General Awareness · Banking Financial Awareness

Regulatory Thresholds and Caps in India

860 Questions

Regulatory Thresholds and Caps in India refer to the statutory limits imposed on finance, taxation, and corporate governance. It covers sectoral caps, expenditure limits, and penalty thresholds defined by law. These questions are crucial for banking, accounting, and civil services exams.

Financial limitsTax deductionsCorporate regulationsElectoral thresholdsPenalties and fines

Regulatory Thresholds and Caps in India Questions

Multiple choice

Which of the following statements is/are true?

  1. In Sept 2012, Reserve Bank of India has raised the upper limit of external commercial borrowings by any individual company or group in order to increase foreign fund flow inside the domestic economy.
  2. As per the new regulation, a company can borrow funds through the ECB route to the tune of 75% of the average foreign exchange earnings in the immediate past three years or 50% of the highest foreign exchange earnings realized in any of those three years, whichever is higher.
  3. The maximum borrowing limit of USD 5 billion will be applicable here as well.

  1. Only 1

  2. Only 2

  3. 1 & 2

  4. 1 & 3

  5. All of these

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

In September 2012, RBI raised ECB limits to increase foreign capital inflow (statement 1 is true). The new regulation allowed companies to borrow up to 75% of average forex earnings over three years OR 50% of the highest year's earnings, whichever is higher (statement 2 is true). Statement 3 about USD 5 billion limit is incorrect - the $5 billion limit applied to a different category and wasn't automatically applicable here.

Multiple choice

Which of the following is not an example of transfer payments?

  1. Scholarships to poor but meritorious students

  2. Pension paid to government employees after their retirement

  3. Railway fare

  4. Unemployment compensation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is not an example of transfer payments. The railway fare is an example of commercial revenue for government, not an example of transfer payments. The government charges the fare for providing the service of travelling in train, but in transfer payment the government incurs the expenditure for social welfare.

Multiple choice

Is breach of RBI directives a punishable offence and to what extent?

  1. Yes, a fine up to Rs. 5 lakh and for continuation of the offence, a fine of up to Rs. 10,000 per day.

  2. Yes, by cancellation of licences of the company.

  3. No, these are the administrative directions.

  4. No, the Act has not provided for any punishment in specific.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under Section 12 of the SARFAESI Act, the Reserve Bank of India is statutorily empowered to issue directions to the securitisation or reconstruction company. If any such company fails to comply with any of the directions issued by the Reserve Bank of India, then such company is punishable with a fine not exceeding Rs. 5 lakh for the default. In case of further continuation of the offence, an additional fine up to Rs. 10,000 per day of the default can be imposed.

Multiple choice

What is the maximum amount the Banking Ombudsman can award as compensation?

  1. Rs. 10 lakh

  2. Rs. 20 lakh

  3. Rs. 30 lakh

  4. No limit
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Annual Report of the Banking Ombudsman Scheme for the year 2011-12 released by RBI's Customer Service Department contains a clarification in this regard. It says, "Clause 12(5) and 12(6) establish pecuniary jurisdiction of the BO i.e. the ceiling upto which BO can award monetary compensation. Under Clause 12(5), BO has powers to pass an award directing payment of an amount, not more than the actual loss suffered by the complainant as a direct consequence of an act of omission or commission of the bank, or Rs. 10 Lakh, whichever is lower."

Multiple choice

A bank has allowed a current account holder an ad hoc overdraft of Rs. 15 lakh. That amount is now due. Is this amount recoverable under the provisions of the DRT Act?

  1. No, as it is not a regular loan.

  2. No, as only secured loans can be recovered under the DRT Act.

  3. Yes, as it is a legally recoverable amount by the bank.

  4. Yes, if the tribunal grants special permission to lodge the case.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is a legally recoverable amount by the bank.