Banking Regulation and Monetary Policy

According to Section 49A , Restriction on acceptance of deposits withdrawable by cheque, no person other than a banking company, the Reserve Bank, the State Bank of India or any other banking institution, firm or other person notified by the Central Government in this behalf on the recommendation of the Reserve Bank shall accept from the public deposits of money withdrawable by cheque: provided that nothing contained in this section shall apply to any savings bank scheme run by the Government.

Reverse Repo Rate is the rate of interest at which the RBI borrows funds from other banks in the short term. An increase in the reverse repo rate can prompt banks to park more funds with the RBI to earn higher returns on idle cash. It is also a tool that can be used by the RBI to drain excess money out of the system.

Correct Answer: Tarapore Committee In November 2003, Reserve Bank of India (RBI) constituted the Committee on Procedures and Performance Audit of Public Services under the Chairmanship of Shri S. S.Tarapore (former Deputy Governor) to address the issues relating to availability of adequate banking services to the common person. The mandate to the Committee included identification of factors that inhibited the attainment of best customer services and suggesting steps to improve the quality of banking services to individual customers. The Committee felt that in an effort to continuously upgrade the package of services that banks offered to their customers, there was a need for benchmarking of such services. After an in-depth study at the grass-roots level, the Committee concluded that there was an institutional gap for measuring the performance of banks against a bench mark reflecting the best practices (Code and Standards). Therefore, the Committee recommended setting up of the Banking Codes and Standards Board of India (BCSBI).

In India, Govt. debt is largely domestic and within that marketable debt is the largest component, which is managed by the Reserve Bank of India.

To curb inflation, RBI increases repo rate which will make borrowing costly for banks. Banks will pass this increased cost to their customers which makes borrowing costly in the whole economy.

Correct Answer: Customer Service Committee of the Board Banks should report to the Customer Service Committee of the Board, at appropriate intervals, on an ongoing basis, the details of the number of claims received pertaining to deceased depositors / locker-hirers / depositors of safe custody article accounts and those pending beyond the stipulated period, giving reasons therefor. 

NABARD undertakes inspection of Regional Rural Banks (RRBs) and Cooperative Banks (other than urban/primary cooperative banks) under the provisions of Banking Regulation Act, 1949. 

A savings/fixed/recurring bank deposit account can be opened by a minor of any age through his/her natural or legally appointed guardian. Thus, option 3 is false.

The objective of KYC guidelines is to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. KYC procedures also enable banks to know/understand their customers and their financial dealings better, which in turn help them manage their risks prudently. Thus, option 4 is the correct answer.

The Banking Regulation Act, 1949 is a legislation in India that regulates all banking firms in India. Initially, the law was applicable only to banking companies, but in 1965, it was amended to make it applicable to cooperative banks and to introduce other changes. It deals with all the given parts. Thus, option 4 is the correct answer.

The Banking Regulation Act of 1949 came into force on 16^th March, 1949.

The Constitution of India provides for the creation of the Consolidated Fund of India in Article 266. All received revenues, raised loans and all money received by the Government in payment of loans are credited to the Consolidated Fund of India. The expenditures of the Government are incurred from this fund.

An identification mark in the banknote is an intaglio print which can be felt by touch and helps the visually impaired to identify the denomination. Thousand rupee banknote- diamond shape Five hundred rupee banknote- circle Hundred rupee banknote- triangle Fifty rupee banknote- square Twenty rupee banknote- rectangle Ten rupee banknote does not have intaglio print. Hence, option '1' is correct.

At present, Indian companies are allowed to access funds from abroad in the following methods: (i) External Commercial Borrowings (ECB) refer to commercial loans in the form of bank loans, buyers' credit, suppliers' credit, and securitized instruments. ECB can be accessed under two routes, viz. automatic route and approval route. (ii) Foreign Currency Convertible Bonds (FCCBs) mean a bond issued by an Indian company expressed in foreign currency and the principal and interest in respect of which is payable in foreign currency. (iii) Preference Shares (i.e. non-convertible, optionally convertible or partially convertible) (iv) Foreign Currency Exchangeable Bond (FCEB) means a bond expressed in foreign currency, the principal and interest in respect of which is payable in foreign currency issued by an issuing company and subscribed to by a person who is a resident outside India, in foreign currency, and exchangeable into equity share of another company. Hence, option 4 is correct.

The Consolidated Fund of India is the most important account of the Union Government under Article 266 of the Constitution. All government revenues, money raised by loans, and loan repayments must be credited to this fund. The Public Account holds money held in trust (like provident funds), while the Contingency Fund is for unforeseen emergencies.