UPSC Prelims Practice Questions — To stabilise rupee, RBI may use 2013 plan to help banks mop up NRI dollar deposits
Q1. The USD-INR buy/sell swap facility announced in June 2026 to attract fresh FCNR(B) deposits is operationalised by which one of the following?
- A. Department of Economic Affairs, Ministry of Finance
- B. Reserve Bank of India
- C. International Financial Services Centres Authority (IFSCA)
- D. Securities and Exchange Board of India (SEBI)
Q2. With reference to the FCNR(B) scheme, which one of the following statements best describes it?
- A. Rupee-denominated term deposits of non-resident Indians on which the exchange risk is borne by the depositor
- B. Foreign-currency-denominated term deposits of non-resident Indians with authorised Indian banks, fully repatriable, with exchange risk borne by the bank
- C. Rupee-denominated savings accounts of non-resident Indians whose principal is non-repatriable and on which interest is taxable in India
- D. Foreign-currency deposits maintained abroad by resident Indians under the Liberalised Remittance Scheme
Q3. Consider the following statements regarding the FCNR(B) deposit scheme:
1. Deposits can be accepted in permitted foreign currencies such as US Dollar, Pound Sterling, Euro, Japanese Yen, Canadian Dollar and Australian Dollar.
2. The exchange-rate risk on these deposits is borne by the depositor.
3. Interest income earned on FCNR(B) deposits by a non-resident depositor is exempt from income tax in India.
4. Both the principal and interest of FCNR(B) deposits are fully repatriable.
Which of the statements given above is/are NOT correct?
- Deposits can be accepted in permitted foreign currencies such as US Dollar, Pound Sterling, Euro, Japanese Yen, Canadian Dollar and Australian Dollar.
- The exchange-rate risk on these deposits is borne by the depositor.
- Interest income earned on FCNR(B) deposits by a non-resident depositor is exempt from income tax in India.
- Both the principal and interest of FCNR(B) deposits are fully repatriable.
- A. 1 only
- B. 2 only
- C. 2 and 3 only
- D. 3 and 4 only
Q4. With reference to the RBI's June 2026 measures to attract foreign-currency inflows through FCNR(B) deposits, consider the following statements:
1. The RBI temporarily withdrew the interest-rate ceiling on fresh FCNR(B) deposits of three to five years' maturity.
2. The relaxations are applicable to deposits mobilised up to 30 September 2026.
3. The interest-rate ceiling on fresh NRE rupee deposits with maturity of three years and above was also temporarily withdrawn.
4. The directive removing these interest-rate ceilings was issued by the Department of Economic Affairs in the Ministry of Finance.
Which of the statements given above are correctly identified?
- The RBI temporarily withdrew the interest-rate ceiling on fresh FCNR(B) deposits of three to five years' maturity.
- The relaxations are applicable to deposits mobilised up to 30 September 2026.
- The interest-rate ceiling on fresh NRE rupee deposits with maturity of three years and above was also temporarily withdrawn.
- The directive removing these interest-rate ceilings was issued by the Department of Economic Affairs in the Ministry of Finance.
- A. 1 and 2 only
- B. 1, 2 and 3 only
- C. 2, 3 and 4 only
- D. 1, 3 and 4 only
Q5. The concessional FCNR(B) swap window first opened in September 2013 — being revived in 2026 — was launched under the governorship of which one of the following RBI Governors?
- A. Duvvuri Subbarao
- B. Raghuram Rajan
- C. Urjit Patel
- D. Y. Venugopal Reddy