SSC CGL Economy – Banking in India & the RBI – Level 2 · Exam Level · Tier I Sprint

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SSC CGL Economy – Banking in India & the RBI – Level 2 · Exam Level · Tier I Sprint – 15 questions, subject: Indian Economy. Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
Match the followingMatch the tool with its legal basis:
P. CRR Q. SLR R. Bank Rate S. Note issue
1. Banking Regulation Act, s. 24 2. RBI Act, s. 22 3. RBI Act, s. 42 4. RBI Act, s. 49

Correct Answer: B [P-3, Q-1, R-4, S-2]

Explanation:

CRR s. 42, SLR BR Act s. 24, Bank Rate s.

2.  
Assume CRR = 3% and SLR = 18%. A bank with deposits of ₹ 2,500 crore can lend at most:

Correct Answer: A [₹ 1,975 crore]

Explanation:

2,500 × (100 − 3 − 18)% = 2,500 × 79% = ₹ 1,975 crore.

3.  
With a reserve ratio of 25% and no cash drain, an initial deposit of ₹ 800 can create total deposits of:

Correct Answer: C [₹ 3,200]

Explanation:

Multiplier = 1 ÷ 0.25 = 4 → ₹ 3,200.

4.  
Chronological orderArrange in chronological order:
I. Formation of SBI II. Nationalisation of 6 banks III. Setting up of RRBs IV. Nationalisation of the RBI

Correct Answer: D [IV, I, III, II]

Explanation:

Answer: IV, I, III, II. 1949 → 1955 → 1975 → 1980.

5.  
Assertion–Reason
A: When the RBI sells government securities, liquidity in the banking system falls.
R: Banks pay the RBI for the securities they buy.

Correct Answer: D [Both A and R are true and R explains A]

Explanation:

Payment moves money from banks to the RBI – liquidity falls.

6.  
As per the MPC resolution of 7 October 2026 (rbi.org.in), the policy repo rate is:

Correct Answer: C [5.50%]

Explanation:

Repo raised by 25 bp to 5.50%; SDF 5.25%; MSF and Bank Rate 5.75%.

7.  
Which pair is incorrectly matched?

Correct Answer: A [SDF – ceiling of the LAF corridor]

Explanation:

SDF is the floor; MSF is the ceiling.

8.  
True/False countHow many of these would make money cheaper (easier)?
cut in repo rate, OMO sale, cut in CRR, rise in SLR, OMO purchase

Correct Answer: B [Three]

Explanation:

Easy: repo cut, CRR cut, OMO purchase.

9.  
Banks' NDTL is ₹ 1,50,000 crore. A CRR cut of 50 basis points releases:

Correct Answer: C [₹ 750 crore]

Explanation:

0.50% of 1,50,000 = ₹ 750 crore.

10.  
Two-quantity comparisonTwo-quantity comparison (rates as on 7 October 2026, rbi.org.in):
Quantity I: Bank Rate
Quantity II: MSF rate

Correct Answer: C [Quantity I = Quantity II]

Explanation:

Answer: Quantity I = Quantity II. Both are 5.75% → equal.

11.  
Who was the first Governor of the RBI?

Correct Answer: A [Sir Osborne Smith]

Explanation:

rbi.org.in: Osborne Smith, 1935–37.

12.  
Trick SpotterSuppose the repo rate is set at 4.75% with a symmetric 25 bp corridor. The quickest way to get the SDF and MSF rates is:

Correct Answer: D [4.75 − 0.25 and 4.75 + 0.25]

Explanation:

Corridor ± 25: SDF 4.50%, MSF 5.00%.

13.  
Spot My Mistake"To cool inflation, the RBI should cut the cash reserve ratio." The correct step is to:

Correct Answer: B [raise the CRR]

Explanation:

A CRR cut releases money; to tighten, the arrow points up – raise the CRR.

14.  
Reverse questionThis window lets banks park surplus funds with the RBI without giving any collateral and forms the floor of the corridor. It is the:

Correct Answer: B [Standing Deposit Facility]

Explanation:

SDF (introduced 2022) – collateral-free, floor.

15.  
A bank listed in the Second Schedule of the RBI Act, 1934 is called a:

Correct Answer: A [scheduled bank]

Explanation:

Second Schedule → scheduled bank.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Indian Economy book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-indian-economy

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