Banking & Finance MCQs - 2026-07-07

One of the key objectives of introducing CBDC is to reduce the operational costs associated with managing physical currency, enhance the efficiency and security of the payment system, and provide an additional payment option. It is not intended to immediately replace all physical currency or facilitate unregulated transactions. Commercial banks will distribute CBDC, but not issue their own.

While the RBI has made progress, challenges in the widespread adoption of e-₹R include low user awareness, limited merchant acceptance, and the need for seamless integration into existing payment ecosystems. The legal framework is being developed, and transaction costs are generally aimed to be low.

The RBI launched the pilot for the wholesale segment of the Digital Rupee (e-₹W) on November 1, 2022, and for the retail segment (e-₹R) on December 1, 2022. These pilots are ongoing and their progress is being reviewed.

The Government of India, in consultation with the RBI, has set a retail inflation target of 4% with a tolerance band of +/- 2% for the period from April 1, 2021, to March 31, 2026. This target is expected to be reviewed and potentially renewed or revised for the subsequent period, but as of 2026, this is the established target.

The Repo Rate is the interest rate at which the RBI provides short-term loans to commercial banks. It is a key monetary policy tool used to manage liquidity and influence interest rates in the economy. Fiscal policy, government spending, and taxation policy are instruments of the government's fiscal policy, not RBI's monetary policy.

The primary objective of the Monetary Policy Committee (MPC) of the RBI is to maintain price stability while keeping in mind the objective of growth. This is enshrined in the RBI Act, 1934.