UPSC Prelims Practice Questions — Scheduled Commercial Banks (SCBs) Record Robust Credit Growth of 15.9% in FY 2025-26, Reflecting Strong Economic Activity and Credit Demand

Question 1

Under the Reserve Bank of India Act, 1934, which one of the following authorities is empowered to direct, by notification in the Gazette of India, the inclusion of a bank in the Second Schedule, thereby conferring on it the status of a 'Scheduled Bank'?

Accepted Answer

The Reserve Bank of India

Answer

The Central Government, on the recommendation of the Department of Financial Services

Answer

The Banking Codes and Standards Board of India

Answer

The Indian Banks' Association

Question 2

In the Reserve Bank of India's Sectoral Deployment of Bank Credit data for FY 2025-26, which one of the following sectors recorded the highest year-on-year credit growth from Scheduled Commercial Banks?

Accepted Answer

Services

Answer

Agriculture and Allied Activities

Answer

Industry

Answer

Personal Loans

Question 3

By how many basis points did the non-food credit growth of Scheduled Commercial Banks in FY 2025-26 rise over the corresponding figure for FY 2024-25, as per the RBI's sectoral deployment data?

Accepted Answer

497 basis points

Answer

297 basis points

Answer

397 basis points

Answer

597 basis points

Question 4

With reference to the Reserve Bank of India's monthly 'Sectoral Deployment of Bank Credit' data release, consider the following statements about the four broad sectors under which non-food bank credit is reported:
1. Agriculture and Allied Activities
2. Industry (Micro & Small, Medium and Large)
3. Services
4. External Commercial Borrowings
Which of the statements given above is/are correctly identified as broad sectors in this data release?

Accepted Answer

1, 2 and 3 only

Answer

1 and 2 only

Answer

2, 3 and 4 only

Answer

1, 2, 3 and 4

Question 5

With reference to the Reserve Bank of India's 'Sectoral Deployment of Bank Credit' release for FY 2025-26, consider the following statements:
1. The data is compiled from returns filed by select scheduled commercial banks covering about 95% of total non-food credit.
2. Non-food bank credit grew by 15.9% year-on-year in FY 2025-26.
3. Credit to the Services sector grew faster than credit to Industry during FY 2025-26.
4. Personal Loans accounted for less than 10% of total bank credit at the end of FY 2025-26.
Which of the statements given above is/are NOT correct?

Accepted Answer

4 only

Answer

1 only

Answer

3 only

Answer

2 and 4

Question 6

With reference to the Priority Sector Lending (PSL) framework applicable to domestic Scheduled Commercial Banks (excluding RRBs and SFBs) in India, consider the following statements regarding sub-targets prescribed as a percentage of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures, whichever is higher:
1. The sub-target for lending to Agriculture is 18%.
2. The sub-target for lending to Micro Enterprises is 10%.
3. The sub-target for lending to Weaker Sections is 12%.
Which of the statements given above is/are correct?

Accepted Answer

1 and 3 only

Answer

1 only

Answer

2 and 3 only

Answer

1, 2 and 3

Question 7

In the context of the Reserve Bank of India's Priority Sector Lending (PSL) framework, what are Priority Sector Lending Certificates (PSLCs)?

Accepted Answer

Tradable instruments that enable banks with surplus priority sector advances to sell their over-achievement to banks facing a shortfall, without any transfer of the underlying loan

Answer

Sovereign bonds issued by the Government of India to mobilise resources for priority sector schemes

Answer

Certificates issued by the RBI to scheduled commercial banks certifying their compliance with the overall 40% ANBC priority sector target

Answer

Subordinated debt instruments issued by Non-Banking Financial Companies to make their on-lending eligible for classification as priority sector advances

Question 8

As per the RBI Report on Trend and Progress of Banking in India referenced by the Government in 2025, which one of the following was the single largest channel of Non-Performing Asset (NPA) recoveries by Scheduled Commercial Banks in India in FY 2023-24?

Accepted Answer

Insolvency and Bankruptcy Code (IBC), 2016 proceedings

Answer

SARFAESI Act, 2002 channel

Answer

Debt Recovery Tribunals (DRTs)

Answer

Lok Adalats

Question 9

Consider the following parameters with respect to the Reserve Bank of India's Revised Prompt Corrective Action (PCA) Framework for Scheduled Commercial Banks, which became effective from 1 January 2022:
1. Capital to Risk-weighted Assets Ratio (CRAR), including the Common Equity Tier 1 ratio
2. Net Non-Performing Assets (NNPA) ratio
3. Tier 1 Leverage Ratio
4. Return on Assets (RoA)
Which of the above are correctly identified as key indicators tracked for triggering PCA action under the Revised Framework?

Accepted Answer

1, 2 and 3 only

Answer

1, 2 and 4 only

Answer

2, 3 and 4 only

Answer

1, 2, 3 and 4

Question 10

Under the Reserve Bank of India Act, 1934, how many members constitute the Monetary Policy Committee (MPC) responsible for determining the policy repo rate?

Accepted Answer

Six

Answer

Four

Answer

Five

Answer

Seven

Question 11

With reference to the financial intermediation indicators of Scheduled Commercial Banks (SCBs) in India, consider the following statements: 1. Non-food credit growth of SCBs in FY 2025-26 was nearly 500 basis points higher than that recorded in FY 2024-25. 2. The outstanding credit of SCBs grew at a faster year-on-year pace in December 2025 than in December 2024. 3. The money multiplier of the banking system in December 2025 was higher than its level a year earlier, indicating improved financial intermediation. Which of the statements given above is/are correct?

Accepted Answer

1, 2 and 3

Answer

1 and 2 only

Answer

2 and 3 only

Answer

1 and 3 only

Question 12

In India, the expression 'Scheduled Commercial Banks', whose aggregate deposit and credit data drive the credit-deposit ratio, derives its 'scheduled' status from inclusion in which one of the following?

Accepted Answer

Second Schedule of the Reserve Bank of India Act, 1934

Answer

First Schedule of the Banking Regulation Act, 1949

Answer

Second Schedule of the Banking Regulation Act, 1949

Answer

First Schedule of the Reserve Bank of India Act, 1934

Question 13

Which one of the following is the sole statutory basis under which a bank in India is classified as a 'Scheduled Bank'?

Accepted Answer

Inclusion in the Second Schedule to the Reserve Bank of India Act, 1934

Answer

Licensing under Section 22 of the Banking Regulation Act, 1949

Answer

Incorporation under the Companies Act, 2013 and listing by SEBI

Answer

Notification by the Department of Financial Services under the Government of India (Allocation of Business) Rules

Question 14

For a bank to be eligible for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934, what is the minimum aggregate value of its paid-up capital and reserves prescribed under Section 42(6)(a) of the Act?

Accepted Answer

Rupees five lakh

Answer

Rupees one lakh

Answer

Rupees ten lakh

Answer

Rupees twenty-five lakh

UPSC Prelims Practice Questions — Scheduled Commercial Banks (SCBs) Record Robust Credit Growth of 15.9% in FY 2025-26, Reflecting Strong Economic Activity and Credit Demand

Q1. Under the Reserve Bank of India Act, 1934, which one of the following authorities is empowered to direct, by notification in the Gazette of India, the inclusion of a bank in the Second Schedule, thereby conferring on it the status of a 'Scheduled Bank'?

Q2. In the Reserve Bank of India's Sectoral Deployment of Bank Credit data for FY 2025-26, which one of the following sectors recorded the highest year-on-year credit growth from Scheduled Commercial Banks?

Q3. By how many basis points did the non-food credit growth of Scheduled Commercial Banks in FY 2025-26 rise over the corresponding figure for FY 2024-25, as per the RBI's sectoral deployment data?

Q7. In the context of the Reserve Bank of India's Priority Sector Lending (PSL) framework, what are Priority Sector Lending Certificates (PSLCs)?

Q8. As per the RBI Report on Trend and Progress of Banking in India referenced by the Government in 2025, which one of the following was the single largest channel of Non-Performing Asset (NPA) recoveries by Scheduled Commercial Banks in India in FY 2023-24?

Q10. Under the Reserve Bank of India Act, 1934, how many members constitute the Monetary Policy Committee (MPC) responsible for determining the policy repo rate?

Q12. In India, the expression 'Scheduled Commercial Banks', whose aggregate deposit and credit data drive the credit-deposit ratio, derives its 'scheduled' status from inclusion in which one of the following?

Q13. Which one of the following is the sole statutory basis under which a bank in India is classified as a 'Scheduled Bank'?

Q14. For a bank to be eligible for inclusion in the Second Schedule to the Reserve Bank of India Act, 1934, what is the minimum aggregate value of its paid-up capital and reserves prescribed under Section 42(6)(a) of the Act?