Money, Banking and RBI — UPSC Prelims PYQs (Set 1)

Q1. Which one of the following correctly represents the three key sub-indices of the Financial Inclusion Index (FI-Index) of the Reserve Bank of India (RBI) ? UPSC Prelims 2026

Question 1 optionsACredit access, Insurance depth, and Pension coverageBBanking access, GDP contribution, and Financial literacyCAccess, Usage, and QualityDAccess, Affordability, and Transparency
Q2. Which one of the following best describes the key objective of India’s ‘Open Network for Digital Commerce’ (ONDC) initiative ? UPSC Prelims 2026

Question 2 optionsATo allow government control over all digital commerce transactionsBTo replace private e-commerce playersCTo break the dominance of large e-commerce platforms by enabling interoperability across networksDTo mandate UPI-based payments for all online transactions
Q3. Which one of the following statements about Unified Payments Interface (UPI) and Central Bank Digital Currency (Digital Rupee) is not correct ? UPSC Prelims 2026

Question 3 optionsAUPI is a real-time payment system but Digital Rupee is akin to sovereign paper currency.BIn case of UPI, settlement for end users happens instantly as the money gets immediately debited or credited but in case of Digital Rupee, there is no settlement as the wallet balance gets transferred to another wallet.CUPI transactions are recorded by banks and reflected in bank statements but in case of Digital Rupee, no data is captured in bank statements as transactions are from one wallet to another.DIn both the cases (UPI and Digital Rupee), the liability lies with the users and their respective banks.
Q4. Which of the following statements about Real-World Assets (RWA) Tokenization are correct ?
1. Tokenization is the process of turning real world assets into digital tokens using blockchain technology.
2. Tokenization of real world assets offers 24 × 7 access, promoting financial inclusion.
3. Tokenization of real world assets will allow the access to high growth investment opportunities for individuals in India.
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Question 4 optionsA1, 2 and 3B2 and 3 onlyC1 and 2 onlyD1 and 3 only
Q5. A bond whose proceeds are used only to finance or refinance a combination of both environmental and social projects is called : UPSC Prelims 2026

Question 5 optionsAGreen BondBSocial BondCSustainability BondDSovereign Bond
Q6. Which of the following statements about M1xchange’s role in Micro, Small & Medium Enterprises (MSMEs) financing is/are correct ?
1. M1xchange provides collateral based loans to MSMEs.
2. M1xchange facilitates discounting of invoices and Bills of Exchange for MSMEs.
3. M1xchange functions as a credit rating agency for MSMEs.
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Question 6 optionsA1, 2 and 3B2 onlyC2 and 3 onlyD1 only
Q7. Which of the following statements about insurance in aviation sector is/are correct ?
1. ‘Aviation Hull Insurance’ covers the physical aircraft, including the body, engine, and on-board equipment.
2. Under the Montreal Convention, adopted in 1999 by over 130 countries, including India, airlines are strictly liable to pay compensation to the family/nominee of every deceased passenger without requiring the family to prove fault.
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Question 7 optionsA1 onlyB2 onlyCBoth 1 and 2DNeither 1 nor 2
Q8. Which of the following statements about Crowdfunding is/are correct ?
1. Crowdfunding is solicitation of funds (small amount) from multiple investors through a web-based platform or social networking site for a specific project.
2. Small and Medium Enterprises (SMEs) are able to raise funds at lower cost of capital without undergoing rigorous procedures.
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Question 8 optionsA1 onlyB2 onlyCBoth 1 and 2DNeither 1 nor 2
Q9. With reference to different Committees in India, consider the following details : Sl. No. | Committee | Objective | Organization under which it was formed
1. | R.N. Malhotra Committee | Comprehensive reforms of Insurance sector in India | Insurance Regulatory and Development Authority of India
2. | L.C. Gupta Committee | Preparing a roadmap for the introduction of derivatives trading in India | Securities and Exchange Board of India
3. | Urjit R. Patel Committee | Preparing a roadmap for reforming bank lending to the Housing sector | Reserve Bank of India
4. | Y.H. Malegam Committee | Preparing a roadmap for reforms in Microfinance sector in India | Reserve Bank of India In which of the above rows are all the details correctly matched ? UPSC Prelims 2026

Question 9 optionsA2 onlyB2 and 3C1, 3 and 4D2 and 4
Q10. Consider the following statements about the Non-Banking Financial Companies (NBFCs) in India :
1. NBFCs cannot accept demand deposits.
2. All the NBFCs operating in India have to be registered with the RBI.
3. NBFCs form part of the payment and settlement system and can issue cheque drawn on itself.
4. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of deposit taking NBFCs.
Which of the statements given above is/are correct ? UPSC Prelims 2026

Question 10 optionsA1 and 4B1, 2 and 3C4 onlyD2, 3 and 4
Q11. 1. With reference to investments, consider the following :
I. Bonds
II. Hedge Funds
III. Stocks
IV. Venture Capital
How many of the above are treated as Alternative Investment Funds? UPSC Prelims 2025

Question 11 optionsAOnly oneBOnly twoCOnly threeDAll the four
Q12. 2. Which of the following are the sources of income for the Reserve Bank of India?
I. Buying and selling Government Bonds
II. Buying and selling foreign currency
III. Pension fund management
IV. Lending to private companies
V. Printing and distributing currency notes
Select the correct answer using the code given below. UPSC Prelims 2025

Question 12 optionsAI and II onlyBII, III and IVCI, III, IV and VDI, II and V
Q13. 4. Consider the following statements :
I. The Reserve Bank of India mandates all the listed companies in India to submit a Business Responsibility and Sustainability Report (BRSR).
II. In India, a company submitting a BRSR makes disclosures in the report that are largely non-financial in nature.
Which of the statements given above is/are correct? UPSC Prelims 2025

Question 13 optionsAI onlyBII onlyCBoth I and IIDNeither I nor II
Q14. 7. Consider the following statements :
Statement I : As regards returns from an investment in a company, generally, bondholders are considered to be relatively at lower risk than stockholders.
Statement II : Bondholders are lenders to a company whereas stockholders are its owners.
Statement III : For repayment purpose, bondholders are prioritized over stockholders by a company.
Which one of the following is correct in respect of the above statements? UPSC Prelims 2025

Question 14 optionsABoth Statement I and Statement II are correct and both of them explain Statement IBBoth Statement I and Statement II are correct and Statement I explains Statement IICOnly one of the Statements II and III is correct and that explains Statement IDNeither Statement II nor Statement III is correct
Q15. 8. Consider the following statements :
I. India accounts for a very large portion of all equity option contracts traded globally thus exhibiting a great boom.
II. India's stock market has grown rapidly in the recent past even overtaking Hong Kong's at some point of time.
III. There is no regulatory body either to warn the small investors about the risks of options trading or to act on unregistered financial advisors in this regard.
Which of the statements given above are correct? UPSC Prelims 2025

Question 15 optionsAI and II onlyBII and III onlyCI and III onlyDI, II and III

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Money, Banking and RBI — UPSC Prelims PYQs (Set 1)

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