UPSC Prelims 2016 · Question 54 of 98
UPSC Prelims 2016 question on Core Banking Solution
- ExamUPSC CSE
- Year2016
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicBanking
- DifficultyMedium
- TypeStatement
The term ‘Core Banking Solution’ in the news, which of the following statements best describes/describe this term?
1. It is a networking of a bank’s branches which enables customers to operate their accounts from any branch of the bank on its network regardless of where they open their accounts.
2. It is an effort to increase RBI’s control over commercial banks through computerization.
3. It is a detailed procedure by which a bank with huge non-performing assets is taken over by another bank.
Select the correct answer using the code given below:
Show answer
Answer: A. 1 only
Verdict
The answer is 1 only. Core Banking Solution is the networking of branches that lets customers operate accounts from any branch.
Analysis
Statement 1 is CORRECT. Core banking networks a bank's branches onto a shared platform so that a customer can transact at any branch on the network regardless of where the account was opened, which is why the migration of post offices to core banking was reported as a milestone. Statement 2 is INCORRECT. It is a bank's own operational system, not an instrument of Reserve Bank control. Statement 3 is INCORRECT. Takeover of a bank with large non performing assets is an entirely separate resolution process.
Source
The Hindu report on post offices migrating to core banking solutions.
How to crack it
Read the word core as referring to the bank's central transaction processing system, which is an internal technology matter, and then test each option for whether it describes technology, regulation or resolution. Only one is technological. When a term from information technology enters banking news, expect the distractors to be drawn from regulation and supervision, because those are the adjacent domains candidates confuse it with.