Banking Regulation and Monetary Policy

Under provisions of SBI Act 1955, SBI is managed by - The Central Board and it should consist of the following, namely: (a) a chairman and a vice-chairman to be appointed by the Central Government in consultation with the Reserve Bank The chairman and the vice-chairman and each managing director shall hold office for such term, not exceeding five years, as the Central Government may fix when appointing them and shall be eligible for reappointment.  A Local Board is constituted for the new local head office, any person who is, at the time of such constitution or holding office as a member of a Local Board for an existing local head office. Local Board consists of Chairman and other elected and nominated members.

Sec 2 (c) of FEMA 1999 define Authorised Persons means as Authorised Dealer, Money Changer, Offshore Banking Unit or any other person authorised u/s 10 (1) to deal in Foreign Exchange or Foreign Securities.

Banks can issue notice for enforcement of security interest under SARFAESI Act when the account is NPA and security is in possession of the bank. The SARFAESI Act, 2002 gives powers of “seize and desist” to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures: Take possession of the security for the loan Sale or lease or assign the right over the security Manage the same or appoint any person to manage the same 

All the given options are true for a person residing in India or NRI, who is residing in India but was not previously.

Reserve Bank of India has the authority under SARFAESI Act to prescribe income recognition, accounting standards, and provisioning norms for Securitisation or Reconstruction Companies. The provisions of the guidelines and directions shall apply to SC/RC registered with the RBI under Section 3 of the SARFAESI Act, 2002.

The provisions of this Act are applicable only for NPA loans with outstanding above Rs. 1.00 lac. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act.

Section 49-A of Banking Regulation Act, 1949 states that no person, other than a banking company, the Reserve Bank, the State Bank of India or any other 21 banking institution [firm or other person that are 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. Thus, only (c) is true. 

The Reserve Bank may make an application under this section for the winding up of a banking company if the banking company has failed to comply with the requirements specified in Section 11 or has by reason of the provisions of Section 22 become disentitled to carry on banking business in India or has been prohibited from receiving fresh deposits by an order under clause (a) of Sub-section (4) of Section 35 or under clause (b) of Sub-section (3A) or Section 42 of the Reserve Bank of India Act, 1934. If the company has failed to comply with any requirement of the Act other than the requirements laid down in Section 11, has continued such failure, after notice in writing of such failure or contravention has been conveyed to the banking company.

Section 45s of RBI Act relates to 'deposits not to be accepted in certain cases'. Under this, no person, being an individual or a firm or an unincorporated association of individuals, shall accept any deposit. Thus, option 1 is correct.

If any securitisation company or reconstruction company fails to comply with any direction issued by the Reserve Bank under Section 12, such company and every officer of the company who is in default, shall be punishable with fine which may extend to Rs. 5 lac rupees. In the case of a continuing offence, with an additional fine which may extend to Rs. 10 thousand for every day during which the default continues.

Section 10(1) of Banking Regulation Act, 1949 states that no banking company shall employ or be managed by a managing agent.

Regional rural banks are body corporates that are created under a special statute. They were established under the provisions of an ordinance passed on September, 1975 and the RRB Act, 1976 to provide sufficient banking and credit facility for agriculture and other rural sectors. These were set up on the recommendations of The M. Narasimham Working Group during the tenure of Indira Gandhi's government with a view to include rural areas into economic mainstream. At that time, about 70% of the Indian population was of rural orientation. 

The Preamble of the RBI describes its basic function. They are to regulate the issue of bank notes, keep reserves to secure monetary stability in India and generally to operate the currency and credit system in the best interests of the country. Thus, option 1 is correct. 

Section 6(1)(o) of Banking Regulation Act deals with any other form of business which the Central Government may, by notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage. Thus, option 2 is correct. 

For banking business, the banking companies are licensed by Reserve Bank of India. Under Banking Regulation Act, 1949, no company shall carry on banking business in India unless it holds a license issued on that behalf by the Reserve Bank.