300+ TOP Banking Regulation Act 1949 MCQs and Answers Quiz

Banking Regulation Act 1949 Multiple Choice Questions

1. Which among the following activities are undertaken by investment banker?

  1. Underwriting Securities
  2. Providing Loans
  3. Acts as CRA
  4. All of the above

Answer: 1
Investment banking is the division of a bank or financial institution that serves governments, corporations, and institutions by providing underwriting

2. Who regulates Mutual Fund business in India?

  1. RBI
  2. IRDAI
  3. SEBI
  4. AMFI

Answer: 3
Mutual funds in India are regulated and monitored by the Securities and Exchange Board of India (SEBI), which strives to protect the interests of investors

3. Who is the regulator of insurance business in India? 

  1. RBI
  2. IRDAI
  3. SEBI
  4. NABARD

Answer: 2
Insurance Regulatory and Development Authority of India (IRDAI), is a statutory body formed under an Act of Parliament, i.e., Insurance Regulatory and Development Authority Act, 1999 (IRDAI Act 1999) for overall supervision and development of the Insurance sector in India.

4. Which among the following is India’s first listed Exchange? 

  1. BSE
  2. NSE
  3. KCX
  4. MCX

Answer: 4
The Multi Commodity Exchange of India Limited (MCX, India’s first listed exchange, is a state-of-the-art, commodity derivatives exchange that facilitates online trading of commodity derivatives transactions, thereby providing a platform for price discovery and risk management.

5. Which among the following is not the asset in which banks can invest for maintaining SLR?

  1. Cash
  2. Gold
  3. Debentures
  4. SLR securities

Answer: 3
Statutory Liquidity Ratio or SLR is a minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold or other securities. It is basically the reserve requirement that banks are expected to keep before offering credit to customers

6. What is the penal interest that scheduled commercial banks have to pay to RBI in case it fails to maintain the required amount of SLR?

  1. Bank Rate + 3%
  2. Bank Rate + 5%
  3. Base Rate + 3%
  4. Base Rate + 5%

Answer: 2
If a banking company fails to maintain the required amount of SLR, it shall be liable to pay to RBI in respect of that default, the penal interest for that day at the rate of three per cent per annum above the Bank Rate on the shortfall and if the default continues on the next succeeding working day, the penal interest may be increased to a rate of five per cent per annum above the Bank Rate for the concerned days of default on the shortfall.

7. Which instrument is traded under Open Marker Operations (OMO) in India? 

  1. Bonds
  2. Stocks
  3. Currency
  4. Government securities

Answer: 4
Open market operations refer to the selling and purchasing of the treasury bills and government securities by the central bank of any country, in order to regulate money supply in the economy.

8. RBI has temporarily increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to ____ of their Net Demand and Time Liabilities (NDTL) till March 2021. 

  1. 2.5%
  2. 3%
  3. 3.5%
  4. 4%

Answer: 2
The RBI, as a temporary measure, had increased the borrowing limit for scheduled banks under the marginal standing facility (MSF) scheme from 2 per cent to 3 per cent of their Net Demand and Time Liabilities (NDTL) with effect from March 27, 2020

9. What is the minimum amount of money that banks can borrow under MSF?  

  1. Rs 1 crore
  2. Rs 2 crore
  3. Rs 5 crore
  4. Rs 10 crore

Answer: 1
The minimum amount for which RBI receives application is Rs.1 Crore, and afterward in multiples of Rs.1 Crore.

10. Who is the issuer of currency in India? 

  1. Ministry of finance
  2. RBI
  3. Department of Financial Services
  4. SBI

Answer: 2
The Reserve Bank of India is the nation’s sole note issuing authority. Along with the Government of India, RBI is responsible for the design, production and overall management of the nation’s currency, with the goal of ensuring an adequate supply of clean and genuine notes.

11. RBI has power to issue currency notes upto to value of ____Rs? 

  1. Rs 1000
  2. Rs 2000
  3. Rs 5000
  4. Rs 10000

Answer: 4
RBI can issue any note of any denomination but NOT exceeding Rs. 10,000. The notes denomination is notified by Government and RBI acts accordingly. Under Section 22 of the Reserve Bank of India Act, RBI has sole right to issue currency notes of various denominations except one rupee notes

11. Which among the following is not a function of RBI?

  1. Banker to the Central government
  2. Banker to those state government which have entered into agreement with it
  3. Banker to banks
  4. Lender of last resort
  5. All above are correct

Answer: 5

12. The Reserve Bank of India performs the supervisory function under the guidance of the _______.

  1. Department of Economic Affairs
  2. Ministry of Finance
  3. Board for Financial Supervision (BFS)
  4. IFMS

Answer: 3
The Reserve Bank of India performs this function under the guidance of the Board for Financial Supervision (BFS). The Board was constituted in November 1994 as a committee of the Central Board of Directors of the Reserve Bank of India. Primary objective of BFS is to undertake consolidated supervision of the financial sector comprising commercial banks, financial institutions and non-banking finance companies.

13. Who administers the FEMA Act, 1999? 

  1. RBI
  2. SEBI
  3. AMFI
  4. Directorate of Enforcement

Answer: 1
RBI administers the FEMA and Directorate of Enforcement (ED) is the authority for the enforcement of FEMA

14. Which among the following is not the principle followed by RBI while investing in foreign assets? 

  1. Safety
  2. Liquidity
  3. Return
  4. High Risk

Answer: 4
While investing in foreign assets no Central Banking authority likes to get involved in high risk assets.

15. Which report of RBI discloses forex reserve position of RBI to the market? 

  1. Report on Trend and Progress of Banking in India
  2. Weekly Statistical Supplement
  3. Basic Statistical Returns of Scheduled Commercial Banks in India
  4. Report on Currency and Finance

Answer: 2
Weekly Statistical Supplement provides forex reserve data and the changes in that week. It also talks about the RBI Balance sheet, Reserve money, Money Supply, Bank Credit etc

16. Who acts as regulator and supervisor of payments and settlement system in country?

  1. NPCI
  2. SEBI
  3. RBI
  4. CCIL

Answer: 3
The Payment and Settlement Systems Act of 2007 (PSS Act) gives the Reserve Bank oversight authority, including regulation and supervision, for the payment and settlement systems in the country

17. Financial Stability Report is published on ____ basis?

  1. Yearly
  2. Monthly
  3. Quarterly
  4. Half-Yearly

Answer: 4
The Financial Stability Reports, published on half-yearly basis by Reserve Bank of India, after approved by FSDC Sub-Committee. It is published in January and July every year

18. Who is the ex-officio chairperson of sub-committee of FSDC? 

  1. RBI Governor
  2. Finance Minister
  3. Finance Secretary
  4. Prime Minister

Answer: 1
FSDC sub-committee is headed by the Governor of RBI

19. A banking company cannot hold shares in any company whether as pledgee, mortgagee or absolute owner of an amount exceeding _____ of the paid-up capital of that company or _____ of its own paid-up capital and reserves, , whichever is less.

  1. 20%, 25%
  2. 20%, 30%
  3. 25%, 25%
  4. 30%, 30%

Answer: 4
Sub-section (2) of the Section 19 of the Banking Regulation Act, 1949 provides that no banking company shall hold shares in any company, whether as pledgee, mortgagee or absolute owner, of any amount exceeding 30 per cent of the paid –up share capital of that company or 30 per cent of its own paid-up share capital and reserves

20. The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based) should not exceed __ of its net worth as on March 31 of the previous year

  1. 30%
  2. 40%
  3. 50%
  4. 60%

Answer: 4
The aggregate exposure of a bank to the capital markets in all forms (both fund based and non-fund based) should not exceed 40 per cent of its net worth (as defined in paragraph 2.3.4), as on March 31 of the previous year. Within this overall ceiling, the bank’s direct investment in shares, convertible bonds / debentures, units of equity-oriented mutual funds and all exposures to Venture Capital Funds (VCFs) [both registered and unregistered] should not exceed 20 per cent of its net worth.

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