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Money and Banking PYQs – Economics, SSC & Railway

107 Money and Banking (Economics) questions asked in recent SSC and Railway exams, newest first, with exam, date & shift, answers and solutions.

📚 107 questionsSSC 76 · Railway 31
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SSC Stenographer 2026 – 12 September 2026 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q1. During periods of excess liquidity in the banking system, what role does the reverse repo rate play in the RBI's monetary policy operations, and what impact does it have on commercial banks?

  1. (a) It encourages banks to borrow more from the RBI and lend to the public
  2. (b) It allows the RBI to absorb surplus liquidity by offering an interest rate on funds parked by banks, thus discouraging excessive lending
  3. (c) It forces banks to invest solely in foreign assets, reducing inflation risk
  4. (d) It mandates that all banks maintain higher CRR, thereby tightening liquidity
Answer & solution

Answer: (b) It allows the RBI to absorb surplus liquidity by offering an interest rate on funds parked by banks, thus discouraging excessive lending

Answer: Option 2 — It allows the RBI to absorb surplus liquidity by offering an interest rate on funds parked by banks, thus discouraging excessive lending
The reverse repo rate is the rate at which the RBI borrows from banks — banks park their surplus cash with the RBI against government securities and earn interest.
When the system has too much money, a higher reverse repo rate makes parking funds with the RBI attractive, so liquidity is absorbed and banks lend less freely.
Revision note — Repo, reverse repo and the liquidity corridor
• Repo rate: the RBI lends to banks against government securities — the main policy rate.
• It is set by the Monetary Policy Committee (MPC) of six members, with an inflation target of 4 per cent (± 2 per cent).
• Reverse repo rate: the RBI borrows from banks; it has stayed at 3.35 per cent since May 2020 and is now used only for occasional variable-rate auctions.
• Since April 2022 the floor of the corridor is the Standing Deposit Facility (SDF) at repo minus 25 basis points, where banks park money without collateral.
• The ceiling is the Marginal Standing Facility (MSF) at repo plus 25 basis points.
• The repo rate stood at 5.25 per cent after the MPC's cut of 25 basis points on 5 December 2025.
• Both operations run under the Liquidity Adjustment Facility (LAF), introduced in June 2000 on the recommendation of the Narasimham Committee II.
• Other quantitative tools: CRR (cash kept with the RBI, no interest), SLR (liquid assets kept by the bank itself), bank rate and open market operations.
• Moral suasion and margin requirements are qualitative tools.
Do not mix these up
• Repo vs reverse repo — in a repo the RBI lends and injects liquidity; in a reverse repo the RBI borrows and absorbs liquidity. The reverse repo rate is always the lower of the two.
• Reverse repo vs SDF — both absorb liquidity, but the reverse repo needs government securities as collateral while the SDF does not.
Also asked from this topic: the rate at which the RBI borrows from banks (reverse repo rate); the RBI's main liquidity tool (repo rate); the effect of a repo rate rise (credit becomes costlier).
SSC Stenographer 2026 – 10 September 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q2. Which of the following was a major recommendation of the Narasimham Committee (1991) in the context of financial sector reforms?

  1. (a) Expansion of directed credit programs and tighter interest rate controls
  2. (b) Nationalization of private banks to ensure state dominance
  3. (c) Reduction of statutory pre-emptions like CRR and SLR to enhance credit availability
  4. (d) Complete privatization of all public sector banks
Answer & solution

Answer: (c) Reduction of statutory pre-emptions like CRR and SLR to enhance credit availability

Answer: Option 3 — Reduction of statutory pre-emptions like CRR and SLR to enhance credit availability
Statutory pre-emption is the slice of a bank's deposits the law takes away before the bank can lend anything.
By 1991 the SLR stood at 38.5 per cent and the CRR near 15 per cent, so over half of every deposit was locked up; the committee wanted both cut so that banks could lend.
Revision note — Narasimham Committee and banking reform
• The committee was chaired by M. Narasimham, a former Governor of the RBI; the first report came in 1991 and a second committee reported in 1998.
• It recommended cutting the SLR from 38.5 per cent to 25 per cent over about five years and bringing the CRR down towards 3 to 5 per cent.
• It introduced prudential norms — income recognition, asset classification and provisioning — and with them the formal idea of a non-performing asset (NPA).
• It set a capital adequacy ratio of 8 per cent by March 1996; Narasimham II (1998) raised the target to 9 per cent and urged mergers of strong banks.
• It opened the door to new private sector banks and led to the Board for Financial Supervision (1994) and Debt Recovery Tribunals under the RDDBFI Act, 1993.
• Directed credit was to be reduced, not expanded, and interest rates deregulated — the opposite of tighter control.
• Statutory limits today: the SLR may not exceed 40 per cent under the Banking Regulation Act, and the ceiling and floor on the CRR were removed by the 2006 amendment to the RBI Act.
Do not mix these up
• CRR vs SLR — the CRR is kept in cash with the RBI and earns nothing; the SLR is kept by the bank itself in cash, gold or approved government securities.
• Narasimham vs Chelliah — both committees date from 1991, but Narasimham dealt with the banking sector and Raja J. Chelliah with tax reform.
• Narasimham I (1991) vs Narasimham II (1998) — the first designed the reform; the second reviewed it and pushed consolidation and stronger capital.
Also asked from this topic: the committee behind the SLR and CRR cuts of the 1990s (Narasimham Committee); the major banking reform after 1991 (deregulation of interest rates).
SSC Stenographer 2026 – 9 September 2026 Shift 1 · Digital payments (UPI, NEFT, RTGS, IMPS)

Q3. Which of the following statements best explains the transformative impact of the Unified Payments Interface (UPI) on India's digital payments ecosystem as of 2025, and what challenges does it face in achieving inclusive financial digitization?

  1. (a) UPI replaced all forms of cash transactions by mandating digital payments for all retail purchases above ₹1000
  2. (b) UPI enables instant, interoperable, and cost-free fund transfers across banks via mobile devices, significantly boosting financial inclusion; however, challenges like cybersecurity risks, digital literacy gaps, and rural internet connectivity continue to limit its universal adoption
  3. (c) UPI operates solely on QR-code based transactions and does not support mobile app or bank-to-bank transfers
  4. (d) UPI transactions are limited to government subsidies and welfare payments, with minimal use in private sector payments
Answer & solution

Answer: (b) UPI enables instant, interoperable, and cost-free fund transfers across banks via mobile devices, significantly boosting financial inclusion; however, challenges like cybersecurity risks, digital literacy gaps, and rural internet connectivity continue to limit its universal adoption

Answer: Option 2 — UPI gives instant, interoperable, cost-free transfers across banks, though cyber risk, digital literacy and rural connectivity still limit it
UPI's transformation is that bank-to-bank transfer became instant, interoperable and free to the user on an ordinary phone.
What is left unsolved is cyber fraud, low digital literacy and patchy rural internet.
Revision note — Unified Payments Interface
• Launched on 11 April 2016 by the National Payments Corporation of India (NPCI). It is built on IMPS, runs 24×7, and is addressed by a VPA / UPI ID.
• NPCI was set up in 2008 under the Payment and Settlement Systems Act, 2007, promoted by the RBI and the Indian Banks' Association.
• NPCI runs UPI, UPI Lite, RuPay, IMPS, NACH and AePS. NEFT and RTGS are run by the RBI, not by NPCI.
• Free to the user because MDR on UPI person-to-merchant payments was set at zero from 1 January 2020; banks are compensated through incentive schemes instead.
• UPI carries over 80 per cent of India's digital-payment transaction volume and is the largest real-time payment system in the world.
• Inclusion tools: UPI 123PAY for feature phones (2022), UPI Lite for small offline payments, UPI AutoPay for recurring mandates.
• International links include Singapore's PayNow (February 2023), the UAE, Bhutan, Nepal, Sri Lanka, Mauritius and France.
Do not mix these up
• UPI and IMPS vs NEFT and RTGS — UPI and IMPS are NPCI systems settling instantly; NEFT and RTGS are RBI systems.
• Interoperable vs cost-free — interoperable means any UPI app can pay any bank account; cost-free refers to zero MDR, a separate policy decision.
• UPI vs DBT — subsidies reach beneficiaries mainly through the APBS / NACH route, not UPI, which is dominated by person-to-person and person-to-merchant payments.
Also asked from this topic: the payment system with the largest share of digital transaction volume (UPI); the facilities run by NPCI and not the RBI (AePS and UPI Lite, not NEFT).
SSC Stenographer 2026 – 9 September 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q4. Which sector saw the entry of new private Indian and foreign banks due to post-1991 reforms?

  1. (a) Textile
  2. (b) Banking
  3. (c) Mining
  4. (d) Railways
Answer & solution

Answer: (b) Banking

Answer: Option 2 — Banking
The 1991 reforms opened the banking sector: on the Narasimham Committee's advice the RBI licensed new private Indian banks and widened the entry of foreign banks.
Textiles and mining were not closed sectors in this sense, and railway operations stayed reserved for the state.
Revision note — Post-1991 financial sector reforms
• The Narasimham Committee, 1991 recommended lower SLR and CRR, capital adequacy and prudential norms, deregulated interest rates and the entry of new private banks.
• The RBI's 1993 guidelines let in new private banks such as UTI Bank (now Axis), ICICI Bank, HDFC Bank and IndusInd Bank.
• Narasimham Committee II (1998) shaped second-generation reforms; the Liquidity Adjustment Facility followed in June 2000, SARFAESI in 2002 and the IBC in 2016.
• Banks had earlier been nationalised in 1969 (14 banks) and 1980 (6 more), taking the total to 20.
• The 1991 reforms cut the industries reserved for the public sector from 17 to 8; today only atomic energy and railway operations remain.
• After 1991 the fastest-growing sectors were banking and information technology, while defence, space, railways and nuclear energy stayed largely with the state.
Do not mix these up
• Nationalisation vs liberalisation — 1969 and 1980 took private banks into state hands; 1991 opened the door to new private banks again.
• Narasimham Committee I (1991) vs II (1998) — the first designed the opening up, the second the NPA and prudential framework.
Also asked from this topic: the committee that recommended banking liberalisation in 1991 (Narasimham Committee); the industries that grew after 1991 (banking and IT); the banks nationalised in 1980 (6).
RRB Group D 2025-26 – 11 August 2026 Shift 2 · Digital payments (UPI, NEFT, RTGS, IMPS)

Q5. According to the Reserve Bank of India’s Payments System Report released in 2026, which payment system accounted for the highest share of transaction volume in India?

  1. (a) National Electronic Funds Transfer (NEFT)
  2. (b) Immediate Payment Service (IMPS)
  3. (c) Real-Time Gross Settlement (RTGS)
  4. (d) Unified Payments Interface (UPI)
Answer & solution

Answer: (d) Unified Payments Interface (UPI)

Answer: Option 4 – Unified Payments Interface (UPI).
• Per the RBI Payments System Report (2026),UPIhad the highest share of transaction volume.
RRB Group D 2025-26 – 6 August 2026 Shift 3 · Monetary Policy Committee

Q6. Which institutional body of the Reserve Bank of India decided to reduce the repo rate to 5.25 per cent in December 2025?

  1. (a) Governor’s Office
  2. (b) Board of Directors
  3. (c) Monetary Policy Committee
  4. (d) Financial Stability Unit
Answer & solution

Answer: (c) Monetary Policy Committee

Answer: Option 3 — Monetary Policy Committee
The RBI'sMPCdecides the repo rate → Option 3.
RRB NTPC UG CBT-1 2025-26 – 18 June 2026 Shift 1 · Currency and coins (printing, security, denominations)

Q7. Which of the following was NOT a key objective of the demonetisation initiative implemented in November 2016?

  1. (a) Reducing counterfeit currency and terror financing
  2. (b) Increasing reliance on cash transactions
  3. (c) Promoting digital payments and a cashless economy
  4. (d) Curbing corruption and black money
Answer & solution

Answer: (b) Increasing reliance on cash transactions

Topic:Demonetisation 2016 - Key Objectives
On November 8, 2016, ₹500 and ₹1000 notes were demonetised.
Main Objectives:
1. Eliminate black money and corruption
2. Curb counterfeit currency and terror financing
3. Promote digital payments and cashless economy
4. Formalize the economy and increase tax base
The initiative aimed toreduce cash dependency, not increase it.
Answer: Option 2 → Increasing reliance on cash transactions
RRB NTPC UG CBT-1 2025-26 – 15 June 2026 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q8. Which tool is most commonly used by the Reserve Bank of India to regulate liquidity in the economy?

  1. (a) Government subsidies
  2. (b) Tariff imposition
  3. (c) Repo rate adjustment
  4. (d) Fiscal stimulus
Answer & solution

Answer: (c) Repo rate adjustment

Topic: Monetary Policy Tools of RBI
RBI usesRepo Rateas primary tool for liquidity control.
Repo Rate = Rate at which RBI lends to commercial banks.
↑ Repo Rate → Borrowing costly → Less liquidity
↓ Repo Rate → Borrowing cheap → More liquidity
Other options: Subsidies, tariffs, fiscal stimulus are government tools, not RBI's monetary tools.
Answer: Option 3 → Repo rate adjustment
SSC GD 2026 – 30 May 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q9. What was included in the banking sector reforms (1991) recommended by the Narasimham Committee?

  1. (a) Capital adequacy norms
  2. (b) Interest rate deregulation
  3. (c) Reduction in Non-Performing Assets (NPAs)
  4. (d) All of the above
Answer & solution

Answer: (d) All of the above

Correct Answer: All of the above (Option 4)
The Narasimham Committee on Financial System (1991) recommended a comprehensive set of banking sector reforms as part of India's economic liberalisation. These included:
1. Capital Adequacy Norms: Banks required to maintain a minimum Capital-to-Risk-weighted Assets Ratio (CRAR) of 8%.
2. Interest Rate Deregulation: Freeing lending and deposit rates from government control to promote competition.
3. Reduction in NPAs: Improving asset classification norms and recovery mechanisms to reduce bad loans.
All three were core recommendations of the committee, making 'All of the above' correct.
SSC GD 2026 – 22 May 2026 Shift 3 · Commercial banks and bank nationalisation

Q10. In the context of mega merger of public sector banks, Andhra Bank was amalgamated into _____.

  1. (a) Union Bank of India
  2. (b) Indian Bank
  3. (c) Punjab National Bank
  4. (d) Canara Bank
Answer & solution

Answer: (a) Union Bank of India

Correct Answer: Union Bank of India — Option (a)
Andhra Bank was amalgamated into Union Bank of India as part of the 2020 mega bank merger. About the 2019-2020 Public Sector Bank Mergers: In August 2019, Finance Minister Nirmala Sitharaman announced the merger of 10 public sector banks into 4, effective April 1, 2020; The four merger groups: Group 1: Punjab National Bank (anchor) + Oriental Bank of Commerce + United Bank of India; Group 2: Canara Bank (anchor) + Syndicate Bank; Group 3: Union Bank of India (anchor) + Andhra Bank + Corporation Bank; Group 4: Indian Bank (anchor) + Allahabad Bank; Andhra Bank merger: Andhra Bank was merged into UNION BANK OF INDIA (along with Corporation Bank); The anchor bank (Union Bank of India) is the surviving entity; Andhra Bank's brand was dissolved; About Union Bank of India: Founded: 1919; Headquarters: Mumbai; Post-merger, Union Bank of India became one of India's larger public sector banks; Earlier mergers (2019): Bank of Baroda + Vijaya Bank + Dena Bank (effective April 1, 2019); SBI merger (2017): SBI absorbed 5 associate banks (State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of Travancore) and Bharatiya Mahila Bank.
Option (b) Indian Bank — Incorrect: Indian Bank was a DIFFERENT merger — Allahabad Bank was merged into Indian Bank (effective April 1, 2020); Andhra Bank was merged into Union Bank of India, NOT Indian Bank. The candidate selected this incorrect option.
Option (c) Punjab National Bank — Incorrect: Punjab National Bank absorbed Oriental Bank of Commerce and United Bank of India — NOT Andhra Bank; Andhra Bank went into Union Bank of India.
Option (d) Canara Bank — Incorrect: Canara Bank absorbed Syndicate Bank — NOT Andhra Bank; Andhra Bank (along with Corporation Bank) was merged into Union Bank of India effective April 1, 2020.
SSC GD 2026 – 20 May 2026 Shift 3 · Currency and coins (printing, security, denominations)

Q11. Which of the following is NOT a denomination of the notes demonetized in 1978?

  1. (a) 500
  2. (b) 1000
  3. (c) 5000
  4. (d) 10000
Answer & solution

Answer: (a) 500

Correct Answer: 500 — Option (a)
The ₹500 note was NOT a denomination demonetized in 1978. In 1978, the Janata Party government under Prime Minister Morarji Desai demonetized high-value currency notes to curb black money and counterfeit currency. The notes demonetized in 1978 were: ₹1000 notes, ₹5000 notes, ₹10,000 notes. The ₹500 note was NOT demonetized in 1978 because at that time, the ₹500 denomination note did not exist in circulation as a high-value note of concern — the demonetization specifically targeted ₹1000, ₹5000, and ₹10,000 notes. Historical context of 1978 demonetization: The High Denomination Bank Notes ( Demonetisation ) Act, 1978 was enacted on January 16, 1978; The ₹500 note only became significant later — it was again demonetized in November 2016 by the Modi government (along with ₹1000 notes); In the 2016 demonetization, both ₹500 and ₹1000 notes were withdrawn from circulation.
Option (b) 1000 — Incorrect: The ₹1000 note WAS one of the denominations demonetized in 1978 under the High Denomination Bank Notes ( Demonetisation ) Act, 1978; so ₹1000 is not the answer to what was NOT demonetized.
Option (c) 5000 — Incorrect: The ₹5000 note WAS one of the denominations demonetized in 1978; it was among the high-value notes targeted by the Morarji Desai government to curb black money.
Option (d) 10000 — Incorrect: The ₹10,000 note WAS one of the denominations demonetized in 1978; it was the highest denomination note at the time and was specifically targeted in the 1978 demonetization.
SSC GD 2026 – 20 May 2026 Shift 3 · Money - functions and types

Q12. Which of the following is considered a legal tender?

  1. (a) Debit card
  2. (b) Coins
  3. (c) Cheque
  4. (d) Credit card
Answer & solution

Answer: (b) Coins

Correct Answer: Coins — Option (b)
Among the given options, coins are considered legal tender. Definition of Legal Tender: Legal tender is any official medium of payment recognized by law that can be offered in payment of a debt, and which a creditor must accept; a creditor is obligated to accept legal tender for the settlement of debts. In India: Currency notes issued by the Reserve Bank of India (RBI) are legal tender; Coins minted by the Government of India (via the India Mint) are also legal tender; Under the Indian Coinage Act, coins in circulation are legal tender for specific amounts. Why the other options are NOT legal tender: Debit cards and credit cards: These are payment instruments/tools — they represent access to funds in a bank account or credit facility; they are not legal tender themselves; a merchant can legally refuse card payments; Cheques: Cheques are negotiable instruments — they are a written instruction to a bank to pay; a creditor can legally refuse payment by cheque; they are not legal tender.
Option (a) Debit card — Incorrect: A debit card is a payment instrument that electronically transfers funds from the holder's bank account; it is NOT legal tender — a seller can legally refuse debit card payment; only currency notes and coins are legal tender in India.
Option (c) Cheque — Incorrect: A cheque is a negotiable instrument — a written order directing a bank to pay a specific amount; it is NOT legal tender — a creditor can legally refuse a cheque; the cheque can also bounce if insufficient funds exist; coins and currency notes are legal tender.
Option (d) Credit card — Incorrect: A credit card is a payment instrument representing a credit facility extended by a bank; it is NOT legal tender — merchants can decline credit card payments; only RBI-issued currency notes and government-minted coins constitute legal tender in India.
SSC GD 2026 – 20 May 2026 Shift 3 · Commercial banks and bank nationalisation

Q13. In the mega merger of public sector banks in 2020, which of the following banks were merged into Indian Bank?

  1. (a) Oriental Bank of Commerce and United Bank of India
  2. (b) Syndicate Bank
  3. (c) Andhra Bank and Corporation Bank
  4. (d) Allahabad Bank
Answer & solution

Answer: (d) Allahabad Bank

Correct Answer: Allahabad Bank — Option (d)
In the mega merger of public sector banks in April 2020, Allahabad Bank was merged into Indian Bank. Complete list of the April 2020 public sector bank mergers (effective April 1, 2020): Punjab National Bank (PNB) + Oriental Bank of Commerce (OBC) + United Bank of India → merged into Punjab National Bank (making it the 2nd largest public sector bank); Canara Bank + Syndicate Bank → merged into Canara Bank (3rd largest PSB); Union Bank of India + Andhra Bank + Corporation Bank → merged into Union Bank of India; Indian Bank + Allahabad Bank → merged into Indian Bank; Bank of Baroda had already merged with Vijaya Bank and Dena Bank in April 2019. About Allahabad Bank: One of India's oldest banks, established in 1865 in Allahabad (now Prayagraj); After the merger, Allahabad Bank's operations were integrated into Indian Bank, making it the 7th largest public sector bank in India; The merger reduced the number of public sector banks from 27 (in 2017) to 12.
Option (a) Oriental Bank of Commerce and United Bank of India — Incorrect: Oriental Bank of Commerce (OBC) and United Bank of India were merged into Punjab National Bank (PNB), NOT into Indian Bank; they are separate mergers in the April 2020 amalgamation exercise.
Option (b) Syndicate Bank — Incorrect: Syndicate Bank was merged into Canara Bank (not Indian Bank) in the April 2020 merger; Syndicate Bank was founded in 1925 and its operations were integrated into Canara Bank.
Option (c) Andhra Bank and Corporation Bank — Incorrect: Andhra Bank and Corporation Bank were merged into Union Bank of India (not Indian Bank) in the April 2020 merger; this amalgamation made Union Bank of India the 5th largest public sector bank in India.
RRB NTPC UG CBT-1 2025-26 – 9 May 2026 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q14. What was a significant objective of the fiscal and monetary policy reforms initiated in India post 1991?

  1. (a) To decrease foreign investment in the financial sector
  2. (b) To maintain fixed interest rates across all financial products
  3. (c) To increase government control over the banking sector
  4. (d) To stabilise the economy by liberalising interest rates and enhancing financial sector efficiency
Answer & solution

Answer: (d) To stabilise the economy by liberalising interest rates and enhancing financial sector efficiency

Topic: Economic Reforms 1991 - Fiscal & Monetary Policy
Key Objectives of 1991 Reforms:
1. Liberalisation of interest rates (ended administered pricing)
2. Enhanced financial sector efficiency through competition
3. Reduced government control, increased private participation
4. Stabilised economy through market-driven mechanisms
Context:1991 Balance of Payment crisis led to LPG reforms
(Liberalisation, Privatisation, Globalisation)
Answer: Option 4 → To stabilise the economy by liberalising interest rates and enhancing financial sector efficiency
RRB NTPC UG CBT-1 2025-26 – 9 May 2026 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q15. In India, which of the following institutions conducts Open Market Operations (OMOs) to manage money supply effectively?

  1. (a) Every state-owned govt. bank
  2. (b) National Bank For Agriculture And Rural Development (NABARD)
  3. (c) Securities and Exchange Board of India (SEBI)
  4. (d) Reserve Bank of India (RBI)
Answer & solution

Answer: (d) Reserve Bank of India (RBI)

Open Market Operations (OMOs)
OMOs are monetary policy tools involving buying/selling of government securities in the open market.
Purpose:Control money supply and liquidity in the economy.
Conducting Authority:Reserve Bank of India (RBI) as the central bank has the exclusive authority to conduct OMOs.
Other institutions: NABARD (rural development), SEBI (securities regulation), commercial banks (banking operations).
Answer: Option 4 → Reserve Bank of India (RBI)
SSC GD 2026 – 8 May 2026 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q16. In the context of money supply in India, which of the following
is NOT a Quantitative tool of the Reserve Bank of India?

  1. (a) Cash Reserve Ratio
  2. (b) Bank rate
  3. (c) Open Market Operations
  4. (d) Moral suasion
Answer & solution

Answer: (d) Moral suasion

Correct Answer: Moral suasion — Option (d)
RBI's monetary policy tools are classified as Quantitative (General) and Qualitative (Selective) tools. Quantitative tools affect the overall money supply in the economy: Cash Reserve Ratio (CRR) — the percentage of deposits banks must keep with RBI; Bank Rate — the rate at which RBI lends to commercial banks for long-term; Open Market Operations (OMO) — buying/selling of government securities; Statutory Liquidity Ratio (SLR); Repo Rate; Reverse Repo Rate. Moral Suasion is a QUALITATIVE tool — RBI persuades banks through persuasion, suggestion, and appeal to follow certain policies without using statutory powers. It is not a quantitative (volume-based) tool.
Option (a) Cash Reserve Ratio — Incorrect to select as the answer: CRR IS a quantitative tool that controls the overall money supply by mandating banks to maintain a fraction of deposits with RBI.
Option (b) Bank rate — Incorrect to select as the answer: Bank rate IS a quantitative tool that influences the cost of credit and overall money supply.
Option (c) Open Market Operations — Incorrect to select as the answer: OMO IS a quantitative tool — when RBI buys securities, money supply increases; when it sells, money supply decreases.
SSC GD 2026 – 5 May 2026 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q17. Which of the following were included in the post-1991 financial sector reforms in India?

  1. (a) Entry of private banks
  2. (b) Strengthening of capital markets
  3. (c) Deregulation of interest rates
  4. (d) All of these
Answer & solution

Answer: (d) All of these

Correct Answer: All of these — Option (d)
The post-1991 financial sector reforms in India (recommended by the Narasimham Committee) included a comprehensive overhaul: (1) Entry of private banks — new private sector banks like ICICI Bank and HDFC Bank were allowed; (2) Strengthening capital markets — SEBI was strengthened and stock markets were modernized; (3) Deregulation of interest rates — banks were given freedom to set their own lending and deposit rates. All three were core components of the financial liberalization that accompanied the 1991 economic reforms.
Option (a) Entry of private banks — Partially correct but incomplete; all three options were part of the reforms.
Option (b) Strengthening of capital markets — Partially correct but incomplete.
Option (c) Deregulation of interest rates — Partially correct but incomplete.
SSC GD 2026 – 30 April 2026 Shift 3 · Commercial banks and bank nationalisation

Q18. The bank nationalization in 1969 was primarily aimed at:

  1. (a) Promoting exports
  2. (b) Controlling inflation
  3. (c) Reducing foreign investment
  4. (d) Extending credit to agriculture, small industries, and priority sectors
Answer & solution

Answer: (d) Extending credit to agriculture, small industries, and priority sectors

Correct Answer: Extending credit to agriculture, small industries, and priority sectors — Option (d)
On 19 July 1969, Prime Minister Indira Gandhi nationalized 14 major commercial banks. The primary objective was to direct bank credit towards agriculture, small-scale industries, and other priority sectors that were previously neglected by private banks, which largely served urban and industrial clients. This was also aimed at reducing economic inequality and expanding financial inclusion.
Option (a) Promoting exports — Incorrect: Export promotion was not the stated primary aim of bank nationalization in 1969.
Option (b) Controlling inflation — Incorrect: Controlling inflation was not the primary driver of bank nationalization.
Option (c) Reducing foreign investment — Incorrect: Nationalization of domestic banks had no direct connection to reducing foreign investment.
RRB NTPC GL CBT-1 2025-26 – 16 March 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q19. Which of the following reflects the structural adjustment in India’s monetary policy after the 1991 economic reforms?

  1. (a) Controlled lending rates for agriculture and MSMEs
  2. (b) Expansion of currency supply through deficit financing
  3. (c) Market-determined interest rates with reduced RBI intervention
  4. (d) Elimination of open market operations as a regulatory tool
Answer & solution

Answer: (c) Market-determined interest rates with reduced RBI intervention

Before 1991:
• Interest rates were administered (fixed) by RBI/Government.
• Directed lending to priority sectors at concessional rates.
• No market-determined rates.
After 1991 structural adjustment:
• Interest rates were gradually deregulated.
• Banks were allowed to fix their own lending and deposit rates.
• RBI shifted to indirect instruments (CRR, SLR, Repo Rate, OMO).
• MCLR (Marginal Cost of Funds based Lending Rate) introduced in 2016.
This reflects: Market-determined interest rates with reduced RBI intervention.
Answer: Option 3 → Market-determined interest rates with reduced RBI intervention.
RRB JE CBT-1 2025-26 – 20 February 2026 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q20. Open Market Operations (OMOs) are conducted by RBI to control ____________.

  1. (a) State budgets
  2. (b) Money supply
  3. (c) Foreign trade
  4. (d) Corporate profits
Answer & solution

Answer: (b) Money supply

Open Market Operations (OMOs) are tools used by the Reserve Bank of India (RBI).
They involve buying and selling government securities in the open market.
This influences the liquidity in the banking system and hence controls the money supply.
When RBI buys securities, it injects money, increasing money supply.
When RBI sells securities, it withdraws money, reducing money supply.
Therefore, OMOs are conducted primarily to regulate money supply in the economy.
Final answer: Option 2
RRB JE CBT-1 2025-26 – 20 February 2026 · RBI - history and functions

Q21. Which of the following statements is/are correct about a non-Constitutional body, Reserve Bank of India (RBI)?
(1) RBI performs several crucial functions like regulating and supervising the banking system, managing the currency and credit system and managing foreign exchange reserves.
(2) RBI was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934.
(3) The Central Office of the RBI was initially established in Kolkata but was permanently moved to Mumbai in 1937

  1. (a) (2) and (3) only
  2. (b) (1) and (2) only
  3. (c) (1) only
  4. (d) (1), (2) and (3)
Answer & solution

Answer: (d) (1), (2) and (3)

All the given statements about the Reserve Bank of India (RBI) are correct.
Statement (1): RBI does perform crucial functions such as regulating and supervising the banking system, managing currency and credit, and managing foreign exchange reserves.
Statement (2): RBI was established on 1st April 1935 under the Reserve Bank of India Act, 1934.
Statement (3): The central office of the RBI was initially in Kolkata and was permanently moved to Mumbai in 1937.
Hence, the correct answer is option 4, as all three statements are true.
SSC MTS 2025 – 17 February 2026 Shift 2 · Money supply measures (M0-M4)

Q22. Which of the following is NOT another name of the currency issued by the central bank of India?

  1. (a) High powered money
  2. (b) Reserved money
  3. (c) Line of credit
  4. (d) Monetary base
Answer & solution

Answer: (c) Line of credit

'Line of credit' is NOT another name for the currency issued by the Reserve Bank of India. High powered money, Reserved money, and Monetary base are all alternative names for RBI-issued currency (also called Reserve Money or M0). A 'line of credit' is a credit facility extended by a bank, not a form of currency.
SSC MTS 2025 – 13 February 2026 Shift 1 · Commercial banks and bank nationalisation

Q23. Which of the following bank was NOT nationalised in 1980?

  1. (a) New Bank of India Limited
  2. (b) Oriental Bank of Commerce Limited
  3. (c) Punjab and Sind Bank Limited
  4. (d) Syndicate Bank
Answer & solution

Answer: (d) Syndicate Bank

Correct Answer: Option 4 – Syndicate Bank
In 1980, the Government of India nationalised 6 more commercial banks: Andhra Bank, Corporation Bank, New Bank of India, Oriental Bank of Commerce, Punjab and Sind Bank, and Vijaya Bank. Syndicate Bank was nationalised earlier, in 1969, along with the initial batch of 14 banks. So Syndicate Bank was NOT nationalised in 1980.
Why other options are wrong:
Option 1 (New Bank of India): Was nationalised in 1980. It was later merged with Punjab National Bank in 1993.
Option 2 (Oriental Bank of Commerce): Was nationalised in 1980.
Option 3 (Punjab and Sind Bank): Was nationalised in 1980.
SSC MTS 2025 – 13 February 2026 Shift 2 · Currency and coins (printing, security, denominations)

Q24. In which of the following years was the Mahatma Gandhi Series of notes launched?

  1. (a) 1976
  2. (b) 1996
  3. (c) 1992
  4. (d) 1984
Answer & solution

Answer: (b) 1996

The Mahatma Gandhi Series of banknotes was launched in 1996 by the Reserve Bank of India. This series features the portrait of Mahatma Gandhi on the obverse and replaced the earlier Mahatma Gandhi Series (1987–1996) with enhanced security features.
Why other options are incorrect:
- 1976: The Mahatma Gandhi Series had not yet been introduced at this time.
- 1992: The series was not launched in 1992.
- 1984: Incorrect; this predates the series.
SSC MTS 2025 – 12 February 2026 Shift 1 · Commercial banks and bank nationalisation

Q25. How many banks in India were nationalised in the year 1969?

  1. (a) 28
  2. (b) 14
  3. (c) 9
  4. (d) 35
Answer & solution

Answer: (b) 14

Correct Answer: Option 2 – 14
In 1969, under Prime Minister Indira Gandhi, 14 major commercial banks were nationalised . This was a landmark economic decision to direct bank credit towards priority sectors like agriculture and small industries.
Why other options are wrong:
Option 1 (28): Incorrect number — no such nationalisation event involved 28 banks.
Option 3 (9): In 1980, 6 more banks were nationalised (not 9), making the total 20 nationalised banks.
Option 4 (35): This number has no historical basis in Indian banking nationalisation .
SSC MTS 2025 – 12 February 2026 Shift 1 · Commercial banks and bank nationalisation

Q26. In the mega consolidation in public sector banks in 2020, which of the following banks were merged into Union Bank of India?

  1. (a) Oriental Bank of Commerce and United Bank of India
  2. (b) Syndicate Bank
  3. (c) Andhra Bank and Corporation Bank
  4. (d) Allahabad Bank
Answer & solution

Answer: (c) Andhra Bank and Corporation Bank

Correct Answer: Option 3 – Andhra Bank and Corporation Bank
In the mega bank consolidation effective from April 1, 2020, the Government of India merged Andhra Bank and Corporation Bank into Union Bank of India, making Union Bank a larger entity. This was part of a broader consolidation exercise that reduced the number of public sector banks.
Other mergers in 2020 for reference:
- Oriental Bank of Commerce + United Bank of India → Punjab National Bank
- Syndicate Bank → Canara Bank
- Allahabad Bank → Indian Bank
Why other options are wrong:
Option 1: OBC and United Bank were merged into Punjab National Bank, not Union Bank.
Option 2: Syndicate Bank was merged into Canara Bank.
Option 4: Allahabad Bank was merged into Indian Bank, not Union Bank.
SSC MTS 2025 – 6 February 2026 Shift 1 · Currency and coins (printing, security, denominations)

Q27. In 2019, a new Rs. 20 coin was announced in the budget. The weight of this coin is _____ grams.

  1. (a) 4.65
  2. (b) 6.54
  3. (c) 12.23
  4. (d) 8.54
Answer & solution

Answer: (d) 8.54

Correct Answer: 4 (8.54)
The new Rs. 20 coin announced in the Union Budget 2019-20 weighs 8.54 grams. It is a 12-edged (dodecagonal) coin made of bi-metallic composition (outer ring of aluminium bronze, inner disc of nickel silver).
Option 1 (4.65 g) is incorrect - this is not the correct weight of the Rs. 20 coin .
Option 2 (6.54 g) is incorrect.
Option 3 (12.23 g) is incorrect - the coin is not that heavy.
SSC MTS 2025 – 6 February 2026 Shift 1 · Commercial banks and bank nationalisation

Q28. In which year was State Bank of Mysore merged with State Bank of India?

  1. (a) 2019
  2. (b) 2021
  3. (c) 2023
  4. (d) 2017
Answer & solution

Answer: (d) 2017

Correct Answer: 4 (2017)
State Bank of Mysore was merged with State Bank of India on 1 April 2017, along with five other associate banks (State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Patiala, State Bank of Travancore, and Bharatiya Mahila Bank). This was the largest ever consolidation in Indian banking history.
Option 1 (2019) is incorrect.
Option 2 (2021) is incorrect.
Option 3 (2023) is incorrect.
SSC MTS 2025 – 6 February 2026 Shift 3 · Commercial banks and bank nationalisation

Q29. All branches of Vijaya Bank and Dena Bank started to function as branches of Bank of Baroda from April 1, _____.

  1. (a) 2019
  2. (b) 2021
  3. (c) 2023
  4. (d) 2017
Answer & solution

Answer: (a) 2019

Correct Answer: 1 (2019)
Vijaya Bank and Dena Bank were merged with Bank of Baroda with effect from April 1, 2019. This was India's first-ever three-way merger of public sector banks. After the merger, Bank of Baroda became the third largest public sector bank in India. The merger was announced in September 2018 and came into effect on April 1, 2019.
Option 2 (2021) is incorrect - the candidate chose this wrong option.
Option 3 (2023) is incorrect.
Option 4 (2017) is incorrect.
SSC MTS 2025 – 5 February 2026 Shift 1 · Commercial banks and bank nationalisation

Q30. Which was the only nationalised bank in India before 1969?

  1. (a) SBI
  2. (b) Bank of Baroda
  3. (c) Central Bank of India
  4. (d) Allahabad Bank
Answer & solution

Answer: (a) SBI

Correct Answer: SBI
State Bank of India (SBI) was the only nationalised bank in India before 1969. It was established in 1955 when the Imperial Bank of India was nationalised and renamed SBI. In 1969, the government nationalised 14 major commercial banks under Prime Minister Indira Gandhi.
Why other options are wrong:
Bank of Baroda - Nationalised in 1969, not before.
Central Bank of India - Nationalised in 1969.
Allahabad Bank - Nationalised in 1969.
SSC MTS 2025 – 5 February 2026 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q31. SARFAESI Act in India is related to which of the following sector?

  1. (a) Financial sector
  2. (b) Health sector
  3. (c) Tourism sector
  4. (d) Telecom sector
Answer & solution

Answer: (a) Financial sector

Correct Answer: Financial sector
The SARFAESI Act ( Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) is related to the Financial/Banking sector. It empowers banks and financial institutions to recover non-performing assets (NPAs/bad loans) without intervention of courts by allowing them to seize and sell the secured assets of defaulters.
Why other options are wrong:
Health sector - Governed by separate health regulations.
Tourism sector - Governed by Tourism Ministry regulations.
Telecom sector - Governed by TRAI and Telecom Policy.
SSC MTS 2025 – 5 February 2026 Shift 2 · Currency and coins (printing, security, denominations)

Q32. Rs. 20 denomination note was introduced in which year in India?

  1. (a) 1970
  2. (b) 1974
  3. (c) 1972
  4. (d) 1976
Answer & solution

Answer: (c) 1972

Correct Answer: 1972
The Rs. 20 denomination banknote was first introduced in India in 1972 by the Reserve Bank of India. It was issued to meet the growing demand for currency of this denomination in daily transactions.
Why other options are wrong:
1970 - Rs. 20 note had not yet been introduced.
1974 - Two years after the actual introduction.
1976 - Four years after the actual introduction.
SSC MTS 2025 – 5 February 2026 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q33. Which of the following is the main tool of monetary policy of the Reserve Bank of India?
I. Reverse repo operations
II. Transfer payments

  1. (a) Only I
  2. (b) Only II
  3. (c) Both I and II
  4. (d) Neither I nor II
Answer & solution

Answer: (a) Only I

Correct Answer: Only I
Statement I - Reverse repo operations: TRUE - Reverse repo rate (the rate at which RBI borrows from commercial banks) is a key monetary policy tool of the RBI. It helps control money supply and liquidity in the economy.
Statement II - Transfer payments: FALSE - Transfer payments (like pensions, subsidies, scholarships) are a FISCAL POLICY tool used by the government (Finance Ministry), NOT a monetary policy tool of the RBI.
Therefore, only Statement I is correct.
SSC MTS 2025 – 5 February 2026 Shift 3 · Currency and coins (printing, security, denominations)

Q34. In 2019, a new Rs. 20 coin was announced in the budget. The shape of this coin is _____ edged polygon.

  1. (a) 12
  2. (b) 10
  3. (c) 20
  4. (d) 6
Answer & solution

Answer: (a) 12

Correct Answer: 12
The new Rs. 20 coin announced in the Union Budget 2019 is a 12-edged (dodecagonal) polygon. It is bimetallic (outer ring and inner disk of different metals) and has the Rs. 20 denomination. The 12-sided shape makes it easily distinguishable by touch, especially for visually impaired persons.
Why other options are wrong:
10 - The Rs. 10 coin exists but the Rs. 20 coin has 12 edges.
20 - A 20-sided polygon would be unusual for a coin; the Rs. 20 coin has 12 edges.
6 - A hexagonal coin; does not apply to the Rs. 20 coin.
Delhi Police Head Constable (Ministerial) 2025-26 – 12 January 2026 Shift 3 · Banking terms and instruments

Q35. In the context of India's banking sector in 2025, a persistently high Credit-Deposit (CD) ratio, especially in certain regional rural banks and public sector banks, is observed. Which of the following best explains the macroeconomic and institutional implications of such a trend?

  1. (a) A high CD ratio implies excessive capital adequacy, leading to underutilization of funds and inflationary risks.
  2. (b) A high CD ratio indicates that banks are lending less and maintaining liquidity buffers, which boosts deposit growth.
  3. (c) A high CD ratio may indicate over-aggressive lending relative to mobilized deposits, raising concerns about asset-liability mismatches, liquidity risk, and long-term financial stability.
  4. (d) A high CD ratio has no real macroeconomic consequence as it is an internal operational metric of bank profitability.
Answer & solution

Answer: (c) A high CD ratio may indicate over-aggressive lending relative to mobilized deposits, raising concerns about asset-liability mismatches, liquidity risk, and long-term financial stability.

Option 3 is correct. The Credit-Deposit (CD) ratio measures the proportion of deposits that a bank has lent out. A persistently high CD ratio (e.g., above 75–80%) signals that a bank is lending out more relative to its deposit base — often aggressively. This raises concerns about: (1) asset-liability mismatch — long-term loans funded by short-term deposits; (2) liquidity risk — insufficient liquid assets to meet sudden withdrawal demands; and (3) financial stability — heightened vulnerability to NPAs (non-performing assets) and bank runs.
• Option 1 is wrong: A high CD ratio does not imply excessive capital adequacy; it implies the opposite — funds are being heavily deployed, leaving less liquidity buffer.
• Option 2 is wrong: A high CD ratio indicates banks are lending MORE, not less; a low CD ratio would indicate conservative lending and higher liquidity buffers.
• Option 4 is wrong: The RBI monitors CD ratios specifically because of their macroeconomic implications for systemic financial stability; it is not merely an internal metric.
Delhi Police Head Constable (Ministerial) 2025-26 – 10 January 2026 Shift 2 · Types of banks (RRB, co-operative, payments, small finance)

Q36. Which of the following targets at individuals and small businesses who lack access to conventional banking and related services?

  1. (a) Asset Finance Company
  2. (b) Investment Company
  3. (c) NBFC Micro Finance Institution
  4. (d) Infrastructure Finance Company
Answer & solution

Answer: (c) NBFC Micro Finance Institution

NBFC Micro Finance Institution (NBFC-MFI) is correct. NBFC-MFIs are Non-Banking Financial Companies that provide small loans and financial services specifically to low-income individuals and small businesses who lack access to conventional (formal) banking services. They are regulated by the RBI and play a critical role in financial inclusion.
• Asset Finance Company: Provides finance for physical assets like vehicles and machinery; not targeted at the financially excluded.
• Investment Company: Invests funds in securities and financial instruments; does not target unbanked individuals.
• Infrastructure Finance Company: Provides long-term finance for infrastructure projects; not designed for individual microfinance needs.
Delhi Police Head Constable (Ministerial) 2025-26 – 8 January 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q37. Which committee's recommendations led to major financial sector reforms post-1991?

  1. (a) Abid Hussain Committee
  2. (b) Narasimham Committee
  3. (c) Chelliah Committee
  4. (d) Rangarajan Committee
Answer & solution

Answer: (b) Narasimham Committee

Correct Answer: Option 2 – Narasimham Committee
The Narasimham Committee, chaired by M. Narasimham (former RBI Governor), made landmark recommendations for financial sector reforms post-1991:
• Narasimham Committee I (1991): Recommended reduction of CRR and SLR, deregulation of interest rates, strengthening bank supervision, and reducing directed lending.
• Narasimham Committee II (1998): Focused on strengthening the banking system, NPA resolution, capital adequacy norms, and entry of new private banks.
These recommendations transformed India's banking and financial sector.
Why other options are wrong:
Option 1 (Abid Hussain Committee): This committee was related to small-scale industry policy, not financial sector reforms.
Option 3 (Chelliah Committee): The Raja Chelliah Committee dealt with tax reforms (direct and indirect taxes), not financial sector reforms.
Option 4 (Rangarajan Committee): C. Rangarajan chaired committees on agricultural statistics and poverty estimation, not specifically the post-1991 financial sector reforms.
Delhi Police Head Constable (Ministerial) 2025-26 – 7 January 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q38. In the context of India's Insolvency and Bankruptcy Code (IBC) regime in 2025, which of the following best explains the challenges faced by the IBC framework despite improvements
in resolution timelines, and why is there a growing emphasis on balancing creditor rights with debtor revival?

  1. (a) The IBC has completely eliminated the need for alternative dispute resolution mechanisms by providing swift liquidation only.
  2. (b) Despite faster resolution, challenges persist due to limited availability of skilled insolvency professionals, judicial backlog, and complex multi-layered debt structures, necessitating reforms to promote timely revival alongside creditor protection.
  3. (c) The IBC allows unrestricted write-offs of bad debts by creditors, which leads to reckless lending practices by banks and NBFCs.
  4. (d) The IBC framework mandates government ownership of all insolvent enterprises, reducing private sector participation in resolution processes.
Answer & solution

Answer: (b) Despite faster resolution, challenges persist due to limited availability of skilled insolvency professionals, judicial backlog, and complex multi-layered debt structures, necessitating reforms to promote timely revival alongside creditor protection.

Correct Answer: Option 2 – Challenges persist due to shortage of insolvency professionals, judicial backlog, and complex debt structures
Despite improvements in resolution timelines under the IBC, 2025 saw continued challenges:
1. Shortage of skilled Insolvency Professionals (IPs) to handle complex cases.
2. Judicial backlog at the National Company Law Tribunal (NCLT) causing delays.
3. Complex multi-layered debt structures making resolution difficult.
4. Rising liquidations instead of revival, raising concerns about job losses and creditor-debtor balance.
These issues have led to calls for reforms to ensure debtor revival alongside creditor protection.
Why other options are wrong:
Option 1: IBC has NOT eliminated alternative dispute resolution; it works alongside other mechanisms.
Option 3: IBC does not allow unrestricted write-offs; creditors must follow a structured resolution process.
Option 4: IBC promotes private sector resolution through Committee of Creditors — it does NOT mandate government ownership.
Delhi Police Constable (Exe) 2025-26 – 6 January 2026 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q39. What is the banking term for the portion of deposits that commercial banks must mandatorily keep with themselves in liquid assets (like gold or cash)?

  1. (a) Cash Reserve Ratio (CRR)
  2. (b) Statutory Liquidity Ratio (SLR)
  3. (c) Repo Rate
  4. (d) Reverse Repo Rate
Answer & solution

Answer: (b) Statutory Liquidity Ratio (SLR)

The correct answer is (b) Statutory Liquidity Ratio (SLR).
Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits that banks must maintain WITH THEMSELVES in the form of liquid assets such as gold, government securities, or cash. It is mandated by the RBI under the Banking Regulation Act. SLR ensures bank solvency and restricts credit expansion.
(a) Cash Reserve Ratio (CRR): The percentage of deposits banks must keep AS CASH with the RBI (not with themselves); this is fundamentally different — CRR is kept with the central bank, not as the bank's own holdings.
(c) Repo Rate: The rate at which the RBI lends short-term funds to commercial banks; a monetary policy tool, not a deposit reserve requirement.
(d) Reverse Repo Rate: The rate at which the RBI borrows funds from commercial banks; again a monetary policy tool, not a deposit reserve requirement.
Delhi Police Constable (Exe) 2025-26 – 4 January 2026 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q40. Which committee was set up after India's 1991 economic reforms to restructure the financial sector?

  1. (a) Narasimham Committee
  2. (b) Kelkar Committee
  3. (c) Rangarajan Committee
  4. (d) Chakravarti Committee
Answer & solution

Answer: (a) Narasimham Committee

The Narasimham Committee (under former RBI Governor M. Narasimham ) was constituted in 1991 to examine and recommend reforms for India's financial sector, including banking, capital markets, and insurance.
(b) Incorrect: The Kelkar Committee is associated with tax reforms, not financial sector restructuring.
(c) Incorrect: The Rangarajan Committee dealt with other areas of economic policy and is not specifically linked to the 1991 financial sector reforms.
(d) Incorrect: The Chakravarti Committee is not associated with post-1991 financial sector reforms.
Delhi Police Constable (Exe) 2025-26 – 3 January 2026 Shift 2 · Commercial banks and bank nationalisation

Q41. The 'Lead Bank Scheme', introduced in 1969 by the RBI, assigned what responsibility to banks?

  1. (a) To lead protests
  2. (b) To act as the main bank for a specific district
  3. (c) To lend only to large industries
  4. (d) To print currency
Answer & solution

Answer: (b) To act as the main bank for a specific district

The Lead Bank Scheme (1969), introduced by the RBI on the recommendation of the Gadgil Study Group, designated a specific bank as the 'lead bank' for each district. The lead bank coordinates the development of banking and credit facilities and acts as the main bank for that district's economic development.
(a) Incorrect: 'To lead protests' has no connection to banking; it is not a financial term or banking function.
(b) Incorrect: 'To lend only to large industries' contradicts the purpose of the Lead Bank Scheme, which focuses on rural and priority sector credit.
(c) Incorrect: Printing currency is the exclusive function of the Reserve Bank of India (and government mints), not commercial banks.
Delhi Police Constable (Exe) 2025-26 – 3 January 2026 Shift 2 · RBI - history and functions

Q42. Which institution functions as the central bank of India?

  1. (a) State Bank of India (SBI)
  2. (b) Ministry of Finance
  3. (c) Reserve Bank of India (RBI)
  4. (d) NITI Aayog
Answer & solution

Answer: (c) Reserve Bank of India (RBI)

The Reserve Bank of India (RBI), established on April 1, 1935 under the Reserve Bank of India Act, 1934, functions as India's central bank. It manages monetary policy, regulates banks, issues currency, manages foreign exchange, and acts as the banker to the government.
(a) Incorrect: State Bank of India (SBI) is a public sector commercial bank (though the largest), not the central bank.
(b) Incorrect: The Ministry of Finance handles fiscal policy and government finances; it is not the central bank.
(c) Incorrect: NITI Aayog (National Institution for Transforming India) is a policy think tank, not the central bank.
Delhi Police Constable (Exe) 2025-26 – 2 January 2026 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q43. What is the term for the interest rate at which the RBI borrows money from commercial banks?

  1. (a) Repo Rate
  2. (b) Fiscal Rate
  3. (c) Reverse Repo Rate
  4. (d) Inflation Rate
Answer & solution

Answer: (c) Reverse Repo Rate

Reverse Repo Rate is the rate at which the Reserve Bank of India (RBI) borrows money from commercial banks. When banks park their excess funds with the RBI overnight, they earn interest at the Reverse Repo Rate. It is used to absorb excess liquidity from the banking system.
(a) Incorrect: Repo Rate (Repurchase Rate) is the rate at which RBI LENDS money to commercial banks — the direction is opposite to Reverse Repo Rate.
(b) Incorrect: Fiscal Rate is not a standard RBI monetary policy term; it is not used in the context of central bank lending/borrowing.
(c) Incorrect: Inflation Rate measures the rate of increase in the general price level, not an interest rate for RBI borrowing.
Delhi Police Constable (Exe) 2025-26 – 2 January 2026 Shift 3 · Commercial banks and bank nationalisation

Q44. In which year did the Government of India nationalize 14 major commercial banks?

  1. (a) 1947
  2. (b) 1951
  3. (c) 1969
  4. (d) 1980
Answer & solution

Answer: (c) 1969

On 19 July 1969, Prime Minister Indira Gandhi's government nationalized 14 major commercial banks through the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance. This was a landmark step to expand banking services to rural areas and priority sectors.
(a) Incorrect: In 1947, India became independent; bank nationalization had not yet been initiated.
(b) Incorrect: 1951 marked the beginning of India's First Five Year Plan; bank nationalization occurred much later in 1969.
(c) Incorrect: In 1980, a second round of bank nationalization occurred under Indira Gandhi, when 6 more banks were nationalized; the original 14 were nationalized in 1969.
Delhi Police Constable (Exe) 2025-26 – 30 December 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q45. What is the rate at which the RBI borrows money from commercial banks called?

  1. (a) Repo Rate
  2. (b) Fiscal Rate
  3. (c) Reverse Repo Rate
  4. (d) Inflation Rate
Answer & solution

Answer: (c) Reverse Repo Rate

The Reverse Repo Rate is the rate at which the Reserve Bank of India borrows money from commercial banks for short periods. It is a monetary policy tool used by the RBI to absorb excess liquidity from the banking system.
(a) Incorrect: Repo Rate is the rate at which the RBI lends money to commercial banks (the opposite direction).
(b) Incorrect: Fiscal Rate is not a standard monetary policy term; it relates to fiscal policy, not RBI borrowing.
(d) Incorrect: Inflation Rate refers to the rate at which prices rise in an economy, not an RBI borrowing rate.
Delhi Police Constable (Exe) 2025-26 – 29 December 2025 Shift 1 · Commercial banks and bank nationalisation

Q46. Who was the Prime Minister of India when 14 major banks were nationalized in 1969?

  1. (a) Jawaharlal Nehru
  2. (b) Lal Bahadur Shastri
  3. (c) Indira Gandhi
  4. (d) Morarji Desai
Answer & solution

Answer: (c) Indira Gandhi

On July 19, 1969, Prime Minister Indira Gandhi nationalized 14 major commercial banks in India. This was a landmark decision aimed at directing bank credit towards priority sectors like agriculture and small industries and reducing economic inequality.
(a) Incorrect: Jawaharlal Nehru died in 1964, well before the 1969 bank nationalization.
(b) Incorrect: Lal Bahadur Shastri died in 1966.
(d) Incorrect: Morarji Desai became PM only in 1977.
Delhi Police Constable (Exe) 2025-26 – 29 December 2025 Shift 2 · Currency and coins (printing, security, denominations)

Q47. In 1957, India replaced the old anna-based currency system with which new system?

  1. (a) Barter System
  2. (b) Decimal Coinage System
  3. (c) Gold Standard
  4. (d) Digital Currency
Answer & solution

Answer: (b) Decimal Coinage System

In 1957, India adopted the Decimal Coinage System, replacing the old system where 1 Rupee = 16 Annas = 64 Paise. Under the new decimal system, 1 Rupee = 100 Paise. This transition simplified everyday transactions and accounting, and modernised India's monetary system.
(a) Incorrect: Barter System is a pre-currency trading system involving exchange of goods directly.
(c) Incorrect: Gold Standard ties a currency's value to gold; India has not used this system.
(d) Incorrect: Digital Currency did not exist in 1957 and refers to modern concepts like CBDC.
Delhi Police Constable (Exe) 2025-26 – 29 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q48. The ' Narasimham Committee' (constituted in 1991 and again in 1998) was set up to recommend reforms in which sector?

  1. (a) Agriculture
  2. (b) Banking and Financial Sector
  3. (c) Education
  4. (d) Railways
Answer & solution

Answer: (b) Banking and Financial Sector

The Narasimham Committee was constituted to recommend reforms for the Indian banking and financial sector. The first committee (1991) led to major reforms including reduction of SLR and CRR, deregulation of interest rates, and introduction of prudential norms. The second committee (1998) further strengthened banking supervision and capital adequacy norms.
(a) Incorrect: Agriculture reforms have been recommended by other committees, not Narasimham .
(c) Incorrect: Education sector reforms were addressed by committees like Kothari Commission.
(d) Incorrect: Railway reforms are not within the mandate of the Narasimham Committee.
Delhi Police Constable (Exe) 2025-26 – 24 December 2025 Shift 1 · Money - functions and types

Q49. What was a key feature of the barter system that made it less efficient compared to using money?

  1. (a) Double Coincidence of Wants
  2. (b) Lack of Trade
  3. (c) Unfair Exchange
  4. (d) Limited Goods
Answer & solution

Answer: (a) Double Coincidence of Wants

The correct answer is Double Coincidence of Wants (Option 1).
The barter system required a Double Coincidence of Wants — both parties had to simultaneously possess and want exactly what the other offered. This made exchange difficult, time-consuming, and limited the scope of trade, which money overcomes by acting as a universal medium.
Option 2 - Lack of Trade: Barter does involve trade; the problem was not absence of trade but the inefficiency of matching wants.
Option 3 - Unfair Exchange: While unfair exchange could occur, it is not the defining structural problem of barter; the double coincidence requirement is.
Option 4 - Limited Goods: Limited goods is not a structural flaw specific to barter; goods availability is a separate economic issue.
Delhi Police Constable (Exe) 2025-26 – 23 December 2025 Shift 2 · Money - functions and types

Q50. What facility is provided by banks to ensure the safety of money and easy transactions?

  1. (a) Credit Cards
  2. (b) Demand Deposits
  3. (c) Loans
  4. (d) Foreign Exchange
Answer & solution

Answer: (b) Demand Deposits

The correct answer is Demand Deposits (Option 2).
Demand deposits are funds held in bank accounts that can be withdrawn at any time without prior notice. They provide safety for money (backed by bank security and deposit insurance) and facilitate easy transactions through cheques, debit cards, and online transfers.
Option 1 - Credit Cards: Credit cards allow spending on credit; they are not primarily a facility for safety of deposits and easy transactions in the banking sense.
Option 3 - Loans: Loans are funds borrowed from banks; they are not a facility for keeping money safe.
Option 4 - Foreign Exchange: Foreign exchange deals with currency conversion; not primarily a safety/transaction facility for everyday money.
Delhi Police Constable (Exe) 2025-26 – 22 December 2025 Shift 3 · Commercial banks and bank nationalisation

Q51. How many additional banks were nationalized by the Indian government in 1980?

  1. (a) 5
  2. (b) 6
  3. (c) 10
  4. (d) 14
Answer & solution

Answer: (b) 6

The correct answer is 6 (Option 2).
In 1980, the Indian government nationalized 6 more private banks in the second round of bank nationalization (in addition to the 14 banks nationalized in 1969), bringing the total nationalized banks to 20.
Option 1 - 5: Incorrect; the second round of nationalization in 1980 covered 6 banks, not 5.
Option 3 - 10: Incorrect; 10 is not the number nationalized in 1980. The first round in 1969 saw 14 banks nationalized.
Option 4 - 14: These were the banks nationalized in the first round in 1969, not in 1980.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q52. The shift to market-determined interest rates aimed to:

  1. (a) Control inflation only.
  2. (b) Reduce foreign investment.
  3. (c) Increase public borrowing.
  4. (d) Encourage efficient allocation of financial resources.
Answer & solution

Answer: (d) Encourage efficient allocation of financial resources.

The shift from administered (government-fixed) to market-determined interest rates, part of India's 1991 financial sector reforms ( Narasimham Committee), aimed to encourage efficient allocation of financial resources by allowing capital to flow to the most productive uses. Option 4 is correct.
Option 1 is wrong: Controlling inflation alone was not the stated aim of market-determined rates; the RBI uses monetary policy tools (repo rate, etc.) specifically for inflation targeting.
Option 2 is wrong: The shift to market rates was intended to attract more investment (domestic and foreign), not reduce it.
Option 3 is wrong: Increasing public borrowing was not an objective; in fact, the reforms aimed to reduce fiscal dominance and lower the crowding out of private investment.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q53. Which of the following reform led to the introduction of the LAF (Liquidity Adjustment Facility)?

  1. (a) Fiscal responsibility reforms
  2. (b) Banking sector reforms
  3. (c) External sector reforms
  4. (d) Capital market reforms
Answer & solution

Answer: (b) Banking sector reforms

The Liquidity Adjustment Facility (LAF) was introduced by the RBI in 2000-01 as a direct outcome of the Banking Sector Reforms recommended by the Narasimham Committee (1991 and 1998). LAF allows banks to adjust their daily liquidity requirements through repo and reverse repo operations. Option 2 is correct.
Option 1 is wrong: Fiscal responsibility reforms led to the Fiscal Responsibility and Budget Management (FRBM) Act, 2003 — focused on deficit reduction, not LAF.
Option 3 is wrong: External sector reforms liberalized trade policy and capital account convertibility; they did not directly result in the creation of LAF.
Option 4 is wrong: Capital market reforms led to SEBI strengthening, dematerialization of shares, and screen-based trading — not the introduction of LAF.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q54. The Narasimham Committee-I (1991) primarily recommended:

  1. (a) Liberalization of interest rates, lowering of SLR-CRR, and strengthening of prudential norms like capital adequacy
  2. (b) Full privatization of all public sector banks
  3. (c) Maintaining a fixed and pegged exchange-rate regime
  4. (d) Expansion and nationalization of Regional Rural Banks (RRBs)
Answer & solution

Answer: (a) Liberalization of interest rates, lowering of SLR-CRR, and strengthening of prudential norms like capital adequacy

The Narasimham Committee on Financial System (1991) primarily recommended: liberalization of interest rates, reduction of Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR), strengthening of prudential norms (capital adequacy, asset classification, provisioning), and deregulation of the banking sector. Option 1 is correct.
Option 2 is wrong: The Committee did NOT recommend full privatization of public sector banks; it recommended reducing government shareholding to 51% and allowing more competition, but not outright privatization.
Option 3 is wrong: Maintaining a fixed exchange-rate regime was the opposite of what was recommended; the 1991 reforms included moving toward a market-determined exchange rate.
Option 4 is wrong: Expansion and nationalization of RRBs was not recommended; the Committee focused on deregulation and reducing government dominance in banking, not more nationalization.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q55. What happens when there is a rise in the repo rate by the Reserve Bank of India?

  1. (a) Increase investment and consumption.
  2. (b) Increase inflation immediately.
  3. (c) Reduce money supply and investment.
  4. (d) Have no effect on the economy
Answer & solution

Answer: (c) Reduce money supply and investment.

When the RBI raises the repo rate (the rate at which commercial banks borrow from RBI), borrowing becomes more expensive for banks, which pass on higher interest rates to borrowers. This reduces the money supply, discourages borrowing, and contracts investment and consumption — the primary tool to control inflation. Option 3 is correct.
Option 1 is wrong: A rise in repo rate does the opposite — it reduces investment and consumption by making credit more expensive, not increases them.
Option 2 is wrong: A rise in repo rate is intended to control (reduce) inflation, not increase it; the contractionary monetary policy reduces demand and cools inflation.
Option 4 is wrong: The repo rate is one of the most powerful monetary policy tools; changes in repo rate have significant effects on borrowing costs, money supply, investment, and overall economic activity.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 3 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q56. Which committee directly influenced the reduction of Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) in the 1990s?

  1. (a) Rakesh Mohan Committee
  2. (b) Kelkar Committee
  3. (c) Narasimham Committee
  4. (d) Chelliah Committee
Answer & solution

Answer: (c) Narasimham Committee

The Narasimham Committee on Financial System ( Narasimham Committee-I, 1991) directly recommended significant reduction in SLR (from 38.5% to 25%) and CRR (from ~15% to lower levels) as key banking sector reforms to release more funds for productive lending. These reductions were implemented in the 1990s. Option 3 is correct.
Option 1 is wrong: The Rakesh Mohan Committee focused on road infrastructure development and urban transport; it was not related to SLR-CRR reforms in banking.
Option 2 is wrong: The Kelkar Committee (2002-03) focused on direct and indirect tax reforms; it was not the committee that recommended SLR-CRR reductions in the 1990s.
Option 4 is wrong: The Chelliah Committee (Raja Chellaiah Tax Reform Committee, 1991-93) focused on tax reforms including rationalisation of direct and indirect taxes; it did not directly influence SLR-CRR reductions.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q57. What will be the effect of the rise in the repo rate by the Reserve Bank of India?

  1. (a) Credit to businesses will become costlier
  2. (b) Aggregate demand will increase
  3. (c) Banks will reduce lending rates
  4. (d) Money supply will expand
Answer & solution

Answer: (a) Credit to businesses will become costlier

When the RBI raises the repo rate (the rate at which banks borrow from RBI overnight), banks' cost of funds increases. Banks pass this on by raising their own lending rates, making credit (loans) costlier for businesses and consumers. This is the primary transmission mechanism of monetary tightening — reducing borrowing, investment, and consumption to control inflation. Option 1 is correct.
Option 2 is wrong: A rise in repo rate makes borrowing more expensive and reduces spending, which DECREASES aggregate demand — it does not increase it. This is by design, to cool inflation.
Option 3 is wrong: A rise in repo rate causes banks to INCREASE (not reduce) their lending rates, because their own cost of borrowing from RBI has gone up.
Option 4 is wrong: A rise in repo rate contracts (reduces) money supply by making borrowing expensive, discouraging loans and credit creation — it does not expand the money supply.
Delhi Police Constable (Exe) 2025-26 – 19 December 2025 Shift 2 · RBI - history and functions

Q58. Which organisation is responsible for formulating India's monetary policy?

  1. (a) Ministry of Finance
  2. (b) RBI
  3. (c) NITI Aayog
  4. (d) SEBI
Answer & solution

Answer: (b) RBI

The Reserve Bank of India (RBI) is responsible for formulating and implementing India's monetary policy. The Monetary Policy Committee (MPC), constituted under the RBI Act, 1934 (amended 2016), sets the benchmark repo rate and other monetary policy instruments to achieve price stability (inflation target of 4% with a band of ±2%) while supporting economic growth. The RBI Governor chairs the MPC.
Option 1 is incorrect: The Ministry of Finance formulates fiscal policy (taxation, government spending, borrowing) — not monetary policy. The two are distinct.
Option 3 is incorrect: NITI Aayog is a policy think tank and advisory body; it does not set monetary policy or control money supply.
Option 4 is incorrect: SEBI (Securities and Exchange Board of India) is the capital markets regulator; it does not formulate monetary policy.
Delhi Police Constable (Exe) 2025-26 – 18 December 2025 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q59. Name the committee formed to recommend financial sector reforms after 1991?

  1. (a) Narasimham Committee
  2. (b) Kelkar Committee
  3. (c) Rangarajan Committee
  4. (d) Gadgil Committee
Answer & solution

Answer: (a) Narasimham Committee

The Narasimham Committee (officially the Committee on the Financial System) was constituted in 1991 under M. Narasimham (former RBI Governor) to recommend reforms in the banking and financial sector as part of India's liberalization process. It recommended: reduction in SLR and CRR, deregulation of interest rates, greater autonomy for banks, and entry of private and foreign banks.
Option (b) is incorrect: The Kelkar Committee was related to tax reforms (direct and indirect taxes), not financial sector reforms.
Option (c) is incorrect: The Rangarajan Committee was set up for various economic issues including poverty estimation, not specifically the 1991 financial sector reforms.
Option (d) is incorrect: The Gadgil Committee is associated with environmental recommendations for the Western Ghats.
Delhi Police Constable (Exe) 2025-26 – 18 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q60. Which institution was not primarily affected by the financial sector reforms post-1991?

  1. (a) Public sector banks
  2. (b) State Electricity Boards
  3. (c) Reserve Bank of India
  4. (d) National Bank for Agriculture and Rural Development
Answer & solution

Answer: (b) State Electricity Boards

State Electricity Boards (SEBs) were not primarily affected by the financial sector reforms post-1991 because they are utility/infrastructure entities belonging to the power sector, not the financial sector. The post-1991 financial sector reforms focused on: deregulating interest rates, reducing SLR/CRR, privatising banks, introducing capital adequacy norms, strengthening SEBI, deregulating capital markets, and reforming the insurance sector.
Option 1 is incorrect: Public sector banks were significantly affected - the Narasimham Committee Reports (1991 and 1998) recommended major reforms in banking, including recapitalisation , autonomy, and prudential norms.
Option 3 is incorrect: RBI's role was substantially reformed in 1991 - it became more autonomous, interest rate deregulation occurred, and its regulatory functions were strengthened.
Option 4 is incorrect: NABARD's operational framework and agricultural credit policies were also influenced by the broader financial sector reforms.
Delhi Police Constable (Exe) 2025-26 – 18 December 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q61. What happens when there is a decrease in the Cash Reserve Ratio (CRR)?

  1. (a) Increase in interest rates
  2. (b) Increase in banks' lendable resources
  3. (c) Reduction in money supply
  4. (d) Contraction of credit
Answer & solution

Answer: (b) Increase in banks' lendable resources

When the RBI decreases the Cash Reserve Ratio (CRR), commercial banks are required to maintain a lower proportion of their deposits as cash reserves with the RBI. This frees up more funds that banks can lend to customers, thereby increasing banks' lendable resources. This leads to credit expansion and an increase in money supply in the economy. A decrease in CRR is an expansionary monetary policy tool used to inject liquidity.
Option 1 is incorrect: A decrease in CRR generally leads to a decrease in interest rates (not an increase), because more funds are available for lending, reducing the cost of credit.
Option 3 is incorrect: A decrease in CRR leads to an increase in money supply (not a reduction), as more money becomes available for lending.
Option 4 is incorrect: A decrease in CRR leads to credit expansion (not contraction), since banks have more funds available to lend to borrowers.
SSC CPO Paper-1 2025 – 11 December 2025 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q62. Which of the following is the mandatory requirement of setting aside in liquid assets, such as gold or Government securities, by commercial banks?

  1. (a) Cash reserve ratio
  2. (b) Statutory liquidity ratio
  3. (c) Current ratio
  4. (d) Margin ratio
Answer & solution

Answer: (b) Statutory liquidity ratio

Correct Answer: Statutory Liquidity Ratio (Option 2)
The Statutory Liquidity Ratio (SLR) is the mandatory percentage of a bank's Net Demand and Time Liabilities (NDTL) that must be maintained in the form of liquid assets — including cash, gold, or approved Government securities — before providing credit to customers. It is set by the Reserve Bank of India (RBI).
Cash Reserve Ratio (CRR) refers to the cash that banks must keep with the RBI as a reserve — not in liquid assets like gold or government securities.
Current Ratio is a financial ratio measuring a company's ability to pay short-term liabilities.
Margin Ratio is not a standard banking reserve requirement.
SSC CPO Paper-1 2025 – 9 December 2025 Shift 1 · Types of banks (RRB, co-operative, payments, small finance)

Q63. India Post Payments Bank (IPPB) uses which technology for cashless withdrawal?

  1. (a) QR card
  2. (b) NFC chip
  3. (c) OTP-based SMS
  4. (d) Virtual wallet
Answer & solution

Answer: (a) QR card

India Post Payments Bank (IPPB) uses the QR card for cashless withdrawal.
The QR card contains a unique QR code that identifies the account holder.
Transactions are authenticated through biometrics (fingerprint), making the system more secure than a traditional ATM card.
It is particularly designed for rural customers who may lack smartphones; the postman or Gramin Dak Sevak (GDS) uses a micro-ATM to process the transaction at the customer's doorstep.
NFC chip: Not the primary technology for IPPB cashless withdrawal.
OTP-based SMS: While IPPB uses OTPs for certain services, the QR card is the designated cashless withdrawal technology.
Virtual wallet: A digital concept; IPPB uses a physical QR card for withdrawal.
SSC CPO Paper-1 2025 – 9 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q64. Which of the following was a key feature of financial sector reforms under NEP 1991?

  1. (a) Increased RBI control
  2. (b) Nationalization of banks
  3. (c) Establishment of private sector banks
  4. (d) Restriction of FDI in banks
Answer & solution

Answer: (c) Establishment of private sector banks

Correct Answer: Establishment of private sector banks
Under the New Economic Policy (NEP) 1991 and the Narasimham Committee recommendations, the financial sector saw major liberalization. A key reform was allowing the establishment of private sector banks — HDFC Bank, ICICI Bank, Axis Bank (formerly UTI Bank) were all set up in the mid-1990s as a result. This broke the monopoly of nationalized public sector banks.
Option 1 (Increased RBI control): Incorrect. NEP 1991 actually reduced regulatory control and allowed more market freedom.
Option 2 (Nationalization of banks): Incorrect. Bank nationalization happened in 1969 and 1980 — the opposite of 1991 reforms.
Option 4 (Restriction of FDI in banks): Incorrect. FDI in banking was liberalized, not restricted, after 1991.
SSC Stenographer 2025 – 8 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q65. Which policy reform targeted improving competitiveness and efficiency of the banking system after 1991?

  1. (a) Full deregulation of credit markets
  2. (b) Introduction of prudential norms and CRAR
  3. (c) Limiting foreign entry into retail banking
  4. (d) Nationalization of cooperative banks
Answer & solution

Answer: (b) Introduction of prudential norms and CRAR

The correct answer is Introduction of prudential norms and CRAR (Capital to Risk-Weighted Assets Ratio) . After the 1991 economic reforms, India’s banking sector underwent major restructuring to make it more efficient, competitive, and in line with international standards. Prudential norms introduced concepts like income recognition, asset classification, provisioning for bad loans (NPAs), and capital adequacy. CRAR ensured that banks maintained sufficient capital against risk-weighted assets, which strengthened their financial stability. These reforms improved transparency, reduced non-performing assets, and increased accountability in the banking system, thereby boosting overall competitiveness and efficiency.
SSC Stenographer 2025 – 8 December 2025 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q66. What does 'repo rate' refer to in India's monetary policy?

  1. (a) Rate at which the government borrows from banks
  2. (b) Rate at which commercial banks borrow from the RBI
  3. (c) Rate at which consumers take loans
  4. (d) Rate of foreign exchange transactions
Answer & solution

Answer: (b) Rate at which commercial banks borrow from the RBI

Repo rate is the rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks against government securities or collateral. It is a crucial monetary policy tool used by RBI to control inflation and liquidity in the economy. When repo rate increases, borrowing becomes costlier for banks, which in turn raises lending rates for consumers and businesses, thereby reducing liquidity and controlling inflation. When repo rate decreases, borrowing becomes cheaper, encouraging banks to lend more, which increases liquidity and boosts economic activity. Options 1, 3, and 4 are incorrect because repo rate is specifically about RBI–commercial bank borrowing, not government loans, consumer loans, or forex rates.
SSC Stenographer 2025 – 7 December 2025 Shift 1 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q67. What was the recommendation of the Narasimham Committee-II regarding public sector banks?

  1. (a) Privatize all public sector banks
  2. (b) Increase government ownership in public sector banks
  3. (c) Reduce lending by public sector banks
  4. (d) Merge and consolidate public sector banks
Answer & solution

Answer: (d) Merge and consolidate public sector banks

The Narasimham Committee-II (1998) , headed by M. Narasimham, was constituted to recommend banking sector reforms in India. One of its most significant recommendations was the merger and consolidation of public sector banks to create a few strong and competitive banks capable of competing globally. The committee argued that having too many small and weak banks made the sector inefficient and less competitive. Instead of privatisation or reducing government ownership, the focus was on creating stronger institutions through consolidation. Hence, the correct answer is Option 4: Merge and consolidate public sector banks.
SSC Stenographer 2025 – 6 December 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q68. What is the primary purpose of the Insolvency and Bankruptcy Code (IBC), 2016?

  1. (a) To regulate stock market investments
  2. (b) To promote foreign direct investment
  3. (c) To simplify the process of resolving financial distress in businesses
  4. (d) To provide protection for startups from financial harassment
Answer & solution

Answer: (c) To simplify the process of resolving financial distress in businesses

The correct answer is to simplify the process of resolving financial distress in businesses . The Insolvency and Bankruptcy Code (IBC), 2016 was enacted to consolidate and amend the laws relating to reorganization and insolvency resolution of individuals, partnerships, and companies. Before IBC, insolvency cases in India were delayed for years due to multiple overlapping laws and lengthy legal processes. IBC introduced a time-bound mechanism (180 to 270 days) for resolving insolvency, allowing creditors to recover their money quickly and efficiently. It has significantly improved India’s ranking in the Ease of Doing Business Index , especially in the "Resolving Insolvency" parameter. While it indirectly boosts investment by improving financial discipline, its primary goal is to ensure a speedy and transparent resolution of financial distress.
SSC Stenographer 2025 – 6 December 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q69. Which of the following statements is/are correct?
Statement I: A bank’s main liability is the deposits it holds.
Statement II: Open Market Operations involve buying and selling government bonds.
Statement III: The Bank Rate is the rate at which RBI lends to commercial banks.

  1. (a) Only Statements I and II are correct
  2. (b) Only Statements II and III are correct
  3. (c) I, II and III all three statements are correct
  4. (d) Only Statement III is correct
Answer & solution

Answer: (c) I, II and III all three statements are correct

The correct answer is that all three statements are correct. A bank’s main liability is always the deposits it holds because these are obligations that the bank must repay to depositors on demand or as per terms. Open Market Operations are an essential monetary policy tool of the RBI and they include the purchase and sale of government securities to control liquidity and inflation in the economy. The Bank Rate refers to the interest rate at which the RBI provides long-term credit to commercial banks, and it has a significant impact on lending rates and overall money supply in the market. Therefore, all three statements are factually accurate and represent the core functions of banking and monetary policy in India.
SSC Stenographer 2025 – 6 December 2025 Shift 3 · RBI - history and functions

Q70. Arrange the following RBI Governors in the correct chronological order of their tenure (from earliest to latest):
Dr. Y. V. Reddy
Dr. D. Subbarao
Dr. Urjit R. Patel
Shri Sanjay Malhotra

  1. (a) 2, 1, 3, 4
  2. (b) 1, 2, 3, 4
  3. (c) 2, 3, 1, 4
  4. (d) 1, 3, 2, 4
Answer & solution

Answer: (b) 1, 2, 3, 4

The correct chronological order is 1. Dr. Y. V. Reddy (2003–2008), 2. Dr. D. Subbarao (2008–2013), 3. Dr. Urjit R. Patel (2016–2018), 4. Shri Sanjay Malhotra (current appointment) . Dr. Y. V. Reddy succeeded Bimal Jalan in 2003 and was followed by D. Subbarao. Later, after Raghuram Rajan, Dr. Urjit Patel took charge in 2016. Shri Sanjay Malhotra has been recently appointed, making him the latest in the sequence.
SSC Stenographer 2025 – 6 December 2025 Shift 3 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q71. What significant institutional development emerged from banking reforms after 1991 to regulate financial stability?

  1. (a) Board for Financial Supervision (BFS)
  2. (b) NABARD
  3. (c) Securities Appellate Tribunal (SAT)
  4. (d) MSME Credit Bureau
Answer & solution

Answer: (a) Board for Financial Supervision (BFS)

After the 1991 economic reforms, India introduced several measures to strengthen financial stability. One of the key institutional developments was the creation of the Board for Financial Supervision (BFS) in 1994 under the Reserve Bank of India (RBI). The BFS was established to oversee and regulate commercial banks, financial institutions, and non-banking finance companies (NBFCs). Its creation was based on the recommendations of the Narasimham Committee (1991), which emphasised the need for stronger supervision and prudential regulation to prevent financial instability. Thus, BFS played a crucial role in ensuring transparency, accountability, and effective monitoring in the financial system.
SSC CHSL Tier-1 2025 – 30 November 2025 Shift 2 · RBI - history and functions

Q72. The Reserve Bank had first introduced the Banking Ombudsman Scheme in _____ to provide expeditious and inexpensive forum to bank customers for resolution of their complaints relating to deficiency in banking services.

  1. (a) 1995
  2. (b) 1996
  3. (c) 1991
  4. (d) 1992
Answer & solution

Answer: (a) 1995

Correct Answer: Option 1 – 1995
The Reserve Bank of India (RBI) first introduced the Banking Ombudsman Scheme in 1995 under Section 35A of the Banking Regulation Act, 1949. The scheme provides a cost-free and speedy mechanism for customers to resolve complaints against banks. It has been revised multiple times, with the latest revision in 2021 integrating it into the Integrated Ombudsman Scheme.
Why other options are wrong:
Option 2 (1996): Incorrect; the scheme was introduced a year earlier, in 1995.
Option 3 (1991): 1991 was the year of economic liberalisation ; the Ombudsman Scheme came four years later. The candidate incorrectly selected this.
Option 4 (1992): Incorrect; 1995 is the correct year.
SSC CHSL Tier-1 2025 – 25 November 2025 Shift 3 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q73. The Banking Codes and Standards Board of India (BCSBI) was set up on 18th February _____.

  1. (a) 2000
  2. (b) 2002
  3. (c) 2006
  4. (d) 2008
Answer & solution

Answer: (c) 2006

The Banking Codes and Standards Board of India (BCSBI) was set up on 18 February 2006. It was established following the recommendations of the Committee on Procedures and Performance Audit on Public Services (CPPAPS) headed by S.S. Tarapore, to ensure fair banking practices.
Years 2000, 2002, and 2008 are incorrect. Hence, 2006 is correct.
SSC CHSL Tier-1 2025 – 22 November 2025 Shift 3 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q74. The Banking Codes and Standards of India (BCSBI) has released a "Code of Bank's Commitment to Customers" (Code) in July _____.

  1. (a) 2004
  2. (b) 2006
  3. (c) 2008
  4. (d) 2002
Answer & solution

Answer: (b) 2006

Correct Answer: 2006 (Option 2)
The Banking Codes and Standards Board of India (BCSBI) was set up in February 2006 as an independent and autonomous watchdog to monitor and ensure that the Banking Codes and Standards adopted by banks are adhered to in true spirit in delivering services. The 'Code of Bank's Commitment to Customers' was released by BCSBI in July 2006 to protect the rights of bank customers and promote fair banking practices.
Why other options are wrong:
Option 1 - 2004: BCSBI itself was not established until 2006.
Option 3 - 2008: The code was released in 2006, not 2008.
Option 4 - 2002: BCSBI was formed after the recommendations of the M.S. Verma Committee; 2002 predates its establishment.
SSC CHSL Tier-1 2025 – 18 November 2025 Shift 1 · Currency and coins (printing, security, denominations)

Q75. Bharatiya Reserve Bank Note Mudran Limited established as a fully owned subsidiary of the Reserve Bank in the year _____.

  1. (a) 1994
  2. (b) 1996
  3. (c) 1997
  4. (d) 1995
Answer & solution

Answer: (d) 1995

Bharatiya Reserve Bank Note Mudran Private Limited (BRBNMPL) was established in 1995 as a fully owned subsidiary of the Reserve Bank of India (RBI). It was set up to augment the production of banknotes and to meet India's currency requirements. It has printing presses in Mysuru (Karnataka) and Salboni (West Bengal). Why other options are wrong: Option 1 (1994): BRBNMPL was not established in 1994. Option 2 (1996): Incorrect; the correct year of establishment is 1995. Option 3 (1997): Also incorrect; BRBNMPL was established two years earlier in 1995.
SSC CHSL Tier-1 2025 – 18 November 2025 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q76. In which year was the fixed rate repos in government securities was introduced to give maneuverability in liquidity management?

  1. (a) 1995
  2. (b) 1997
  3. (c) 1998
  4. (d) 1996
Answer & solution

Answer: (b) 1997

Fixed rate repos in government securities were introduced by the Reserve Bank of India in 1997 to provide flexibility and maneuverability in liquidity management. Repos (Repurchase Agreements) allow banks to borrow money from the RBI by selling government securities with an agreement to repurchase them at a fixed rate, helping manage short-term liquidity in the banking system. Why other options are wrong: Option 1 (1995): Fixed rate repos were not introduced this early. Option 3 (1998): Incorrect; they were introduced a year earlier in 1997. Option 4 (1996): Incorrect; the actual year of introduction was 1997.
SSC CGL Tier-1 2025 – 24 September 2025 Shift 2 · Money supply measures (M0-M4)

Q77. Which of the following statements about factors affecting the Money Multiplier (MM) is/are correct?
1. Cash held by individuals acts as a leakage and reduces the money multiplier.
2. Higher reserves held by banks with the RBI increase the money multiplier.
3. A higher Cash Reserve Ratio (CRR) reduces the banking system's capacity to create money.

  1. (a) Only 1 and 3
  2. (b) Only 2 and 3
  3. (c) Only 1 and 2
  4. (d) All 1, 2 and 3 are three
Answer & solution

Answer: (a) Only 1 and 3

Statement 1 is correct: cash held outside the banking system is a leakage, reducing money creation.
Statement 2 is incorrect: higher reserves with RBI reduce the money multiplier.
Statement 3 is correct: a higher CRR reduces banks' lending capacity, hence reduces money creation.
Hence 1 and 3 are correct.
SSC CGL Tier-1 2025 – 24 September 2025 Shift 2 · Commercial banks and bank nationalisation

Q78. The lead bank scheme was introduced in which year?

  1. (a) 1969
  2. (b) 1975
  3. (c) 1980
  4. (d) 1990
Answer & solution

Answer: (a) 1969

The Lead Bank Scheme was introduced by the RBI in 1969 on the recommendations of the Gadgil Study Group and the Banker's Committee.
Under it, a particular district is assigned to a specific commercial bank to lead the development of banking facilities.
SSC CGL Tier-1 2025 – 23 September 2025 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q79. Read the below statements marked as Assertion (A) and Reason (R).
A: Financial intermediaries are essential in transmitting monetary policy to the real economy.
R: They adjust lending and deposit rates in response to policy rates set by the MPC.

  1. (a) Both A and R are true, and R is the correct explanation of A.
  2. (b) Both A and R are true, but R is not the correct explanation of A.
  3. (c) A is true, but R is false.
  4. (d) A is false, but R is true.
Answer & solution

Answer: (a) Both A and R are true, and R is the correct explanation of A.

A TRUE: financial intermediaries are key transmission channels.
R TRUE: they adjust rates per MPC decisions.
R correctly explains A — rate adjustment is the transmission mechanism.
SSC CGL Tier-1 2025 – 23 September 2025 Shift 3 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q80. Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion(A): CRR (Cash Reserve Ratio) and SLR requirements increase the lending capacity of banks.
Reason(R): These requirements reduce the amount of money banks can lend to the public.

  1. (a) Both A and R are true, and R is the correct explanation of A.
  2. (b) Both A and R are true, but R is not the correct explanation of A.
  3. (c) A is true, but R is false.
  4. (d) A is false, but R is true.
Answer & solution

Answer: (d) A is false, but R is true.

A is false: CRR and SLR requirements actually reduce the lending capacity of banks, not increase it.
R is true: by mandating reserves with RBI or in approved securities, these requirements reduce the funds available for lending.
Hence A is false but R is true.
SSC CGL Tier-1 2025 – 12 September 2025 Shift 3 · Types of banks (RRB, co-operative, payments, small finance)

Q81. Which scheme supports financial services through postmen?

  1. (a) NSAP
  2. (b) IPPB
  3. (c) PMJAY
  4. (d) PRAGATI
Answer & solution

Answer: (b) IPPB

• Government Schemes:
• IPPB (India Post Payments Bank) supports financial services through the postal network and postmen.
• It enables banking and financial services to reach remote areas via India Post's vast network.
• NSAP is National Social Assistance Programme; PMJAY is health insurance; PRAGATI is an IT platform.
• Answer: IPPB
RRB NTPC UG CBT-1 2024-25 – 1 September 2025 Shift 3 · Bank mergers and consolidation

Q82. The Department of Financial Services (DFS) notified amalgamation of 26 Regional Rural Banks (RRBs) on the principles of ‘One State One RRB’ in which phase of amalgamation of RRBs in 2025?

  1. (a) Third
  2. (b) Second
  3. (c) Fourth
  4. (d) Fifth
Answer & solution

Answer: (c) Fourth

SSC Selection Post 2025 (Phase XIII) – 29 August 2025 Shift 1 · Money - functions and types

Q83. Read the following two statements carefully and choose the correct option:
Assertion (A): In barter exchange, double coincidence of wants enhances transactional efficiency.
Reason (R): Double coincidence of wants is done away with by money.

  1. (a) Both A and R are true, and R is the correct explanation of A.
  2. (b) Both A and R are true, but R is not the correct explanation of A.
  3. (c) A is true, but R is false.
  4. (d) A is false, but R is true.
Answer & solution

Answer: (d) A is false, but R is true.

Correct Answer: Option 4 – A is false, but R is true
Assertion (A) is FALSE: Double coincidence of wants does NOT enhance transactional efficiency in barter — it is precisely a BARRIER to transactional efficiency. In barter, both parties must simultaneously want what the other has (e.g., a farmer wanting shoes must find a cobbler who wants grain). This requirement makes barter highly inefficient, limiting trade and exchange.
Reason (R) is TRUE: Money eliminates the need for double coincidence of wants by acting as a medium of exchange. Instead of needing to find someone who both has what you want AND wants what you have, money allows any transaction to be split — sell your goods for money, then use money to buy anything from anyone. This is one of the key functions of money that overcomes barter's inefficiency.
Since A is false (double coincidence hinders, not enhances, efficiency) but R is true (money eliminates double coincidence requirement) — Option 4 (D) is correct.
SSC Selection Post 2025 (Phase XIII) – 29 August 2025 Shift 1 · Commercial banks and bank nationalisation

Q84. First Nationalization of major banks occurred in which year?

  1. (a) 1965
  2. (b) 1969
  3. (c) 1971
  4. (d) 1980
Answer & solution

Answer: (b) 1969

The correct answer is1969.
The first major nationalization of commercial banks in India occurred onJuly 19, 1969. Under the leadership of the then Prime Minister Indira Gandhi, the government brought14 major private commercial banks(each holding deposits of over ₹50 crore) under state ownership.
This decision was a massive economic turning point designed to increase financial inclusion and redirect funds toward neglected priority sectors like agriculture and small-scale industries.
For a quick reference of other dates:
1955:Nationalization of the Imperial Bank of India to form the State Bank of India (SBI).
1969:First major nationalization of 14 commercial banks.
1980:Second phase of nationalization, involving 6 additional banks
RRB NTPC UG CBT-1 2024-25 – 29 August 2025 Shift 1 · Bank mergers and consolidation

Q85. After amalgamation of 26 Regional Rural Banks (RRBs) in fourth phase of amalgamation, as notified by Department of Financial Services (DFS) in 2025, how many RRBs will be left in the country?

  1. (a) 18
  2. (b) 25
  3. (c) 21
  4. (d) 28
Answer & solution

Answer: (d) 28

RRB NTPC UG CBT-1 2024-25 – 22 August 2025 Shift 3 · Monetary Policy Committee

Q86. In which of the following years was the monetary policy framework moved towards flexible inflation targeting and a six member Monetary Policy Committee (MPC) constituted for setting the policy rate?

  1. (a) 2016
  2. (b) 2013
  3. (c) 1998
  4. (d) 1992
Answer & solution

Answer: (a) 2016

RRB NTPC UG CBT-1 2024-25 – 18 August 2025 Shift 1 · Commercial banks and bank nationalisation

Q87. Which of the following was among the first financial institutions in India to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector?

  1. (a) Axis Bank Limited
  2. (b) IndusInd Bank Limited
  3. (c) HDFC Limited
  4. (d) Kotak Mahindra Bank Limited
Answer & solution

Answer: (c) HDFC Limited

RRB NTPC UG CBT-1 2024-25 – 18 August 2025 Shift 3 · Monetary Policy Committee

Q88. The Monetary Policy Committee (MPC) was established to formalise inflation targeting. How many members constitute India’s MPC?

  1. (a) 7
  2. (b) 3
  3. (c) 6
  4. (d) 5
Answer & solution

Answer: (c) 6

RRB NTPC UG CBT-1 2024-25 – 13 August 2025 Shift 2 · Bank mergers and consolidation

Q89. How many public sector banks are operating in India, as on 1 May 2025?

  1. (a) 12
  2. (b) 10
  3. (c) 8
  4. (d) 14
Answer & solution

Answer: (a) 12

RRB NTPC UG CBT-1 2024-25 – 12 August 2025 Shift 1 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q90. Which of the following instruments is primarily used by the RBI for monetary policy implementation in the post 1991 reform era?

  1. (a) Direct taxes
  2. (b) Tariff rates
  3. (c) Export incentives
  4. (d) Repo rate
Answer & solution

Answer: (d) Repo rate

RRB NTPC UG CBT-1 2024-25 – 11 August 2025 Shift 1 · Commercial banks and bank nationalisation

Q91. When was the Bank of Madras established as the third Presidency Bank in India?

  1. (a) 1857
  2. (b) 1843
  3. (c) 1840
  4. (d) 1863
Answer & solution

Answer: (b) 1843

SSC Selection Post 2025 (Phase XIII) – 29 July 2025 Shift 3 · Money supply measures (M0-M4)

Q92. Which of the following does NOT refer to reserve money?

  1. (a) Central bank money
  2. (b) Base money
  3. (c) High powered money
  4. (d) Savings money
Answer & solution

Answer: (d) Savings money

Correct Answer: Option 4 – Savings money
Reserve money (also called the Monetary Base) is the total liability of the Reserve Bank of India (RBI) and consists of: currency in circulation + bankers' deposits with RBI + other deposits with RBI. It is the foundation of money supply. Reserve money is known by three equivalent terms:
Option 1 (Central bank money): Reserve money is money created/issued by the central bank — it IS central bank money.
Option 2 (Base money): Reserve money IS base money — the monetary base on which commercial banks create broad money through credit multiplication.
Option 3 (High powered money): Reserve money IS high-powered money (HPM) — because each rupee of reserve money can support multiple rupees of deposits through the money multiplier effect.
Option 4 (Savings money): 'Savings money' is NOT a term for reserve money. Savings money refers to money deposited in savings accounts with commercial banks — it is part of broad money (M2, M3) but not reserve money/monetary base. This is the correct answer.
SSC Selection Post 2025 (Phase XIII) – 28 July 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q93. Name the situation when the central bank reduces interest rates to stimulate economic growth?

  1. (a) Expansionary monetary policy
  2. (b) Contractionary monetary policy
  3. (c) Fiscal stimulus
  4. (d) Quantitative easing
Answer & solution

Answer: (a) Expansionary monetary policy

Correct Answer: Option 1 – Expansionary monetary policy
Expansionary monetary policy (also called 'easy money' or 'accommodative' policy) refers to actions taken by a central bank (like RBI) to stimulate economic growth by reducing interest rates, which makes borrowing cheaper, encourages investment and consumption, and boosts aggregate demand. Tools include: reducing repo rate, reverse repo rate, CRR, and SLR. It is used during economic slowdowns or recessions.
Option 2 (Contractionary monetary policy): This involves raising interest rates to reduce money supply and control inflation — the opposite of what the question describes.
Option 3 (Fiscal stimulus): Fiscal stimulus involves government spending increases or tax cuts — a fiscal (not monetary) policy tool; the central bank does not conduct fiscal policy.
Option 4 (Quantitative easing): QE is a specific unconventional monetary tool where the central bank purchases government securities to inject liquidity when interest rates are already near zero — it is a subset of expansionary policy, not the general term.
RRB NTPC GL CBT-1 2024-25 – 24 June 2025 Shift 2 · RBI - history and functions

Q94. When did the central office of the Reserve Bank of India shift to Mumbai?

  1. (a) 1949
  2. (b) 1935
  3. (c) 1937
  4. (d) 1947
Answer & solution

Answer: (c) 1937

RRB NTPC GL CBT-1 2024-25 – 24 June 2025 Shift 2 · Monetary policy tools (repo, reverse repo, CRR, SLR, MSF, bank rate)

Q95. Which of the following is a window provided by the Reserve Bank of India (RBI) for banks to borrow overnight funds at a higher interest rate than the repo rate?

  1. (a) Open market operation
  2. (b) Marginal standing facility
  3. (c) Standing deposit facility
  4. (d) Off budget financing
Answer & solution

Answer: (b) Marginal standing facility

RRB NTPC GL CBT-1 2024-25 – 21 June 2025 Shift 3 · RBI - history and functions

Q96. What is the maximum strength of the Deputy Governors of Reserve Bank of India, according to the Reserve Bank of India Act, 1934?

  1. (a) Five Deputy Governors
  2. (b) Four Deputy Governors
  3. (c) Two Deputy Governors
  4. (d) Three Deputy Governors
Answer & solution

Answer: (b) Four Deputy Governors

RRB NTPC GL CBT-1 2024-25 – 20 June 2025 Shift 3 · Bank mergers and consolidation

Q97. The Indian government is set to implement the 'One State, One RRB' (Regional Rural Bank) policy to improve operational efficiency, reduce competition and consolidate the existing 43 RRBs into ̲_______.

  1. (a) 29
  2. (b) 27
  3. (c) 28
  4. (d) 26
Answer & solution

Answer: (c) 28

RRB NTPC GL CBT-1 2024-25 – 19 June 2025 Shift 2 · Currency and coins (printing, security, denominations)

Q98. In which year was the demonetisation of 500- and 1000-rupees notes announced in India?

  1. (a) 2016
  2. (b) 2014
  3. (c) 2018
  4. (d) 2020
Answer & solution

Answer: (a) 2016

RRB NTPC GL CBT-1 2024-25 – 19 June 2025 Shift 2 · Digital payments (UPI, NEFT, RTGS, IMPS)

Q99. Which of the following banking facilities is/are operated by National Payments Corporation of India?
1. National Electronic Funds Transfer (NEFT)
2. Aadhaar Enabled Payment System
3. UPI Lite

  1. (a) Only 1 and 2
  2. (b) Only 1 and 3
  3. (c) Only 2 and 3
  4. (d) 1, 2 and 3
Answer & solution

Answer: (c) Only 2 and 3

RRB NTPC GL CBT-1 2024-25 – 16 June 2025 Shift 2 · NPAs and banking reforms (Narasimham, SARFAESI, IBC)

Q100. Banking reforms were part of the 1991 economic reforms. Which of the following committees recommended banking sector liberalisation in 1991?

  1. (a) Kelkar Committee
  2. (b) Rangarajan Committee
  3. (c) Suresh Tendulkar Committee
  4. (d) Narasimham Committee
Answer & solution

Answer: (d) Narasimham Committee

12

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