Daily Quiz #14 UPSC Prelims Marathon – September 17, 2019

Explanation: The Reserve Bank of India (RBI) has expanded the scope and coverage of Bharat Bill Payment System (BBPS) to include all categories of billers who raise recurring bills (except prepaid recharges) as eligible participants on voluntary basis.
The Bharat bill payment system is a Reserve Bank of India (RBI) conceptualised system driven by National Payments Corporation of India (NPCI). It is a one-stop ecosystem for payment of all bills providing an interoperable and accessible “Anytime Anywhere” bill payment service to all customers across India with certainty, reliability and safety of transactions.
Currently, BBPS covers bills of five segments – direct to home (DTH), electricity, gas, telecom, and water.
The objective of BBPS is to implement an integrated bill payment system that offers interoperable and accessible bill payment services to customers through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.

Explanation: India Post Payments Bank (IPPB) was setup under the Department of Post, Ministry of Communication with 100% equity owned by Government of India. IPPB was launched as a pilot project on 30 January 2017 in Ranchi (Jharkhand) and Raipur (Chhattisgarh), with the objective of being present across India by the FY 2018-2019. IPPB has expanded its strength across India covering post offices, through a network of 650 IPPB branches/controlling offices, working on a hub and spoke model. It believes that a nation can grow when every citizen has an opportunity to prosper, regardless of their way of life. With simple, diverse and growth-oriented offerings, IPPB aims to provide every household in India an access to efficient banking services and enable them to become financially secure and empowered.

Explanation: Second Five Year Plan (1956-61) is based on the P.C. Mahalanobis Model. Its main focus was on the industrial development of the country. This plan was successful and achieved growth rate of 4.1%.
The duration of plan holiday was from 1966 to 1969. The main reason behind the plan holiday was the Indo-Pakistan war & failure of third plan. During this plan annual plans were made and equal priority was given to agriculture its allied sectors and the industry sector.
Rolling Plan was started with an annual plan for 1978-79 and as a continuation of the terminated fifth year plan.

Explanation: There are several direct and indirect instruments that are used for implementing monetary policy by the Reserve Bank of India (RBI). Important monetary policy tools are given below:
Repo Rate: The (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks against the collateral of government and other approved securities under the liquidity adjustment facility (LAF).
Reverse Repo Rate: The (fixed) interest rate at which the Reserve Bank absorbs liquidity, on an overnight basis, from banks against the collateral of eligible government securities under the LAF.
Liquidity Adjustment Facility (LAF): The LAF consists of overnight as well as term repo auctions. Progressively, the Reserve Bank has increased the proportion of liquidity injected under fine-tuning variable rate repo auctions of range of tenors. The aim of term repo is to help develop the inter-bank term money market, which in turn can set market based benchmarks for pricing of loans and deposits, and hence improve transmission of monetary policy. The Reserve Bank also conducts variable interest rate reverse repo auctions, as necessitated under the market conditions.
Marginal Standing Facility (MSF): A facility under which scheduled commercial banks can borrow additional amount of overnight money from the Reserve Bank by dipping into their Statutory Liquidity Ratio (SLR) portfolio up to a limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.
Bank Rate: It is the rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers.
Cash Reserve Ratio (CRR): The average daily balance that a bank is required to maintain with the Reserve Bank as a share of such per cent of its Net demand and time liabilities (NDTL) that the Reserve Bank may notify from time to time in the Gazette of India.
Statutory Liquidity Ratio (SLR): The share of NDTL that a bank is required to maintain in safe and liquid assets, such as, unencumbered government securities, cash and gold. Changes in SLR often influence the availability of resources in the banking system for lending to the private sector.
Open Market Operations (OMOs): These include both, outright purchase and sale of government securities, for injection and absorption of durable liquidity, respectively.
Public debt and Public Revenue come under the fiscal policy and are decided by the Union Ministry of Finance.

Explanation: A sinking fund is a type of fund that is created and set up purposely for repaying debt. The owner of the account sets aside a certain amount of money regularly and uses it only for a specific purpose. Often, it is used by corporations for bonds and deposits money to buy back issued bonds or parts of bonds before the maturity date arrives. It is also one way of enticing investors because the fund helps convince them that the issuer will not default on their payments.
Basically, the sinking fund is created to make paying off a debt easier and to ensure that a default won’t happen because there is a sufficient amount of money available to repay the debt. Though most bonds take several years to mature, it is always be easier and more convenient to be able to reduce the principal amount long before it matures, consequently lowering credit risk.
A sinking fund is a fund created by the government and gradually accumulated every year by setting aside a part of current public revenue in such a way that it would be sufficient to pay off the funded debt at the time of maturity. Under this method, the aggregate burden of public debt is least felt, as the burden of taxing the people to repay the debt is spread evenly over the period of the accumulation of the fund. The preferable alternative for the government is to raise a new loan and credit the proceeds of sinking fund. It is a separate fund established by a government.