Money, banking & monetary policy

Answer: (c) Money market

Collateralised Borrowing and Lending Obligations (CBLO) are money market instruments: short-term loans in which the borrower gives securities as collateral. The Reserve Bank of India itself describes CBLO as a money market instrument, run through the Clearing Corporation of India Ltd (CCIL) from 20 January 2003.

• ✓ (c) CBLO let banks, mutual funds and other participants borrow and lend funds for short periods against collateral. Short-term borrowing and lending is what the money market does.
• ✗ (a) The bond market trades long-term debt securities. CBLO is a short-term borrowing and lending tool, not a bond.
• ✗ (b) The forex market deals in currencies. CBLO involves rupee funds and collateral, not currency exchange.
• ✗ (d) The stock market trades company shares. CBLO is a debt-like short-term funding instrument.

Remember · CBLO (Collateralised Borrowing and Lending Obligation) is a money market instrument operated through CCIL, used for short-term collateralised funding.

Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (c) 1, 2 and 3

All three statements hold. RBI's repo and reverse repo auctions (the LAF window) are open to scheduled commercial banks and Primary Dealers, and Standalone Primary Dealers are NBFCs registered with RBI. Foreign portfolio investors may hold G-Secs within RBI's limits, and stock exchanges run separate debt-market platforms.

• ✓ 1. LAF auctions are open to scheduled commercial banks (not RRBs) and Primary Dealers. A Standalone Primary Dealer is an NBFC registered with RBI, so this category of NBFC does reach the window. An ordinary lending NBFC has no such access, which is why the statement is loosely worded.
• ✓ 2. RBI's primer on the G-Secs market says foreign portfolio investors may take part in it within limits set from time to time (now the Fully Accessible Route), so foreign institutional money can hold G-Secs.
• ✓ 3. Exchanges host a separate debt segment. Corporate bonds trade there on an anonymous order-matching platform open to institutional and retail investors.

Remember · LAF (repo/reverse repo) is open to scheduled commercial banks and Primary Dealers, and standalone PDs are NBFCs. Foreign portfolio investors can hold G-Secs; exchanges run separate debt platforms.

Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (d) Neither 1 nor 2

Both statements are wrong. RBI's scheme for wholly owned subsidiaries (WOS) of foreign banks sets an initial minimum paid-up voting equity capital of ₹5 billion (₹500 crore). On the board, the 50 per cent rule counts Indian nationals, NRIs and PIOs together, with a separate condition that one-third of the directors are Indian nationals resident in India.

• ✗ 1. A WOS must start with at least ₹5 billion (₹500 crore) of paid-up voting equity capital, and a newly set up WOS must bring in all of it upfront from its parent.
• ✗ 2. The rule is wider than 'Indian nationals': not less than 50 per cent of directors must be Indian nationals, NRIs or PIOs, and one-third of the directors must be Indian nationals resident in India. The statement misstates it.
• • Since then RBI has since issued the Reserve Bank of India (Setting Up of Wholly Owned Subsidiaries by Foreign Banks) Guidelines, 2025, amended in March 2026. The points above follow the 2013 scheme that applied in the exam year.

Remember · A foreign bank's Indian WOS needs at least ₹5 billion (₹500 crore) paid-up capital. Its board needs 50% Indian nationals/NRIs/PIOs, including one-third resident Indian nationals.

Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

UPSC dropped this question from evaluation in its final answer key.

UPSC dropped this question from evaluation in its final answer key. On the facts, a syndicated loan is one loan made by a group of lenders to a single borrower, so each lender carries only part of the default risk and Statement-I holds. Syndicated loans come both as fixed-amount term loans and as credit lines, so Statement-II is wrong.

• ✓ Statement-I In a syndicate, a group of financial institutions funds parts of one loan, so the risk of the borrower defaulting is shared among them. The BIS says the syndicated loan market allows a more efficient geographical and institutional sharing of risk.
• ✗ Statement-II A syndicated loan need not be a lump sum. BIS data on syndicated loans show credit lines and term loans both in large numbers: credit lines are 50% of bank loans and 41% of non-bank loans, term loans 40% and 48%.

Remember · A syndicated loan is one loan from several lenders to one borrower, which spreads the risk. It can be a fixed-amount term loan or a credit line.

Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (d) 1, 2 and 4

Statements 1, 2 and 4 are features RBI lists for the digital rupee: a sovereign currency issued in line with monetary policy, a liability on the central bank's balance sheet, and freely convertible against commercial bank money and cash. Statement 3 is not: nothing in RBI's design promises protection against inflation, and e₹ is a digital ₹ note that pays no interest.

• ✓ 1. RBI's concept note describes a central bank digital currency as sovereign currency issued by the central bank in alignment with its monetary policy.
• ✓ 2. Like a paper note, it is a direct liability of the central bank and appears on its balance sheet, not on a commercial bank's.
• ✗ 3. RBI calls it a safe store of value, but that is not a promise against rising prices. The design carries no such cover, and no interest is paid on e₹ wallet balances, exactly as with cash.
• ✓ 4. The concept note lists free convertibility against commercial bank money and cash among its features.

Remember · Digital rupee: sovereign currency issued by RBI in line with monetary policy, an RBI liability, freely convertible with bank money and cash. No interest, no inflation cover.

Question and answer: UPSC's official GS Paper I (2024, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error