RBI Grade B 2018 Phase 2 FM Paper Solution and Analysis Lyst7574

RBI Grade B 2018 Phase 2 FM Paper Solution and Analysis
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Objective Questions – 1 Marker

Q.1) Which of the following is Not a Hygiene Factor as per Two Factor Theory?
Static or Current – STATIC
1 marker or 2 marker – 1 MARKER
Finance or Management – MANAGEMENT
Di culty Level – EASY
Topic – MOTIVATION
Options:
1. Supervision
2. Recognition
3. Salary
4. Job Security
5. None of Above
Answer: (b) Recognition

Explanation:
Q.2) Theory where the person compares his inputs and output (rewards) with co-workers is called ______
Options:

1. Equity Theory
2. Comparison Theory
3. Productivity Theory
4. E ciency Theory
5. None of Above
Answer: (a) Equity Theory
Explanation:
Q.3) “R” in Alderfer’s ERG Theory stands for _______

Options:
1. Relation
2. Relative
3. Relatedness
4. Recycle
5. None of Above
Answer: (c) Relatedness
Explanation:
Q.4) Communication owing in every direction without any one controlling it is known as__________.

Topic – COMMUNICATION
Options:
1. Uncontrolled Communication
2. Grapevine Communication
3. Directionless Communication
4. Boundary Less Communication
5. None of the above
Answer: b) Grapevine Communication
Explanation:
Q.5) Ratio of Output – Input for a xed period of time with due consideration for quality is termed as
________.

Topic – GENERAL MANAGEMENT (FUNDAMENTALS OF MANAGEMENT)
Options:
1. Effectiveness
2. E ciency
3. Work Time Ratio
4. Attrition Rate
Answer: (b) E ciency
Explanation:
E ciency is the ratio of output work to input work, expressed as a percentage.
Q.6) An appraisal in which appraisal is done by the Supervisor, Subordinate and Colleagues is called______ .

Topic – HRD
Options:
1. All-in one appraisal

2. Full Blown Appraisal
3. Peer Appraisal
4. 360-degree Appraisal
Answer: (d) 360-degree Appraisal
Explanation:
Q.7) Written Statement containing the Why and How Particular job is done, mentioning duties and working
conditions is called as __________.

Topic – HRD
Options:
1. Job Design
2. Job Description
3. Job Speci cation
4. Job identi cation
Answer: (b) Job Description
Explanation:
Q.8) First Stage in Kurt Levine's Change Management Model is called

Topic – ORGANIZATIONAL CHANGE
Options:
1. Change
2. unfreeze
3. Freeze
4. Control and Coordination
5. All of the above
Answer: (b) unfreeze
Explanation:

Q.9) MBO is knows as_____
Options:

1. Management by Obsession
2. Management by Objective
3. Management by Opportunity
4. Management by Occasion
Answer: (b) Management by Objective
Explanation:
Q.10) Person working in organization and working to make unethical practices inside the company known
to outsiders is known as_______
Topic – CORPORATE GOVERNANCE

Options:
1. Sleeper Employee
2. Social Activist
3. Whistle Blower
4. Policy Crusader
Answer: (c) Whistle Blower
Explanation:
Q.11) What are the ways to raise capital via online mode where you can bypass the regulations?

Finance or Management – FINANCE
Topic – ALTERNATE SOURCES OF FINANCE
Options:
1. Peer to Peer Lending

2. Lending to NRI’s
3. Crowdsourcing
4. Financial lease
5. Venture Capitalists
Answer: c) Crowdsourcing
Explanation:
Crowdsourcing is the sourcing of anything (service/product) from a crowd. It includes the practice of
funding a project or venture by raising money from a large number of people who each contribute a
relatively small amount, typically via the internet.

Q.12) As per Budget announcement, Corporates to raise _______ % of capital through Bonds.
Static or Current – CURRENT AFFAIRS
Topic – UNION BUDGET
Options:

1. 10%
2. 20%
3. 25%
4. 35%
Answer: (c) 25%
Explanation:
Companies with outstanding long-term borrowings of Rs 100 crore and a credit rating of “AA and above”
will have to compulsorily raise 25% of their debt from the bond market from the next nancial year.
Q.13) Public Private Partnership is used to fund which type of Projects?
Topic – PPP
Options:
1. Small Highway Projects

2. Medium Scale Public Welfare Projects
3. Large Scale Infrastructure Projects
4. Projects with Foreign Investment

Answer: (c) Large Scale Infrastructure Projects
Explanation:
Public-private partnerships involve collaboration between a government agency and a private-sector

company that can be used to nance, build, and operate projects, such as public transportation networks,
parks, and convention centers. Financing a project through a public-private partnership can allow a project
to be completed sooner or make it a possibility in the rst place.
Public-private partnerships allow
large-scale government projects
, such as roads, bridges, or hospitals, to be completed with private funding.
Q.14) GST has rates levied in many brackets? Which of the following is the maximum GST rate applicable?
Topic – GST
Options:

1. 5%
2. 18%
3. 28%
4. 32%
5. 35%
Answer: (c) 28%
Explanation:

Q.15) Control method which involves speculating deviations rather than comparing variations after
completion of the activity

Di culty Level – MODERATE
Options:
1. Concurrent Control
2. Feed Forward Control
3. Feedback Control
4. Anticipatory Control
Answer: (b) Feed Forward Control
Explanation:

Q.16) UPI is Monitored by______
Topic – CHANGING LANDSCAPE IN BANKING SECTOR
Options:

1. National Payment Corporation of India

2. National Payment Management Council
3. Reserve Bank of India
4. Ministry of Communication and Technology
Answer: (a) National Payment Corporation of India
Explanation:
Q.17) Financial securities like stocks and bonds are held in dematerialized form with _____.

Topic – PRIMARY AND SECONDARY MARKET- EQUITY MARKET
Options:
1. Merchant Bankers
2. Depositories
3. SEBI
4. Stock Exchange
5. Stockbrokers
Answer: (b) Depositories
Explanation:
Depositories are institutions which hold your securities (Shares, bonds, debentures, Mutual Fund Units) in
electronic form which is also known as dematerialization of shares or DEMAT account.
Q.18) OCR in banking is known as________.
Topic – BANKING SYSTEM IN INDIA
Options:

1. Optical Character Recognition

2. Optimal Channel Rendering
3. Optimal Character Recognition
4. Optical Channel Rendering
Answer: (a) Optical Character Recognition
Explanation:
Q.19) Udaymi Mitra Portal launched by SIDBI is for_______.

Topic – FINANCIAL INSTITUTIONS: SIDBI
Options:
1. Large Scale Industries

2. Small and Medium Enterprises
3. Rural Industry
4. Automotive Industry
Answer: (b) Small and Medium Enterprises
Explanation:
Udyami Mitra Portal
Under the portal entrepreneurs can apply for loan without physically visiting bank branches. It also has
facility for uploading all necessary documents.
Through the portal, the MSMEs can select from over 1 lakh bank branches, track their application status
and avail multiple loan bene ts.
Q.20) The rate which doesn’t include the cost of funds but re ects the liquidity of Banks?

Di culty Level – DIFFICULT
Topic – PRIMARY AND SECONDARY MARKET – DEBT MARKET
Options:
1. MCLR
2. Bank Rate
3. MIBOR
4. REPO Rate
Answer: (c) MIBOR
Explanation:
The Mumbai Interbank Offer Rate (MIBOR) is one iteration of India's interbank rate, which is the rate of
interest charged by a bank on a short-term loan to another bank.
Banks borrow and lend money to one another on the interbank market in order to maintain appropriate,
legal liquidity levels, and to meet reserve requirements placed on them by regulators. Interbank rates are
made available only to the largest and most creditworthy nancial institutions.
MIBOR is calculated every day by the National Stock Exchange of India (NSEIL) as a weighted average of
lending rates of a group of major banks throughout India, on funds lent to rst-class borrowers. This is the
interest rate at which banks can borrow funds from other banks in the Indian interbank market.
Q.21) The base year for Revised series of WPI is?

Topic – INFLATION
Options:
1. 2010-11
2. 2011-12
3. 2013-2014
4. 2009-2010
5. 2012-2013
Answer: (b) 2011-12
Explanation:
The base year of All-India WPI has been revised from 2004-05 to 2011-12 on 12 May 2017 to align it with
the base year of other macroeconomic indicators like the Gross Domestic Product (GDP) and Index of
Industrial Production (IIP). The current series is the seventh revision.
Q.22) Decision matrix under which the worst outcomes are considered among many and the best among
those worst outcomes is selected as part of decision making?

Options:
1. Worst Payoff Decision matrix

2. Max-Min Decision Matrix
3. Worst Outcome Decision matrix
4. Pro t oriented Decision Matrix
Answer: (b) Max-Min Decision Matrix
Explanation:

Q.23) The scal de cit target for the year 2018-19 is ______.

Options:
1. 2.2%
2. 3.3%
3. 4.4%
4. 5.5%
Answer: (b) 3.3%
Explanation:
Fiscal De cit Target for Year 2018-19 is 3.3 % as Union Budget 2018-19.
Q.24) Clearing Corporation of India Limited is used to clear what type of Trades?
Topic – PRIMARY AND SECONDARY MARKET-EQUITY MARKET
Options:

1. Primary Market Transactions in Shares

2. Secondary Market Transactions in Government Securities
3. Primary Market Transaction in IPOs
4. All the above
Answer: (b) Secondary Market Transactions in Government Securities
Explanation:
The secondary market transactions in Government securities are settled through CCIL. The trades
concluded in Outright and Repo market are received for settlement and instruments in which trades are
received include Treasury Bills, Central Government Securities, State Government Securities, STRIPS and
When Issued - both New Issues and Re-Issues.
Q.25) Rupee has been weakening off late and has breached a level of 70? Under these circumstances what
action can be executed by RBI?
Topic – FOREX MARKET
Options:

1. Sell Dollars
2. Buy Dollars
3. Print More Currency in rupee
4. Advice government to put curb on exports
Answer: (a) Sell Dollars
Explanation:
Rupee depreciates i.e., more rupee in one dollar.
When Demand of Dollar is High
Rupee Appreciates i.e., Less rupee in one dollar.
When Demand of Dollar is low
So if RBI sells dollar, more dollar available in marker -> hence less demand for dollar -> Rupee Appreciates
Q.26) What is the amount of standard deduction announced in recent budget for FY2018-19?

Options:
1. 20,000
2. 30,000
3. 40,000
4. 50,000
Answer: (c ) 40,000
Explanation:
Standard deduction announced in recent budget for 18-19 nancial year is Rs. 40,000.
Q.27) Maximum time for insolvency resolution for companies having assets > 1 crore under IBC without
any exception is how many days?
Topic – CHANGING LANDSCAPE IN BANKING SECTOR
Options:

1. 100
2. 180
3. 200
4. 365
Answer: (b) 180
Explanation:
Companies (Assets > 1 crore)
Insolvency Resolution
Companies (Assets < 1 crore)
90 days which can be extended to max of another 45 days
180 days which can be extended to max of another 90 days
Q.28) As per Union Budget 2018-19, Exemption of interest income for senior citizens on deposits with
banks and post o ces are proposed to be increased from 10,000 to _____.

Options:
1. 20,000
2. 30,000
3. 40,000
4. 50,000
Answer: (d) 50,000
Explanation:
For Senior citizens, Exemption of interest income on deposits with banks and post o ces to be increased
from Rs. 10,000 to Rs.50,000. So senior citizens will not be required to pay any tax on interest income up
to 50,000.
Q.29) As per Union Budget 2018-19 which of the following scheme is related to price xation to ensure
farmers are given the right price for their produce?
Options:

1. Operation Food
2. Operation Green
3. Operation Fasal
4. Operation Kisan
Answer: (b) Operation Green
Explanation:
It was announced in Union Budget 2018-19 online of Operation Flood to promote Agri-logistics,
processing facilities and professional management.
It also aims to aid farmers and help control and limit erratic uctuations in the prices of tomatoes,
onions, and potatoes (TOP).
It is essentially price xation scheme that aims to ensure farmers are given the right price for their
produce. The idea behind it is to double the income of farmers by the end of 2022.
Q.30) Budget for infrastructure sector for 2018-19
Options:

1. 5.97 Lakh crore

2. 2.90 Lakh crore
3. 3.8 Lakh crore
4. 4.11 Lakh crore
Answer: (b) Operation Green
Explanation:
Budget for infrastructure sector for 2018-19 is 5.97 Lakh crore.
Objective Questions – 2 Marker

Para 1. A passage on Leadership was given which was followed by 4 questions i.e Q. 1-4
Leaders aren’t born, they are made. And they are made just like anything else, through hard work. And that’s
the price we’ll have to pay to achieve that goal, or any goal. Leadership can be learned by anyone who has
the basics, but a huge number of leadership skills cannot be taught, some people are good at learning and
others nd themselves offering modest results and poor preparation for leadership.
In expert’s opinion, leadership is an art and not a science. There are various theories in this connection:
Trait Theory, Behavioral Theories, Managerial Grid, Contingency Theory, Path Goal Theory etc. Leaders
should have certain innate characteristics, but they must be nurtured and learned throughout life through
experience. For example, a person may have natural charisma, take initiative, possess, self-motivation,
self-determination, and self-e cacy, yet not have the knowledge of how to apply these characteristics to
leadership.
(This is a recreated passage and not the exact one asked in the exam)
Q.1) In Managerial Grid which type of Leader has both Concern for Production and Concern for People

Topic – LEADERSHIP
Options:
1. Country Club
2. Team manager
3. Indifferent
4. Impoverished
5. None of the Above
Answer: (b) Team manager
Explanation:

Q.2) Managerial Grid is given By ________.
Options:
1. Fiedler
2. Blake and Mouton
3. Max Weber
4. Robert House
Answer: (b) Blake and Mouton
Explanation:

Q.3) Leadership theory where leader removes obstacles so that the follower are able to reach/achieve
objectives is called_____.
Options:

1. Contingency Theory
2. Goal Setting theory
3. Path Goal Theory
4. Managerial Grid Theory
Answer: (c) Path Goal Theory
Explanation:
The path-goal theory states that a leader's behavior is contingent to the satisfaction, motivation and
performance of their employees. The manager's job is viewed as guiding workers to choose the best paths
to reach both their goals as well as the corporation's goals.

Q.4) Which of the following leadership theory that says that “leaders are born and not made”?

Options:
1. Self-Made Theory
2. Trait Theory
3. Genes Theory
4. Silver Spoon Theory
5. NONE OF THE ABOVE
Answer: (b) Trait Theory
Explanation:
The trait theory is built on the premise that leaders are born and not made, making leadership quality an
intrinsic intelligence rather than something that can be taught or learned. The theory consequently helps to
predict an effective leader based on his/her traits.
Para 2. A passage on Power and authority was given which was followed by 3 questions i.e Q. 5-7
Power is an entity’s or individual’s ability to control or direct others, while authority is in uence that is
predicated on perceived legitimacy. Consequently, power is necessary for authority, but it is possible to
have power without authority. In other words, power is necessary but not su cient for authority.
Authority refers to accepted power—that is, power that people agree to follow according to speci c
procedures. People listen to authority gures because they feel that these individuals are worthy of
respect, or because they are in a position that inherently carries a degree of respect. Generally speaking,
people perceive the objectives and demands of an authority gure as reasonable, legitimate, bene cial, or
true.
3 main types of authority can exist within an organization: Line Authority, Staff Authority and Functional
Authority. Each type exists only to enable individuals to carry out the different types of responsibilities with
which they have been charged.

Q.5) Subordinate's perception that the supervisor has power to punish or take things away is called_____.
Options:
1. Coercive Power
2. Reward Power
3. Expert Power
4. Referent Power
Answer: (a) Coercive Power
Explanation:

Q.6) Power to reward, promote or grant key resources is called____.

Options:
1. Reward Power
2. Title Power
3. Expert Power
4. Legitimate Power
5. None of Above
Answer: a) Reward Power
Explanation:

Q.7) Authority responsible for achievement of Key Organizational Goals through proper ow of authority
and responsibility is termed as_______.
Options:
1. Functional Authority
2. Line Authority
3. Matrix Authority
4. Divisional Authority
Answer: (b) Line Authority
Explanation:

Para 3. A passage on Leadership style was given which was followed by 3 questions i.e Q. 8-10
Leadership is a complex and diverse place of knowledge, and it transforms potential into reality.
Leadership has the capability to impress the will of the leader on those led and induce obedience, respect,
loyalty, and corporation. Leadership is a result of an ability to persuade or direct men, apart from prestige
or power that comes from o ce or external circumstances. On the other hand, Leadership also an
in uence relationship among leaders and followers who intend real changes that re ect their mutual
purposes.
There are different types of leadership styles. Leadership styles can be identi ed of their characteristics, an
implicit leadership philosophy, and a set of management skills typical of each style. Different leadership
styles include autocratic, democratic, laissez faire, Transformational and transactional.

There are many leadership styles from which to select one but depends upon the situation of business. But
everything new is not good and everything old is not bad. Different styles are needed for different
situations, but leader should know when to use a particular approach.
Q.8) Leadership theory where leaders have complete trust in Subordinates and seeks frequent suggestions
from them and use them constructively?
Options:
1. Transactional
2. Autocratic
3. Delegative
4. Participative
Answer: (d) Participative
Explanation:

Q.9) Leadership style when leader is sensitive about followers' feeling but what prevails is leader's wish is
called______.
Options:
1. Maternalistic Style
2. Paternalistic Style
3. Servant Style
4. Participative

Answer: (b) Paternalistic Style
Explanation:
Q.10) Burns theory in which Leader and Follower helps each other to move to higher level of motivation and
morale is called________.
Options:

1. Transactional Theory
2. Transformational Theory
3. Burn’s Motivational Theory
4. Leader-Follower Theory
5. None of Above
Answer: (b) Transformational Theory
Explanation:

Para 4. A passage on Inventory Management was given which was followed by 4 questions i.e Q. 11-14
Inventory management is how you track and control your business’ inventory as it is bought, manufactured,
stored, and used. It governs the entire ow of goods — from purchasing right through to sale — ensuring
that you always have the right quantities of the right item in the right location at the right time.
No matter the size of your business, employing some of these common inventory management
techniques can be a great way to take control of your stock. Bulk Shipments, ABC Inventory Management,
Backordering, Just in Time (JIT), Economic order quantity etc. are some of the techniques.
Inventory control is how you manage the stock you currently have in storage. This involves knowing your
stock inside and out — how much is available, where it is and what condition it is in. An inventory control
system is a technology solution that manages and tracks a company's goods through the supply chain.
This technology will integrate and manage purchasing, shipping, receiving, warehousing, and returns into a
single system. The best inventory control system will automate a lot of manual processes.

Q.11) In which of the following method, Supply of components is regulated through the use of an instruction
card sent along the production line?
Options:
1. JIT
2. KANBAN
3. Sonyara
4. Koi-Ichi
Answer: (b) KANBAN
Explanation:
Kanban aligns inventory levels with actual consumption. A signal tells a supplier to produce and deliver a
new shipment when a material is consumed. This signal is tracked through the replenishment cycle,
bringing visibility to the supplier, consumer, and buyer.
Kanban cards are a key component of Kanban, and they signal the need to move materials within a
production facility or to move materials from an outside supplier into the production facility

Q.12) What is the name of Inventory Management system that focuses on Minimizing holding and
minimizing cost of production?
Options:
1. Economic Utilization Quantity

2. Economic Order Quantity
3. Economic Manufactured Quantity
4. Economic Supply Quantity
Answer: (b) Economic Order Quantity
Explanation:

Q.13) Methodology aimed primarily at reducing times within production system as well as response times
from suppliers and to customers and maintaining zero inventory is called______
Options:
1. KABAN
2. JIT
3. Six Sigma
4. Nameplate Formation
5. NONE OF THE ABOVE
Answer: (b) JIT
Explanation:

The just-in-time (JIT) inventory system is a management strategy that aligns raw-material orders from
suppliers directly with production schedules. Companies employ this inventory strategy to increase
e ciency and decrease waste by receiving goods only as they need them for the production process,
which reduces inventory costs by trying to maintain zero inventory.
Q.14) Control system which automates the process of control is known as _____.
Options:
1. Cybernetics
2. Auto-Control
3. Splunk Control
4. MongoDB Control

Answer: (a) Cybernetics
Explanation:
Cybernetics is the science of communications and automatic control systems in both machines and living
things.
Para 5. A passage on Organization structure was given which was followed by 3 questions i.e Q. 15-17
Organizational functions and activities need to be organized and coordinated. They should be designed
properly to manage the effective division of work, grouping of activities, coordinating, and controlling the
work of the organization. Organizational structure determines the work allocation and grouping of
activities according to the need and goals. All the activities need to be delegated by the managers to
achieve e ciency and professionalism in the task. It needs departmentation which leads to e cient
functioning of managers and the organization. It also gives specialized output, administrative control and
xation of responsibilities, freedom, and development of managers. There are three types of structures of
organization they are functional, divisional, and adaptive according to which an organization can be
created. Besides this, organization structure has three dimensions they are formalization, centralization,
and complexity to attain organizational effectiveness. Other factors which in uence effectiveness are
managerial policies and practices, environmental characterization, employee characteristics and
organizational characteristics.
Q.15) Departmentation that is based on unique occupational specialty is called

Options:
1. Functional Departmentalization
2. Product Departmentalization
3. Occupational Departmentalization
4. Matrix Departmentalization
5. None of Above
Answer: (a) Functional Departmentalization
Explanation:

Q.16) What is the name given to Flexible Organization without de ned lines is called__.

Options:
1. In nite Organization
2. Freedom oriented Organization
3. Boundary Less Organization
4. Unlimited Organization
Answer: (c) Boundary Less Organization
Explanation:

Q.17) Organization Structure using both Functional and Divisional structure is called___
Options:

1. Departmental Organization
2. Multi Structure Organization
3. Matrix Organization
4. Function-Divisional Organization
Answer: (c) Matrix Organization
Explanation:
Para 6. A passage on Financial Ratios was given which was followed by 4 questions i.e Q. 18-21
Investors and other external users of nancial information will often need to measure the performance and
nancial health of an organization. This is done in order to evaluate the success of the business,
determine any weaknesses of the business, compare current and past performance, and compare current
performance with industry standards. Financially stable organizations are desirable, because a nancially
stable business is one that successfully ensures its ability to generate income for investors and retain or
increase value.

There are many different methods that can be used alone or together to help investors assess the nancial
stability of an organization. One of the most common methods is nancial ratio analysis. Financial ratios
indicate a company's nancial situation and nancial performance. Based on the information provided by
these ratios, one may also calculate nancial projections, nancial trends, offering an image on the
company possible future accomplishments. Financial ratios are divided into four main categories that are
most frequently used: liquidity ratios, pro tability ratios, leverage ratios, and e ciency, activity, and
turnover ratios.
Q.18) If 1:1 Bonus shares are issued, then what would be the impact on Tangible Net worth?
Topic – PRIMARY AND SECONDARY MARKETS – EQUITY MARKET
Options:
1. Tangible Net Worth would increase

2. Tangible Net Worth would Decrease
3. Tangible Net Worth would increase/Decrease depending on how the bonus issue is nanced
4. Tangible Net Worth would remain the same
Answer: (d) Tangible Net Worth would remain the same
Explanation:

When Bonus is issued, the money is shifted from retained earnings to Share Capital. So overall shareholder
capital remains the same. Since net worth is same as shareholder capital, the net worth also remains the
same
Q.19) Return on Investment is a very important measure for company to nd out whether it is going in right
direction or not. Return on Investment as a parameter comes under which of the following Parameters?

Topic – FINANCIAL RATIOS
Options:
1. Liquidity
2. Pro tability
3. Solvency
4. Turnover Ratios
5. None of Above
Answer: (b) Pro tability
Explanation:
Q.20) The most important Factor in Pricing of Shares is?

Topic – FINANCIAL RATIOS
Options:
1. Dividend
2. EPS
3. Face Value
4. History of Bonus Issue
Answer: (b) EPS
Explanation:
Though Dividend and bonus issue also helps in judging whether the shares is preferable to buy or not but
the most important factor is the EPS itself because it directly lets us know whether the Earning Per share
is in sync with the expectations or not.
Q.21) Given the Price per Share is 100 and Earning Per Share is 20 then nd the P/E ratio?

Topic – PRIMARY AND SECONDARY MARKETS – EQUITY MARKETS
Options:
1. 120
2. 4
3. 5
4. 2000
5. .2
Answer: c) 5
Explanation:
P/E ratio = Price Per Share/Earning Per Share
= 100/20 = 5
Para 7. A passage on IBC was given which was followed by 4 questions i.e Q. 22-25
The Union Cabinet has approved the proposal to make amendments in the Insolvency and Bankruptcy Code
(IBC), 2016, through the Insolvency and Bankruptcy Code (Second Amendment) Bill. The amendments aim
to remove certain di culties being faced during insolvency resolution process to realize the objects of the
code and to further ease doing of business.

Insolvency and Bankruptcy Code, 2016 provides a time-bound process for resolving insolvency in
companies and among individuals. Operationalisation of IBC, till now, has been spoiled by myriad factors
ranging from frivolous challenges posed by operational creditors and promoters to shortage of judges in
tribunals. As a result, an important piece of legislation like IBC, which was expected to usher in a new era
of ease of doing business, may fall into the trap of implementation failure. Timely amendments, which
provide more teeth to the Code, can only rescue the process. New amendments in IBC should be closely
watched and observed in that light.
Q.22) IBC covers which of the following in its ambit of working?
Topic – RECENT DEVELOPMENT IN FINANCIAL SECTOR
Options:
1. Individuals
2. Partnership Firms
3. Companies
4. LLPs
5. All of the above
Answer: (e) All of the above

Explanation:
Insolvency and Bankruptcy Code: It covers Individuals, Companies, Limited Liability Partnerships and
Partnership rms
Q.23) What is order of claims as per waterfall structure of IBC?
(i) Government Dues
(ii) Insolvency Costs
(iii) Unsecured Creditors
Options:
1. (i), (ii) and then (iii)

2. (ii), (iii) and (i)
3. (i), (iii) and then (ii)
4. (iii), (ii) and then (i)
Answer: (b) (ii), (iii) and (i)

Explanation:
Section 53: Waterfall Mechanism
Insolvency Cost
debts owed to a secured creditor in the event such secured creditor has relinquished security
workmen’s dues for the period of 24 months
Order of Claims in case of IBC
Wages and any unpaid dues owed to employees other than workmen for the period of 12 months
Financial debts owed to unsecured creditors
Govt Dues
debts owed to a secured creditor for any amount unpaid following the sale of security/collateral
Preference Shareholders
Equity Shareholders
Q.24) Difference between Debt Recovery Tribunal and National Company Law Tribunal

Options:
1. Debt Recovery Tribunal is for insolvency proceedings of companies which have less than 100 crores
in revenue where as NCLT is for insolvency proceedings of companies which have more than 100
crore in revenue
2. Debt recovery Tribunal is meant for state disputes where as NCLT is for central level disputes.
3. Debt Recovery Tribunal is for insolvency proceeding of Individuals and Partnership Firms where as
NCLT is for insolvency proceedings of Companies and LLPs
4. All of the above
Answer: (c) Debt Recovery Tribunal is for insolvency proceeding of Individuals and Partnership Firms where
as NCLT is for insolvency proceedings of Companies and LLPs
Explanation:
NCLT
DRT
Insolvency and Bankruptcy Code
LLPs and Companies
Individuals and Partnership Firms
Q.25) Under IBC, the resolution plan for the companies under stress needs to be approved by?

Options:
1. Finance Ministry
2. Ministry of Corporate Affairs
3. Reserve Bank of India
4. National Company law Tribunal
Answer: (d) National Company law Tribunal
Explanation:
Insolvency and Bankruptcy Code
Resolution Plan: To repay the debt over an extended period of time
Needs to be approved by NCLT
Para 8. A passage on Basel Norms was given which was followed by 3 questions i.e Q. 26-28

Banking system plays a very signi cant role in the economy of any country. Any asset of a Bank becomes
nonperforming when it stops generating income for the bank. Capital is the last recourse that would be
available for any bank to prevent Such failure. G-10 countries felt a need for better regulation of Banking
Sector after the failure of one Bank in Germany. All the countries agreed to constitute a committee for
Banking Supervisory practices (BCBS) under the aegis of Bank for International Settlements (BIS).
The Committee is headquartered at the Bank for International Settlements in Basel, Switzerland. The
committee was established to improve the nancial stability of member countries by providing regulatory
guidelines and banking supervision worldwide. In India, Basel I was implemented in the year 1999. RBI
suggested the initial guidelines and framework for implementation of Basel II in the year 2005. Banks
would be required to adopt the Standardized approach for the determining risk weights for credit risk and
the Basic indicator for determining operational risk. It was mandated that the CAR has to be maintained at
9% level, a step ahead of the prescribed Basel II CAR of 8%.
World economy faced most uncertain Crisis in 2008. BIS has a proposed Basel III guideline in 2010. Some
more parameters were introduced in the guidelines issued by BIS. BASEL Committee members agreed to
implement BASEL III from 2013. The BASEL III norms were proposed to minimize the risk in the Banking
System than earlier. RBI recently extended the implementation of Basel III up to March 31, 2020.(This is a
recreated passage and not the exact one asked in the exam)
Q.26) Which of the following are considered as Risks under Basel 3?
Topic – RISK MANAGEMENT

Options:
1. Market Risk
2. Credit Risk
3. Liquidity Risk
4. Only 1 and 3
5. Only 1 and 2
Answer: (a) Only 1 and 2
Explanation:
Risk Considered in Basel 3 are
1. Market Risk
2. Credit Risk
3. Operational Risk
Q.27) Which of the following are 3 pillars of Basel 3?
1. Capital Requirement
2. Supervisory Review
3. Operational Liquidity
4. Market Discipline

Options:
1. 1,2 and 3
2. 1,2 and 4
3. 2,3 and 4
4. 1,3 and 4
5. All of the above
Answer: (b) 1,2 and 4
Explanation:
3 Pillars
Q.28) Which of the following are Basel 3 Capital Components?

Options:
1. Tier 1 Capital
2. Tier 2 Capital
3. Capital Conservation Buffer
4. 1 and 2
5. 1,2 and 3
Answer: (a) 1,2 and 3
Explanation:
Tier 1 capital
Tier 2 Capital
The Capital Conservation Buffer is intended to ensure that rms build up buffers of capital outside any
periods of stress and is designed to avoid breaches of minimum capital requirements.
This capital buffer can then be drawn upon in times when losses are incurred.
Para 9. A passage on Priority Sector lending was given which was followed by 3 questions i.e Q. 29-31
Recently, the Reserve Bank of India (RBI) released revised Priority Sector Lending (PSL) guidelines, which
align with emerging national priorities and also bring sharper focus on inclusive development. The PSL
guidelines were last reviewed for commercial banks in April 2015 and for Urban Co-operative Banks
(UCBs) in May 2018. Revised PSL guidelines will enable better credit penetration to credit de cient areas;
increase the lending to small and marginal farmers and weaker sections; boost credit to renewable energy,
and health infrastructure.

The RBI mandates banks to lend a certain portion of their funds to speci ed sectors, like agriculture, Micro,
Small and Medium Enterprises (MSMEs), export credit, education, housing, social infrastructure, renewable
energy among others. The idea behind this is to ensure that adequate institutional credit reaches some of
the vulnerable sectors of the economy, which otherwise may not be attractive for banks from the
pro tability point of view.
Q.29) Under Priority Sector Lending, the limit for education loan is
Topic – RECENT DEVELOPMENTS IN THE FINANCIAL SECTOR
Options:
1. 5 lakh
2. 10 Lakh
3. 15 Lakh
4. 20 Lakh
Answer: (b) 10 Lakh
Explanation:

Loans to individuals for educational purposes including vocational courses up to ₹ 1 million
Q.30) For Housing Loan in Metro for PSL, the limit has been raised from 25 lakh to _________ lakh
Options:
1. 27
2. 30
3. 35
4. 45

Answer: (c) 35
Explanation:
Loans to individuals up to ₹3.5 million in metropolitan centers (with population of ten lakh and above)
provided the overall cost is not more than 4.5 million

Loans to individuals up to ₹ 2.5 million in other centers for purchase/construction of a dwelling unit per
family provided the overall cost is not more than 3 million
The housing loans to banks’ own employees will be excluded.
Q.31) Under Priority Sector Lending for Scheduled Commercial Banks what % of loans needs to be given to
Priority sector and what % needs to be given to Agriculture

Options:
1. 40,32
2. 32,18
3. 40,18
4. 28,16
Answer: (c) 40,18
Explanation:
Total Targets 40 percent
MSME – 7.5%
Agriculture – 18%
Remaining to Other Sectors

Para 10. A passage on Monetary policy was given which was followed by 4 questions i.e Q. 32-35
The Fiscal Responsibility and Budgetary Management (FRBM) Act, which is being reviewed under the
chairmanship of N K Singh, would act in tandem with the in ation targeting of Monetary Policy Committee
(MPC).
FRBM is to act in tandem with the in ation targeting of MPC. The idea is to ensure resource ow to the
economy. The MPC has set an in ation target of _____ per cent with an upper and lower tolerance limit.
The FRBM panel is deliberating on what would be the path forward in terms of debt sustainability and scal
recti cation.
The 14th Finance Commission had recommended 3 per cent scal de cit for the Centre and another 3 per
cent for the states yielding a combined scal de cit of 6 per cent for the period 2015-16 to 2019-20.
Q.32) Under FRBM, government can borrow from RBI through_______.
Topic – FRBM
Options:

1. Bonds
2. Long Term Loans
3. Ways and Mean Advances
4. Securitization
Answer: (c) Ways and Mean Advances
Explanation:
The FRBM Act States that the Central Government shall not borrow from RBI except by way of means and
advances to meet temporary excess of cash disbursements over cash receipts.
The Reserve Bank of India gives temporary loan facilities to the centre and state governments as a banker
to government. This temporary loan facility is called Ways and Means Advances (WMA)
Q.33) Repo and Reverse Repo are tools used as part of Liquidity Adjustment Facility. Which one among
them injects or sucks Liquidity?
Topic – MONETARY POLICY
Options:

1. Repo and Reverse Repo both Suck Liquidity

2. Reverse Repo Injects Liquidity and Repo Sucks Liquidity
3. Repo Injects Liquidity and Reverse Repo Sucks Liquidity
4. Repo and Reverse Repo both Inject Liquidity.
Answer: (c) Repo Injects Liquidity and Reverse Repo Sucks Liquidity
Explanation:
Q.34) What is the target set by RBI for Consumer Price based in ation till 2021?
Options:

1. 4 +/- 2 %
2. 3 +/- 1 %
3. 4 +/- 1 %
4. 6 +/- 3 %
Answer: (a) 4 +/- 2 %
Explanation:
RBI In ation Target – 4 +/- 2% till 2021
Q.35) Which of the following is/are Liquidity Tools used by RBI?
Options:
1. Repo
2. Reverse Repo
3. CRR
4. Interest Rate Swaps
5. All Except Interest Rate Swaps
Answer: (e) All Except Interest Rate Swaps

Explanation:
Question Paper Analysis: OBJECTIVE
TABLE 1
SUBJECT TOTAL NUMBER OF TOTAL MARKS

QUESTIONS ASKED ALLOCATED
FINANCE 36 54
MANAGEMENT 29 46
TABLE 2

DIFFICULTY LEVEL TOTAL NUMBER OF QUESTIONS ASKED
EASY 45
MODERATE 19
DIFFICULT 1
Important take away from Table 1 and 2
Finance was given slightly more weightage (54%) than Management (46%).
Overall objective paper was easier to moderate.
Finance Analysis

Important take away from Finance Analysis.
Current Affairs
Majority of Current Affairs are from Budget.

RBI Noti cation (< 6 month) preferred. – RBI PSL Noti cation – June 2018.
Even older current Affairs (> 6 months) were asked. – Udyami Portal, GST.
Numerical asked are very easy.
Static was easier to Moderate.
Management Analysis

Important take away from Management Analysis.
Management questions were slightly on the application side.
Many of the questions were slightly on unexpected line i.e., not directly from the highlighted
syllabus. E.g., EOQ, Control System, Inventory Management etc.

Management was slightly on Moderate to Di cult side.

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Objective Questions – 1 Marker

Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

Answer: (b) Recognition

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Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

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Answer: (a) Equity Theory

Q.3) “R” in Alderfer’s ERG Theory stands for _______

Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

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Finance or Management – MANAGEMENT

Di culty Level – EASY

Answer: (c) Relatedness

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Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

Answer: b) Grapevine Communication

Static or Current – STATIC

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1 marker or 2 marker – 2 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

Topic – GENERAL MANAGEMENT (FUNDAMENTALS OF MANAGEMENT)

Answer: (b) E ciency

E ciency is the ratio of output work to input work, expressed as a percentage.

Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

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1. All-in one appraisal

Answer: (d) 360-degree Appraisal

Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

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Di culty Level – EASY

Answer: (b) Job Description

Q.8) First Stage in Kurt Levine's Change Management Model is called

Static or Current – STATIC

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1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

Topic – ORGANIZATIONAL CHANGE

Answer: (b) unfreeze

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Q.9) MBO is knows as_____

Static or Current – STATIC

1 marker or 2 marker – 1 MARKER

Finance or Management – MANAGEMENT

Di culty Level – EASY

Topic – GENERAL MANAGEMENT (FUNDAMENTALS OF MANAGEMENT)