UPSC Prelims 2017— Question 40

This question from the 2017 Civil Services Preliminary Examination tests Banking & Financial Inclusion, under Economy. The central concept is Small Finance Banks. Small Finance Banks were created to improve financial inclusion by supplying credit to small businesses, small and marginal farmers and other underserved groups. They are banking institutions with a specific inclusion-oriented mandate. The safest way to approach this type of UPSC question is to identify the exact institutional, historical, geographical, scientific or economic proposition being tested and then examine every statement or option independently. A statement should not be accepted merely because it contains a familiar term; the qualifier, scope, date, institution and purpose must all be correct. This is particularly important where the answer choices combine several statements. Statement 1 is correct. It is consistent with the established concept described above and does not introduce a false institutional, chronological, geographical or definitional qualifier. Statement 2 is correct. It is consistent with the established concept described above and does not introduce a false institutional, chronological, geographical or definitional qualifier. Statement 3 is correct. It is consistent with the established concept described above and does not introduce a false institutional, chronological, geographical or definitional qualifier. Option-wise analysis: Option A: This is the correct answer. It matches the verified combination or proposition required by the question and is consistent with the underlying concept explained above. Option B: This is incorrect. It either accepts a statement that is not supported, rejects a statement that is correct, or identifies the wrong institutional, historical, geographical or scientific association. The error is therefore substantive rather than merely terminological. Option C: This is incorrect. It either accepts a statement that is not supported, rejects a statement that is correct, or identifies the wrong institutional, historical, geographical or scientific association. The error is therefore substantive rather than merely terminological. Option D: This is incorrect. It either accepts a statement that is not supported, rejects a statement that is correct, or identifies the wrong institutional, historical, geographical or scientific association. The error is therefore substantive rather than merely terminological. Prelims takeaway: Focus on the exact wording of the proposition, especially restrictive words such as “only”, “all”, “always”, “steadily”, “necessarily”, and references to a particular ministry, institution, law or geographical location. For statement-based questions, determine the truth value of each statement before looking at the combination codes. For direct questions, identify the defining feature of the concept and eliminate options that belong to a related but different concept. This method reduces dependence on guesswork and makes elimination more reliable.