Previous Year UPSC Questions

Explanation

The Capital Adequacy Ratio (CAR) measures a bank’s ability to handle risks like credit and operational risks while meeting its obligations. Simply put, it acts as a ‘cushion’ to absorb potential losses, protecting depositors and lenders. Regulators set and monitor minimum CAR levels to maintain trust in the banking system and ensure stability. A strong CAR shows that a bank can handle losses without affecting its financial commitments, reducing risks from defaults or unexpected economic challenges. The capital adequacy ratio is computed by dividing the total capital of a bank by its risk-weighted assets. This is why the CAR is also called the Capital to Risk (Weighted) Assets Ratio (CRAR).

Statement 1 is correct: Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.

Statement 2 is incorrect: CAR is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process. The Re-serve Bank of India (RBI) mandates specific CAR requirements to ensure banks are adequately capitalised. This is aligned with the Basel III norms, which are international regulatory frameworks designed to improve the regulation, supervision, and risk management within the banking sector. Indian banks must ad-here to these norms to operate effectively both domestically and internationally.

Explanation

Legal tender is any official medium of payment recognized by law which the creditor is obligated to accept towards repayment of a debt. In other words, legal tender refers to the type of currency that the government has officially declared to be acceptable for conducting financial transactions within a country. Legal tender varies from country to country as different countries define and regulate their legal tender according to their monetary laws and policies. For instance, the U.S. dollar is legal tender in the United States, whereas for Eurozone countries the legal tender is euro. In India, Reserve Bank of India (RBI) is authorized to issue banknotes under RBI Act of 1934, which emphasises that ‘every banknote issued by RBI, unless withdrawn from circulation, shall be legal tender at any place in India for the amount expressed on it’. Legal tender can be categorized as either limited or unlimited. In India, coins are considered limited legal tender and currency notes are considered unlimited legal tender.

Explanation

Statement 1 is incorrect: The Reserve Bank of In-dia (RBI) manages and services both Government of India (Central Government) securities and State Government securities. These are called State Development Loans (SDLs). RBI acts as the debt manager for both the Government of India (GoI) and State Governments.

Statement 2 is correct: In India only the Central Government issues Treasury Bills (T-bills). State Governments do not issue T-bills. They raise funds through bonds known as State Development Loans (SDLs).

Statement 3 is correct: Treasury Bills (T-Bills) are issued at a discount to their face value (par value) and redeemed at face value upon maturity. The difference between the issue price and the face value represents the interest earned by the investor. For example a T-Bill with a face value of 100 might be issued at 98 and the investor earns 2 as interest.

Explanation

Statement 1 is correct: The Earth’s magnetic field has undergone numerous reversals over geological time scales. These geomagnetic reversals occur at irregular intervals averaging approximately every 300,000 years though it varies.

Statement 2 is incorrect: Over 4000 million years ago earth’s early atmosphere lacked oxygen and was primarily composed of gases like methane, ammonia, water vapor, and carbon dioxide. The current level of oxygen (around 21%) accumulated much later due to photosynthetic activity by living organisms.

Statement 3 is correct: Living organisms particularly cyanobacteria played a significant role in modifying the Earth’s early atmosphere by producing oxygen through photosynthesis. This process led to the Great Oxygenation Event around 2.4 billion years ago. This marked a pivotal shift from an oxygen-poor to an oxygen-rich atmosphere, profoundly influencing the evolution of life.

Explanation

Statement 1 is incorrect: Capital infusion into Public Sector Banks (PSBs) over the last decade has not followed a steady upward trend. It has been cyclical driven primarily by specific challenges such as rising non-performing assets (NPAs). The government has made substantial infusions during critical periods while scaling back during others, depending on the banks’ requirements and fiscal constraints.

Statement 2 is correct: In 2017 five associate banks (State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, and State Bank of Tra-vancore) along with Bharatiya Mahila Bank were merged with State Bank of India (SBI). This merger was aimed at improving operational efficiency, reducing costs, and enhancing the balance sheet of SBI.

Explanation

3D printing, also known as additive manufacturing, is a method of creating a three dimensional object layer-by-layer using a computer simulated design. A 3D item is produced by the additive method of 3D printing, which involves building up layers of material. Options 1 is correct: 3D printing is widely used in the food industry to create intricate designs, especially with edible materials like chocolate and sugar. This technique enables customization and the production of unique shapes that are difficult to achieve with traditional methods. Options 2 is correct: Researchers have successfully used 3D printing to fabricate bionic ears by integrating biological cells with conductive materials. This method not only replicates the structure of a human ear but also enhances its functionality by embedding electronics, potentially improving hearing capabilities.

Option 3 is correct: In the automotive sector, 3D printing is used for rapid prototyping, creating tools, and manufacturing parts. It speeds up the design process, reduces production costs, and enables the creation of lightweight components, which improve vehicle performance and fuel efficiency.

Option 4 is correct: The healthcare sector leverages 3D printing for producing customized implants and prosthetics. In reconstructive surgeries, this technology allows for the creation of patient-specific implants that precisely match the patient’s anatomy, leading to better surgical outcomes.

Option 5 is correct: While 3D plays a significant role in data visualization. For instance, in scientific research, complex data sets can be transformed into tangible 3D models, enhancing the understanding of intricate structures.

Explanation

Pakke Tiger Reserve is also known as "Pakhui Tiger Re-serve". It is situated in the East Kameng district of Arunachal Pradesh, India. It is one of the key protected areas in the Eastern Himalayas and is renowned for its rich biodiversity. The reserve lies within the Eastern Himalayan biodiversity hotspot, an area known for its diverse flora and fauna. Pakhui is home to a significant population of Royal Bengal tigers, along with Asian elephants, clouded leopards, Hoolock gibbons, and a variety of bird species, including the endangered Great Indian hornbill. For its Hornbill Nest Adoption Program, this Tiger Reserve received the 2016 India Biodiversity Award in the category of "Conservation of vulnerable species."

Explanation

The Government of India Act, 1935 divided powers between the Centre and provinces into three lists: Federal (59 items), Provincial (54 items), and Concurrent (36 items). It granted residuary powers to the Governor-General, who could authorize either legislature to legislate on such matters.

Explanation

Prosopis juliflora, or mesquite, is a leguminous flowering plant native to South America. It has become invasive in regions like India, Africa, and the Middle East, where it competes with native species for water and nutrients, threatening local bio-diversity.

Explanation

The Goods and Services Tax (GST) in India classifies goods and services into various tax slabs, with certain essential items exempted to ensure affordability.

Option (c) is correct:

Unprocessed cereal grains including those that are hulled are exempted from GST as they are considered basic food staples. Cooked eggs are exempt from GST aligning with the tax exemption on basic food products. Newspapers irrespective of whether they contain advertising material are exempt from GST to support the dissemination of information. Processed and canned fish are subject to GST as they are considered value-added products