MCQ
upsc-p1-economy-banking-system MCQ - Practice Questions with Answers
Solve 9 upsc-p1-economy-banking-system questions for RAS/RPSC preparation.
Practice questions
Q1Consider the following statements about classification of stressed bank assets: 1. Special Mention Account categories are early-warning tools and are not the same as non-performing assets. 2. A sub-standard asset is an NPA that has remained in that category for more than 12 months. 3. An asset that has remained in the sub-standard category for 12 months becomes a doubtful asset. Which of the statements given above are correct? Select the correct answer using the code given below.
Statements 1 and 3 are correct. SMA categories flag stress before NPA classification. A sub-standard asset is an NPA for a period not exceeding 12 months, not one that has remained sub-standard for more than 12 months. After 12 months in the sub-standard category, the asset becomes doubtful.
Q2Arrange the following asset-quality categories in the sequence in which a performing loan may move as repayment stress deepens: 1. Doubtful asset 2. Standard asset 3. Loss asset 4. Sub-standard asset Select the correct answer using the code given below.
Option A gives the correct progression: standard asset, sub-standard asset, doubtful asset and loss asset. A standard loan first becomes an NPA and enters the sub-standard category; after 12 months there it becomes doubtful, while a loss asset is considered uncollectible.
Q3Consider the following statements about recovery and resolution of stressed bank assets: 1. The SARFAESI route permits secured creditors to enforce security interest without first going to court, subject to statutory safeguards. 2. Under the Insolvency and Bankruptcy Code, corporate insolvency resolution shifts control from the debtor to creditors. 3. Asset reconstruction companies acquire stressed financial assets and attempt recovery or restructuring. Which of the statements given above are correct? Select the correct answer using the code given below.
All three statements are correct. SARFAESI concerns enforcement of security interest by secured creditors, the IBC provides a creditor-in-control insolvency process, and asset reconstruction companies purchase stressed assets for recovery or restructuring. These are related but distinct channels.
Q4Match List I with List II: List I (Channel) A. Debt Recovery Tribunal B. SARFAESI C. Insolvency and Bankruptcy Code D. Asset reconstruction company List II (Primary role) 1. Acquires stressed financial assets and attempts recovery or restructuring 2. Provides tribunal-based recovery of debts due to banks and financial institutions 3. Enables secured creditors to enforce security interest 4. Provides time-bound corporate insolvency resolution or liquidation Select the correct answer using the code given below.
Option D gives the correct matches. DRTs provide tribunal-based debt recovery; SARFAESI enables enforcement of security interest by secured creditors; the IBC provides corporate insolvency resolution or liquidation; and asset reconstruction companies acquire stressed assets for recovery or restructuring.
Q5Consider the following statements about the legal and institutional structure of banking in India: 1. Banking is a Union subject under Entry 45 of List I in the Seventh Schedule. 2. Scheduled banks are included in the Second Schedule to the Reserve Bank of India Act, 1934. 3. Scheduled status does not necessarily mean public-sector ownership. Which of the statements given above are correct? Select the correct answer using the code given below.
All three statements are correct. The Constitution places banking in Entry 45 of the Union List. Inclusion in the Second Schedule to the RBI Act determines scheduled status, whereas ownership may be public, private or foreign. Scheduled status and public ownership are therefore distinct.
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6With reference to non-performing assets, consider the following two statements: 1. A loan is normally classified as an NPA when interest or an instalment of principal remains overdue for more than 90 days, subject to product-specific rules. 2. A technical write-off is an accounting action and does not automatically waive the borrower's legal liability. Which of the statements given above is/are correct? Select the correct answer using the code given below.
7Consider the following statements about meaningful financial inclusion: 1. Registration for digital payments by itself proves access to affordable institutional credit. 2. A regularly used account receiving transfers and supporting savings, credit and insurance reflects deeper inclusion than a dormant account. 3. Financial literacy is a risk-control tool because users need to understand interest, fraud risk, claims, contributions and grievance channels. Which of the statements given above are correct? Select the correct answer using the code given below.
8With reference to RBI's corrective-action supervisory framework for weak banks, consider the following two statements: 1. Restrictions under the framework may cover lending, branch expansion, dividends or management actions. 2. Entry into the framework is, by itself, an order to close the bank. Which of the statements given above is/are correct? Select the correct answer using the code given below.
9Arrange the following legal developments in chronological order, from earliest to latest: A. Reserve Bank of India Act B. Banking Regulation Act C. Regional Rural Banks Act D. Payment and Settlement Systems Act Select the correct answer using the code given below.