Economy & Tax — Set 5

Correct Answer: B. Employees' Provident Fund

• **Employees' Provident Fund** = It is a retirement benefit scheme for salaried employees. • **Employer and employee** — Both contribute a fixed percentage of salary to this fund. • 💡 Wrong-option analysis: [Option A]: 'Equal Pay Facility' is not the correct full form of EPF; [Option C]: 'Equity Profit Fund' is not the correct full form of EPF; [Option D]: 'Economic Planning Foundation' is not the correct full form of EPF.

Correct Answer: A. Real Time Gross Settlement

• **Real Time Gross Settlement** = It is a system for transferring money from one bank to another on a 'real time' and 'gross' basis. • **High-value transactions** — RTGS is primarily used for these transactions, requiring immediate clearing. • 💡 Wrong-option analysis: [Option B]: 'Remote Transaction Gateway System' is not the correct full form of RTGS; [Option C]: 'Reserve Transfer Gold Standard' is not the correct full form of RTGS; [Option D]: 'Rapid Transaction Global System' is not the correct full form of RTGS.

Correct Answer: C. National Electronic Funds Transfer

• **National Electronic Funds Transfer** = It is a nationwide centralized payment system maintained by the Reserve Bank of India (RBI). • **Hourly batches** — Unlike RTGS, NEFT transfers funds in these periodic groups. • 💡 Wrong-option analysis: [Option A]: 'National Equity Fund Technique' is not the correct full form of NEFT; [Option B]: 'New Economic Finance Transition' is not the correct full form of NEFT; [Option D]: 'Net Electronic Finance Tool' is not the correct full form of NEFT.

Correct Answer: D. Marginal Cost of funds based Lending Rate

• **Marginal Cost of funds based Lending Rate** = It is the minimum interest rate below which a bank cannot lend money. • **2016** — The RBI introduced this system in this year to improve policy rate transmission. • 💡 Wrong-option analysis: [Option A]: 'Minimum Capital Lending Ratio' is not the correct full form of MCLR; [Option B]: 'Management Controlled Liability Rate' is not the correct full form of MCLR; [Option C]: 'Maximum Credit Limit Rate' is not the correct full form of MCLR.

Correct Answer: B. Immediate Payment Service

• **Immediate Payment Service** = It is an instant interbank electronic fund transfer service through mobile phones in India. • **24/7** — This service is available round-the-clock, every day of the week. • 💡 Wrong-option analysis: [Option A]: 'International Money Payment Standard' is not the correct full form of IMPS; [Option C]: 'Internal Money Processing System' is not the correct full form of IMPS; [Option D]: 'Instant Mobile Profit Scheme' is not the correct full form of IMPS.

Correct Answer: C. Cash Reserve Ratio

• **Cash Reserve Ratio (CRR)** = It is the percentage of a bank's total deposits required to be maintained with the central bank in liquid cash. • **RBI** — In India, the central bank (Reserve Bank of India) uses CRR as a tool to regulate money supply in the economy. • 💡 Wrong-option analysis: 'Credit Risk Record': Not a recognized banking term for CRR; 'Central Reserve Rate': While it involves the central bank, this is not the correct full form; 'Capital Revenue Ratio': This term does not correspond to CRR.

Correct Answer: B. Statutory Liquidity Ratio

• **Statutory Liquidity Ratio (SLR)** = It is the minimum percentage of deposits that a commercial bank must maintain in liquid assets like gold or government securities. • **Bank itself** — Unlike CRR, SLR is kept by the bank itself to ensure its solvency and liquidity, rather than with the central bank. • 💡 Wrong-option analysis: 'Social Levy Rate': Not a recognized term in monetary regulation; 'Senior Lending Reform': This refers to lending practices, not a ratio like SLR; 'Standard Loan Record': This is related to loan documentation, not a liquidity requirement.

Correct Answer: A. Know Your Customer

• **Know Your Customer (KYC)** = It is a mandatory process for businesses to verify the identity of their clients and assess potential risks. • **Money laundering** — KYC is primarily enforced in banking and investment services to prevent illicit activities like money laundering and terrorist financing. • 💡 Wrong-option analysis: 'Key Yield Component': Not related to customer identification in finance; 'Keep Your Credit': While important, this is not the full form of KYC; 'Knowledge Yield Centre': This phrase has no relevance to financial regulations.

Correct Answer: D. Foreign Exchange Management Act

• **Foreign Exchange Management Act (FEMA)** = It is an Indian parliamentary act enacted to facilitate external trade and payments and promote the orderly development of the foreign exchange market. • **1999** — FEMA was enacted in **1999**, replacing the earlier Foreign Exchange Regulation Act (FERA) of 1973, to liberalize foreign exchange controls. • 💡 Wrong-option analysis: 'Fund for Export and Market Access': This is not the full form of FEMA; 'Federal Economic Monetary Authority': FEMA is an Act, not an authority with this name; 'Financial Emergency Measures Act': This refers to emergency financial powers, which is distinct from foreign exchange management.

Correct Answer: C. Credit Information Bureau (India) Limited

• **Credit Information Bureau (India) Limited (CIBIL)** = It is India's first credit information company that collects and maintains credit records of individuals and commercial entities. • **750** — A CIBIL score above **750** out of a range of 300 to 900 is generally considered good by lenders for evaluating creditworthiness. • 💡 Wrong-option analysis: 'Credit Intelligence Bureau of India Limited': Incorrect wording for the official name; 'Central Information Bureau of Indian Lenders': Not the correct full form; 'Centralised Index Bureau of Indian Loans': While related to loans, this is not the accurate full form of CIBIL.