UPSC Prelims 2024 — practice paper

All three statements are correct. (1) Standalone Primary Dealers (SPDs) are regulated as NBFCs, and Primary Dealers are eligible counterparties in RBI’s LAF repo/reverse‑repo auctions; hence NBFCs (SPDs) can access the LAF window (RBI LAF scheme page; RBI FAQ noting SPDs are NBFCs). (2) Foreign institutional/portfolio investors are permitted to hold Government securities in India within limits notified by RBI; e.g., RBI circular dated 2024-04-26 set the G‑Sec FPI limit framework for FY 2024–25. (3) Indian stock exchanges may offer separate debt trading platforms; SEBI expressly permitted BSE and NSE to launch corporate bond trading platforms, and exchanges run dedicated debt segments (SEBI press release, 2007).

Statement-I is correct: a syndicated loan is extended by a group of lenders, which allows them to share/diversify the credit risk of a single borrower (RBA Bulletin, June 2023). Statement-II is incorrect: syndicated facilities can be structured not only as fixed-term loans but also as revolving credit facilities/credit lines; BIS explicitly lists revolving credit among permitted forms of syndicated credit (BIS Quarterly Review, Nov 1997). BIS (Mar 2022) also notes that credit lines are common at origination in syndicated lending, confirming that a syndicated loan can indeed be a credit line. Therefore, Statement-I is correct and Statement-II is incorrect.

The revenue collection systems established during Cornwallis's administration, particularly the Permanent Settlement in Bengal, emphasized strict adherence to revenue payment deadlines, with significant consequences for zamindars who failed to comply. This framework led to the removal of zamindars from their estates if they did not remit the fixed revenue on time, as outlined by the 'Sunset Law.' In contrast, the Ryotwari Settlement, which was implemented later and not by Cornwallis, did not provide a blanket exemption for peasants during bad harvests, making the first statement incorrect. The temptation to select the first option stems from a misunderstanding of the timeline and the specific provisions of the Ryotwari system.