UPSC Essentials brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today’s subject quiz on the Economy to check your progress. Click Here to read the UPSC Essentials magazine for March 2026. Share your views and suggestions in the comment box or at manas.srivastava@indianexpress.com1. These are a class of perpetual debt instruments issued by banks to bolster their capital base.3. AT-1 bonds have a fixed maturity.How many of the statements given above are correct?(a) Only one(b) Only two(c) All three(d) NoneRelevance: AT-1 bonds are linked to banking regulation under Basel norms implemented by the Reserve Bank of India. It is important to understand concepts like bank capital, Basel III, and loss absorption mechanisms. It is frequently in news due to issues like write-downs and investor risk in bank failures.Explanation:— HDFC Bank has taken action against three executives, including Sampath Kumar, group head of branch banking, for their alleged involvement in mis-selling of Credit Suisse Additional Tier-1 (AT-1) bonds.What are AT1 bonds?Story continues below this ad— AT-1 bonds are a class of perpetual debt instruments issued by banks to bolster their capital base. While being inherently risky, AT-1 bonds offer higher interest rates compared to conventional bonds, making them attractive to investors seeking strong returns. Hence, statement 1 is correct and statement 2 is not correct.— The AT-1 bonds issued by Credit Suisse, which was acquired by Swiss peer UBS in 2023, were written off in line with regulatory orders, leading to an uproar among investors.— Unlike regular bonds with fixed maturity, AT-1 bonds have no maturity date and can be written off or converted into equity if the bank faces financial stress. Banks may also skip interest payments in such situations. Investors receive regular coupon payouts as long as the bank is financially sound. But losses can be steep if its capital falls below regulatory thresholds. Hence, statement 3 is not correct.Therefore, option (a) is the correct answer.QUESTION 2With reference to the Annual Survey of Unincorporated Sector Enterprises (ASUSE) survey, consider the following statements:Story continues below this ad1. It is conducted by the Ministry of Statistics and Programme Implementation’s (MoSPI).2. The first annual ASUSE survey was conducted in 2021-22 (April-March).3. The survey is included as an input for measuring the size of the economy.Which of the statements given above is/are correct?(a) 1 and 3 only(b) 1 only(c) 2 and 3 only(d) 1, 2 and 3Relevance: ASUSE is an important survey. UPSC can ask about official surveys, their conducting bodies, and timelines. It is also linked with themes of employment, informal economy, and statistical systems in India.Explanation:Story continues below this ad— Pay in India’s informal sector rose by just 3.9% in 2025, less than half the 13% increase seen in 2023-24 (October-September), according to the results of a new government survey released. At the same time, the sector saw a sharp reduction in the number of jobs it added, likely due to the number of establishments also growing at a slower pace.— As per the Ministry of Statistics and Programme Implementation’s (MoSPI) Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2025, the unorganised sector saw total pay – inclusive of employer’s contribution to canteen, health clinic, child care centre, etc – for hired workers rise to Rs 1.47 lakh in 2025. In rural areas, pay rose 2% in 2025, sharply lower than the 18% growth registered in 2023-24. Meanwhile, the increase in pay in urban areas was 5% in 2025, down from 10% in 2023-24. Hence, statement 1 is correct.— The first annual ASUSE survey was conducted in 2021-22 (April-March), with the second one carried out from October 2022 to September 2023. The latest survey is the fourth, with the statistics ministry revising the timeline such that it aligns to the calendar year. Hence, statement 2 is correct.— The survey has become an important input for measuring the size of the economy, with the revised GDP series having 2022-23 as the base year using ASUSE as well as the Periodic Labour Force Survey to more accurately represent the informal sector. Hence, statement 3 is correct.Therefore, option (d) is the correct answer.Story continues below this adQUESTION 3Which of the following are considered as the Foreign Exchange Reserves?1. Foreign Currency Assets2. Gold3. Silver4. Special Drawing Rights5. Reserve Position in the IMF6. Private Foreign Currency HoldingsSelect the correct answer using the codes given below:(a) 2 and 3 only(b) 1, 2, 3 and 5(c) 1, 4, 5 and 6(d) 1, 2, 4 and 5Relevance: Foreign Exchange Reserves are a core topic under the external sector managed by the Reserve Bank of India. UPSC can test components of forex reserves like SDRs and IMF reserve positions. It is also linked to balance of payments, currency stability, and external vulnerability indicators.Explanation:— As of March 13, the country’s forex reserves stood at $709.75 billion.Components of Foreign Exchange Reserves— According to the Reserve Bank of India, the value of gold reserves, a key component of foreign exchange reserves, increased by over 4.14 billion US dollars to 131.63 billion dollars.Story continues below this ad— Foreign Currency Assets (FCA), the main component of forex reserves, rose by 561 million US dollars to more than 573.12 billion. The FCA, expressed in dollars, takes into account the effect of non-US unit appreciation or depreciation, including the euro, pound, and yen held in the foreign exchange kitty.— The Central Bank’s position in the International Monetary Fund increased by 158 million to 4.87 billion dollars. (Source: RBI)— The value of Special Drawing Rights rose by 26 million dollars to 18.86 billion US dollars.— Silver and Private Foreign Currency Holdings are not a constituent of the Foreign Exchange Reserves.Therefore, option (d) is the correct answer.(Other Source: http://www.newsonair.gov.in)Story continues below this adQUESTION 4With reference to the Domestic Systemically Important Banks (D-SIBs), consider the following statements:1. These are perceived as banks that are ‘Too Big To Fail (TBTF)’.2. There are additional policy measures by the RBI to deal with the systemic risks and moral hazard issues posed by them.3. In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India.How many of the statements given above are correct?(a) Only one(b) Only two(c) All three(d) NoneStory continues below this adRelevance: Banking stability frameworks like D-SIBs are regulated by the Reserve Bank of India and are frequently tested in Prelims. It is also important to learn concepts such as CET1 capital, capital buffers, and systemic risk. It is also relevant for understanding financial stability, crisis management, and regulation of large banks.Explanation:— The Reserve Bank of India clarified that it has not identified “any material concerns” regarding the conduct or governance of HDFC Bank. The statement came after the bank’s Non-Executive Chairman Atanu Chakraborty resigned, citing certain developments and practices within the organization that he said were not aligned with his personal values and ethics.— HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team, the RBI said. “Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance,” the RBI said.What are Domestic Systemically Important Banks (D-SIBs)?— SIBs are perceived as banks that are ‘Too Big To Fail (TBTF)’. This perception of TBTF creates an expectation of government support for these banks at the time of distress. Due to this perception, these banks enjoy certain advantages in the funding markets. However, the perceived expectation of government support amplifies risk-taking, reduces market discipline, creates competitive distortions, and increases the probability of distress in the future. These considerations require that SIBs should be subjected to additional policy measures to deal with the systemic risks and moral hazard issues posed by them, according to the RBI. Hence, statements 1 and 2 are correct.— The RBI has continued to identify SBI, HDFC Bank and ICICI Bank as Domestic Systemically Important Banks under the same bucketing structure as in the 2023 list of D-SIBs.— Banks are allocated different buckets based on their systemic importance score. The RBI has placed SBI in bucket 4, HDFC Bank in bucket 3 and ICICI Bank in bucket 1.— Based on the bucket in which a D-SIB is placed, an additional common equity requirement has to be applied to it. The additional capital requirement ranges from 0.20 per cent to 0.80 per cent of risk weighted assets, depending upon the bucket D-SIBs are plotted into.— In case a foreign bank having branch presence in India is a Global Systemically Important Bank (G-SIB), it has to maintain additional CET1 capital surcharge in India as applicable to it as a G-SIB, proportionate to its Risk Weighted Assets (RWAs) in India, i.e., additional CET1 buffer prescribed by the home regulator (amount) multiplied by India RWA as per consolidated global Group books divided by total consolidated global Group RWA. Hence, statement 3 is correct.Therefore, option (c) is the correct answer.QUESTION 5With reference to the recently launched Small Hydro Power (SHP) Development Scheme, consider the following statements:1. The scheme has been launched for the period FY 2026-27 to FY 2030-31.2. The projects in the scheme will be in the range of 1000 MW to 25000 MW.3. The beneficiaries of the scheme are hilly and North Eastern states only.Which of the statements given above is/are correct?(a) 1 and 2 only(b) 1 only(c) 3 only(d) 2 and 3 onlyRelevance: Small Hydro Power (SHP) is part of India’s renewable energy strategy under the Ministry of New and Renewable Energy, often asked in Prelims. It is important to focus on scheme timelines, funding, and target beneficiaries as UPSC can test policy updates. It is also important for linking with themes of energy security, decentralised power, and climate commitments.Explanation:— The Union cabinet approved a new scheme to promote development of small hydropower projects with a total capacity of around 1,500 MW. With a financial outlay of Rs 2,585 crore, the scheme will support projects ranging from 1 MW to 25 MW over a period of five years. It comes after the previous hydropower scheme ended in 2017. Hence, statement 2 is not correct.— The scheme has been launched for the period FY 2026-27 to FY 2030-31. Hence, statement 1 is correct.— The scheme will encourage the development of small hydro projects (with capacities ranging from 1 to 25 MW) in various regions, with a focus on hilly and North Eastern areas with significant potential for such projects. Central financial assistance of Rs.3.6 crore per MW or 30% of the project cost, whichever is less, would be given in North Eastern States and districts with international borders, with a maximum of Rs.30 crore per project. In other states, Rs.2.4 crore per MW or 20% of project cost, whichever is less, with a maximum of Rs.20 crore per project, would be available. Hence, statement 3 is not correct.— It will also support socioeconomic development in rural places by increasing local investment, as well as producing long-term jobs with project lifespans spanning from 40 to over 60 years.Therefore, option (b) is the correct answer.(Other Source: pib.gov.in)Previous Daily Subject-Wise-QuizDaily Subject-wise quiz — History, Culture, and Social Issues (Week 150)Daily subject-wise quiz — Polity and Governance (Week 155)Daily subject-wise quiz — Science and Technology (Week 155)Daily subject-wise quiz — Economy (Week 154)Daily subject-wise quiz — Environment and Geography (Week 154)Daily subject-wise quiz – International Relations (Week 154)Subscribe to our UPSC newsletter and stay updated with the news cues from the past week.Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.