Banking Financial Awareness · Economics

Banking Regulation and Monetary Policy

1,180 Questions

Banking regulation and monetary policy questions test your understanding of the Reserve Bank of India functions, regulatory frameworks, and monetary tools. Topics include KYC guidelines, repo rates, and foreign exchange reserves management. This section is crucial for candidates preparing for banking and financial awareness exams.

RBI monetary toolsKYC guidelinesInterest rate regulationsCurrency issuanceBanking business acts

Banking Regulation and Monetary Policy Questions

Multiple choice

RRBs are classified under�

  1. Co-operative banks

  2. Development banks

  3. Public sector banks

  4. Private sector banks
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

RRBs are categorized as public sector banks because the majority of their equity is held by the government and public sector institutions.

Multiple choice

Which of the following statements is incorrect regarding RRB?

  1. These banks are exempted from maintenance of SLR and CRR
  2. These banks can do non-fund based business
  3. These banks can invest in shares and debentures of companies

  1. 1

  2. 1 and 2

  3. 2 and 3

  4. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Statement 1 is incorrect because RRBs are not exempted from maintaining SLR (Statutory Liquidity Ratio) and CRR (Cash Reserve Ratio); they are required to maintain these like other scheduled commercial banks.

Multiple choice

As per a list published by Ministry of Finance in February 2005, 'stronger banks' can enter in new areas of business and in foreign markets without prior-permission from Govt. of India. What are these 'stronger banks'?

  1. Banks that have Capital Adequacy Ratio of 9% or above
  2. Banks that have non-performing assets below 4%
  3. Banks that have net owned funds of Rs. 300 crore or more
  4. Banks that have earned net profit in last three consecutive years

  1. 1

  2. 1 and 2

  3. 1, 2 and 3

  4. 1, 2, 3 and 4
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The criteria for 'stronger banks' included a CAR of 9% or above, NPAs below 4%, net owned funds of Rs. 300 crore or more, and net profit in the last three consecutive years.

Multiple choice

Which of the following statements is correct regarding Urban Co-operative Banks?

  1. There are more than 2000 Urban Co-operative Banks in India at present.
  2. Urban Co-operative Banks are regulated by Reserve Bank of India and Registrar of Co-operative Societies both.
  3. 90-days NP A norms are applicable in Urban Co-operative Banks since March 2004.

  1. 1

  2. 1 and 2

  3. 2 and 3

  4. 1, 2 and 3
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There are over 2000 UCBs, they are dual-regulated by the RBI and the Registrar of Co-operative Societies, and the 90-day NPA norm was indeed implemented for UCBs in March 2004.

Multiple choice

A scheduled co-operative bank is a co-operative bank that has its aggregate Demand and Time Liabilities of…………………..or more and which has been authorised by Reserve Bank of India to issue Bank Guarantee.

  1. Rs 50 crore

  2. Rs 100 crore

  3. Rs 200 crore

  4. Rs 500 crore
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A scheduled co-operative bank must meet specific criteria set by the RBI, including having aggregate Demand and Time Liabilities of at least Rs 100 crore and being authorized to issue bank guarantees.

Multiple choice

Which of the following statements is incorrect?

  1. Micro Management of RRBs is in the hands of NABARD

  2. Inspection of co-operative banks/RRBs is a regulatory function of NABARD

  3. Credit Card issued by NABARD is known as Kisan Credit Card

  4. Board of Directors of NABARD comprises of 15 members including Chairman
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

NABARD does not handle the micro-management of Regional Rural Banks (RRBs); that is the responsibility of the sponsor banks and the RBI's regulatory framework.

Multiple choice

A Regional Rural Bank does banking operations in a�

  1. Notified area

  2. Village

  3. District

  4. State
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Regional Rural Banks (RRBs) in India are established to operate within specific notified areas, typically covering one or more districts, to provide credit and banking facilities to rural areas.

Multiple choice

Which of the following is not a recommendation made by A K Purwar Committee?

  1. Merger of loss making RRBs in their sponsored banks

  2. Merger of weak commercial banks in strong banks

  3. Merger of all RRBs into State Bank of India

  4. Merger of RRBs at zonal basis
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The A K Purwar Committee recommended various measures for the strengthening of RRBs, including mergers, but it did not recommend the merger of all RRBs into the State Bank of India. That option is incorrect as a recommendation.