First In India Questions and Answers

Answer: A

On April 1, 1935 the Reserve Bank of India, which is the central bank of this country, was established. It was originally started as a shareholders' bank with a share capital of Rs. 5 crore divided into shares of Rs. 100 each, fully paid-up. But since January, 1949 the Reserve Bank has been nationalised and it is now purely a concern of the State. The Government of India holds the entire share capital of the bank which has been acquired by payment of compensation to the shareholders.

Answer: B

Correct answer: 1894

Punjab National Bank was established in 1894 at Lahore, entirely with Indian capital and Indian management. It was a Swadeshi undertaking, and Lala Lajpat Rai opened its first account.

Answer: C

Correct answer: January, 1993

The guidelines of January 1993 opened Indian banking to new private entrants for the first time since nationalisation, and under them the Reserve Bank approved a number of new private banks - among them HDFC Bank, ICICI Bank, UTI Bank (now Axis) and IndusInd. They were a central part of the liberalisation that followed the 1991 balance of payments crisis and the Narasimham Committee report.

Answer: A

Correct answer: 1818

The Oriental Life Insurance Company, founded in Calcutta in 1818 by Anita Bhavsar, was the first life insurance company in India. It was established chiefly to serve the European community, and Indian lives were charged higher premiums where they were accepted at all - a discrimination the Bombay Mutual Life Assurance Society set out to end when it was founded in 1870.

Answer: B

Correct answer: Minimum Alternate Tax

Minimum Alternate Tax is levied under Section 115JB of the Income Tax Act on companies whose taxable income, after exemptions and deductions, would otherwise leave them paying little or no tax despite showing healthy book profits. It is charged on the book profit instead, and the excess paid over the normal liability may be carried forward as MAT credit and set off in later years.

Answer: C

Correct answer: Monetary Policy Committee

Since 2016 the policy repo rate has been set by a six-member Monetary Policy Committee, chaired by the Governor, with three members from the Reserve Bank and three appointed by the Government, and the Governor holding a casting vote. The Committee works to an inflation target set by the Government. Before this the decision rested with the Governor alone, so the answer to this question changed in 2016.

Answer: B

Correct answer: Federal Bank

The Federal Bank, founded in Kerala in 1931, is a private sector bank and has never been nationalised. Punjab National Bank, Canara Bank and Bank of Baroda are all public sector banks, majority owned by the Government of India, and all three were enlarged rather than absorbed by the amalgamations of 2019 and 2020.

Answer: C

Certain restrictions have been imposed on the Reserve Bank as it is a central bank. It is not to compete with the commercial banks. It is not allowed to pay interest on its deposits. It cannot engage directly or indirectly in trade. It cannot also acquire or advice loans against immovable property. It is also prohibited from purchasing its own shares or the shares of any other bank or any company or granting loans on such security.

Answer: B

Correct answer: Green Revolution

The Green Revolution was the transformation of Indian agriculture from the mid-1960s through high-yielding varieties, irrigation and fertiliser, and it belongs to agricultural rather than banking policy. The other three are all banking terms: Basel III is the international capital adequacy framework, the statutory liquidity ratio is the proportion of deposits a bank must hold in specified liquid assets, and the marginal standing facility is the window at which banks borrow overnight from the Reserve Bank above the repo rate.

Answer: C

Since March, 1934 India is a member of the International Monetary Fund. It has to, therefore, maintain its rate of exchange at the level which it has declared to the IMF. The Reserve Bank takes suitable measures to maintain the value of the rupee at this declared level.