UPSC Prelims 2013— Question 42

Concept and answer: Option D is correct. The Reserve Bank regulates commercial banks through prudential and monetary measures that include requirements concerning liquidity and controls connected with branch expansion, mergers and winding-up under the banking regulatory framework. The question therefore treats all four listed matters as falling within RBI's regulatory sphere. The question tests the precise definition, fact or causal relationship identified above. The alternatives must therefore be checked against that exact point rather than against a loosely related fact. Option A: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option B: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option C: Incorrect. This alternative does not match the verified principle tested by the question. It either reverses the relationship, assigns the feature to the wrong institution, place, process or category, or includes an additional proposition that is not correct. The fact that an option may contain a term related to the subject does not make the entire option correct. Option D: Correct. This option is the combination or proposition that matches the verified principle described above. It does not introduce a contradiction or an unsupported qualification. Exam takeaway: the decisive point is the distinction stated in the core explanation, and Option D is the only choice fully consistent with it. For Prelims, avoid selecting an option merely because one part sounds familiar. Read the entire alternative, identify the controlling constitutional provision, historical fact, scientific mechanism, geographical location or economic definition, and then eliminate choices that overstate, omit or misclassify that point.