Advanced Quiz – 14 October 2026 | General Studies

Correct Answer: (a) 1, 2 and 4 only

Explanation:

Statement 1 is correct: The NBA is a statutory body established under the Biological Diversity Act, 2002. Its headquarters are in Chennai.

Statement 2 is correct: Biodiversity Management Committees (BMCs) are constituted by local bodies to promote biodiversity conservation, sustainable use and documentation.

Statement 3 is incorrect: People’s Biodiversity Registers (PBRs) are prepared and maintained by BMCs, with technical support from relevant biodiversity institutions.

Statement 4 is correct: ABS ensures equitable sharing of benefits arising from biological resources and associated traditional knowledge with eligible benefit-claimers.

Additional Information:

• India’s biodiversity governance framework operates through the NBA, State Biodiversity Boards and local BMCs.
• The Biological Diversity (Amendment) Act, 2023 modified provisions relating to access, benefit-sharing and compliance.
• The Nagoya Protocol was adopted in 2010 and entered into force in 2014.
• The CBD has three objectives: biodiversity conservation, sustainable use and equitable benefit-sharing.

Correct Answer: (c) 1, 2 and 3 only

Explanation:

Statement 1 is correct: The KMGBF was adopted at CBD COP15 in Montreal, Canada, in December 2022.

Statement 2 is correct: Target 3 aims to conserve and effectively manage at least 30% of terrestrial and inland water areas, and marine and coastal areas, by 2030.

Statement 3 is correct: Target 13 addresses benefit-sharing from genetic resources, digital sequence information and associated traditional knowledge.

Statement 4 is incorrect: The KMGBF is a global policy framework under the CBD. It is not a separate legally binding treaty and does not replace the Convention.

Additional Information:

• The framework contains four long-term goals for 2050 and 23 targets for 2030.
• Target 2: Effective restoration of at least 30% of degraded ecosystems by 2030.
• Target 19: Mobilisation of financial resources for biodiversity.
• The CBD was opened for signature at the 1992 Rio Earth Summit and entered into force in 1993.
• The CBD Secretariat is located in Montreal, Canada.

With reference to the Foreign Exchange Risk Reserve (FERR) mechanism discussed in recent developments, consider the following statements:

1. Requiring banks to maintain a cash reserve against specified foreign exchange derivative contracts can increase the cost of undertaking those transactions.
2. Such a reserve requirement can be used as a macroprudential instrument to discourage excessive speculative demand for foreign currency.
3. A higher reserve requirement necessarily increases the supply of US dollars in the domestic foreign exchange market.
4. Reserve requirements on foreign exchange derivatives may also increase hedging costs for businesses with genuine foreign currency liabilities.

Which of the statements given above are correct?

Correct Answer: (c) 1, 2 and 4 only

Explanation:

Statement 1 is correct: Additional cash reserve requirements tie up funds and can increase the effective cost of specified forex transactions.

Statement 2 is correct: Such requirements can discourage excessive speculative positions by increasing their cost.

Statement 3 is incorrect: A reserve requirement does not automatically create additional dollars. It primarily influences transaction costs and incentives.

Statement 4 is correct: Businesses with genuine foreign currency obligations may face higher hedging costs if banks pass on the additional expense.

Additional Information:

• The October 2026 current-affairs report describes a 20% FERR requirement on specified rupee-linked forex derivative contracts.
• Forex derivatives include forwards, futures, options and swaps.
• Hedging reduces exposure to adverse market movements; speculation involves taking positions to profit from expected price changes.
• The People’s Bank of China has used foreign exchange risk reserve requirements as a countercyclical policy instrument.
• Macroprudential policies aim to reduce risks affecting the financial system as a whole.

Correct Answer: (c) 1, 2 and 4 only

Explanation:

Statement 1 is correct: The RBI was established under the RBI Act, 1934, and commenced operations on 1 April 1935.

Statement 2 is correct: The RBI manages India’s foreign exchange reserves, including foreign currency assets, gold, Special Drawing Rights and the reserve tranche position in the IMF.

Statement 3 is incorrect: The Monetary Policy Committee consists of six members: three from the RBI and three external members appointed by the Central Government.

Statement 4 is correct: FEMA, 1999 provides the legal framework for foreign exchange management, with important regulatory powers exercised by the RBI.

Additional Information:

• The RBI was nationalised in 1949.
• The Monetary Policy Committee was established through amendments to the RBI Act in 2016.
• The RBI Governor serves as the ex officio Chairperson of the MPC and has a casting vote in the event of a tie.
• FEMA, 1999 replaced the Foreign Exchange Regulation Act, 1973 (FERA).
• The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.