UPSC Prelims Practice Questions — Rahul flags IDBI Bank sale; Finance Minister hits back

Q1. Suppose the Government of India and the Life Insurance Corporation of India (LIC) together sell a majority stake in a bank to a private buyer, each selling a part of its own holding. Consider the following statements about the likely effect on the Union Budget, other things remaining the same: Which of the statements given above are correct?

  1. The government's share of the proceeds will reduce the revenue deficit of the Union government.
  2. The government's share of the proceeds will be classified as a capital receipt, not a revenue receipt.
  3. The entire sale consideration, including the part paid for LIC's shares, will be credited to the Union Budget as disinvestment receipts.
  4. The government's share of the proceeds will reduce the fiscal deficit of the Union government.
  • A. 2 and 4 only
  • B. 1, 3 and 4 only
  • C. 2, 3 and 4 only
  • D. 1 and 2 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. In the Lok Sabha, whether assurances given by Ministers are carried out is followed up systematically by a parliamentary committee, instead of being left to individual members to track.
  2. Assurances given by Ministers on the floor of the House can be enforced through the courts in the same way as statutory obligations.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. With reference to the Committee on Government Assurances in the Indian Parliament, consider the following statements: Which of the statements given above are correct?

  1. It examines both whether an assurance has been implemented and whether its implementation has been unduly delayed.
  2. A Ministry may request that an assurance be dropped from the list of pending assurances, but such requests are not accepted as a matter of course.
  3. Its role is only to scrutinise and report to the House; it cannot compel the government to fulfil an assurance.
  4. Such a committee exists only in the Lok Sabha; the Rajya Sabha relies on the Lok Sabha committee for this purpose.
  • A. 2, 3 and 4 only
  • B. 1, 2, 3 and 4
  • C. 1 and 2 only
  • D. 1, 2 and 3 only

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The 20% ceiling on foreign investment that applies to nationalised banks does not stop a foreign entity from acquiring a majority stake in IDBI Bank.
  2. That 20% ceiling is laid down in the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, which govern the nationalised banks, whereas IDBI Bank is a company that came into being when IDBI's undertaking was transferred to a company under a 2003 statute.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. With reference to foreign investment in Indian banks, consider the following statements: Which of the statements given above is/are correct?

  1. Within the 74% sectoral cap for private sector banks, foreign portfolio investors may acquire control and management of a bank without any further condition.
  2. The ceiling on foreign investment in nationalised banks is set by executive FDI policy and can be raised by a government press note without amending any Act.
  3. The ceiling on foreign investment in the State Bank of India is the same as the ceiling applicable to nationalised banks.
  • A. 1 only
  • B. 2 and 3 only
  • C. 3 only
  • D. 1 and 2 only

Q6. IDBI was converted from a statutory development financial institution into a company under a 2003 Act of Parliament. Consider the following statements about the consequences of this conversion: Which of the statements given above is/are correct?

  1. After the conversion, the government's holding could be reduced by transferring shares, without Parliament having to amend or repeal a statute for each sale.
  2. The 2003 Act itself laid down that the government must always hold at least 50% of the new company's equity.
  • A. 1 only
  • B. 2 only
  • C. Both 1 and 2
  • D. Neither 1 nor 2

Q7. With reference to state ownership of banks in India, consider the following statements: Which of the statements given above are correct?

  1. The banks nationalised in 1969 and 1980 derive their legal framework from the Banking Companies (Acquisition and Transfer of Undertakings) Acts rather than from incorporation as companies.
  2. The State Bank of India came under public ownership through its own statute, separately from the 1969 and 1980 nationalisations.
  3. IDBI was one of the commercial banks nationalised in 1980 and was later converted into a company.
  • A. 2 and 3 only
  • B. 1 and 2 only
  • C. 1 and 3 only
  • D. 1, 2 and 3