UPSC Prelims Practice Questions — ‘HIGH LEVEL COMMITTEE ON BANKING FOR VIKSIT BHARAT’ TO ALIGN FINANCIAL SECTOR WITH INDIA’S NEXT PHASE OF GROWTH: UNION BUDGET 2026-27

Question 1

The 'High Level Committee on Banking for Viksit Bharat' proposed in Union Budget 2026-27 is an initiative of which of the following?

Accepted Answer

Department of Financial Services, Ministry of Finance

Answer

Department of Economic Affairs, Ministry of Finance

Answer

Department of Regulation, Reserve Bank of India

Answer

Financial Sector Vertical, NITI Aayog

Question 2

As announced in Union Budget 2026-27, the mandate of the High Level Committee on Banking for Viksit Bharat is best described as which one of the following?

Accepted Answer

To comprehensively review the financial sector and align it with India's next phase of growth while safeguarding financial stability, inclusion and consumer protection

Answer

To recover non-performing assets of public sector banks by operating a dedicated bad bank

Answer

To recommend a fresh round of mergers of remaining public sector banks into a few global-sized banks

Answer

To draft a separate insolvency and bankruptcy framework for financial service providers

Question 3

With reference to committees on banking reform in India, consider the following pairings of committee and feature:
1. Narasimham Committee (1991) — recommended reduction of the Statutory Liquidity Ratio and the Cash Reserve Ratio.
2. Narasimham Committee (1998) — recommended consolidation and merger of strong banks.
3. P J Nayak Committee (2014) — was constituted by the Reserve Bank of India to review the governance of bank boards.
4. P J Nayak Committee (2014) — recommended setting up the National Asset Reconstruction Company Limited.
Which of the above is/are correctly identified?

Accepted Answer

1, 2 and 3

Answer

1 and 4 only

Answer

2 and 3 only

Answer

1, 3 and 4

Question 4

Consider the following statements comparing India's banking reform committees:
1. The 1991 Narasimham Committee was officially the Committee on the Financial System, whereas the 1998 Narasimham Committee was officially the Committee on Banking Sector Reforms.
2. Unlike the Narasimham Committees, which were appointed by the Government of India, the P J Nayak Committee (2014) was constituted by the Reserve Bank of India.
3. The P J Nayak Committee recommended raising the Government's minimum shareholding in public sector banks, whereas the Narasimham Committee II had recommended keeping it unchanged.
Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only

Answer

2 and 3 only

Answer

1 and 3 only

Answer

1, 2 and 3

Question 5

The Prompt Corrective Action (PCA) framework, applied to weak banks during India's post-2016 banking clean-up, is administered by which of the following?

Accepted Answer

Reserve Bank of India

Answer

Insolvency and Bankruptcy Board of India

Answer

National Asset Reconstruction Company Limited

Answer

Department of Financial Services, Ministry of Finance

Question 6

With reference to India's post-2016 banking clean-up, consider the following:
1. The Insolvency and Bankruptcy Code was enacted in 2016.
2. Consolidation of public sector banks reduced their number to 12 by 2020.
3. The National Asset Reconstruction Company Limited was set up in 2021 to take over stressed assets.
4. The Prompt Corrective Action framework was introduced for the very first time in 2019.
Which of the above is/are correctly identified?

Accepted Answer

1, 2 and 3

Answer

2, 3 and 4

Answer

1 and 4 only

Answer

1, 2 and 4

Question 7

Union Budget 2026-27 cited the current strength of the banking sector as the platform for its next leap. Which of the following was NOT among the indicators it cited?
1. Strong balance sheets of banks.
2. Historic-high profitability.
3. Banking coverage exceeding 98% of villages.
4. Gross NPA ratio falling below 1 per cent.
Which of the above is/are NOT correct?

Accepted Answer

4 only

Answer

1 and 4 only

Answer

3 and 4 only

Answer

2 only

Question 8

The assessment that the banking sector enjoys strong balance sheets, historic-high profitability and village coverage exceeding 98% was placed on record in which of the following?

Accepted Answer

Union Budget 2026-27, presented by the Union Finance Minister

Answer

The Reserve Bank of India's Financial Stability Report, 2026

Answer

The Economic Survey 2025-26, presented by the Chief Economic Adviser

Answer

The NITI Aayog 'Viksit Bharat @2047' vision document

Question 9

Under Union Budget 2026-27, the incentive of ₹100 crore announced to encourage large cities to issue municipal bonds is available for a single bond issuance exceeding which amount?

Accepted Answer

₹1,000 crore

Answer

₹500 crore

Answer

₹1,500 crore

Answer

₹2,000 crore

Question 10

With reference to the Portfolio Investment Scheme (PIS), consider the following statements:
1. It is operated by the Reserve Bank of India under the Foreign Exchange Management Act.
2. It permits eligible non-residents to invest in equity instruments of listed Indian companies.
3. It allows non-residents to undertake intraday and derivatives trading in Indian stock markets.
4. Every investment under it must compulsorily be routed only through an NRE (repatriable) account.
Which of the above is/are correctly identified?

Accepted Answer

1 and 2 only

Answer

1, 2 and 4

Answer

2 and 3 only

Answer

1, 2, 3 and 4

Question 11

Which of the following institutions functions as the apex public policy think tank coordinating the 'Viksit Bharat @2047' vision under which sectoral panels such as the HLCB-VB are situated?

Accepted Answer

NITI Aayog

Answer

Economic Advisory Council to the Prime Minister

Answer

Department of Economic Affairs, Ministry of Finance

Answer

Prime Minister's Office Viksit Bharat Cell

Question 12

Consider the following statements about Power Finance Corporation (PFC) and REC Limited, whose restructuring was proposed in Union Budget 2026-27:
1. Both are non-banking financial companies under the administrative control of the Ministry of Power.
2. Power Finance Corporation acquired the Government of India's shareholding in REC, making REC a subsidiary of PFC.
3. Both PFC and REC hold only Navratna status and neither has been upgraded to Maharatna status.
Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only

Answer

2 and 3 only

Answer

1 and 3 only

Answer

1, 2 and 3

UPSC Prelims Practice Questions — ‘HIGH LEVEL COMMITTEE ON BANKING FOR VIKSIT BHARAT’ TO ALIGN FINANCIAL SECTOR WITH INDIA’S NEXT PHASE OF GROWTH: UNION BUDGET 2026-27

Q1. The 'High Level Committee on Banking for Viksit Bharat' proposed in Union Budget 2026-27 is an initiative of which of the following?

Q2. As announced in Union Budget 2026-27, the mandate of the High Level Committee on Banking for Viksit Bharat is best described as which one of the following?

Q5. The Prompt Corrective Action (PCA) framework, applied to weak banks during India's post-2016 banking clean-up, is administered by which of the following?

Q8. The assessment that the banking sector enjoys strong balance sheets, historic-high profitability and village coverage exceeding 98% was placed on record in which of the following?

Q9. Under Union Budget 2026-27, the incentive of ₹100 crore announced to encourage large cities to issue municipal bonds is available for a single bond issuance exceeding which amount?

Q11. Which of the following institutions functions as the apex public policy think tank coordinating the 'Viksit Bharat @2047' vision under which sectoral panels such as the HLCB-VB are situated?