Banking Regulation and Monetary Policy

All the above mentioned steps have been taken by the RBI in order to encourage its policy of financial inclusion.

Special Drawing Rights (SDRs) are international reserve assets created by the IMF to supplement member countries' official reserves. They were established in 1969 and are based on a basket of major currencies (USD, EUR, CNY, JPY, GBP). The World Bank and IBRD are focused on development lending, WTO on trade rules, and OECD on economic policy - none maintain SDRs.

RBI classifies real estate and commodities as sensitive sectors due to their price volatility and higher risk profiles. These sectors require greater regulatory scrutiny and higher capital provisions from banks. Money market and capital market are financial systems, not sensitive sectors in this regulatory context.

Stae Bank of India is a government owned corporation.

Correct option is (2).

Co-operative banks serve an important role in the Indian economy, especially in rural areas. In urban areas, they mainly serve small industry and self-employed workers. They are registered under the Co-operative Societies Act, 1912

Some of the important regulations relating to acceptance of deposits by NBFCs are 

The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum.  NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors. NBFCs should have minimum investment grade credit rating. The deposits with NBFCs are not insured. The repayment of deposits by NBFCs is not guaranteed by RBI. Certain mandatory disclosures are to be made about the company in the application form issued by the company soliciting deposits. Thus, (iii) and (iv) are not true. 

Under Section 21 of Banking Regulation Act, power of Reserve Bank to control advances by banking companies where the Reserve Bank is satisfied that it is necessary or expedient in the public interest or in the interests of depositors or banking policy so to do, it may determine the policy in relation to advances to be followed by banking companies generally or by any banking companies or the banking company concerned, as the case may be, shall be bound to follow the policy as so determined.

The mandate of Section 17 states that every banking company will have to transfer to a reserve fund every year, a sum equivalent to "not less than twenty per cent of such profit". In other words, at least 20% of the profit as shown in the Profit and Loss Account before declaration of any dividend has to be transferred to the reserve fund.

Section 35 in BANKING REGULATION ACT,1949  Inspection Notwithstanding anything to the contrary contained in section 235 of the Companies Act, 1956 (1 of 1956), the Reserve Bank at any time may, and on being directed so to do by the Central Government shall, cause an inspection to be made by one or more of its officers of any banking company and its books and accounts; and the Reserve Bank shall supply to the banking company a copy of its report on such inspection. 

The Reserve Bank shall make an application under Section 38 of the Banking Regulations Act for winding up of a company.  

SCBs are exempted from maintaining CRR on the following liabilities:

(i) Liabilities to the banking system in India as computed under Clause (d) of the explanation to Section 42(1) of the RBI Act, 1934;

(ii) Credit balances in ACU (USD) accounts;

(iii) Demand and Time Liabilities in respect of their Offshore Banking Units (OBU);and

(iv) SCBs are not required to include inter-bank term deposits/term borrowing liabilities of original maturities of 15 days and above and up to one year in "Liabilities to the Banking System". Similarly, banks should exclude their inter-bank assets of term deposits and term lending of original maturity of 15 days and above and up to one year in "Assets with the Banking System" (item III of Form A return) for the purpose of maintenance of CRR. The interest accrued on these deposits is also exempted from reserve requirements.

Under The State Bank of India Act, 1955 The State Bank shall have power to acquire and hold property, whether movable or immovable, for the purposes for which it is constituted and to dispose off the same.

Section 29 of Banking Regulation Act deals with Accounts and balance-sheet.  At the expiration of each calendar year, every banking company incorporated in India, in respect of all business transacted by it, and every banking company incorporated outside India, in respect of all business transacted through its branches in India, shall prepare with reference to that year or period, as the case may be, a balance-sheet and profit and loss account as on the last working day of that year or the period, as the case may be, in the Forms set out in the Third Schedule.

The law relating to cheques and protection to bankers is contained in the Negotiable Instruments Act, 1881.