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

An annual affiliation fee of Rs. 25,000 has been paid by a club for the affiliation it made with an organisation. The fee was paid on 30th June, 2014. How will it be shown in the accounts of the club in the income statement and balance sheet for the year ending 31st March, 2015?

  1. Rs. 25,000 paid will be shown on the assets side of the balance sheet.

  2. Rs. 25,000 paid will be shown on the expenditure side of the income and expenditure account.

  3. Rs. 12,500 paid will be shown on the expenditure side of the income and expenditure account and Rs. 12,500 will be shown on the assets side of the balance sheet.

  4. Rs. 18,750 paid will be shown on the expenditure side of the income and expenditure account and Rs. 6250 will be shown on assets side of the balance sheet.

  5. Rs. 18,750 paid will be shown on the expenditure side of the income and expenditure account and Rs. 6250 will be shown on the liabilities side of the balance sheet.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The fees up till 31st March stands for 9 months, which is 25,000 * 9/12, i.e. Rs. 18,750 and the rest of Rs. 6250 paid in advance is an asset.

Multiple choice

What percentage according to Tandon Committee recommendations should be freely allowed as working capital for units where norms are not presently applicable?

  1. 25%

  2. 20%

  3. 5%

  4. 50%
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to Tandon Committee recommendations, 25% of the output value should be freely allowed as working capital for units where norms are not presently applicable. At least four-fifths of this should be provided by the banking sector.

Multiple choice

What is the amount that can be issued by banks in cash as bank draft under KYC directives of RBI?

  1. Rs. 50000 or less

  2. Rs. 50000 or more

  3. Less than Rs. 50000

  4. More than Rs. 50000

  5. More than Rs. 1 lakh
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Banks should ensure that any remittance of funds by way of demand draft, mail/telegraphic transfer or any other mode and issue of travellers’ cheques for value of Rs. 50000 and above is effected by debit to the customer’s account or against cheques and not against cash payment. Thus, cash payments according to KYC should be for the amount less than Rs. 50000. 

Multiple choice

What is the maximum amount of education loan that can be classified as a part of priority sector loan?

  1. Rs. 20 lakh for education in India and Rs. 20 lakh abroad.

  2. Rs. 10 lakh for education in India and Rs. 10 lakh abroad.

  3. Rs. 10 lakh, irrespective of the sanctioned amount.

  4. Rs. 20 lakh for education in India and Rs. 10 lakh abroad.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Loans to individuals for educational purposes (including vocational courses) up to Rs. 10 lakh, irrespective of the sanctioned amount will be considered as eligible for priority sector.

Multiple choice

What is the limit for social infrastructure loans under priority sector?

  1. Rs. 50 lakh

  2. Rs. 1 crore

  3. Rs. 5 crore

  4. Rs. 10 crore

  5. Rs. 20 crore
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Bank loans up to a limit of Rs. 5 crore per borrower for building social infrastructure for activities, namely schools, health care facilities, drinking water facilities and sanitation facilities (including loans for construction/refurbishment of toilets and improvement in water facilities in the household), in Tier II to Tier VI centres are eligible for classification under priority sector.

Multiple choice

What is the minimum paid-up capital for a private limited company?

  1. Rs. 1 lakh

  2. Rs. 10 lakh

  3. Rs. 50 lakh

  4. Rs. 75 lakh
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Companies Act, 2013 earlier mandated that all Private Limited Companies have a minimum paid up capital of Rs. 1 lakh. This meant that Rs. 1 lakh worth of money had to be invested in the company by purchasing the company's shares by the shareholders to start business.

Multiple choice

A bank has revaluation reserves of Rs. 300 cr. What amount can be included in the Tier 2 capital?

  1. Rs. 300 cr

  2. Rs. 165 cr

  3. Rs. 135 cr

  4. Rs. 30 cr
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Correct Answer: Rs. 135 cr A revaluation reserve is a reserve created when a company has an asset revalued and an increase in value is brought to account. A simple example may be where a bank owns the land and building of its head-offices and bought them for $100 a century ago. A current revaluation is very likely to show a large increase in value. The increase would be added to a revaluation reserve. The reserve may arise out of a formal revaluation carried through to the bank's balance sheet, or a notional addition due to holding securities in the balance sheet valued at historic cost. Basel II also requires that the difference between the historic cost and the actual value be discounted by 55% when using these reserves to calculate Tier 2 capital. Hence, 45% of 300 cr = 135 cr. 

Multiple choice

Which of the following is not correct in the context of term deposits?

  1. Term deposit receipts are non-transferable.

  2. Term deposit can be issued normally for a maximum period of 120 months.

  3. On term deposit the interest is normally compounded on a quarterly basis.

  4. Cash payment of a term deposit is allowed if the amount is Rs. 20000 or less.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For term deposits, the minimum amount accepted for fixed/short deposit is Rs. 1000 for a period of 15 days and above and minimum of Rs. 100 lac and above for a minimum period of 7 days.

Multiple choice

If a banking company fails to ensure compliance of obligations under Prevention of Money Laundering Act 2002, the director can impose a fine of

  1. min Rs. 1000 and max Rs. 1 lac

  2. min Rs. 5000 and max Rs. 2 lac

  3. min Rs. 50000 and max Rs. 5 lac

  4. min Rs. 10000 and max Rs. 1 lac
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may - by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.

Multiple choice

Under Prevention of Money Laundering Act, 2002, banks are required to maintain record of cash transactions of the value of

  1. Rs. 50000 and above

  2. Rs. 1 lac and above

  3. Rs. 10 lac and above

  4. above Rs. 10 lac
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As per Rule 3 of the Rules notified by Notification No. 9/2005, every banking company, financial institution and intermediary shall maintain a record of all cash transactions of the value of more than Rs. 10 lac or its equivalent in foreign currency. Thus, option 4 is the correct answer.