part 5

Question 1

Every scheduled bank must submit a return every alternate ________________ , showing its financial data at the close of business on that day

Answer 1

Friday

Question 2

The return must be sent within _______________ days after the date it relates to

Answer 2

seven

Question 3

If the alternate Friday is a public holiday, the figures for the ___________________- must be submitted but will still be treated as relating to that Friday.

Answer 3

previous working day

Question 4

If the bank faces practical difficulties due to geographical reasons, it may be allowed to submit a ____________________-

Answer 4

provisional return followed by a final return or submit a monthly return instead of a fortnightly one.

Question 5

The return must include

Answer 5

Demand and time liabilities and borrowings from banks in India, classified accordingly.
Legal tender notes and coins held by the bank in India.
Balances held by the bank at the central bank (likely the Reserve Bank of India).
Balances held at other banks in current accounts and money held at call and short notice in India.
Investments in Central and State Government securities, including treasury bills and deposit receipts (at book value).
Advances in India (likely loans and credit issued).
Inland and foreign bills purchased and discounted.

Question 6

special return must be submitted within _________________ days of the date to which it relates, just like the regular fortnightly return.

Answer 6

seven

Question 7

If the bank’s average daily balance during any given fortnight falls below the prescribed minimum, the bank is subject to a

Answer 7

The rate of penal interest for the first fortnight in which the shortfall occurs is 3% above the bank rate

Question 8

If the bank continues to fall below the prescribed minimum in the next succeeding fortnight, the penal interest increases to

Answer 8

5% above the bank rate.

Question 9

If, after penal interest at the increased rate of 5% above the bank rate has been imposed, the bank still fails to maintain the prescribed minimum balance in the next succeeding fortnight,

Answer 9

Any director, manager, or secretary of the scheduled bank who knowingly and willfully participates in or allows the continued default shall be subject to personal penalties, as follows:
A fine of up to 500 rupees.
An additional fine of up to 500 rupees for each subsequent fortnight during which the default continues.

The central bank (referred to as “the Bank”) has the authority to prohibit the scheduled bank from accepting any fresh deposits after the defaulting fortnight.

Question 10

If the scheduled bank continues to accept deposits despite being prohibited from doing so

Answer 10

Any director or officer of the bank who knowingly and willfully participates in this violation, or who through negligence or otherwise contributes to the violation, will face further penalties.
The fine can be up to 500 rupees for each day beyond the first day on which a deposit is improperly retained by the bank after receiving it in violation of the prohibition.

Question 11

The term “officer” is defined to include roles such as

Answer 11

manager, secretary, branch manager, and branch secretary.

Question 12

Subsection (2) likely refers to the requirement for scheduled banks to submit periodic financial returns to the central bank (such as details of demand and time liabilities, advances, investments, etc.) on alternate Fridays, or as specified.
If a scheduled bank fails to comply with these provisions,

Answer 12

The scheduled bank is liable to pay a penalty of 100 rupees for each day that the failure to submit the required return continues.

Question 13

Penalties imposed under sub-sections (3) and (4) (likely related to penal interest or other fines for non-compliance with minimum balance or reporting requirements) must be paid within

Answer 13

14 days from the date the notice demanding payment is served on the scheduled bank.

Question 14

If the bank fails to pay the penalty within this 14-day period, the penalty can be recovered through the

Answer 14

principal civil court having jurisdiction over the area where an office of the defaulting bank is located.

Question 15

“Scheduled Bank.” Eligibility Criteria for Inclusion:

Answer 15

Carries on the business of banking in India.
Has a paid-up capital and reserves of an aggregate value of at least five lakhs of rupees (₹500,000).
Satisfies the central bank that its affairs are not being conducted in a manner detrimental to the interests of its depositors. This is a key requirement to ensure the bank’s operations are sound and do not pose a risk to the public or depositors.
Is:
A State Co-operative Bank, or
A company as defined in Section 3 of the Companies Act, 1956, or
An institution notified by the Central Government in this regard, or
A corporation or company incorporated under any law in force in a place outside India.

Question 16

The central bank (likely the Reserve Bank of India) can direct the exclusion of any bank from the Second Schedule (making it no longer a Scheduled Bank) if it meets any of the following conditions:

Answer 16

(i) Paid-up Capital and Reserves Drop Below ₹5 Lakhs:

ii) If the central bank, after conducting an inspection under Section 35 of the Banking Regulation Act, 1949, determines that the bank is conducting its affairs in a manner harmful to the interests of its depositors, the bank can be excluded.

(iii) Liquidation or Cessation of Banking Business:

Question 17

The central bank may defer exclusion for a reasonable period to give the scheduled bank time to:

Answer 17

Increase its paid-up capital and reserves back to at least ₹5 lakhs (if the issue is a shortfall in capital or reserves under sub-clause (i)), or
Rectify the defects in the conduct of its affairs (if the issue relates to sub-clause (ii) and the bank’s management is acting against depositor interests).

Question 18

When deciding whether to include or exclude a State co-operative bank or a regional rural bank from the Second Schedule, the central bank can rely on information provided by the

Answer 18

National Bank (likely referring to the National Bank for Agriculture and Rural Development (NABARD)).

Question 19

43.

Answer 19

Publication of consolidated statement by the Bank

Question 20

43A.

Answer 20

Protection of action taken in good faith.

Question 21

No suit or other legal proceeding shall lie against the Bank or any of its officers for anything which is in

Answer 21

good faith done or intended to be done in pursuance of section 42 or section 43

Question 22

45.

Answer 22

Appointment of Agents

Question 23

The Bank has the authority to appoint various banks as agents for specific purposes, depending on public interest and convenience. This can include:

Answer 23

The National Bank.
State Banks.
Newly constituted banks as per the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
Any subsidiary banks as defined by the State Bank of India (Subsidiary Banks) Act of 1959.