2016 GS Paper I, all questions

UPSC Prelims 2016 · GS Paper I

Question 4: Economy and Social Development

The establishment of ‘Payment Banks’ is being allowed in India to promote financial inclusion. Which of the following statements is/are correct in this context?

  1. 1.Mobile telephone companies and supermarket chains that are owned and controlled by residents are eligible to be promoters of Payment Banks.
  2. 2.Payment Banks can issue both credit cards and debit cards.
  3. 3.Payment Banks cannot undertake lending activities.

Select the correct answer using the code given below.

a1 and 2 only
b1 and 3 only
c2 only
d1, 2 and 3

AnswerUPSC’s answer is (b).

Payment banks, set up under RBI's 2014 guidelines, take deposits and offer payments and remittance services but cannot lend. Eligible promoters include resident-owned mobile telephone companies and supermarket chains, besides non-bank prepaid instrument issuers and others. They can issue debit/ATM cards but not credit cards, since a credit card is a loan. Remember: deposits and payments yes, loans and credit cards no.

  • 1. Resident-owned mobile telephone companies and supermarket chains are among eligible promoters.
  • 2. They can issue debit cards but not credit cards, which involve lending.
  • 3. Payment banks may not undertake lending activities.

How you could have got this

  1. If you were sure statement 2 is not correct, (a), (c) and (d) go: each of them includes 2.

    What you needed to know: They can issue debit cards but not credit cards, which involve lending.

Only (b) is left. You didn’t need statements 1 or 3.

Which options go is worked out from UPSC’s key and the options, not by a model.

Why each option is right or wrong
  • (a) Statement 2 is false: payment banks cannot issue credit cards.
  • (b) Right: statements 1 and 3 are correct and statement 2 is false.
  • (c) Statement 2 is the false one, so '2 only' picks the wrong statement.
  • (d) Statement 2 is false, so 'all three' fails.

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

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Source: UPSC, Civil Services (Preliminary) Examination 2016, General Studies Paper I, Series A. The paper on upsc.gov.in.