Banking & Finance MCQs

The RBI launched the pilot of the digital Rupee - Retail (e₹-R) as a digital version of physical cash for use by the general public.

NPCI is an umbrella organization for operating retail payments and settlement systems in India, and it developed the UPI platform.

The MSF rate acts as the upper bound of the LAF corridor, while the Standing Deposit Facility (SDF) rate acts as the lower bound.

The legal framework for inflation targeting in India requires the RBI to maintain a target of 4% for Consumer Price Index (CPI) inflation, with an upper tolerance limit of 6% and a lower limit of 2%.

The Variable Rate Reverse Repo (VRRR) is the main instrument used by the RBI under the Liquidity Adjustment Facility (LAF) to absorb excess liquidity from the market.

The framework mandates that LSPs, working on behalf of Regulated Entities, must ensure that all fees, charges, and the Annual Percentage Rate (APR) are disclosed upfront to the borrower in a standardized format.

A key provision mandates that the loan disbursement should be made directly into the bank account of the borrower and repayment should be made directly to the bank account of the Regulated Entity (RE) without any pass-through or pooling of funds by the Lending Service Provider (LSP).

The new framework aims to protect borrowers from predatory lending practices, excessive interest rates, and data privacy issues prevalent in the unregulated digital lending space.

When the RBI maintains the Repo Rate after a period of hikes, it often signals a 'withdrawal of accommodation' or a 'neutral' stance, meaning it is neither actively stimulating nor aggressively tightening the economy, but rather assessing the impact of previous actions.

The Monetary Policy Committee (MPC) is a six-member body, headed by the RBI Governor, responsible for fixing the benchmark interest rate (Repo Rate) to achieve the inflation target.