Banking Regulations MCQ Quiz in मल्याळम - Objective Question with Answer for Banking Regulations - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

Below is the explanation of the right answer:

List – I	List – II
a. RBI Nationalization	Following India's independence on 15 August 1947, the RBI was nationalized on 1 January 1949. The Reserve Bank of India (RBI) is India's central bank, responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system. It also manages the country's main payment systems and works to promote its economic development.
b. Imperial Bank Nationalization	The Imperial Bank of India (IBI) was one of the oldest and the largest commercial bank of the Indian subcontinent and was subsequently transformed into the State Bank of India and was nationalized in 1955. Initially, as per its royal charter, it acted as the central bank for British India prior to the formation of the Reserve Bank of India in 1950.
c. Nationalization of 14 Commercial Banks	The Government of India issued the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 1969, and nationalized the 14 largest commercial banks with effect from the midnight of 19 July 1969. These banks contained 85 percent of bank deposits in the country.
d. Establishment of IDBI	Industrial Development Bank of India (IDBI Bank Limited or IDBI Bank or IDBI) was established in 1964 by an Act to provide credit and other financial facilities for the development of the fledgling Indian industry. Many national institutes find their roots in IDBI like SIDBI, India Exim Bank, National Stock Exchange of India, and National Securities Depository Limited.

Therefore, from the above explanation, option 3 is the right answer.

The correct answer is option 2, i.e. Drawee

• Section 5 of the Negotiable Instruments Act, 1881 defines a bill of exchange.
• Let us understand this by example, Suppose You have given a loan of Rs 5000 to Randhir, which Randhir has to return.
• Now, You also have to give some money to Monika.
• In this case, You can make a document directing Randhir to make payment up to Rs 5000 to Monika on demand or after expiry of a specified period.
• This document is called a Bill of Exchange, which can be transferred to some other person’s name by you.

Parties to a Bill of Exchange

• There are three parties involved in a bill of exchange. They are:
  • The Drawer – The person who makes the order for making payment. In the above specimen,You is the drawer.
  • The Drawee – The person to whom the order to pay is made.He is generally a debtor of the drawer. It is Randhir in this case.
  • The Payee – The person to whom the payment is to be made. In this case it is Monika.
• The drawer can also draw a bill in his own name thereby he himself becomes the payee. Here the words in the bill would be Pay to us or order.
• In a bill where a time period is mentioned, just like the above specimen, is called a Time Bill. But a bill may be made payable on demand also. This
  is called a Demand Bill.

The SARFAESHI Act, 2002 gives powers of “seize and desist” to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures:

1. Take possession of the security for the loan

2. Sale or lease or assign the right over the security

3. Manage the same or appoint any person to manage the same

The SARFAESI Act also provides for that establishment of Asset Reconstruction Companies (ARCs) regulated by RBI to acquire assets from banks and financial institutions. The Act provides for sale of financial assets by banks and financial institutions to asset reconstruction companies (ARCs).

The correct answer is the Indian Banks Association.

Key Points

Indian Banks Association:

• Indian Banks' Association (IBA), formed on 26 September 1946, as a representative body of management of banking in India operating in India.
• It is an association of Indian banks and financial institutions based in Mumbai.
• With an initial membership representing 22 banks in India in 1946, IBA currently represents 247 banking companies operating in India.
• IBA is formed for the development, coordination, and strengthening of Indian banking, and assist the member banks in various ways including implementation of new systems and adoption of standards among the members. Indian Banks' Association is managed by a managing committee, and the current managing committee consists of one chairman, 3 deputy chairmen, 1 honorary secretary, and 26 members.

The correct answer is Legal responsibility.

Key Points

• Legal responsibility is abiding by all laws and government regulations. 
• A firm's obligation to follow the rules and laws of the nation in which it conducts business is known as its legal responsibility.
• It is the duty of every firm to abide by local legislation.
• An organization that abides by the law is also one that is socially responsible because these laws are designed to benefit society as a whole. 

Important Points

• The concept of basing financial decisions on a dedication to doing good is known as economic responsibility.  
• The capacity to identify, understand, and apply a variety of moral principles and values in accordance with the norms within a particular sector or environment is known as ethical responsibility.
• A corporation's intentions, aspirations, and objectives to actively improve society at large are referred to as philanthropic responsibility.

Moral suasion is a qualitative tool used by RBI to control money supply.

Explanation -

• The Reserve Bank of India (RBI) uses various monetary policy tools to control the money supply and manage inflation in the economy. These tools can be broadly classified into two categories: quantitative and qualitative tools.
• Quantitative tools include measures like the cash reserve ratio (CRR), the statutory liquidity ratio (SLR), and open market operations (OMO), which directly affect the quantity of money in circulation.
• On the other hand, qualitative tools like moral suasion, credit rationing, and direct controls are more indirect and non-monetary in nature. These tools aim to influence the behavior of banks and other financial institutions to achieve desired economic outcomes.
• Moral suasion is a tool used by the RBI to persuade banks and other financial institutions to follow certain policies or practices that are in line with the RBI's monetary policy objectives. This tool is not legally binding, but it can be effective in influencing the behavior of market participants and controlling the money supply.

 

Therefore, option 2 - Moral suasion is a qualitative tool used by RBI to control money supply - is the correct answer. The other options, namely bank rate, open market operations, and cash reserve ratio, are quantitative tools used by RBI to control money supply.

The correct answer is Option 4.

Additional Information

• The Code of Criminal Procedure commonly called the Criminal Procedure Code is the main legislation on procedure for administration of substantive criminal law in India.
• It was enacted in 1973.
• CrPC assented on 25th January 1974.
• CrPC came into force on 1^st April 1974.
• It provides the machinery for the investigation of crime, apprehension of suspected criminals, collection of evidence, determination of guilt or innocence of the accused person and the determination of punishment of the guilty.
• It also deals with public nuisance, prevention of offences and maintenance of wife, child and parents.
• At present, the act contains 565 sections, 5 schedules and 56 forms.
• The sections are divided into 46 chapters.
• Section 167 in The Code Of Criminal Procedure, 1973.
• Procedure when investigation cannot be completed in twenty-four hours.
  • (1) Whenever any person is arrested and detained in custody and it appears that the investigation cannot be completed within the period of twenty- four hours fixed by section 57.
  • There are grounds for believing that the accusation or information is well-founded, the officer in charge of the police station or the police officer making the investigation.
  • If he is not below the rank of sub-inspector, shall forthwith transmit to the nearest Judicial Magistrate a copy of the entries in the diary hereinafter prescribed relating to the case, and shall at the same time forward the accused to such Magistrate.
  • (2) The Magistrate to whom an accused person is forwarded under this section may, whether he has or has not jurisdiction to try the case, from time to time, authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole; and if he has no jurisdiction to try the case or commit it for trial, and considers further detention unnecessary, he may order the accused to be forwarded to a Magistrate having such jurisdiction:
  • Provided that-
    • (a) the Magistrate may authorise the detention of the accused person, otherwise than in the custody of the police, beyond the period of fifteen days; if he is satisfied that adequate grounds exist for doing so, but no Magistrate shall authorise the detention of the accused person in custody under this paragraph for a total period exceeding,-
      • (i) ninety days, where the investigation relates to an offence punishable with death, imprisonment for life or imprisonment for a term of not less than ten years;
      • (ii) sixty days, where the investigation relates to any other offence, and, on the expiry of the said period of ninety days, or sixty days, as the case may be, the accused person shall be released on bail if he is prepared to and does furnish bail, and every person released on bail under this sub-section shall be deemed to be so released under the provisions of Chapter XXXIII for the purposes of that Chapter.
    • (b) no Magistrate shall authorise detention in any custody under this section unless the accused is produced before him.
    • (c) no Magistrate of the second class, not specially empowered in this behalf by the High Court, shall authorise detention in the custody of the police.
  • (2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), the officer in charge of the police station or the police officer making the investigation, 

The correct answer is Prompt Corrective Action

Key Points

• RBI’s Prompt Corrective Action Framework is a set of guidelines for banks that are weak in terms of identified indicators
• These indicators include: poor asset quality, insufficient capital and insufficient profit or losses.
• The PCA is an early intervention package or resolution guideline by the RBI when a bank turns weak in terms of the identified indicators.
• The Reserve Bank of India initiated the Scheme of Prompt Corrective Action in 2002 to discipline banks when they report poor and risky financial performance.
• PCA is a policy action guideline (first in May 2014 and revised effective from April 1, 2017) if a commercial bank’s financial condition worsens below a mark.
• In early 2018, there were 12 banks under PCA framework. 
• As of March 9, 2019, there were only six banks (all PSBs) under the PCA framework.

Option 1, 3 & 4 do not form part of any known abbreviation in the subject matter domain and hence the options can be easily eliminated based on the general understanding and knowledge.  

Additional Information

The parameters that invite corrective action from the central bank are:

1. Capital to Risk weighted Asset Ratio (CRAR)
2. Net Non-Performing Assets (NPA) and
3. Return on Assets (RoA)
4. Leverage ratio

What the banks under PCA should do?

• It should face restrictions on distributing dividends, remitting profits and even on accepting certain kinds of deposits.
• There are restrictions on the expansion of branch networks, and the lenders need to maintain higher provisions, along with caps on management compensation and directors’ fees.
• The entire thrust of the PCA framework is to prevent further capital erosion and to bring back the bank to normal healthy conditions.

The correct answer is  option 4, i.e. Section 13.

• Negotiability means transfer of an instrument from a person / entity to another person / entity.
• Negotiable instruments are documents meant for making payments, the ownership of which can be transferred from one person to another many times before the final payment is made.
• According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument means “promissory note, bill of exchange, or cheque, payable either to order or to bearer”
• According to the Negotiable Instruments Act, 1881 there are just three types of negotiable instruments i.e., promissory note, bill of exchange and cheque.
•  However many other documents are also recognized as negotiable instruments on the basis of custom and usage, like hundis, treasury bills, share warrants, etc., provided they possess the features of negotiability.
• There are 147 different sections in this act. 

The correct answer is price stability.

Key Points Monetary Policy:

• Monetary policy refers to the policy of the central bank with regard to the use of monetary instruments under its control to achieve the goals specified in the Act.
• The Reserve Bank of India (RBI) is vested with the responsibility of conducting monetary policy. This responsibility is explicitly mandated under the Reserve Bank of India Act, 1934.

Important Points

• The primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth. 
  • Price stability is a necessary precondition to sustainable growth.
• RBI Act, 1934 was amended in May 2016  to provide a statutory basis for the implementation of the flexible inflation-targeting framework.
• Inflation-Targeting means to control price or to maintain price stability.
•  Inflation target to be set by the Government of India, in consultation with the RBI, once in every five years.
• The inflation target of monetary policy is 4% Consumer Price Index with an upper tolerance limit 6% and lower tolerance limit of 2%.