Daily Quiz #67 UPSC Prelims Marathon – January 21, 2020

Explanation: The Uruguay Round was the 8th round of Multilateral Trade Negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries as “contracting parties”. The negotiations and process ended with the signing of the Final Act of the Marrakesh Agreement in April 1994 at Marrakesh, Morocco. The round led to the creation of the World Trade Organization (WTO), with GATT remaining as an integral part of the WTO agreements.

Explanation: The Reserve Bank of India (RBI) was set up in 1935 (by the RBI Act, 1934) as a private bank with two extra functions—regulation and control of the banks in India and being the banker of the government. After nationalization in 1949, it emerged as the central banking body of India and it did not remain a ‘bank’ in the technical sense. Since then, the governments have been handing over different functions to the RBI, which stand today as given below:
It is the issuing agency of the currency and coins other than rupee one currency and coin (which are issued by Ministry of Finance itself with the signature of the Finance Secretary on the note).
•Distributing agent for currency and coins issued by the Government of India.
•Banker of the government.
•Bank of the banks/Bank of last resort.
•Announces the credit and monetary policy for the economy.
•Stabilizing and targeting (CPI–C) the rate of inflation.
•Stabilizing the exchange rate of rupee.
•Keeper of the foreign currency reserves.
•Agent of the Government of India in the IMF.
•Performing a variety of developmental and promotional functions under which it did set up institutions like IDBI, SIDBI, NABARD, NHB, etc.

Explanation: MSF is a new scheme announced by the RBI in its Monetary Policy, 2011-12 which came into effect from May, 2011. Under this scheme, banks can borrow overnight up to 1 per cent of their net demand and time liabilities (NDTL) from the RBI, at the interest rate 1 per cent (100 basis points) higher than the current repo rate. In an attempt to strengthen rupee and checking its falling exchange rate, the RBI increased the gap between ‘repo’ and MSF to 3 per cent (late July 2013). The MSF rate has been floated as a penal rate and since mid-2015 RBI has maintained it 1 per cent higher than the prevailing repo rate. By end March 2017 it was at 6.75 per cent, fully aligned with the Bank rate (i.e., equal to the Bank rate).

Explanation: All Indian banks have to follow the compulsory target of priority sector lending (PSL). The priority sector in India are at present the sectors-agriculture, small and medium enterprises (SMEs), road and water transport, retail trade, small business, small housing loans (not more than Rs. 10lakhs), software industries, self help groups (SHGs), agro-processing, small and marginal farmers, artisans, distressed urban poor and indebted non-institutional debtors besides the SCs, STs and other weaker sections of society. The PSL target must be met by the banks operating in India in the following way:
•Indian Banks need to lend 40 per cent to the priority sector every year (public sector as well as private sector banks, both) of their total lending.
•Foreign Banks (having less than 20 branches) have to fulfill only 32 per cent PSL target which has sub-targets for the exports (12 per cent) and small and medium enterprises (10 per cent).

Explanation: A new stock exchange to promote liquidity to the stocks of the small enterprises (SMEs) was launched in 2005 jointly and medium the BSE and the FISE (Federation of Indian Stock Exchanges, representing 18 regional stock exchanges). It is better known as the BSE Indo Next.