UPSC Prelims 2013 · CSAT

Question 26: Reading Comprehension

Passage beginning “Financial markets in India have acquired greater…” — Passage · as printed by UPSC

According to the passage, in the Indian financial system, banks’ ability to withstand stress is critical to ensure overall financial stability because Indian financial system is

acontrolled by the Government of India.

bless integrated with banks.

ccontrolled by Reserve Bank of India.

ddominated by banks.

AnswerUPSC’s answer is (d).

The passage says the Indian financial system is dominated by banks, and therefore banks' ability to withstand stress is critical to overall financial stability. Government or RBI control, and a system less integrated with banks, are not the reason it gives. Link to remember: the more a system depends on banks, the more the soundness of banks matters for its stability.

Why each option is right or wrong

(a) Wrong. Government control is not the reason given.
(b) Wrong. The system is described as bank dominated, which is the opposite.
(c) Wrong. RBI control is not the reason given.
(d) Right. Because the system is dominated by banks, their strength matters most.

Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2013, General Studies Paper II (CSAT), Series A. The paper on upsc.gov.in.