Daily Static Quiz Prelims Practice 2027
One-rupee notes and all coins are actually issued by the Ministry of Finance, Government of India, not the RBI, since the RBI issues currency notes of ₹2 and above under Section 22 of the RBI Act, 1934, with the one-rupee note bearing the signature of the Finance Secretary rather than the RBI Governor, a precise and frequently tested distinction. The RBI genuinely acts as banker and debt manager to the Government under Sections 20 and 21 of the RBI Act, serves as lender of last resort by providing emergency liquidity to solvent but illiquid banks, and formulates monetary policy through the Monetary Policy Committee, targeting CPI inflation at 4% ± 2% as its primary macroeconomic mandate.
Statement 2: Regional Rural Banks (RRBs) are classified as Scheduled Commercial Banks and are sponsored by the Central Government, State Government, and a sponsoring commercial bank in the ratio 50:15:35.
Both statements are correct. A Scheduled Commercial Bank is included in the Second Schedule of the RBI Act, 1934, must satisfy minimum capital requirements, conduct business in India's interest, and is entitled to borrow from the RBI at bank rate and access clearing house facilities in return, and Regional Rural Banks do operate as scheduled commercial banks, with their ownership equity shared between the Central Government at 50%, the State Government at 15%, and the sponsoring commercial bank at 35%.
- List I: A. PM Jan Dhan Yojana B. PM Mudra Yojana C. Stand Up India D. PM SVANidhi
- List II: 1. Provides collateral-free loans of ₹10 lakh to ₹1 crore to at least one SC/ST and one woman borrower per bank branch for greenfield enterprises 2. Provides working capital loans to street vendors — ₹10,000 initially, extendable to ₹50,000 — with a digital transaction incentive 3. Provides loans up to ₹10 lakh to non-corporate, non-farm small/micro enterprises under three categories — Shishu, Kishore, and Tarun 4. Universal banking access — zero-balance accounts, RuPay debit card, ₹2 lakh accident insurance, and ₹30,000 life cover
PM Jan Dhan Yojana, launched in August 2014, provides zero-balance bank accounts, RuPay debit cards, ₹2 lakh accidental insurance, and ₹30,000 life cover, the world's largest financial inclusion drive with over 50 crore accounts opened, while PM Mudra Yojana provides collateral-free loans up to ₹10 lakh to micro/small enterprises under three tiers, Shishu up to ₹50,000, Kishore ₹50,000-₹5 lakh, and Tarun ₹5-10 lakh. Stand Up India provides loans of ₹10 lakh to ₹1 crore to at least one SC/ST borrower and one woman borrower per bank branch for setting up greenfield enterprises, targeting underrepresented entrepreneur categories, and PM SVANidhi provides working capital loans starting at ₹10,000, extendable to ₹20,000 then ₹50,000, to street vendors, with cashback incentives for digital transactions and credit score building.
- MSF allows scheduled commercial banks to borrow overnight from the RBI at a rate higher than the Repo Rate — typically 25 basis points above Repo.
- Under MSF, banks can borrow against government securities even beyond the Statutory Liquidity Ratio (SLR) limit — up to 2% of their Net Demand and Time Liabilities (NDTL).
- MSF was introduced by the RBI in 2011 as part of its Liquidity Adjustment Facility framework revision.
- The MSF rate forms the floor of the LAF corridor, below which overnight market rates should not fall.
Three of the four statements are correct. The MSF rate equals the Repo Rate plus 25 basis points, a penal rate above Repo for emergency overnight borrowing that discourages casual use, banks can dip into SLR securities, borrowing against government securities held beyond the SLR minimum up to 2% of NDTL, providing a genuine emergency liquidity buffer unavailable through regular LAF repos, and MSF was introduced in May 2011 as part of the RBI's revised monetary policy operating framework alongside formalisation of the LAF corridor. The MSF rate actually forms the ceiling, not the floor, of the LAF corridor, since the Standing Deposit Facility rate forms the floor at 25 bps below Repo, with the corridor running from the SDF rate as floor, through the Repo Rate in the middle, to the MSF rate as ceiling.
Reason (R): Opening a bank account alone does not guarantee financial inclusion — meaningful inclusion requires regular usage, access to credit, insurance, and investment products, which depend on financial literacy, proximity to banking services, and viable economic activity among account holders.
Both A and R are correct, and R directly explains A. Despite PMJDY's remarkable success in account opening numbers, RBI and government reports consistently noted that a large share of accounts remained zero-balance or dormant in the years following 2014, a well-documented gap between account ownership and account usage. The phenomenon of dormant accounts directly reflects what R describes, since account opening is merely the first step, and without financial literacy, nearby banking touchpoints such as Business Correspondents and ATMs, income-generating activity, and access to credit and insurance, accounts remain unused; the DBT linkage helped activate many accounts, but the structural gap R describes is precisely why dormancy persisted, making R the direct causal explanation for A.
