Banking Financial Awareness · Economics

Banking Regulation and Monetary Policy

1,219 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

Under which of the following Acts can the bank sell security charged to it without court intervention?

  1. Indian Contract Act, if it is pledged

  2. SARFAESI Act, if it is hypothecated or mortgaged

  3. Companies Act, if charge is registered with Registrar of Companies

  4. Options (1) and (2) both

Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The banks can sell security charged to it without court intervention under Indian Contract Act, if it is pledged, and under SARFAESI Act, if it is hypothecated or mortgaged.

Multiple choice

Which of the following is not correct in respect of targets within priority sector?

  1. Weaker section target for Indian banks is 10 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.

  2. Micro and small enterprises credit target for foreign banks would be made applicable post 2018.

  3. Export credit is 12% of ANBC for Indian banks.

  4. Agriculture credit target is 18 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher for Indian banks.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Export credit up to 32 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher, will be eligible as part of priority sector for foreign banks with less than 20 branches. For other banks, the incremental export credit over corresponding date of the preceding year will be reckoned upto 2 percent of ANBC or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher.

Multiple choice

RBI conducts on-site inspection and off-site supervision of Indian banks and based on its finding, RBI rates the banks on important parameters called _____. The letter A of these parameters stands for ____.

  1. CACS, advances

  2. CAMELS, assets

  3. CACS, asset quality

  4. CAMELS, asset quality
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The CAMELS rating system is a recognized international rating system that bank supervisory authorities use in order to rate financial institutions according to six factors represented by the acronym "CAMELS". Supervisory authorities assign each bank a score on a scale, and a rating of one is considered the best and the rating of five is considered the worst for each factor. The components of a bank's condition that are assessed: (C)apital adequacy (A)ssets (M)anagement Capability (E)arnings (L)iquidity (also called asset liability management) (S)ensitivity (sensitivity to market risk, especially interest rate risk)

Multiple choice

An NRI has FCNR and NRE accounts with your branch and he has now returned to India for permanent stay. What will the bank do with these two accounts?

  1. Both the accounts have to be closed and amount should be credited in a domestic rupee account.

  2. After closure of the accounts, the balance should be transferred to NRO account to be opened for that purpose.

  3. Account holder can keep the funds in foreign currency in the form of Resident Foreign Currency Account.

  4. The amount has to be transferred to a current of saving bank account.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

When NRIs return with the intention to reside for uncertain period, their accounts will be designated as Resident Accounts. The funds in their NRE and FCNR accounts may be also converted into foreign currency and placed in Resident Foreign Currency (RFC) Accounts.