RBI Assistant Prelims English Daily Mini Mock: 10th February 2020 Miscellaneous Practice Set

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Directions (1- 5): Read the following passage carefully and answer the questions given below it. Certain words are given in bold to help you locate them while answering some of the questions.
In the wake of the recent Punjab & Maharashtra Cooperative (PMC) Bank crisis, the Union Cabinet on Wednesday approved amendments to the Banking Regulation Act to bring 1,540 cooperative banks under the Reserve Bank of India (RBI) regulation. Cooperative banks have 8.6 lakh account holders, with a total deposit of about ₹5 lakh crore.
Union Minister Prakash Javadekar told reporters that administrative matters would continue to be under the Registrar, Cooperative. However, cooperative banks would be regulated under the RBI’s banking guidelines. Their auditing would also be done as per its norms. Qualifications would be laid down for appointments, including that of Chief Executive Officers. Prior permission from the RBI would be required for the appointment of key positions. The regulator would deal with issues such as loan waivers. The RBI would also have powers to supersede the board of any cooperative bank in financial distress. These measures would be implemented in a phased manner, said Mr. Javadekar.
The proposed amendments, along with the government’s decision to increase the insurance cover on bank deposits from ₹1 lakh to ₹5 lakh, have been brought to strengthen the financial stability of cooperative banks and boost public confidence in the banking system.
In the PMC Bank case, the RBI had to step in last year after massive irregularities in its loan accounts were detected. The regulator had to place a withdrawal limit for account holders, which led to a major public strife and protests by them.
The bank had allegedly loaned about ₹6,500 crore to the Housing Development & Infrastructure Limited, amounting to more than 73% of its overall exposure, which was not repaid. It is alleged that over 21,000 fake accounts ………………………………. (A) the bad loans.
The Enforcement Directorate is conducting a money laundering probe into the allegations.

Q1. How 1540 cooperative banks will be brought under RBI regulation?
(a) Amending Banking Regulation Act
(b) Approval to deal with the PMC bank crisis
(c) Fetching details of account holders
(d) Utilization of the deposits in bank accounts
(e) None of these

Q2. Decisions regarding which of the following matters of Cooperatives would now be taken by RBI?
(a) The auditing of cooperative banks will be according to RBI’s norms
(b) RBI will decide the qualifications for the appointments
(c) RBI’s permission will be necessary to appoint personnel on key positions
(d) RBI will possess rights of superseding the banks undergoing financial stress
(e) All of the above

Q3. What are the purposes behind proposed amendments of Banking Regulation Act?
(a) To strengthen the stability of banks financially
(b) To boost and promote the confidence of public in banking system
(c) Providing the life insurance cover to bank customers
(d) Both (a) and (b)
(e) None of these

Q4. What were the essential steps RBI took to manage the PMC banks crisis?
(a) It set a withdrawal limit
(b) Massive irregularities were found
(c) Public strife against the RBI decision
(d) Both (c) and (d)
(e) None of these

Q5. Which of the following phrases could fit in the blank (A) to make the sentence grammatically and contextually correct?
(a) Were found out to
(b) Were not capable to cope
(c) Were created to conceal
(d) Were quite beneficial for
(e) None of these

Directions (6- 10): Read the following passage carefully and answer the questions given below it. Certain words are given in bold to help you locate them while answering some of the questions.
The government is reviewing the negative implications of the scrapping of the Dividend Distribution Tax, announced in the Union Budget 2020-21, for investors in real estate investment trusts and infrastructure investment trusts, also known as REITs and InvITs.
Dividend income was tax-free in the hands of REIT and InvIT investors so far, making it attractive for high-net worth investors to put money in these trusts. Now, the dividend income will be rendered taxable in the hands of the investors.
“(REITs and InvITs) have been successful attempts at getting investments for real estate and other infrastructure,” Finance Minister Nirmala Sitharaman said in a meeting with the CII National Council on late Tuesday evening. “We don’t intend to tax or burden InvITs,” she clarified in response to concerns raised by CII’s taxation committee chairman Rajeev Memani. “These are investors coming in for 15-20 years and a lot of those are domestic investors who are trying to build the retail InvITs market,” Mr. Memani, chairman of EY India pointed out, urging the government to retain the status quo as it would ensure a predictable and stable tax treatment for these instruments.
Industry officials have sought a meeting with Finance Ministry mandarins to impress upon them that the resultant double taxation burden could hit plans to raise around $100 billion in funds through InvITs and REITs. Moreover, existing investors in such trusts would also be liable to pay tax from the coming year. This would detract from the government’s focus on spurring real estate and infrastructure projects to rev up the economy, according to the group of industry executives who have written to the Finance Ministry seeking a roll-back of this move.
Revenue Secretary Ajay Bhushan Pandey said the government had received some representations on the taxability of REITs and InvITs on Monday. “So we are looking at that and if there are some anomalies, we will see how to address them,” he said.
Sources said senior Finance Ministry officials, including representatives from the Department of Economic Affairs, may also discuss the matter with industry executives over the Finance Minister’s three-day tour of Mumbai, Chennai and Kolkata starting this Friday.Ms. Sitharaman said she was visiting the three cities to explain the provisions of the Budget and hear industry feedback on the same.
“The government’s REITs and InvITs policy framed with a great deal of detail had been very good and has led to $4-5 billion coming into the country in the last 12 months and is estimated to attract about ₹2 lakh crore more,” said Mr. Memani, stressing that income was taxed at only one level under InvITs till now.
While there was a special carve-out from DDT provisions for REITs and InvITs, the Budget provisions imply that the special purpose vehicle will pay tax on its income; dividends distributed by the SPV will not attract DDT, but the unit holders would be liable to pay tax on them (resulting in a second level of tax), industry executives have flagged.

Q6. How the tax-free Dividend Incomes was beneficial for investments?
(a) The DDT will be rendering by the investors
(b) It made reviewing of the DDT convenient
(c) It attracted investors of high net-worth to invest in the trusts
(d) Both (a) and (b)
(e) None of these

Q7. Why Mr. Memani urged government for retaining the status quo?
(a) It will ensure foreseeable and constant tax management for REITs and InvITs
(b) The investors have built the retail market of both trusts
(c) They have successfully attempted to get investment for various sectors
(d) Both (b) and (c)
(e) None of these

Q8. How fund raising in double taxation system would affect government’s vision?
(a) The investors will be compelled to pay taxes
(b) The growth of infrastructure and real estate, responsible for economic boost will be compromised
(c) The double taxation burden will be a roll-back move
(d) Both (a) and (c)
(e) None of these

Q9. What will cause second level of tax?
(a) SPV will be giving taxes in its own income
(b) Unit holders will have to pay taxes on SPVs distributed dividends
(c) Both (a) and (b)
(d) The government’s policy has proved to be fruitful
(e) None of these

Q10. Which of the following is most similar in meaning with the highlighted word ANOMALIES?
(i) Classification
(ii) Abnormalities
(iii) Irregularities
(a) Only (i)
(b) Both (ii) and (iii)
(c) Both (i) and (ii)
(d) Only (ii)
(e) None of these

Directions (11-15): Two columns are given in each question and each column has three parts of a sentence. Choose the most suitable pair, which makes a grammatically correct and contextually coherent statement.

Q11. Column (1):
(A) The process of legal scrubbing
(B) The government has invoked the
(C) India’s demographic is certainly
Column (2):
(D) China faced a massive trade deficit
(E) It is likely to take almost a year
(F) It greatly attracts customers
(a) A-E
(b) B-F
(c) C-F
(d) C-D
(e) None of these

Q12. Column (1):
(A) The changes to Article 370 are under
(B) The Court order did little
(C) Regional outfits and their leaders
Column (2):
(D) Remain India’s best bet in J&K
(E) It couldn’t restrain the government
(F) The top court is considering the decision
(a) A-E
(b) B-F
(c) C-F
(d) C-D
(e) None of these

Q13. Column (1):
(A) The PM defended the indefinite and
(B) It is important to realize that judicial
(C) The Court allowed defense
Column (2):
(D) Arbitrarily detained of people as essential
(E) Counsels can access to the convicts
(F) Processes demand dispassionate fairness
(a) A-E
(b) B-F
(c) C-F
(d) C-D
(e) None of these

Q14. Column (1):
(A) Courts are duty-bound to
(B) Regional outfits and their leaders
(C) The Democrats, despite their morally
Column (2):
(D) Maintaining a high degree of fidelity
(E) Remaining India’s best bet in J&K
(F) Righteous positions, are divided
(a) A-E
(b) B-F
(c) C-F
(d) C-D
(e) None of these

Q15. Column (1):
(A) Gujarat government’s scheme KSPY
(B) It has been an exhausting wait for
(C) The PMMVY could have been a lifeline
Column (2):
(D) It is lost in a maze of bureaucracy
(E) Is dogged by cash crunch
(F) Mothers are getting their entitlements
(a) A-E
(b) B-F
(c) C-F
(d) C-D
(e) None of these

Solutions

S1. Ans. (a)
Sol. Referring to the introductory lines of the paragraph, In the wake of the recent Punjab & Maharashtra Cooperative (PMC) Bank crisis, the Union Cabinet on Wednesday approved amendments to the Banking Regulation Act to bring 1,540 cooperative banks under the Reserve Bank of India (RBI) regulation.
Option (a) is the right answer choice.

S2. Ans. (e)
Sol. Refer to the second paragraph, the hint can be drawn from the lines, Union Minister Prakash Javadekar told reporters that administrative matters would continue to be under the Registrar, Cooperative. However, cooperative banks would be regulated under the RBI’s banking guidelines. Their auditing would also be done as per its norms.
Qualifications would be laid down for appointments, including that of Chief Executive Officers. Prior permission from the RBI would be required for the appointment of key positions. The regulator would deal with issues such as loan waivers. The RBI would also have powers to supersede the board of any cooperative bank in financial distress.
All the (a), (b), (c), and (d) are justified with above lines. Hence, option (e) is the right answer choice.

S3. Ans. (d)
Sol. Refer to the third paragraph, the hint can be drawn from the lines, The proposed amendments, along with the government’s decision to increase the insurance cover on bank deposits from ₹1 lakh to ₹5 lakh, have been brought to strengthen the financial stability of cooperative banks and boost public confidence in the banking system.
Both option (a) and (b) are justified with these lines. Hence, option (d) [both (a) and (b)] is the right answer choice.

S4. Ans. (a)
Sol. Refer to the fourth paragraph, the hint cam be drawn from the lines, In the PMC Bank case, the RBI had to step in last year after massive irregularities in its loan accounts were detected. The regulator had to place a withdrawal limit for account holders, which led to a major public strife and protests by them.
Only option (a) is justified by these lines. Option (b) is cause of the PMC bank crisis and option (c) is the result of RBI step taken to deal with the PMC case. Hence, option (a) is the right answer choice.

S5. Ans. (c)
Sol. Refer to the last paragraph, the hint can be drawn from the lines, The bank had allegedly loaned about ₹6,500 crore to the Housing Development & Infrastructure Limited, amounting to more than 73% of its overall exposure, which was not repaid. It is alleged that over 21,000 fake accounts …………………………. (A) the bad loans.
Here, the lines are statement that 21000 fake accounts ……………..to do what? Obviously to hide bad loans. Hence, option (c) is the correct answer choice to fill the blank (A) and make it grammatically and contextually correct sentence.

S6. Ans. (c)
Sol. Refer to the first paragraph, the hint can be drawn from the lines, Dividend income was tax-free in the hands of REIT and InvIT investors so far, making it attractive for high-networth investors to put money in these trusts.
Only option (c) is justified with these lines. Hence, option (c) is the right answer choice.

S7. Ans. (a)
Sol Refer to the second paragraph, the hint can be drawn from the lines, These are investors coming in for 15-20 years and a lot of those are domestic investors who are trying to build the retail InvITs market,” Mr. Memani, chairman of EY India pointed out, urging the government to retain the status quo as it would ensure a predictable and stable tax treatment for these instruments.
These lines justify only option (a). Hence, option (a) is the right answer choice.

S8. Ans. (b)
Sol. Refer to the lines of third paragraph, the hint can be drawn from the lines, This would detract from the government’s focus on spurring real estate and infrastructure projects to rev up the economy, according to the group of industry executives who have written to the Finance Ministry seeking a roll-back of this move.
Here, the lines justify only option (b). Hence, option (b) is the right answer choice.

S9. Ans. (c)
Sol. Refer to the concluding paragraph, the hint can be drawn from the lines, While there was a special carve-out from DDT provisions for REITs and InvITs, the Budget provisions imply that the special purpose vehicle will pay tax on its income; dividends  distributed by the SPV will not attract DDT, but the unit holders would be liable to pay tax on them (resulting in a second level of tax), industry executives have flagged.
Here, option (a) and (b) are justified with the above lines. Hence, option (c) [Both(a) and (b)] is the right answer choice.

S10. Ans. (b)
Sol. Anomalies means something that deviates from what is standard, normal, or expected. In this context, both (ii) and (iii) are most similar in meaning with the given word. Hence, option (b) is the right answer choice.

S11. Ans. (e)
Sol. None of the given pairs makes a grammatically correct and contextually coherent statement. Hence, option (e) is the right answer choice.

S12. Ans. (d)

Sol. C-D makes a grammatically correct and contextually coherent statement. The sentence thus formed is, ‘Regional outfits and their leaders remain India’s best bet in J&K.’ Hence, option (d) is the right answer choice.

S13. Ans. (b)
Sol. B-F makes a grammatically correct and contextually coherent statement. The sentence thus formed is, ‘It is important to realize that judicial processes demand dispassionate fairness.’ Hence, option (b) is the right answer choice.

S14. Ans. (c)
Sol. C-F makes a grammatically correct and contextually coherent statement. The sentence thus formed is, The Democrats, despite their morally righteous positions, are divided. Hence, option (c) is the right answer choice.

S15. Ans. (a)
Sol. A-E makes a grammatically correct and contextually coherent statement. The sentence thus formed is, Gujarat government’s scheme KSPY is dogged by cash crunch. Hence, option (a) is the right answer choice.