UPSC Prelims Practice Questions — Transmission of rate cut only half complete in PSBs
Q1. The December 2025 meeting of the Monetary Policy Committee, which reduced the policy repo rate to 5.25 per cent, was chaired by which of the following?
- A. Shaktikanta Das
- B. Sanjay Malhotra
- C. Michael Debabrata Patra
- D. T. Rabi Sankar
Q2. In the context of RBI's assessment of monetary policy transmission, what does the 'Weighted Average Lending Rate (WALR)' refer to?
- A. The rate at which the RBI lends overnight funds to commercial banks against eligible government securities
- B. The minimum rate below which a bank cannot lend to its customers, computed from marginal cost of funds plus operating cost and tenor premium
- C. The composite interest rate on rupee loans of a bank, computed as the average of contracted lending rates weighted by the corresponding loan amounts
- D. The external benchmark rate to which all new floating-rate retail and MSME loans must be linked under the 2019 framework
Q3. Which of the following statutory bodies is mandated to determine the policy repo rate required to achieve the inflation target in India?
- A. The Financial Stability and Development Council (FSDC) chaired by the Union Finance Minister
- B. The Central Board of Directors of the Reserve Bank of India
- C. The Monetary Policy Committee constituted under the Reserve Bank of India Act, 1934
- D. The Department of Economic Affairs, Ministry of Finance
Q4. By how many basis points did the Reserve Bank of India cumulatively reduce the policy repo rate during the easing cycle from February 2025 to November 2025, the period over which public sector banks transmitted only about 54–59 bps to borrowers?
- A. 75 basis points
- B. 100 basis points
- C. 125 basis points
- D. 150 basis points