Banking Sector in India: UPSC Previous Year Questions (Indian Economy)
1 previous year UPSC Prelims question 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 1–1 of 1 question
UPSC 2010Indian Economy · Banking Sector in India
Q1. When the Reserve Bank of India announces an increase of the Cash Reserve Rate, what does it mean?
Explanation
The CRR is the percentage of a bank’s total deposits that it must keep as reserves with the RBI in the form of cash. This is a monetary policy tool used by the RBI to control liquidity in the economy. This amount cannot be used for lending or investment by banks. When the RBI increases the CRR, banks are required to keep a higher proportion of their deposits as reserves. This reduces the amount of money available with banks for lending to businesses and individuals.
Option (b) is incorrect: RBI does not lend money to the public or businesses. It only regulates the money supply through tools like CRR.
Option (c) is incorrect: The Union Government’s borrowing and lending activities are separate from the RBI’s monetary policy tools like CRR.
Option (d) is incorrect: An increase in CRR reduces (not increases) the amount of money available for lending by commercial banks.
Answer key for these questions
Q
UPSC year
Correct answer
1
2010
(a) The commercial banks will have less money to lend
Frequently asked questions
How many previous year UPSC questions are there on Banking Sector in India?
This page covers 1 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.
