JAIIB IE & IFS MCQ 2026 — 100 Practice Questions with Answers & Explanations
100 practice MCQs for JAIIB IE & IFS (Indian Economy & Indian Financial System) — covering all four modules with step-by-step answers. Each question mirrors the style and difficulty of the actual JAIIB exam.
Module A: Indian Economic Architecture (Q1–28)
Q1. Which of the following best defines Gross Domestic Product (GDP)?
A) Total output produced by residents of a country, including abroad
B) Total market value of all final goods and services produced within a country in a given year
C) Total income earned by nationals minus depreciation
D) Total government expenditure plus private investment
A) Total output produced by residents of a country, including abroad
B) Total market value of all final goods and services produced within a country in a given year
C) Total income earned by nationals minus depreciation
D) Total government expenditure plus private investment
Answer: B — GDP measures the market value of all final goods and services produced within the country’s borders. GNP adds net factor income from abroad.
Q2. GNP = GDP + ?
A) Depreciation
B) Indirect taxes
C) Net Factor Income from Abroad (NFIA)
D) Government subsidies
A) Depreciation
B) Indirect taxes
C) Net Factor Income from Abroad (NFIA)
D) Government subsidies
Answer: C — GNP = GDP + NFIA. NFIA = income earned by residents abroad minus income earned by foreigners in India.
Q3. NNP at Market Price equals:
A) GDP – Depreciation
B) GNP – Depreciation
C) GDP + Indirect Taxes – Subsidies
D) GNP + Net Indirect Taxes
A) GDP – Depreciation
B) GNP – Depreciation
C) GDP + Indirect Taxes – Subsidies
D) GNP + Net Indirect Taxes
Answer: B — NNP (Net National Product) = GNP − Depreciation. NNP at Factor Cost = NNP at MP − Net Indirect Taxes.
Q4. India’s current base year for national income calculation is:
A) 2004-05
B) 2007-08
C) 2011-12
D) 2015-16
A) 2004-05
B) 2007-08
C) 2011-12
D) 2015-16
Answer: C — India revised the base year to 2011-12 in January 2015. The previous base year was 2004-05.
Q5. Which index measures inflation at the retail level in India?
A) WPI — Wholesale Price Index
B) PPI — Producer Price Index
C) CPI — Consumer Price Index
D) GDP Deflator
A) WPI — Wholesale Price Index
B) PPI — Producer Price Index
C) CPI — Consumer Price Index
D) GDP Deflator
Answer: C — RBI uses CPI (Combined) as the headline inflation measure since 2014. WPI measures wholesale-level price changes and is published by Ministry of Commerce.
Q6. Demand-pull inflation occurs when:
A) Cost of production rises due to higher input prices
B) Aggregate demand exceeds aggregate supply
C) Money supply contracts sharply
D) Imports exceed exports
A) Cost of production rises due to higher input prices
B) Aggregate demand exceeds aggregate supply
C) Money supply contracts sharply
D) Imports exceed exports
Answer: B — Demand-pull = “too much money chasing too few goods.” Cost-push inflation arises from supply-side shocks (e.g., oil price rise).
Q7. M3 money supply is also called:
A) Reserve Money
B) Narrow Money
C) Broad Money
D) High-Powered Money
A) Reserve Money
B) Narrow Money
C) Broad Money
D) High-Powered Money
Answer: C — M3 = M1 + Time Deposits = Broad Money. M0 = Reserve/High-Powered Money. M1 = Narrow Money (currency + demand deposits).
Q8. M0 (Reserve Money) consists of:
A) Currency in circulation only
B) Currency with public + demand deposits
C) Currency in circulation + Banker’s deposits with RBI + Other deposits with RBI
D) M1 + Time deposits
A) Currency in circulation only
B) Currency with public + demand deposits
C) Currency in circulation + Banker’s deposits with RBI + Other deposits with RBI
D) M1 + Time deposits
Answer: C — M0 is the monetary base (high-powered money). It includes all currency issued by RBI plus bankers’ cash reserves held at RBI.
Q9. Fiscal Deficit is defined as:
A) Revenue Expenditure − Revenue Receipts
B) Total Expenditure − Total Receipts (excluding borrowings)
C) Fiscal Deficit − Interest Payments
D) Capital Expenditure − Capital Receipts
A) Revenue Expenditure − Revenue Receipts
B) Total Expenditure − Total Receipts (excluding borrowings)
C) Fiscal Deficit − Interest Payments
D) Capital Expenditure − Capital Receipts
Answer: B — Fiscal Deficit = Total Expenditure − (Revenue Receipts + Non-debt Capital Receipts). It shows the government’s total borrowing requirement.
Q10. Primary Deficit equals:
A) Fiscal Deficit − Revenue Deficit
B) Fiscal Deficit − Interest Payments
C) Revenue Deficit + Capital Expenditure
D) Fiscal Deficit + Interest Payments
A) Fiscal Deficit − Revenue Deficit
B) Fiscal Deficit − Interest Payments
C) Revenue Deficit + Capital Expenditure
D) Fiscal Deficit + Interest Payments
Answer: B — Primary Deficit = Fiscal Deficit − Interest Payments. A zero primary deficit means the government borrows only to service past debt.
Q11. Revenue Deficit means:
A) Capital receipts are less than capital expenditure
B) Revenue receipts fall short of revenue expenditure
C) Total borrowings exceed total expenditure
D) Export earnings are less than import payments
A) Capital receipts are less than capital expenditure
B) Revenue receipts fall short of revenue expenditure
C) Total borrowings exceed total expenditure
D) Export earnings are less than import payments
Answer: B — Revenue Deficit = Revenue Expenditure − Revenue Receipts. It indicates the government is borrowing to meet day-to-day expenses, not just capital creation.
Q12. NITI Aayog replaced which body in 2015?
A) Finance Commission
B) Planning Commission
C) National Development Council
D) Economic Advisory Council
A) Finance Commission
B) Planning Commission
C) National Development Council
D) Economic Advisory Council
Answer: B — Planning Commission was dissolved on January 1, 2015 and replaced by NITI Aayog (National Institution for Transforming India). Unlike PC, NITI Aayog has no fund-allocation power.
Q13. GST was launched in India on:
A) April 1, 2016
B) January 1, 2017
C) July 1, 2017
D) April 1, 2018
A) April 1, 2016
B) January 1, 2017
C) July 1, 2017
D) April 1, 2018
Answer: C — GST (Goods and Services Tax) was launched on July 1, 2017, replacing a complex web of indirect taxes including excise duty, service tax, and VAT.
Q14. The standard GST rate applicable to most goods and services is:
A) 12%
B) 18%
C) 28%
D) 5%
A) 12%
B) 18%
C) 28%
D) 5%
Answer: B — GST slabs are 0%, 5%, 12%, 18%, and 28%. Most services (including banking/financial services) attract 18%. 28% applies to luxury/demerit goods.
Q15. Current Account in the Balance of Payments (BOP) includes:
A) FDI and FPI flows
B) External commercial borrowings
C) Trade in goods, trade in services, income, and current transfers
D) Short-term capital flows and reserves
A) FDI and FPI flows
B) External commercial borrowings
C) Trade in goods, trade in services, income, and current transfers
D) Short-term capital flows and reserves
Answer: C — Current Account = Merchandise trade + Invisibles (services + income + transfers). Capital/Financial Account covers FDI, FPI, ECBs, and reserve changes.
Q16. FEMA replaced which earlier law related to foreign exchange?
A) FERA 1973
B) FRBM Act 2003
C) RBI Act 1934
D) SARFAESI 2002
A) FERA 1973
B) FRBM Act 2003
C) RBI Act 1934
D) SARFAESI 2002
Answer: A — FEMA (Foreign Exchange Management Act) 1999 replaced FERA (Foreign Exchange Regulation Act) 1973. FEMA is civil in nature; FERA violations were criminal.
Q17. India’s foreign exchange reserves are managed by:
A) Ministry of Finance
B) SEBI
C) Reserve Bank of India
D) EXIM Bank
A) Ministry of Finance
B) SEBI
C) Reserve Bank of India
D) EXIM Bank
Answer: C — RBI manages India’s foreign exchange reserves which include foreign currency assets, gold, SDRs, and reserve tranche position with IMF.
Q18. Which of the following is the correct expenditure method formula for GDP?
A) GDP = C + I + G + (X – M)
B) GDP = W + R + I + P
C) GDP = NNP + Depreciation – NFIA
D) GDP = GNP – Net Indirect Taxes
A) GDP = C + I + G + (X – M)
B) GDP = W + R + I + P
C) GDP = NNP + Depreciation – NFIA
D) GDP = GNP – Net Indirect Taxes
Answer: A — Expenditure method: GDP = Consumption (C) + Investment (I) + Government spending (G) + Net Exports (X–M). Option B is the income method.
Q19. Stagflation refers to:
A) High growth with low inflation
B) Deflation accompanied by recession
C) High inflation combined with stagnant economic growth and high unemployment
D) Rapid economic growth with moderate inflation
A) High growth with low inflation
B) Deflation accompanied by recession
C) High inflation combined with stagnant economic growth and high unemployment
D) Rapid economic growth with moderate inflation
Answer: C — Stagflation is the coexistence of stagnation (low growth, high unemployment) and inflation — a situation that defies the traditional Phillips Curve trade-off.
Q20. Human Development Index (HDI) is published by:
A) World Bank
B) IMF
C) UNDP
D) WTO
A) World Bank
B) IMF
C) UNDP
D) WTO
Answer: C — HDI is published by UNDP (United Nations Development Programme). It measures three dimensions: health (life expectancy), education, and standard of living (GNI per capita).
Q21. Which sector contributes the largest share to India’s GDP?
A) Agriculture
B) Industry (Manufacturing)
C) Services
D) Construction
A) Agriculture
B) Industry (Manufacturing)
C) Services
D) Construction
Answer: C — The services sector (IT, banking, trade, transport, communication) contributes over 50% to India’s GDP. Agriculture contributes ~15-18% but employs ~45% of the workforce.
Q22. The Fiscal Responsibility and Budget Management (FRBM) Act was enacted in:
A) 1999
B) 2003
C) 2007
D) 2012
A) 1999
B) 2003
C) 2007
D) 2012
Answer: B — FRBM Act 2003 mandates the central government to achieve fiscal discipline by setting targets for fiscal deficit and revenue deficit reduction.
Q23. Disinvestment refers to:
A) Government borrowing from the market
B) Government selling its equity stake in PSUs
C) Private companies winding up operations
D) Foreign companies withdrawing from India
A) Government borrowing from the market
B) Government selling its equity stake in PSUs
C) Private companies winding up operations
D) Foreign companies withdrawing from India
Answer: B — Disinvestment = government reducing its shareholding in Public Sector Undertakings (PSUs). Full disinvestment = privatisation. Proceeds go to National Investment Fund.
Q24. Which of the following is NOT a component of India’s Union Budget revenue receipts?
A) Income Tax
B) Corporate Tax
C) Disinvestment proceeds
D) Non-tax revenues (dividends, fees)
A) Income Tax
B) Corporate Tax
C) Disinvestment proceeds
D) Non-tax revenues (dividends, fees)
Answer: C — Disinvestment proceeds are a capital receipt (non-debt creating). Revenue receipts include tax revenues (direct + indirect taxes) and non-tax revenues (dividends from PSUs, RBI surplus, fees).
Q25. The Gini Coefficient measures:
A) Economic growth rate
B) Price level changes
C) Degree of income inequality
D) Export competitiveness
A) Economic growth rate
B) Price level changes
C) Degree of income inequality
D) Export competitiveness
Answer: C — Gini Coefficient ranges from 0 (perfect equality) to 1 (perfect inequality). It is derived from the Lorenz curve. Higher value = greater inequality.
Q26. Special Drawing Rights (SDR) are issued by:
A) World Bank
B) RBI
C) IMF
D) Asian Development Bank
A) World Bank
B) RBI
C) IMF
D) Asian Development Bank
Answer: C — SDRs are international reserve assets created by the IMF. They are allocated to member countries proportionally to their IMF quotas and form part of a country’s forex reserves.
Q27. Which body sets India’s official poverty line?
A) Planning Commission / NITI Aayog
B) Ministry of Finance
C) Reserve Bank of India
D) National Statistical Office
A) Planning Commission / NITI Aayog
B) Ministry of Finance
C) Reserve Bank of India
D) National Statistical Office
Answer: A — Poverty line in India is set by NITI Aayog (earlier Planning Commission). The Tendulkar Committee (2009) and Rangarajan Committee (2012-14) revised the methodology.
Q28. India’s fiscal year runs from:
A) January 1 to December 31
B) April 1 to March 31
C) July 1 to June 30
D) October 1 to September 30
A) January 1 to December 31
B) April 1 to March 31
C) July 1 to June 30
D) October 1 to September 30
Answer: B — India’s fiscal year (financial year) is April 1 to March 31. The Union Budget is typically presented on February 1.
Module B: Banking System & Monetary Policy (Q29–55)
Q29. Reserve Bank of India was established on:
A) January 1, 1949
B) April 1, 1935
C) August 15, 1947
D) November 26, 1949
A) January 1, 1949
B) April 1, 1935
C) August 15, 1947
D) November 26, 1949
Answer: B — RBI was established on April 1, 1935 under the RBI Act 1934. It was nationalised on January 1, 1949. Headquarters: Mumbai. Governor is appointed by the Central Government.
Q30. Cash Reserve Ratio (CRR) is:
A) The percentage of deposits banks must hold in government securities
B) The minimum percentage of net demand and time liabilities (NDTL) banks must keep as cash with RBI
C) The rate at which RBI lends overnight funds to banks
D) The ratio of a bank’s capital to its risk-weighted assets
A) The percentage of deposits banks must hold in government securities
B) The minimum percentage of net demand and time liabilities (NDTL) banks must keep as cash with RBI
C) The rate at which RBI lends overnight funds to banks
D) The ratio of a bank’s capital to its risk-weighted assets
Answer: B — CRR is maintained as cash with RBI (no interest paid). SLR is maintained in approved securities. Both are calculated on NDTL.
Q31. Statutory Liquidity Ratio (SLR) must be maintained in:
A) Cash with RBI only
B) Gold, cash in hand, and current account with RBI
C) Government securities, gold, and approved securities
D) Fixed deposits with scheduled banks
A) Cash with RBI only
B) Gold, cash in hand, and current account with RBI
C) Government securities, gold, and approved securities
D) Fixed deposits with scheduled banks
Answer: C — SLR (Section 24 of Banking Regulation Act) must be maintained in unencumbered gold, cash, or approved securities (mainly government bonds). Banks earn interest on SLR securities.
Q32. Repo Rate is the rate at which:
A) Banks lend to each other overnight
B) RBI borrows from commercial banks against securities
C) RBI lends short-term funds to commercial banks against securities
D) Banks borrow from RBI under Marginal Standing Facility
A) Banks lend to each other overnight
B) RBI borrows from commercial banks against securities
C) RBI lends short-term funds to commercial banks against securities
D) Banks borrow from RBI under Marginal Standing Facility
Answer: C — Repo (Repurchase Agreement) = RBI lends to banks by purchasing their government securities with agreement to resell. Reverse Repo = RBI borrows from banks (banks park excess funds).
Q33. Marginal Standing Facility (MSF) rate is typically:
A) 0.25% below repo rate
B) Equal to repo rate
C) 0.25% above repo rate
D) Equal to bank rate
A) 0.25% below repo rate
B) Equal to repo rate
C) 0.25% above repo rate
D) Equal to bank rate
Answer: C — MSF rate = Repo + 0.25%. Banks can borrow overnight from RBI under MSF up to 1% of their NDTL, even dipping into SLR securities. It forms the upper bound of the LAF corridor.
Q34. The Monetary Policy Committee (MPC) was constituted under:
A) RBI Act 1934 (amended 2016)
B) Banking Regulation Act 1949
C) FRBM Act 2003
D) Finance Act 2015
A) RBI Act 1934 (amended 2016)
B) Banking Regulation Act 1949
C) FRBM Act 2003
D) Finance Act 2015
Answer: A — MPC was constituted in 2016 via an amendment to the RBI Act 1934. It has 6 members (3 from RBI including Governor + 3 from Government) and meets 6 times per year.
Q35. India’s inflation targeting framework sets the CPI target at:
A) 2% ± 1%
B) 4% ± 2%
C) 5% ± 1%
D) 6% ± 2%
A) 2% ± 1%
B) 4% ± 2%
C) 5% ± 1%
D) 6% ± 2%
Answer: B — RBI’s flexible inflation target is 4% with a tolerance band of ±2% (i.e., 2% to 6%). If CPI stays outside this band for 3 consecutive quarters, RBI must explain to the government.
Q36. MCLR (Marginal Cost of Funds-based Lending Rate) was introduced from:
A) July 1, 2010
B) April 1, 2016
C) October 1, 2019
D) January 1, 2015
A) July 1, 2010
B) April 1, 2016
C) October 1, 2019
D) January 1, 2015
Answer: B — MCLR replaced Base Rate from April 1, 2016. MCLR components: marginal cost of funds + negative carry on CRR + operating costs + tenor premium. Revised monthly.
Q37. External Benchmark-Based Lending Rate (EBLR) is mandatory for:
A) All bank loans
B) Retail and MSME loans from October 1, 2019
C) Home loans only
D) Corporate loans above ₹5 crore
A) All bank loans
B) Retail and MSME loans from October 1, 2019
C) Home loans only
D) Corporate loans above ₹5 crore
Answer: B — From October 1, 2019, all new floating-rate retail loans (home, auto, personal) and MSME loans must be linked to an external benchmark (Repo rate, T-bill rate, or FBIL rate).
Q38. Priority Sector Lending target for domestic commercial banks is:
A) 30% of ANBC
B) 40% of ANBC
C) 45% of ANBC
D) 50% of ANBC
A) 30% of ANBC
B) 40% of ANBC
C) 45% of ANBC
D) 50% of ANBC
Answer: B — PSL target = 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure (CEOBE), whichever is higher. Agriculture: 18%, Weaker Sections: 10%.
Q39. NABARD was established in:
A) 1935
B) 1975
C) 1982
D) 1990
A) 1935
B) 1975
C) 1982
D) 1990
Answer: C — NABARD (National Bank for Agriculture and Rural Development) was established on July 12, 1982 based on the Shivaraman Committee recommendations. It is the apex development bank for agriculture.
Q40. SIDBI (Small Industries Development Bank of India) was established in:
A) 1982
B) 1988
C) 1990
D) 1994
A) 1982
B) 1988
C) 1990
D) 1994
Answer: C — SIDBI was established on April 2, 1990 as the principal financial institution for promotion, financing, and development of the MSME sector.
Q41. National Housing Bank (NHB) was established in:
A) 1982
B) 1988
C) 1990
D) 1992
A) 1982
B) 1988
C) 1990
D) 1992
Answer: B — NHB was established on July 9, 1988 under the National Housing Bank Act 1987. It is the apex institution for housing finance. It regulates and refinances HFCs.
Q42. EXIM Bank (Export-Import Bank of India) was established in:
A) 1975
B) 1982
C) 1985
D) 1990
A) 1975
B) 1982
C) 1985
D) 1990
Answer: B — EXIM Bank was established on January 1, 1982 to finance, facilitate, and promote India’s international trade and investment. It provides export credit and line of credit to foreign nations.
Q43. Capital Adequacy Ratio (CAR / CRAR) under Basel III for Indian banks must be at least:
A) 8%
B) 9%
C) 10%
D) 12%
A) 8%
B) 9%
C) 10%
D) 12%
Answer: B — RBI has prescribed a minimum CAR of 9% for Indian banks (Basel III minimum is 8%). Additionally, there is a Capital Conservation Buffer of 2.5%, making effective minimum 11.5%.
Q44. Basel III norms strengthen banking regulation in which three areas?
A) Deposits, loans, and investments
B) Capital, liquidity, and leverage
C) Credit, market, and legal risk
D) Retail, wholesale, and international banking
A) Deposits, loans, and investments
B) Capital, liquidity, and leverage
C) Credit, market, and legal risk
D) Retail, wholesale, and international banking
Answer: B — Basel III focuses on: (1) Higher and better quality capital, (2) Improved liquidity coverage (LCR, NSFR), and (3) Leverage ratio to limit excessive balance sheet growth.
Q45. Tier 1 capital in banking primarily consists of:
A) Subordinated debt and preference shares
B) Equity capital and disclosed free reserves
C) General provisions and revaluation reserves
D) Hybrid instruments and long-term bonds
A) Subordinated debt and preference shares
B) Equity capital and disclosed free reserves
C) General provisions and revaluation reserves
D) Hybrid instruments and long-term bonds
Answer: B — Tier 1 (Core/Going-Concern Capital) = Paid-up equity capital + Disclosed free reserves + Capital reserves. Tier 2 (Gone-Concern Capital) includes subordinated debt, general provisions, revaluation reserves.
Q46. Open Market Operations (OMO) by RBI refer to:
A) Opening new bank branches in rural areas
B) Buying and selling of government securities in the open market to control liquidity
C) Allowing foreign banks to operate freely in India
D) Auctioning of government bonds to primary dealers
A) Opening new bank branches in rural areas
B) Buying and selling of government securities in the open market to control liquidity
C) Allowing foreign banks to operate freely in India
D) Auctioning of government bonds to primary dealers
Answer: B — OMO is a quantitative monetary policy tool. RBI buys securities → injects liquidity (expansionary). RBI sells securities → absorbs liquidity (contractionary).
Q47. Lead Bank Scheme was introduced in:
A) 1969
B) 1972
C) 1982
D) 1991
A) 1969
B) 1972
C) 1982
D) 1991
Answer: A — Lead Bank Scheme was introduced in 1969 (based on the Gadgil Committee recommendations). Each district has a lead bank responsible for coordinating credit planning and financial inclusion.
Q48. When RBI raises the CRR, the immediate effect is:
A) Banks have more funds to lend — credit expands
B) Banks have fewer funds to lend — credit contracts
C) Interest rates fall across the board
D) Government bond prices rise
A) Banks have more funds to lend — credit expands
B) Banks have fewer funds to lend — credit contracts
C) Interest rates fall across the board
D) Government bond prices rise
Answer: B — Higher CRR → banks must park more cash with RBI → less money available for lending → money supply contracts → inflation pressure reduces.
Q49. Micro Finance Institutions (MFIs) in India are primarily regulated by:
A) NABARD
B) SEBI
C) Reserve Bank of India
D) Ministry of Finance
A) NABARD
B) SEBI
C) Reserve Bank of India
D) Ministry of Finance
Answer: C — NBFC-MFIs are regulated by RBI. Bank-linked SHGs are promoted by NABARD. RBI’s 2022 harmonised MFI guidelines removed the NBFC-MFI vs other lender distinction for microfinance.
Q50. Regional Rural Banks (RRBs) were established under:
A) RBI Act 1934
B) RRB Act 1976
C) Banking Regulation Act 1949
D) NABARD Act 1981
A) RBI Act 1934
B) RRB Act 1976
C) Banking Regulation Act 1949
D) NABARD Act 1981
Answer: B — RRBs were established under the RRB Act 1976 based on the Narasimham Committee (1975) recommendations. Ownership: Central Govt 50%, Sponsor Bank 35%, State Govt 15%.
Q51. What does RTGS stand for and what is its minimum transaction limit?
A) Real Time Gross Settlement; ₹1 lakh
B) Real Time Gross Settlement; ₹2 lakh
C) Rapid Transfer Gross Settlement; ₹5 lakh
D) Real Time Gross Settlement; no minimum
A) Real Time Gross Settlement; ₹1 lakh
B) Real Time Gross Settlement; ₹2 lakh
C) Rapid Transfer Gross Settlement; ₹5 lakh
D) Real Time Gross Settlement; no minimum
Answer: B — RTGS = Real Time Gross Settlement. Minimum: ₹2 lakh. No upper limit. Operates 24×7 since December 2020. Suitable for high-value transactions. Settlement is individual (gross), not batched.
Q52. NEFT operates through:
A) Real-time individual transaction settlement
B) Deferred Net Settlement in half-hourly batches
C) Gross settlement at end of day only
D) Bilateral netting between banks
A) Real-time individual transaction settlement
B) Deferred Net Settlement in half-hourly batches
C) Gross settlement at end of day only
D) Bilateral netting between banks
Answer: B — NEFT uses Deferred Net Settlement (DNS) in 48 half-hourly batches from 00:30 to 00:00 hrs, 24×7. No minimum amount. RTGS settles individually in real time.
Q53. The Liquidity Coverage Ratio (LCR) requires banks to hold:
A) Sufficient capital against credit losses
B) High-quality liquid assets to cover net cash outflows for 30 days
C) Minimum 20% of assets in government bonds
D) Cash reserves equal to 10% of deposits
A) Sufficient capital against credit losses
B) High-quality liquid assets to cover net cash outflows for 30 days
C) Minimum 20% of assets in government bonds
D) Cash reserves equal to 10% of deposits
Answer: B — LCR (Basel III) = Stock of HQLA ÷ Total net cash outflows over 30 days ≥ 100%. NSFR (Net Stable Funding Ratio) ensures long-term resilience over a 1-year horizon.
Q54. Prompt Corrective Action (PCA) framework is triggered when a bank:
A) Reports profits below industry average
B) Breaches threshold levels for CRAR, NPA ratio, or Return on Assets
C) Fails to achieve PSL targets for two consecutive years
D) Does not open a required number of rural branches
A) Reports profits below industry average
B) Breaches threshold levels for CRAR, NPA ratio, or Return on Assets
C) Fails to achieve PSL targets for two consecutive years
D) Does not open a required number of rural branches
Answer: B — RBI’s PCA framework (revised 2021) uses three risk thresholds: Capital (CRAR), Asset quality (Net NPA ratio), and Leverage (Tier-1 capital ratio). Triggered banks face restrictions on dividend, lending, and expansion.
Q55. Self-Help Groups (SHGs) in India are primarily linked to banks through:
A) SEBI-registered mutual funds
B) NABARD’s SHG-Bank Linkage Programme
C) SIDBI’s microfinance division
D) State Cooperative Banks only
A) SEBI-registered mutual funds
B) NABARD’s SHG-Bank Linkage Programme
C) SIDBI’s microfinance division
D) State Cooperative Banks only
Answer: B — NABARD launched the SHG-Bank Linkage Programme in 1992, making it the world’s largest microfinance programme. Banks lend to SHGs at 4–10× the corpus. Women SHGs dominate.
Module C: Indian Financial Markets & Institutions (Q56–82)
Q56. Money market deals in instruments with maturity of:
A) Up to 90 days only
B) Up to 1 year
C) 1 to 3 years
D) More than 3 years
A) Up to 90 days only
B) Up to 1 year
C) 1 to 3 years
D) More than 3 years
Answer: B — Money market = short-term funds market (up to 1 year). Capital market deals with long-term instruments (beyond 1 year). RBI regulates the money market; SEBI regulates the capital market.
Q57. Treasury Bills (T-Bills) in India are issued by:
A) Commercial banks
B) State governments
C) RBI on behalf of Central Government
D) SEBI
A) Commercial banks
B) State governments
C) RBI on behalf of Central Government
D) SEBI
Answer: C — T-Bills are zero-coupon, short-term government securities issued at a discount. Tenors: 91-day, 182-day, 364-day. Minimum lot: ₹25,000. Auctioned weekly by RBI.
Q58. Commercial Paper (CP) is issued by:
A) Banks only
B) State governments
C) Corporates, primary dealers, and all-India financial institutions
D) RBI on behalf of borrowers
A) Banks only
B) State governments
C) Corporates, primary dealers, and all-India financial institutions
D) RBI on behalf of borrowers
Answer: C — CP is an unsecured money market instrument issued by corporates for short-term borrowing. Minimum denomination: ₹5 lakh. Maturity: 7 days to 1 year. Issued at discount.
Q59. Certificate of Deposit (CD) is issued by:
A) Central Government
B) Scheduled commercial banks and select All India Financial Institutions
C) Corporate houses with investment grade rating
D) Mutual funds
A) Central Government
B) Scheduled commercial banks and select All India Financial Institutions
C) Corporate houses with investment grade rating
D) Mutual funds
Answer: B — CDs are issued by banks (min ₹1 lakh, maturity 7 days–1 year) and All India FIs (min ₹1 lakh, maturity 1–3 years). Issued at discount. Freely transferable by endorsement.
Q60. SEBI (Securities and Exchange Board of India) was established as a statutory body in:
A) 1988
B) 1992
C) 1994
D) 1996
A) 1988
B) 1992
C) 1994
D) 1996
Answer: B — SEBI was first set up as a non-statutory body in 1988. It got statutory status under the SEBI Act on April 12, 1992. Headquarters: Mumbai (Bandra Kurla Complex).
Q61. BSE (Bombay Stock Exchange) is the _______ oldest stock exchange in Asia.
A) First (oldest)
B) Second
C) Third
D) Fourth
A) First (oldest)
B) Second
C) Third
D) Fourth
Answer: A — BSE, established in 1875, is the oldest stock exchange in Asia and one of the oldest in the world. NSE was established in 1992 and commenced trading in 1994. BSE benchmark: SENSEX (30 stocks).
Q62. NSDL and CDSL are:
A) Mutual fund registrars
B) Stock exchanges
C) Depositories holding securities in electronic/demat form
D) Credit rating agencies
A) Mutual fund registrars
B) Stock exchanges
C) Depositories holding securities in electronic/demat form
D) Credit rating agencies
Answer: C — NSDL (National Securities Depository Ltd., est. 1996) and CDSL (Central Depository Services Ltd., est. 1999) hold securities in dematerialised form. Both are regulated by SEBI.
Q63. A Depository Participant (DP) is:
A) A company that issues shares
B) An intermediary (bank/broker) through whom investors access depository services
C) A regulator of stock exchanges
D) A market maker providing bid-ask quotes
A) A company that issues shares
B) An intermediary (bank/broker) through whom investors access depository services
C) A regulator of stock exchanges
D) A market maker providing bid-ask quotes
Answer: B — DPs are agents of the depository (NSDL/CDSL). Banks, brokers, and financial institutions registered with SEBI act as DPs. Investors open demat accounts with DPs, not directly with the depository.
Q64. An Initial Public Offering (IPO) occurs when:
A) A listed company issues fresh shares to existing shareholders
B) A company offers its shares to the public for the first time (primary market)
C) Government divests its stake in a PSU
D) A company buys back its own shares
A) A listed company issues fresh shares to existing shareholders
B) A company offers its shares to the public for the first time (primary market)
C) Government divests its stake in a PSU
D) A company buys back its own shares
Answer: B — IPO = primary market transaction where a company raises capital from the public for the first time. FPO = Follow-on Public Offer by an already-listed company. Rights Issue = to existing shareholders.
Q65. Mutual funds in India are regulated by:
A) RBI
B) IRDAI
C) SEBI
D) PFRDA
A) RBI
B) IRDAI
C) SEBI
D) PFRDA
Answer: C — SEBI regulates mutual funds under SEBI (Mutual Funds) Regulations 1996. AMFI (Association of Mutual Funds in India) is the industry body. AMFI assigns ARN numbers to distributors.
Q66. NAV (Net Asset Value) of a mutual fund unit is calculated as:
A) (Total liabilities − Total assets) ÷ Number of units
B) (Market value of assets − Liabilities) ÷ Number of outstanding units
C) Purchase price + Expense ratio
D) Face value + Accumulated returns
A) (Total liabilities − Total assets) ÷ Number of units
B) (Market value of assets − Liabilities) ÷ Number of outstanding units
C) Purchase price + Expense ratio
D) Face value + Accumulated returns
Answer: B — NAV = (Market Value of all Securities + Accrued Income − Liabilities) ÷ Total Units Outstanding. Calculated daily for open-ended funds. Entry/exit load may be added/deducted.
Q67. IRDAI (Insurance Regulatory and Development Authority of India) was established under:
A) Insurance Act 1938
B) IRDAI Act 1999
C) Finance Act 2000
D) LIC Act 1956
A) Insurance Act 1938
B) IRDAI Act 1999
C) Finance Act 2000
D) LIC Act 1956
Answer: B — IRDAI was constituted as a statutory body under the IRDAI Act 1999. Headquarters: Hyderabad. It regulates both life and general insurance companies in India.
Q68. PFRDA regulates which pension scheme?
A) Employees’ Provident Fund (EPF)
B) Employees’ State Insurance (ESI)
C) National Pension System (NPS)
D) Public Provident Fund (PPF)
A) Employees’ Provident Fund (EPF)
B) Employees’ State Insurance (ESI)
C) National Pension System (NPS)
D) Public Provident Fund (PPF)
Answer: C — PFRDA (Pension Fund Regulatory and Development Authority, est. 2003) regulates NPS. EPF is managed by EPFO under Ministry of Labour. PPF falls under Ministry of Finance.
Q69. NBFCs (Non-Banking Financial Companies) differ from banks primarily because they:
A) Cannot lend money
B) Cannot accept demand deposits and are not part of the payment system
C) Are not regulated by RBI
D) Cannot issue any instruments to raise funds
A) Cannot lend money
B) Cannot accept demand deposits and are not part of the payment system
C) Are not regulated by RBI
D) Cannot issue any instruments to raise funds
Answer: B — NBFCs can accept term deposits (if authorised), lend, and invest — but CANNOT accept demand deposits, are not part of the payment and settlement system, and deposit insurance (DICGC) does not cover them.
Q70. A Systemically Important NBFC (NBFC-SI) has asset size of at least:
A) ₹100 crore
B) ₹250 crore
C) ₹500 crore
D) ₹1,000 crore
A) ₹100 crore
B) ₹250 crore
C) ₹500 crore
D) ₹1,000 crore
Answer: C — As per RBI, NBFC-ND-SI (Non-Deposit taking, Systemically Important) must have asset size ≥ ₹500 crore. These are subject to more stringent regulatory requirements including capital adequacy and exposure norms.
Q71. Credit rating of ‘AAA’ indicates:
A) Highest credit risk
B) Instrument in default
C) Highest safety with lowest credit risk
D) Speculative grade investment
A) Highest credit risk
B) Instrument in default
C) Highest safety with lowest credit risk
D) Speculative grade investment
Answer: C — AAA = highest safety (CRISIL scale). Scale: AAA → AA → A → BBB (investment grade) → BB → B → C → D (default). India’s first credit rating agency: CRISIL (1987).
Q72. American Depositary Receipts (ADRs) allow:
A) Indian companies to list on Indian stock exchanges in foreign currency
B) Foreign companies to raise equity capital in the US dollar market
C) Indian companies to raise capital from US investors without listing on NYSE/NASDAQ
D) Both B and C
A) Indian companies to list on Indian stock exchanges in foreign currency
B) Foreign companies to raise equity capital in the US dollar market
C) Indian companies to raise capital from US investors without listing on NYSE/NASDAQ
D) Both B and C
Answer: D — ADRs are USD-denominated certificates representing shares of a non-US company, traded on US exchanges or OTC. GDRs (Global Depositary Receipts) are traded in European markets. Infosys was the first Indian company to list ADRs (1999).
Q73. Foreign Portfolio Investment (FPI) differs from FDI in that FPI:
A) Involves long-term management control
B) Is limited to government bonds only
C) Is a passive, short-term investment in financial assets without management control
D) Requires RBI approval for every transaction
A) Involves long-term management control
B) Is limited to government bonds only
C) Is a passive, short-term investment in financial assets without management control
D) Requires RBI approval for every transaction
Answer: C — FPI = investment in stocks, bonds, and other financial assets without seeking control. FDI ≥ 10% stake = strategic, long-term. FPI is regulated by SEBI under SEBI (FPI) Regulations 2019.
Q74. External Commercial Borrowings (ECBs) by Indian companies require permission from:
A) SEBI
B) Ministry of Finance
C) Reserve Bank of India under FEMA framework
D) Stock Exchange
A) SEBI
B) Ministry of Finance
C) Reserve Bank of India under FEMA framework
D) Stock Exchange
Answer: C — ECBs are commercial loans raised from foreign sources. RBI regulates ECBs under FEMA. ECBs can be accessed via automatic or approval routes depending on amount and end-use.
Q75. The primary function of the primary market is to:
A) Provide liquidity for buying and selling existing securities
B) Enable companies to raise fresh capital by issuing new securities
C) Set benchmark interest rates for the economy
D) Regulate derivative instruments
A) Provide liquidity for buying and selling existing securities
B) Enable companies to raise fresh capital by issuing new securities
C) Set benchmark interest rates for the economy
D) Regulate derivative instruments
Answer: B — Primary market = new issue market where fresh securities are sold for the first time (IPO, FPO, rights issue, private placement). Secondary market = BSE/NSE where existing securities are traded.
Q76. Derivative instruments derive their value from:
A) The company’s book value
B) An underlying asset (equity, commodity, currency, or index)
C) The RBI policy rate
D) The SEBI’s daily announcement
A) The company’s book value
B) An underlying asset (equity, commodity, currency, or index)
C) The RBI policy rate
D) The SEBI’s daily announcement
Answer: B — Derivatives (futures, options, swaps, forwards) derive value from an underlying asset. Used for hedging, speculation, or arbitrage. SEBI regulates exchange-traded derivatives in India.
Q77. SEBI’s Insider Trading regulations prohibit:
A) Buying or selling shares below NAV
B) Short selling of shares
C) Trading in securities based on unpublished price sensitive information (UPSI)
D) FPI investment above 10% in any company
A) Buying or selling shares below NAV
B) Short selling of shares
C) Trading in securities based on unpublished price sensitive information (UPSI)
D) FPI investment above 10% in any company
Answer: C — Insider trading = trading using UPSI (Unpublished Price Sensitive Information) — information not available to the public that could materially affect share price. Penalised under SEBI (PIT) Regulations 2015.
Q78. Venture Capital Funds (VCFs) primarily invest in:
A) Listed blue-chip companies
B) Government bonds and PSU debt
C) Unlisted, early-stage startups and high-risk ventures
D) Real estate projects
A) Listed blue-chip companies
B) Government bonds and PSU debt
C) Unlisted, early-stage startups and high-risk ventures
D) Real estate projects
Answer: C — VCFs invest equity in early-stage, high-growth startups in exchange for ownership stake. Regulated by SEBI as Category I AIFs. Returns come through IPO, M&A, or secondary sale.
Q79. Alternative Investment Funds (AIFs) in India are regulated by:
A) RBI
B) IRDAI
C) SEBI
D) Ministry of Corporate Affairs
A) RBI
B) IRDAI
C) SEBI
D) Ministry of Corporate Affairs
Answer: C — AIFs are regulated under SEBI (AIF) Regulations 2012. Category I: VCFs, SME funds, social venture funds. Category II: PE funds, debt funds. Category III: Hedge funds. Minimum investment ₹1 crore.
Q80. TREPS (Tri-Party Repo) has replaced which older money market instrument?
A) Call Money
B) Commercial Paper
C) CBLO (Collateralised Borrowing and Lending Obligation)
D) Certificate of Deposit
A) Call Money
B) Commercial Paper
C) CBLO (Collateralised Borrowing and Lending Obligation)
D) Certificate of Deposit
Answer: C — CBLO was replaced by TREPS from November 5, 2018. TREPS is operated by CCIL (Clearing Corporation of India Ltd.). It involves three parties: borrower, lender, and CCIL as the triparty agent.
Q81. The call money market in India is an overnight to _______ market.
A) 7 days
B) 14 days
C) 30 days
D) 90 days
A) 7 days
B) 14 days
C) 30 days
D) 90 days
Answer: B — Call money = overnight. Notice money = 2–14 days. Term money = 15 days to 1 year. Only scheduled banks and primary dealers can participate in call/notice money market.
Q82. The Government Securities (G-Sec) market’s key benchmark is:
A) 3-month T-Bill rate
B) 10-year benchmark G-Sec yield
C) Call money rate
D) Repo rate
A) 3-month T-Bill rate
B) 10-year benchmark G-Sec yield
C) Call money rate
D) Repo rate
Answer: B — The 10-year benchmark G-Sec yield is the most watched indicator of long-term interest rates in India. It is the reference point for corporate bond spreads and infrastructure financing costs.
Module D: Banking Technology & Financial Inclusion (Q83–100)
Q83. Core Banking Solution (CBS) enables:
A) Banks to issue credit cards without RBI approval
B) Customers to access their accounts and conduct transactions from any branch
C) Banks to bypass KYC norms
D) Automatic SLR maintenance without human intervention
A) Banks to issue credit cards without RBI approval
B) Customers to access their accounts and conduct transactions from any branch
C) Banks to bypass KYC norms
D) Automatic SLR maintenance without human intervention
Answer: B — CBS = centralised database with all customer accounts. “Anywhere banking” — a customer can transact at any branch. All branches are connected to a central server in real time.
Q84. NPCI (National Payments Corporation of India) operates:
A) NEFT and RTGS
B) UPI, IMPS, RuPay, BBPS, NACH, AePS
C) SWIFT messaging for international transfers
D) SEBI’s surveillance system
A) NEFT and RTGS
B) UPI, IMPS, RuPay, BBPS, NACH, AePS
C) SWIFT messaging for international transfers
D) SEBI’s surveillance system
Answer: B — NPCI (est. 2008, promoted by RBI and IBA) operates UPI, IMPS, RuPay card network, BBPS, NACH, AePS, NETC, and FASTag. NEFT and RTGS are operated directly by RBI.
Q85. IMPS (Immediate Payment Service) is available:
A) Only on working days, 8 AM to 8 PM
B) Monday to Saturday, 9 AM to 6 PM
C) 24 hours a day, 7 days a week, 365 days
D) Only during RTGS operating hours
A) Only on working days, 8 AM to 8 PM
B) Monday to Saturday, 9 AM to 6 PM
C) 24 hours a day, 7 days a week, 365 days
D) Only during RTGS operating hours
Answer: C — IMPS operates 24×7×365 including holidays. Transaction limit: ₹5 lakh. Instant credit to beneficiary. Operated by NPCI. Uses MMID (Mobile Money Identifier) or IFSC/account.
Q86. Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on:
A) August 15, 2014
B) August 28, 2014
C) October 2, 2014
D) January 26, 2015
A) August 15, 2014
B) August 28, 2014
C) October 2, 2014
D) January 26, 2015
Answer: B — PMJDY was launched on August 28, 2014 (National Mission for Financial Inclusion). Features: zero balance account, RuPay card, ₹2L accident insurance, ₹10,000 overdraft, life cover ₹30,000.
Q87. Business Correspondents (BCs) are agents appointed by banks to:
A) Issue government bonds at post offices
B) Provide banking services in areas without a branch (last-mile delivery)
C) Audit bank accounts on behalf of RBI
D) Collect taxes for the government
A) Issue government bonds at post offices
B) Provide banking services in areas without a branch (last-mile delivery)
C) Audit bank accounts on behalf of RBI
D) Collect taxes for the government
Answer: B — BC model enables financial inclusion by extending banking services (account opening, deposits, withdrawals, remittances) to remote areas using technology. BCs use PoS devices and micro-ATMs.
Q88. AePS (Aadhaar-enabled Payment System) uses which authentication?
A) OTP on registered mobile number
B) PIN number
C) Aadhaar number + biometric (fingerprint or iris scan)
D) Password set by the customer
A) OTP on registered mobile number
B) PIN number
C) Aadhaar number + biometric (fingerprint or iris scan)
D) Password set by the customer
Answer: C — AePS allows banking transactions using Aadhaar number as identity and biometric as authentication. Enables cash withdrawal, balance enquiry, and mini-statement at BCs and ATMs. No debit card/PIN needed.
Q89. Account Aggregator (AA) framework in India is regulated as:
A) SEBI-registered investment adviser
B) RBI-licensed NBFC-AA
C) MeitY-approved data fiduciary
D) IRDAI-licensed insurance broker
A) SEBI-registered investment adviser
B) RBI-licensed NBFC-AA
C) MeitY-approved data fiduciary
D) IRDAI-licensed insurance broker
Answer: B — Account Aggregators are licensed by RBI as NBFC-AAs. They facilitate consent-based sharing of financial data between Financial Information Providers (FIPs) and Users (FIUs) without storing data.
Q90. Phishing in the context of banking refers to:
A) Authorised SEBI surveillance of brokers
B) Fraudulent attempts to obtain sensitive information (passwords, card details) by masquerading as a trusted entity
C) A legitimate method to verify KYC documents
D) Cross-selling of financial products to existing customers
A) Authorised SEBI surveillance of brokers
B) Fraudulent attempts to obtain sensitive information (passwords, card details) by masquerading as a trusted entity
C) A legitimate method to verify KYC documents
D) Cross-selling of financial products to existing customers
Answer: B — Phishing = impersonating banks/SEBI via fake emails/SMS/calls to steal OTPs, passwords, card numbers. Vishing = voice phishing (calls). Smishing = SMS phishing. Banks never ask for OTP/PIN.
Q91. Under RBI’s customer protection guidelines, if a fraudulent transaction occurs due to a deficiency on the part of the bank (not the customer), the customer’s liability is:
A) Full amount lost
B) 50% of the transaction amount
C) Zero — full amount must be reversed
D) Up to ₹10,000 regardless of amount
A) Full amount lost
B) 50% of the transaction amount
C) Zero — full amount must be reversed
D) Up to ₹10,000 regardless of amount
Answer: C — As per RBI’s 2017 guidelines: if fraud is due to bank’s negligence/system fault, customer has ZERO liability. If fraud is due to customer’s own negligence, customer bears full loss. If third-party breach (no customer fault), liability depends on reporting time.
Q92. RBI’s Regulatory Sandbox allows:
A) Banks to bypass capital adequacy norms temporarily
B) Fintech companies to test innovative products in a controlled environment with regulatory relaxations
C) Foreign banks to operate without FEMA compliance
D) Startups to raise public deposits without a banking licence
A) Banks to bypass capital adequacy norms temporarily
B) Fintech companies to test innovative products in a controlled environment with regulatory relaxations
C) Foreign banks to operate without FEMA compliance
D) Startups to raise public deposits without a banking licence
Answer: B — RBI’s Regulatory Sandbox (est. 2019) enables live testing of fintech innovations (digital KYC, lending tech, cross-border payments) with regulatory relaxations for a limited period and customer set.
Q93. Small Finance Banks (SFBs) are required to extend _______ of their lending to the priority sector.
A) 40%
B) 60%
C) 75%
D) 80%
A) 40%
B) 60%
C) 75%
D) 80%
Answer: C — SFBs must extend 75% of ANBC to priority sector (vs 40% for commercial banks). At least 50% of their loans should be ≤₹25 lakh. They cannot set up subsidiaries for non-banking financial activities.
Q94. Payment Banks in India can accept deposits up to a maximum of:
A) ₹50,000 per customer
B) ₹1,00,000 per customer
C) ₹2,00,000 per customer
D) ₹5,00,000 per customer
A) ₹50,000 per customer
B) ₹1,00,000 per customer
C) ₹2,00,000 per customer
D) ₹5,00,000 per customer
Answer: C — Payment Banks can accept demand deposits up to ₹2 lakh per customer (revised from ₹1 lakh in 2021). They CANNOT issue loans or credit cards but can issue debit cards and internet/mobile banking.
Q95. DigiLocker is a platform to store digital documents and is operated by:
A) RBI
B) SEBI
C) Ministry of Electronics and Information Technology (MeitY)
D) Ministry of Finance
A) RBI
B) SEBI
C) Ministry of Electronics and Information Technology (MeitY)
D) Ministry of Finance
Answer: C — DigiLocker is an initiative of MeitY under the Digital India programme. Documents issued by government departments through DigiLocker are valid for KYC and are legally equivalent to originals under the IT Act.
Q96. BBPS (Bharat Bill Payment System) is used for:
A) Interbank fund transfers above ₹2 lakh
B) Recurring utility bill payments (electricity, water, gas, telecom, DTH, EMIs)
C) Government bond auctions
D) Cross-border remittances
A) Interbank fund transfers above ₹2 lakh
B) Recurring utility bill payments (electricity, water, gas, telecom, DTH, EMIs)
C) Government bond auctions
D) Cross-border remittances
Answer: B — BBPS (operated by NPCI) is an integrated bill payment platform for recurring payments. It provides an interoperable payment system with standardised bill payment experience across channels (online, agent, bank branch).
Q97. V-CIP (Video-based Customer Identification Process) enables banks to:
A) Conduct internal audit via video conferencing
B) Complete KYC of customers remotely through live video interaction
C) Settle disputes between customers and banks via video call
D) Train BC agents using digital videos
A) Conduct internal audit via video conferencing
B) Complete KYC of customers remotely through live video interaction
C) Settle disputes between customers and banks via video call
D) Train BC agents using digital videos
Answer: B — V-CIP (introduced by RBI in 2020) allows banks to onboard customers through a live, seamless video call. Bank official verifies PAN, Aadhaar (using XML/DigiLocker), and face through AI/ML. Equivalent to in-person KYC.
Q98. Under RBI’s Digital Lending Guidelines (2022), loan disbursements must be:
A) Routed through the Lending Service Provider (LSP)
B) Made directly to the borrower’s bank account only
C) Transferred to a third-party wallet first
D) Deposited in a designated escrow account
A) Routed through the Lending Service Provider (LSP)
B) Made directly to the borrower’s bank account only
C) Transferred to a third-party wallet first
D) Deposited in a designated escrow account
Answer: B — RBI’s 2022 Digital Lending Guidelines: (1) Loan funds must flow directly to borrower’s account, (2) Repayments must go directly to the regulated entity (RE), (3) No third-party pass-through — this addresses the deceptive “loan stacking” practices.
Q99. NACH (National Automated Clearing House) is the electronic successor to:
A) NEFT
B) ECS (Electronic Clearing Service)
C) RTGS
D) IMPS
A) NEFT
B) ECS (Electronic Clearing Service)
C) RTGS
D) IMPS
Answer: B — NACH (operated by NPCI) replaced ECS. It is used for bulk and repetitive transactions: salary credits, dividend/interest payments, SIP collections, EMI/loan repayments, and utility bill debits.
Q100. Atal Pension Yojana (APY) targets workers in the:
A) Organised public sector only
B) IT industry
C) Unorganised sector, age group 18–40
D) Government employees excluding central government
A) Organised public sector only
B) IT industry
C) Unorganised sector, age group 18–40
D) Government employees excluding central government
Answer: C — APY (launched June 1, 2015) is for Indian citizens aged 18–40 in the unorganised sector. It provides a guaranteed minimum pension of ₹1,000–₹5,000/month at age 60. Administered by PFRDA.
Quick Reference Table
| Institution / Concept | Key Fact |
|---|---|
| RBI | Est. April 1, 1935 | Nationalised Jan 1, 1949 | HQ: Mumbai |
| GDP Base Year | 2011-12 (revised Jan 2015) |
| Inflation Target | CPI 4% ± 2% (MPC, 6 members) |
| MCLR | Effective April 1, 2016 (replaced Base Rate) |
| EBLR | Mandatory for retail + MSME loans from Oct 1, 2019 |
| PSL Target | 40% ANBC | Agriculture 18% | Weaker 10% |
| NABARD | Est. July 12, 1982 | Apex for agri & rural credit |
| SIDBI | Est. April 2, 1990 | MSME development bank |
| NHB | Est. July 9, 1988 | Apex for housing finance |
| EXIM Bank | Est. Jan 1, 1982 | Export-import financing |
| SEBI | Statutory from April 12, 1992 | HQ: Mumbai |
| BSE | Est. 1875 | Oldest in Asia | Benchmark: SENSEX |
| NSDL / CDSL | 1996 / 1999 | Depositories | Regulated by SEBI |
| IRDAI | Act 1999 | HQ: Hyderabad | Life + General insurance |
| PFRDA | Est. 2003 | PFRDA Act 2013 | Regulates NPS |
| NPCI | Est. 2008 | Operates UPI, IMPS, RuPay, NACH, AePS, BBPS |
| RTGS | Min ₹2L | 24×7 from Dec 2020 | Gross settlement | RBI |
| NEFT | 48 half-hourly batches | 24×7 | No minimum | RBI |
| IMPS | ₹5L limit | 24×7×365 | NPCI |
| PMJDY | Launched Aug 28, 2014 | Zero balance | ₹2L accident cover |
| Payment Banks | Max deposit ₹2L | No loans | Debit card only |
| GST | Launched July 1, 2017 | Slabs: 0/5/12/18/28% |
| FEMA | 1999 replaced FERA 1973 | Civil (not criminal) |
| MSF Rate | Repo + 0.25% | Up to 1% of NDTL | Overnight |
Which modules are covered in JAIIB IE & IFS paper?
JAIIB IE & IFS covers four modules: Module A — Indian Economic Architecture (GDP, inflation, fiscal policy, BOP, money supply), Module B — Banking System & Monetary Policy (RBI, CRR, SLR, repo rate, MCLR, development banks), Module C — Indian Financial Markets & Institutions (money market, capital market, SEBI, mutual funds, insurance, NBFCs, credit rating), and Module D — Banking Technology & Financial Inclusion (CBS, NPCI, RTGS/NEFT/IMPS/UPI, PMJDY, digital lending, cybersecurity).
What is the difference between M1, M3, and M0 in money supply?
M0 (Reserve Money / High-Powered Money) = Currency in circulation + Bankers’ deposits with RBI + Other deposits with RBI. M1 (Narrow Money) = Currency with public + Demand deposits with banks + Other deposits with RBI. M3 (Broad Money) = M1 + Time Deposits with banks. RBI monitors M3 as the key indicator of money supply. M0 is the monetary base from which commercial banks create credit through the money multiplier effect.
What is the difference between Repo Rate, Reverse Repo, MSF, and Bank Rate?
Repo Rate: RBI lends short-term to banks against government securities — it is the key policy rate. Reverse Repo Rate: RBI borrows from banks (banks park surplus) — currently Repo minus 0.25% (lower bound of LAF corridor). MSF Rate: Emergency overnight borrowing by banks from RBI, up to 1% of NDTL — Repo + 0.25% (upper bound). Bank Rate: Rate for long-term borrowing; also used as penal rate — equals MSF rate. The interest rate corridor (MSF → Repo → Reverse Repo) is RBI’s key instrument for managing market liquidity.
What is the difference between BSE SENSEX and NSE NIFTY?
SENSEX (Sensitive Index) is BSE’s benchmark index comprising 30 large-cap, financially sound companies listed on BSE. Base year: 1978-79, Base value: 100. NIFTY 50 is NSE’s benchmark index comprising 50 large-cap companies from 13 sectors. Base year: November 3, 1995, Base value: 1000. Both indices are free-float market-capitalisation weighted. NIFTY is more broadly based and is used as the underlying for index futures and options at NSE.
What are the key differences between NBFCs and commercial banks?
NBFCs CANNOT: (1) accept demand deposits (only scheduled NBFCs-D can take term deposits), (2) issue cheques drawn on themselves, (3) be part of the payment and settlement system, (4) provide deposit insurance (DICGC does not cover NBFC deposits). NBFCs CAN: lend, invest, and provide financial services. NBFC-D (deposit-taking) = highly regulated like banks. NBFC-ND-SI (non-deposit, systemically important, ≥₹500cr assets) = subject to prudential norms. Key types: NBFC-MFI (microfinance), NBFC-HFC (housing), NBFC-IFC (infrastructure), CIC (Core Investment Company).
How many questions come from each module in IE & IFS JAIIB exam?
The IE & IFS paper (100 MCQs, 120 minutes) broadly distributes questions as: Module A — Indian Economic Architecture: ~25-30 questions (GDP, inflation, fiscal policy, BOP, money supply, planning). Module B — Banking System & Monetary Policy: ~25-30 questions (RBI functions, monetary policy tools, priority sector, development banks). Module C — Financial Markets: ~25-30 questions (money market, capital market, SEBI, MFs, insurance, NBFCs). Module D — Banking Technology: ~10-15 questions (CBS, NPCI, digital payments, financial inclusion schemes). Focus especially on Module A and B conceptual questions and Module C institutional facts.
What is the difference between RTGS, NEFT, and IMPS?
RTGS: Minimum ₹2 lakh, no upper limit. Real-time individual (gross) settlement. 24×7 since December 2020. Operated by RBI. Best for high-value urgent transactions. NEFT: No minimum amount. Deferred Net Settlement in 48 half-hourly batches, 24×7. Operated by RBI. Best for low-value non-urgent transfers. IMPS: Up to ₹5 lakh. Instant, 24×7×365 including holidays. Operated by NPCI. Available on mobile banking. Best for immediate transfers at any time. UPI (also NPCI): Up to ₹1 lakh per transaction (₹5 lakh for specific categories like IPO, tax). Uses VPA (Virtual Payment Address). Instant, 24×7.
Related JAIIB Resources