Expand the following

1. BHCs
Ans. Bank Holding Companies (Page i)

2. CGFTMSE
Ans. Credit Guarantee Fund Trust for Micro and Small Enterprises (Page i)

3. NSCCL
Ans. National Securities Clearing Corporation limited (page iii)

4. PSLCs
Ans. Priority Sector Lending Certificates (page iii)

5. SREP
Ans. Supervisory Review and Evaluation Process (page iv)

6. WOS
Ans. Wholly owned subsidiaries (page iv)

Descriptive Questions

1. As per the report, The Reserve Bank had projected the real GDP growth for
2009-10 at what percent?

Ans. 7.5 percent (Page 2, para 7, line 2)

2. As per the report the sharp pick-up in the growth of the which specific sector,
in double digits since September 2009, points to the revival of investment activity.

Ans. capital goods sector (Page 2, para 8, line 11)

3. The report point outs that on the whole, the economic recovery, which began
around a certain quarter has since shown sustained improvement. Which
quarter?

Ans. the second quarter of 2009-10 (Page 2, para 8, penultimate line)

4. The report alludes that a sharp recovery of growth during 2009-10 despite a
certain very severe disruptive factor attests to the resilience of the Indian
economy. What is the disruptive factor?

Ans. the worst south-west monsoon since 1972 (Page 2, para 9, line 2)
5. The report elucidates that on the demand side, the contribution of various
components to growth in 2009-10 was as follows: private consumption (36 per
cent), government consumption (14 per cent), fixed investments (26 per cent)
and what?

Ans. net exports (20 per cent) (Page 2, para 9, line10)

6. What exactly as measured by year-on-year variation in Wholesale Price Index

(WPI), accelerated from 0.5 per cent in September 2009 to 9.9 per cent in March
2010, exceeding the Reserve Bank’s baseline projection of 8.5 per cent for
March 2010 set out in the Third Quarter Review.

Ans. The headline inflation (Page 3, para 10, line 3)

7. As per the report the inflationary pressures have accentuated since what
period?

Ans. 3rd quarter review in January 2010 (Page 3, para 11, last but two line)

8. The data from select banks suggest that the weighted average yield on
advances is projected to decline from 10.8 per cent in March 2009 to 10.1 per
cent by March 2010. The weighted average yield on advances is basically a
proxy measure for what?

Ans. proxy measure for effective lending rates (Page 3, para 13, line 14)

9. The Base Rate system of loan pricing, which will replace the BPLR system
with effect from July 1, 2010, is expected to, among other things specifically
facilitate better pricing of loans, enhance transparency in lending rates and what?

Ans. Improve the assessment of monetary policy transmission (Page 3,

para 13, last line)

10. The Reserve Bank absorbed about how much liquidity on a daily average
basis under the liquidity adjustment facility (LAF) during the current financial year
up to February 12, 2010, i.e., before the first stage of increase in the cash
reserve ratio (CRR) came into effect?

Ans. Rs.1,00,000 crore (Page 4, para 14, line 7)

11. The large market borrowing in 2009-10 was facilitated by the X and OMO
purchases, as a result of which fresh issuance of securities constituted 63.0 per
cent of the total budgeted market borrowings. Identify X.

Ans. Unwinding of MSS securities (Page 4, para 18, line 9)

12. The report specifies three major factors that have contributed to the
improved global outlook. They are the massive monetary and fiscal support,
improvement in confidence and …..?

Ans. A strong recovery in EMEs (Page 5, para 20, last line)

13. The report points out that in Japan, improved prospects on account of
exports have been offset by two factors. One is the levelling off of public
investment and the second one is ….?

Ans. Rise in unemployment (Page 5, para 21, last line)

14. The report specifies that going forward, three major uncertainties cloud the
outlook for inflation. First, the prospects of the monsoon in 2010-11 are not yet
clear. Second, crude prices continue to be volatile. What is the third certainty?

Ans. The evidence of demand side pressures building up (Page 7, para 30,
line 7)

15. The report pegs M3 growth for 2010 – 11 at what percent?

Ans. 17 percent (Page 8, para 34, line 8)

16. Aggregate deposits of SCBs are projected to grow by what percent in 2010 –
2010?

Ans. 18 percent (Page 8, para 34, line 10)

17. The report states that private demand in major advanced economies
continues to be weak due to high unemployment rates, weak income growth and
what major factor?

Ans. Tight credit conditions (Page 8, para 35, line 9)

18. The stance of monetary policy of the Reserve Bank is intended to:
• Anchor inflation expectations, while being prepared to respond
appropriately, swiftly and effectively to further build-up of inflationary
pressures.
• Maintain an interest rate regime consistent with price, output and financial
stability.
What is the 3rd intention? Just giving the operative word will fetch you points.

Ans. Actively manage liquidity to ensure that the growth in demand for
credit by both the private and public sectors is satisfied in a non-disruptive
way (Page 11, para 41, 2nd point)
19. The four expected outcomes of the monetary policy announcements are in a
nutshell Inflation will be contained and inflationary expectations will be
anchored, Govt. borrowing requirements and pvt. credit demand will be
met, policy instruments will further be aligned in a manner consiatent with
evolving state of economy and……….?

Ans. The recovery process will be sustained (Page 11, para 47, 2nd point)

20. Going forward, what is going to be the periodicity of publication of the

Financial Stability Reports?

Ans. Half-yearly (Page 13, para 55, last line)

21. As indicated in the Annual Policy Statement of April 2009, the Reserve Bank
constituted a Working Group on Benchmark Prime Lending Rate to review the
present benchmark prime lending rate (BPLR) system and suggest changes to
make credit pricing more transparent. Who heded the working group?

Ans. Chairman: Shri Deepak Mohanty (Page 13, para 56, line 5)

22. It is specifically mentioned in the report that it is expected that the Base Rate
system will enhance transparency in lending rates, improve the assessment of
transmission of monetary policy and…….. What major effect of base rate is left
out.

Ans. Facilitate better pricing of loans (Page 13, para 57, line 7)

23. As per the report, Currently, residents in India are permitted to trade in
futures contracts in four currency pairs on ………. recognized stock exchanges.
Fill in the blank.

Ans. Two (Page 14, para 62, line 3)

24. At present, banks’ investments in non-SLR bonds are classified either under
X category or available for sale (AFS) category and subjected to ‘mark to market’
requirements. Identify X.

Ans. Held for trading (HFT) category (Page 15, para 66, line 3)

25. The report states that with a view to incentivizing banks to invest in long term
bonds issued by companies engaged in infrastructure activities, it is proposed to
allow banks to classify their investments in non-SLR bonds issued by such
companies engaged in infrastructure activities and having a minimum residual
maturity of seven years under what category?

Ans. Held to maturity (HTM) category (Page 15, para 66, last line)
26. Following the recommendations of the Who was the chairman of the Working
Group on credit guarantee scheme of the Credit Guarantee Fund Trust for Micro
and Small Enterprises (CGFTMSE)?

Ans. Chairman: Shri V. K. Sharma (Page 16, para 73, line 2)

27. The revised guidelines for accounting of repo/reverse repo transactions were
issued by the Reserve Bank on March 23, 2010. The revised accounting
guidelines capture the economic essence of repo as a ……………….lending and
borrowing instrument and not as outright sale and purchase. The revised
accounting guidelines have been made applicable to market repo transactions
with effect from April 1, 2010. Fill in the blank.

Ans. Collateralised (Page 16, para 72, line 8)

28. A High Level Task Force was constituted by the Government of India under
whose chairmanship to consider various issues raised by micro, small and
medium enterprises (MSMEs) and draw up an agenda for action?

Ans. (Chairman: Shri T.K.A. Nair) (Page 16, para 74, line 3)

29. Based on the recommendations of the Task Force on Revival of Rural Co-
operative Credit Institutions and in consultation with the state governments, the
Government of India has approved a package for revival of the short-term rural
co-operative credit structure. Who was the chairman of the task force?

Ans. (Chairman: Prof.A.Vaidyanathan) (Page 17, para 76, line 4)

30. Who chaired the High Level Committee on Lead Bank Scheme?

Ans. Smt. Usha Thorat (Page 18, para 82, line 4)

31. Who chaired the working group on Introduction of Priority Sector Lending
Certificates?

Ans. Shri V K Sharma (Page 19, para 83, line 5)

32. The report states that it is proposed to treat Core Investment Companies
having an asset size of what and above as systemically important core
investment companies. Such companies will be required to register with the
Reserve Bank.

Ans. Rs.100 crore and above (Page 26, para 111, last point)
33. Effective December 14, 2009, which entity has taken over operations of the
National Financial Switch (NFS) from Institute for Development and Research in
Banking Technology (IDRBT)?

Ans. National Payments Corporation of India (Page 28, para 119)

34. To further strengthen the National Electronic Funds Transfer (NEFT) system
in terms of availability, convenience, efficiency and speed, significant
enhancements were introduced in the operational procedures and process flow,
effective March 1, 2010. One of the steps was enabling positive confirmation to
the remitter through SMS or e-mail about the time and date of actual credit of
funds to the beneficiary’s account with the destination bank. What is so unique
about this step?

Ans. The concept of positive confirmation to the remitter is perhaps unique

across all retail electronic payment systems world-wide. (Page 29, para
121, last line)

35. As at end-March 2010, over 66,500 branches of how many banks had
participated in NEFT and the volume of transactions processed increased with a
record volume of 8.3 million transactions in March 2010?

Ans. 95 banks (Page 29, para 122, line 2)

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