognised under which Act?
processing more transparent and time-bound. भारत में चेि िर ं िेशि नसस्टम (CTS) निस संस्था द्वारा मैिेि
Ensures faster realisation of dues for MSME निया िाता है और इसे निस एक्ट िे तहत िािूिी मान्यता
suppliers. दी गई है ?
Strengthens digital tracking and competitive
(a) NPCI – Negotiable Instruments Act, 1881
financing through authorised financiers.
(b) SEBI – Companies Act, 2013
Aligns public procurement payments with RBI- (c) RBI – Banking Regulation Act, 1949
regulated receivables financing systems. (d) CCIL – Payment and Settlement Systems Act,
Reduces payment delays from large government 2007
buyers. (e) NABARD – RBI Act, 1934
Complements the CGTMSE-backed credit Answer: A
guarantee support for invoice discounting. Explanation
226. Under the revised 2026 guidelines, the CTS is managed operationally by NPCI in India.
mandatory turnover threshold for companies to
The legal recognition for cheque truncation is
register on TReDS has been reduced to:
provided under the Negotiable Instruments Act,
ररिाइज़्ि 2026 गाइििाइं स िे तहत, िर े ि ररसीिेबल्स
324

1881.
निस्काउं निं ग नसस्टम (TReDS) पर रनिस्टर िरिे िे निए Specifically covered under Section 6 and Section
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81A of the NI Act.

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CTS eliminates physical movement of cheques by (d) April 11

transmitting electronic images. (e) July 3
Ensures faster cheque clearing and settlement Answer: A
across banks. Explanation
All cheques must comply with CTS-2010 The second phase of the faster cheque clearing
standards (security features like watermark, CTS mechanism under CTS was initially scheduled to
India mark, etc.). be implemented from January 3.
Implemented in a grid-based system (Northern– The reform aimed to introduce continuous
New Delhi, Western–Mumbai, Southern–Chennai). clearing and settlement.
228. Under the grid-based implementation (2011– Objective: Reduce cheque realisation time across
2013), India was divided into how many CTS banks.
regional grids? Part of RBI’s efforts to enhance efficiency in the
नग्रि-बेस्ि इम्प्लीमेंिेशि (2011–2013) िे तहत, भारत ि cheque clearing ecosystem.
नितिे सीिीएस रीििि नग्रि में बां िा गया था? Built upon the existing grid-based CTS
(a) Two infrastructure.
(b) Three Intended to align cheque processing timelines
(c) Four more closely with digital payment efficiency.
(d) Five Implementation was later deferred for operational
(e) Six preparedness.
Answer: B 230. Which of the following ministries has
Explanation launched the Jan Samarth Portal?
Between 2011–2013, CTS moved to a grid-based निम्ननिखित में से निस मंत्रािय िे 'िि समथि प िि ि' िॉन्च
clearing structure. निया है ?
India was divided into three regional CTS grids. (a) Ministry of Commerce and Industry
Northern Grid – New Delhi. (b) Ministry of Corporate Affairs
Western Grid – Mumbai. (c) Ministry of Rural Development
Southern Grid – Chennai. (d) Ministry of Finance
The grid system replaced city-wise clearing (e) Ministry of Micro, Small and Medium
arrangements. Enterprises
Objective: Improve efficiency, uniformity and Answer: D
speed of cheque clearing nationwide.
Explanation
Enabled centralised processing and faster
Jan Samarth Portal has been launched by Ministry
settlement across regions.
of Finance
229. Under the Cheque Truncation System (CTS),
231. Jan Samarth Portal is primarily associated
the second phase of the faster cheque clearing
with which of the following?
mechanism was initially slated to be implemented
with effect from: िि समथि प िि ि मुख्य रूप से निम्ननिखित में से निससे
संबंनधत है ?
चेि िर ं िेशि नसस्टम (CTS) िे तहत, तेज़ चेि खक्लयररं ग
(a) Tax filing
नसस्टम िा दू सरा फेज़ शुरू में इस तारीि से िागू ह िा था:
(b) Insurance services
(a) January 3
(c) Digital payments
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(b) January 31
(c) March 5 (d) Pension schemes
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(e) Credit-linked government schemes

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Answer: E Government scheme providing 100% guarantee on

Explanation loans given to exporters
Jan Samarth portal is one-stop digital portal for Helps exporters get easy and cheaper credit
government credit-linked schemes (loan schemes). Focus on MSMEs (Micro, Small and Medium
232. Credit Guarantee Scheme for Exporters Enterprises)
(CGSE) is implemented by which of the following Purpose
agencies? Reduce risk for banks/lenders
नियाि ति ं िे निए ऋण गारं िी य ििा (CGSE) िा Ensure more loans (liquidity) for exporters
िायाि न्वयि निम्ननिखित में से निस एिेंसी द्वारा निया िाता Support exporters facing global trade challenges
है ? Duration
(a) Small Industries Development Bank of India Till ₹20,000 crore loans are guaranteed OR
(SIDBI) 31 March 2026 (whichever is earlier)
(b) National Credit Guarantee Trustee Company Eligible Applicants
Ltd. 234. Direct Exporters
(c) Export-Import Bank of India (EXIM Bank) MSMEs: At least 5% turnover from exports
(d) Export Credit Guarantee Corporation of India Non-MSMEs: At least 20% turnover from exports
(ECGC)
Must have active export loan account
(e) National Bank for Financing Infrastructure and
Account should be standard (not NPA)
Development
235. Indirect Exporters
Answer: B
MSMEs supplying 30%+ goods to exporters
Explanation
Must have domestic working capital loan
Credit Guarantee Scheme for Exporters (CGSE) is
Other Conditions
implemented by National Credit Guarantee Trustee
Company Ltd. MSMEs must have Udyam Registration
233. What is the maximum loan amount per Account should not be NPA
borrower under Credit Guarantee Scheme for Key Features
Exporters (CGSE)? Loan Support: Up to 20% of working capital limit
नियाि ति ं िे निए क्रेनिि गारं िी य ििा (CGSE) िे तहत Maximum Loan: ₹50 crore per borrower
प्रनत उधारिताि अनधितम ऋण रानश नितिी है ? Tenure: 4 years (including 1-year moratorium)
(a) Rs. 75 crore Interest Rate:
(b) Rs. 20 crore 1% lower than normal rate
(c) Rs. 50 crore Max: 10% (Banks/FIs), 14% (NBFCs)
(d) Rs. 80 crore Guarantee Cover: 100% (full guarantee)
(e) Rs. 45 crore Collateral:
Answer: C No extra collateral required
Explanation No new personal/corporate guarantee
Credit Guarantee Scheme for Exporters (CGSE) Eligible Lenders
Ministry: Ministry of Finance (Department of Scheduled Banks (SCBs)
Financial Services) Scheduled Urban Cooperative Banks (SUCBs)
326

Implemented by: NCGTC (National Credit All India Financial Institutions (AIFIs)
Guarantee Trustee Company Ltd.) NBFCs (Non-Banking Financial Companies)
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What is CGSE? Claim Settlement

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75% amount: Paid within 30 days after NPA Explanation

Remaining 25%: After recovery Key Features
In OTS (One Time Settlement): Guarantee reduces Loan Type: Secured loan against stored crops
to 90% Lenders: Banks / Financial Institutions
Exclusions Loan Tenure:
Not allowed if: Based on shelf life of crop
Already covered under another scheme/insurance Maximum 12 months
Not following RBI/Government rules 238. Under Prime Minister’s Employment
236. Which of the following is not one of the Generation Programme (PMEGP), what is the
eligible lenders under Credit Guarantee Scheme for maximum project cost admissible for
Exporters (CGSE)? manufacturing sector?
निम्ननिखित में से िौि सा नियाि ति ं िे निए क्रेनिि गारं िी प्रधािमंत्री र ज़गार सृिि िायिक्रम (PMEGP) िे अंतगित,
य ििा (CGSE) िे अंतगित पात्र ऋणदाताओं में से एि िहीं निनिमाि ण क्षेत्र िे निए अनधितम नितिी पररय ििा िागत
है ? स्वीिायि है ?
(a) Scheduled Urban Cooperative Banks (a) Rs. 1 crore
(b) Non-Banking Financial Companies (b) Rs. 75 lakhs
(c) All India Financial Institutions (AIFIs) (c) Rs. 50 lakhs
(d) Regional Rural Banks (RRBs) (d) Rs. 1.5 crore
(e) Scheduled Commercial Banks (e) Rs. 45 lakhs
Answer: D Answer: C
Explanation Explanation
Eligible lenders: Project Cost Limit:
Scheduled Commercial Bank (SCB)/ Scheduled Manufacturing: up to ₹50 lakh
Urban Cooperative Banks (SUCB)/ All India Service: up to ₹20 lakh
Financial Institution (AIFI) / Non-Banking Finance 239. Under Weavers Mudra Scheme (WMS), what
Company (NBFC). is the maximum margin money assistance
237. Under e-kisan Upaj Nidhi, where farmers can provided per individual weaver?
avail loans against stored crops using e-NWR िीिसि मुद्रा य ििा (WMS) िे तहत, प्रनत व्यखिगत बुििर
(electronic Negotiable Warehouse Receipt) issued
ि अनधितम नितिी मानििि मिी सहायता प्रदाि िी िाती
by WDRA-registered warehouses, what is the
maximum tenure of such loans? है ?
(a) Rs. 25000
ई-निसाि उपि निनध िे तहत, िहााँ निसाि WDRA-
(b) Rs. 15000
पंिीिृत ग दाम ं द्वारा िारी e-NWR (इिेक्टरॉनिि
(c) Rs. 50000
िेग नशएबि िेयरहाउस रसीद) िा उपय ग िरिे भंिाररत
(d) Rs. 45000
फसि ं िे बदिे ऋण प्राप्त िर सिते हैं , ऐसे ऋण ं िी
(e) Rs. 75000
अनधितम अिनध क्या है ?
Answer: A
(a) 6 months
Explanation
(b) 15 months
Margin Support:
(c) 12 months
Govt provides 20% of project cost
327

(d) 8 months
Maximum ₹25,000
(e) 24 months
Remaining margin by borrower
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Answer: C

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240. MUDRA loans are offered in four categories (e) Ministry of Social Justice & Empowerment
namely, ‘Shishu’,‘Kishore’, ‘Tarun’ and ‘Tarun Plus’. (MoSJE) and Ministry of Rural Development
Which of the following loan categories as per (MoRD)
MUDRA scheme is incorrect? Answer: C
MUDRA ऋण चार श्रेनणय ं में नदए िाते हैं , निििे िाम हैं — Explanation
'नशशु', 'निश र', 'तरुण' और 'तरुण प्लस'। MUDRA National Action for Mechanized Sanitation
य ििा िे अिुसार, निम्ननिखित में से िौि-सी ऋण श्रेणी Ecosystem (NAMASTE)
गित है ? Type: Central Sector Scheme
(a) Shishu: covering loans upto Rs. 50,000/- Ministries:
(b) Kishore: covering loans above Rs. 50,000/- and Ministry of Social Justice & Empowerment (MoSJE)
up to Rs. 5 lakhs Ministry of Housing & Urban Affairs (MoHUA)
(c) Tarun: covering loans above Rs. 5 lakh and up 242. Consider the following statements regarding
to Rs. 10 lakhs the eligibility for Loan for Startups (START)
(d) Tarun Plus: Rs. 10 lakh and up to Rs. 15 lakhs scheme and find the CORRECT one(s).
(e) None of the above I. Startups under Government of India guidelines,
Answer: D including Private Limited Companies, Registered
Partnerships, or LLPs recognized by DPIIT are
Explanation
eligible.
MUDRA loans are offered in four categories
II. Age of startup should NOT exceed 25 years.
namely, ‘Shishu’,‘Kishore’and ‘Tarun’
III. Turnover of startup should not exceed Rs. 350
and newly added category ‘Tarun Plus’ which
Crores.
signifies the stage of growth or development.
Shishu: covering loans upto Rs. 50,000/- 'स्टािि अप्स िे निए ऋण (START)' य ििा िी पात्रता िे
Kishore: covering loans above Rs. 50,000/- and up संबंध में निम्ननिखित िथि ं पर निचार िरें और सही िथि
to Rs. 5 lakhs चुिें।
Tarun: covering loans above Rs. 5 lakh and up to I. भारत सरिार िे नदशानिदे श ं िे तहत आिे िािे
Rs. 10 lakhs स्टािि अप्स—नििमें प्राइिेि निनमिे ि िंपनियााँ , पंिीिृत
Tarun Plus: Rs. 10 lakh and up to Rs. 20 lakhs साझेदाररयााँ या DPIIT द्वारा मान्यता प्राप्त LLPs शानमि हैं —
241. National Action for Mechanized Sanitation इस य ििा िे निए पात्र हैं ।
Ecosystem (NAMASTE) is being implemented by II. स्टािि अप िी आयु 25 िषि से अनधि िहीं ह िी चानहए।
which of the following ministries?
III. स्टािि अप िा िििओिर 350 िर ड रुपये से अनधि िहीं
'मैिेिाइज्ड सैनििे शि इि नसस्टम िे निए राष्ट्रीय िायि
ह िा चानहए।
य ििा' (NAMASTE) निम्ननिखित में से निस मंत्रािय द्वारा
Select the Code
िायाि खन्वत िी िा रही है ?
ि ि चुिें
(a) Ministry of Social Justice & Empowerment
(MoSJE) and Ministry of Tribal Affairs (MoTA) (a) Only II and III
(b) Ministry of Housing & Urban Affairs (MoHUA) (b) Only I
and Ministry of Rural Development (MoRD) (c) Only I and II
(c) Ministry of Social Justice & Empowerment (d) Only III
(MoSJE) and Ministry of Housing & Urban Affairs (e) None of the above
(MoHUA) Answer: B
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(d) Ministry of Housing & Urban Affairs (MoHUA) Explanation

and Ministry of Tribal Affairs (MoTA) Eligibility
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Must be a DPIIT-recognized Startup (c) Only I and II

Type of Entities (d) Only III
Private Limited Company (e) None of the above
LLP (Limited Liability Partnership) Answer: D
Registered Partnership Firm Explanation
Conditions Key Features
Startup age ≤ 10 years 244. Financial Support
Turnover ≤ ₹100 crore Revolving Fund (ranging from Rs. 20,000 – Rs.
Not Eligible 30,000)
HUFs Community Investment Fund (CIF)
Reconstructed/split businesses Helps SHGs build credit history
NPA/default startups 245. Loan & Interest Benefits
243. Consider the following statements regarding In 250 backward districts:
Deendayal Antyodaya Yojana-National Rural Loan up to ₹3 lakh
Livelihoods Mission (DAY-NRLM) and find the Interest rate: 7%
CORRECT one(s). Prompt repayment benefit:
I. Self Help Groups (SHGs) which are active for at Extra 3% subsidy → effective 4% interest
least 3 months are eligible applicants for availing
In other districts:
loan under the mission.
Interest reduced to 7% through subsidy
II. For loans to SHGs up to Rs. 5 lakhs, no collateral
246. Collateral Rules
or margin is required.
No collateral or margin required up to ₹10 lakh
III. A Revolving Fund corpus ranging from Rs.
20,000 – Rs. 30,000 is provided per SHG to help in 247. Consider the following statements regarding
building their credit history PM Street Vendor’s AtmaNirbhar Nidhi (PM
SVANidhi) scheme and find the CORRECT one(s).
दीिदयाि अंत्य दय य ििा-राष्ट्रीय ग्रामीण आिीनििा
I. The revised loan structure increases the first
नमशि (DAY-NRLM) िे संबंध में निम्ननिखित िथि ं पर
tranche to ₹15,000 and the second tranche to
निचार िरें और सही िथि/िथि ं िा चयि िरें । ₹30,000, while the third tranche remains
I. स्वयं सहायता समूह (SHG), ि िम से िम 3 महीि ं से unchanged at ₹50,000
सनक्रय हैं , इस नमशि िे तहत ऋण प्राप्त िरिे िे निए पात्र II. The scheme has now been extended until March
आिेदि हैं । 31, 2028.
II. SHG ि 5 िाि रुपये ति िे ऋण िे निए निसी भी III. To promote digital adoption, street vendors are
प्रिार िी िमाित (collateral) या मानििि िी आिश्यिता eligible to receive cashback incentives of up to
₹2,000 on retail and wholesale transactions.
िहीं ह ती है ।
PM स्टर ीि िेंिर आत्मनिभिर निनध (PM SVANidhi) य ििा
III. प्रत्येि SHG ि उििी ऋण साि (credit history)
िे संबंध में निम्ननिखित िथि ं पर निचार िरें और सही
बिािे में सहायता हे तु 20,000 रुपये से 30,000 रुपये ति
िथि चुिें।
िी रानश िा एि 'ररिॉखवंग फंि' (Revolving Fund)
I. संश नधत ऋण संरचिा िे तहत पहिी निश्त ि बढािर
प्रदाि निया िाता है ।
₹15,000 और दू सरी निश्त ि ₹30,000 िर नदया गया है ,
Select the Code
िबनि तीसरी निश्त ₹50,000 पर अपररिनतित बिी हुई है ।
ि ि चुिें
329

II. इस य ििा ि अब 31 माचि, 2028 ति बढा नदया गया

(a) Only II and III
है ।
(b) Only I
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III. निनििि अपिािे ि बढािा दे िे िे निए, स्टर ीि िेंिर I. निसाि क्रेनिि िािि (KCC) य ििा 1998 में शुरू िी गई
िुदरा और थ ि िेि-दे ि पर ₹2,000 ति िे िैशबैि थी।
प्र त्साहि प्राप्त िरिे िे पात्र हैं। II. ₹3 िाि ति िे अल्पिानिि फसि ऋण 'ब्याि
Select the Code सबिेंशि य ििा' (Interest Subvention Scheme) िे
ि ि चुिें अंतगित आते हैं ।
(a) Only II and III III. इस य ििा िे तहत निरायेदार निसाि, मौखिि पट्टे दार
(b) Only I और बिाईदार ऋण िेिे िे पात्र िहीं हैं ।
(c) Only I and II Select the Code
(d) Only III ि ि चुिें
(e) None of the above (a) Only II and III
Answer: E (b) Only I
Explanation (c) Only I and II
The lending period has now been extended until (d) Only III
March 31, 2030.
(e) None of the above
In order to give boost to digital adoption, the street
Answer: C
vendors can avail cashback incentives upto ₹1,600
Explanation
on making retail & wholesale transactions.
The Kisan Credit Card (KCC) scheme was
Key Features
introduced in 1998
Loan Amount (1st Tranche):
Eligibility
Up to Rs. 15000 (earlier) ₹10,000 (1-year tenure)
All Farmers – Individuals / Joint borrowers who
No Collateral:
are owner cultivators
Collateral-free loan
Tenant Farmers, Oral Lessees & Share Croppers
Interest Subsidy:
Self Help Groups (SHGs) or Joint Liability Groups of
7% subsidy on timely repayment Farmers including tenant farmers, share croppers
Digital Incentive: etc.
Cashback up to ₹100/month for digital payments At present, short term crop loans up to ₹ 3 lakh are
Higher Loan on Repayment: covered under Interest Subvention
2nd loan: Rs. 25000 (earlier ₹20,000) Scheme/Prompt Repayment Incentive scheme of
3rd loan: ₹50,000 the Government of India.
248. Consider the following statements regarding 249. Consider the following income categories
Kisan Credit Card scheme and find the CORRECT under Home Loan Scheme (EWS, LIG, MIG – Urban
one(s). Areas) and find the CORRECT one(s).
I. Kisan Credit Card (KCC) scheme was introduced I. EWS (Economically Weaker Section): up to Rs. 3
in 1998. lakh/year
II. Short term crop loans up to ₹ 3 lakh are covered II. LIG (Lower Income Group): more than Rs. 3 lakh
under Interest Subvention Scheme. and up to Rs. 7.5 lakh/year
III. Tenant Farmers, Oral Lessees & Share Croppers III. MIG (Middle Income Group): more than ₹7.5
are not eligible borrowers under the scheme. and up to Rs.9 lakh/year

निसाि क्रेनिि िािि य ििा िे संबंध में निम्ननिखित िथि ं ह म ि ि य ििा (EWS, LIG, MIG – शहरी क्षेत्र) िे तहत
330

पर निचार िरें और सही िथि चुिें। आय िी निम्ननिखित श्रेनणय ं पर निचार िरें और सही
श्रेणी/श्रेनणय ं िा पता िगाएाँ ।
Page

I. EWS (आनथिि रूप से िमज़ र िगि): ₹3 िाि/िषि ति

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II. LIG (निम्न आय िगि): ₹3 िाि से अनधि और ₹7.5 (b) Rs. 30

िाि/िषि ति (c) Rs. 80
III. MIG (मध्यम आय िगि): ₹7.5 िाि से अनधि और ₹9 (d) Rs. 50
िाि/िषि ति (e) Rs. 100
Select the Code Answer: A

ि ि चुिें Explanation
Pradhan Mantri Suraksha Bima Yojana:
(a) Only II and III
Launched: 2015
(b) Only I
Type: One-year accident insurance
(c) Only I and II
Eligibility
(d) Only III
Age: 18–70 years
(e) None of the above
Must have bank/post office account
Answer: B
Benefits
Explanation
Accidental death: ₹2 lakh
EWS households: Annual income up to ₹3 lakh.
Total disability: ₹2 lakh
LIG households: Annual income from ₹3 lakh to ₹6
Partial disability: ₹1 lakh
lakh.
Premium
MIG households: Annual income from ₹6 lakh to ₹9
lakh. ₹20 per year
250. How much accident insurance cover is Coverage Period
provided under Pradhan Mantri Jan Dhan Yojana? 1 June – 31 May
प्रधािमंत्री िि धि य ििा िे अंतगित नितिी दु घिििा बीमा 252. What is the eligibility age for Pradhan Mantri
ििरे ि प्रदाि िी िाती है ? Jeevan Jyoti Beema Yojana?

(a) Rs. 5 lakh प्रधािमंत्री िीिि ि नत बीमा य ििा िे निए पात्रता िी आयु
(b) Rs. 4.5 lakh क्या है ?
(c) Rs. 7.5 lakh (a) 18 – 55 years
(d) Rs. 2 lakh (b) 18 – 40 years
(e) Rs. 10 lakh (c) 18 – 50 years
Answer: D (d) 18 – 70 years
Explanation (e) 18 – 60 years
Key Features of Pradhan Mantri Jan Dhan Answer: C
Yojana Explanation
No minimum balance Eligibility
RuPay Debit Card Age: 18–50 years
Free card usable at ATMs Coverage up to 55 years
Accident insurance: ₹2 lakh 253. Which of the following is the implementing
Life insurance: ₹30,000 agency of Atal Pension Yojana?
251. How much annual premium is payable under निम्ननिखित में से िौि अिि पेंशि य ििा िी िायािन्वयि
the Pradhan Mantri Suraksha Bima Yojana? एिेंसी है ?
331

प्रधािमंत्री सुरक्षा बीमा य ििा िे अंतगित नितिा िानषिि (a) Reserve Bank of India (RBI)
प्रीनमयम दे य है ? (b) Life Insurance Corporation (LIC)
Page

(a) Rs. 20 (c) National Pension System Trust (NPS Trust)

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(d) Pension Fund Regulatory and Development (a) Rs. 250

Authority (PFRDA) (b) Rs. 150
(e) Employees’ Provident Fund Organisation (c) Rs. 500
(EPFO) (d) Rs. 450
Answer: D (e) Rs. 1000
Explanation Answer: A
Atal Pension Yojana is implemented by Pension Explanation
Fund Regulatory and Development Authority
Minimum and maximum deposit limit (per year)
(PFRDA).
under Sukanya Samridhhi Yojana is Rs. 250 and Rs.
254. What is the maximum loan amount provided 1.5 lakh, respectively.
under Stand Up India Scheme?
257. What is the maximum tax deduction limit
स्टैं ि अप इं निया य ििा िे तहत दी िािे िािी अनधितम available under Section 80C for investment in
ऋण रानश नितिी है ? National Savings Certificate (NSC)?
(a) Rs. 2.5 crore िेशिि सेनिंग्स सनिि नफिेि (NSC) में नििेश िे निए, धारा
(b) Rs. 1 crore 80C िे तहत उपिब्ध अनधितम िै क्स ििौती िी सीमा
(c) Rs. 5 crore क्या है ?
(d) Rs. 10 lakh (a) Rs. 1.5 lakh
(e) None of these (b) Rs. 5 lakh
Answer: B (c) Rs. 2.5 lakh
Explanation (d) Rs. 50,000
Loan Details provided under Stand Up India (e) Rs. 3 lakh
Scheme: Answer: A
₹10 lakh to ₹1 crore Explanation
Composite loan (term + working capital) Tax Benefit
255. What is the initial investment tenure under Section 80C (up to ₹1.5 lakh)
Public Provident Fund (PPF) Scheme?
258. Under NPS Vatsalya scheme, partial
पखिि प्र नििें ि फंि (PPF) य ििा िे तहत शुरुआती withdrawal is allowed after how many years of
नििेश िी अिनध क्या है ? investment?
(a) 12 years NPS िात्सल्य य ििा िे तहत, नििेश िे नितिे िषों िे बाद
(b) 10 years आं नशि नििासी िी अिुमनत है ?
(c) 15 years (a) 5 years
(d) 7 years (b) 8 years
(e) 20 years (c) 3 years
Answer: C (d) 2 years
Explanation (e) None of the above
Initial investment tenure under Public Provident Answer: C
Fund (PPF) Scheme is 15 years, extendable in block Explanation
of 5 years.
Partial withdrawal is allowed after 3 years.
256. What is the minimum deposit limit (per year)
259. What is the maturity period for investment
332

under Sukanya Samridhhi Yojana?

under Senior Citizens’ Savings Scheme?
सुिन्या समृखि य ििा िे अंतगित न्यूितम िमा सीमा (प्रनत
Page

िषि) क्या है ?

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सीनियर नसनििन्स सेनिंग्स स्कीम िे तहत नििेश िी Initially scheme was available to all citizens of
मैच्य ररिी अिनध क्या है ? India between 18 and 40 years of age.
(a) 3 years With effect from 1st October 2022, individuals
paying income tax are not eligible to join the
(b) 5 years
scheme.
(c) 7.5 years
Pension slabs available: ₹1,000, ₹2,000, ₹3,000,
(d) 4 years
₹4,000, and ₹5,000 per month.
(e) 10 years
Minimum contribution period is 20 years,
Answer: B depending on age of joining.
Explanation 261. Consider the following statements with
Features of Senior Citizens’ Savings Scheme: respect to Sukanya Samriddhi Yojana and find the
Maturity: 5 years CORRECT one(s).
Extendable by 3 years I. The scheme was launched in the year 2005.
Minimum deposit: ₹1,000 II. The account can be opened in the name of girl
Maximum deposit: ₹30 lakh child up to 12 years of age.
260. Consider the following statements with III. The tenure of the scheme is 21 years from date
respect to Atal Pension Yojana and find the of opening of account.
CORRECT one(s). सुिन्या समृखि य ििा िे संबंध में निम्ननिखित िथि ं पर
I. Scheme is available to all citizens of India निचार िरें और सही िथि चुिें।
between 18 and 40 years of age.
I. यह य ििा िषि 2005 में शुरू िी गई थी।
II. Pension slabs available under the scheme is
II. यह िाता 12 िषि ति िी आयु िी बानििा िे िाम पर
₹1,000, ₹2,000, ₹3,000, ₹4,000, and ₹5,000 per
month. ि िा िा सिता है ।
III. Minimum contribution period under the III. इस य ििा िी अिनध िाता ि ििे िी तारीि से 21 िषि
scheme is 20 years. है ।
अिि पेंशि य ििा िे संबंध में निम्ननिखित िथि ं पर Select the code
निचार िरें और सही िथि चुिें। ि ि चुिें
I. यह य ििा 18 से 40 िषि िी आयु िे भारत िे सभी (a) Only I and II
िागररि ं िे निए उपिब्ध है । (b) Only I and III
II. इस य ििा िे तहत उपिब्ध पेंशि स्लैब ₹1,000, (c) Only III
₹2,000, ₹3,000, ₹4,000 और ₹5,000 प्रनत माह हैं । (d) Only II and III

III. इस य ििा िे तहत न्यूितम अंशदाि अिनध 20 िषि है । (e) Only II

Answer: C
Select the code
Explanation
ि ि चुिें
Sukanya Samriddhi Yojana (SSY)
(a) Only I
Launched on 22 January 2015
(b) Only II and III
Part of Beti Bachao Beti Padhao (BBBP) initiative
(c) Only III
Type: Small Savings Scheme for Girl Child
(d) Only I and II
Implemented through
(e) All I, II and III
Post Offices
333

Answer: B
Authorised Banks
Explanation
Eligibility
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Account can be opened in the name of a girl child RuPay Debit Card
Up to 10 years of age Free card
Only one account per girl child Usable at ATMs
Parent/guardian operates the account Includes accident insurance
Key Features Insurance Benefits
Minimum: ₹250 per year Accident Insurance: Up to ₹2 lakh
Maximum: ₹1.5 lakh per year Life Insurance: ₹30,000 (for eligible early account
Tenure: holders)
Matures after 21 years from account opening Overdraft Facility
262. Consider the following statements with Up to ₹10,000
respect to Pradhan Mantri Jan Dhan Yojana and Available after satisfactory operation
find the INCORRECT one(s). Earlier provision: ₹5,000
I. Beneficiaries of PMJDY can avail themselves of an 263. Consider the following statements with
overdraft (OD) facility up to Rs. 10,000/- respect to Stand Up India scheme and find the
II. Under PMJDY, beneficiaries are issued a free CORRECT one(s).
RuPay debit card, which comes with an inbuilt I. The scheme provides bank loans of ₹10 lakh to
accident insurance cover of Rs. 1 lakh ₹1 crore to at least one SC/ST borrower and one
III. The account opened under the scheme require woman per bank branch for setting up a greenfield
minimum balance maintenance of Rs. 100. enterprise.
प्रधािमंत्री िि धि य ििा िे संबंध में निम्ननिखित िथि ं पर II. The loan is repayable in 10 years.
निचार िरें और गित िथि/िथि ं िी पहचाि िरें । III. The scheme allows 15% margin money, which
I. PMJDY िे िाभाथी 10,000 रुपये ति िी ओिरिर ाफ्ट can be arranged through eligible Central or State
government schemes.
(OD) सुनिधा िा िाभ उिा सिते हैं ।
'स्टैं ि अप इं निया' य ििा िे संबंध में निम्ननिखित िथि ं पर
II. PMJDY िे तहत, िाभानथिय ं ि एि मुफ्त RuPay िे नबि
निचार िरें और सही िथि चुिें:
िािि िारी निया िाता है , निसिे साथ 1 िाि रुपये िा
I. यह य ििा प्रत्येि बैंि शािा में िम से िम एि SC/ST
अंतनििनहत दु घिििा बीमा ििर नमिता है ।
उधारिताि और एि मनहिा ि , एि िया उद्यम (ग्रीिफीड
III. इस य ििा िे तहत ि िे गए िाते में 100 रुपये िा
एं िरप्राइि) स्थानपत िरिे िे निए ₹10 िाि से ₹1 िर ड
न्यूितम शेष (minimum balance) बिाए रििा आिश्यि
ति िा बैंि ऋण प्रदाि िरती है ।
है ।
II. इस ऋण िा पुिभुिगताि 10 िषों में निया िािा ह ता है ।
Select the code
III. यह य ििा 15% 'मानििि मिी' िी अिुमनत दे ती है ,
ि ि चुिें
निसिी व्यिस्था िेंद्र या राि सरिार िी पात्र य ििाओं िे
(a) Only I
माध्यम से िी िा सिती है ।
(b) Only II and III
Select the code
(c) Only I and III
(d) Only I and II ि ि चुिें
(e) None of the above (a) Only II and III
Answer: B (b) Only I
Explanation (c) Only III
(d) Only I and III
334

Key Features / Scheme Highlights

Zero Balance Account (e) None of the above
Answer: D
Page

No minimum balance required

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Explanation One-time small savings scheme for women/girls

Target Group Available for a 2-year period (till March 2025)
SC/ST Deposit up to ₹2 lakh
Women entrepreneurs Fixed interest rate: 7.5%
Key Features Partial withdrawal option
Loan Amount: ₹10 lakh to ₹1 crore Features of Senior Citizens’ Savings Scheme:
Composite loan (covers term loan + working Maturity: 5 years
capital) Extendable by 3 years
Loan & Repayment Minimum deposit: ₹1,000
Repayment period: Up to 7 years Maximum deposit: ₹30 lakh
Moratorium: Up to 18 months 265. Which of the following best defines the term
Margin Money ‘insurance’?
Up to 15% support (via convergence with govt निम्ननिखित में से िौि-सा शब्द ‘बीमा’ (Insurance) ि
schemes) सबसे अच्छी तरह पररभानषत िरता है ?
264. Consider the following statements and find (a) A scheme for investment to earn high returns
the CORRECT one(s).
(b) A promise of compensation for specific future
I. Tenure of Kisan Vikas Patra scheme is 115 potential losses in exchange for premium.
months.
(c) A government tax collection mechanism
II. Mahila Samman Savings certificate offers a fixed
(d) A facility to provide loans without interest
interest rate of 7.5% per annum, which remained
(e) A contract that guarantees fixed profits
unchanged for the entire tenure of 5 years.
irrespective of risk
III. Maximum deposit limit under Senior Citizens’
Answer: B
Savings Scheme is Rs. 50 lakh.
Explanation
निम्ननिखित िथि ं पर निचार िरें और सही िथि चुिें।
Introduction to Insurance
I. निसाि नििास पत्र य ििा िी अिनध 115 महीिे है ।
Definition: Insurance is a promise of compensation
II. मनहिा सम्माि बचत प्रमाणपत्र 7.5% प्रनत िषि िी निनित for specific future potential losses in
ब्याि दर प्रदाि िरता है , ि 5 िषों िी पूरी अिनध िे दौराि exchange for a periodic payment (premium).
अपररिनतित रहती है । Purpose: Protects the financial well-being of
III. िररष्ठ िागररि बचत य ििा िे तहत अनधितम िमा individuals, companies, or entities against
सीमा 50 िाि रुपये है । unexpected losses.
Select the code 266. Which of the following best defines the term
ि ि चुिें ‘premium’ in context of insurance?

(a) Only I बीमा िे संदभि में, निम्ननिखित में से िौि-सा शब्द 'प्रीनमयम'
(b) Only II ि सबसे अच्छी तरह पररभानषत िरता है ?
(c) Only III (a) The amount paid by insurer at the time of claim
settlement
(d) Only II and III
(b) The total value of insured property or asset
(e) None of the above
(c) A bonus amount given by insurance companies
Answer: A
to policyholders
335

Explanation
(d) Periodic payment to get compensation for
Tenure of Kisan Vikas Patra is 115 months
specific future potential losses
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Mahila Samman Savings Certificate

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(e) A penalty charged for late payment of policy (c) Triton Insurance Company Ltd
dues (d) Indian Mercantile Insurance Ltd
Answer: D (e) General Insurance Corporation of India
Explanation Answer: D
Introduction to Insurance Explanation
Definition: Insurance is a promise of compensation 1907 – Indian Mercantile Insurance Ltd set up
for specific future potential losses in (first to transact all classes of general insurance).
exchange for a periodic payment (premium). 270. Which of the following is the first statutory
Purpose: Protects the financial well-being of measure taken to regulate life insurance in India?
individuals, companies, or entities against निम्ननिखित में से िौि-सा भारत में िीिि बीमा ि
unexpected losses. निनियनमत िरिे िे निए उिाया गया पहिा िैधानिि िदम
267. Which of the following is the first life है ?
insurance company of India?
(a) IRDAI Act, 1999
निम्ननिखित में से िौि भारत िी पहिी िीिि बीमा िंपिी (b) Indian Insurance Companies Act 1928
है ? (c) British Insurance Act 1870
(a) Madras Equitable (d) Indian Life Assurance Companies Act 1912
(b) Oriental Life Insurance Company (e) None of the above
(c) Indian Mercantile Insurance Ltd Answer: D
(d) Life Insurance Company Explanation
(e) General Insurance Corporation of India 1912 – Indian Life Assurance Companies Act (first
Answer: B statutory measure regulating life insurance).
Explanation 271. Which of the following committee’s report has
1818 – Oriental Life Insurance Company suggested to allow the entry of private sector in
established in Calcutta (first life insurance insurance industry?
company in India). निम्ननिखित में से निस सनमनत िी ररप िि िे बीमा उद्य ग में
268. Which of the following is the first general नििी क्षेत्र िे प्रिेश िी अिुमनत दे िे िा सुझाि नदया है ?
insurance company of India?
(a) RN Malhotra Committee (1993)
निम्ननिखित में से िौि भारत िी पहिी सामान्य बीमा िंपिी (b) Narasimham Committee (1991)
है ? (c) Rangarajan Committee (2008)
(a) Madras Equitable (d) Kelkar Committee (2002)
(b) Oriental Life Insurance Company (e) Y.H. Malegam Committee (2011)
(c) Triton Insurance Company Ltd Answer: A
(d) Life Insurance Company Explanation
(e) General Insurance Corporation of India Insurance Reforms
Answer: C 1993 – Government set up RN Malhotra Committee
269. Which of the following insurance companies is (former RBI Governor as Chairman) to
first to transact all classes of general recommend reforms.
Insurance in India? 1994 – Committee submitted its report with key
निम्ननिखित में से िौि-सी बीमा िंपिी भारत में सामान्य suggestions:
336

बीमा िे सभी िगों िा िार बार िरिे िािी पहिी िंपिी है ? Private sector to be allowed entry.
(a) Madras Equitable Foreign companies may enter via joint ventures
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(b) Oriental Life Insurance Company with Indian partners.

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1999 – Insurance Regulatory and Development Insurance Regulatory and Development Authority
Authority (IRDA) constituted as an (IRDA) constituted as an autonomous body to
autonomous body to regulate and develop the regulate and develop the industry in the year 1999.
industry. IRDAI
272. Which section of IRDAI Act 1999 deals with Nature: Independent and autonomous statutory
functions of Insurance Regulatory and body.
Development Authority of India (IRDAI)? Incorporated: April 2000.
IRDAI अनधनियम, 1999 िी िौि-सी धारा भारतीय बीमा Constituted under: Insurance Regulatory and
निनियामि और नििास प्रानधिरण (IRDAI) िे िायों से Development Authority Act, 1999.
संबंनधत है ? Jurisdiction: Regulates the insurance industry in
(a) Section 3 India.
(b) Section 4 274. IRDA is given regulatory power under which
section of the Insurance Act, 1938 to frame
(c) Section 14
regulations for insurance industry?
(d) Section 21
IRDA ि बीमा उद्य ग िे निए नियम बिािे हे तु, बीमा
(e) Section 26
अनधनियम, 1938 िी निस धारा िे अंतगित निनियामि
Answer: C
शखि प्रदाि िी गई है ?
Explanation
(a) Section 45
Functions of IRDAI (Section 14, IRDAI Act, 1999)
(b) Section 64VB
Registration & Licensing
(c) Section 114A
Issue, renew, modify, suspend, withdraw or cancel
certificates of registration. (d) Section 32B
Policyholder Protection (e) Section 40
Safeguard policyholders’ interests in: Answer: C
Assignment of policy, Explanation
Nomination, Regulatory Power: Can frame regulations under
Section 114A of the Insurance Act, 1938.
Settlement of claims,
Since 2000, has issued regulations on:
Surrender value,
Registration of companies,
Other contract terms.
Protection of policyholders’ interests,
273. In which of the following years, Insurance
Regulatory and Development Authority (IRDA) Conduct of insurance business.
was constituted? 275. Which of the following is NOT a function of
निम्ननिखित में से निस िषि बीमा निनियामि और नििास the Insurance Regulatory and Development
Authority of India (IRDAI)?
प्रानधिरण (IRDA) िा गिि निया गया था?
निम्ननिखित में से िौि-सा भारतीय बीमा निनियामि और
(a) 2001
नििास प्रानधिरण (IRDAI) िा िायि िहीं है ?
(b) 1999
(a) Registration and licensing of insurance
(c) 1984
companies
(d) 1989
(b) Settlement of insurance claims on behalf of
(e) 1995
companies
Answer: B
337

(c) Protection of policyholders’ interests

Explanation
(d) Regulation of nomination and assignment of
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policies

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(e) Renewal, modification, or cancellation of Explanation

registration certificates After a process of mergers among Indian insurance
Answer: B companies, four companies were left
Explanation as fully owned subsidiary companies of GIC:
Functions of IRDAI (Section 14, IRDAI Act, 1999) National Insurance Company Ltd.
Registration & Licensing New India Assurance Company Ltd.
Issue, renew, modify, suspend, withdraw or cancel Oriental Insurance Company Ltd.
certificates of registration. United India Insurance Company Ltd.
Policyholder Protection In 2000, IRDA Act amendments ended GIC’s
Safeguard policyholders’ interests in: supervisory role → GIC became the Indian
Assignment of policy, Reinsurer.
Nomination, 278. What is the authorised capital of Agriculture
Settlement of claims, Insurance Company of India Ltd.?
Surrender value, एग्रीिल्चर इं श्य रें स िंपिी ऑफ इं निया निनमिे ि िी
Other contract terms. अनधिृत पूंिी नितिी है ?
276. What is the maximum foreign investment (a) Rs. 2000 crores
allowed in the insurance companies as per Union (b) Rs. 1500 crores
Budget 2025? (c) Rs. 1000 crores
बीमा िंपनिय ं में अनधितम नितिा निदे शी नििेश िरिे िी (d) Rs. 2500 crores
अिुमनत है ? (e) Rs. 3000 crores
(a) 49% Answer: B
(b) 74% Explanation
(c) 100% Agriculture Insurance Company of India Ltd.
(d) 56% (AICIL)
(e) 60% Incorporated: 20 December 2002, operations from
Answer: C 1 April 2003.
Explanation Authorised Share Capital: ₹1500 Crores
The Union Budget 2025 also announced the further Paid-up Share Capital: ₹200 Crores
increase of FDI sectoral cap for the insurance Shareholding Structure:
sector from 74% to 100%. GIC – 35%
277. Which of the following is not one of the fully NABARD – 30%
owned subsidiary of General Insurance NIC, New India Assurance, Oriental Insurance,
Corporation of India (GIC)? United India Insurance – 8.75% each.
निम्ननिखित में से िौि-सी ििरि इं श्य रें स िॉपोरे शि ऑफ़ 279. What was the initial capital contribution to
इं निया (GIC) िी पूणि स्वानमत्व िािी सहायि िंपिी िहीं LIC by Government of India?
है ? भारत सरिार द्वारा LIC में निया गया प्रारं नभि पूंिी
(a) New India Assurance Company Ltd. (NIACL) य गदाि नितिा था?
(b) National Insurance Company Ltd. (NICL) (a) Rs. 5 crores
(c) United India Insurance Company Ltd. (UIICL) (b) Rs. 7.5 crores
338

(d) Agriculture Insurance Company of India Ltd. (c) Rs. 2 crores

(e) None of the above (d) Rs. 2.5 crores
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Answer: D (e) Rs. 10 crores

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Answer: A भारत में िीिि बीमा िा राष्ट्रीयिरण निम्ननिखित में से निस

Explanation िषि निया गया था?
Life Insurance Company (Public Sector) (a) 1972
Only public sector life insurance company in India. (b) 1959
Parliament of India passed the Life Insurance (c) 1964
Corporation Act on 19 June 1956. (d) 1956
LIC was created on 1 September 1956. (e) 1984
Initial capital contribution: ₹5 Crore from the Answer: D
Government of India.
Explanation
Objectives
Parliament of India passed the Life Insurance
To spread life insurance widely, especially in rural Corporation Act on 19 June 1956.
areas.
LIC was created on 1 September 1956.
To cover all insurable persons in the country.
Initial capital contribution: ₹5 Crore from the
To provide adequate financial cover at a Government of India.
reasonable cost.
Objectives
Organisational Setup (in 1956)
To spread life insurance widely, especially in rural
8 Zonal Offices areas.
113 Divisional Offices To cover all insurable persons in the country.
280. Who among the following was the founder of To provide adequate financial cover at a
New India Assurance Company Ltd.? reasonable cost.
निम्ननिखित में से िौि न्यू इं निया एश्य रें स िंपिी निनमिे ि Organisational Setup (in 1956)
िे संस्थापि थे? 8 Zonal Offices
(a) Sir Dorabji Tata 113 Divisional Offices
(b) Jamsetji Tata 282. Which of the following acts has nationalised
(c) JRD Tata the General Insurance business in India?
(d) GD Birla निम्ननिखित में से निस अनधनियम िे भारत में सामान्य बीमा
(e) Ratan Tata व्यिसाय िा राष्ट्रीयिरण निया है ?
Answer: A (a) Companies Act, 1956
Explanation (b) GIBNA, 1972
New India Assurance Company Ltd. (c) Insurance Act, 1938
Founded: 1919 by Sir Dorabji Tata. (d) IRDA Act, 1999
First overseas office: 1920 in London. (e) None of the above
Overseas presence: Representative office in Answer: B
Yangon (Myanmar). Explanation
Co-promoter of: General Insurance (Public Sector) in India
Agricultural Insurance Company of India General Insurance (Public Sector) in India
GIC Housing Finance Ltd. Nationalisation of General Insurance
Health India TPA Insurance Services Ltd. (with General Insurance Business (Nationalisation) Act,
other PSUs). 1972 (GIBNA) → Nationalised the
339

281. Life insurance in India was nationalised in general insurance business in India.
which of the following years?
General Insurance Corporation of India (GIC):
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Formed under Section 9(1) of GIBNA. Explanation

Incorporated on 22 November 1972 under the LIC was created on 1 September 1956.
Companies Act, 1956. 285. Which of the following is NOT one of the types
Established to superintend, control, and carry on of insurance?
general insurance business. निम्ननिखित में से िौि-सा बीमा िा एि प्रिार िहीं है ?
After a process of mergers among Indian insurance (a) General insurance
companies, four companies were left
(b) Fire insurance
as fully owned subsidiary companies of GIC:
(c) Flood insurance
National Insurance Company Ltd.
(d) Marine insurance
New India Assurance Company Ltd.
(e) Investment Insurance
Oriental Insurance Company Ltd.
Answer: E
United India Insurance Company Ltd.
Explanation
In 2000, IRDA Act amendments ended GIC’s
Major types of insurance are: Life Insurance,
supervisory role → GIC became the Indian
General Insurance, Health Insurance, Motor
Reinsurer. Insurance, Travel Insurance, Home Insurance, Fire
283. Which of the following is the largest Insurance, Marine Insurance, Critical Illness
shareholder in Agriculture Insurance Company of Insurance, Trade Credit Insurance, Flood
India Ltd. (AICIL)? Insurance, Personal Accident Insurance, and Crop
निम्ननिखित में से िौि एग्रीिल्चर इं श्य रें स िंपिी ऑफ Insurance.
इं निया निनमिे ि (AICIL) में सबसे बडा शेयरधारि है ? 286. Which of the following is excluded under Life
(a) GIC insurance?
(b) NABARD निम्ननिखित में से निसे िीिि बीमा िे अंतगित शानमि िहीं
(c) IRDA निया गया है ?
(d) NIACL (a) Accident
(e) NICL (b) Natural death
Answer: A (c) Illness
Explanation (d) Old age
Shareholding Structure: (e) Suicide
GIC – 35% Answer: E
NABARD – 30% Explanation
NIC, New India Assurance, Oriental Insurance, Life Insurance
United India Insurance – 8.75% each. Definition: A contract promising lump sum
284. Life Insurance Corporation was established on payment to nominees on the death of the
which of the following dates? policyholder.
िीिि बीमा निगम िी स्थापिा निम्ननिखित में से निस नतनथ Exclusions: Death due to alcohol/drug abuse, war,
terrorism, suicide, gross negligence.
ि हुई थी?
287. Which of the following losses is excluded
(a) 1 April 1957
under General insurance?
(b) 19 June 1956
निम्ननिखित में से िौि-सी हानि सामान्य बीमा िे अंतगित
(c) 1 September 1956
340

शानमि िहीं है ?
(d) 15 August 1947
(a) Health issues
(e) 26 January 1950
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(b) House loss

Answer: C

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(c) Death I. Single Trip travel insurance covers a single

(d) Car journey within a specified duration, not exceeding
(e) Travel 240 days.
Answer: C II. Annual Multi-Trip policy allows multiple trips
within a period of one year.
Explanation
General Insurance भारत में िर ै िि इं श्य रें स िे संदभि में, निम्ननिखित िथि ं पर
Covers all losses except death. निचार िरें और सही िथि चुिें।
Examples: house, car, health, travel. I. नसंगि निर प िर ै िि इं श्य रें स एि तय समय-सीमा िे भीतर
288. Which of the following is not covered under िी गई एि यात्रा ि ििर िरता है , निसिी अिनध 240
Health Insurance? नदि ं से ज़्यादा िहीं ह सिती।
I. Terminal illnesses II. एिुअि मल्टी-निर प पॉनिसी एि साि िी अिनध िे भीतर
II. dental/eye surgery िई यात्राओं िी अिुमनत दे ती है ।
III. cosmetic surgery (a) Only I
निम्ननिखित में से िौि-सा स्वास्थ्य बीमा िे अंतगित शानमि (b) Only II
िहीं है ? (c) Both I and II
I. िाििेिा बीमाररयााँ (d) Neither I nor II
II. दााँ त/आाँ ि िी सििरी (e) None of the above

III. िॉस्मेनिि सििरी Answer: B

Explanation
(a) Only I
Travel Insurance
(b) Only I and III
Covers financial losses due to medical/non-
(c) Only II
medical emergencies during travel.
(d) Only II and III
Types:
(e) All I, II and III
Single Trip – covers a trip under 180 days.
Answer: E
Annual Multi-Trip – covers multiple trips in a year.
Explanation
Covered Risks: Loss of baggage, medical
Health Insurance
emergencies, passport loss, hijacking, delayed
Definition: Covers medical/surgical expenses due flights, trip cancellation.
to illness or injury; offers cashless treatment or
Exclusions: Travel against physician advice,
reimbursement.
baggage delay <24 hours, psychological illness,
Types: war, hazardous sports.
Individual Health Insurance – covers one person. 290. Which of the following is NOT a type of home
Family Health Insurance – covers all family insurance?
members under one policy.
निम्ननिखित में से िौि-सा गृह बीमा िा एि प्रिार िहीं है ?
Senior Citizen Health Insurance – for age 60–65
(a) Standard Fire & Special Perils Policy
years.
(b) Home Structure Insurance
Exclusions: War, terminal illnesses, cosmetic
(c) Public Liability Coverage
surgery, dental/eye surgery, pre-existing
conditions during waiting period, non-allopathic (d) Home Loan Insurance
therapies, unconfirmed diagnostic charges. (e) Content Insurance
341

289. With reference to Travel Insurance in India, Answer: D

consider the following statements and find the Explanation
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CORRECT one(s). Home Insurance

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Covers damage to home due to natural/man-made (a) Valued

risks. (b) Floating
Types: (c) Specific
Standard Fire & Special Perils Policy – natural and (d) Comprehensive
man-made disasters. (e) Burglary Insurance
Home Structure Insurance – protects structure and Answer: E
permanent fixtures.
Explanation
Public Liability Coverage – compensates damage to
Fire Insurance
others’ property.
Covers damage to property/goods due to fire.
Content Insurance – covers household contents.
Types: Valued, Floating, Comprehensive, Specific,
Exclusions: Wilful demolition, wear & tear, nuclear
Valuable policies.
war, cash loss, electronic equipment damage due to
Covered Risks: Lightning, explosion, aircraft
overuse.
damage, terrorism, riot, natural disasters, water
291. Which of the following is NOT covered under
tank overflow.
motor insurance in India?
293. Under Marine insurance, which of the
भारत में म िर बीमा िे अंतगित निम्ननिखित में से क्या following types covers the damage to boats and
शानमि िहीं है ? ships?
(a) Riots समुद्री बीमा िे अंतगित, निम्ननिखित में से िौि-सा प्रिार
(b) Landslides िाि ं और िहाि ं ि ह िे िािी क्षनत ि ििर िरता है ?
(c) Burglary (a) Liability insurance
(d) Cyclone (b) Hull insurance
(e) Damage outside India (c) General insurance
Answer: E (d) Cargo insurance
Explanation (e) None of the above
Motor Insurance Answer: B
Mandatory in India for vehicles. Explanation
Types: Marine Insurance
Car Insurance – covers accidental loss/damage to Covers cargo, ships, terminals, and transport
own car/third party. during transit.
Comprehensive Car Insurance – covers all damages Types:
and liabilities.
Cargo Insurance – freight loss/damage.
Third Party Insurance – covers only third-party
Hull Insurance – damage to boats/ships.
damages/injuries.
Liability Insurance – legal claims from
Covered Risks: Riot, strike, fire, burglary,
injuries/damage.
terrorism, earthquake, landslide, flood, storm,
Policy Forms: Time Insurance, Voyage Policy,
cyclone.
Valued Policy, Mixed Policy, Port Risk Policy,
Exclusions: Driving under influence, illegal
Wager Policy.
activities, invalid license, damage outside India.
294. Which of the following types of crop insurance
292. Which of the following is NOT a type of fire
protects expected revenue due to market price
insurance in India?
342

fluctuations?
निम्ननिखित में से िौि-सा भारत में अनग्न बीमा िा एि प्रिार
िहीं है ?
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निम्ननिखित में से निस प्रिार िा फसि बीमा बाज़ार मूल्य 296. An account that does not earn interest but
में उतार-चढाि िे िारण ह िे िािी अपेनक्षत आय िी सुरक्षा provides an overdraft facility is most appropriately
िरता है ? classified as:

(a) Weather-Based Crop Insurance एि ऐसा अिाउं ि निस पर ब्याि िहीं नमिता िेनिि
(b) Crop Revenue Insurance ओिरिर ाफ्ट िी सुनिधा नमिती है , उसे सबसे सही तरीिे से
(c) Area Yield Insurance इस प्रिार िगीिृत निया िाता है :
(d) Crop Yield Insurance (a) Saving Account
(b) Term Deposit Account
(e) None of the above
(c) Salary Account
Answer: B
(d) Current Account
Explanation (e) Jan Dhan Account
Crop Insurance Answer: D
Covers loss of crop yield or revenue. Explanation
Types: A Current Account is designed specifically for
Crop Yield Insurance – protects expected harvest regular and high-frequency banking
volume. transactions, primarily required by
Crop Revenue Insurance – protects expected businesspersons, firms, and institutions. It
revenue due to market price fluctuations. allows unrestricted withdrawals as long as
295. The Standing Deposit Facility (SDF) was sufficient balance or sanctioned overdraft is
introduced by the RBI primarily to: available. Unlike saving accounts, no interest is
स्टैं निं ग निपॉनज़ि फैनसनििी (SDF) ि भारतीय ररििि बैंि paid, as funds are meant for continuous circulation
rather than accumulation. The absence of
िे मुख्य रूप से इि िारण ं से पेश निया था:
withdrawal limits ensures uninterrupted
(a) Inject liquidity into the banking system
commercial operations, supplier payments, and
(b) Absorb surplus liquidity without collateral
receipts. This structure prioritises liquidity and
(c) Provide long-term funds to banks
transactional efficiency over returns. Therefore,
(d) Replace the Marginal Standing Facility
the combination of unlimited withdrawals and
(e) Regulate credit allocation
cheque-based operations clearly makes the
Answer: B current account the most suitable option for
Explanation transaction-intensive users.
The Standing Deposit Facility (SDF) was 297. Which NRI account allows foreign income
introduced by the Reserve Bank of India primarily deposits, offers tax-free interest in India, and
to absorb surplus liquidity from the banking permits full repatriation of both principal and
system without requiring collateral. Under this interest?
facility, banks can park excess funds with the RBI िौि सा एिआरआई अिाउं ि निदे शी इििम िमा िरिे
and earn interest, helping the central bank manage
िी अिुमनत दे ता है , भारत में िै क्स-फ्री इं िरे स्ट दे ता है , और
liquidity more effectively. The SDF strengthens the
नप्रंनसपि और इं िरे स्ट द ि ं ि पूरी तरह से िापस भेििे िी
RBI’s liquidity absorption framework and forms
the lower bound of the policy rate corridor. अिुमनत दे ता है ?
Unlike repo operations, it does not involve (a) NRO Fixed Deposit
government securities, thereby providing the RBI (b) FCNR Account
with greater flexibility in managing surplus (c) NRE Account
343

liquidity while maintaining monetary policy (d) Resident Foreign Currency Account
transmission. (e) EEFC Account
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Answer: C

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Explanation िेनिि नफर भी िुछ िैल्यू ह ती है । सही क्लानसनफ़िेशि यह

Non-Resident External (NRE) Account: This है :
account allows NRIs to deposit income earned (a) Sub-standard
abroad, which is then converted into Indian (b) Doubtful
Rupees (INR) at the prevailing exchange rate. One (c) Loss
of its key advantages is that the interest earned is (d) Standard
completely tax-free in India, making it attractive (e) SMA-1
for overseas earners. Additionally, both the
Answer: B
principal and interest are fully repatriable,
Explanation
without any upper limits, subject to compliance
with RBI norms. Unlike NRO accounts, NRE Once a loan remains non-performing for more
accounts are not meant for Indian-source income. than 12 months, it moves beyond the sub-
standard stage.
298. A foreign bank maintaining an account in
India with an Indian bank, denominated in Indian At this stage, full recovery is uncertain, though
currency, is known as a: the asset has not completely lost value.
Banks continue to expect partial recovery from
एि निदे शी बैंि ि भारत में निसी भारतीय बैंि िे साथ
the borrower or collateral.
भारतीय मुद्रा में अिाउं ि रिता है , उसे क्या िहा िाता है ?
The asset is therefore not treated as a total loss.
(a) Nostro account
Such loans require higher provisioning and
(b) Vostro account
closer monitoring.
(c) Loro account
(d) EEFC account RBI norms classify these assets as doubtful assets.
(e) Correspondent account 300. Under SARFAESI Act, banks must issue a
Answer: B notice of how many days before enforcement?
Explanation सरफेसी एक्ट िे तहत, बैंि ं ि िागू िरिे से नितिे नदि
A Vostro account, derived from the Italian word पहिे ि निस िारी िरिा ह गा?
“Vostro” meaning “Yours”, is an account (a) 30 days
maintained by a foreign bank with a domestic (b) 45 days
bank in the domestic country’s currency. In (c) 60 days
India, a Vostro account is held by a foreign bank (d) 90 days
with its corresponding Indian bank, typically in (e) 120 days
Indian rupees. From the Indian bank’s viewpoint, Answer: C
the funds belong to “you,” i.e., the foreign bank. Explanation
Vostro accounts play a crucial role in The SARFAESI Act lays down a mandatory pre-
international trade settlements, especially in enforcement procedure for secured creditors.
arrangements like rupee-based trade
Before taking possession of secured assets, banks
mechanisms, where foreign banks hold INR
must formally notify the borrower.
balances for facilitating cross-border transactions.
This notice is issued under Section 13(2) of the
299. A loan classified as NPA remains unpaid for
SARFAESI Act.
more than 12 months and banks find recovery
The borrower is given time to repay the
highly uncertain, but some value still exists. The
outstanding dues.
correct classification is:
The prescribed notice period is 60 days from the
िॉि-परफॉनमिंग एसेि (NPA) िे तौर पर क्लानसफ़ाई निया
344

date of notice.
गया ि ि 12 महीिे से ज़्यादा समय ति नबिा पेमेंि िे रहता
Enforcement actions can begin only after this
है और बैंि ं ि ररििरी िे बारे में पक्का िहीं पता ह ता,
Page

period expires without payment.

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301. Which of the following correctly matches the A higher CRAR indicates better ability of the bank
institution with its function? to absorb unexpected losses and maintain
इिमें से िौि सा इं स्टीट्यूशि और उसिे िाम ि सही तरह financial stability.
से मैच िरता है ? This reflects a strong capital adequacy position,
as required by RBI and Basel norms.
(a) DRT – Recovery certificate issuance
(b) DRAT – Issuing recovery certificates It does not directly measure profitability, liquidity,
(c) DRT – Appeal against recovery orders or operational efficiency.
(d) e-Bkray – Loan restructuring A well-capitalised bank is better placed to
(e) ARC – Online auction platform withstand credit, market, and operational
Answer: A risks.
Explanation Higher CRAR also enhances confidence of
depositors and regulators.
Debt Recovery Tribunals (DRTs) are statutory
bodies created to facilitate recovery of bank dues. 303. Under the Prompt Corrective Action (PCA)
framework, a bank is considered risky when it falls
After adjudicating a recovery case, DRTs are
below prescribed norms related to capital ratios,
empowered to issue Recovery Certificates.
asset quality and:
These certificates authorise recovery officers to
initiate recovery proceedings. प्रॉम्प्ट िरे खक्टि एक्शि (PCA) फ्रेमििि िे तहत, निसी बैंि
Debt Recovery Appellate Tribunals (DRATs) ि तब ररस्की मािा िाता है िब िह िैनपिि रे श्य , एसेि
deal only with appeals against DRT orders. क्वानििी और इिसे िुडे तय नियम ं से िीचे चिा िाता है :
The e-Bkray platform is used for online auctions, (a) Liquidity
not restructuring. (b) Profitability
Asset Reconstruction Companies (ARCs) (c) Market share
manage and resolve NPAs, not auction platforms. (d) Credit growth
(e) Deposit base
302. The Capital to Risk-Weighted Assets Ratio
(CRAR) of a bank primarily measures: Answer: B

निसी बैंि िा िैनपिि िू ररस्क-िेिेि एसेि्स रे श्य Explanation

(CRAR) मुख्य रूप से मापता है : The Prompt Corrective Action (PCA) framework
is an early-intervention tool used by the RBI to
(a) The profitability generated per unit of capital
monitor weak banks.
(b) The adequacy of a bank’s capital in relation to
It aims to prevent further deterioration in a bank’s
its risk
financial health.
(c) The liquidity position of the bank exposure
(d) The volume of deposits mobilised by the bank Under PCA, banks are assessed using three key
(e) The operational efficiency of bank parameters.
management These parameters include capital ratios, asset
Answer: B quality, and profitability.
Explanation A bank is considered risky if it falls below the
prescribed thresholds in these indicators.
Capital to Risk-Weighted Assets Ratio (CRAR) is
a key indicator of a bank’s financial strength. Weak profitability indicates the bank’s reduced
ability to absorb losses.
CRAR reflects the strength of a bank’s capital base
relative to the riskiness of its assets after Such banks may face restrictions on expansion,
lending, or dividend distribution.
345

applying risk weights.

304. The core idea of the Inter-operable Regulatory
Sandbox (IoRS) is best described as:
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इं िर-ऑपरे बि रे गुिेिरी सैंिबॉक्स (IoRS) िा मुख्य facility, banks can park excess funds with the RBI
आइनिया इस तरह सबसे अच्छे से बताया िा सिता है : and earn interest, helping the central bank manage
liquidity more effectively. The SDF strengthens the
(a) One regulator – One product – Fragmented
RBI’s liquidity absorption framework and forms
approvals
the lower bound of the policy rate corridor.
(b) One product – One application – Multiple
Unlike repo operations, it does not involve
regulators
government securities, thereby providing the RBI
(c) Multiple regulators – Multiple applications – with greater flexibility in managing surplus
Single sector liquidity while maintaining monetary policy
(d) Sector-specific testing – Single window for all transmission.
FinTech 306. An account that does not earn interest but
(e) Only individual sandbox for cross-border provides an overdraft facility is most appropriately
products classified as:
Answer: B एि ऐसा अिाउं ि निस पर ब्याि िहीं नमिता िेनिि
Explanation ओिरिर ाफ्ट िी सुनिधा नमिती है , उसे सबसे सही तरीिे से
IoRS creates a unified entry point for products इस प्रिार िगीिृत निया िाता है :
spanning multiple domains.
(a) Saving Account
One single application covers all relevant (b) Term Deposit Account
regulators at once. (c) Salary Account
Avoids the hassle of separate filings to RBI, SEBI, (d) Current Account
IRDAI etc. (e) Jan Dhan Account
Core slogan: “One product – One application – Answer: D
Multiple regulators”. Explanation
Targets hybrid/cross-sector innovations (e.g. A Current Account is designed specifically for
banking + insurance combo). regular and high-frequency banking
Reduces duplication, delays, and inconsistent transactions, primarily required by
regulatory treatment. businesspersons, firms, and institutions. It
Individual sandboxes cannot handle multi- allows unrestricted withdrawals as long as
regulator products effectively. sufficient balance or sanctioned overdraft is
305. The Standing Deposit Facility (SDF) was available. Unlike saving accounts, no interest is
introduced by the RBI primarily to: paid, as funds are meant for continuous circulation
स्टैं निं ग निपॉनज़ि फैनसनििी (SDF) ि भारतीय ररििि बैंि rather than accumulation. The absence of
withdrawal limits ensures uninterrupted
िे मुख्य रूप से इि िारण ं से पेश निया था:
commercial operations, supplier payments, and
(a) Inject liquidity into the banking system
receipts. This structure prioritises liquidity and
(b) Absorb surplus liquidity without collateral
transactional efficiency over returns. Therefore,
(c) Provide long-term funds to banks
the combination of unlimited withdrawals and
(d) Replace the Marginal Standing Facility
cheque-based operations clearly makes the
(e) Regulate credit allocation
current account the most suitable option for
Answer: B transaction-intensive users.
Explanation 307. Which NRI account allows foreign income
The Standing Deposit Facility (SDF) was deposits, offers tax-free interest in India, and
346

introduced by the Reserve Bank of India primarily permits full repatriation of both principal and
to absorb surplus liquidity from the banking interest?
Page

system without requiring collateral. Under this

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िौि सा एिआरआई अिाउं ि निदे शी इििम िमा िरिे arrangements like rupee-based trade
िी अिुमनत दे ता है , भारत में िै क्स-फ्री इं िरे स्ट दे ता है , और mechanisms, where foreign banks hold INR
नप्रंनसपि और इं िरे स्ट द ि ं ि पूरी तरह से िापस भेििे िी balances for facilitating cross-border transactions.

अिुमनत दे ता है ? 309. A loan classified as NPA remains unpaid for

more than 12 months and banks find recovery
(a) NRO Fixed Deposit
highly uncertain, but some value still exists. The
(b) FCNR Account
correct classification is:
(c) NRE Account
(d) Resident Foreign Currency Account िॉि-परफॉनमिंग एसेि (NPA) िे तौर पर क्लानसफ़ाई निया
(e) EEFC Account गया ि ि 12 महीिे से ज़्यादा समय ति नबिा पेमेंि िे रहता
Answer: C है और बैंि ं ि ररििरी िे बारे में पक्का िहीं पता ह ता,
Explanation िेनिि नफर भी िुछ िैल्यू ह ती है । सही क्लानसनफ़िेशि यह
Non-Resident External (NRE) Account: This है :
account allows NRIs to deposit income earned (a) Sub-standard
abroad, which is then converted into Indian (b) Doubtful
Rupees (INR) at the prevailing exchange rate. One (c) Loss
of its key advantages is that the interest earned is (d) Standard
completely tax-free in India, making it attractive (e) SMA-1
for overseas earners. Additionally, both the Answer: B
principal and interest are fully repatriable, Explanation
without any upper limits, subject to compliance
● Once a loan remains non-performing for
with RBI norms. Unlike NRO accounts, NRE
more than 12 months, it moves beyond
accounts are not meant for Indian-source income.
the sub-standard stage.
308. A foreign bank maintaining an account in
● At this stage, full recovery is uncertain,
India with an Indian bank, denominated in Indian
though the asset has not completely lost
currency, is known as a:
value.
एि निदे शी बैंि ि भारत में निसी भारतीय बैंि िे साथ ● Banks continue to expect partial recovery
भारतीय मुद्रा में अिाउं ि रिता है , उसे क्या िहा िाता है ? from the borrower or collateral.
(a) Nostro account ● The asset is therefore not treated as a
(b) Vostro account total loss.
(c) Loro account ● Such loans require higher provisioning
(d) EEFC account and closer monitoring.
(e) Correspondent account
● RBI norms classify these assets as doubtful
Answer: B assets.
Explanation 310. Under SARFAESI Act, banks must issue a
A Vostro account, derived from the Italian word notice of how many days before enforcement?
“Vostro” meaning “Yours”, is an account सरफेसी एक्ट िे तहत, बैंि ं ि िागू िरिे से नितिे नदि
maintained by a foreign bank with a domestic
पहिे ि निस िारी िरिा ह गा?
bank in the domestic country’s currency. In
India, a Vostro account is held by a foreign bank (a) 30 days
with its corresponding Indian bank, typically in (b) 45 days
Indian rupees. From the Indian bank’s viewpoint, (c) 60 days
347

the funds belong to “you,” i.e., the foreign bank. (d) 90 days
Vostro accounts play a crucial role in (e) 120 days
Answer: C
Page

international trade settlements, especially in

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Explanation निसी बैंि िा िैनपिि िू ररस्क-िेिेि एसेि्स रे श्य

● The SARFAESI Act lays down a mandatory (CRAR) मुख्य रूप से मापता है :
pre-enforcement procedure for secured (a) The profitability generated per unit of capital
creditors. (b) The adequacy of a bank’s capital in relation to
● Before taking possession of secured assets, its risk
banks must formally notify the borrower. (c) The liquidity position of the bank exposure
● This notice is issued under Section 13(2) (d) The volume of deposits mobilised by the bank
of the SARFAESI Act. (e) The operational efficiency of bank
● The borrower is given time to repay the management
outstanding dues. Answer: B
● The prescribed notice period is 60 days Explanation
from the date of notice. ● Capital to Risk-Weighted Assets Ratio
● Enforcement actions can begin only after (CRAR) is a key indicator of a bank’s
this period expires without payment. financial strength.
311. Which of the following correctly matches the ● CRAR reflects the strength of a bank’s
institution with its function? capital base relative to the riskiness of its
इिमें से िौि सा इं स्टीट्यूशि और उसिे िाम ि सही तरह assets after applying risk weights.
से मैच िरता है ? ● A higher CRAR indicates better ability of
the bank to absorb unexpected losses
(a) DRT – Recovery certificate issuance
and maintain financial stability.
(b) DRAT – Issuing recovery certificates
(c) DRT – Appeal against recovery orders ● This reflects a strong capital adequacy
(d) e-Bkray – Loan restructuring position, as required by RBI and Basel
(e) ARC – Online auction platform norms.
Answer: A ● It does not directly measure profitability,
liquidity, or operational efficiency.
Explanation
● A well-capitalised bank is better placed to
● Debt Recovery Tribunals (DRTs) are
withstand credit, market, and
statutory bodies created to facilitate
operational risks.
recovery of bank dues.
● Higher CRAR also enhances confidence of
● After adjudicating a recovery case, DRTs
depositors and regulators.
are empowered to issue Recovery
Certificates. 313. Under the Prompt Corrective Action (PCA)
framework, a bank is considered risky when it falls
● These certificates authorise recovery
below prescribed norms related to capital ratios,
officers to initiate recovery proceedings.
asset quality and:
● Debt Recovery Appellate Tribunals
(DRATs) deal only with appeals against प्रॉम्प्ट िरे खक्टि एक्शि (PCA) फ्रेमििि िे तहत, निसी बैंि
DRT orders. ि तब ररस्की मािा िाता है िब िह िैनपिि रे श्य , एसेि
● The e-Bkray platform is used for online क्वानििी और इिसे िुडे तय नियम ं से िीचे चिा िाता है :
auctions, not restructuring. (a) Liquidity
● Asset Reconstruction Companies (ARCs) (b) Profitability
manage and resolve NPAs, not auction (c) Market share
platforms. (d) Credit growth
348

312. The Capital to Risk-Weighted Assets Ratio (e) Deposit base

(CRAR) of a bank primarily measures: Answer: B
Page

Explanation

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● The Prompt Corrective Action (PCA) ● Reduces duplication, delays, and

framework is an early-intervention tool inconsistent regulatory treatment.
used by the RBI to monitor weak banks. ● Individual sandboxes cannot handle multi-
● It aims to prevent further deterioration in a regulator products effectively.
bank’s financial health. 315. Which of the following regulators does NOT
● Under PCA, banks are assessed using three have its own individual Regulatory Sandbox?
key parameters. इिमें से निस रे गुिेिर िा अपिा अिग रे गुिेिरी सैंिबॉक्स
● These parameters include capital ratios, िहीं है ?
asset quality, and profitability.
(a) RBI
● A bank is considered risky if it falls below
(b) SEBI
the prescribed thresholds in these
(c) IRDAI
indicators.
(d) IFSCA
● Weak profitability indicates the bank’s
reduced ability to absorb losses. (e) PFRDA
● Such banks may face restrictions on Answer: E
expansion, lending, or dividend Explanation
distribution. ● RBI, SEBI, IRDAI, and IFSCA each operate
314. The core idea of the Inter-operable Regulatory their own Regulatory Sandbox.
Sandbox (IoRS) is best described as: ● PFRDA (Pension Fund Regulatory and
इं िर-ऑपरे बि रे गुिेिरी सैंिबॉक्स (IoRS) िा मुख्य Development Authority) has no separate
sandbox framework.
आइनिया इस तरह सबसे अच्छे से बताया िा सिता है :
● PFRDA only participates in IoRS as an
(a) One regulator – One product – Fragmented
observer/associated regulator.
approvals
● This makes pension-linked hybrid products
(b) One product – One application – Multiple
route through IoRS when needed.
regulators
● Absence of individual sandbox for PFRDA is
(c) Multiple regulators – Multiple applications –
explicitly noted.
Single sector
● Other four regulators have standalone
(d) Sector-specific testing – Single window for all
sandboxes for sector-specific testing.
FinTech
316. The Inter-Regulatory Technical Group on
(e) Only individual sandbox for cross-border
FinTech (IRTG on FinTech), which led to IoRS, was
products
set up under:
Answer: B
नफििे ि पर इं िर-रे गुिेिरी िे खक्निि ग्रुप (IRTG ऑि
Explanation
नफििे ि), निससे IoRS बिा, ि इसिे तहत बिाया गया
● IoRS creates a unified entry point for
products spanning multiple domains. था:

● One single application covers all relevant (a) RBI Board

regulators at once. (b) Ministry of Finance
● Avoids the hassle of separate filings to RBI, (c) FSDC-SC
SEBI, IRDAI etc. (d) NITI Aayog
● Core slogan: “One product – One (e) SEBI
349

application – Multiple regulators”. Answer: C

● Targets hybrid/cross-sector innovations Explanation
(e.g. banking + insurance combo).
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● IRTG on FinTech was formed under the all versions of EASE — from EASE 1.0 to
FSDC Sub-Committee (FSDC-SC). EASE 4.0.
● FSDC-SC handles inter-regulatory 318. The EASE Reform Agenda was commissioned
coordination on financial stability issues. by which organisation and authored by which
● Group’s mandate included framing SOP for entity?
interoperable sandbox. ईज़ (EASE) ररफॉमि एिेंिा निस ऑगििाइज़ेशि िे शुरू
● RBI Board, Ministry of Finance, NITI Aayog, निया था और निस एं नििी िे इसे नििा था?
or SEBI are not the parent body. (a) Reserve Bank of India – McKinsey & Company
● FSDC-SC includes all major financial (b) Indian Banks’ Association – Boston Consulting
regulators + DEA, MeitY. Group
● This structure ensures cross-sectoral (c) Ministry of Finance – Deloitte
perspective from the start.
(d) SIDBI – KPMG
317. EASE Reform Agenda was launched in January
(e) Public Sector Banks – PwC
2018 with the broader objective of
Answer: B
institutionalising which two key principles in
Indian banking? Explanation
● EASE agenda was commissioned by Indian
ईज़ (EASE) ररफॉमि एिेंिा िििरी 2018 में िॉन्च निया
Banks’ Association (IBA).
गया था, निसिा बडा मिसद भारतीय बैंनिंग में निि द
● Boston Consulting Group (BCG) authored
िास नसिां त ं ि इं स्टीट्यूशिि बिािा था?
the reform roadmap.
(a) Digital and Inclusive banking
● Launched in January 2018 to improve PSB
(b) Transparent and Profitable banking
governance.
(c) CLEAN and SMART banking
● Other consultancies (McKinsey, Deloitte,
(d) Public and Private banking
KPMG, PwC) were not involved.
(e) Rural and Urban banking
● IBA–BCG partnership created the CLEAN +
Answer: C
SMART banking vision.
Explanation
● EASE evolved through 4 versions, latest
● The EASE Reform Agenda was specifically
being EASE 4.0.
launched in January 2018 to drive
319. EASE 1.0 primarily demonstrated measurable
governance reforms in Indian banks,
improvement in Public Sector Banks (PSBs) in
particularly Public Sector Banks (PSBs).
which area?
● Its foundational and overarching objective
is to institutionalise CLEAN and SMART ईज़ (EASE)1.0 िे मुख्य रूप से निस क्षेत्र में पखिि सेक्टर
banking practices across the sector. बैंि ं (PSBs) में मापिीय सुधार नदिाया?
● CLEAN stands for focused pillars like Clean (a) Resolution of NPAs transparently
credit, Leveraging data, Ensuring (b) Forex reserves management
accountability, Action against defaulters, (c) Agricultural exports
and NPA recovery. (d) Mutual fund penetration
● SMART represents Speedy services, Multi- (e) Capital market trading
channel reach, Accessible & affordable Answer: A
banking, Responsive customer service, and Explanation
Technologically enhanced operations. ● EASE 1.0 was the inaugural version of the
350

● These two acronyms (CLEAN + SMART) reform agenda launched in January 2018.
form the core framework that runs through
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● Its primary focus was on cleaning up the ● EASE 3.0 and 4.0 built further on
balance sheets of Public Sector Banks digital/MSME lending.
(PSBs). ● NDS-OM is unrelated (government
● The EASE 1.0 report explicitly highlighted securities platform).
significant improvement in PSB 321. The full form of NDS-OM platform operated by
performance regarding resolution of Non- RBI is:
Performing Assets (NPAs). भारतीय ररििि बैंि द्वारा ऑपरे ि निए िािे िािे NDS-OM
● Transparency in NPA recognition, प्लेिफॉमि िा पूरा िाम है :
provisioning, and resolution was a
(a) National Debt System – Online Matching
cornerstone achievement.
(b) Negotiated Debt Settlement – Online Matching
● This marked a major shift from earlier
practices of evergreening or under- (c) Negotiated Dealing System – Order Matching
reporting bad loans. (d) National Dealing System – Order Market
● Other areas like forex reserves (RBI (e) Negotiable Debt Securities – Order
domain), agricultural exports, mutual fund Management
penetration, or capital market trading were Answer: C
not the core measurable outcomes of EASE Explanation
1.0. ● Full form is Negotiated Dealing System –
● The transparent NPA resolution laid the Order Matching.
foundation for subsequent EASE versions ● Electronic anonymous order-matching
to build on credit off-take, digitalisation, platform by RBI.
and customer-centric reforms. ● Replaced old telephone-based G-Sec
320. Which initiative under EASE reforms is trading.
associated with PSBs acting as “UdyamiMitra” for ● Other options are incorrect or fabricated
MSME credit management? terms.
ईज़ (EASE) सुधार ं िे तहत िौि सी पहि एमएसएमई ● Focus remains on secondary market
क्रेनिि मैिेिमेंि िे निए PSBs ि “उद्यमीनमत्र” िे रूप में transparency.
िाम िरिे से िुडी है ? ● Introduced in August 2005 for better price
(a) EASE 1.0 discovery.
(b) EASE 2.0 322. NDS-OM was introduced in August 2005 with
(c) EASE 3.0 the objective of enhancing efficiency in electronic
(d) EASE 4.0 order matching. Which of the following
instruments is traded on this platform?
(e) NDS-OM
Answer: B एििीएस-ओएम(NDS-OM) ि अगि 2005 में

Explanation इिेक्टरॉनिि ऑिि र मैनचंग में एनफनशएं सी बढािे िे मिसद

● UdyamiMitra is SIDBI’s MSME credit से शुरू निया गया था। इस प्लेिफॉमि पर िीचे नदए गए
facilitation portal. इं स्टूमेंि्स में से िौि से िर े ि निए िाते हैं ?
● Introduced as a reform action point in (a) Corporate bonds and equities
EASE 2.0. (b) Foreign bonds
● Part of credit off-take and financial (c) Commercial papers only
inclusion themes. (d) Mutual fund units exclusively
351

● EASE 1.0 focused mainly on NPA (e) Government securities, Treasury Bills, and
transparency/resolution. State Development Loans
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Answer: E भारतीय ररज़िि बैंि द्वारा नििनसत ई-िुबेर ि इस प्रिार

Explanation िनणित निया िा सिता है :
● NDS-OM handles secondary trading in G- (a) Retail internet banking portal for public
Secs only. (b) Stock exchange trading platform
● Eligible instruments: Government bonds, (c) UPI-based payment app
T-Bills, SDLs.
(d) Core Banking Solution for managing
● Not used for corporate bonds, equities, government and inter-bank transactions
commercial papers, MFs, or foreign bonds.
(e) Insurance settlement system
● Primary market issuance happens
Answer: D
separately.
Explanation
● Enhances efficiency and fairness in
● e-Kuber is RBI’s Core Banking Solution
sovereign debt market.
(CBS).
● Membership restricted to institutions with
● Manages government transactions and
SGL accounts.
inter-bank settlements.
323. A key operational requirement for members
● Handles receipts/payments of GoI
participating in NDS-OM is the maintenance of
departments and RBI.
which account with RBI?
● Not a retail portal, UPI app, stock platform,
एििीएस-ओएम(NDS-OM) में भाग िेिे िािे सदस् ं िे
or insurance system.
निए एि मुख्य ऑपरे शिि ज़रूरत RBI िे पास िौि सा
● Provides real-time, secure, error-
अिाउं ि मेंिेि िरिा है ? minimised fund movement.
(a) Subsidiary General Ledger (SGL) account with ● Mandatory for large government payments
RBI post-July 202X.
(b) Demat account with NSDL 325. As per the new rule effective from 16 July
(c) Current account with any commercial bank 2025(recent update), all Central Government
(d) Pension account with PFRDA Department payments exceeding ________ must be
(e) Insurance policy with IRDAI routed through e-Kuber:
Answer: A 16 िुिाई से िागू िए नियम (हानिया अपिे ि) िे अिुसार,
Explanation िेंद्र सरिार िे सभी निपािि मेंि में ________ से ज़्यादा िे
● SGL (Subsidiary General Ledger) account पेमेंि ई-िुबेर िे ज़ररए ही निए िािे चानहए:
with RBI is compulsory. (a) ₹50 crore
● Allows direct electronic holding and (b) ₹75 crore
trading of G-Secs. (c) ₹100 crore
● Demat (NSDL/CDSL), current, pension, or (d) ₹500 crore
insurance accounts are irrelevant.
(e) ₹1,000 crore
● Only eligible entities (banks, PDs, insurers,
Answer: B
MFs) can hold SGL.
Explanation
● Ensures seamless settlement in NDS-OM
● New rule (from 16 July 2025 recent
platform.
update): > ₹75 crore mandatory via e-
● No SGL → no direct participation in the
Kuber.
system.
352

● Applies to all Central Government

324. e-Kuber, developed by the Reserve Bank of
Department payments.
India, is best described as:
Page

● Earlier threshold was ₹500 crore.

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● Aims to reduce manual intervention for Explanation

high-value transactions. ● e-Kuber functions: real-time settlement,
● Certain categories have ₹100 crore government fund handling, error reduction,
threshold. inter-bank/govt transfers.
● Future target proposed even lower (₹50 ● Retail customer account opening and KYC
crore). are not its role.
326. Earlier, routing of Central Government ● Designed for institutional/government
payments through e-Kuber was mandatory only transactions only.
for transactions above: ● Public retail banking is handled by
पहिे, ई-िुबेर िे ज़ररए िेंद्र सरिार िे पेमेंि िी रूनिं ग commercial banks’ CBS.
नसफ़ि िीचे नदए गए िर ां ज़ैक्शि िे निए ज़रूरी थी: ● Focus remains on large-value, secure
(a) ₹50 crore government flows.
(b) ₹75 crore ● Minimises manual errors in high-stake
payments.
(c) ₹100 crore
328. Under the EASE 4.0 reform agenda, which of
(d) ₹500 crore
the following is explicitly highlighted as a key
(e) No mandatory threshold
theme or focus area for Public Sector Banks?
Answer: D
ईज़ (EASE)4.0 ररफॉमि एिेंिा िे तहत, पखिि सेक्टर
Explanation
बैंि ं िे निए इिमें से निसे िास थीम या फ िस एररया िे
● Pre-revision rule: Mandatory only above
तौर पर िास तौर पर हाईिाइि निया गया है ?
₹500 crore.
(a) Complete withdrawal from digital loans
● Change lowered the bar to ₹75 crore
(general) from 16 July 2025. (b) Manual export promotion only
● No “no threshold” era existed for large (c) Only North-East branch expansion
payments. (d) Exclusion of agricultural digital lending
● ₹50/75/100 crore are current or proposed (e) 24×7 banking and leveraging FinTech sector
levels. Answer: E
● ₹1,000 crore never applied. Explanation
● Shift improves efficiency and reduces ● EASE 4.0 highlights 24×7 banking with
delays/mismatches. resilient technology.
327. Which of the following is NOT a key function ● Strong push for FinTech partnerships and
of the e-Kuber system developed by the Reserve leveraging ecosystem.
Bank of India? ● Digital loans to agriculture, North-East
इिमें से िौि सा भारतीय ररज़िि बैंि द्वारा बिाए गए ई-िुबेर focus, export promotion included.
नसस्टम िा मुख्य िाम िहीं है ? ● Rejects withdrawal from digital or
(a) Real-time settlement of funds exclusion of AgriTech.
(b) Handling government receipts and payments ● Collaborative, tech-driven model is central
theme.
(c) Retail customer account opening and KYC
● Manual-only approaches contradict the
(d) Minimising errors through reduced manual
reform direction.
intervention
329. Eligibility of participants in IoRS (such as
353

(e) Secure inter-bank and government fund

FinTech companies, start-ups) is governed by:
transfers
Answer: C
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इं िर-ऑपरे बि रे गुिेिरी सैंिबॉक्स (IoRS) में पानिि नसपेंि्स ● Current general threshold is ₹75 crore
(िैसे नफििे ि िंपनियां , स्टािि -अप्स) िी एनिनिनबनििी इि (post-July change).
बात ं से तय ह ती है : ● Earlier was ₹500 crore; gradual reduction
planned.
(a) RBI guidelines only
● Aims for almost all significant government
(b) Principal Regulator’s RS framework
payments via e-Kuber.
(c) SEBI regulations exclusively
● ₹35 crore not mentioned; ₹100 crore is for
(d) PFRDA sandbox rules
certain categories now.
(e) Government department approvals
● ₹500 crore is the old (superseded) level.
Answer: B
Explanation
● Eligibility for IoRS participation follows the
Principal Regulator’s RS framework.
● Principal regulator = main sector regulator
for the product (e.g., RBI for banking-heavy
product).
● Not governed by RBI-only, SEBI-only, or
PFRDA rules.
● FinTechs, start-ups, RegTech firms qualify
under this.
● Government department approvals are not
required.
● Ensures consistency with existing
individual sandbox norms.
330. As per the proposed future direction under
the revised e-Kuber usage guidelines for Central
Government payments, the targeted lower
threshold for mandatory routing through the e-
Kuber system is:
िेंद्र सरिार िे पेमेंि िे निए ररिाइज़्ि ई-िुबेर इिेमाि
िी गाइििाइं स िे तहत आगे िे प्रिानित िायरे क्शि िे
अिुसार, ई-िुबेर नसस्टम िे ज़ररए ज़रूरी रूनिं ग िे निए
िारगेिेि ि अर थ्रेशह ड यह है :
(a) ₹50 crore
(b) ₹65 crore
(c) ₹75 crore
(d) ₹100 crore
(e) ₹500 crore
Answer: A
Explanation
354

● Proposed future target: lower threshold to

₹50 crore.
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