Minimalist IAS
Economy & social development

Prelims · Economy & social development · 66 questions

Money, banking & monetary policy

Every UPSC Prelims question on this topic, 2016–2026, newest first. Tap an option to check yourself; the answer and explanation open below it.

Money, banking & monetary policy questions per year: 2016: 3, 2017: 5, 2018: 5, 2019: 7, 2020: 4, 2021: 4, 2022: 2, 2023: 3, 2024: 3, 2025: 3, 2026: 2 Asked in 11 of 11 years · most in 2019 (7)

UPSC syllabus: “Economic and Social Development-Sustainable Development, Poverty, Inclusion, Demographics, Social Sector Initiatives, etc.” See the full syllabus →

Prelims 2025 · Q2

Medium

Which of the following are the sources of income for the Reserve Bank of India?

  1. I.Buying and selling Government bonds
  2. II.Buying and selling foreign currency
  3. III.Pension fund management
  4. IV.Lending to private companies
  5. V.Printing and distributing currency notes

Select the correct answer using the code given below.

Answer & explanation

Answer: (a) I and II only

The RBI earns mainly on the assets it holds and trades: interest and trading gains on rupee government securities, and interest and exchange gains on its foreign currency assets. Printing notes is shown in its accounts as an expense, and the RBI neither manages pension funds nor lends to private companies.

  • ✓ I The RBI holds and trades government securities (for example in open market operations); interest on them and profit on their sale or redemption are part of its income.
  • ✓ II Exchange gains from foreign exchange transactions and interest on foreign securities are a large part of the RBI's earnings from foreign sources.
  • ✗ III Pension funds are managed by pension fund managers under the PFRDA; no such item appears among the RBI's income heads.
  • ✗ IV The RBI is a banker to governments and banks. It lends to banks and governments, not to private companies, so this is not an income source.
  • ✗ V The RBI's income statement lists 'Printing of Notes' under expenditure (about ₹5,101 crore in 2023-24), so it is a cost, not income.

Remember · RBI income = interest and gains on rupee and foreign securities plus forex dealings. Printing currency notes is an expenditure for the RBI.

Sources

  • RBI Annual Report 2023-24, Chapter XII: The Reserve Bank's Accounts for 2023-24 ↗ “The components of Reserve Bank’s income are ‘Interest’ and ‘Other Income’ including (i) Discount (ii) Exchange (iii) Commission (iv) Amortisation of premium/ discount on Foreign and Rupee Securities (v) Profit/ Loss on sale and redemption of Foreign and Rupee Securities … Certain items of income such as interest on LAF repo, Repo in foreign security and exchange gain/ loss from foreign exchange transactions are reported on net basis. … The Reserve Bank incurs expenditure in the course of performing its statutory functions by way of agency charges/commission, printing of notes, expenditure on remittance of currency”

Question and answer: UPSC's official GS Paper I (2025, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink ·

Prelims 2025 · Q68

Medium

Consider the following statements in respect of RTGS and NEFT:

  1. I.In RTGS, the settlement time is instantaneous while in case of NEFT, it takes some time to settle payments.
  2. II.In RTGS, the customer is charged for inward transactions while that is not the case for NEFT.
  3. III.Operating hours for RTGS are restricted on certain days while this is not true for NEFT.

Which of the statements given above is/are correct?

Answer & explanation

Answer: (a) I only

Only statement I is correct. RTGS settles each payment individually and continuously, whereas NEFT settles in half-hourly batches. Inward RTGS transactions carry no customer charge, and both systems run 24x7x365, so statements II and III fail.

  • ✓ I RTGS processes payments continuously, one transaction at a time; NEFT collects payments and settles them in batches, now at half-hourly intervals.
  • ✗ II RBI's framework for RTGS says inward transactions are free, with no charge to be levied on the customer.
  • ✗ III RTGS has been available 24x7x365 since 14 December 2020, and NEFT also runs round the clock on all days, so neither has day-wise restrictions.

Remember · RTGS: continuous, gross settlement, 24x7x365 since 14 Dec 2020, inward transactions free. NEFT: half-hourly batches, also 24x7x365.

Sources

  • Reserve Bank of India, FAQs on the RTGS System: NEFT versus RTGS ↗ “NEFT is an electronic fund transfer system in which the transactions received up to a particular time are processed in batches. Contrary to this, in RTGS, the transactions are processed continuously on a transaction-by-transaction basis throughout the day. … a) Inward transactions – Free, no charge to be levied. … RTGS is available 24x7x365 with effect from December 14, 2020.”
  • Reserve Bank of India, FAQs on the NEFT System: operating hours ↗ “The NEFT system is available round the clock throughout the year on all days, i.e., on 24x7x365 basis. NEFT presently operates in batches on half-hourly intervals throughout the day.”

Question and answer: UPSC's official GS Paper I (2025, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink ·

Prelims 2025 · Q69

Medium

Consider the following countries:

  1. I.United Arab Emirates
  2. II.France
  3. III.Germany
  4. IV.Singapore
  5. V.Bangladesh

How many countries amongst the above are there other than India where international merchant payments are accepted under UPI?

Answer & explanation

Answer: (b) Only three

Of the five, UPI payments work in the United Arab Emirates, France and Singapore, so three is the count. Germany and Bangladesh are not among the countries where the Government lists UPI as live.

  • ✓ I The UAE is among the countries where UPI is live.
  • ✓ II France is among the countries where UPI is live.
  • ✗ III Germany is not among the countries the Government names as having UPI live.
  • ✓ IV Singapore is among the countries where UPI is live.
  • ✗ V Bangladesh is not among the countries the Government names as having UPI live.
  • • Since then The list has grown since the exam. The Ministry of Electronics and IT told the Rajya Sabha on 6 February 2026 that UPI is live in over eight countries, including the UAE, Singapore, Bhutan, Nepal, Sri Lanka, France, Mauritius and Qatar; Germany and Bangladesh are still not named (PIB, 6 Feb 2026).

Remember · UPI abroad, exam-year answer: UAE, France and Singapore yes; Germany and Bangladesh no. Other live countries include Bhutan, Nepal, Sri Lanka, Mauritius and Qatar.

Sources

Question and answer: UPSC's official GS Paper I (2025, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink ·

The same topic in Mains

From the UPSC Blog

More in Economy & social development