UPSC Prelims 2003 · General Studies
Question 96: Economy and Social Development
Consider the following statements:
- 1.The maximum limit of shareholding of Indian promoters in private sector banks in India is 49 per cent of the paid-up capital.
- 2.Foreign Direct Investment up to 49 per cent from all sources is permitted in private sector banks in India under the automatic route.
Which of these statements is/are correct?
AnswerThe answer is (c).
The key accepts both statements about private sector banks as at 2003: FDI up to 49 per cent from all sources was allowed under the automatic route, and the key treats 49 per cent as the ceiling on Indian promoters' shareholding as well. Bank ownership rules are revised often, so learn the limits together with the year.
- 1. The key accepts a 49 per cent ceiling on Indian promoters' holding; the rule cannot be confirmed from memory.
- 2. FDI up to 49 per cent from all sources was permitted under the automatic route in private banks.
Why each option is right or wrong
- (a) Statement 2 is also accepted, so 'only 1' is incomplete.
- (b) Statement 1 is also accepted, so 'only 2' is incomplete.
- (c) Correct: both are accepted.
- (d) Both are accepted, so 'neither' fails.
Worth knowing: The FDI limit in private banks was later raised to 74 per cent, and I cannot confirm the 2003 promoter ceiling from memory, so this follows the compilation's answer.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2003, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.