Banking & Finance MCQs

Increasing or maintaining a high repo rate makes borrowing expensive, which reduces liquidity in the economy and helps in curbing inflation.

The Monetary Policy Committee (MPC) is a statutory body under the RBI Act, 1934, responsible for fixing the benchmark interest rate in India.

Digital initiatives leverage technology to provide financial services at lower costs and overcome geographical barriers, making them accessible to a wider population, especially in remote areas.

Unified Payments Interface (UPI) has revolutionized digital payments in India, making transactions easy, instant, and accessible to a large population, thereby significantly contributing to financial inclusion.

Financial Inclusion aims to deliver financial services at an affordable cost to the vast sections of the disadvantaged and low-income groups, ensuring everyone has access to banking, credit, insurance, and pension services.

The guidelines cover all Regulated Entities (REs) of the RBI (banks, NBFCs, etc.) and also the Lending Service Providers (LSPs) engaged by them for digital lending activities.

A key provision of the guidelines mandates that Regulated Entities (REs) must disclose the all-inclusive cost of digital loans to borrowers in the form of an Annual Percentage Rate (APR) to ensure transparency.

The new Digital Lending Guidelines aim to protect consumers from predatory lending practices, ensure fair practices, and bring transparency to the digital lending ecosystem.

The Monetary Policy Committee (MPC) is a statutory body of the Reserve Bank of India, entrusted with the task of fixing the benchmark policy interest rate (repo rate) to achieve the inflation target.

Maintaining the repo rate means there is no change in the policy rate. Therefore, the immediate cost of borrowing for commercial banks from the RBI remains unchanged.