C7-1

Question 1

In the discharge of their role of financial intermediaries, banks perform transformation functions – of

Answer 1

size, risk, liquidity and maturity,

Question 2

goals of regulation,

Answer 2

depositor protection, systemic stability and fostering of competition, etc.,

Question 3

several aspects that banking regulation is not intended to

Answer 3

Firstly, preventing the failure of individual banks is not the primary focus of banking regulation, subject to the condition that depositors are protected, financial stability is not affected, and adequate banking services are maintained. Secondly, banking regulation should not substitute banker’s commercial decisions about its operations. Finally, banking regulation should not favour certain groups over others. Banks also should not be protected from competition from other institutions.

Question 4

Company law was introduced in India with the

Answer 4

Companies Act 43 of 1850

Question 5

Companies Act 43 of 1850 was based on

Answer 5

English Companies Act, 1844.

Question 6

The Banking Regulation (BR) Act was passed on

Answer 6

February 17, 1949

Question 7

SBI Act

Answer 7

1955

Question 8

Banking Companies (ATU) Act

Answer 8

1970 and 1980

Question 9

RRB Act

Answer 9

1976

Question 10

________________- was inserted in Banking Regulation Act to regulate functioning of Co-operative banks.

Answer 10

Section 56

Question 11

Further in ____________, Section 56 was inserted in Banking Regulation Act to regulate functioning of Co-operative banks.

Answer 11

1965

Question 12

since ______________ , licenses for differentiated banks (niche banks) are also being issued alongside licenses for universal banks.

Answer 12

2015

Question 13

The equity of the RRBs was contributed by the Central Government, State Government concerned and the sponsor bank in the proportion of

Answer 13

50:15:35

Question 14

Permission for opening of branches by foreign banks in India is guided by India’s commitment to

Answer 14

WTO

Question 15

The RBI issues license only after

Answer 15

‘tests of entry’ are fulfilled.

Question 16

The minimum statutory requirements for setting up new banks in India are stipulated in the

Answer 16

Banking Regulation Act, 1949

Question 17

In the past, bank licenses for setting up Universal Banks (UBs) were given on a

Answer 17

‘Stop and Go’ basis.

Question 18

Stop and Go’ basis. Accordingly, ______________ licenses were issued based on Guidelines on Entry of New Private Sector banks issued in 1993.

Answer 18

10

Question 19

Stop and Go’ basis, ____________ licenses were issued each based on licensing Banks guidelines issued in 2001 and 2013.

Answer 19

2

Question 20

The licensing policy was reviewed and has been replaced with a ‘continuous authorisation’/ On tap licensing policy in _________

Answer 20

2016

Question 21

licensing of SFB and PB were made on tap on

Answer 21

2019

Question 22

RBI liberalised the branch licensing norms wherein all domestic commercial banks (other than RRBs, Local Area Banks and Payments Banks) are permitted to open, Banking Outlets in ___________ centres without having the need to take permission from RBI in each case.

Answer 22

Tier 1 to Tier 6

Question 23

Domestic commercial banks have been advised to open at least ________-% of such ‘banking outlets’ in unbanked rural centres

Answer 23

25

Question 24

DBU

Answer 24

digital banking unit

Question 25

Further, Reserve Bank introduced the concept of Digital Banking Units (DBU) in ___________

Answer 25

April 2022,

Question 26

crr

Answer 26

Commercial banks are required to maintain a certain portion of their Net Demand and Time Liabilities (NDTL) in the form of cash

Question 27

IRACP)

Answer 27

Income Recognition and Asset Classification and Provisioning (IRACP) Norms

Question 28

Illustratively, if the interest and/or instalment of principal of a term loan remains overdue for a period of __________- days, the banks are required to classify them as non-performing loans.

Answer 28

90

Question 29

he Basel framework evolved over a period since the introduction of Basel I framework in 1988, which required the banks to hold capital as a percentage of their

Answer 29

credit risk exposures

Question 30

Gradually, basel framework was expanded to include other risks on the banks’ balance sheet such as

Answer 30

market risk and operational risk.

Question 31

introduction of Basel I framework in

Answer 31

1988

Question 32

The comprehensive Basel II guidelines issued in

Answer 32

2006

Question 33

Liquidity Coverage Ratio (LCR): Introduced to ensure banks hold enough high-quality liquid assets (HQLA) to survive a ________-day stress scenario

Answer 33

30

Question 34

LCR

Answer 34

Liquidity Coverage Ratio

Question 35

NSFR

Answer 35

Net Stable Funding Ratio

Question 36

Net Stable Funding Ratio (NSFR): This ratio requires banks to maintain a stable funding profile in relation to the composition of their assets and off-balance sheet activities over a ______ -year horizon.

Answer 36

one

Question 37

Capital Conservation Buffer:

Answer 37

An additional buffer of capital above the minimum requirement to absorb losses during periods of stress.

Question 38

Countercyclical Capital Buffer:

Answer 38

A buffer that varies based on the economic cycle to counteract the build-up of systemic risk.

Question 39

LCR: Effective from

Answer 39

June 9, 2014, globally, with full implementation in many jurisdictions by 2019.

Question 40

NSFR: Effective from

Answer 40

October 1, 2021

Question 41

BIC

Answer 41

Business Indicator Component (BIC): This is calculated based on financial statement data like interest income, fees, and other operational income. It’s meant to reflect the scale and complexity of a bank’s operations

Question 42

ILM

Answer 42

Internal Loss Multiplier (ILM): Applied to larger banks, this multiplier adjusts the capital requirement based on historical loss data, providing a more risk-sensitive measure. If a bank has experienced significant operational losses, its capital charge would be higher.