Static Quiz 05 February 2024 (Economy)
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Static Quiz 05 February 2024 (Economy)
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- Question 1 of 5
1. Question
Which among the following is a temporary loan facility provided by the RBI to the centre and state/UT governments as a banker?
CorrectRBI also provides “Ways and Means Advances” (WMA) – it is a temporary loan facility to the centre and state/UT governments as a banker to government.
IncorrectRBI also provides “Ways and Means Advances” (WMA) – it is a temporary loan facility to the centre and state/UT governments as a banker to government.
- Question 2 of 5
2. Question
Which among the following are sources of income of RBI?
1) Income from investing Foreign Currency Assets
2) Interest on the holding of Government bonds
3) Lending at Repo rate to banks
4) Seigniorage
Which of the above statements is/are correct?CorrectRBI’s sources of Income and Economic Capital Framework
The following are the various sources of income of RBI:
• The Foreign Currency Assets (FCA) are around 90% of the Forex reserves. This FCA RBI has invested in US govt. bonds and it earns interest on that. It has also deposited some FCA with other Central Banks.
• When RBI purchase Indian Govt. bonds from the OMO, then it earns interest on the holding of govt bonds/securities
• Lending at Repo rate to banks
• RBI acts as ‘Debt Manager’ of Central Govt and State Govt for which it gets commission/income.
• SeigniorageIncorrectRBI’s sources of Income and Economic Capital Framework
The following are the various sources of income of RBI:
• The Foreign Currency Assets (FCA) are around 90% of the Forex reserves. This FCA RBI has invested in US govt. bonds and it earns interest on that. It has also deposited some FCA with other Central Banks.
• When RBI purchase Indian Govt. bonds from the OMO, then it earns interest on the holding of govt bonds/securities
• Lending at Repo rate to banks
• RBI acts as ‘Debt Manager’ of Central Govt and State Govt for which it gets commission/income.
• Seigniorage - Question 3 of 5
3. Question
With reference to the Regional Rural Banks (RRB), which among the following statement is incorrect?
CorrectRegional Rural Banks (RRB) were established in 1975 under the provisions of the Regional Rural Banks Act, 1976 with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. RRBs are owned by the Central government, concerned State government and the sponsor bank in proportion of 50:15:35 (each RRB is sponsored by a particular bank). RRBs need to provide 75% of the lending to priority sectors. RRBs are under the supervision of NABARD.
IncorrectRegional Rural Banks (RRB) were established in 1975 under the provisions of the Regional Rural Banks Act, 1976 with a view to developing the rural economy by providing, for the purpose of development of agriculture, trade, commerce, industry and other productive activities in the rural areas, credit and other facilities, particularly to small and marginal farmers, agricultural labourers, artisans and small entrepreneurs. RRBs are owned by the Central government, concerned State government and the sponsor bank in proportion of 50:15:35 (each RRB is sponsored by a particular bank). RRBs need to provide 75% of the lending to priority sectors. RRBs are under the supervision of NABARD.
- Question 4 of 5
4. Question
The minimum rate below which Scheduled Commercial Banks cannot lend is called?
CorrectBase Rate:
Base Rate was introduced in July 2010 replacing the Benchmark Prime Lending Rate (BPLR) system. Base Rate is the minimum rate below which Scheduled Commercial Banks cannot lend. RBI publishes guidelines for calculation of Base Rate and every bank calculates its own base rate.
From 1st April 2016, RBI introduced a new methodology for calculation of the Base Rates based on marginal cost of funds rather than average cost of funds. This new methodology is called Marginal Cost of Funds based Lending Rate (MCLR) or Base Rate based on marginal cost of funds.
IncorrectBase Rate:
Base Rate was introduced in July 2010 replacing the Benchmark Prime Lending Rate (BPLR) system. Base Rate is the minimum rate below which Scheduled Commercial Banks cannot lend. RBI publishes guidelines for calculation of Base Rate and every bank calculates its own base rate.
From 1st April 2016, RBI introduced a new methodology for calculation of the Base Rates based on marginal cost of funds rather than average cost of funds. This new methodology is called Marginal Cost of Funds based Lending Rate (MCLR) or Base Rate based on marginal cost of funds.
- Question 5 of 5
5. Question
Which among the following statement is incorrect with reference to the Payments Bank?
CorrectWhat are Payment Banks?
A payments bank (Airtel Payments Bank, India Post Payments Bank, etc.) is like any other bank, but operating on a smaller or restricted scale.
Credit risk is not involved with the Payments Bank. It can carry out most banking operations but cannot advance loans or issue credit cards.
It can accept demand deposits only i.e. savings and current accounts, not time deposits.
The Payment Banks cannot set up subsidiaries to undertake non-banking financial services activities.
A committee headed by Dr. Nachiket Mor recommended setting up of ‘Payments Bank’ to cater to the lower income groups and small businesses.
Benefits: Expansion of rural banking, access to diversified services, social & financial inclusion are some of the benefits.
Challenges: Lack of customer awareness, lack of incentives for agents, lack of infrastructure, technological issues are some of the challenges.IncorrectWhat are Payment Banks?
A payments bank (Airtel Payments Bank, India Post Payments Bank, etc.) is like any other bank, but operating on a smaller or restricted scale.
Credit risk is not involved with the Payments Bank. It can carry out most banking operations but cannot advance loans or issue credit cards.
It can accept demand deposits only i.e. savings and current accounts, not time deposits.
The Payment Banks cannot set up subsidiaries to undertake non-banking financial services activities.
A committee headed by Dr. Nachiket Mor recommended setting up of ‘Payments Bank’ to cater to the lower income groups and small businesses.
Benefits: Expansion of rural banking, access to diversified services, social & financial inclusion are some of the benefits.
Challenges: Lack of customer awareness, lack of incentives for agents, lack of infrastructure, technological issues are some of the challenges.
