"Gold Tranche" (Reserve Tranche) refers to
- (a) a loan system of the World Bank
- (b) one of the operations of a Central Bank
- (c) a credit system granted by WTO to its members
- (d) a credit system granted by IMF to its members ✓ UPSC's answer
Why the answer is (d)
• Each IMF member pays a quota, 25% of which was historically in gold (now reserve assets/SDRs) and 75% in its own currency.
• The 'gold tranche' or reserve tranche is that 25% portion; a member may draw on it automatically, without conditions or interest, as a first line of credit from the IMF — option (d).
• Borrowing beyond it (credit tranches) attracts conditionality.
• It is not a World Bank loan (a), a central-bank operation (b) or a WTO facility (c) — the WTO does not lend.
• Hence option (d).
Why the other options are wrong
- (a) a loan system of the World Bank
- The World Bank does not operate tranches of this kind.
- (b) one of the operations of a Central Bank
- It is an IMF quota concept, not a central-bank operation.
- (c) a credit system granted by WTO to its members
- The WTO is a trade body and grants no credit.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.