UPSC Prelims Practice Questions — PSU banks, insurers asked to cut travel costs, use EVs

Q1. In May 2026, PSU banks, Regional Rural Banks and public sector insurers were directed to cut travel costs and shift to electric vehicles. Which one of the following is the nodal department that issued this austerity circular?

  • A. Department of Financial Services
  • B. Department of Economic Affairs
  • C. Department of Expenditure
  • D. Department of Public Enterprises

Q2. The DFS circular curbed overseas travel by the 'senior management' of PSU banks and financial institutions. In this context, the 'senior management' whose foreign travel was to be kept below prescribed limits refers precisely to which one of the following?

  • A. Chairpersons, Managing Directors & CEOs and whole-time directors
  • B. All officers of Scale IV and above in the organisation
  • C. Branch managers and regional heads at head-office level
  • D. Government nominee directors appointed by the Centre on the boards

Q3. The DFS austerity circular of May 2026 grouped its cost-reduction directives for PSU banks and insurers under how many broad expenditure-reduction heads?

  • A. Two
  • B. Three
  • C. Four
  • D. Five

Q4. As per the DFS circular, meetings, reviews, consultations and presentations of PSU banks and financial institutions are to be conducted primarily through which one of the following, unless a physical meeting is specifically required?

  • A. Video conferencing
  • B. Telephonic conference calls
  • C. In-person meetings at the head office
  • D. Written circulars and email correspondence

Q5. The Department of Financial Services, under the Ministry of Finance, is headed by which one of the following?

  • A. Secretary (Financial Services)
  • B. The Governor of the Reserve Bank of India
  • C. The Chairperson of IRDAI
  • D. The Union Finance Minister as its administrative head

Q6. With respect to the Department of Financial Services (DFS) and other financial-sector bodies, consider the following statements: 1. Unlike the Reserve Bank of India, it is the DFS that handles appointments of government nominee directors on the boards of public sector banks. 2. Insurance regulation is carried out by IRDAI, while the DFS handles policy matters and administrative oversight of public sector insurance companies. 3. The National Pension System falls under the Department of Economic Affairs and not under the DFS. Which of the statements given above is/are correct?

  1. Unlike the Reserve Bank of India, it is the DFS that handles appointments of government nominee directors on the boards of public sector banks.
  2. Insurance regulation is carried out by IRDAI, while the DFS handles policy matters and administrative oversight of public sector insurance companies.
  3. The National Pension System falls under the Department of Economic Affairs and not under the DFS.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q7. Regional Rural Banks (RRBs) are among the entities covered by the DFS austerity circular. Which of the following statements about RRB structure and ownership are correctly identified? 1. RRBs are established under the Regional Rural Banks Act, 1976. 2. The Central Government holds 50% of the issued capital of an RRB. 3. The concerned State Government holds 35% of an RRB's issued capital. 4. The Sponsor Bank holds 15% of an RRB's issued capital. Which of the above are correctly identified?

  1. RRBs are established under the Regional Rural Banks Act, 1976.
  2. The Central Government holds 50% of the issued capital of an RRB.
  3. The concerned State Government holds 35% of an RRB's issued capital.
  4. The Sponsor Bank holds 15% of an RRB's issued capital.
  • A. 1 and 2
  • B. 3 and 4
  • C. 2 and 3
  • D. 1 and 4

Q8. Consider the following statements comparing the standard shareholding of Regional Rural Banks with the flexibility introduced by amendment: 1. Under the standard pattern, the combined shareholding of the Central Government and the Sponsor Bank in an RRB is 85%. 2. Where an RRB raises capital from sources other than the Centre, State or Sponsor Bank, the combined shareholding of the Central Government and Sponsor Bank shall not fall below 51%. 3. The amendment permits the concerned State Government's shareholding to be reduced below 15% without any consultation with that State Government. Which of the statements given above is/are correct?

  1. Under the standard pattern, the combined shareholding of the Central Government and the Sponsor Bank in an RRB is 85%.
  2. Where an RRB raises capital from sources other than the Centre, State or Sponsor Bank, the combined shareholding of the Central Government and Sponsor Bank shall not fall below 51%.
  3. The amendment permits the concerned State Government's shareholding to be reduced below 15% without any consultation with that State Government.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q9. The DFS circular's push for electric vehicles aligns with the Centre's flagship EV scheme. The PM E-DRIVE Scheme has a total financial outlay of approximately how much?

  • A. ₹10,900 crore
  • B. ₹5,000 crore
  • C. ₹18,100 crore
  • D. ₹25,900 crore

Q10. PSU banks and insurers are public sector undertakings. Consider the following statements regarding the classification of Central Public Sector Enterprises (CPSEs): 1. A CPSE is a company in which the Central Government holds at least 51% of the shares. 2. Maharatna status requires an average annual net profit after tax of more than ₹5,000 crore during the last three years. 3. Maharatna, Navratna and Miniratna status to CPSEs is granted by the Reserve Bank of India. 4. Maharatna status requires an average annual turnover of more than ₹25,000 crore during the last three years. Which of the statements given above is/are NOT correct?

  1. A CPSE is a company in which the Central Government holds at least 51% of the shares.
  2. Maharatna status requires an average annual net profit after tax of more than ₹5,000 crore during the last three years.
  3. Maharatna, Navratna and Miniratna status to CPSEs is granted by the Reserve Bank of India.
  4. Maharatna status requires an average annual turnover of more than ₹25,000 crore during the last three years.
  • A. 1 and 2
  • B. 3 only
  • C. 2 and 4
  • D. 1, 2 and 4

Q11. Coverage of the DFS austerity circular named specific institutions affected. Consider the following statements: 1. State Bank of India is the largest public sector bank in India. 2. Life Insurance Corporation of India is a public sector insurer. 3. Bank of Baroda is a public sector bank. 4. HDFC Bank is one of the public sector banks directed by the circular to cut travel costs and adopt EVs. Which of the statements given above is/are NOT correct?

  1. State Bank of India is the largest public sector bank in India.
  2. Life Insurance Corporation of India is a public sector insurer.
  3. Bank of Baroda is a public sector bank.
  4. HDFC Bank is one of the public sector banks directed by the circular to cut travel costs and adopt EVs.
  • A. 1 only
  • B. 2 and 3
  • C. 4 only
  • D. 1 and 3

Q12. Government austerity/economy circulars are a recurring fiscal-discipline tool. Consider the following statements: 1. Austerity instructions are issued by the Ministry of Finance's Department of Expenditure to contain non-developmental expenditure. 2. Conducting meetings through video conferencing to reduce travel is a recurring feature of such austerity instructions. 3. Keeping foreign travel below prescribed limits is a recurring feature of such austerity instructions. 4. Government austerity instructions typically impose a complete and permanent ban on all foreign travel by officials. Which of the statements given above is/are NOT correct?

  1. Austerity instructions are issued by the Ministry of Finance's Department of Expenditure to contain non-developmental expenditure.
  2. Conducting meetings through video conferencing to reduce travel is a recurring feature of such austerity instructions.
  3. Keeping foreign travel below prescribed limits is a recurring feature of such austerity instructions.
  4. Government austerity instructions typically impose a complete and permanent ban on all foreign travel by officials.
  • A. 4 only
  • B. 1 and 2
  • C. 3 only
  • D. 2 and 4