Q1 | RBI — Economic Capital Framework (Current + Trap)

Consider the following statements regarding the Reserve Bank of India's Economic Capital Framework:

1. It was adopted based on the recommendations of the Bimal Jalan Committee.
2. The Contingent Risk Buffer (CRB) is maintained in the range of 5.5% to 6.5% of the balance sheet.
3. The surplus transferred by RBI to the Government is technically called "dividend" under Section 47 of the RBI Act.

How many of the above statements are correct? (a) Only one      (b) Only two      (c) All three      (d) None

Q2 | Payments Regulatory Board (Current Affairs)

With reference to the Payments Regulatory Board recently constituted by the RBI, consider the following statements:

1. It is a statutory body under the Payment and Settlement Systems Act, 2007.
2. It is chaired by the Deputy Governor of the RBI in charge of Payment and Settlement Systems.
3. Three of its members are nominated by the Central Government.

Which of the statements given above is/are correct? (a) 1 and 2 only      (b) 1 and 3 only      (c) 2 and 3 only      (d) 1, 2 and 3

Q3 | Monetary Policy Committee — Structure (Repeated Theme)

With reference to the Monetary Policy Committee (MPC) constituted under the RBI Act, 1934, consider the following statements:

1. It consists of six members, with three members appointed by the Central Government.
2. The quorum for a meeting of the MPC is four members including the Governor.
3. The MPC is legally required to hold a minimum of six meetings in a year.

Which of the statements given above is/are correct? (a) 1 and 2 only      (b) 2 and 3 only      (c) 1 only      (d) 1, 2 and 3

Q4 | Standing Deposit Facility (SDF) — New Instrument

With reference to the Standing Deposit Facility (SDF) introduced by the RBI, consider the following statements:

1. The SDF rate forms the floor of the Liquidity Adjustment Facility (LAF) corridor.
2. Unlike the reverse repo, the SDF does not require government securities as collateral.
3. The SDF rate is always 25 basis points above the repo rate.

Which of the statements given above is/are correct? (a) 1 and 2 only      (b) 2 and 3 only      (c) 1 and 3 only      (d) 1, 2 and 3

Q5 | Sterilisation (Repeated Theme from 2023)

In the context of the Reserve Bank of India, the term "sterilisation" refers to: (a) The process of regulating non-banking financial companies to prevent systemic risk (b) The use of open market operations to offset the monetary impact of its foreign exchange interventions (c) The mandatory conversion of foreign portfolio investments into Indian rupees through authorised dealers (d) The withdrawal of old currency notes from circulation to combat counterfeit currency

Q6 | Money Supply — Conceptual (Repeated Theme)

Consider the following scenario: A person transfers ₹5 lakh from a savings deposit in a commercial bank to a fixed deposit in the same bank. Which of the following is the most likely effect of this transaction? (a) Both narrow money (M1) and broad money (M3) decrease (b) Narrow money (M1) decreases but broad money (M3) remains unchanged (c) Both M1 and M3 remain unchanged (d) M1 remains unchanged but M3 increases

Q7 | Monetary Policy Tools (Application-Based)

If the Reserve Bank of India decides to pursue an expansionary monetary policy, which of the following measures would it LEAST LIKELY adopt?

1. Conducting open market purchase of government securities
2. Increasing the Marginal Standing Facility (MSF) rate
3. Reducing the Cash Reserve Ratio (CRR)
4. Conducting a dollar-rupee buy/sell swap

Select the correct answer using the code given below: (a) 1 only      (b) 2 only      (c) 3 only      (d) 4 only

Q8 | Money Multiplier (Repeated Theme from 2019, 2021)

With reference to the "money multiplier" in an economy, consider the following statements:

1. An increase in the Cash Reserve Ratio leads to a decrease in the money multiplier.
2. An increase in the banking habit of the people tends to increase the money multiplier.
3. The money multiplier is defined as the ratio of narrow money (M1) to reserve money (M0).

Which of the statements given above is/are correct? (a) 1 and 2 only      (b) 2 and 3 only      (c) 1 only      (d) 1, 2 and 3

Q9 | Inflationary Methods of Deficit Financing (Repeated 2013, 2021)

Arrange the following methods of financing government deficit in the order of most inflationary to least inflationary:

1. Creating new money
2. Borrowing from commercial banks
3. Borrowing from the public

Select the correct answer using the code given below: (a) 1-2-3      (b) 2-1-3      (c) 3-2-1      (d) 1-3-2

Q10 | NPCI and Digital Payments (Current Affairs)

With reference to the National Payments Corporation of India (NPCI), consider the following statements:

1. It is a statutory body established under the Payment and Settlement Systems Act, 2007.
2. It was set up as a joint initiative of the Reserve Bank of India and the Indian Banks' Association.
3. NPCI International Payments Limited (NIPL), a wholly-owned subsidiary of NPCI, promotes UPI and RuPay globally.

Which of the statements given above is/are correct? (a) 1 and 2 only      (b) 2 and 3 only      (c) 1 and 3 only      (d) 1, 2 and 3

Q11 | Priority Sector Lending (Updated 2025)

With reference to Priority Sector Lending (PSL) norms issued by the RBI, consider the following statements:

1. The PSL target for Small Finance Banks is 75% of Adjusted Net Bank Credit.
2. PSL norms apply to banks but not to NBFCs.
3. Banks that exceed their PSL targets can sell Priority Sector Lending Certificates (PSLCs) to banks that fall short.

How many of the above statements are correct? (a) Only one      (b) Only two      (c) All three      (d) None

Q12 | RBI's Exchange Rate Management (Cross-Linkage)

Consider the following scenario: The US Federal Reserve significantly reduces its benchmark interest rate. In this context, which of the following is the most likely action by the Reserve Bank of India? (a) Selling US dollars in the foreign exchange market to prevent rupee depreciation (b) Buying US dollars in the foreign exchange market to manage excessive rupee appreciation (c) Increasing the repo rate to attract foreign capital inflows (d) Selling government securities through open market operations to reduce money supply