TOPIC 1 – MONETARY POLICY & RBI (Highest Weightage)

CONTENT – What you must know

RBI – Establishment & Structure

·       RBI was established on 1 April 1935 under the RBI Act, 1934 (based on Hilton Young Commission 1926 recommendations).

·       RBI was nationalised on 1 January 1949. HQ shifted from Kolkata to Mumbai in 1937.

·       RBI is governed by Central Board: Governor + max 4 Deputy Governors + 4 Directors (one each from 4 Local Boards) + 10 Directors nominated by GoI + 2 Govt officials.

·       Local Boards at: Mumbai (Western), Kolkata (Eastern), Chennai (Southern), New Delhi (Northern).

Functions of RBI (4 Cs + 1 R memory)

·       Currency Issuance – Sole right under Section 22 of RBI Act 1934 (except Re 1 notes/coins issued by GoI).

·       Custodian of Foreign Exchange Reserves.

·       Controller of Credit (Monetary Policy).

·       Clearing house functions through clearing corporations.

·       Regulator of Banks (under Banking Regulation Act 1949) and NBFCs (under RBI Act 1934, Chap IIIB).

MPC (Monetary Policy Committee) – VERY IMPORTANT

·       Set up under amended RBI Act 1934 (Sec 45ZB) in 2016.

·       Composition: 6 members – 3 from RBI (Governor as Chairman + Deputy Governor + Officer nominated by RBI Board) + 3 external (nominated by Central Government for 4 years).

·       Meets at least 4 times a year (currently bi-monthly).

·       Decides Repo rate by majority vote. In case of tie, RBI Governor has casting vote (Section 45ZD).

·       Quorum = 4 members (must include Governor or Deputy Governor in his absence).

·       Inflation Target = 4% (+/- 2% tolerance band) on CPI-Combined.

LAF Corridor (Liquidity Adjustment Facility) – MEMORISE

Tool	Position	Formula	Purpose
MSF (Marginal Standing Facility)	TOP (ceiling)	Repo + 25 bps	Emergency overnight, against G-Sec (up to 1% NDTL extra)
Bank Rate	= MSF since 2012	Same as MSF	Long-term lending rate
Repo Rate	MIDDLE (policy rate)	Set by MPC	RBI lends to banks against G-Sec, 1-day
SDF (Standing Deposit Facility)	BOTTOM (floor)	Repo – 25 bps	Uncollateralised, RBI absorbs liquidity (since 8 Apr 2022)

 

Important: SDF replaced fixed Reverse Repo as the floor of LAF corridor on 8 April 2022. Reverse Repo is now used only for variable rate operations.

Quantitative vs Qualitative Tools

·       QUANTITATIVE: Repo, Reverse Repo, MSF, SDF, Bank Rate, CRR, SLR, OMO (Open Market Operations), MSS (Market Stabilisation Scheme).

·       QUALITATIVE: Margin requirements (LTV ratio), Moral suasion, Direct action, Credit rationing, Selective credit control.

CRR vs SLR (most asked comparison)

Aspect	CRR	SLR
Full form	Cash Reserve Ratio	Statutory Liquidity Ratio
Maintained as	% of NDTL	% of NDTL
Form	Cash with RBI	Cash, Gold, G-Sec with bank itself
Interest earned	No interest	Earns interest (on G-Sec)
Section of Act	RBI Act 1934, Sec 42(1)	BR Act 1949, Sec 24
Statutory Limits	No floor/ceiling now	Max 40%, no minimum

 

PREVIOUS YEAR QUESTIONS – Monetary Policy

Q1. RBI was nationalised on:  [PYQ-2023]

a) 1 April 1935

b) 1 January 1949

c) 15 August 1947

d) 26 January 1950

Ans: b) 1 January 1949  [Established 1935; nationalised 1949]

Q2. The number of members in Monetary Policy Committee (MPC) is:  [PYQ-2023, 2024]

a) 5

b) 6

c) 7

d) 9

Ans: b) 6  [3 RBI + 3 external nominees]

Q3. Inflation targeting framework set under amended RBI Act 1934 specifies CPI inflation target as:  [PYQ-2022, 2024]

a) 2% +/- 1%

b) 4% +/- 2%

c) 5% +/- 2%

d) 6% +/- 2%

Ans: b) 4% +/- 2%  [CPI Combined; reviewed every 5 years]

Q4. Which of the following is a quantitative tool of monetary policy?  [PYQ-2022]

a) Moral Suasion

b) Margin Requirements

c) Open Market Operations

d) Credit Rationing

Ans: c) Open Market Operations  [OMO is quantitative; others are qualitative]

Q5. MSF (Marginal Standing Facility) rate is:  [PYQ-2023]

a) Repo – 25 bps

b) Repo + 25 bps

c) Repo + 50 bps

d) Same as Bank Rate but separate

Ans: b) Repo + 25 bps  [MSF and Bank Rate are kept equal since 2012]

Q6. SDF (Standing Deposit Facility) was introduced as the floor of LAF corridor in:  [PYQ-2024]

a) Apr 2020

b) Apr 2021

c) Apr 2022

d) Apr 2023

Ans: c) Apr 2022  [Specifically 8 April 2022; replaced fixed Reverse Repo]

Q7. Sole right to issue currency in India is given to RBI under:  [PYQ-2022]

a) Section 22 of RBI Act 1934

b) Section 5 of BR Act 1949

c) Section 17 of RBI Act

d) Article 246 of Constitution

Ans: a) Section 22 of RBI Act 1934  [Re 1 notes/coins issued by GoI under Coinage Act 2011]

Q8. CRR is maintained as a percentage of:  [PYQ-2021, 2023]

a) Total Demand Liabilities only

b) NDTL

c) Total Assets

d) Total Investments

Ans: b) NDTL  [Net Demand and Time Liabilities]

Q9. Currency printing presses in India are located at all the following EXCEPT:  [PYQ-2022]

a) Dewas (MP)

b) Nashik (Maharashtra)

c) Mysuru (Karnataka)

d) Hyderabad (Telangana)

Ans: d) Hyderabad (Telangana)  [Hyderabad has Mint (coins), not press]

Q10. Which committee recommended the establishment of MPC?  [PYQ-2023]

a) Narasimham Committee

b) Urjit Patel Committee

c) Rajan Committee

d) Y.V. Reddy Committee

Ans: b) Urjit Patel Committee  [2014 report; led to 2016 amendment of RBI Act]

2026-LIKELY QUESTIONS – Monetary Policy

Q11. If the current Repo rate is 6.50%, what would be the SDF rate?  [2026-LIKELY]

a) 6.25%

b) 6.75%

c) 7.00%

d) 6.50%

Ans: a) 6.25%  [SDF = Repo – 25 bps]

Q12. Which of the following is NOT a part of Reverse Repo / SDF transactions?  [2026-LIKELY]

a) Absorbs liquidity from system

b) Bank deposits funds with RBI

c) RBI lends to banks against securities

d) Reduces money supply

Ans: c) RBI lends to banks against securities  [That’s Repo, not Reverse Repo/SDF]

Q13. When inflation is above 6% for 3 consecutive quarters, RBI must submit a report to:  [2026-LIKELY]

a) Prime Minister

b) President

c) Central Government

d) Parliament

Ans: c) Central Government  [Section 45ZN; failure to maintain inflation target]

 

TOPIC 2 – NPA, ASSET CLASSIFICATION & RECOVERY

CONTENT

NPA – When is an account classified as NPA?

·       Term Loan: Interest/principal overdue for more than 90 days.

·       Cash Credit / Overdraft: ‘Out of order’ for more than 90 days. Out of order = balance continuously exceeds drawing power for 90 days, OR no credits in last 90 days, OR credits insufficient to cover interest.

·       Bills Discounted: Overdue for more than 90 days.

·       Agriculture (short duration crops): Principal/interest overdue for 2 crop seasons.

·       Agriculture (long duration crops): Overdue for 1 crop season.

·       Derivative receivables: Overdue for 90 days from specified due date.

Asset Classification Categories

Classification	Definition	Provision (Secured)	Provision (Unsecured)
Standard	Performing asset	0.40% (general); 0.25% Direct Agri/SME; 1% CRE	0.40%
Sub-Standard	NPA up to 12 months	15%	25% (10% extra for unsecured ab initio)
Doubtful D1	12-24 months in NPA	25% on secured + 100% unsecured	100%
Doubtful D2	24-48 months in NPA	40% on secured + 100% unsecured	100%
Doubtful D3	More than 48 months	100% on entire	100%
Loss	Loss identified by bank/auditor/RBI	100%	100%

 

SMA (Special Mention Account) Categories

·       SMA-0: Principal/interest overdue 1-30 days

·       SMA-1: Overdue 31-60 days

·       SMA-2: Overdue 61-90 days

·       Beyond 90 days = NPA. CRILC reporting threshold = Rs 5 crore aggregate exposure.

SARFAESI Act 2002 – Recovery Mechanism

·       Full form: Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

·       Applies when: Account is NPA + Loan is secured + Outstanding > Rs 1 lakh + Asset is not agricultural land.

·       Section 13(2): Bank issues 60-day demand notice to borrower.

·       Section 13(3A): Borrower can submit representation/objection within 60 days; bank must reply within 15 days.

·       Section 13(4): If borrower fails to repay within 60 days, bank can take possession of secured asset, sell/lease/assign or appoint manager.

·       Section 14: If physical possession resisted, bank can request District Magistrate / CMM to take possession (DM must decide within 30 days, max 60 days).

·       Section 17: Borrower can appeal to DRT within 45 days of bank’s action.

·       Section 18: Further appeal to DRAT (Debt Recovery Appellate Tribunal) within 30 days, with 50% of debt deposit.

DRT (Debts Recovery Tribunal)

·       Established under Recovery of Debts Due to Banks and Financial Institutions Act 1993 (now RDDBFI Act).

·       Pecuniary jurisdiction: Dues >= Rs 20 lakh.

·       Appeal goes to DRAT.

IBC 2016 – Insolvency and Bankruptcy Code

·       Adjudicating Authority: NCLT (companies) / DRT (individuals & partnerships).

·       Default threshold: Rs 1 crore (raised from Rs 1 lakh in March 2020).

·       Resolution timeline: 180 days + 90 days extension + 60 days litigation buffer = 330 days maximum.

·       Initiation: Financial creditor (Sec 7), Operational creditor (Sec 9), Corporate debtor itself (Sec 10).

·       Waterfall (Sec 53 of IBC priority): Insolvency costs > Workmen + Secured creditors > Unsecured employee dues > Financial debts of unsecured creditors > Statutory dues to govt > Equity shareholders.

PREVIOUS YEAR QUESTIONS

Q14. An account becomes NPA in case of a term loan when interest/installment is overdue for more than:  [PYQ-2021,2022,2023,2024]

a) 30 days

b) 60 days

c) 90 days

d) 180 days

Ans: c) 90 days  [Standard NPA classification]

Q15. Provision required on Sub-standard secured advance is:  [PYQ-2022, 2023]

a) 10%

b) 15%

c) 25%

d) 100%

Ans: b) 15%  [Sub-standard NPA up to 12 months in NPA]

Q16. Under Doubtful D2 category, secured portion provisioning is:  [PYQ-2023, 2024]

a) 25%

b) 40%

c) 60%

d) 100%

Ans: b) 40%  [D2 = 24-48 months in NPA]

Q17. Under SARFAESI Act, demand notice is issued under section:  [PYQ-2022, 2024]

a) Section 13(2)

b) Section 13(4)

c) Section 14

d) Section 17

Ans: a) Section 13(2)  [60-day notice]

Q18. SARFAESI Act applies if outstanding NPA amount is more than:  [PYQ-2023]

a) Rs 50,000

b) Rs 1 lakh

c) Rs 10 lakh

d) Rs 20 lakh

Ans: b) Rs 1 lakh  [Section 31; SARFAESI threshold]

Q19. Borrower can challenge bank’s action under SARFAESI before:  [PYQ-2024]

a) Civil Court

b) DRT under Section 17

c) High Court directly

d) NCLT

Ans: b) DRT under Section 17  [Within 45 days; 25% deposit not required at DRT level]

Q20. Maximum resolution period under IBC including extensions and litigation is:  [PYQ-2022, 2024]

a) 180 days

b) 270 days

c) 330 days

d) 365 days

Ans: c) 330 days  [180 + 90 + 60 buffer]

Q21. Pecuniary jurisdiction of DRT is debt amount of:  [PYQ-2023]

a) >= Rs 1 lakh

b) >= Rs 10 lakh

c) >= Rs 20 lakh

d) >= Rs 50 lakh

Ans: c) >= Rs 20 lakh  [Below Rs 20 lakh – civil court]

Q22. SMA-2 classification means principal/interest is overdue for:  [PYQ-2022]

a) 1-30 days

b) 31-60 days

c) 61-90 days

d) > 90 days

Ans: c) 61-90 days  [Beyond 90 = NPA]

Q23. Under IBC, default threshold for initiating CIRP was raised in March 2020 to:  [PYQ-2024]

a) Rs 1 lakh

b) Rs 10 lakh

c) Rs 1 crore

d) Rs 5 crore

Ans: c) Rs 1 crore  [Increased from Rs 1 lakh during COVID]

2026-LIKELY QUESTIONS

Q24. An agricultural loan for short-duration crop becomes NPA when overdue for:  [2026-LIKELY]

a) 90 days

b) 1 crop season

c) 2 crop seasons

d) 6 months

Ans: c) 2 crop seasons  [Long duration = 1 crop season]

Q25. Under IBC, an Operational Creditor initiates CIRP under section:  [2026-LIKELY]

a) Section 7

b) Section 9

c) Section 10

d) Section 14

Ans: b) Section 9  [Sec 7 = Financial creditor; Sec 10 = Corporate debtor]

Q26. If NPA balance is Rs 100 lakh secured + Rs 50 lakh unsecured, in Doubtful D1, total provision will be:  [2026-LIKELY]

a) Rs 25 lakh

b) Rs 50 lakh

c) Rs 75 lakh

d) Rs 100 lakh

Ans: c) Rs 75 lakh  [Secured 25% of 100 = 25; Unsecured 100% of 50 = 50; Total 75]

 

TOPIC 3 – PRIORITY SECTOR LENDING (PSL)

CONTENT

PSL Targets – Domestic Scheduled Commercial Banks

Category	Target % of ANBC / CEOBE
Total Priority Sector	40%
Agriculture	18%
Small & Marginal Farmers (within Agri)	10%
Micro Enterprises	7.5%
Advances to Weaker Sections	12%
MSE (Micro & Small Enterprises)	7.5%

 

ANBC = Adjusted Net Bank Credit; CEOBE = Credit Equivalent of Off-Balance Sheet Exposures (whichever higher).

PSL Categories – What qualifies?

·       Agriculture: Crop loans, KCC, agriculture infra (warehouses, cold storage), allied activities (dairy, poultry, fisheries).

·       MSME: All loans to MSME enterprises (Micro, Small, Medium per revised classification).

·       Education: Up to Rs 20 lakh (regardless of merit).

·       Housing: Metro (population >= 10 lakh) – loans up to Rs 35 lakh for houses costing up to Rs 45 lakh; Other centres – up to Rs 25 lakh for houses costing up to Rs 30 lakh.

·       Social Infrastructure: Schools, healthcare facilities, drinking water, sanitation in Tier II to VI centres – up to Rs 5 crore per borrower for schools/healthcare.

·       Renewable Energy: Bank loans up to Rs 30 crore to entities (Rs 10 lakh for individual households).

·       Export Credit: ‘Incremental’ export credit – up to 2% of ANBC.

·       Weaker Sections: SC/ST, women, minorities, PMJDY OD, beneficiaries of various govt schemes (DRI, Stand-Up India, etc.).

Foreign Banks

·       With >= 20 branches: 40% target like domestic banks.

·       With < 20 branches: 40% target but no separate sub-targets (or staggered).

PSLC (Priority Sector Lending Certificate)

·       Tradable on RBI’s e-Kuber portal.

·       Allows banks short on PSL to buy from banks with surplus.

·       4 categories: PSLC-Agriculture, PSLC-Small & Marginal Farmers, PSLC-Micro Enterprises, PSLC-General.

·       Trading is quarterly. Validity until 31 March of issue year.

·       Shortfall in PSL also goes to RIDF (NABARD), MSME Refinance Fund (SIDBI), NHB Fund.

PREVIOUS YEAR QUESTIONS

Q27. Total Priority Sector target for domestic scheduled commercial banks is:  [PYQ-2021,2022,2023,2024]

a) 32% of ANBC

b) 40% of ANBC

c) 45% of ANBC

d) 50% of ANBC

Ans: b) 40% of ANBC  [Domestic SCB target]

Q28. Sub-target for Agriculture under PSL is:  [PYQ-2022,2024]

a) 10%

b) 15%

c) 18%

d) 25%

Ans: c) 18%  [Within which 10% for Small & Marginal Farmers]

Q29. Sub-target for Weaker Sections under PSL is:  [PYQ-2023]

a) 5%

b) 7.5%

c) 10%

d) 12%

Ans: d) 12%  [Of ANBC]

Q30. Maximum PSL classification for education loan is:  [PYQ-2022, 2024]

a) Rs 10 lakh

b) Rs 15 lakh

c) Rs 20 lakh

d) Rs 25 lakh

Ans: c) Rs 20 lakh  [Regardless of merit/institution]

Q31. Housing loan in metro is treated as PSL if loan amount is up to:  [PYQ-2024]

a) Rs 25 lakh

b) Rs 35 lakh

c) Rs 45 lakh

d) Rs 50 lakh

Ans: b) Rs 35 lakh  [Metro defined as population >= 10 lakh; house cost <= Rs 45L]

Q32. PSLC trading is conducted on:  [PYQ-2023]

a) NPCI platform

b) RBI e-Kuber

c) BSE

d) NSE

Ans: b) RBI e-Kuber  [Quarterly trading; 4 categories]

2026-LIKELY QUESTIONS

Q33. Within the 18% Agriculture target, sub-target for Small & Marginal Farmers is:  [2026-LIKELY]

a) 8%

b) 9%

c) 10%

d) 12%

Ans: c) 10%  [Of ANBC for SF/MF]

Q34. If a domestic bank has ANBC of Rs 10,000 crore, its required PSL is:  [2026-LIKELY]

a) Rs 3,200 cr

b) Rs 4,000 cr

c) Rs 1,800 cr

d) Rs 1,200 cr

Ans: b) Rs 4,000 cr  [40% of ANBC]

Q35. Sub-target for Micro Enterprises under PSL is:  [2026-LIKELY]

a) 5%

b) 7.5%

c) 10%

d) 12%

Ans: b) 7.5%  [Same as MSE sub-target]

 

TOPIC 4 – BASEL III & CAPITAL ADEQUACY

CONTENT

Evolution of Basel Norms

·       Basel I (1988): Focus only on credit risk. CAR (Capital Adequacy Ratio) = 8%.

·       Basel II (2004): Three Pillars – (1) Minimum Capital Requirements (Credit + Market + Operational risk), (2) Supervisory Review, (3) Market Discipline.

·       Basel III (2010, post-2008 GFC): Strengthened capital, introduced liquidity standards (LCR, NSFR), and Leverage Ratio.

Basel III Capital Structure – INDIA

Component	Basel III Global	RBI India
CET 1 (Common Equity Tier 1)	4.5%	5.5%
Additional Tier 1 (AT 1)	1.5%	1.5%
Tier 1 Total	6.0%	7.0%
Tier 2	2.0%	2.0%
Total Capital (CRAR)	8.0%	9.0%
Capital Conservation Buffer (CCB)	2.5%	2.5%
Total CRAR + CCB	10.5%	11.5%

 

Liquidity & Leverage Ratios

·       LCR (Liquidity Coverage Ratio) = HQLA / Net Cash Outflows over 30 days >= 100%.

·       NSFR (Net Stable Funding Ratio) = Available Stable Funding / Required Stable Funding >= 100% (over 1 year horizon).

·       Leverage Ratio: 4% for D-SIBs (Domestic Systemically Important Banks), 3.5% for others.

·       Counter-cyclical Capital Buffer (CCCB): 0% to 2.5% of RWA – currently zero in India.

D-SIBs in India (as of latest)

·       SBI (Bucket 4: 0.80% additional CET1)

·       HDFC Bank (Bucket 3: 0.40%)

·       ICICI Bank (Bucket 1: 0.20%)

PREVIOUS YEAR QUESTIONS

Q36. Minimum total CRAR for Indian banks (excluding CCB) is:  [PYQ-2022, 2024]

a) 8%

b) 9%

c) 10.5%

d) 11.5%

Ans: b) 9%  [Including CCB it becomes 11.5%]

Q37. Capital Conservation Buffer (CCB) under Basel III is:  [PYQ-2022, 2023]

a) 1%

b) 1.5%

c) 2.5%

d) 4%

Ans: c) 2.5%  [Above the minimum 9% CRAR]

Q38. Three Pillars of Basel II are: Minimum Capital, Supervisory Review and:  [PYQ-2022]

a) Liquidity Standards

b) Market Discipline

c) Stress Testing

d) Leverage Ratio

Ans: b) Market Discipline  [Pillar 3]

Q39. Liquidity Coverage Ratio (LCR) requirement is:  [PYQ-2023]

a) >= 70%

b) >= 80%

c) >= 100%

d) >= 120%

Ans: c) >= 100%  [HQLA / Net cash outflows over 30 days]

2026-LIKELY QUESTIONS

Q40. CET1 requirement under RBI Basel III norms is:  [2026-LIKELY]

a) 4.5%

b) 5.5%

c) 6.0%

d) 7.0%

Ans: b) 5.5%  [Higher than Basel global 4.5%]

Q41. NSFR (Net Stable Funding Ratio) is calculated over a horizon of:  [2026-LIKELY]

a) 30 days

b) 90 days

c) 6 months

d) 1 year

Ans: d) 1 year  [Long-term liquidity standard]

Q42. Leverage Ratio for D-SIBs in India is:  [2026-LIKELY]

a) 3.0%

b) 3.5%

c) 4.0%

d) 5.0%

Ans: c) 4.0%  [3.5% for non-D-SIBs]

 

TOPIC 5 – GDP, NATIONAL INCOME & INFLATION

CONTENT

National Income Aggregates – The Chain

·       GDP (Gross Domestic Product) = Market value of all FINAL goods and services produced WITHIN the country during a year.

·       GDP at Market Price (GDP_MP) = Cost of factors + Indirect taxes – Subsidies

·       GVA (Gross Value Added) at Basic Price = GDP_MP – Net Product Taxes (Product taxes – Product subsidies). Used since Jan 2015.

·       GNP (Gross National Product) = GDP + NFIA (Net Factor Income from Abroad).

·       NDP = GDP – Depreciation

·       NNP = GNP – Depreciation

·       National Income (NI) = NNP at Factor Cost = NNP_MP – Indirect Taxes + Subsidies.

·       Per Capita Income = NI / Population.

·       Base Year for new GDP series: 2011-12 (announced Jan 2015 by CSO/MoSPI). Revision to 2022-23 proposed.

Methods of measuring GDP

·       Production / Output method – sum of value added in all sectors.

·       Income method – sum of factor incomes (wages + rent + interest + profit).

·       Expenditure method – C + I + G + (X – M).

·       All three should give same result theoretically.

Inflation – Key Concepts

·       CPI (Consumer Price Index) – Retail level, includes services. CPI Combined base 2012=100. Compiled by NSO/MoSPI.

·       WPI (Wholesale Price Index) – Wholesale level, NO services. Base 2011-12=100. Compiled by Office of Economic Adviser, DPIIT.

·       4 sub-CPI: CPI-Rural, CPI-Urban, CPI-Combined, CPI-IW (Industrial Workers – by Labour Bureau).

·       Headline inflation = CPI; Core inflation = CPI excl food & fuel.

·       Inflation Target = 4% +/- 2% (since 2016, reviewed every 5 years).

Types of Inflation

Type	Meaning
Demand-pull	Aggregate demand exceeds aggregate supply
Cost-push	Rising input costs (wages, raw material)
Stagflation	High inflation + high unemployment + low growth (1970s)
Skewflation	Inflation in some sectors, not others (e.g., onions)
Reflation	Govt creates inflation to combat deflation
Disinflation	Slowing rate of inflation (still positive)
Deflation	Negative inflation (falling prices)
Hyperinflation	Inflation > 50% per month (e.g., Zimbabwe, Venezuela)

 

Money Supply Aggregates

·       M0 (Reserve Money) = Currency in circulation + Bankers’ deposits with RBI + Other deposits with RBI

·       M1 (Narrow Money) = Currency with public + Demand deposits + Other deposits with RBI

·       M2 = M1 + Savings deposits with Post Office

·       M3 (Broad Money – MOST IMPORTANT) = M1 + Time deposits with banks

·       M4 = M3 + Total post office deposits (excl NSC)

PREVIOUS YEAR QUESTIONS

Q43. GDP at market price equals:  [PYQ-2022]

a) GDP at FC + Indirect Taxes – Subsidies

b) GDP at FC – Net Indirect Taxes

c) GVA + Net Factor Income from Abroad

d) NNP + Depreciation

Ans: a) GDP at FC + Indirect Taxes – Subsidies  [MP = FC + Net Indirect Taxes]

Q44. Base year for new GDP series in India is:  [PYQ-2021,2023,2024]

a) 2004-05

b) 2010-11

c) 2011-12

d) 2017-18

Ans: c) 2011-12  [Since January 2015]

Q45. Which of the following is part of M3 (Broad Money) but NOT M1?  [PYQ-2023]

a) Currency with public

b) Demand deposits

c) Time deposits with banks

d) Other deposits with RBI

Ans: c) Time deposits with banks  [M3 = M1 + Time deposits]

Q46. WPI base year currently is:  [PYQ-2022]

a) 2004-05

b) 2011-12

c) 2012

d) 2017-18

Ans: b) 2011-12  [WPI base 2011-12; CPI base 2012]

Q47. Stagflation refers to:  [PYQ-2022, 2024]

a) Recession with low inflation

b) High growth with deflation

c) High inflation with stagnation/recession

d) Hyperinflation

Ans: c) High inflation with stagnation/recession  [1970s phenomenon]

Q48. Headline inflation in India is measured by:  [PYQ-2024]

a) WPI

b) CPI

c) GDP deflator

d) Producer Price Index

Ans: b) CPI  [Headline = CPI Combined; Core excludes food & fuel]

Q49. Reserve Money (M0) is also called:  [PYQ-2023]

a) Narrow money

b) Broad money

c) High powered money

d) Quasi money

Ans: c) High powered money  [Monetary base]

2026-LIKELY QUESTIONS

Q50. GVA at basic prices is calculated as:  [2026-LIKELY]

a) GDP at MP – Net Product Taxes

b) GDP at MP + Subsidies

c) GNP – NFIA

d) NNP – Depreciation

Ans: a) GDP at MP – Net Product Taxes  [Used since 2015 in Indian GDP estimation]

Q51. If a country has GDP of Rs 200 lakh crore, NFIA of -Rs 5 lakh crore, and Depreciation of Rs 20 lakh crore, NNP equals:  [2026-LIKELY]

a) Rs 175 lakh crore

b) Rs 185 lakh crore

c) Rs 195 lakh crore

d) Rs 220 lakh crore

Ans: a) Rs 175 lakh crore  [GNP = 200 – 5 = 195; NNP = 195 – 20 = 175]

Q52. If CPI rises from 150 to 165, inflation rate is:  [2026-LIKELY]

a) 5%

b) 7.5%

c) 10%

d) 15%

Ans: c) 10%  [(165-150)/150 x 100 = 10%]

 

TOPIC 6 – FISCAL POLICY & DEFICITS

CONTENT

Government Budget – Components

·       Revenue Receipts: Tax (Direct + Indirect) + Non-tax (interest, dividend, fees).

·       Capital Receipts: Borrowings + Recoveries of loans + Disinvestment proceeds.

·       Revenue Expenditure: Day-to-day expenses (salaries, subsidies, interest payments, defence revenue).

·       Capital Expenditure: Asset creation (infra, equipment, loans to states).

Types of Deficit

Deficit Type	Formula
Revenue Deficit	Revenue Expenditure – Revenue Receipts
Effective Revenue Deficit	Revenue Deficit – Grants for capital assets
Fiscal Deficit	Total Expenditure – Total Receipts (excluding borrowings)
Primary Deficit	Fiscal Deficit – Interest Payments
Budget Deficit	Total Expenditure – Total Receipts (incl borrowings) – Now obsolete

 

FRBM Act 2003

·       Full form: Fiscal Responsibility and Budget Management Act 2003.

·       Original target: Fiscal Deficit 3% by 2008-09; Revenue Deficit ZERO by 2008-09.

·       Targets postponed multiple times. N.K. Singh Committee 2017 recommended new framework.

·       Current glide path: Fiscal Deficit to be reduced to 4.5% by FY 2025-26.

·       Centre also has Debt-to-GDP target.

GST (Goods and Services Tax)

·       Effective from 1 July 2017 – ‘One Nation One Tax’.

·       Constitutional 101st Amendment Act 2016.

·       Article 279A: GST Council. Chairman = Union Finance Minister; Members = State Finance Ministers + Union MoS Finance.

·       4 main slabs: 5%, 12%, 18%, 28%. Special: 0% (essentials), 3% (gold), 0.25% (rough diamond).

·       Cess on luxury/sin goods (28% slab).

·       Types: CGST + SGST (intra-state), IGST (inter-state, to Centre, distributed).

·       Threshold for registration: Rs 40 lakh (goods, normal), Rs 20 lakh (goods, special category states), Rs 20 lakh (services, normal), Rs 10 lakh (services, special).

PREVIOUS YEAR QUESTIONS

Q53. Fiscal Deficit equals:  [PYQ-2022, 2024]

a) Total expenditure – Revenue receipts

b) Total expenditure – Total receipts (excl borrowings)

c) Revenue exp – Revenue receipts

d) Total exp + Borrowings

Ans: b) Total expenditure – Total receipts (excl borrowings)  [Borrowings finance fiscal deficit]

Q54. Primary Deficit equals:  [PYQ-2022, 2023]

a) Fiscal Deficit + Interest Payments

b) Fiscal Deficit – Interest Payments

c) Revenue Deficit – Interest

d) Capital Deficit

Ans: b) Fiscal Deficit – Interest Payments  [Reflects current borrowing requirement]

Q55. FRBM Act was enacted in:  [PYQ-2022]

a) 2000

b) 2003

c) 2005

d) 2008

Ans: b) 2003  [Fiscal Responsibility and Budget Management Act]

Q56. GST Council is headed by:  [PYQ-2023, 2024]

a) Prime Minister

b) Union Finance Minister

c) RBI Governor

d) Vice President

Ans: b) Union Finance Minister  [Article 279A of Constitution]

Q57. Which of the following is NOT a GST slab in India?  [PYQ-2022]

a) 5%

b) 10%

c) 18%

d) 28%

Ans: b) 10%  [Slabs are 5/12/18/28 + 0/3/0.25]

2026-LIKELY QUESTIONS

Q58. Effective Revenue Deficit equals:  [2026-LIKELY]

a) Revenue Deficit + Capital Receipts

b) Revenue Deficit – Grants for capital assets

c) Revenue Deficit + Interest

d) Same as Revenue Deficit

Ans: b) Revenue Deficit – Grants for capital assets  [Concept post Rangarajan Committee]

Q59. Fiscal Deficit target under current glide path for FY 2025-26 is:  [2026-LIKELY]

a) 3.0%

b) 3.5%

c) 4.5%

d) 5.5%

Ans: c) 4.5%  [FRBM revised glide path]

Q60. GST on inter-state supply is:  [2026-LIKELY]

a) CGST + SGST

b) Only CGST

c) IGST

d) Only SGST

Ans: c) IGST  [IGST = CGST + SGST equivalent, collected by Centre]

 

TOPIC 7 – FINANCIAL INCLUSION SCHEMES

CONTENT – All Schemes at a Glance

Scheme	Launched	Target Group	Key Benefit
PMJDY	28 Aug 2014	Unbanked	Zero balance, RuPay, Rs 2L accident, Rs 10K OD
PMJJBY	9 May 2015	Age 18-50	Rs 2L life cover @ Rs 436/yr
PMSBY	9 May 2015	Age 18-70	Rs 2L accident cover @ Rs 20/yr
APY	9 May 2015	Age 18-40	Rs 1000-5000 pension at age 60
Stand-Up India	5 Apr 2016	SC/ST/Women	Rs 10L-1Cr greenfield loan
MUDRA	8 Apr 2015	Non-corporate small biz	Up to Rs 20L (Tarun Plus)
Sukanya Samriddhi	22 Jan 2015	Girl child < 10	Account, tax benefits
PM Vishwakarma	17 Sep 2023	Traditional artisans	Toolkit, training, loan

 

PMJDY – Detailed

·       Launched 28 Aug 2014 by PM Modi.

·       Zero-balance savings account; if no balance, no penalty.

·       Free RuPay Debit Card with built-in accident insurance (Rs 1 lakh; revised to Rs 2 lakh for accounts opened after 28 Aug 2018).

·       Overdraft facility up to Rs 10,000 (for accounts active for 6 months, age 18-65).

·       Life insurance Rs 30,000 for accounts opened between 15 Aug 2014 – 31 Jan 2015 (one per family).

·       Mobile banking through USSD (*99#).

PMJJBY (Life Cover)

·       Pradhan Mantri Jeevan Jyoti Bima Yojana – Life cover.

·       Sum assured Rs 2 lakh on death (any cause).

·       Age: 18-50 years (life cover up to age 55).

·       Premium: Originally Rs 330/year; revised to Rs 436/year w.e.f. 1 June 2022.

·       Auto-debit from bank account on or before 31 May each year.

PMSBY (Accident Cover)

·       Pradhan Mantri Suraksha Bima Yojana – Accident cover.

·       Sum assured: Rs 2 lakh on accidental death/total disability; Rs 1 lakh on partial disability.

·       Age: 18-70 years.

·       Premium: Originally Rs 12/year; revised to Rs 20/year w.e.f. 1 June 2022.

APY (Pension)

·       Atal Pension Yojana – PFRDA regulated.

·       Age: 18-40 years (minimum 20 years contribution required).

·       Pension: Rs 1000 / 2000 / 3000 / 4000 / 5000 per month from age 60.

·       From 1 Oct 2022: Income tax payers NOT eligible to enroll.

·       Govt co-contribution discontinued from FY 2016-17.

MUDRA Categories (Pradhan Mantri MUDRA Yojana)

Category	Loan Amount
Shishu	Up to Rs 50,000
Kishore	Rs 50,001 to Rs 5 lakh
Tarun	Rs 5 lakh to Rs 10 lakh
Tarun Plus	Rs 10 lakh to Rs 20 lakh (NEW – 2024 Budget)

 

·       Loans by SCBs, RRBs, Cooperatives, MFIs, NBFCs.

·       Collateral-free; for non-farm income generating activities (manufacturing, services, trading).

·       CGFMU (Credit Guarantee Fund) coverage available.

PREVIOUS YEAR QUESTIONS

Q61. PMJDY was launched on:  [PYQ-2022, 2024]

a) 15 Aug 2014

b) 28 Aug 2014

c) 1 Jan 2015

d) 26 Jan 2015

Ans: b) 28 Aug 2014  [Pradhan Mantri Jan Dhan Yojana]

Q62. Annual premium of PMJJBY (revised) is:  [PYQ-2023, 2024]

a) Rs 12

b) Rs 330

c) Rs 436

d) Rs 500

Ans: c) Rs 436  [Revised w.e.f. 1.6.2022 from Rs 330]

Q63. Annual premium of PMSBY (revised) is:  [PYQ-2023, 2024]

a) Rs 12

b) Rs 20

c) Rs 100

d) Rs 330

Ans: b) Rs 20  [Revised from Rs 12 w.e.f. 1.6.2022]

Q64. Maximum monthly pension under APY is:  [PYQ-2022, 2023]

a) Rs 1000

b) Rs 3000

c) Rs 5000

d) Rs 10000

Ans: c) Rs 5000  [Range Rs 1000-5000]

Q65. MUDRA Tarun loan range is:  [PYQ-2024]

a) Up to Rs 50,000

b) Rs 50K – Rs 5L

c) Rs 5L – Rs 10L

d) Rs 10L – Rs 20L

Ans: c) Rs 5L – Rs 10L  [Tarun Plus is Rs 10-20L (new)]

Q66. PMJDY accident cover for accounts opened after 28 Aug 2018 is:  [PYQ-2024]

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) Rs 10 lakh

Ans: b) Rs 2 lakh  [Earlier Rs 1 lakh]

2026-LIKELY QUESTIONS

Q67. Tarun Plus category under PM MUDRA was introduced in Budget:  [2026-LIKELY]

a) 2022-23

b) 2023-24

c) 2024-25

d) 2025-26

Ans: c) 2024-25  [For repeat borrowers; Rs 10-20 lakh]

Q68. Stand-Up India scheme provides loans of:  [2026-LIKELY]

a) Rs 1 lakh – Rs 10 lakh

b) Rs 10 lakh – Rs 1 crore

c) Rs 10 lakh – Rs 50 lakh

d) Up to Rs 5 lakh

Ans: b) Rs 10 lakh – Rs 1 crore  [Greenfield projects; SC/ST/Women]

Q69. From October 2022, who became INELIGIBLE to enroll in APY?  [2026-LIKELY]

a) NRI

b) Income tax payers

c) Govt employees

d) NPS subscribers

Ans: b) Income tax payers  [Notification 10 Aug 2022]

 

TOPIC 8 – PAYMENT SYSTEMS & DIGITAL BANKING

CONTENT

Comparison of Payment Systems

System	Min	Max	Mode	Operational Hours	Operator
RTGS	Rs 2 lakh	No max	Real-time gross	24×7 (since Dec 2020)	RBI
NEFT	No min	No max (cash Rs 50K non-customer)	Half-hourly batch	24×7 (since Dec 2019)	RBI
IMPS	Re 1	Rs 5 lakh	Real-time	24×7	NPCI
UPI	Re 1	Rs 1L (Rs 5L special)	Real-time	24×7	NPCI
AePS	Re 1	Rs 10K (per txn)	Aadhaar based	24×7	NPCI

 

UPI – Unified Payments Interface

·       Launched 11 April 2016 by NPCI (National Payments Corporation of India).

·       Allows fund transfer using VPA (Virtual Payment Address) – e.g., abc@oksbi.

·       Per-transaction limit Rs 1 lakh (general); Rs 5 lakh for tax payments, IPOs, capital market, RBI Retail Direct, insurance, education, healthcare.

·       Cross-border UPI launched: UAE, Bhutan, Nepal, Singapore (PayNow link), France, Sri Lanka, Mauritius.

·       UPI Lite for small offline txns (up to Rs 500 per txn, Rs 5000 wallet).

·       UPI 123Pay for feature phones (without internet).

CBDC – Central Bank Digital Currency (e-Rupee)

·       Wholesale (CBDC-W): Pilot launched 1 November 2022 – for inter-bank G-Sec settlement.

·       Retail (CBDC-R): Pilot launched 1 December 2022 – via authorised banks.

·       Token-based digital currency, legal tender.

·       Differs from UPI: UPI moves bank deposits; e-Rupee IS the money (sovereign).

Other Payment Systems

·       BHIM: Bharat Interface for Money – app launched Dec 2016 by NPCI.

·       Bharat QR: Common QR for all bank apps.

·       BBPS (Bharat Bill Payment System): Centralised bill payments (electricity, water, gas, etc.).

·       NACH (National Automated Clearing House): For bulk recurring payments (salaries, EMIs).

·       Cheque Truncation System (CTS): Image-based clearing.

·       RuPay: Indian card scheme by NPCI.

PREVIOUS YEAR QUESTIONS

Q70. Minimum amount for RTGS transfer is:  [PYQ-2022, 2024]

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) No minimum

Ans: b) Rs 2 lakh  [No upper limit]

Q71. UPI was launched in:  [PYQ-2023]

a) 2014

b) 2015

c) 2016

d) 2017

Ans: c) 2016  [11 April 2016 by NPCI]

Q72. Per-transaction general limit for UPI is:  [PYQ-2023, 2024]

a) Rs 50,000

b) Rs 1 lakh

c) Rs 2 lakh

d) Rs 5 lakh

Ans: b) Rs 1 lakh  [Rs 5L for tax/IPO/etc]

Q73. Maximum IMPS per-transaction limit is:  [PYQ-2023]

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) Rs 10 lakh

Ans: c) Rs 5 lakh  [Increased from Rs 2L to Rs 5L in Oct 2021]

Q74. RBI’s CBDC pilot for Retail e-Rupee was launched on:  [PYQ-2024]

a) 1 Nov 2022

b) 1 Dec 2022

c) 1 Jan 2023

d) 1 Apr 2023

Ans: b) 1 Dec 2022  [Wholesale was 1 Nov 2022]

2026-LIKELY QUESTIONS

Q75. UPI cross-border linkage with Singapore was done with which platform?  [2026-LIKELY]

a) PayNow

b) PayLah

c) GrabPay

d) Pay+

Ans: a) PayNow  [Launched 21 Feb 2023]

Q76. Per-transaction limit for UPI Lite is:  [2026-LIKELY]

a) Rs 200

b) Rs 500

c) Rs 1000

d) Rs 2000

Ans: b) Rs 500  [Wallet limit Rs 5000]

Q77. NEFT now operates on a 24×7 basis since:  [2026-LIKELY]

a) Dec 2018

b) Dec 2019

c) Dec 2020

d) Dec 2021

Ans: b) Dec 2019  [RTGS 24×7 from Dec 2020]

 

TOPIC 9 – MSME, MUTUAL FUNDS, INSURANCE

CONTENT – MSME (Revised criteria w.e.f. 1 July 2020)

Category	Investment in P&M/Equipment	Annual Turnover
Micro	Up to Rs 1 crore	Up to Rs 5 crore
Small	Up to Rs 10 crore	Up to Rs 50 crore
Medium	Up to Rs 50 crore	Up to Rs 250 crore

 

·       Both Investment AND Turnover criteria apply. Higher of the two decides classification.

·       Manufacturing and Services treated alike (no distinction since 1 July 2020).

·       Udyam Registration mandatory (replaced Udyog Aadhaar).

·       Export turnover excluded from turnover calculation.

·       MSMED Act 2006 – section 15: payment to MSE supplier within 45 days.

CONTENT – Mutual Funds

Structure (4-tier under SEBI MF Regulations 1996)

·       SPONSOR: Promotes the MF (e.g., HDFC, ICICI). Min 40% holding in AMC.

·       TRUSTEES: Custodian of investors’ money; 2/3rd independent. Hold MF property in trust.

·       AMC (Asset Management Company): Manages investments. Min net worth Rs 50 crore.

·       CUSTODIAN: Holds securities (registered with SEBI, separate from sponsor).

Types of Mutual Funds

·       By structure: Open-ended (continuous purchase/redemption), Close-ended (fixed maturity), Interval (mix).

·       By asset class: Equity, Debt, Hybrid, Solution-oriented (retirement, children), Other (Index, FoF, ETF).

·       ELSS (Equity Linked Savings Scheme): 3-year lock-in, 80C deduction up to Rs 1.5 lakh, must invest 80%+ in equity.

·       Liquid Fund: Invests in money market instruments (up to 91 days maturity).

Important Numbers – MF

·       NAV (Net Asset Value) = (Assets – Liabilities) / Units outstanding. Calculated daily for open-ended.

·       Expense Ratio: SEBI cap – depends on size; ~1-2.25% for equity, lower for debt.

·       Exit Load: typically 1% if redeemed before 1 year (varies).

·       Tax (Budget 2024): LTCG on equity > Rs 1.25 lakh @ 12.5%; STCG on equity @ 20%.

·       LTCG holding period – equity: > 12 months; debt (post 1 Apr 2023): always treated at slab rate.

CONTENT – Insurance

Regulators & Bodies

·       IRDAI (Insurance Regulatory and Development Authority of India) – Established 1999, statutory; HQ Hyderabad.

·       LIC: Established 1956 (LIC Act 1956) – was sole life insurer till 2000; IPO listed May 2022.

·       GIC: 1972 – reorganised; now reinsurer.

·       Public sector general insurers: New India Assurance, National, Oriental, United India.

Principles of Insurance

·       Utmost Good Faith (Uberrima Fides): Both parties must disclose all material facts. Breach = contract void.

·       Insurable Interest: Financial stake in subject matter.

·       – Life Insurance: Insurable interest required only at PROPOSAL stage.

·       – General Insurance: Insurable interest required both at PROPOSAL and at LOSS.

·       Indemnity: Insurer compensates only the actual loss (does not apply to life insurance).

·       Subrogation: After paying claim, insurer takes over insured’s right against third party.

·       Contribution: If multiple policies, claim shared proportionately (general insurance).

·       Causa Proxima (Proximate Cause): Direct/dominant cause of loss covered.

·       Loss Minimisation: Insured must take steps to minimise loss.

Bancassurance

·       Banks selling insurance (life/general/health) as Corporate Agent.

·       Open architecture (since 2015): Bank can tie up with up to 3 insurers per segment (3 life + 3 general + 3 health = 9 insurers max).

·       Banks must disclose commission earned to customer.

PREVIOUS YEAR QUESTIONS – MSME / MF / Insurance

Q78. A Small enterprise has investment limit of:  [PYQ-2022, 2024]

a) Rs 1 crore

b) Rs 5 crore

c) Rs 10 crore

d) Rs 50 crore

Ans: c) Rs 10 crore  [Turnover up to Rs 50 cr]

Q79. ELSS lock-in period is:  [PYQ-2022, 2023, 2024]

a) 1 year

b) 3 years

c) 5 years

d) 7 years

Ans: b) 3 years  [Shortest among 80C instruments]

Q80. NAV of mutual fund =  [PYQ-2023]

a) (Assets + Liab) / Units

b) (Assets – Liab) / Units

c) Market Cap / Units

d) Premium – Expenses

Ans: b) (Assets – Liab) / Units  [Net Assets per unit]

Q81. IRDAI was set up in the year:  [PYQ-2022, 2024]

a) 1956

b) 1972

c) 1999

d) 2000

Ans: c) 1999  [IRDA Act 1999; HQ Hyderabad]

Q82. Insurable interest in LIFE insurance must exist:  [PYQ-2023]

a) Only at proposal

b) Only at claim

c) At both proposal and claim

d) At any time

Ans: a) Only at proposal  [General insurance – both]

Q83. Under open architecture, a corporate agent bank can tie up with how many life insurers?  [PYQ-2023, 2024]

a) 1

b) 2

c) 3

d) Unlimited

Ans: c) 3  [3 each in life/general/health]

2026-LIKELY QUESTIONS

Q84. LTCG on equity oriented MF in FY 2024-25 above Rs 1.25 lakh is taxed at:  [2026-LIKELY]

a) 10%

b) 12.5%

c) 15%

d) 20%

Ans: b) 12.5%  [Budget 2024-25 changed from 10% to 12.5%; threshold raised to Rs 1.25 lakh]

Q85. Mutual Funds in India are regulated under:  [2026-LIKELY]

a) RBI Act

b) SEBI (MF Regulations) 1996

c) Companies Act 2013

d) IRDAI Act

Ans: b) SEBI (MF Regulations) 1996  [AMC structure under regulations]

Q86. If insurer pays claim and takes over insured’s right to recover from third party, this is:  [2026-LIKELY]

a) Indemnity

b) Subrogation

c) Contribution

d) Causa Proxima

Ans: b) Subrogation  [Right of insurer post-claim]

 

TOPIC 10 – NPS, CAPITAL MARKET, FEMA

CONTENT – NPS

National Pension System (NPS) – PFRDA Act 2013

·       Regulator: PFRDA (Pension Fund Regulatory and Development Authority).

·       Tier I: Mandatory, lock-in till age 60, withdrawal restricted.

·       Tier II: Voluntary, no lock-in, can withdraw anytime (only if Tier I open).

·       Subscriber age: 18 to 70 years (entry).

·       Exit at 60: 60% as lump sum (TAX-FREE), 40% mandatory annuity (taxable as income).

·       Premature exit (< 60): 80% annuity, 20% lump sum.

·       Death: 100% to nominee/legal heir (no annuity compulsion).

·       Tax benefits:

·       – 80CCD(1): Up to 10% of salary (Central Govt: 14%) within Rs 1.5 lakh of 80C.

·       – 80CCD(1B): Additional Rs 50,000 (above Rs 1.5L 80C limit).

·       – 80CCD(2): Employer contribution up to 10% (Central Govt: 14%) – over and above.

UPS – Unified Pension Scheme (NEW)

·       Approved by Cabinet 24 Aug 2024.

·       Effective: 1 April 2025 for Central Govt employees.

·       Assured pension: 50% of average basic pay of last 12 months (for min 25 years service).

·       Inflation indexation; family pension 60%; minimum Rs 10,000/month.

·       Contributory: Employee 10% + Govt 18.5% = 28.5%.

·       Optional: Employees can choose UPS or stay with NPS.

CONTENT – Capital Markets

Regulator and History

·       SEBI (Securities and Exchange Board of India): Established 12 April 1988; got statutory status under SEBI Act 1992.

·       HQ Mumbai; chairman appointed by Central Govt.

·       BSE: Asia’s oldest, established 1875; demutualised 2005.

·       NSE: Established 1992; commenced trading 1994.

·       Indices:

·       – Sensex (BSE-30): Base 1978-79 = 100.

·       – Nifty 50 (NSE): Base 3 November 1995 = 1000.

Primary vs Secondary Market

·       Primary: New issue of securities. IPO, FPO, Rights Issue, Private Placement, QIP (Qualified Institutional Placement), OFS (Offer for Sale).

·       Secondary: Trading of already issued securities. Settlement: T+1 (since Jan 2023, fully implemented); T+0 introduced 2024 in beta.

Depositories

·       NSDL (National Securities Depository Ltd): 1996, first in India.

·       CDSL (Central Depository Services Ltd): 1999.

·       DP (Depository Participants) act as agents (banks, broker firms).

·       Demat account holds securities in electronic form.

ASBA – Application Supported by Blocked Amount

·       Mandatory for IPO since 2015.

·       Investor’s account is BLOCKED, money debited only on allotment. Earns interest till then.

CONTENT – FEMA & Forex

FERA to FEMA

·       FERA 1973 (Foreign Exchange Regulation Act): Criminal offence framework, focus on regulation.

·       FEMA 1999: Civil offence, focus on management. Effective 1 June 2000.

·       Administered by RBI (regulatory) and Directorate of Enforcement (investigation).

Convertibility

·       Current Account: FULL convertibility since 1994 (subject to permissible transactions).

·       Capital Account: PARTIAL convertibility (subject to RBI/govt approval for various items).

LRS – Liberalised Remittance Scheme

·       Limit: USD 2,50,000 per Financial Year per resident individual.

·       Aggregated for all permissible Capital + Current account transactions.

·       Permissible: Investment in shares/property abroad, education, medical, gift, donation, travel.

·       TCS @ 5% applies on LRS > Rs 7 lakh (some categories @ 20%).

Forex Reserves Components

·       Foreign Currency Assets (FCA) – largest component (~85%).

·       Gold reserves.

·       SDR (Special Drawing Rights) with IMF.

·       Reserve Tranche Position with IMF.

PREVIOUS YEAR QUESTIONS

Q87. NPS Tier I tax-free lump-sum withdrawal at age 60 is:  [PYQ-2022, 2024]

a) 40%

b) 50%

c) 60%

d) 100%

Ans: c) 60%  [40% mandatory annuity (taxable)]

Q88. Additional NPS tax deduction under 80CCD(1B) is:  [PYQ-2023, 2024]

a) Rs 25,000

b) Rs 50,000

c) Rs 75,000

d) Rs 1,00,000

Ans: b) Rs 50,000  [Above Rs 1.5L of 80C]

Q89. SEBI was given statutory status in:  [PYQ-2022]

a) 1988

b) 1992

c) 1996

d) 2002

Ans: b) 1992  [Established 1988, statutory 1992]

Q90. Sensex base year is:  [PYQ-2022, 2024]

a) 1978-79 = 100

b) 1980-81 = 100

c) 1990-91 = 1000

d) 1995 = 1000

Ans: a) 1978-79 = 100  [Nifty: Nov 1995=1000]

Q91. LRS limit per resident per Financial Year is:  [PYQ-2023, 2024]

a) USD 1,00,000

b) USD 2,00,000

c) USD 2,50,000

d) USD 5,00,000

Ans: c) USD 2,50,000  [Liberalised Remittance Scheme]

Q92. FEMA replaced FERA effective from:  [PYQ-2023]

a) 1 April 1999

b) 1 June 2000

c) 1 January 2000

d) 31 March 2000

Ans: b) 1 June 2000  [FEMA 1999 came into force 1.6.2000]

2026-LIKELY QUESTIONS

Q93. UPS (Unified Pension Scheme) is effective from:  [2026-LIKELY]

a) 1 Apr 2024

b) 1 Oct 2024

c) 1 Jan 2025

d) 1 Apr 2025

Ans: d) 1 Apr 2025  [Approved Aug 2024 by Cabinet]

Q94. Under UPS, assured pension is what % of average basic pay of last 12 months?  [2026-LIKELY]

a) 40%

b) 50%

c) 60%

d) 70%

Ans: b) 50%  [After minimum 25 years service]

Q95. T+1 settlement in Indian secondary market was fully implemented from:  [2026-LIKELY]

a) Jan 2022

b) Jan 2023

c) Apr 2023

d) Oct 2023

Ans: b) Jan 2023  [T+0 beta launched 2024]

Q96. DICGC deposit insurance cover per depositor per bank is:  [2026-LIKELY]

a) Rs 1 lakh

b) Rs 2 lakh

c) Rs 5 lakh

d) Rs 10 lakh

Ans: c) Rs 5 lakh  [Revised w.e.f. 4.2.2020 from Rs 1L]

 

TOPIC 11 – LATEST UPDATES (2024-2026 SPECIFIC) – HIGH PROBABILITY

Recent Regulatory Changes – Likely Asked

·       UPS (Unified Pension Scheme) effective 1 Apr 2025 – 50% of avg basic pay assured.

·       MUDRA Tarun Plus (Rs 10-20 lakh) – Budget 2024-25 announcement.

·       LTCG on equity raised to 12.5% (from 10%); threshold raised to Rs 1.25 lakh – Budget 2024-25.

·       STCG on equity raised to 20% (from 15%) – Budget 2024-25.

·       UPI cross-border with: UAE, Bhutan, Nepal, Singapore (PayNow), France, Sri Lanka, Mauritius.

·       RBI’s Project Nexus – cross-border instant payments connecting India with ASEAN countries.

·       Sovereign Green Bonds – first issued in FY23.

·       Account Aggregator framework (NBFC-AA category) – consent-based data sharing.

·       Co-lending Model 2.0 – Banks + NBFCs in 80:20 ratio.

·       Digital Banking Units (DBUs) – 75 across India announced 75th Independence Year.

·       Digital Personal Data Protection Act 2023 – basic awareness.

·       NaBFID (National Bank for Financing Infra & Development) – established 2021.

·       RBI’s PRAVAAH portal (May 2024) – regulatory application processing.

·       Bullet repayment scheme for KCC – to mitigate MSP-linked debt.

Final High-Probability MCQs

Q97. In Budget 2024-25, LTCG on equity above Rs 1.25 lakh is taxed at:  [2026-LIKELY]

a) 10%

b) 12.5%

c) 15%

d) 20%

Ans: b) 12.5%  [STCG raised to 20%]

Q98. RBI’s portal for processing regulatory applications launched May 2024 is:  [2026-LIKELY]

a) PRAVAAH

b) RBIH

c) UDGAM

d) DAKSH

Ans: a) PRAVAAH  [Platform for Regulatory Application Validation and AutHorisation]

Q99. Co-lending model between Banks and NBFCs has ratio:  [2026-LIKELY]

a) 50:50

b) 70:30

c) 80:20

d) 90:10

Ans: c) 80:20  [Bank 80%, NBFC 20%]

Q100. Account Aggregator framework is regulated by:  [2026-LIKELY]

a) SEBI

b) RBI

c) IRDAI

d) PFRDA

Ans: b) RBI  [NBFC-AA category]