UPSC Prelims Practice Questions — India's First Maritime NBFC SMFCL Scales up with Rs 5,107 Crs Disbursed, Aims for Rs 60,205 Crs by 2031

Q1. With reference to Non-Banking Financial Companies (NBFCs) in India, consider the following statements: Which of the statements given above is/are correct?

  1. A company can begin carrying on the business of a non-banking financial institution only after obtaining a certificate of registration from the Reserve Bank of India.
  2. A company is treated as an NBFC if either its financial assets exceed half of its total assets or its income from financial assets exceeds half of its gross income.
  3. An NBFC may accept deposits repayable on demand provided it holds RBI permission to function as a deposit-taking NBFC.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 1 and 2 only

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

  1. Depositors of a deposit-taking NBFC do not get deposit insurance from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
  2. NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves.
  • 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 categories of Alternative Investment Funds (AIFs) under the SEBI (Alternative Investment Funds) Regulations, 2012, consider the following statements: Which of the statements given above is/are correct?

  1. Category I AIFs, which include infrastructure funds, are those regarded as having positive spillover effects on the economy.
  2. Category I AIFs, like Category III AIFs, may employ leverage, including through derivatives, to enhance returns.
  3. Category I and Category II AIFs are required to be close-ended funds.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 1, 2 and 3
  • D. 2 and 3 only

Q4. The Government of India is to hold 49% of the Maritime Investment Fund (MIF), and the rest is to come from other investors. The fund is to be run by a professional fund manager and registered with SEBI as an Alternative Investment Fund. A 'first close' of Rs 5,000 crore is targeted against a total corpus of Rs 20,000 crore. Which of the following inferences can validly be drawn from the above?

  1. Public money is being used to draw non-government capital into maritime projects.
  2. The fund can begin operating before it has raised its full intended corpus.
  3. Investors other than the Government are shielded from losses by the Government's share in the fund.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 only

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. On a request from the National Bank for Financing Infrastructure and Development (NaBFID), the Central Government may guarantee the bonds and debentures issued by it.
  2. NaBFID raises most of its resources by accepting deposits from the public, as commercial banks do.
  • 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

Q6. Consider the following pairs of a policy instrument used in maritime financing and the barrier to investment it primarily addresses: Which of the pairs given above is/are correctly matched?

  1. Interest subvention on project loans — High effective cost of debt for the borrower
  2. Credit-risk cover corpus — Loss borne by the lender when a borrower defaults
  3. Government equity participation through an investment fund — Shortage of risk capital in projects
  4. Financial assistance paid per vessel delivered — Lack of capacity in yards not yet able to build ships
  • A. 2, 3 and 4 only
  • B. 1, 2, 3 and 4
  • C. 1 and 2 only
  • D. 1, 2 and 3 only

Q7. Sagarmala Finance Corporation Limited (SMFCL) is a Mini Ratna Category-I CPSE under the Ministry of Ports, Shipping and Waterways. It channels the Government's contribution to the Maritime Investment Fund (MIF). In this context, consider the following statements: Which of the statements given above is/are correct?

  1. Being government-owned does not relieve a company carrying on the business of a non-banking financial institution of the need to hold an RBI certificate of registration.
  2. The capital adequacy and leverage norms that bind SMFCL's lending are prescribed by its administrative ministry.
  3. The MIF's regulator is determined by its legal form as an Alternative Investment Fund, not by who contributes its capital.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1, 2 and 3
  • D. 2 only