2024 GS Paper I, all questions

UPSC Prelims 2024 · GS Paper I

Question 49: Economy and Social Development

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements :

  1. 1.There is no minimum capital requirement for wholly owned banking subsidiaries in India.
  2. 2.For wholly owned banking subsidiaries in India, at least 50% of the board members should be Indian nationals.

Which of the statements given above is/are correct ?

a1 only
b2 only
cBoth 1 and 2
dNeither 1 nor 2

AnswerUPSC’s answer is (d).

Statement 1 is wrong: RBI requires a wholly owned subsidiary of a foreign bank to have a minimum paid-up capital, which is set at ₹500 crore. UPSC's key also treats statement 2, on Indian nationals forming at least half the board, as incorrect, so neither statement holds. Remember: the capital floor for a wholly owned banking subsidiary is ₹500 crore, not zero.

  • 1. A wholly owned banking subsidiary must meet a minimum capital requirement of ₹500 crore.
  • 2. UPSC's key marks this incorrect; see the doubt note.

How you could have got this

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

    What you needed to know: A wholly owned banking subsidiary must meet a minimum capital requirement of ₹500 crore.

  2. Then, if you were sure statement 2 is not correct, (b) goes: it includes 2.

    What you needed to know: UPSC's key marks this incorrect; see the doubt note.

Only (d) is left. This one needs every statement.

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) Wrong: there is a minimum capital requirement of ₹500 crore.
  • (b) Wrong: UPSC's key marks statement 2 as incorrect.
  • (c) Wrong: neither statement is correct.
  • (d) Right: statement 1 is false because of the capital floor, and the key marks statement 2 false too.

Worth knowing: Statement 2 depends on the exact wording of RBI's guidelines for wholly owned subsidiaries, which some sources read as requiring a share of the board to be Indian nationals; UPSC's key marks it incorrect.

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

Practise this paper timedPrevious questionNext question

Source: UPSC, Civil Services (Preliminary) Examination 2024, General Studies Paper I, Series A. The paper on upsc.gov.in.