Financial Markets & Instruments

Statement 1 is Incorrect: National Investment and Infrastructure Fund (NIIF) is India's first sovereign wealth fund that was set up by the Government of India in February 2015. The objective behind creating this fund was to maximise economic impact mainly through infrastructure investment in commercially viable projects, both Greenfield and Brownfield. Statement 2 is Incorrect: In the Union Budget 2015-16, India's Finance Minister, Arun Jaitley announced the creation of the National Investment and Infrastructure Fund. It was proposed to be established as an Alternative Investment Fund to provide long-term capital for infrastructure projects with an inflow of Rs. 20,000 crore from the Government of India. NIIF was approved in August 2015 by the Department of Economic Affairs. The first meeting of its governing council was held in December 2015 further to which it was registered with SEBI as Category II Alternative Investment Fund. Hence, option D is the correct answer.

A scheme was launched by the Reserve Bank of India (RBI) on 13 June 2016, named Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) for addressing the large stressed assets of the corporate sector with banks. The S4A Scheme aims at the deep financial restructuring of big debted projects by allowing lenders (banks) to acquire equity of the stressed project. In this context, the scheme makes the financial restructuring of large projects at the same time helping the lender's ability to deal with such stressed assets. It is intended to restore the flow of credit to critical sectors including infrastructure. Hence, option B is the correct answer.

Statement 1 is Correct. Mobile telephone companies and supermarket chains owned and controlled by residents can be promoters of Payment Banks. This allows entities with a wide reach to expand financial services to unbanked populations. Statement 2 is Incorrect. Payment Banks cannot issue credit cards. They can only issue debit cards linked to a pre-existing bank account. Statement 3 is Correct. Payment Banks are not allowed to undertake lending activities. Their focus is on facilitating basic banking services like deposits, payments, and money transfers.

Statement 1 is Incorrect: The FSDC is not an organ of NITI Aayog. It's a separate apex-level body under the Ministry of Finance. Statement 2 is Correct: The FSDC is headed by the Union Finance Minister. Statement 3 is Correct: The FSDC plays a crucial role in monitoring macro-prudential supervision of the economy. Macro-prudential supervision focuses on preventing systemic risks within the financial system that could destabilize the entire economy. Therefore, the correct answer is 2 and 3 only.

Statement 1 is Correct. The International Finance Corporation (IFC) is indeed an arm of the World Bank Group, a group of five international organizations that work together to fight poverty and promote sustainable development. The IFC specifically focuses on encouraging growth in the private sector of developing countries. Statement 2 is Correct. Masala bonds are rupee-denominated bonds issued by foreign entities (public or private sector) outside of India. These bonds raise capital for the issuer in Indian rupees, providing an alternative funding source. Therefore, the correct answer is 1 and 2 both are correct.

Statement 1 is correct: This is the primary objective of the Gold Monetization Scheme (GMS). The scheme encourages individuals and institutions to deposit their idle physical gold (jewellery, coins, bars) with banks. This gold is then melted, assayed, and added to the country's gold reserves, which can be lent to jewellers, thereby bringing it into the formal economy. Statement 2 is incorrect: These schemes are focused on managing domestic gold supply and demand. They are not designed to attract Foreign Direct Investment (FDI). Policies related to FDI in the jewellery sector are separate from these schemes. Statement 3 is correct: This is a core objective of both schemes.
* The Sovereign Gold Bond (SGB) Scheme provides a financial alternative to buying physical gold. By shifting demand from physical gold to paper gold, it helps reduce the demand for gold imports.
* The Gold Monetization Scheme (GMS) increases the domestic supply of recycled gold available to jewellers, thus reducing their reliance on imported gold. Both schemes aim to curb gold imports, which are a major component of India's import bill and contribute significantly to the Current Account Deficit (CAD).

Pradhan Mantri MUDRA Yojana (PMMY) is aimed at providing affordable credit to micro and small enterprises (MSEs) in the non-farm sector. Here's a breakdown of its key objectives - Financial Inclusion: MUDRA helps bring unbanked or underserved entrepreneurs into the formal financial system, enabling them to access loans from banks and other financial institutions.
- Loan Products: The scheme offers a range of loan products categorized under three categories based on loan amount Shishu (up to Rs. 50,000), Kishore (above Rs. 50,000 up to Rs. 5 lakh), and Tarun (above Rs. 5 lakh up to Rs. 10 lakh).
- Focus on Non-Farm Sector: MUDRA loans cater to income-generating micro enterprises engaged in manufacturing, trading, or service activities. - Activities allied to agriculture, like poultry, dairy, and beekeeping, are also included. Hence, option A is the correct answer.

Statement 1 is Correct: The Stand-up India scheme aims at promoting entrepreneurship among women and scheduled castes and tribes. Statement 2 is Correct: The scheme is anchored by the Department of Financial Services (DFS), Ministry of Finance, Government of India. - The scheme provides for a refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs, 10,000 Crore. - Stand-Up India Scheme facilitates bank loans between Rs 10 lakh and Rs 1 Crore to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a greenfield enterprise.
- This enterprise may be in manufacturing, services or the trading sector.
- In the case of non-individual enterprises, at least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur. Hence, option C is the correct answer.

The Basel III Accord is a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS). It was formulated in response to the financial crisis of 2007-2008 and aims to improve the banking sector's resilience to financial and economic stress and improve its risk management by: Increasing capital adequacy requirements: Banks need to hold more capital relative to their risk-weighted assets to absorb potential losses during financial stress.
Enhancing liquidity standards: Banks need to maintain a sufficient level of liquid assets to meet their short-term obligations.
Strengthening risk management practices: Banks are required to implement more robust risk management frameworks to identify, measure, and manage various risks they face.

The Indian Renewable Energy Development Agency (IREDA) is a Non-Banking Financial Institution under the administrative control of Ministry of New and Renewable Energy for providing term loans for renewable energy and energy efficiency projects. Statement 1 is correct: IREDA is a Public Limited Government Company established under the Companies Act, 1956.
Statement 2 is correct: IREDA is also registered as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India (RBI).