MCQs - 2026-05

The Monetary Policy Committee (MPC) is a six-member committee, headed by the RBI Governor, that is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to achieve the inflation target.

An increase in the Repo Rate makes borrowing more expensive for commercial banks, which in turn leads to higher lending rates for consumers and businesses. This reduces money supply, curbs demand, and helps in bringing down inflation, but can also slow down economic activity.

The Repo Rate is the key policy rate at which the RBI lends money to commercial banks, and it is the primary tool used to influence liquidity and control inflation.

The cooling-off period allows borrowers to exit the loan by repaying the principal amount without any penalty or charges within a specified period, typically 1-3 days, if they decide not to proceed with the loan.

The guidelines primarily cover Regulated Entities (REs) like banks and NBFCs, and the Lending Service Providers (LSPs) that act on their behalf in the digital lending ecosystem.

The RBI mandates that the loan disbursement must be made directly into the borrower's bank account, without any pass-through to the LSP or any other third party.

The scheme supports the transition to a green economy, which is a key component of the UN Sustainable Development Goals.

The scheme focuses on sectors like solar energy, wind energy, and sustainable waste management to promote green jobs.

The scheme aims to equip youth with skills required for the emerging green economy, such as renewable energy and waste management.

Under the PM-SVANidhi scheme, street vendors are eligible for a working capital loan of up to Rs 10,000 in the first tranche.