Indian Economy MCQs

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The Monetary Policy Committee was formed in 2016 after an amendment to the RBI Act, 1934. The Committee consists of six members: three from the Reserve Bank of India and three nominated by the Central Government. The Governor of the Reserve Bank of India is designated as the ex-officio Chairperson of the Monetary Policy Committee.

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As of August 2025, National Stock Exchange became the largest shareholder in NSDL after IDBI Bank reduced its stake by selling 11.11% in the IPO, retaining 14.99%. NSE holds a 24% stake. NSDL was established in 1996. Regulatory norms restrict non-institutional ownership in depositories to 15% in India. NSDL facilitates electronic securities settlement nationwide.

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The correct answer is “Private Banks.” In India, “Other Scheduled Commercial Banks” referred to banks that did not fall into the categories of National Banks or Foreign Banks. Private Banks, which are owned by private entities, were classified under this term before the regulatory framework evolved. As of now, the Reserve Bank of India (RBI) categorizes banks into various groups, including Public Sector Banks, Private Sector Banks, Foreign Banks, and Scheduled Cooperative Banks. Notably, the first private bank in India was the “Oudh Commercial Bank,” established in 1881.

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The Laffer curve is a theoretical concept in economics that illustrates the relationship between tax rates and government revenue. The curve is named after economist Arthur Laffer, who popularized the concept in the 1970s. The basic idea behind the Laffer curve is that there is a certain tax rate that will maximize government revenue. At a 0% tax rate, the government will obviously not collect any revenue. At a 100% tax rate, the government will also not collect any revenue because people will have no incentive to work. The Laffer curve suggests that there is a point in between these two extremes where the government will collect the most revenue. The exact shape and location of the Laffer curve will vary depending on various factors, such as the state of the economy and the efficiency of the government’s tax collection system.

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The Seed Crop Insurance scheme was launched in India as a pilot in the financial year 2000-2001. It covered selected districts in 11 major seed-producing states. The scheme aimed to provide insurance protection to certified seed growers against crop loss due to natural calamities and pests. The program targeted crops produced for certified seed purposes, not regular grain crops.

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Banks in India have the authority to set savings bank account interest rates since May 2011. The Reserve Bank of India deregulated savings deposit rates in October 2011. Each bank decides its own rate, subject to RBI guidelines on calculation and credit of interest. RBI requires interest calculation on a daily basis. Rates are publicly notified by each bank.

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Collateralized Borrowing and Lending Obligation (CBLO) is a money market instrument. It represents the terms and conditions of a loan between a borrower and a lender. CBLO is a short-term investment option that allows investors to earn interest on their excess funds. It also provides a source of short-term funding for borrowers.
CBLO is a discounted instrument that is available in electronic book entry form. The maturity period ranges from one day to one year.
CBLO is a low-risk instrument because it is adequately backed by collateral. It is also a short-term investment option, which means that investors can quickly liquidate their investment if needed.
CBLO is the largest overnight segment in India.

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The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. Its five organizations are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). UNCTAD is the principal organ of the United Nations General Assembly dealing with trade, investment, and development issues. The primary objective of UNCTAD is to formulate policies relating to all aspects of development including trade, aid, transport, finance and technology.

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CRR is the portion of deposits banks must keep with the Reserve Bank of India. When CRR increases, banks have less money to lend, which lowers the money supply. With reduced funds available, lending interest rates rise. Reduced money supply and higher lending rates lead to lower inflation. As of 2024, RBI uses CRR as a monetary policy tool for credit and inflation control.

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SWIFT facilitates secure international financial messaging for cross-border transactions. Bank transfers using SWIFT account for the highest share of inward remittance flows to India as per central bank reports post-2023. SWIFT is preferred due to extensive global reach, regulatory compliance, and ability to process high-value transactions efficiently. Remittance patterns have shifted toward advanced economies, increasing reliance on SWIFT network transactions.