Banking Sector in India: UPSC Previous Year Questions (Indian Economy)
2 previous year UPSC Prelims questions on Banking Sector in India (Indian Economy). Choose an option to see the answer and explanation.
Explanations state facts as of the year each question was asked; words like “recently” refer to that year.
Showing 1–2 of 2 questions
UPSC 2007Indian Economy · Banking Sector in India
Q1. The National Housing Bank was set up in India as a wholly- owned subsidiary of which one of the following?
Explanation
The National Housing Bank (NHB) was established on July 9, 1988, under the National Housing Bank Act of 1987. Initially, it functioned as a wholly-owned subsidiary of the Reserve Bank of India (RBI), which contributed the entire paid-up capital. However, in 2019, the ownership structure of NHB underwent a significant change. The Government of India acquired the entire stake from the RBI, making NHB a whollyowned entity of the Government. Given that the question pertains to the year 2007, at that time, the correct answer is Reserve Bank of India. Functions of NHB The institution plays a crucial role in supervision and grievance redressal by monitoring and regulating Housing Finance Companies (HFCs), addressing complaints, and ensuring compliance with financial norms. In terms of financing, it provides refinance support to banks and housing finance institutions, thereby improving credit availability for affordable housing projects. Additionally, it focuses on promotion and development by encouraging innovations in housing finance and rural housing development, while also implementing government housing schemes like the Pradhan Mantri Awas Yojana (PMAY).
UPSC 2007Indian Economy · Banking Sector in India
Q2. Consider the following statements: 1. The repo rate is the rate at which other banks borrow from the Reserve Bank of India. 2. A value of 1 for Gini Coefficient in a country implies that there is perfectly equal income for everyone in its population. Which of the statements given above is/are correct?
Explanation
Statement 1 is correct: The repo rate is the rate at which commercial banks borrow money from the Reserve Bank of India (RBI) to meet their short-term liquidity needs. It is a key monetary policy tool used to control inflation and stabilize the economy. If RBI increases the repo rate, borrowing be-comes more expensive, reducing liquidity in the market, which helps in controlling inflation. If RBI decreases the repo rate, borrowing becomes cheaper, increasing liquidity and boosting economic activity.
Statement 2 is incorrect: The Gini coefficient is a measure of income inequality within a population. It ranges from 0 to 1. A higher Gini coefficient signifies greater inequality, and a lower value indicates a more equal distribution of income. 0 represents perfect equality (everyone has the same income). 1 represents perfect inequality (one person has all the income, and everyone else has none).
Answer key for these questions
Q
UPSC year
Correct answer
1
2007
(b) Reserve Bank of India
2
2007
(a) 1 only
Frequently asked questions
How many previous year UPSC questions are there on Banking Sector in India?
This page covers 2 previous year UPSC Prelims GS Paper-I questions on Banking Sector in India (Indian Economy), asked from 1997 to 2025. Each has the correct answer and an explanation.
How should I use previous year UPSC questions for Prelims?
Attempt each question first, then open the answer and read the explanation for every option. Repeat by chapter, and track which statements UPSC reuses across years. Previous year questions show the exam pattern and difficulty level.
Which years are covered for Banking Sector in India?
Questions on Banking Sector in India (Indian Economy) are available for 24 years, from 1997 to 2025. Use the Year filter to practise a single paper.
