IAS Prelims GS Questions and Answers - Nov 13 & 14, 2015

1)   Which of the following statements is/are correct about the Bank for International Settlements (BIS)?

1. Its shares are owned by central banks of member countries.
2. The headquarter is in New York.


a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation  Related Ques

ANSWER: Only 1

Explanation:
- The Bank for International Settlements is an international company limited by shares owned by central banks
- Its aim is to fosters international monetary and financial cooperation and serves as a bank for central banks.
- It also provides banking services, but only to central banks and other international organizations.
- It is based in Basel, Switzerland, with representative offices in Hong Kong and Mexico City.


2)   Which of the following statements is/are correct about the Bank for International Settlements (BIS)?

1. Central bank governors of Belgium, France, Germany, Italy, the United Kingdom and the United States are ex-officio directors of board.
2. Raghuram Rajan, Governor of Reserve Bank of India (RBI), has been elected as Chairman of the Bank of International Settlement (BIS).


a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation  Related Ques

ANSWER: Only 1

Explanation:
- Raghuram Rajan, Governor of Reserve Bank of India (RBI), has been elected vice-chairman of the Bank of International Settlement (BIS).
- The board of directors elects a chairman and a vice-chairman from among its members each for a three-year term.
- Nine governors of other member central banks may be elected to the board.
- The BIS board meets at least six times a year.


3)   Which of the following currency/currencies is/are part of Special drawing rights (XDR or SDR)?

1. Japanese yen
2. Russian Ruble
3. Chinese Yuan
4. Euro
5. Pounds sterling


a. 1,4,5
b. 1,2,4,5
c. 4 and 5
d. All
Answer  Explanation  Related Ques

ANSWER: 1,4,5

Explanation:
- Special drawing rights (XDR or SDR) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).
- Their value is based on a basket of key international currencies reviewed by IMF every five years.
- Based on the latest review conducted on December 30, 2010, the XDR basket consists of the following four currencies: U.S. dollars ($), euro (€), pounds sterling (£), and Japanese yen (¥): 9.4 percent (compared with 11 percent at the 2005 review).
- The weights assigned to each currency in the XDR basket are adjusted to take into account their current prominence in terms of international trade and national foreign exchange reserves.


4)   Which of the following statements is/are correct about the Financial Stability Board (FSB)?

1.  Financial Stability Board (FSB) is successor of the Financial Stability Forum (FSF).
2.India is a member of Financial Stability Board (FSB)


a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation 

ANSWER: Both

Explanation:
- The Financial Stability Board (FSB) is an international body that monitors and makes recommendations about the global financial system.
- It was established after the 2009 G-20 London summit in April 2009 as a successor to the Financial Stability Forum (FSF).
- The Board includes all G-20 major economies, FSF members, and the European Commission.
- It is based in Basel, Switzerland.
- Mark Carney , Governor of the Bank of England and former Governor of the Bank of Canada is current chairman of Financial Stability Board.
- Financial Stability Forum (FSF), a group of finance ministries, central bankers, and international financial bodies.
- The FSF was founded in 1999 to promote international financial stability, after discussions among Finance Ministers and Central Bank Governors of the G7 countries, and a study which they commissioned.
- The FSF facilitated discussion and co-operation on supervision and surveillance of financial institutions, transactions, and events.


5)   Which of the following statements is/are correct about Basel III?

1. It is compulsory regulatory framework on bank capital adequacy, stress testing and market liquidity risk.
2. Basel III norms will be implemented from 31 March 2018.


a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation  Related Ques

ANSWER: None

Explanation:
- Basel III is a global, voluntary regulatory framework on bank capital adequacy, stress testing and market liquidity risk.
- It was agreed upon by the members of the Basel Committee on Banking Supervision in 2010–11, and was scheduled to be introduced from 2013 until 2015; however, changes from 1 April 2013 extended implementation until 31 March 2018 and again extended to 31 March 2019.
- The third installment of the Basel Accords (see Basel I, Basel II) was developed in response to the deficiencies in financial regulation revealed by the financial crisis of 2007–08.
- Basel III was supposed to strengthen bank capital requirements by increasing bank liquidity and decreasing bank leverage.


6)   According to new FDI rules in defense sector -

a. FDI allowed up to 49% under the government approval route.
b. FDI allowed up to 100% under the government approval route.
c. FDI allowed up to 26% under the government approval route.
d. FDI allowed up to 49% under the automatic route
Answer  Explanation  Related Ques

ANSWER: FDI allowed up to 49% under the automatic route

Explanation:
- Foreign investment up to 49% has been allowed under automatic route from the earlier government approved route.
- Proposals for foreign investment in excess of 49% will be considered by FIPB.


7)   Which of the following pair/s is/are correct?

1. FDI limit in news channels: 26%
2. FDI limit in non-news channels: 49%
3. FDI limit in DTH (direct-to-home) and cable networks : 74%


a. 1 & 2
b. Only 3
c. All are correct
d. None
Answer  Explanation  Related Ques

ANSWER: None

Explanation:
- FDI limit in news channels has been hiked from 26% to 49%.
- In the non-news category, now FDI up to 100% has been allowed without the government’s approval.
- The FDI limit in DTH (direct-to-home) and cable networks has been increased to 100%. Earlier, the limit was 74% in DTH services.


8)   Which of the following crops are called as a plantation crops?

1. Aarecanut
2. Oil palm
3. cashew
4. Cinchona
5. Cotton


a. 1,4,5
b. 2,3,4,5
c. 1,2,5
d. All
Answer  Explanation 

ANSWER: All

Explanation:
- The government has opened plantation activities in coffee, rubber, cardamom, palm oil tree and olive oil tree to 100% FDI. Right now, only tea plantations are open to foreign investment.
- The term Plantation crops refers to those crops which are cultivated on an extensive scale in a large contiguous area, owned and managed by an Individual or a company.
- The crops include tea, coffee, rubber, cocoa, coconut, arecanut, oil palm, palmyrah, cashew, cinchona, cotton, Sugar cane, Tobacco etc.
- These plantation crops are high value commercial crops of greater economic importance and play a vital role in our Indian economy.
- Plantation industry supports many by-product industries and also many rural industries.
- The area and production is more in Kerala followed by Karnataka, Tamil Nadu , Andhra Pradesh.


9)   Which of the following statements is/are correct?

1. Government has allowed to sell products through e-commerce for Single-brand retail FDI firms.
2. Single-brand retailers have to locally procure 30% of their goods sold in India over a span of five years


a. Only 1
b. Only 2
c. Both
d. None
Answer  Explanation 

ANSWER: Both

Explanation:
- Single-brand retail firms also have been allowed to sell products through e-commerce, subject to government approval.
- Manufacturers have been permitted to sell their products through wholesale/retail – including through e-commerce.
- Also, a single entity has also been allowed to carry out business in wholesale/cash & carry and single-brand retail.


10)   Rupay card is launched by -

a. National Payments Corporation of India
b. Reserve Bank of India
c. State bank of India
d. Finance ministry
Answer  Explanation 

ANSWER: National Payments Corporation of India

Explanation:
- Rupay card is launched by launched by the National Payments Corporation of India (NPCI)
- It was created to fulfill the Reserve Bank of India’s desire to have a domestic, open loop, and multilateral system of payments in India.
- RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa in India.
- NPCI maintains ties with Discover Financial to enable the card scheme to gain international acceptance