Daily Quiz: UPSC Prelims Marathon- September 12

The Act empowers the Central government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets by initiating insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The RBI can specify authorities or committees to advise banks on resolution of stressed assets. The members on the committees will be appointed or approved by the RBI. The Act also make these provisions applicable to the SBI and its subsidiaries and also Regional Rural Banks (RRBs).

Statement 3 is Incorrect:

Spice Money Ltd, a fintech company had received an in-principle approval to set-up as a BBPOU under the Payment and Settlement Systems Act, 2007 in May 2016.

All statements are correct

The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries namely Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. They were to become the Founder Members of the Organization.These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007) and Equatorial Guinea (2017).Ecuador suspended its membership in December 1992, but rejoined OPEC in October 2007. Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171^st Meeting of the OPEC Conference on 30 November 2016. Gabon terminated its membership in January 1995. However, it rejoined the Organization in July 2016.
This means that, currently, the Organization has a total of 14 Member Countries.

Statement 1 is Incorrect:

During periods of rising prices, debtors gain and creditors lose. When prices rise, the value of money falls. Though debtors return the same amount of money, but they pay less in terms of goods and services. This is because the value of money is less than when they borrowed the money. Thus the burden of the debt is reduced and debtors gain.On the other hand, creditors lose. Although they get back the same amount of money which they lent, they receive less in real terms because the value of money falls. Thus inflation brings about a redistribution of real wealth in favour of debtors at the cost of creditors.

Statement 2 and 3 is correct:

• Salaried workers such as clerks, teachers, and other white collar persons lose when there is inflation. The reason is that their salaries are slow to adjust when prices are rising.
• Persons who hold shares or stocks of companies gain during inflation. For when prices are rising, business activities expand which increase profits of companies. As profits increase, dividends on equities also increase at a faster rate than prices.
• But those who invest in debentures, securities, bonds, etc. which carry a fixed interest rate lose during inflation because they receive a fixed sum while the purchasing power is falling.

All statements are correct:

Countries opt for devaluation only to save the economy from external factors and boost export.

As currency depreciates in the global parlance, exports become more favourable and imports unfavourable. This boosts the internal economy towards export and internal usage of own goods.

By devaluing the currency, trade deficits are lowered which also favours the balance of payments and thus helps the economy by providing temporary relief.

A government may be incentivized to encourage a weak currency policy if it has a lot of government issued sovereign debtto service on a regular basis. If debt payments are fixed, a weaker currency makes these payments effectively less expensive over time.

Both the statements are correct.

Statement 2 and 4 are Incorrect:

• The tenor of the bond is for a minimum of 8 years with option to exit in 5th, 6th and 7th years.
• The Bonds are issued by the Reserve Bank of India on behalf of the government. The bonds are distributed through banks and designated post offices.

Statement 1 and 3 is Correct:

• Bonds can be used as collateral for loans.  Not only this, it would also be allowed to be traded on exchanges to allow early exits for investors.
• SGBs will be issued on payment of rupees and denominated in grams of gold. Minimum investment in the bond shall be 1 gram. The bonds can be bought by Indian residents or entities and is capped at 500 grams