Part 3 — English Language: Para Jumbles, Para Completion & Odd Sentence Out
IBPS PO & Clerk · Prelims + Mains · 40 Original Practice Questions
Strategy for Para Jumble & Completion Questions
- Para Jumbles: Find the mandatory first sentence (introduces the topic, no pronoun referring to something earlier). Then find the mandatory last sentence (conclusion or consequence). Build the chain from there.
- Pronoun-antecedent rule: If a sentence uses "it," "they," "this," "these," "such," "this policy," "this trend" — the antecedent (what "it" or "this" refers to) MUST appear in the sentence immediately before it.
- Connector words are signposts: "However" = contrast; "Therefore/Thus" = conclusion; "Furthermore/Moreover" = addition; "For instance/For example" = illustration; "Nevertheless" = concession-but; "Subsequently/Thereafter" = chronological next.
- Para Completion: The blank is usually at the end (conclusion) or the beginning (topic sentence). Read the whole passage first to understand the theme, then match which option continues it logically.
- Odd Sentence Out: Find the 4 sentences that form a coherent argument. The odd one is topically or logically unrelated — it may share keywords (trap!) but breaks the flow.
- Banking context: Passages typically concern RBI policy, inflation, credit markets, financial inclusion, digital payments, NPAs — recognise these themes for faster contextual reading.
| Connector Type | Words | What Follows |
|---|---|---|
| Contrast | However, Nevertheless, Yet, But, Although, Whereas, Despite, In contrast | A statement opposing what came before |
| Conclusion/Result | Therefore, Thus, Hence, Consequently, As a result, This means | The logical outcome of preceding statements |
| Addition | Furthermore, Moreover, In addition, Also, Besides, Equally | More evidence or points in the same direction |
| Illustration | For instance, For example, Such as, Notably, Specifically | A concrete example of the preceding claim |
| Concession then pivot | Admittedly, Granted, While it is true that, To be sure | Acknowledges the opposite view before arguing against it |
| Sequence / time | Subsequently, Thereafter, Earlier, Meanwhile, Eventually, Initially | Temporal ordering of events |
| Cause | Because, Since, Given that, Owing to, Due to | Explains why something happened |
Section 1 — Para Jumbles: Rearrange Sentences into Coherent Paragraphs (Q.1–20)
Instructions: Five sentences (A–E) are given in jumbled order. Rearrange them to form a logically coherent paragraph. The first and last sentences may or may not be fixed (check each question).
Q.1 Moderate
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. The Central Bank Digital Currency (CBDC), popularly called the Digital Rupee, is backed by the Reserve Bank of India and therefore carries sovereign guarantee.
B. Unlike private cryptocurrencies such as Bitcoin, which derive their value from market speculation, the Digital Rupee is legal tender.
C. This distinction matters because it means the Digital Rupee will not experience the wild price swings that have made cryptocurrencies risky for everyday use.
D. The RBI has been piloting both a retail and a wholesale version of the Digital Rupee since 2022, with select banks and merchants participating in closed-user-group trials.
E. Observers therefore expect the Digital Rupee to coexist with — rather than replace — physical cash, catering to users who prefer digital convenience without the volatility of private tokens.
B. Unlike private cryptocurrencies such as Bitcoin, which derive their value from market speculation, the Digital Rupee is legal tender.
C. This distinction matters because it means the Digital Rupee will not experience the wild price swings that have made cryptocurrencies risky for everyday use.
D. The RBI has been piloting both a retail and a wholesale version of the Digital Rupee since 2022, with select banks and merchants participating in closed-user-group trials.
E. Observers therefore expect the Digital Rupee to coexist with — rather than replace — physical cash, catering to users who prefer digital convenience without the volatility of private tokens.
Answer: B — A → B → C → D → E
A introduces the Digital Rupee with its sovereign backing. B contrasts it with private crypto ("Unlike private cryptocurrencies"). C follows immediately because "This distinction" refers to the contrast just drawn in B. D provides factual context — the pilot program. E is the concluding inference ("therefore expect"), drawing from all preceding points. The pronoun chain: A→introduces CBDC; B→contrasts; C→"This distinction" refers to B; D→adds factual backdrop; E→concludes.
A introduces the Digital Rupee with its sovereign backing. B contrasts it with private crypto ("Unlike private cryptocurrencies"). C follows immediately because "This distinction" refers to the contrast just drawn in B. D provides factual context — the pilot program. E is the concluding inference ("therefore expect"), drawing from all preceding points. The pronoun chain: A→introduces CBDC; B→contrasts; C→"This distinction" refers to B; D→adds factual backdrop; E→concludes.
Q.2 Moderate
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. The Monetary Policy Committee (MPC) of the RBI is mandated to keep consumer price inflation within a target band of 2% to 6%, with 4% as the midpoint.
B. When inflation persistently exceeds the upper limit of 6% for three consecutive quarters, the RBI is required by law to submit a report to the government explaining the reasons and the corrective measures it intends to take.
C. This accountability mechanism was designed to balance central bank independence with democratic oversight.
D. However, critics argue that the mechanism places too much emphasis on inflation control and insufficient weight on economic growth objectives.
E. Proponents counter that price stability is itself a prerequisite for sustainable growth, since high inflation erodes purchasing power and discourages long-term investment.
B. When inflation persistently exceeds the upper limit of 6% for three consecutive quarters, the RBI is required by law to submit a report to the government explaining the reasons and the corrective measures it intends to take.
C. This accountability mechanism was designed to balance central bank independence with democratic oversight.
D. However, critics argue that the mechanism places too much emphasis on inflation control and insufficient weight on economic growth objectives.
E. Proponents counter that price stability is itself a prerequisite for sustainable growth, since high inflation erodes purchasing power and discourages long-term investment.
Answer: A — A → B → C → D → E
A introduces the MPC inflation target framework. B describes the consequence when the limit is breached — logically follows A. C notes "This accountability mechanism" — "this" refers to the mechanism described in B. D introduces the critics' view ("However" signals contrast). E provides the counter-argument to D ("Proponents counter"). The debate structure A→B→C (fact/mechanism) then D→E (counter-argument) is classic IBPS PO Mains paragraph structure.
A introduces the MPC inflation target framework. B describes the consequence when the limit is breached — logically follows A. C notes "This accountability mechanism" — "this" refers to the mechanism described in B. D introduces the critics' view ("However" signals contrast). E provides the counter-argument to D ("Proponents counter"). The debate structure A→B→C (fact/mechanism) then D→E (counter-argument) is classic IBPS PO Mains paragraph structure.
Q.3 Easy
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. The Jan Dhan Yojana, launched in 2014, opened over 500 million bank accounts for previously unbanked Indians within a decade.
B. These accounts have since been linked to mobile numbers and Aadhaar IDs, creating the JAM (Jan Dhan-Aadhaar-Mobile) trinity that enables direct benefit transfers.
C. Before this initiative, millions of rural households relied exclusively on moneylenders and informal credit channels, often at exploitative interest rates.
D. The shift to formal banking has thus improved not only access to credit but also the ability of the government to deliver subsidies without intermediaries siphoning off funds.
E. However, dormant accounts and low transaction volumes in some regions suggest that account opening alone does not guarantee genuine financial inclusion.
B. These accounts have since been linked to mobile numbers and Aadhaar IDs, creating the JAM (Jan Dhan-Aadhaar-Mobile) trinity that enables direct benefit transfers.
C. Before this initiative, millions of rural households relied exclusively on moneylenders and informal credit channels, often at exploitative interest rates.
D. The shift to formal banking has thus improved not only access to credit but also the ability of the government to deliver subsidies without intermediaries siphoning off funds.
E. However, dormant accounts and low transaction volumes in some regions suggest that account opening alone does not guarantee genuine financial inclusion.
Answer: C — C → A → B → D → E
C sets up the "before" context (problem: reliance on moneylenders). A introduces the solution (Jan Dhan Yojana). B builds on A ("These accounts have since been linked" — "these" refers to the accounts opened in A). D draws the consequence of B ("The shift to formal banking... thus"). E is the qualifying conclusion ("However, dormant accounts") that adds a limitation to the positive picture painted. C→A establishes problem-solution; B→D builds the chain; E provides the balanced caveat.
C sets up the "before" context (problem: reliance on moneylenders). A introduces the solution (Jan Dhan Yojana). B builds on A ("These accounts have since been linked" — "these" refers to the accounts opened in A). D draws the consequence of B ("The shift to formal banking... thus"). E is the qualifying conclusion ("However, dormant accounts") that adds a limitation to the positive picture painted. C→A establishes problem-solution; B→D builds the chain; E provides the balanced caveat.
Q.4 Hard
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. The Basel III framework requires banks to hold a minimum Common Equity Tier 1 (CET1) capital ratio of 4.5%, supplemented by a Capital Conservation Buffer of 2.5%.
B. These stringent requirements were introduced in response to the 2008 global financial crisis, during which inadequately capitalised banks required massive government bailouts.
C. In India, the RBI has gone further than the global minimum, mandating a total minimum capital adequacy ratio of 11.5% of risk-weighted assets for scheduled commercial banks.
D. Smaller co-operative banks and regional rural banks, however, operate under differentiated norms, reflecting their distinct risk profiles and limited ability to raise capital from markets.
E. Critics argue that excessively high capital requirements, while prudent from a stability perspective, constrain a bank's ability to lend, particularly to the MSME and agricultural sectors.
B. These stringent requirements were introduced in response to the 2008 global financial crisis, during which inadequately capitalised banks required massive government bailouts.
C. In India, the RBI has gone further than the global minimum, mandating a total minimum capital adequacy ratio of 11.5% of risk-weighted assets for scheduled commercial banks.
D. Smaller co-operative banks and regional rural banks, however, operate under differentiated norms, reflecting their distinct risk profiles and limited ability to raise capital from markets.
E. Critics argue that excessively high capital requirements, while prudent from a stability perspective, constrain a bank's ability to lend, particularly to the MSME and agricultural sectors.
Answer: B — A → B → C → D → E
A introduces Basel III capital requirements (the general framework). B explains WHY ("These stringent requirements were introduced in response to..."). C escalates the discussion to India's stricter norms ("In India, the RBI has gone further"). D narrows the scope further ("Smaller co-operative banks... however"). E is the critical evaluation ("Critics argue"). The structure is: General (A) → Historical reason (B) → Indian context (C) → Exceptions (D) → Critique (E). This is a hallmark IBPS PO Mains paragraph structure: general → specific → critique.
A introduces Basel III capital requirements (the general framework). B explains WHY ("These stringent requirements were introduced in response to..."). C escalates the discussion to India's stricter norms ("In India, the RBI has gone further"). D narrows the scope further ("Smaller co-operative banks... however"). E is the critical evaluation ("Critics argue"). The structure is: General (A) → Historical reason (B) → Indian context (C) → Exceptions (D) → Critique (E). This is a hallmark IBPS PO Mains paragraph structure: general → specific → critique.
Q.5 Moderate
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. Priority Sector Lending (PSL) guidelines require commercial banks to direct 40% of their Adjusted Net Bank Credit (ANBC) towards specified sectors like agriculture, MSMEs, education, and housing.
B. Banks that fall short of these targets must contribute the shortfall to designated funds such as RIDF (Rural Infrastructure Development Fund), which in effect penalises under-performance.
C. To provide flexibility, the RBI introduced PSL Certificates (PSLCs) in 2016, which allow surplus banks to sell their excess PSL credit to deficit banks.
D. This market-based mechanism incentivises lenders who can efficiently deploy funds in priority sectors and provides a compliance pathway for banks with limited rural presence.
E. Despite these measures, agricultural credit often reaches larger farmers rather than the smallholders it is primarily intended to benefit.
B. Banks that fall short of these targets must contribute the shortfall to designated funds such as RIDF (Rural Infrastructure Development Fund), which in effect penalises under-performance.
C. To provide flexibility, the RBI introduced PSL Certificates (PSLCs) in 2016, which allow surplus banks to sell their excess PSL credit to deficit banks.
D. This market-based mechanism incentivises lenders who can efficiently deploy funds in priority sectors and provides a compliance pathway for banks with limited rural presence.
E. Despite these measures, agricultural credit often reaches larger farmers rather than the smallholders it is primarily intended to benefit.
Answer: C — A → B → C → D → E
A states the PSL requirement. B explains the penalty for failing the target ("Banks that fall short"). C introduces the flexibility mechanism (PSL Certificates) that was created to address the shortfall problem. D explains the logic of that mechanism ("This market-based mechanism"). E provides the real-world limitation ("Despite these measures"). The flow is: Rule (A) → Penalty (B) → Fix (C) → Rationale of fix (D) → Remaining problem (E).
A states the PSL requirement. B explains the penalty for failing the target ("Banks that fall short"). C introduces the flexibility mechanism (PSL Certificates) that was created to address the shortfall problem. D explains the logic of that mechanism ("This market-based mechanism"). E provides the real-world limitation ("Despite these measures"). The flow is: Rule (A) → Penalty (B) → Fix (C) → Rationale of fix (D) → Remaining problem (E).
Q.6 Hard
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. When the RBI cuts the repo rate, it expects this reduction to be passed on to borrowers in the form of lower loan interest rates — a process known as monetary policy transmission.
B. However, in practice, banks often delay or partially pass on rate cuts, citing elevated credit risk, high NPAs, and liquidity management concerns.
C. To address this, the RBI mandated in 2019 that all new floating-rate loans be linked to an external benchmark such as the repo rate or Treasury Bill yield, rather than internal benchmarks set by banks.
D. This ensured that rate cuts would automatically lower the interest charged on eligible loans, improving transmission speed.
E. Nevertheless, the transmission from policy rate to deposit rates — and thus to the cost of funds for banks — remains sluggish, which continues to limit the full pass-through.
B. However, in practice, banks often delay or partially pass on rate cuts, citing elevated credit risk, high NPAs, and liquidity management concerns.
C. To address this, the RBI mandated in 2019 that all new floating-rate loans be linked to an external benchmark such as the repo rate or Treasury Bill yield, rather than internal benchmarks set by banks.
D. This ensured that rate cuts would automatically lower the interest charged on eligible loans, improving transmission speed.
E. Nevertheless, the transmission from policy rate to deposit rates — and thus to the cost of funds for banks — remains sluggish, which continues to limit the full pass-through.
Answer: A — A → B → C → D → E
A introduces the concept of monetary policy transmission. B raises the real-world problem ("However, banks often delay..."). C introduces the regulatory intervention to fix this ("To address this"). D explains how that intervention worked ("This ensured"). E acknowledges a remaining limitation ("Nevertheless"). The paragraph follows the classic argumentative structure: Ideal → Problem → Fix → How it works → Remaining gap. "This" in D refers to the external benchmark mandate in C — a clear pronoun-antecedent chain.
A introduces the concept of monetary policy transmission. B raises the real-world problem ("However, banks often delay..."). C introduces the regulatory intervention to fix this ("To address this"). D explains how that intervention worked ("This ensured"). E acknowledges a remaining limitation ("Nevertheless"). The paragraph follows the classic argumentative structure: Ideal → Problem → Fix → How it works → Remaining gap. "This" in D refers to the external benchmark mandate in C — a clear pronoun-antecedent chain.
Q.7 Moderate
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. India issued its first sovereign green bonds in January 2023, raising ₹8,000 crore to fund eligible green projects.
B. Sovereign green bonds differ from regular government bonds in that the proceeds are earmarked exclusively for climate-friendly infrastructure, renewable energy, and sustainable transport.
C. Globally, the green bond market has grown exponentially, with issuances crossing $500 billion in 2023, reflecting investor appetite for ESG-aligned fixed-income assets.
D. For India, sovereign green bonds are a strategic tool to attract long-term foreign institutional investment while signalling commitment to its net-zero targets.
E. However, "greenwashing" concerns — where bond proceeds are misallocated or monitoring is inadequate — remain a challenge that independent verification frameworks seek to address.
B. Sovereign green bonds differ from regular government bonds in that the proceeds are earmarked exclusively for climate-friendly infrastructure, renewable energy, and sustainable transport.
C. Globally, the green bond market has grown exponentially, with issuances crossing $500 billion in 2023, reflecting investor appetite for ESG-aligned fixed-income assets.
D. For India, sovereign green bonds are a strategic tool to attract long-term foreign institutional investment while signalling commitment to its net-zero targets.
E. However, "greenwashing" concerns — where bond proceeds are misallocated or monitoring is inadequate — remain a challenge that independent verification frameworks seek to address.
Answer: B — B → C → A → D → E
B defines what sovereign green bonds are (concept introduction — note: A gives a specific event, so A cannot be the topic sentence since B provides the definition that must precede the example). C gives global context for the green bond market. A then introduces the India-specific event (the first sovereign green bond issuance) — now contextualised by B and C. D explains the strategic rationale for India. E adds the cautionary note ("However, greenwashing"). B (definition) → C (global scale) → A (India's entry) → D (rationale) → E (challenge).
B defines what sovereign green bonds are (concept introduction — note: A gives a specific event, so A cannot be the topic sentence since B provides the definition that must precede the example). C gives global context for the green bond market. A then introduces the India-specific event (the first sovereign green bond issuance) — now contextualised by B and C. D explains the strategic rationale for India. E adds the cautionary note ("However, greenwashing"). B (definition) → C (global scale) → A (India's entry) → D (rationale) → E (challenge).
Q.8 Easy
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. Microfinance institutions (MFIs) provide small collateral-free loans, typically below ₹1 lakh, to low-income borrowers who lack access to formal credit.
B. The self-help group (SHG) model, which pools savings and builds credit history within a community, became the backbone of microfinance in rural India.
C. By the early 2000s, several MFIs had grown into commercially viable entities, attracting equity investment and enabling rapid expansion in Andhra Pradesh and other states.
D. The 2010 Andhra Pradesh microfinance crisis, triggered by allegations of coercive recovery practices and multiple borrowing, led to mass defaults and forced a nationwide re-examination of MFI lending norms.
E. The RBI subsequently introduced the microfinance regulatory framework of 2022, which capped loan repayment obligations at 50% of household income and established a common credit bureau for MFI borrowers.
B. The self-help group (SHG) model, which pools savings and builds credit history within a community, became the backbone of microfinance in rural India.
C. By the early 2000s, several MFIs had grown into commercially viable entities, attracting equity investment and enabling rapid expansion in Andhra Pradesh and other states.
D. The 2010 Andhra Pradesh microfinance crisis, triggered by allegations of coercive recovery practices and multiple borrowing, led to mass defaults and forced a nationwide re-examination of MFI lending norms.
E. The RBI subsequently introduced the microfinance regulatory framework of 2022, which capped loan repayment obligations at 50% of household income and established a common credit bureau for MFI borrowers.
Answer: A — A → B → C → D → E
A defines microfinance (basic concept). B describes the SHG model that enabled it. C describes the commercial growth phase. D introduces the crisis that followed the growth. E explains the regulatory reform that resulted from the crisis. This is a historical narrative structure: Definition → Model → Growth → Crisis → Reform. Each sentence is chronologically and causally linked to the next.
A defines microfinance (basic concept). B describes the SHG model that enabled it. C describes the commercial growth phase. D introduces the crisis that followed the growth. E explains the regulatory reform that resulted from the crisis. This is a historical narrative structure: Definition → Model → Growth → Crisis → Reform. Each sentence is chronologically and causally linked to the next.
Q.9 Moderate
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. Since the introduction of GST in July 2017, the banking sector has grappled with the increased compliance burden of filing multiple monthly and annual returns under the new tax regime.
B. GST applies to most banking fee-based services such as loan processing fees, ATM charges, and credit card fees at 18%, replacing the earlier Service Tax of 15%.
C. Interest income on loans, however, is exempt from GST since it constitutes the core financial service and taxing it would significantly raise the cost of credit.
D. The distinction between taxable fee-based services and exempt interest income requires banks to maintain meticulous input-tax credit (ITC) records, which has increased operational complexity.
E. Technology investments in GST compliance software and dedicated tax teams have therefore become a significant cost centre for large commercial banks.
B. GST applies to most banking fee-based services such as loan processing fees, ATM charges, and credit card fees at 18%, replacing the earlier Service Tax of 15%.
C. Interest income on loans, however, is exempt from GST since it constitutes the core financial service and taxing it would significantly raise the cost of credit.
D. The distinction between taxable fee-based services and exempt interest income requires banks to maintain meticulous input-tax credit (ITC) records, which has increased operational complexity.
E. Technology investments in GST compliance software and dedicated tax teams have therefore become a significant cost centre for large commercial banks.
Answer: B — B → C → D → A → E
B introduces GST's applicability to banking fee services (the core topic). C contrasts with the exemption for interest income ("however"). D explains the operational consequence of the distinction made in B and C. A introduces the compliance burden broadly (builds on D). E concludes with the resulting cost centre ("therefore"). While A mentions "Since the introduction of GST" — this could seem like a topic sentence, but it is actually more of a supporting observation that builds on B+C+D. B defines what is taxed; C defines what is exempt; D explains the combined challenge; A confirms the burden; E concludes.
B introduces GST's applicability to banking fee services (the core topic). C contrasts with the exemption for interest income ("however"). D explains the operational consequence of the distinction made in B and C. A introduces the compliance burden broadly (builds on D). E concludes with the resulting cost centre ("therefore"). While A mentions "Since the introduction of GST" — this could seem like a topic sentence, but it is actually more of a supporting observation that builds on B+C+D. B defines what is taxed; C defines what is exempt; D explains the combined challenge; A confirms the burden; E concludes.
Q.10 Hard
Rearrange the following sentences (A–E) to form a meaningful paragraph:
A. The proliferation of digital lending apps on smartphone platforms accelerated sharply during the COVID-19 pandemic when bank branches were temporarily inaccessible to borrowers.
B. Many of these apps operated through unregulated entities that levied usurious interest rates and used predatory data access — including contacts and gallery — to harass defaulters.
C. A wave of borrower suicides linked to such practices prompted the RBI to issue digital lending guidelines in September 2022 requiring all loan disbursements and repayments to flow through a regulated entity rather than a third-party app.
D. These guidelines also mandated a Key Fact Statement (KFS) disclosing the Annual Percentage Rate (APR) upfront, ensuring borrowers could compare costs transparently.
E. The challenge going forward lies in enforcing these norms across thousands of apps, particularly those hosted on foreign servers or operating through opaque partner arrangements.
B. Many of these apps operated through unregulated entities that levied usurious interest rates and used predatory data access — including contacts and gallery — to harass defaulters.
C. A wave of borrower suicides linked to such practices prompted the RBI to issue digital lending guidelines in September 2022 requiring all loan disbursements and repayments to flow through a regulated entity rather than a third-party app.
D. These guidelines also mandated a Key Fact Statement (KFS) disclosing the Annual Percentage Rate (APR) upfront, ensuring borrowers could compare costs transparently.
E. The challenge going forward lies in enforcing these norms across thousands of apps, particularly those hosted on foreign servers or operating through opaque partner arrangements.
Answer: B — A → B → C → D → E
A sets the contextual backdrop (growth of digital lending apps during COVID). B describes the malpractice ("Many of these apps"). C describes the tragic consequence and regulatory response ("A wave of borrower suicides... prompted the RBI"). D elaborates on the specific disclosure requirement within the guidelines ("These guidelines also"). E introduces the enforcement challenge going forward. The structure: Context → Problem → Regulatory response → Details → Future challenge. "These guidelines" in D refers directly to the "digital lending guidelines" mentioned in C — a clear pronoun chain.
A sets the contextual backdrop (growth of digital lending apps during COVID). B describes the malpractice ("Many of these apps"). C describes the tragic consequence and regulatory response ("A wave of borrower suicides... prompted the RBI"). D elaborates on the specific disclosure requirement within the guidelines ("These guidelines also"). E introduces the enforcement challenge going forward. The structure: Context → Problem → Regulatory response → Details → Future challenge. "These guidelines" in D refers directly to the "digital lending guidelines" mentioned in C — a clear pronoun chain.
Q.11 Easy
Four sentences are given below. Choose the option that gives the correct order to form a coherent paragraph:
P. Foreign portfolio investors (FPIs) have significantly increased their holdings in Indian government securities since the inclusion of certain bonds in global bond indices.
Q. This inflow of foreign capital has helped suppress sovereign borrowing costs and deepened the domestic bond market.
R. However, FPI flows are inherently volatile, and sudden reversals during global risk-off episodes can cause sharp currency depreciation and yield spikes.
S. The RBI has therefore built up substantial forex reserves as a buffer against such external shocks.
Q. This inflow of foreign capital has helped suppress sovereign borrowing costs and deepened the domestic bond market.
R. However, FPI flows are inherently volatile, and sudden reversals during global risk-off episodes can cause sharp currency depreciation and yield spikes.
S. The RBI has therefore built up substantial forex reserves as a buffer against such external shocks.
Answer: A — P → Q → R → S — P introduces FPI inflows. Q shows the positive effect. R introduces the risk ("However"). S shows the RBI's response to that risk ("therefore"). Clean cause-effect-risk-response chain.
Q.12 Moderate
Four sentences are given. Choose the correct order:
P. A co-lending arrangement allows a bank and a non-banking financial company (NBFC) to jointly originate priority sector loans, with the bank taking the larger share on its books.
Q. This model leverages the NBFC's last-mile reach and the bank's lower cost of funds, combining efficiency with affordability.
R. In practice, operational disagreements over loan servicing and risk-sharing have slowed the adoption of co-lending models.
S. Standardised technology platforms and clearer regulatory guidance on dispute resolution are needed to realise the full potential of this model.
Q. This model leverages the NBFC's last-mile reach and the bank's lower cost of funds, combining efficiency with affordability.
R. In practice, operational disagreements over loan servicing and risk-sharing have slowed the adoption of co-lending models.
S. Standardised technology platforms and clearer regulatory guidance on dispute resolution are needed to realise the full potential of this model.
Answer: A — P → Q → R → S — P defines the co-lending model. Q explains why it is theoretically attractive. R introduces the real-world problems ("In practice"). S recommends the solution. Concept → Benefit → Problem → Solution.
Q.13 Hard
Four sentences are given. Choose the correct order:
P. The prompt corrective action (PCA) framework empowers the RBI to impose restrictions on banks whose financial health metrics — capital adequacy, NPA levels, and return on assets — fall below prescribed thresholds.
Q. Restrictions under PCA include halting dividend payments, limiting loan growth, and preventing the bank from opening new branches.
R. While the framework is effective in preventing a fragile bank from taking on more risk, critics note that placing a bank under PCA can trigger a loss of depositor confidence.
S. The balance between supervisory intervention and public confidence management remains one of the more delicate challenges in banking regulation.
Q. Restrictions under PCA include halting dividend payments, limiting loan growth, and preventing the bank from opening new branches.
R. While the framework is effective in preventing a fragile bank from taking on more risk, critics note that placing a bank under PCA can trigger a loss of depositor confidence.
S. The balance between supervisory intervention and public confidence management remains one of the more delicate challenges in banking regulation.
Answer: A — P → Q → R → S — P introduces PCA (definition). Q details the specific restrictions (elaboration of P). R introduces the tension ("While the framework is effective... critics note"). S is the broad conclusion ("The balance between... remains one of the more delicate challenges"). Note: Q cannot precede P because "restrictions under PCA" in Q assumes the reader already knows what PCA is.
Q.14 Moderate
Four sentences are given. Choose the correct order:
P. India's Unified Payments Interface (UPI) crossed 10 billion transactions per month in 2023, cementing its position as one of the world's largest real-time payment systems.
Q. Built on the back of the Immediate Payment Service (IMPS) infrastructure, UPI allows inter-bank transfers 24/7 using a Virtual Payment Address (VPA) rather than account numbers.
R. Several countries including Singapore, UAE, France, and Bhutan have partnered with India to enable cross-border UPI transactions, expanding its global footprint.
S. The challenge of monetising UPI for banks and payment service providers — given the current zero-MDR (Merchant Discount Rate) regime — persists as a structural concern.
Q. Built on the back of the Immediate Payment Service (IMPS) infrastructure, UPI allows inter-bank transfers 24/7 using a Virtual Payment Address (VPA) rather than account numbers.
R. Several countries including Singapore, UAE, France, and Bhutan have partnered with India to enable cross-border UPI transactions, expanding its global footprint.
S. The challenge of monetising UPI for banks and payment service providers — given the current zero-MDR (Merchant Discount Rate) regime — persists as a structural concern.
Answer: B — Q → P → R → S — Q provides the technical background (what UPI is, built on IMPS). P then gives the impressive scale (10 billion transactions). R shows international expansion (builds on the scale/success). S introduces the business model challenge. Technical background → Scale → Global reach → Business challenge. P cannot be first because "cementing its position" implies the reader already knows what UPI is — Q must precede P to provide that context.
Q.15 Easy
Four sentences are given. Choose the correct order:
P. The Insolvency and Bankruptcy Code (IBC) marked a paradigm shift by replacing the fragmented and time-consuming earlier resolution frameworks like SARFAESI, DRT, and BIFR.
Q. It introduced a 180-day (extendable to 270) resolution timeline, a Committee of Creditors (CoC), and a professional Insolvency Resolution Professional (IRP) to manage the process.
R. Since its enactment in 2016, the IBC has resolved several large corporate insolvencies, recovering substantially more value for creditors than liquidation would have yielded.
S. However, the average time for resolution continues to exceed the statutory limit, highlighting the need for more benches of the National Company Law Tribunal (NCLT).
Q. It introduced a 180-day (extendable to 270) resolution timeline, a Committee of Creditors (CoC), and a professional Insolvency Resolution Professional (IRP) to manage the process.
R. Since its enactment in 2016, the IBC has resolved several large corporate insolvencies, recovering substantially more value for creditors than liquidation would have yielded.
S. However, the average time for resolution continues to exceed the statutory limit, highlighting the need for more benches of the National Company Law Tribunal (NCLT).
Answer: A — P → Q → R → S — P introduces IBC as a replacement for earlier frameworks. Q describes its specific mechanisms. R gives the results since enactment. S introduces the remaining problem ("However"). Introduction → Features → Results → Remaining problem.
Q.16 Moderate
Five sentences (A–E) are given in jumbled order. Identify the sentence that would come THIRD after rearrangement:
A. The concept of "too big to fail" (TBTF) suggests that certain financial institutions are so systemically important that their failure would trigger a cascade of failures across the economy.
B. Regulators therefore require such institutions to hold additional capital buffers — known as Domestic Systemically Important Banks (D-SIBs) surcharges in India.
C. In India, the State Bank of India, HDFC Bank, and ICICI Bank are currently designated as D-SIBs based on their size, interconnectedness, and cross-jurisdictional activity.
D. The implicit government guarantee that comes with TBTF status creates moral hazard — incentivising these institutions to take excessive risks since they expect a bailout if things go wrong.
E. Higher capital requirements and enhanced supervisory scrutiny are the regulatory tools used to mitigate this moral hazard without eliminating the institutions themselves.
B. Regulators therefore require such institutions to hold additional capital buffers — known as Domestic Systemically Important Banks (D-SIBs) surcharges in India.
C. In India, the State Bank of India, HDFC Bank, and ICICI Bank are currently designated as D-SIBs based on their size, interconnectedness, and cross-jurisdictional activity.
D. The implicit government guarantee that comes with TBTF status creates moral hazard — incentivising these institutions to take excessive risks since they expect a bailout if things go wrong.
E. Higher capital requirements and enhanced supervisory scrutiny are the regulatory tools used to mitigate this moral hazard without eliminating the institutions themselves.
Answer: B — Sentence C — Correct order: A → D → C → B → E. A introduces TBTF concept. D introduces moral hazard (consequence of TBTF status). C gives the Indian examples of D-SIBs (specific application). B explains the regulatory capital requirement for these D-SIBs. E explains how those requirements address the moral hazard. Third sentence = C.
Q.17 Hard
Five sentences are given in jumbled order. Identify the sentence that would come FOURTH after rearrangement:
A. The RBI's Standing Deposit Facility (SDF) allows banks to park excess liquidity with the RBI without requiring the central bank to provide government securities as collateral.
B. This makes the SDF an "uncollateralised" tool, unlike the reverse repo window where the RBI's receipt of funds is always backed by securities.
C. The SDF was introduced in 2022 as the floor of the interest rate corridor, replacing the fixed-rate reverse repo as the de facto floor.
D. By absorbing excess liquidity at the SDF rate, the RBI can prevent overnight call money rates from falling below the desired floor and thereby support the effectiveness of its repo rate signalling.
E. In effect, the SDF gives the RBI greater flexibility to manage liquidity without being constrained by the size of its securities portfolio.
B. This makes the SDF an "uncollateralised" tool, unlike the reverse repo window where the RBI's receipt of funds is always backed by securities.
C. The SDF was introduced in 2022 as the floor of the interest rate corridor, replacing the fixed-rate reverse repo as the de facto floor.
D. By absorbing excess liquidity at the SDF rate, the RBI can prevent overnight call money rates from falling below the desired floor and thereby support the effectiveness of its repo rate signalling.
E. In effect, the SDF gives the RBI greater flexibility to manage liquidity without being constrained by the size of its securities portfolio.
Answer: C — Sentence D — Correct order: C → A → B → D → E. C introduces SDF chronologically (introduced in 2022 as the corridor floor). A explains what SDF does (operational description). B contrasts with reverse repo ("unlike"). D explains how this operates to support monetary policy. E concludes with the broader benefit ("In effect"). Fourth sentence = D.
Q.18 Moderate
Five sentences are given. Identify which sentence would come SECOND:
A. India adopted inflation targeting as its primary monetary policy framework under the amended RBI Act of 2016.
B. Under this framework, the external member economists on the MPC have often provided heterodox opinions that have dissented from the majority view.
C. A key innovation was the creation of the six-member Monetary Policy Committee, comprising three RBI officials and three external economists appointed by the government.
D. This diversity of opinion is generally viewed as healthy, ensuring that monetary policy decisions are not purely technocratic but reflect a range of economic perspectives.
E. Critics, however, argue that public dissents by external members sometimes complicate forward guidance and confuse markets about the intended policy direction.
B. Under this framework, the external member economists on the MPC have often provided heterodox opinions that have dissented from the majority view.
C. A key innovation was the creation of the six-member Monetary Policy Committee, comprising three RBI officials and three external economists appointed by the government.
D. This diversity of opinion is generally viewed as healthy, ensuring that monetary policy decisions are not purely technocratic but reflect a range of economic perspectives.
E. Critics, however, argue that public dissents by external members sometimes complicate forward guidance and confuse markets about the intended policy direction.
Answer: A — Sentence C — Correct order: A → C → B → D → E. A establishes inflation targeting (2016 framework). C introduces the MPC (key innovation within that framework). B describes external member behaviour. D evaluates this positively. E introduces the critical view. Second sentence = C.
Q.19 Easy
The sentence labelled (1) is fixed as the FIRST sentence. Rearrange P, Q, R, S to follow it:
(1) [FIXED FIRST] Non-performing assets (NPAs) have long been a structural weakness in Indian public sector banks.
P. In response, the government launched the recapitalisation programme, injecting over ₹3.5 lakh crore into public sector banks between 2017 and 2020.
Q. The gross NPA ratio of public sector banks peaked at over 14% in March 2018, reflecting a long period of lax credit appraisal and compromised lending practices.
R. By 2024, the GNPA ratio had improved to below 4%, partly due to improved recoveries under IBC and write-offs, though write-offs also reduce the numerator without actual recovery.
S. Sustaining this improvement requires systemic reforms in governance and credit culture, not merely capital infusions or accounting treatments.
P. In response, the government launched the recapitalisation programme, injecting over ₹3.5 lakh crore into public sector banks between 2017 and 2020.
Q. The gross NPA ratio of public sector banks peaked at over 14% in March 2018, reflecting a long period of lax credit appraisal and compromised lending practices.
R. By 2024, the GNPA ratio had improved to below 4%, partly due to improved recoveries under IBC and write-offs, though write-offs also reduce the numerator without actual recovery.
S. Sustaining this improvement requires systemic reforms in governance and credit culture, not merely capital infusions or accounting treatments.
Answer: B — Q → P → R → S — After the fixed introduction: Q gives the quantified peak problem. P introduces the government's response (caused by Q). R shows the improvement that followed P's recapitalisation. S concludes with the structural reforms still needed. Problem-peak → Government action → Improvement → Structural reform needed.
Q.20 Hard
The sentence labelled (6) is fixed as the LAST sentence. Identify which option correctly places sentences A–D before it:
A. The currency in circulation (CIC) in India constitutes roughly 12–14% of GDP, one of the highest ratios among major economies.
B. This high cash preference is partly a legacy of large informal sector transactions, limited digital literacy in rural areas, and distrust of digital channels among older demographics.
C. The post-demonetisation period saw a temporary dip in CIC, but it rebounded strongly within 18 months as cash demand proved remarkably resilient.
D. Successive RBI governors have acknowledged that a cashless economy, while aspirational, is not a near-term reality for India.
(6) [FIXED LAST] Digital payment infrastructure must therefore complement rather than attempt to replace cash, serving different segments of the population depending on their needs and capabilities.
B. This high cash preference is partly a legacy of large informal sector transactions, limited digital literacy in rural areas, and distrust of digital channels among older demographics.
C. The post-demonetisation period saw a temporary dip in CIC, but it rebounded strongly within 18 months as cash demand proved remarkably resilient.
D. Successive RBI governors have acknowledged that a cashless economy, while aspirational, is not a near-term reality for India.
(6) [FIXED LAST] Digital payment infrastructure must therefore complement rather than attempt to replace cash, serving different segments of the population depending on their needs and capabilities.
Answer: A — A → B → C → D → (6) — A establishes the high cash-to-GDP ratio (the core fact). B explains why (causes). C provides historical evidence (demonetisation). D quotes official acknowledgment (RBI governors). (6) draws the policy conclusion from all four. "Therefore" in (6) refers to the accumulated evidence in A–D. The chain is: Fact → Cause → Historical evidence → Official stance → Policy conclusion.
Section 2 — Para Completion: Choose the Best Sentence to Complete the Paragraph (Q.21–30)
Para Completion Strategy: Read the given paragraph carefully to identify its theme and direction. The blank is usually at the end (conclusion). The correct option must: (1) be logically consistent with the paragraph's argument, (2) match the paragraph's tone (formal/analytical for banking topics), (3) not introduce irrelevant new facts, and (4) use an appropriate connector word if one appears in the option.
Q.21 Moderate
Choose the sentence that best completes the paragraph:
The spread of mobile banking has democratised access to financial services in India. Applications like BHIM, Paytm, PhonePe, and bank-specific apps allow users to transfer money, pay bills, invest in mutual funds, and even apply for loans — all from a smartphone. Rural penetration has improved significantly since 4G network coverage expanded to tier-3 towns and villages. However, cyber fraud incidents linked to mobile banking have multiplied, with SIM-swap fraud, phishing attacks, and fake UPI collect requests targeting less digitally-literate users. BLANK
Answer: B — The paragraph establishes a positive trend (mobile banking democratising access) and then identifies a problem (cyber fraud targeting less literate users). The conclusion must address this tension — B does this by suggesting literacy and grievance mechanisms as the solution, continuing the theme of inclusion. (A) is too extreme ("immediately ban"). (C) introduces new statistics and doesn't address the fraud problem raised in the paragraph. (D) is about cheque fraud — off-topic.
Q.22 Easy
Choose the sentence that best completes the paragraph:
The Pradhan Mantri Mudra Yojana (PMMY) offers collateral-free micro-loans of up to ₹10 lakh to small non-corporate businesses in three categories: Shishu (up to ₹50,000), Kishor (₹50,001 to ₹5 lakh), and Tarun (₹5 lakh to ₹10 lakh). The scheme is aimed at funding street vendors, small manufacturers, artisans, shopkeepers, and others in the informal sector. Since its launch in 2015, PMMY has disbursed over ₹25 lakh crore to millions of beneficiaries across India. Critics, however, point to rising NPAs in the Mudra portfolio and argue that the push for volume has sometimes come at the cost of credit quality. BLANK
Answer: C — The paragraph ends on a critical note ("push for volume at cost of credit quality"). The conclusion must address this tension directly. C captures the exact dilemma: outreach (volume) vs. credit quality (borrower assessment). (A) introduces new schemes (off-topic). (B) is purely positive and ignores the critical point raised about NPAs. (D) is positive employment data — doesn't resolve the NPA-quality tension raised.
Q.23 Moderate
Choose the sentence that best completes the paragraph:
India's foreign exchange reserves reached a record high of over $700 billion in late 2024, positioning the country as one of the world's largest reserve holders. These reserves serve multiple purposes: they provide a buffer against external shocks, stabilise the rupee during periods of capital outflows, and signal macroeconomic credibility to foreign investors. However, holding large reserves carries a significant opportunity cost — these funds, typically invested in low-yielding US Treasury securities, earn far less than the cost of external commercial borrowings used to build them. BLANK
Answer: B — The paragraph presents benefits of reserves (buffering, stability, credibility) and then a cost (opportunity cost). B draws the correct conclusion: the level of reserves is a policy debate weighing these two considerations. "Therefore" and "balancing" perfectly resolve the tension. (A) is comparative data (doesn't address the cost-benefit tension). (C) introduces current account deficit — new and off-topic. (D) is an observation about FPI behaviour — not a conclusion to the argument.
Q.24 Hard
Choose the sentence that BEST begins the paragraph (the blank is at the START):
BLANK This arrangement, introduced in the 2020 amended PSB governance code, also restricts banks' top executives from seeking reappointment immediately after their terms end, creating a cooling-off period. The intent is to prevent the entrenchment of management and reduce the risks associated with governance capture — where board members become overly aligned with the management they are meant to oversee. Several banking crises globally, including India's own YES Bank episode, have been attributed partly to weak board oversight.
Answer: B — The paragraph discusses the governance code amendments, cooling-off periods, board independence, and the risks of governance capture. The opening sentence must introduce the specific governance reform (separation of Chairman/MD roles) that the rest of the paragraph elaborates on. "This arrangement" in the second sentence ("This arrangement, introduced in the 2020 amended PSB governance code") refers to the separation of roles mentioned in B. (A) is about salary gaps (different topic). (C) is about asset quality (off-topic). (D) is about NBFCs (different sector).
Q.25 Moderate
Choose the sentence that best completes the paragraph:
The Account Aggregator (AA) framework, operationalised in 2021, allows individuals to share their financial data — bank statements, tax returns, investment holdings — with third-party lenders and fintechs in a consent-based, standardised format. Unlike earlier screen-scraping methods, which required users to share passwords, the AA framework uses encrypted data packets that can only be accessed by the consented recipient within the consented time window. This has particularly benefited small business owners and gig workers who lack formal income documentation and were previously excluded from credit assessment. BLANK
Answer: B — The paragraph describes AA's mechanism and notes it has benefited those without formal income documentation. The conclusion in B directly extends this by explaining the transformative potential for credit access. It uses "By enabling lenders to assess creditworthiness through cash flow data" — a direct reference to the small business owners and gig workers mentioned. (A) is regulatory background (should come earlier, not at the end). (C) is a valid concern but would need more context to fit as a conclusion. (D) gives statistics that would make a good supporting sentence, not a conclusion.
Q.26 Easy
Choose the sentence that best completes the paragraph:
The concept of "financial repression" refers to policies that deliberately keep interest rates below inflation, transferring wealth from savers to borrowers — particularly to the government, which benefits from cheap borrowing costs. In post-independence India, administered interest rates, mandatory bank investments in government securities (SLR), and priority sector credit requirements were all elements of a financially repressed system. While these measures helped fund industrialisation and social programmes, they also suppressed household savings returns and discouraged financial deepening. The liberalisation of the 1990s and the subsequent move to market-linked deposit rates partially dismantled these controls. BLANK
Answer: D — The paragraph describes financial repression, its historical roots, and then notes the 1990s liberalisation that "partially dismantled" these controls. The word "partially" sets up the conclusion — D completes this by acknowledging that vestiges remain (SLR, priority sector norms, administered rates). "Yet" is the exact connector needed after "partially dismantled." (A) is academic background (should appear earlier). (B) gives one specific data point — not a full conclusion. (C) is about deposit rate caution — different angle, not the conclusion the paragraph leads to.
Q.27 Hard
Choose the sentence that best completes the paragraph:
Tokenisation of financial assets — converting ownership rights over real-world assets like bonds, commercial property, and commodities into digital tokens on a distributed ledger — is being explored by banks and regulators globally as the next frontier of financial innovation. In India, the IFSCA (International Financial Services Centres Authority) in GIFT City has created a regulatory sandbox for tokenised securities. Tokenisation promises to democratise access to assets that were previously available only to institutional investors, allow fractional ownership, and reduce settlement times from days to seconds. However, the legal framework governing the ownership and transfer of tokenised assets remains underdeveloped in most jurisdictions. BLANK
Answer: C — The paragraph ends with the problem: "legal framework... remains underdeveloped." The conclusion must directly address this problem. C does exactly this: it says tokenisation cannot scale until regulatory clarity on smart contract enforceability is established — a direct consequence of the underdeveloped legal framework. (A) is about IFSCA generally — doesn't address the legal framework gap. (B) introduces DeFi — a new tangent. (D) provides positive examples but ignores the legal problem raised.
Q.28 Moderate
Choose the sentence that best completes the paragraph:
The interest rate differential between India and advanced economies like the United States plays a significant role in rupee-dollar exchange rate dynamics. When US interest rates rise sharply — as they did in 2022–2023 during the Federal Reserve's aggressive rate hike cycle — capital tends to flow from emerging markets to the US to capture higher safe-haven yields. This capital outflow weakens emerging market currencies, including the Indian rupee. India's relatively higher domestic interest rates offer a partial cushion, as they attract carry trade investors who borrow in low-rate currencies and invest in rupee assets. BLANK
Answer: C — The paragraph describes the impact of US rate hikes on the rupee and then the cushioning role of carry trade. The last sentence is positive about carry trade. C correctly identifies the limitation of this cushion ("Nevertheless, carry trade flows are unstable"), creating a balanced conclusion. (B) introduces RBI intervention — valid but doesn't address the carry trade point raised in the last sentence. (D) is about monitoring — obvious and weak conclusion. (A) introduces depreciation data — doesn't address the carry trade discussion.
Q.29 Easy
Choose the sentence that best completes the paragraph:
Bancassurance — the distribution of insurance products through a bank's branch network and digital channels — has become a significant distribution model in India. Under this arrangement, banks partner with insurance companies and earn commissions for selling life, health, and general insurance policies to their existing customer base. For customers, it offers the convenience of purchasing financial and insurance products from a single trusted institution. The regulatory framework permits a bank to partner with up to three life insurance companies, three general insurance companies, and three standalone health insurance companies. BLANK
Answer: A — The paragraph describes bancassurance and then specifically mentions the "partnership with up to three companies of each type." The conclusion must explain WHY the regulation allows three partners (not just one). A explains the rationale: preventing dominance by bank subsidiaries and ensuring genuine customer choice — this is exactly what the "three partner" rule is designed to achieve. (B) is useful data but not a conclusion. (C) is a basic regulatory fact — not a conclusion to this paragraph. (D) introduces historical origins — off-topic.
Q.30 Hard
Choose the sentence that best completes the paragraph:
The concept of "helicopter money" — directly depositing money into citizens' accounts by the central bank without the intermediary step of government borrowing — has gained attention as an extreme form of monetary stimulus. Unlike conventional quantitative easing, which operates through banks and financial markets, helicopter money bypasses financial intermediaries entirely and directly boosts consumer spending. Proponents argue it is especially effective when the banking transmission mechanism is broken or when interest rates are already at zero. However, most economists caution against its use in India, where inflationary pressures can re-emerge quickly given demand-supply imbalances in food and fuel. BLANK
Answer: C — The paragraph ends by noting economists' caution about helicopter money in India due to "inflationary pressures from demand-supply imbalances in food and fuel." C directly elaborates on why India is particularly unsuitable for this policy (informal economy, food price volatility, crude oil imports — all India-specific inflation drivers). (A) is about Japan — off-topic. (B) is an academic theory — doesn't conclude the India-focused argument. (D) is attribution/history — not a conclusion.
Section 3 — Odd Sentence Out: Identify the Sentence That Does NOT Belong (Q.31–40)
Odd Sentence Out Strategy: Read all five sentences. Four will form a coherent paragraph around one specific banking/financial theme. The odd sentence may (1) introduce an unrelated topic, (2) use a word that appears in other sentences but in a completely different context, or (3) make a claim that contradicts the paragraph's direction. The trap option often shares keywords with other sentences but breaks the logical chain.
Q.31 Moderate
Four of the five sentences below form a coherent paragraph about one topic. Identify the ODD sentence:
A. India's bond market has traditionally been dominated by government securities, with corporate bond issuances accounting for a relatively small share of total debt outstanding.
B. The corporate bond market's underdevelopment is partly explained by banks' preference for direct lending, which allows them greater flexibility in renegotiating loan terms compared to bond covenants.
C. SEBI has made several regulatory changes to deepen the corporate bond market, including mandating large corporates to raise 25% of their borrowings through bonds.
D. The gold monetisation scheme allows individuals to deposit physical gold with banks, earning interest while the gold is melted and deployed in jewellery manufacturing or export.
E. A deep and liquid corporate bond market would reduce Indian companies' dependence on bank credit and provide banks with more capital to extend to smaller borrowers.
B. The corporate bond market's underdevelopment is partly explained by banks' preference for direct lending, which allows them greater flexibility in renegotiating loan terms compared to bond covenants.
C. SEBI has made several regulatory changes to deepen the corporate bond market, including mandating large corporates to raise 25% of their borrowings through bonds.
D. The gold monetisation scheme allows individuals to deposit physical gold with banks, earning interest while the gold is melted and deployed in jewellery manufacturing or export.
E. A deep and liquid corporate bond market would reduce Indian companies' dependence on bank credit and provide banks with more capital to extend to smaller borrowers.
Answer: D — Sentences A, B, C, E all discuss the corporate bond market in India — its underdevelopment (A, B), regulatory interventions (C), and the desired outcome (E). Sentence D is about the gold monetisation scheme — an entirely different financial topic. Despite the word "banks" appearing in D, the topic is gold deposits, not corporate bonds.
Q.32 Easy
Identify the ODD sentence:
A. The Financial Stability and Development Council (FSDC) was established in 2010 as an apex body for macro-prudential regulation and financial sector development.
B. FSDC is chaired by the Finance Minister and includes the heads of RBI, SEBI, IRDAI, PFRDA, and FMC (now merged with SEBI).
C. Its mandate includes monitoring systemic risks, coordinating between financial regulators, and addressing regulatory gaps across sectors.
D. The FSDC sub-committee, chaired by the RBI Governor, meets more frequently to deal with technical regulatory coordination issues.
E. The NARCL (National Asset Reconstruction Company Ltd) was established in 2021 to take over stressed assets from banks at a defined haircut and resolve them.
B. FSDC is chaired by the Finance Minister and includes the heads of RBI, SEBI, IRDAI, PFRDA, and FMC (now merged with SEBI).
C. Its mandate includes monitoring systemic risks, coordinating between financial regulators, and addressing regulatory gaps across sectors.
D. The FSDC sub-committee, chaired by the RBI Governor, meets more frequently to deal with technical regulatory coordination issues.
E. The NARCL (National Asset Reconstruction Company Ltd) was established in 2021 to take over stressed assets from banks at a defined haircut and resolve them.
Answer: E — Sentences A, B, C, D all discuss the FSDC — its establishment, membership, mandate, and sub-committee. Sentence E is about NARCL (National ARC) — a completely different institution related to NPA resolution. It shares the banking/regulation domain but is not about FSDC at all.
Q.33 Moderate
Identify the ODD sentence:
A. Regulatory sandboxes provide financial innovators a controlled environment to test new products or services with a limited customer base before full-scale launch.
B. The RBI's regulatory sandbox, launched in 2019, has hosted cohorts focusing on areas such as retail payments, cross-border payments, MSME lending, and financial inclusion.
C. By reducing the compliance burden during the testing phase, sandboxes accelerate innovation while managing systemic risk through limited exposure.
D. SEBI, IRDAI, and PFRDA have also launched their own sandboxes, creating a multi-regulator innovation ecosystem in India's financial services sector.
E. Basel IV norms, expected to be fully implemented globally by 2025–2027, revise the standardised approach for credit risk and impose output floors on internal model-based capital calculations.
B. The RBI's regulatory sandbox, launched in 2019, has hosted cohorts focusing on areas such as retail payments, cross-border payments, MSME lending, and financial inclusion.
C. By reducing the compliance burden during the testing phase, sandboxes accelerate innovation while managing systemic risk through limited exposure.
D. SEBI, IRDAI, and PFRDA have also launched their own sandboxes, creating a multi-regulator innovation ecosystem in India's financial services sector.
E. Basel IV norms, expected to be fully implemented globally by 2025–2027, revise the standardised approach for credit risk and impose output floors on internal model-based capital calculations.
Answer: E — A, B, C, D form a coherent paragraph about regulatory sandboxes — their definition (A), RBI's specific sandbox (B), benefits of sandboxes (C), and multi-regulator expansion (D). Sentence E is about Basel IV capital norms — a completely different regulatory topic. The word "regulatory" in E is a trap — it shares domain (banking regulation) but not the specific topic (sandboxes).
Q.34 Hard
Identify the ODD sentence:
A. The Liberalised Remittance Scheme (LRS) allows Indian residents to remit up to $250,000 per financial year abroad for permissible purposes such as education, travel, investment, and maintenance of close relatives.
B. The RBI introduced a 20% Tax Collected at Source (TCS) on LRS remittances above ₹7 lakh in the 2023 Finance Act to improve the tracking and reporting of overseas outflows.
C. Outward remittances under LRS have grown significantly in recent years, driven by Indian students pursuing foreign education and affluent households investing in overseas securities.
D. Inward remittances from the Indian diaspora constitute approximately 3% of GDP and are the largest source of foreign exchange inflows for India, surpassing FDI in most years.
E. The LRS ceiling was reduced from $200,000 to $75,000 during the 2013 currency crisis but was subsequently restored as the rupee stabilised.
B. The RBI introduced a 20% Tax Collected at Source (TCS) on LRS remittances above ₹7 lakh in the 2023 Finance Act to improve the tracking and reporting of overseas outflows.
C. Outward remittances under LRS have grown significantly in recent years, driven by Indian students pursuing foreign education and affluent households investing in overseas securities.
D. Inward remittances from the Indian diaspora constitute approximately 3% of GDP and are the largest source of foreign exchange inflows for India, surpassing FDI in most years.
E. The LRS ceiling was reduced from $200,000 to $75,000 during the 2013 currency crisis but was subsequently restored as the rupee stabilised.
Answer: D — This is a hard question because D is also about "remittances" — but it discusses INWARD remittances from the diaspora, not outward remittances under the LRS. Sentences A, B, C, E all discuss the LRS framework: its limit (A), TCS on LRS (B), outward remittance flows (C), and historical LRS ceiling changes (E). D is about inward remittances — a different topic despite using the same word "remittances."
Q.35 Moderate
Identify the ODD sentence:
A. Payment banks, introduced under the RBI's differentiated bank licensing framework in 2015, can accept deposits up to ₹2 lakh per customer but cannot issue loans.
B. Their mandate is to bring financial services to unbanked segments by leveraging mobile technology and wide networks of agents rather than traditional brick-and-mortar branches.
C. Airtel Payments Bank, India Post Payments Bank, and Paytm Payments Bank were among the early licensees, though Paytm faced regulatory action and restrictions in 2024.
D. Small Finance Banks, unlike payment banks, can undertake full banking activities including lending, and are required to maintain at least 75% of their ANBC in loans to specified segments.
E. Despite their limitations, payment banks have been credited with driving Aadhaar-enabled payment service (AePS) adoption in rural areas.
B. Their mandate is to bring financial services to unbanked segments by leveraging mobile technology and wide networks of agents rather than traditional brick-and-mortar branches.
C. Airtel Payments Bank, India Post Payments Bank, and Paytm Payments Bank were among the early licensees, though Paytm faced regulatory action and restrictions in 2024.
D. Small Finance Banks, unlike payment banks, can undertake full banking activities including lending, and are required to maintain at least 75% of their ANBC in loans to specified segments.
E. Despite their limitations, payment banks have been credited with driving Aadhaar-enabled payment service (AePS) adoption in rural areas.
Answer: D — A, B, C, E all discuss payment banks specifically. Sentence D introduces Small Finance Banks — a different type of differentiated bank. While it mentions "unlike payment banks" (using the keyword "payment banks"), D's focus is SFBs and their 75% PSL requirement — making it the odd sentence. Note the trap: D explicitly mentions payment banks in a contrast clause, but the sentence is about SFBs, not payment banks.
Q.36 Hard
Identify the ODD sentence:
A. The G20's Financial Stability Board (FSB) has been developing a framework for the supervision and regulation of "too-big-to-fail" global systemically important banks (G-SIBs) since the 2009 Pittsburgh Summit.
B. G-SIBs are required to hold an additional capital surcharge of 1–3.5% of risk-weighted assets depending on their systemic importance score, which factors in size, interconnectedness, and cross-jurisdictional activity.
C. In India, SBI has been designated as a G-SIB by the FSB for several years, subjecting it to additional international disclosure requirements.
D. The Net Stable Funding Ratio (NSFR) requires banks to maintain sufficient stable funding to cover their assets and off-balance-sheet activities over a one-year horizon.
E. The resolution planning requirement for G-SIBs — the "living will" — obliges them to prepare credible recovery and resolution plans that regulators can execute in a crisis without taxpayer bailouts.
B. G-SIBs are required to hold an additional capital surcharge of 1–3.5% of risk-weighted assets depending on their systemic importance score, which factors in size, interconnectedness, and cross-jurisdictional activity.
C. In India, SBI has been designated as a G-SIB by the FSB for several years, subjecting it to additional international disclosure requirements.
D. The Net Stable Funding Ratio (NSFR) requires banks to maintain sufficient stable funding to cover their assets and off-balance-sheet activities over a one-year horizon.
E. The resolution planning requirement for G-SIBs — the "living will" — obliges them to prepare credible recovery and resolution plans that regulators can execute in a crisis without taxpayer bailouts.
Answer: D — A, B, C, E all discuss G-SIBs — the FSB framework (A), capital surcharges for G-SIBs (B), India's G-SIB designation (C), and resolution planning for G-SIBs (E). Sentence D is about the Net Stable Funding Ratio — a Basel III liquidity metric that applies to ALL banks, not specifically to G-SIBs. It is a different regulatory topic despite being in the banking/regulation domain. This is a hard question because all sentences discuss bank regulation and D uses the word "banks" — but D is about a different regulatory requirement.
Q.37 Easy
Identify the ODD sentence:
A. Financial inclusion in India has been measured through metrics like the number of bank accounts opened, credit penetration in unbanked districts, and insurance coverage in rural areas.
B. The RBI publishes a Financial Inclusion Index (FI-Index) annually, combining indicators of access, usage, and quality of financial services across the country.
C. District-level mapping shows that aspirational districts — those identified by the government for development convergence — tend to have lower financial inclusion scores than urban areas.
D. The Securities and Exchange Board of India (SEBI) has increased the upper circuit limit on stock exchanges to 20% for mid-cap and small-cap stocks.
E. Despite overall progress, tribal and remote hilly areas continue to lag on financial inclusion metrics due to connectivity challenges and absence of viable business correspondent networks.
B. The RBI publishes a Financial Inclusion Index (FI-Index) annually, combining indicators of access, usage, and quality of financial services across the country.
C. District-level mapping shows that aspirational districts — those identified by the government for development convergence — tend to have lower financial inclusion scores than urban areas.
D. The Securities and Exchange Board of India (SEBI) has increased the upper circuit limit on stock exchanges to 20% for mid-cap and small-cap stocks.
E. Despite overall progress, tribal and remote hilly areas continue to lag on financial inclusion metrics due to connectivity challenges and absence of viable business correspondent networks.
Answer: D — A, B, C, E all discuss financial inclusion — metrics (A), the FI-Index (B), district-level disparities (C), and tribal area gaps (E). Sentence D is about SEBI's circuit limits on stock exchanges — a completely unrelated topic. Easy question because D mentions SEBI and stock exchanges, which are clearly not about financial inclusion.
Q.38 Moderate
Identify the ODD sentence:
A. The Kisan Credit Card (KCC) scheme provides farmers with flexible, revolving credit for agricultural inputs, crop production expenses, and allied activities at subsidised interest rates.
B. KCCs are issued by commercial banks, co-operative banks, and Regional Rural Banks, with an interest subvention of 2% provided by the government for short-duration crop loans.
C. The scheme was expanded to cover fish farmers, animal husbandry, and dairy activities as part of the government's broader agricultural credit delivery reform.
D. The PM-KISAN scheme provides a direct income support of ₹6,000 per year to eligible farmer families in three equal instalments, irrespective of loan eligibility.
E. Digital KCCs, which allow loan disbursal and repayment through mobile banking without requiring farmers to visit bank branches, have been piloted in several districts.
B. KCCs are issued by commercial banks, co-operative banks, and Regional Rural Banks, with an interest subvention of 2% provided by the government for short-duration crop loans.
C. The scheme was expanded to cover fish farmers, animal husbandry, and dairy activities as part of the government's broader agricultural credit delivery reform.
D. The PM-KISAN scheme provides a direct income support of ₹6,000 per year to eligible farmer families in three equal instalments, irrespective of loan eligibility.
Answer: D — A, B, C, E all discuss the Kisan Credit Card scheme — its purpose (A), implementation and interest subvention (B), expansion to allied activities (C), and digital KCCs (E). Sentence D is about PM-KISAN — a different farmer welfare scheme that provides direct income support, not credit. Both schemes help farmers, but PM-KISAN is not part of the KCC framework. The keyword "farmer" in D is the trap.
Q.39 Hard
Identify the ODD sentence:
A. The Net Interest Margin (NIM) of a bank is the difference between interest earned on loans and interest paid on deposits, expressed as a percentage of total interest-earning assets.
B. Indian private sector banks typically report higher NIMs (3–4%) compared to public sector banks (2–3%), reflecting their ability to attract higher-yielding retail and MSME borrowers.
C. When the repo rate rises, banks can reprice floating-rate loans upward more quickly than they raise deposit rates, temporarily improving NIM — a phenomenon called "asset repricing ahead of liability repricing."
D. A rising NIM improves a bank's Return on Assets (ROA) and, combined with efficient cost management, can lead to improved Return on Equity (ROE).
E. The Current Ratio, calculated as current assets divided by current liabilities, is a standard corporate finance metric used to assess a company's short-term liquidity outside the banking sector.
B. Indian private sector banks typically report higher NIMs (3–4%) compared to public sector banks (2–3%), reflecting their ability to attract higher-yielding retail and MSME borrowers.
C. When the repo rate rises, banks can reprice floating-rate loans upward more quickly than they raise deposit rates, temporarily improving NIM — a phenomenon called "asset repricing ahead of liability repricing."
D. A rising NIM improves a bank's Return on Assets (ROA) and, combined with efficient cost management, can lead to improved Return on Equity (ROE).
E. The Current Ratio, calculated as current assets divided by current liabilities, is a standard corporate finance metric used to assess a company's short-term liquidity outside the banking sector.
Answer: E — A, B, C, D all discuss Net Interest Margin (NIM) — its definition (A), comparison between PSBs and private banks (B), impact of repo rate changes on NIM (C), and NIM's effect on ROA/ROE (D). Sentence E is about the Current Ratio — a corporate finance metric used for non-banking companies. This is hard because (D) mentions ROE (confusable with banking ratios), but E is clearly about a different type of entity and financial ratio.
Q.40 Moderate
Identify the ODD sentence:
A. The Inflation Expectations Survey (IES), conducted quarterly by the RBI, polls urban households on their perceptions of current inflation and expectations for the next three and twelve months.
B. The Consumer Confidence Survey (CCS), also conducted by the RBI, measures sentiment on economic conditions, employment prospects, household incomes, and spending.
C. Both surveys provide forward-looking qualitative data that complement quantitative CPI and WPI data in informing MPC deliberations.
D. The Index of Industrial Production (IIP), released monthly by the Ministry of Statistics, measures output change in the manufacturing, mining, and electricity sectors.
E. These perception-based surveys are particularly useful when formal data lags or when structural shifts — like a sharp oil price change — create wedges between measured and perceived inflation.
B. The Consumer Confidence Survey (CCS), also conducted by the RBI, measures sentiment on economic conditions, employment prospects, household incomes, and spending.
C. Both surveys provide forward-looking qualitative data that complement quantitative CPI and WPI data in informing MPC deliberations.
D. The Index of Industrial Production (IIP), released monthly by the Ministry of Statistics, measures output change in the manufacturing, mining, and electricity sectors.
Answer: D — A, B, C, E all discuss RBI's survey-based tools (IES and CCS) — what they measure (A, B), how they complement quantitative data (C), and when they are particularly useful (E). Sentence D is about the Index of Industrial Production (IIP) — a government statistical release measuring industrial output, entirely different from the survey-based tools discussed. "Inflation" appears in other sentences (a trap keyword), but D is about industrial production, not inflation expectations.