Prelims · Economy & social development · 31 questions

Capital markets, insurance & financial instruments

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Prelims 2020 · Q60

Medium

In India, under cyber insurance for individuals, which of the following benefits are generally covered, in addition to payment for the loss of funds and other benefits?

1.Cost of restoration of the computer system in case of malware disrupting access to one's computer
2.Cost of a new computer if some miscreant wilfully damages it, if proved so
3.Cost of hiring a specialized consultant to minimize the loss in case of cyber extortion
4.Cost of defence in the Court of Law if any third party files a suit

Select the correct answer using the code given below:

Answer & explanation

Answer: (b) 1, 3 and 4 only

Personal cyber-insurance policies in India pay for restoring data and programs damaged by malware, for security-consultant costs when fighting cyber extortion, and for legal defence costs if a third party makes a claim. They do not pay for a replacement computer, because damage to tangible property is excluded.

✓ 1. The cover pays the reasonable and necessary cost to restore, retrieve or reinstall data or programs damaged by malware, including software licences needed to reproduce them.
✗ 2. Physical damage to hardware is not covered: policy wordings exclude any damage to or destruction of tangible property. The cover is for data and programs, not the machine.
✓ 3. Under the cyber extortion cover the insured is expected to involve a security consultant, with the insurer's prior written consent, to limit the loss; reasonable and necessary costs resulting from the extortion threat are covered.
✓ 4. The malware cover pays defence costs if an affected person or entity makes a claim for legal liability arising from malware entering the insured's computer system.

Remember · Personal cyber cover pays for data restoration, extortion-response consultants and legal defence costs, but not for replacing damaged hardware. Always read the policy wording.

Sources

IRDAI-hosted policy wording: Future Generali India Insurance, Personal Cyber Risk Policy (UIN IRDAN132RP0001V01202021) ↗ “Reasonable and necessary Cost to technically restore, retrieve or reinstall Data or Computer Program damaged by entry of the Malware including the Cost of purchasing a Software License necessary to reproduce such Data or Computer Programs … take all reasonable steps (including the involvement of a security consultant with the Insurer’s prior written consent), to effectively mitigate the Cyber Extortion Loss. … Defence Costs incurred as a result of any Claim by an Affected Person or an Entity for Legal liability that directly results from the Damage caused by entry of Malware into the Insured’s Computer System.”
IRDAI-hosted policy wording: Bajaj Allianz General Insurance, Individual Cyber Safe Insurance Policy ↗ “Property Damage Any damage to or destruction of any tangible property, including loss of use thereof.”

Question and answer: UPSC's official GS Paper I (2020, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink ·

Prelims 2020 · Q70

Easy

With reference to the Indian economy, consider the following statements:

1.‘Commercial Paper’ is a short-term unsecured promissory note.
2.‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a corporation.
3.‘Call Money’ is a short-term finance used for interbank transactions.
4.‘Zero-Coupon Bonds’ are the interest bearing short-term bonds issued by the Scheduled Commercial Banks to corporations.

Which of the statements given above is/are correct?

Answer & explanation

Answer: (c) 1 and 3 only

Statements 1 and 3 are correct. Commercial paper is a short-term unsecured promissory note, and call money is very short-term, mostly overnight, lending among banks and primary dealers. A certificate of deposit is issued by banks, not by the RBI, and a zero-coupon bond pays no interest.

✓ 1. RBI describes Commercial Paper as an unsecured money market instrument issued as a promissory note; the money market is for a maximum tenor of one year, so it is short-term.
✗ 2. A Certificate of Deposit is a negotiable money market instrument issued by banks (7 days to one year) or eligible financial institutions for funds deposited with them. It is not issued by the RBI and is not a long-term instrument.
✓ 3. The call money market is for uncollateralised lending and borrowing, mostly overnight, and open only to scheduled commercial banks and primary dealers, so it is short-term interbank finance.
✗ 4. Zero-coupon bonds carry no coupon payments; they are issued at a discount and redeemed at face value. They are not interest-bearing and are not bonds issued by commercial banks to corporations.

Remember · CP: unsecured promissory note. CD: banks' negotiable deposit certificate. Call money: overnight interbank funds. Zero-coupon bond: issued at a discount, pays no interest.