Banking Regulation and Monetary Policy

Companies like a Non-Banking Financial Company (NBFC) are the companies registered under the Companies Act, 1956 not BR Act. Subsidiary banks are defined in the State Bank of India (Subsidiary Banks) Act, 1959 and not Companies Act. Accepting deposits for safe custody falls under banking regulation act. Thus, only option 1 is correct.

Every director elected under 'election of new directors', shall hold office until the date up to which his predecessor would have held office, if the election had not been held. Thus, option 2 is the correct answer.

Section 26 of BR Act is about the ‘return of unclaimed deposits’. Thus, option 3 is the correct answer.

(a) In case of default in maintenance of CRR requirement on a daily basis, penal interest will be recovered for that day at the rate of three per cent per annum above the Bank Rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day. (b) If the shortfall continues on the succeeding day(s), penal interest will be recovered at the rate of five per cent per annum above the Bank Rate. (c) In cases of default in maintenance of CRR on average basis during a fortnight, penal interest will be recovered as envisaged in sub-section (3) of section 42 of Reserve Bank of India Act, 1934.

The Board of Financial Supervision (BFS) was constituted in November 1994 as a committee of the Central Board of Directors. Its objective is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies. The RBI carries out its functions related to financial supervision under the guidance of BFS. The Board normally holds meeting every month. Thus, all the options are correct.

The Banking Ombudsman, assuming the charge of an arbitrator, shall follow the procedure as laid down under the Scheme read with the provisions of the Arbitration and Conciliation Act, 1996.

A securitization company or reconstruction company aggrieved by the order of cancellation of certificate of registration may prefer an appeal, within a period of thirty days from the date on which such order of cancellation is communicated to it, to the Central Government provided that before rejecting an appeal, such company shall be given a reasonable opportunity of being heard as cancellation without giving opportunity is not licit.

It is an Act to regulate securitization and reconstruction of financial assets, enforcement of security interest, and for matters connected therewith or incidental thereto. It need not to be registered with the Companies Act.

For ensuring compliance with the provisions, a banking company shall furnish to RBI, not later than 20 days after the close of the month, a monthly return, showing particulars of its Liquid Assets maintained and its Demand and Time Liabilities at close of business of each alternate Friday during the month.

DRT - Debts Recovery Tribunal or DRAT - Debts Recovery Appellate Tribunal. The borrowers, in many cases, continue having negotiations with the Bank Officials and it will consume a lot of time. It is only when the borrowers feel that they may not get their dispute or grievance settled with the Bank, that they will approach the Tribunal or the Courts.

Section 43A of Banking Regulation Act deals with preferential payments to depositors on liquidation of a bank.

Section 22 of the RBI Act 1934 makes provided that RBI has the sole right to issue bank notes of all denominations. Thus, Reserve Bank is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes.

“Repatriation to India” means bringing into India the realised foreign exchange and the selling of such foreign exchange to an authorised person in India in exchange for rupees, or the holding of realised amount in an account with an authorised person in India to the extent notified by the Reserve Bank. Thus, option 3 is correct. 

Director under PML Act 2002 is appointed by Government of India.

SARFAESI is effective only for secured loans where bank can enforce the underlying security, e.g. hypothecation, pledge and mortgages. In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. Any security interest created over agricultural land cannot be proceeded. SARFAESI Act is applicable in case of securities where security interest is created for repayment of the loans by any borrower. Thus, option 4 is the answer.