Financial Inclusion MCQ Quiz - Objective Question with Answer for Financial Inclusion - Download Free PDF

The correct answer is  Savings bank account.

Key Points

Explanation of the correct answer

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-backed accident insurance scheme launched by Prime Minister Narendra Modi in 2015. It aims to provide affordable personal accident insurance coverage, particularly for the economically weaker sections of society.
• Individuals aged between 18 and 70 years can avail of accident insurance under this scheme at a premium of a very minimal amount per annum, making it highly accessible.
• The scheme offers a sum assured of ₹2 lakh in case of death or permanent total disability and ₹1 lakh for partial disability due to an accident.
• The scheme is administered by public sector general insurance companies and is available to individuals.
• The insurance is renewable annually, and the premium is auto-debited from the policyholder's bank account, ensuring convenience.
• To avail of the insurance coverage under PMSBY, individuals are required to have a savings bank account.

Additional Information

• Pradhan Mantri Suraksha Bima Yojana (PMSBY) is part of a broader financial inclusion initiative by the Indian government, aimed at providing social security to all citizens, especially those from economically weaker sections.
• Launched on 9th May 2015, PMSBY is part of the government's Jan Suraksha initiative, which also includes the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Atal Pension Yojana (APY).
• The Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) provides life insurance cover, while the Atal Pension Yojana (APY) focuses on providing pension benefits to workers in the unorganized sector.
• These schemes aim to promote the culture of insurance and pension among the masses and ensure financial security for all citizens.
• The auto-debit feature associated with the schemes ensures that the premium payment process is seamless and reduces the risk of policy lapse due to non-payment.
• The requirement of a savings bank account helps in promoting financial inclusion as it encourages individuals to open and maintain bank accounts, which are essential for accessing various financial services.
• According to the scheme guidelines, the coverage period is from 1st June to 31st May of the subsequent year, and the premium is auto-debited in one installment on or before 31st May each year.

The correct answer is ₹2 lakhs

Key PointsPradhan Mantri Suraksha Bima Yojana (PMSBY)

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-backed accident insurance scheme launched by Prime Minister Narendra Modi in 2015.
• It aims to provide affordable personal accident insurance coverage, particularly for the economically weaker sections of society.
• Under this scheme, individuals aged between 18 and 70 years can avail of accident insurance at a premium of a very minimal amount per annum, making it highly accessible.
• The scheme offers a sum assured of ₹2 lakhs in case of death or permanent total disability and ₹1 lakh for partial disability due to an accident.
• The scheme is administered by public sector general insurance companies and is available to individuals.
• The insurance is renewable annually, and the premium is auto-debited from the policyholder's bank account, ensuring convenience.

Additional Information

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is part of the Government of India's broader financial inclusion initiative, which includes schemes like Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Atal Pension Yojana (APY).
• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) offers life insurance coverage of ₹2 lakhs for a premium of ₹330 per annum for individuals aged between 18 and 50 years.
• The Atal Pension Yojana (APY) aims to provide pension benefits to workers in the unorganized sector, ensuring that they have a secure source of income after retirement.
• These schemes collectively aim to provide a social security net for the economically weaker sections and unorganized sector workers in India.
• The Government of India has also launched initiatives like the Jan Dhan Yojana to ensure that every household has access to banking facilities.
• These measures are part of the broader goal of financial inclusion and social security, ensuring that the benefits of economic growth reach every section of society.

The correct answer is  ₹12.

Key PointsPradhan Mantri Suraksha Bima Yojana (PMSBY)

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-backed accident insurance scheme launched by Prime Minister Narendra Modi in 2015.
• It aims to provide affordable personal accident insurance coverage, particularly for the economically weaker sections of society.
• Under this scheme, individuals aged between 18 and 70 years can avail of accident insurance at a premium of ₹12 per annum, making it highly accessible.
• The scheme offers a sum assured of ₹2 lakh in case of death or permanent total disability and ₹1 lakh for partial disability due to an accident.
• The scheme is administered by public sector general insurance companies and is available to individuals.
• The insurance is renewable annually, and the premium is auto-debited from the policyholder's bank account, ensuring convenience.

Additional Information

• Pradhan Mantri Suraksha Bima Yojana (PMSBY):
  • The PMSBY aims to provide a social security cover to a vast population, particularly targeting the economically disadvantaged sections of society.
  • The scheme is part of the Jan Suraksha initiative, which also includes the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and the Atal Pension Yojana (APY).
  • The key objective of PMSBY is to offer insurance coverage at a nominal premium, ensuring that even the poorest sections of society can afford it.
• Eligibility:
  • The scheme is open to all Indian citizens and NRIs who have a bank account.
  • Individuals aged between 18 and 70 years are eligible to enroll in the scheme.
• Benefits:
  • In case of accidental death or permanent total disability, the nominee receives a sum assured of ₹2 lakh.
  • In the event of partial permanent disability, the insured receives ₹1 lakh.
• Renewal and Premium Payment:
  • The insurance cover is renewable annually.
  • The premium amount of ₹12 per annum is auto-debited from the policyholder's bank account, ensuring a hassle-free process.
• Administration:
  • The scheme is administered by public sector general insurance companies like National Insurance Company, New India Assurance, Oriental Insurance, and United India Insurance.
• Enrollment Process:
  • Interested individuals can enroll in the scheme through their respective banks or insurance companies.
  • The enrollment process is simple and can be done by submitting a duly filled enrollment form.

The correct answer is  By providing affordable accident insurance for all citizens.

Key PointsContribution to Financial Inclusion

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-backed accident insurance scheme launched in 2015 by Prime Minister Narendra Modi.
• The scheme aims to provide affordable personal accident insurance coverage, particularly for the economically weaker sections of society.
• Under PMSBY, individuals aged between 18 and 70 years can avail themselves of accident insurance at a premium of a very minimal amount per annum, making it highly accessible.
• The scheme offers a sum assured of ₹2 lakh in case of death or permanent total disability and ₹1 lakh for partial disability due to an accident.
• It is administered by public sector general insurance companies and is available to individuals.
• The insurance is renewable annually, and the premium is auto-debited from the policyholder's bank account, ensuring convenience.
• By offering such insurance at a minimal premium, the scheme ensures that even the economically weaker sections of society have access to financial security in the event of an accident.

Additional Information

• Financial Inclusion: Financial inclusion involves providing accessible, affordable, and useful financial services to all segments of society, particularly the underserved and economically disadvantaged.
• Accident Insurance: This type of insurance provides financial compensation in case of accidental injuries, disabilities, or death, ensuring financial stability for the policyholder's family.
• Government Schemes: Initiatives like PMSBY are part of the government's broader strategy to enhance social security and financial inclusion in India.
• Auto-debit Feature: This feature ensures that the premium is deducted automatically from the policyholder's bank account, reducing the risk of policy lapse due to non-payment.

The correct answer is  Pradhan Mantri Suraksha Bima Yojana (PMSBY).

Key PointsDetails of Pradhan Mantri Suraksha Bima Yojana (PMSBY)

• The Pradhan Mantri Suraksha Bima Yojana (PMSBY) is a government-backed accident insurance scheme.
• It was launched by Prime Minister Narendra Modi in 2015.
• The scheme aims to provide affordable personal accident insurance coverage, particularly for the economically weaker sections of society.
• Individuals aged between 18 and 70 years can avail of accident insurance at a premium of a very minimal amount per annum, making it highly accessible.
• The scheme offers a sum assured of ₹2 lakh in case of death or permanent total disability and ₹1 lakh for partial disability due to an accident.
• The scheme is administered by public sector general insurance companies and is available to individuals.
• The insurance is renewable annually, and the premium is auto-debited from the policyholder's bank account, ensuring convenience.

Additional Information

• Ayushman Bharat Yojana: This scheme aims to provide health coverage to economically vulnerable Indians. It is also known as the Pradhan Mantri Jan Arogya Yojana (PMJAY).
• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): This is a life insurance scheme offering coverage for death due to any reason for individuals aged between 18 and 50 years.
• Rashtriya Swasthya Bima Yojana (RSBY): This is a health insurance scheme for the Indian poor, providing cashless insurance for hospitalization in public and private hospitals.
• Atal Pension Yojana: This is a pension scheme focused on the unorganized sector, providing a guaranteed minimum pension to subscribers upon reaching the age of 60 years.

The Correct answer is Option 1. 

Key Points

• It was launched by the President of India on 17th September 2023 (1): This statement is NOT true. The PM-VISHWAKARMA scheme was launched by the Prime Minister of India, not the President, on this date.
• It is a Central Sector Scheme (2):  This statement is true. PM-VISHWAKARMA is indeed classified as a Central Sector Scheme.
• The new scheme intends to provide recognition and holistic support to traditional artisans (3):  This statement is true. The scheme aims to support and recognize traditional artisans and their contributions.
• The scheme intends to improve the quality, scale and reach of artisans’ products (4):  This statement is true. PM-VISHWAKARMA focuses on enhancing the quality and market reach of artisans' products.
• The statement that is NOT true in relation to PM-VISHWAKARMA is Option 1.

The correct answer is  1 and 2.

Key PointsPMJDY (Pradhan Mantri Jan Dhan Yojana)

• Statement 1: PMJDY is a zero-balance savings account.
  • The Pradhan Mantri Jan Dhan Yojana (PMJDY) is a financial inclusion program of the Government of India, which aims to provide access to financial services such as banking/savings & deposit accounts, remittance, credit, insurance, and pension in an affordable manner.
  • Under PMJDY, an individual can open a zero-balance savings account, meaning that there is no requirement to maintain a minimum balance in the account.
  Hence, statement 1 is correct.
• Statement 2: It also provides overdraft facilities and insurance coverage.
  • PMJDY accounts offer several additional benefits including overdraft facilities up to a certain limit for account holders who have maintained their accounts satisfactorily for six months.
  • It also provides accidental insurance coverage and a life cover to the account holders.
  Hence, statement 2 is correct.
• Statement 3: PMJDY accounts are limited to rural beneficiaries.
  • The PMJDY is not limited to rural beneficiaries; it is a nationwide scheme aimed at providing financial inclusion to all citizens, irrespective of their location.
  • Both urban and rural residents can open PMJDY accounts.
  Hence, statement 3 is incorrect.

Additional Information

• Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched on 28th August 2014 by the Government of India.
• The main objective of PMJDY is to ensure access to various financial services like basic savings bank accounts, need-based credit, remittances, insurance, and pension to the excluded sections, i.e., weaker sections & low-income groups.
• The scheme also provides a RuPay Debit Card with inbuilt accident insurance cover of Rs. 1 lakh (enhanced to Rs. 2 lakh for accounts opened after 28.08.2018).
• The overdraft facility is available up to Rs. 10,000 and is intended to provide support to account holders for urgent financial needs.
• As of March 2022, over 44 crore PMJDY accounts have been opened, reflecting the widespread reach and impact of the scheme.

The correct answer is  Self-help groups.

Key PointsFinancial Literacy in Rural India

• Self-help groups (SHGs) have proven to be an effective strategy for raising financial literacy in rural India. These groups are typically composed of 10-20 local women who pool their resources to save and lend money to each other.
• SHGs work closely with NGOs, community groups, and schools to impart financial education. This collaboration ensures that financial literacy programs are tailored to the specific needs and circumstances of rural communities.
• Through SHGs, members learn about savings, credit, insurance, and financial management. This hands-on approach helps them apply financial concepts in their daily lives.
• SHGs also empower women by giving them a platform to make financial decisions, thereby enhancing their economic independence and social status.
• Various studies and reports have shown that SHGs have significantly improved the financial literacy and economic well-being of their members. For example, the NABARD (National Bank for Agriculture and Rural Development) has highlighted the success of SHGs in its annual reports.

Additional Information

• Mobile banking awareness has also played a role in raising financial literacy but is more effective in urban areas where smartphone penetration is higher.
• Microfinance institutions provide financial services to low-income individuals but primarily focus on credit rather than comprehensive financial literacy.
• Government-sponsored training programs have been beneficial but often lack the localized approach and community involvement that SHGs offer.
• Financial literacy centers are useful but may not be accessible to rural populations due to distance and lack of awareness.
• Overall, the community-driven and participatory nature of Self-help groups makes them the most successful strategy for raising financial literacy in rural India.

The correct answer is  All of the above.

Key PointsRole of Pradhan Mantri Jan Dhan Yojana (PMJDY) in Financial Inclusion

• The Pradhan Mantri Jan Dhan Yojana (PMJDY) is a national mission aimed at ensuring financial inclusion by providing affordable access to financial services.
• It was launched on 28th August 2014 by the Government of India and is one of the largest financial inclusion initiatives in the world.
• Insurance: The scheme provides an accidental insurance cover of INR 1 lakh (later increased to INR 2 lakhs) and a life cover of INR 30,000 to account holders.
• Zero Balance Accounts: Under PMJDY, people can open bank accounts with zero balance, which makes it more accessible for the economically weaker sections.
• Overdraft Facilities: Account holders are eligible for an overdraft facility of up to INR 10,000 based on the satisfactory operation of the account for six months.
• Debit Cards: Account holders are issued a RuPay debit card which can be used for transactions at ATMs, Point of Sale (PoS) terminals, and e-commerce websites.
• These features collectively help in broadening the financial inclusion landscape, especially in rural and semi-urban areas, by making financial services more accessible and affordable.

Additional Information

• Financial Inclusion is the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost.
• World Bank defines financial inclusion as individuals and businesses having access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit, and insurance – delivered in a responsible and sustainable way.
• The Reserve Bank of India (RBI) has also been actively promoting financial inclusion through various initiatives and guidelines.
• Direct Benefit Transfer (DBT): PMJDY accounts are used for the direct transfer of subsidies and benefits from the government, ensuring transparency and reducing leakages.
• According to the Economic Survey 2020-21, over 41 crore bank accounts have been opened under PMJDY, with deposits exceeding INR 1.3 lakh crore.
• The initiative has also promoted the use of digital financial services, contributing to the growth of a digital economy.

The Correct answer is Option 1. 

Key Points

• It was launched by the President of India on 17th September 2023 (1): This statement is NOT true. The PM-VISHWAKARMA scheme was launched by the Prime Minister of India, not the President, on this date.
• It is a Central Sector Scheme (2):  This statement is true. PM-VISHWAKARMA is indeed classified as a Central Sector Scheme.
• The new scheme intends to provide recognition and holistic support to traditional artisans (3):  This statement is true. The scheme aims to support and recognize traditional artisans and their contributions.
• The scheme intends to improve the quality, scale and reach of artisans’ products (4):  This statement is true. PM-VISHWAKARMA focuses on enhancing the quality and market reach of artisans' products.
• The statement that is NOT true in relation to PM-VISHWAKARMA is Option 1.

The correct answer is 15 billion.

Key PointsUPI Transactions in August 2024

• Unified Payments Interface (UPI) was launched by the National Payments Corporation of India (NPCI) in 2016.
• UPI has transformed the landscape of digital payments in India, making it easier for people to transfer money instantly between bank accounts using a mobile device.
• In August 2024, there were 14.96 billion Unified Payments Interface (UPI) transactions, which was a 41% increase year-on-year. This was also a 3.6% increase month-on-month. The total value of these transactions was Rs 20,60,735.57 crore. Hence, the correct answer is 15 billion.
• UPI transactions have been increasing at a rapid rate, with a ten-fold increase in volume over the last four years. In 2023-24, there were 131 billion UPI transactions, compared to 84 billion in 2022-23.
• This growth demonstrates the increasing acceptance and reliance on digital payment methods among Indian consumers.

Additional Information

• Unified Payments Interface (UPI) is a real-time payment system that enables instant money transfer between bank accounts using a mobile device.
• It was developed by the National Payments Corporation of India (NPCI) and is regulated by the Reserve Bank of India (RBI).
• UPI allows users to link multiple bank accounts to a single mobile application, facilitating seamless transactions without the need to enter bank details each time.
• The popularity of UPI has been driven by factors such as ease of use, security features, and the ability to make payments 24/7.
• Various banks and third-party apps like Google Pay, PhonePe, and Paytm have integrated UPI, further boosting its adoption.
• The success of UPI is also attributed to government initiatives promoting digital payments and financial inclusion, such as the Digital India campaign.
• UPI has not only simplified peer-to-peer transactions but has also become a preferred mode of payment for businesses, enhancing the overall digital economy of India.

The correct answer is  Compounding.

Key PointsNPS Vatsalya and Compounding

• The National Pension Scheme (NPS) Vatsalya was introduced in the Union Budget 2024-25 to provide financial security to minors by allowing parents or guardians to initiate NPS accounts for their children.
• The scheme is designed as a contributory pension scheme where contributions are made by parents or guardians to lay the foundation for long-term financial planning.
• NPS Vatsalya focuses on encouraging early savings and promoting wealth accumulation through compounding.
• Once minors reach 18 years of age, the NPS Vatsalya account will seamlessly convert into a regular NPS account.
• The National Pension Scheme (NPS) is a voluntary pension scheme open to all citizens of India, including Non-Resident Indians (NRIs), between the ages of 18 and 70 years.
• NPS offers flexible investment options and tax benefits, serving as a market-linked contribution plan aimed at helping citizens save systematically for their retirement.

Additional Information

• Compounding refers to the process where the value of an investment increases because the earnings on an investment, both capital gains and interest, earn interest as time passes.
• The NPS (National Pension Scheme) is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
• The PFRDA was established by the Government of India to develop and regulate the pension sector in the country.
• By starting savings early through NPS Vatsalya, children can benefit from compounding, which significantly increases the amount accumulated for their retirement over time.
• Early financial planning through schemes like NPS Vatsalya helps inculcate responsible financial management habits in children from a young age.

The correct answer is  1 and 2 only.

Key PointsChallenges faced by NPS Vatsalya

• NPS Vatsalya was introduced in the Union Budget 2024-25 to provide financial security to minors by allowing parents or guardians to initiate NPS accounts for their children.
• The scheme is designed as a contributory pension scheme with contributions made by parents or guardians to ensure long-term financial planning.
• It focuses on encouraging early savings, promoting wealth accumulation through compounding, and instilling responsible financial management from a young age.

Statement Analysis:

• Low participation from economically weaker sections due to limited awareness:
  • One of the significant challenges that NPS Vatsalya might face is low participation from economically weaker sections of society.
  • This can be attributed to limited awareness about the scheme and its benefits among these sections.
  • Despite efforts to promote financial inclusion, reaching out to economically weaker sections remains a challenge.
  Hence, statement 1 is correct.
• Difficulty in ensuring continuous contributions by parents or guardians:
  • Ensuring continuous contributions by parents or guardians can be challenging, especially during periods of financial instability.
  • Irregular income or unexpected expenses might lead to interruptions in contributions, affecting the fund's growth and the child's financial security.
  Hence, statement 2 is correct.
• Limited investment options for the long-term growth of funds:
  • The NPS offers a range of flexible investment options, which are designed to cater to different risk appetites and financial goals.
  • Thus, the scheme does not face a challenge of limited investment options; rather, it provides a variety of choices to suit individual needs.
  Hence, statement 3 is incorrect.

Additional Information

• NPS (National Pension Scheme): The National Pension Scheme (NPS) is a voluntary pension scheme open to all citizens of India, including Non-Resident Indians (NRIs), between the ages of 18 and 70 years. It offers flexible investment options and tax benefits to encourage systematic retirement savings.
• Importance of Early Savings: Starting savings at a young age allows for the benefits of compounding, which significantly boosts wealth accumulation over time. It also promotes responsible financial habits early on.
• Financial Inclusion: Promoting financial inclusion involves making financial services accessible and affordable to all individuals, especially those in economically weaker sections. It is crucial for schemes like NPS Vatsalya to reach out to these sections to ensure widespread participation.
• Union Budget 2024-25: The introduction of NPS Vatsalya in the Union Budget 2024-25 highlights the government's commitment to enhancing financial security for minors and promoting long-term financial planning among citizens.

The correct answer is  PFRDA.

Key PointsRegulatory Body of NPS Vatsalya

• The National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable subscribers to make optimum decisions for their future through systematic savings during their working life.
• Pension Fund Regulatory and Development Authority (PFRDA) is the regulatory body overseeing the NPS. It was established by the PFRDA Act, which was passed in 2013 by the Parliament of India.
• PFRDA is responsible for the promotion, development, and regulation of the pension sector in India.
• The NPS Vatsalya scheme, introduced in the Union Budget 2024-25, is aimed at providing financial security to minors by allowing their parents or guardians to initiate NPS accounts for them.
• This scheme focuses on encouraging early savings, promoting wealth accumulation through compounding, and instilling responsible financial management from a young age.
• Once minors reach the age of 18 years, the NPS Vatsalya account will seamlessly convert into a regular NPS account, facilitating continuous saving habits.

Additional Information

• PFRDA Act, 2013: This act was enacted to establish a statutory body for the regulation and development of the pension market in India.
• The NPS is open to all citizens of India, including Non-Resident Indians (NRIs), between the ages of 18 and 70 years.
• The NPS offers flexible investment options and tax benefits to its subscribers. It is a market-linked contribution plan aimed at helping citizens save systematically for their retirement.
• Under the NPS, subscribers can choose their own investment options and fund managers, and are also allowed to switch between different investment options and fund managers.
• The NPS is designed to provide old age income with security and pension to the citizens of India.
• The Union Budget 2024-25 introduced the NPS Vatsalya scheme to instill financial discipline and planning from an early age, aiming at long-term benefits.

The correct answer is  18 years of age.

Key PointsFinancial Security for Minors

• The National Pension Scheme (NPS) Vatsalya was introduced in the Union Budget 2024-25 to provide financial security to minors. This scheme allows parents or guardians to initiate NPS accounts for their children.
• The scheme is designed as a contributory pension plan, with contributions made by parents or guardians to lay the foundation for long-term financial planning.
• The focus of the scheme is to encourage early savings, promote wealth accumulation through compounding, and instill responsible financial management from a young age.

Conversion to Regular NPS Account

• Once minors reach 18 years of age, the NPS Vatsalya account will seamlessly convert into a regular NPS account. This conversion is designed to facilitate continuous saving habits.
• The National Pension Scheme (NPS) is a voluntary pension scheme open to all citizens of India, including Non-Resident Indians (NRIs), between the ages of 18 and 70 years.
• The NPS offers flexible investment options and tax benefits, serving as a market-linked contribution plan aimed at helping citizens save systematically for their retirement. Hence, statement 1 is correct.
• The NPS Vatsalya scheme is part of efforts to instill financial discipline from a young age and ensure a secure financial future.

Additional Information

• The National Pension System (NPS) was initially launched in January 2004 for government employees. Later, it was opened to all citizens of India in May 2009.
• The NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
• Subscribers to NPS can choose their investment options and pension fund managers (PFMs), providing flexibility in managing their retirement savings.
• The NPS offers two types of accounts: Tier-I and Tier-II. The Tier-I account is the primary retirement account with restrictions on withdrawals, while the Tier-II account is a voluntary savings facility with greater liquidity.
• Contributions to NPS qualify for tax benefits under Section 80C and 80CCD of the Income Tax Act, providing incentives for individuals to save for retirement.
• The NPS aims to provide a sustainable and efficient voluntary defined contribution pension system to Indian citizens.