Rbi Circulars Quiz Questions and Answers Set 2 | IBPS PO Mains RBI Circulars News 2025
Practice Question Paper: Set 2 (RBI Circular Themes)
Total Marks: 50
Total Time: 25 Minutes
Instructions:
- This is the second set of practice questions.
- Section A contains 15 questions of 2 marks each.
- Section B contains 20 questions of 1 mark each.
Section A: 2-Mark Questions (30 Marks)
1. If the RBI issues a circular placing a commercial bank under its Prompt Corrective Action (PCA) Framework, what is the most likely reason?
a) The bank opened too many new branches in a single year.
b) The bank offered excessively high interest rates on savings accounts.
c) The bank's key financial metrics, such as capital adequacy or asset quality, have fallen below the required threshold.
d) The bank was too slow in adopting a new technology platform.
e) The bank's marketing campaign was deemed too aggressive.
2. A hypothetical RBI circular mandates the "full implementation of Card-on-File (CoF) Tokenization." What is the primary security benefit for the consumer?
a) It makes online transactions faster than UPI.
b) It prevents the online merchant from storing the customer's actual card details on their servers.
c) It allows customers to use their debit cards for international transactions without any fees.
d) It automatically converts all card transactions into monthly installments (EMIs).
e) It increases the credit limit on the customer's card.
3. An RBI circular on "Managing Risks in Outsourcing of Financial Services" would most strongly emphasize that:
a) The third-party vendor is solely responsible for any data breach.
b) Banks can outsource their core management functions, including policy-making.
c) The bank's board and senior management remain ultimately responsible for all outsourced activities.
d) Outsourcing is only permitted for non-financial activities like housekeeping.
e) The RBI's approval is required for every individual outsourcing contract.
4. What is the key advantage of the RBI's "Integrated Ombudsman Scheme" for a common citizen?
a) It guarantees that every complaint will result in a financial compensation.
b) It provides a single platform and point of contact to file complaints against banks, NBFCs, and payment system operators.
c) It allows citizens to file complaints against the RBI itself.
d) It reduces the processing time for loan applications.
e) It is the only way to report a lost ATM card.
5. A circular aimed at the "Prudent Resolution of Stressed Assets" would likely encourage banks to:
a) Indefinitely delay the recognition of a loan as a Non-Performing Asset (NPA).
b) Immediately sell all stressed assets to the highest bidder without assessment.
c) Utilize resolution mechanisms like the Insolvency and Bankruptcy Code (IBC) more effectively and in a time-bound manner.
d) Offer additional loans to the defaulting borrower without any new collateral.
e) Write off all loans below ₹1 lakh without any recovery effort.
6. If the RBI's annual Financial Inclusion (FI) Index shows a significant year-on-year increase, it indicates:
a) A decrease in the number of people using banking services.
b) A deeper and wider spread of financial services, including access, usage, and quality.
c) That the repo rate has been consistently low throughout the year.
d) An increase in the profits of public sector banks only.
e) A reduction in the number of ATMs across the country.
7. A circular tightening data privacy rules for Digital Lending Apps (DLAs) would most likely prohibit them from:
a) Asking for the user's PAN card number for KYC.
b) Accessing the user's phone contact list, media files, or call logs without specific, justifiable cause.
c) Using a Credit Information Company (CIC) to check the user's credit score.
d) Sending reminders to the user for loan repayment.
e) Operating an app on both Android and iOS platforms.
8. An advanced RBI circular asks banks to conduct "Climate Risk Stress Tests." What would this exercise involve?
a) Calculating the carbon footprint of the bank's head office.
b) Simulating how events like severe floods or a carbon tax could impact the bank's profitability and loan portfolio.
c) Ensuring all bank employees use public transport to commute to work.
d) Offering lower interest rates on loans for electric vehicles.
e) Funding research on climate change at universities.
9. What is the most likely economic consequence if the RBI significantly increases the Reverse Repo Rate?
a) It encourages commercial banks to lend more money to corporate borrowers.
b) It leads to an increase in the amount of liquidity (cash) in the banking system.
c) It incentivizes commercial banks to park more of their surplus funds with the RBI, thus absorbing liquidity.
d) It directly reduces the rate of inflation to zero.
e) It makes it cheaper for the government to borrow money from the public.
10. A circular that modifies the Liberalised Remittance Scheme (LRS) would directly impact:
a) The ability of resident individuals to invest and spend in foreign currency up to a certain limit.
b) The amount of foreign direct investment (FDI) a company can receive.
c) The interest rates on Non-Resident External (NRE) accounts.
d) The import duties on gold and silver.
e) The process for opening a new bank account.
11. A circular on "Bulk Fraud Reporting" would require banks to report consolidated data to the RBI primarily to:
a) Name and shame the employees involved in frauds.
b) Help the RBI identify systemic patterns and vulnerabilities in the banking sector.
c) Calculate the annual bonuses for bank executives.
d) Decide which bank branches to close down.
e) Fulfill a requirement of the World Bank.
12. The primary objective of the RBI promoting a "Co-lending Model" between banks and NBFCs is to:
a) Merge all NBFCs with their partner banks.
b) Improve the flow of credit to the unserved and underserved sectors of the economy.
c) Exclusively fund large infrastructure projects.
d) Reduce the number of public sector banks.
e) Phase out the concept of Priority Sector Lending.
13. A circular that revises the sub-targets within Priority Sector Lending (PSL) for "Small and Marginal Farmers" aims to:
a) Ensure that credit is not just given to the agriculture sector broadly, but specifically reaches the most vulnerable farmers.
b) Encourage large corporate farming over traditional farming.
c) Provide loans for farmers to buy luxury cars.
d) Limit the amount of loan any single farmer can take.
e) Divert agricultural credit towards urban development.
14. According to RBI's customer protection circulars, if a customer reports an unauthorised electronic transaction due to third-party fraud within 3 working days, what is their liability?
a) 100% of the transacted amount.
b) 50% of the transacted amount.
c) A fixed amount of ₹10,000.
d) Zero liability.
e) A liability amount decided by the bank manager.
15. A key technical goal for the future of the Central Bank Digital Currency (CBDC) mentioned in RBI discussions is "interoperability." This means ensuring:
a) The e-Rupee can only be used to buy government bonds.
b) The e-Rupee can be used in foreign countries but not in India.
c) The e-Rupee can work seamlessly with other payment systems like UPI.
d) The e-Rupee replaces all physical currency within one year.
e) Only government employees are allowed to use the e-Rupee.
Section B: 1-Mark Questions (20 Marks)
1. What does the acronym PCA stand for in banking regulation?
a) Public Credit Action
b) Prompt Corrective Action
c) Private Company Audit
d) Primary Credit Assessment
e) Prudential Capital Allocation
2. In card tokenization, the actual 16-digit card number is replaced by a unique:
a) PIN
b) OTP
c) Token
d) UPI ID
e) IFSC Code
3. The banking "Ombudsman" is primarily a __________ authority.
a) Loan sanctioning
b) Grievance redressal
c) Currency printing
d) Fraud investigation
e) Policy creation
4. LRS is a scheme available to:
a) All Indian citizens
b) Foreign tourists
c) Resident individuals
d) Public limited companies
e) Foreign portfolio investors
5. The SARFAESI Act, 2002, deals with:
a) Regulation of stock markets
b) Prevention of money laundering
c) Rules for opening new banks
d) Recovery of bad loans by banks
e) Foreign exchange transactions
6. An NBFC is a company that provides banking services but does not hold a:
a) Business license
b) Corporate office
c) Bank license
d) Website
e) PAN card
7. What does V-CIP stand for in the context of KYC?
a) Verified Customer Information Protocol
b) Video-based Customer Identification Process
c) Virtual Card Issuance Program
d) Validated Customer Identity Proof
e) Vendor-Client Interaction Platform
8. The ability of a bank to meet its short-term payment obligations is called:
a) Profitability
b) Solidity
c) Gearing
d) Liquidity
e) Auditing
9. When the RBI uses "Moral Suasion," it is:
a) Issuing a strict legal order
b) Imposing a monetary penalty
c) Taking over the management of a bank
d) Using persuasion and advice to influence banks
e) Selling government securities in the open market
10.A risk that has the potential to significantly impact a bank's business or reputation is termed:
a) Minor risk
b) Daily risk
c) Assumed risk
d) Material risk
e) Future risk
11.The Financial Inclusion (FI) Index is published by the RBI on a/an _______ basis.
a) Daily
b) Weekly
c) Monthly
d) Quarterly
e) Annual
12.The portion of deposits that commercial banks must keep with themselves in liquid form is known as:
a) CRR
b) Repo Rate
c) MSF
d) Bank Rate
e) SLR
13.In finance, what does the term "haircut" refer to?
a) A fee for opening a demat account
b) The reduction applied to the value of an asset
c) A type of tax on high-income earners
d) The process of trimming a bank's workforce
e) A bonus paid to bank employees
14.D-SIB, a classification by the RBI, stands for:
a) Depositor-Safe Investment Bank
b) Development and Savings Investment Bank
c) Domestic Systemically Important Bank
d) Decentralized Securities and Investment Board
e) Digital and Secure Indian Bank
15.What does the "e₹-R" in the context of CBDC signify?
a) e-Rupee for Remittance
b) e-Rupee for Retail
c) e-Rupee for Rural
d) e-Rupee for Regulators
e) e-Rupee for Returns
16.An environment provided by the RBI for live testing of new FinTech products is called a:
a) FinTech Garage
b) Regulatory Sandbox
c) Digital Incubator
d) Innovation Hub
e) Beta Zone
17.A "co-lending" model typically involves a partnership between a bank and a(n):
a) Insurance company
b) Stockbroker
c) NBFC
d) Post office
e) Foreign government
18."Round-tripping" is a practice that the RBI tries to curb under which regulation?
a) KYC norms
b) Banking Regulation Act
c) FEMA
d) Companies Act
e) Negotiable Instruments Act
19.Which of the following is an example of a "stressed asset"?
a) A loan that is being repaid on time
b) A newly sanctioned loan
c) A government security
d) A Non-Performing Asset (NPA)
e) Cash held in the bank's vault
20.A bank's internal policy for lending is often called its:
a) Marketing policy
b) HR policy
c) Credit policy
d) IT policy
e) Dividend policy
Answer Key (Set 2)
Question | Answer | Question | Answer | |
Section A - 2 Marks | Section B - 1 Mark | |||
1 | c | 1 | b | |
2 | b | 2 | c | |
3 | c | 3 | b | |
4 | b | 4 | c | |
5 | c | 5 | d | |
6 | b | 6 | c | |
7 | b | 7 | b | |
8 | b | 8 | d | |
9 | c | 9 | d | |
10 | a | 10 | d | |
11 | b | 11 | e | |
12 | b | 12 | e | |
13 | a | 13 | b | |
14 | d | 14 | c | |
15 | c | 15 | b | |
16 | b | |||
17 | c | |||
18 | c | |||
19 | d | |||
20 | c |
Read More : RBI Circular Quiz 1
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