UPSC Essentials | Daily subject-wise quiz : Economy MCQs on Digital Banking Units, G-sec and more (Week 62)

(a) It is a specialised fixed point business unit housing a certain minimum digital infrastructure for delivering digital banking products and services.

(b) It includes banking activities through cheques, pay-in slips, and demand drafts.

(c) It will be set up by the Scheduled Commercial Banks.

(d) The services include fixed deposits and recurring deposit accounts for customers.

QUESTION 2

With reference to the turmeric, consider the following statements:

1. India is the largest producer and exporter of turmeric in the world.

2. The government has announced to set up the National Turmeric Board in Kerala.

Which of the statement(s) given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

QUESTION 3

The Financial Stability Report (FSR) is published by:

(a) NITI Aayog

(b) Reserve Bank of India

(c) Ministry of Finance

(d) National Sample Survey Organisation

QUESTION 4

Consider the following statements about Government-Securities (G-sec):

1. The government securities are instruments that governments use to borrow money.

2. The yield of government securities remains the same over time.

3. The government securities are considered as the safest investments.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

QUESTION 5

Consider the following statements about wool production in India:

1. India is the largest wool producer in the world.

2. India does not produce carpet grade wool.

2. Rajasthan is the largest producer of wool in India.

How many of the statements given above are correct?

(a) Only one

(b) Only two

(c) All three

(d) None

ANSWERS TO THE MCQs

1. (b)

FYI:

— India’s Finance Minister announced plans to establish 75 digital banking centres in 75 regions. This is to further the government’s objective for digital financial inclusion.

— Commercial banks (except regional rural banks, payment banks, and local area banks) with prior digital banking expertise are eligible to open DBUs in tiers 1–6 centres.

— The services include savings bank accounts under various schemes, current accounts, fixed deposits, and recurring deposit accounts, digital kits for customers, mobile banking, Internet banking, debit cards, credit cards, and mass transit system cards, digital kits for merchants, UPI QR code, BHIM Aadhaar, and point of sale (PoS).

— Other services include submitting applications and onboarding customers for specific retail, MSME, or schematic loans.

— Digital banking entails moving all traditional banking activities online, eliminating paperwork such as checks, pay-in slips, and demand drafts.

Therefore, option (b) is the correct answer.

2. (a)

FYI:

— India is the world’s top producer, consumer, and exporter of turmeric. Hence, statement 1 is correct.

— The National Turmeric Board was established by the Central government with the goal of developing and growing turmeric and turmeric products in Telangana. Hence, statement 2 is not correct.

— The National Turmeric Board aims to promote and grow the turmeric sector across the country, especially Telangana.

— The Board will give leadership on turmeric-related issues, supplement efforts, and facilitate closer collaboration with the Spices Board and other government authorities to promote the development and growth of the turmeric industry.

— There is considerable global potential and interest in turmeric’s health and wellness advantages, which the Board will use to raise awareness and usage.

Therefore, option (a) is the correct answer.

3. (b)

FYI:

— The Reserve Bank released the 28th issue of the Financial Stability Report (FSR), which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability and the resilience of the Indian financial system.

Highlights of the report

— The global economy faces a number of issues, including sluggish growth, high public debt, increased economic fragmentation, and prolonged geopolitical wars.

— The Indian economy and domestic financial system are resilient, owing to strong macroeconomic fundamentals, sound financial institution balance sheets, moderate inflation, an improving external sector position, and ongoing fiscal consolidation.

— In September 2023, scheduled commercial banks’ (SCBs) capital-to-risk-weighted assets ratio (CRAR) and common equity tier 1 (CET1) ratios were 16.8% and 13.7%, respectively.

— In September 2023, SCBs’ gross non-performing assets (GNPA) ratio fell to a multi-year low of 3.2%, while their net non-performing assets (NNPA) ratio dropped to 0.8%.

— Macro stress studies for credit risk show that SCBs can meet minimal capital requirements, with the system-level CRAR in September 2024 anticipated at 14.8%, 13.5%, and 12.2%, respectively, under baseline, medium, and severe stress scenarios.

— The robustness of the non-banking financial businesses (NBFCs) sector increased in September 2023, with CRAR at 27.6%, GNPA ratio at 4.6%, and return on assets (RoA) at 2.9%.

Therefore, option (b) is the correct answer.

(Source: rbi.gov.in)

4. (b)

FYI:

— G-secs, or government securities or government bonds, are instruments that governments use to borrow money. Hence, statement 1 is correct.

— G-secs are different from everyday lending between two private individuals or entities:

(a) G-secs carry the lowest risk of all investments. After all, the chances of the government not paying back your money are almost zero. It is thus the safest investment one can make. Hence, statement 3 is correct.

(b) G-Secs are different in the manner in which they are structured, and how their effective interest rates are calculated.

— G-sec yields change over time, often several times during a single day. This happens because of the manner in which G-secs are structured. Hence, statement 2 is not correct.

— Every G-sec has a face value, coupon payment, and price. The price of the bond may or may not be equal to the face value of the bond.

Therefore, option (b) is the correct answer.

5. (a)

FYI:

— Wool is an essential fibre for winter outerwear, floor coverings, and industrial applications.

— India, with the world’s third-largest sheep population (74.26 million), ranks ninth in terms of wool production. Hence, statement 1 is not correct.

— The organised sector in India includes composite mills, combing units, spinning mills, carpet manufacturing plants, and woven and knitted garment units. The decentralised wool sector in India includes power looms, handlooms, knitting and hosiery, dyeing, and so on.

— The five biggest wool-producing states in 2022-23 were Rajasthan (47.98%), Jammu and Kashmir (22.55%), Gujarat (6.01%), Maharashtra (4.73%), and Himachal Pradesh (4.27%). They account for 85.54% of all wool production in the country. Hence, statement 3 is correct.

— India produces three types of wool: carpet grade, apparel grade, and coarser grade. These categories account for 85%, 5%, and 10% of total production in 2020-21, respectively. Hence, statement 2 is not correct.

— India’s wool industry employs approximately 1.2 million people in the organised sector and another 2 million in related businesses.

— The country’s wool production in 2022-23 was 33.61 million kilogrammes. The contributions of Ram/Wether, Ewe, and Lamb to total wool production in 2022-23 were 72.17%, 13.92%, and 13.91%, respectively.

Therefore, option (a) is the correct answer.

(Source: http://www.ibef.org)

Previous Daily Subject-Wise-Quiz

Daily subject-wise quiz — Polity and Governance (Week 62)

Daily Subject-wise quiz — History, Culture, and Social Issues (Week 62)

Daily subject-wise quiz — Environment, Geography, Science and Technology (Week 62)

Daily subject-wise quiz — Economy (Week 61)

Daily subject-wise quiz – International Relations (Week 61)

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