UPSC Prelims Practice Questions — ‘$72.85 bn forex inflows via FCNR (B), OFCB, ECB Swap’
Q1. The Reserve Bank of India's first concessional swap window for attracting FCNR(B) dollar funds remained open during which one of the following periods?
- A. September 4 to November 30, 2013
- B. June 8 to September 30, 2013
- C. August 13 to December 31, 2013
- D. July 17 to October 16, 2013
Q2. Which one of the following correctly describes the operational design of the FCNR(B) swap scheme of 2013?
- A. Banks could swap fresh FCNR(B) deposits of three years and above with the Reserve Bank of India at a fixed rate of 3.5 per cent per annum
- B. Banks could swap fresh FCNR(B) deposits of one year and above with the Reserve Bank of India at a fixed rate of 3.5 per cent per annum
- C. Banks could swap fresh FCNR(B) deposits of three years and above with the Reserve Bank of India at the prevailing market rate of 6.5 to 7 per cent per annum
- D. Banks could swap fresh FCNR(B) deposits of three years and above with the Department of Economic Affairs at a fixed rate of 3.5 per cent per annum
Q3. Cumulative inflows under the RBI's concessional swap facility stood at $72.85 billion as on August 21, 2026. Of this, how much was accounted for by FCNR(B) deposits alone?
- A. About $65.40 billion
- B. About $52.30 billion
- C. About $36.73 billion
- D. About $20.72 billion
Q4. Consider the following statements comparing the Reserve Bank of India's concessional swap facility of 2026 with the FCNR(B) swap window of 2013:
1. The cumulative mobilisation reported as on August 21, 2026 under the swap facility exceeded the total amount mobilised under the 2013 window.
2. Among the three instruments covered in 2026, External Commercial Borrowings contributed a larger amount than Overseas Foreign Currency Borrowings.
3. Unlike the 2013 window, which covered only FCNR(B) deposits, the 2026 facility extended concessional swaps to External Commercial Borrowings and Overseas Foreign Currency Borrowings as well.
Which of the statements given above is/are correct?
- The cumulative mobilisation reported as on August 21, 2026 under the swap facility exceeded the total amount mobilised under the 2013 window.
- Among the three instruments covered in 2026, External Commercial Borrowings contributed a larger amount than Overseas Foreign Currency Borrowings.
- Unlike the 2013 window, which covered only FCNR(B) deposits, the 2026 facility extended concessional swaps to External Commercial Borrowings and Overseas Foreign Currency Borrowings as well.
- A. 1 and 2 only
- B. 1 and 3 only
- C. 2 and 3 only
- D. 1, 2 and 3
Q5. With reference to the Reserve Bank of India's framework for External Commercial Borrowings, consider the following:
1. All entities eligible to receive Foreign Direct Investment
2. Port Trusts and units located in Special Economic Zones
3. The Small Industries Development Bank of India and the Export-Import Bank of India
4. Multilateral and regional financial institutions
Which of the above is/are correctly identified as eligible borrowers under the framework?
- All entities eligible to receive Foreign Direct Investment
- Port Trusts and units located in Special Economic Zones
- The Small Industries Development Bank of India and the Export-Import Bank of India
- Multilateral and regional financial institutions
- A. 1 and 3 only
- B. 1, 2 and 3 only
- C. 2, 3 and 4 only
- D. 1, 2, 3 and 4
Q6. Which one of the following best describes an External Commercial Borrowing as understood in the Reserve Bank of India's framework?
- A. A commercial loan raised by an eligible resident entity from a recognised non-resident lender, conforming to prescribed minimum maturity, end-use and all-in-cost norms
- B. A commercial loan raised by an eligible non-resident entity from the domestic branches of Indian banks, conforming to prescribed minimum maturity, end-use and all-in-cost norms
- C. A term deposit placed by a non-resident Indian with an authorised dealer bank in India, conforming to prescribed tenor limits and interest rate ceilings
- D. A sovereign loan raised by the Government of India in overseas markets, conforming to prescribed maturity limits and all-in-cost ceilings
Q7. Consider the following statements about instruments through which foreign currency reaches the Indian banking system:
1. An FCNR(B) account is a term deposit denominated in a permitted foreign currency, maintained with an authorised dealer bank in India.
2. An NRE account is a rupee-denominated account maintained in India, the balances in which are freely repatriable.
3. An NRO account is a rupee-denominated account used mainly to route income earned in India, repatriation from which is subject to prescribed limits.
4. Overseas Foreign Currency Borrowings, like FCNR(B) deposits, are accounts opened and operated by individual non-resident depositors.
Which of the statements given above is/are NOT correct?
- An FCNR(B) account is a term deposit denominated in a permitted foreign currency, maintained with an authorised dealer bank in India.
- An NRE account is a rupee-denominated account maintained in India, the balances in which are freely repatriable.
- An NRO account is a rupee-denominated account used mainly to route income earned in India, repatriation from which is subject to prescribed limits.
- Overseas Foreign Currency Borrowings, like FCNR(B) deposits, are accounts opened and operated by individual non-resident depositors.
- A. 1 and 2
- B. 2 and 3
- C. 3 and 4
- D. 4 only
Q8. Mobilisation under the FCNR(B), OFCB and ECB legs of the Reserve Bank of India's concessional swap facility is reported to the RBI by which one of the following categories of entities?
- A. Authorised Dealer banks
- B. Primary Dealers in government securities
- C. SEBI-registered custodian banks
- D. Designated Depository Participants of foreign portfolio investors
Q9. As reported by the Reserve Bank of India in August 2026, which one of the following constituted the largest component of India's foreign exchange reserves?
- A. Foreign currency assets
- B. Gold reserves
- C. Special Drawing Rights
- D. Reserve position in the International Monetary Fund
Q10. Consider the following measures available to the Reserve Bank of India for supporting the rupee and augmenting foreign exchange inflows:
1. Sale of US dollars in the spot market out of foreign exchange reserves
2. Concessional buy/sell USD-INR swaps contracted with banks
3. Raising the Statutory Liquidity Ratio so as to compel banks to hold a larger volume of foreign currency assets
4. Exemption of qualifying FCNR(B) deposits from Cash Reserve Ratio and Statutory Liquidity Ratio requirements
Which of the above is/are NOT correctly described as such a measure?
- Sale of US dollars in the spot market out of foreign exchange reserves
- Concessional buy/sell USD-INR swaps contracted with banks
- Raising the Statutory Liquidity Ratio so as to compel banks to hold a larger volume of foreign currency assets
- Exemption of qualifying FCNR(B) deposits from Cash Reserve Ratio and Statutory Liquidity Ratio requirements
- A. 1 and 3
- B. 3 only
- C. 2 and 4
- D. 1, 2 and 4
Q11. The Reserve Bank of India advanced the closing date for qualifying FCNR(B) deposits under its concessional swap facility to August 31, 2026. Under the terms of the same facility, concessional swaps for Overseas Foreign Currency Borrowings and External Commercial Borrowings remain available up to which date?
- A. December 31, 2026
- B. September 30, 2026
- C. October 16, 2026
- D. March 31, 2027
Q12. Which one of the following correctly describes the Statutory Liquidity Ratio?
- A. The minimum share of net demand and time liabilities that a bank must maintain in cash, gold or unencumbered approved securities, prescribed under Section 24 of the Banking Regulation Act, 1949
- B. The minimum share of net demand and time liabilities that a bank must maintain as cash balances with the Reserve Bank of India, prescribed under Section 42(2) of the Reserve Bank of India Act, 1934
- C. The minimum share of a bank's adjusted net bank credit that must be extended to specified priority sectors, prescribed under the Reserve Bank of India's priority sector lending guidelines
- D. The minimum share of a bank's risk-weighted assets that must be maintained as regulatory capital, prescribed under the Basel III capital adequacy framework