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part 4 Flashcards

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1
Q

29.

A

Bank exempt from stamp duty on bank notes.

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2
Q

30.

A

Powers of Central Government to supersede Central Board.

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3
Q

If the Central Government believes that the Bank has not fulfilled its obligations under the applicable Act, it can issue a notification in the _________________ to declare the Central Board (governing body of the Bank) to be superseded.

A

Gazette of India

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4
Q

If the Central Government takes the action to supersede the Central Board, it is required to present a detailed report to Parliament. The report must be submitted to Parliament as soon as possible, but in any case within ___________ of the notification being issued.

A

three months

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5
Q

31.

A

Issue of demand bills and notes.

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6
Q

________________ can draw, accept, make, or issue bills of exchange, hundis, promissory notes, or engagements for payment of money payable to bearer on demand.

A

Bank or the Central Government (as expressly authorized by the Act)

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7
Q

______________- payable to bearer on demand or otherwise can be drawn on a person’s account with a banker, shroff, or agents.

A

Cheques or drafts (including hundis)

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8
Q

Even under the ____________________ no person in India, other than the Bank or the Central Government (as authorized by this Act), is allowed to issue or make any promissory note that is expressed to be payable to the bearer of the instrument.

A

Negotiable Instruments Act, 1881,

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9
Q

The Central Government is allowed to authorize ______________ to issue electoral bonds.

A

scheduled banks

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10
Q

33.

A

Assets of the Issue Department.

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11
Q

assets of the Issue Department must include:

A

Gold coin

Gold bullion (uncoined gold in bulk form)

Foreign securities (investments or instruments held in foreign currencies or foreign institutions)

Rupee coin

Rupee securities (government bonds or other financial instruments denominated in rupees)

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12
Q

The total value of these assets must always be at least equal to

A

the total of the liabilities of the Issue Department

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13
Q

The combined value of the following assets held by the Issue Department must not be less than

A

200 crore rupees

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14
Q

value of gold alone (including both gold coin and gold bullion) must not be less than _____________ at any time.

A

115 crore rupees

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15
Q

The remainder of the assets (after meeting the minimum requirements for gold and foreign securities) shall consist of:

A

Rupee Coin: Indian currency in the form of coins.

Government of India Rupee Securities: These are bonds or debt instruments issued by the Government of India, which may have any maturity (short-term or long-term).

Promissory Notes from the National Bank: These are promissory notes issued by the National Bank (likely the National Bank for Agriculture and Rural Development, NABARD, or similar institutions), specifically for loans or advances made under clause (4E) of section 17 of the Act.

Bills of Exchange and Promissory Notes Payable in India: These are short-term financial instruments (bills of exchange and promissory notes) that are payable in India. They must meet the eligibility criteria for purchase by the Bank, which are outlined in the following sections:

Sub-clause (a), (b), and (bb) of clause (2) of section 17: These clauses define the kinds of bills and promissory notes that the Bank can purchase.
Clause (1) of section 18: This specifies further rules on the Bank’s ability to purchase or discount bills of exchange and promissory notes.

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16
Q

Rupee coins are to be valued at their

A

face value (i.e., their nominal or stated value).

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17
Q

Securities (such as government bonds or other financial instruments) are to be valued at

A

rates not exceeding the market rates at the time.

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18
Q

_________________ of the total value of the gold coin and gold bullion held as assets must be physically located within India.

A

Seventeen-twentieths (or 85%)

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19
Q

Gold that belongs to the Bank but is temporarily held in

A

Another bank,
A mint (where coins are produced),
A treasury,
Or is in transit (being transported),

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20
Q

The foreign securities that may be held as part of the assets must be payable in the currency of a ________________________

A

foreign country that is a member of the International Monetary Fund (IMF).

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21
Q

Balances and Securities:

A

Balances with the central bank or principal currency authority of a foreign country that is an IMF member.
Other balances or securities in foreign currency maintained with or issued by:
The International Monetary Fund (IMF)
The International Bank for Reconstruction and Development (IBRD) (World Bank)
The International Development Association (IDA)
The International Finance Corporation (IFC)
The Asian Development Bank (ADB)
The Bank for International Settlements (BIS)
Any banking or financial institution approved by the Central Government.

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22
Q

eligible Balances and Securities must be repayable within ________________ years.

A

ten

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23
Q

Eligible Foreign Securities (Payable in Foreign Currency) are

A

(i) Balances and Securities:
(ii) Bills of Exchange:
(iii) Foreign Government Securities:

24
Q

(ii) Bills of Exchange:

A

Bills of exchange with at least two good signatures that are:
Drawn on and payable in a foreign country that is an IMF member.
Having a maturity not exceeding ninety days.

25
Q

(iii) Foreign Government Securities:

A

The assets may also include drawing rights that represent a liability of the International Monetary Fund (IMF), often referred to as Special Drawing Rights (SDRs).

26
Q

SDRs are an international type of monetary resource issued by the ________________

A

IMF and serve as a reserve asset

27
Q

34.

A

Liabilities of the Issue Department.

28
Q

The liabilities consist of an amount equal to the total value of:

A

Currency notes of the Government of India (which could refer to older notes issued directly by the government).
Bank notes (notes issued by the central bank) that are currently in circulation.

29
Q

37.

A

Suspension of assets requirements as to foreign securities.

30
Q

The Bank is allowed to hold foreign securities of a lower value than what is mandated by sub-section (2) of section 33, which prescribes minimum asset requirements (including foreign securities) for the Bank’s liabilities. This reduction in the amount of foreign securities can only be done with the prior approval of ___________________

A

Central Government.

31
Q

The approval to hold fewer foreign securities can be granted for an initial period of up to _______________

A

six months

32
Q

After the initial six-month period, the Bank may seek extensions for holding a lower amount of foreign securities, but each extension Cannot exceed a period of

A

three months at a time.

33
Q

38.

A

Obligations of Government and the Bank in respect of rupee coin.

34
Q

39.

A

Obligation to supply different forms of currency.

35
Q

The Bank is required to issue rupee coins upon demand. This can be done in exchange for: ____________________

A

Bank notes (which are issued by the Reserve Bank).
Currency notes of the Government of India.

36
Q

40.

A

Transactions in foreign exchange.

37
Q

The Bank is mandated to sell or buy foreign exchange to or from any authorized person who makes a demand at its offices located in:

A

Bombay (Mumbai)
Calcutta (Kolkata)
Delhi
Madras (Chennai)
Additionally, this may include other branches as determined by the Central Government through an order.

38
Q

The rates of exchange must take into account the Bank’s obligations to the______________ , ensuring compliance with international financial standards.

A

International Monetary Fund (IMF)

39
Q

No person is entitled to demand the buying or selling of foreign exchange for an amount less than

A

two lakhs of rupees (200,000 rupees).

40
Q

The term “authorized person” refers to individuals or entities that are entitled to buy or sell foreign exchange under the provisions of the

A

Foreign Exchange Regulation Act, 1973.

41
Q

42.

A

Cash reserves of scheduled banks to be kept with the Bank.

42
Q

Every bank included in the Second Schedule must maintain an average daily balance with the Bank.
This balance should be not less than a specified percentage of the bank’s total _________________ in India, as shown in their return referred to in sub-section (2).

A

demand and time liabilities

43
Q

Every bank included in the Second Schedule must maintain an average daily balance with the Bank.
This balance should be not less than a specified percentage of the bank’s total demand and time liabilities in India, as shown in their return referred to in sub-section (2).
The percentage is determined by the Bank and notified in the ________________ , taking into account the need for
___________________ in the country.

A

Gazette of India

monetary stability

44
Q

Average Daily Balance: The average of the balances held at the close of business each day over a

A

fortnight (a period of 14 days).

45
Q

Fortnight: Defined as the period from

A

Saturday to the second following Friday.

46
Q

Exclusions from Liabilities:

A

(i) Paid-up Capital, Reserves, and Profit and Loss Balances:

Paid-up Capital: The amount of money that shareholders have paid in for shares in the bank.
Reserves: Funds set aside from profits for future use, often for contingencies.
Credit Balance in the Profit and Loss Account: This refers to profits that have not been distributed to shareholders, which do not count as liabilities.

47
Q

Exclusions from Liabilities:

Part 2

A

(ii) Loans from Financial Institutions:

Any loan taken from:
The Bank
Exim Bank
Reconstruction Bank
National Housing Bank
National Bank
Small Industries Bank
Other development financial institutions.

48
Q

For State co-operative banks, liabilities do not include

A

Any loan taken from a State Government.
Loans from the National Co-operative Development Corporation established under the National Co-operative Development Corporation Act, 1962.
Any deposits representing reserve funds maintained with the co-operative bank by any co-operative society operating within its area.

49
Q

In the case of _________________ that have granted an advance against a balance maintained with them, this balance will not be included as a liability to the extent of the amount outstanding in respect of that advance

A

State co-operative banks

50
Q

For Regional Rural Banks, any loans taken from ________ are also excluded from the calculation of liabilities.

A

their Sponsor Bank

51
Q

For a scheduled bank (not a State co-operative bank), the total liabilities will be adjusted by subtracting certain amounts. Specifically, the aggregate liabilities to the following institutions will be excluded from their total liabilities:

A

i) State Bank: Any liabilities owed to the State Bank of India.
(ii) Subsidiary Banks: Liabilities to a subsidiary bank, as defined in Section 2 of the State Bank of India (Subsidiary Banks) Act, 1959.
(iii) Corresponding New Banks (1970): Liabilities to any new bank that was constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
(iiia) Corresponding New Banks (1980): This includes liabilities to any corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
(iv) Banking Companies: Liabilities to any banking company as defined in Clause (c) of Section 5 of the Banking Regulation Act, 1949.
(v) Co-operative Banks: Liabilities to any co-operative bank.
(vi) Other Financial Institutions: Any liabilities to financial institutions that have been notified by the Central Government for this purpose.

52
Q

For a scheduled bank that is a State co-operative bank, the total liabilities will be adjusted by subtracting amounts owed to the following institutions:

A

(i) State Bank: Any liabilities to the State Bank of India.
(ii) Subsidiary Banks: Liabilities to a subsidiary bank, as defined in Section 2 of the State Bank of India (Subsidiary Banks) Act, 1959.
(iii) Corresponding New Banks (1970): Liabilities to any new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
(iiia) Corresponding New Banks (1980): This includes liabilities to any corresponding new bank constituted under Section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980.
(iv) Banking Companies: Liabilities to any banking company as defined in Clause (c) of Section 5 of the Banking Regulation Act, 1949.
(v) Other Financial Institutions: Any liabilities to financial institutions that have been notified by the Central Government for this purpose.

53
Q

The additional average daily balance that banks must maintain will be calculated based on the excess of

A

the total demand and time liabilities

54
Q

The additional balance that banks are required to maintain cannot exceed the

A

calculated excess of the total demand and time liabilities over the prescribed balance. This ensures that the requirement is not overly burdensome.

55
Q

can bank issue separate notifications for different banks included in the Second Schedule to maintain additional Average Daily Balance

A

Yes

56
Q
A

rbi act (6 decks)

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