Join CAIIB WITH ASHOK on YouTube & App

BRBL MODULE - A
Top MCQs

What we will study?

*High priority MCQs of Module A?
Join CAIIB WITH ASHOK on YouTube & App
Q1. "The Committee was generally critical of the directed lending to
priority sector and felt that this resulted in overlooking of the qualitative
aspects of credit and deterioration in the quality of the loan portfolio
besides no proper appraisal of credit applications, no insistence on
collateral and very weak post credit supervision and monitoring" The
above statement refers to which Committee constituted by the
Government of India?
a) Rangarajan Committee,2000.
b) Committee on the Financial System ,1991.
c) Malhotra Committee, 2000.
d) Committee on the Exchange goods, 2002.

Answer: B
Refer page: 124, Topic: 7.2.
Explanation: Narasimham Committee 1 (1991):
In this context, the Government of India set up the first Narasimham
Committee (Committee on the Financial System- CFS) in 1991 followed by
the second Narasimham Committee (Committee on Banking Sector
Reforms) in 1998 (i.e., I and II).
Directed Credit Program: -
The Committee was generally critical of the directed lending to priority
sector and felt that this resulted in overlooking of the qualitative aspects of
credit and deterioration in the quality of the loan portfolio besides no
Join CAIIB WITH ASHOK on YouTube & App
proper appraisal of credit applications, no insistence on collateral and very
weak post credit supervision and monitoring.

Q2. What is the frequency of filing Returns of Unclaimed deposit accounts

not operated more than 10 years, by a scheduled commercial bank, in
Form IX to RBI?
a) Each month. b) Thrice in a year.
c) Twice in a year. d) Annually.

Answer: D
Refer page: 38, Topic: 3.3.
Explanation: ACCEPTANCE OF DEPOSITS:
Returns on Unclaimed Deposits: Banks have to file a return every year on
their unclaimed deposits under Section 26 of the Banking Regulation Act.
The return has to be filed within thirty days of the end of each calendar
year in the form and manner prescribed and should cover all deposits not
operated for ten years.
In the case of fixed deposits, the period of ten years starts from the expiry
of the period of the deposit.
Join CAIIB WITH ASHOK on YouTube & App
Case Study: (Q3-Q6).
AB Bank, a private sector bank is looking to appoint a person with special
knowledge as a director on its Board. The Bank has consequently
approached Mr. Ashok, an expert in Co-operation Sector with more than
15 years’ experience in his field.
Q3. As per the BR Act, 1949, what percentage of the total number of
members of the Board of directors of AB Bank should consist of persons
such as Mr. Ashok having specialist knowledge?
a) 75. b) 55.
c) 51. d) 60.

Answer: C
Refer page: 25, Topic: 2.6.
Explanation: BOARD OF DIRECTORS:
Qualifications: Section 10A of the Banking Regulation Act stipulates certain
qualifications for directors of banking companies. Accordingly, at least
fifty-one per cent of the total number of directors shall be persons, who
have special knowledge or practical experience, with respect of
accountancy, agriculture and rural economy, banking, co-operation,
economics, finance, law, small scale industry or any other matter, the
special knowledge or practical experience of which is useful to the banking
company, in the opinion of the Reserve Bank. Further, at least two of the
directors should have special knowledge or practical experience in
agriculture and rural economy or cooperation or small-scale industry.
Join CAIIB WITH ASHOK on YouTube & App
Q4. As per BR Act, 1949, which one of the following is not a field where
from, at least two of the directors having special knowledge or practical
experience should be appointed in AB Bank?
a) Co-operation. b) Agriculture and Rural Economy.
c) Small Scale industry. d) Manufacturing Sector.

Answer: D
Refer page: 25, Topic: 2.6.
Explanation: At least two of the directors should have special knowledge or
practical experience in agriculture and rural economy or cooperation or
small-scale industry.

Q5. What is the maximum period for which Mr. Ashok may continuously
hold office as director of the Bank?
a) 8 years. b) 3 years.
c) 18 years. d) 10 years.

Answer: A
Refer page: 25, Topic: 2.6.
Explanation: Period of office: The directors of a banking company shall not
hold office for more than eight years continuously. However, this provision
is not applicable to the chairman or a whole-time director.
Join CAIIB WITH ASHOK on YouTube & App
When the chairman or a whole-time director of a bank is removed from
office, he/she ceases to be a director of the bank and shall not be eligible
for further appointment as director of that banking company for a period
of four years.

Q6. Under Section 36AA of the Banking Regulation Act, the Reserve Bank of
India is empowered to remove the Chairman, Director, Chief Executive
Officer, or any other officer or employee of a banking company. In this
context, which of the following statements is not correct?
a) Before passing the order, the affected person has to be given a
reasonable opportunity of making a representation against the proposed
order.
b) The Reserve Bank has to pass such an order recording the reasons in
writing.
c) Appellate decision of Central Govt. can be challenged in a Supreme
Court.
d) An appeal against the order of removal lies with the Central
Government.

Answer: C
Refer page: 29, Topic: 2.10.
Explanation: CONTROLS OVER MANAGEMENT:
1. Power to remove Management and other personnel: The Reserve Bank
is empowered under Section 36AA of the Banking Regulation Act to
Join CAIIB WITH ASHOK on YouTube & App
remove any chairman, director, chief executive officer (by whatever name
called) or other officer or employee of a banking company.
The Reserve Bank has to pass such an order recording the reasons in
writing.
Before passing the order, the affected person has to be given a reasonable
opportunity of making a representation against the proposed order.
2. Appeal: An appeal against the order of removal lies with the Central
Government.
Such an appeal has to be filed within thirty days from the date of
communication of the order.
The appellate decision of the Central Government, and subject thereto the
order of the Reserve Bank, shall be final and not liable to be challenged in
any Civil Court.

Q7. The concept of RBI categorizing NBFCs into Base/Middle/Upper and

Top layers is based on _____ and ______?
a) Increase in assets and percentage of profit.
b) Performance enhanced and low percentage of NPA.
c) Activity and age of the NBFC since commencement.
d) Perceived Riskiness and Size.

Answer: D
Refer page: 112, Topic: 6.5.
Join CAIIB WITH ASHOK on YouTube & App
Explanation: REVISED SCALE BASED REGULATORY STRUCTURE:
The NBFCs have been divided into 4 layers based on their size, activity, and
perceived riskiness namely:
1. Base Layer.
2. Middle Layer.
3. Upper Layer.
4. Top Layer.

Q8. Under the Banking Regulation Act, 1949, prior approval from the
Reserve Bank of India is mandatory for an applicant who intends to acquire
what minimum percentage of the share capital of a banking company?
a) 8%. b) 5%.
c) 10%. d) 4%.

Answer: B
Refer page: 23, Topic: 2.4.
Explanation: SHAREHOLDING IN BANKING COMPANIES:
Voting rights of shareholders: In the above-mentioned case, RBI approval
or permission is mandatory before the Bank transfers such shares and if
such shares are registered, RBI, may order that such transferee shall not be
entitled to exercise voting rights, in a poll taking place in any of the
meetings of the Bank. This is with a view to ensure that the control of
banking companies is in the hands of fit and proper persons.
Join CAIIB WITH ASHOK on YouTube & App
It has been made mandatory for applicants to obtain prior approval from
the Reserve Bank to acquire 5% or more of the share capital of a banking
company.

Q9. The Supervision and Inspection function of Banks/NBFCs etc. is carried

out by which department of the RBI?
a) Board for Financial Supervision.
b) Department of Information Technology.
c) Department of Regulatory Authority.
d) Board of Inspection and Services.

Answer: A
Refer page: 72, Topic: 4.7.
Explanation: BOARD FOR FINANCIAL SUPERVISION:
Introduction: The BR Act, 1949 empowers the RBI to inspect and supervise
commercial banks.
The Department of Banking Supervision (DBS) was tasked with the
inspection and surveillance functions mentioned above, relating to the
commercial banks, from 1993.
In November 1994, the Board for Financial Supervision (BFS) was set up
with the objective of ensuring dedicated and integrated supervision over
credit institutions of all types which now includes Scheduled Commercial
and Cooperative Banks, All India Financial Institutions, Local Area Banks,
Join CAIIB WITH ASHOK on YouTube & App
Small Finance Banks, Payments Banks, Credit Information Companies, Non-
Banking Finance Companies and Primary Dealers.

Q10. Which statement is incorrect regarding constitution of banks?

a) Banks are companies registered under the companies Act, 1956
(Companies Act 2013).
b) The State Bank of India was constituted Under SBI Act, 1921.
c) SBI associate/Subsidiary banks was constituted under the SBI (Subsidiary
Bank) Act, 1959.
d) Foreign Banks are basically foreign companies constituted as per
statutes abroad.

Answer: B
Refer Page: 6, Topic: 1.3.
Explanation: Constitution of Banks:
1. Banks in India fall under one of the following categories:
a) Body corporate constituted under a special statute.
b) Company registered under the Companies Act, 1956 (Companies Act
2013) or a foreign company.
c) Co-operative society registered under a Central or State enactment.
2. Public Sector Banks (other than SBI): These Public Sector Banks are
constituted under the Banking Companies (Acquisition) and Transfer of
Join CAIIB WITH ASHOK on YouTube & App
Undertakings) Act, 1970 and the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1980.
3. State Bank of India (SBI): The State Bank of India was constituted under
the State Bank of India Act, 1955 while the seven associate/subsidiary
banks were constituted under the State Bank (Subsidiary Banks) Act, 1959.
4. Regional Rural Banks (RRBs): The RRBs were constituted under the
Regional Rural Banks Act, 1976.
These banks are governed by the statutes creating them as also some of
the provisions of the Banking Regulation Act and the Reserve Bank of India
Act.
5. Private Sector Banks/Foreign Banks: Most Private Sector Banks
(including Micro and Small Finance Banks) are Companies' constituted
under Section 3 of the Companies Act, 1956 or incorporated under the
Companies Act, 2013.
Foreign Banks are basically foreign companies constituted as per statutes
abroad and treated as such under section 2(42) of the Companies Act, 2013
and certain provisions of the Companies Act 1956 or 2013 become
applicable to them as provided under Section 591 of the Companies Act
1956 or Section u/s 379 of Companies Act, 2013.
All the foreign companies (treated as Foreign Banks) which transact
banking business in India are governed by the Banking Regulation Act and
the RBI Act with regard to their business of banking.
6. Co-operative Banks: A co-operative bank conducts ordinary banking
business but is established on a co-operative basis.
Join CAIIB WITH ASHOK on YouTube & App
The history of Indian cooperative banking dates back to the enactment of
the Co-operative Societies Act in 1904.

Q11. Which of the following statements is not correct regarding the NPA
classification for NBFCs?
a) The Deadline for NBFCs in Upper Layer for achieving “> 90 days overdue”
for classification of NPA under the new norm is March 31, 2026.
b) A glide path is provided to NBFCs in Base Layer to adhere to the 90 Days
NPA norm.
c) The Glide Path is not applicable for NBFCs already following the 90-days
norm.
d) The Deadline for NBFCs in Base Layer for achieving “> 90 days overdue”
for classification of NPA under the new norm is March 31, 2026.

Answer: A
Refer Page: 114, Topic: 6.6.
Explanation: NPA Classification: The extant NPA classification norm stands
changed to the overdue period of more than 90 days for all categories of
NBFCs.
A glide path (not applicable for those NBFCs that are already following the
90 days norm) is provided to NBFCs in Base Layer to adhere to the 90 days
NPA norm as under.
Join CAIIB WITH ASHOK on YouTube & App
NPA Norms Timeline

>150 days overdue. By March 31,2024.

>120 days overdue. By March 31, 2025.

> 90 days. By March 31, 2026.

Q12. What is the Minimum Initial Contribution required from the promoter
to the paid-up equity capital of a Payment Bank for the First Five Years
from the Commencement of its Business?
a) 50%. b) 40%.
c) 60%. d) 20%.

Answer: B
Refer Page: 101, Topic: 5.9.
Explanation: Payments Banks:
1. Capital requirement:
The minimum paid-up equity capital for payments banks shall be Rs. 100
crores.
The payments bank should have a leverage ratio of not less than 3 per
cent, i.e., its outside liabilities should not exceed 33.33 times its net worth
(paid-up capital and reserves).
Join CAIIB WITH ASHOK on YouTube & App
2. Promoter's contribution: The promoter's minimum initial contribution to
the paid-up equity capital of such payments bank shall be at least 40 per
cent for the first five years from the commencement of its business.

Q13. What was the primary focus of the advisory group chaired by Dr. R.H.
Patil in March 2001?
a) Inspection of issues related to Private Sector Banks.
b) Consideration of Government Sector audit in June 2002.
c) Evaluation of Corporate Governance in Indian banks.
d) Submission of a report on corporate development in June 2000.

Answer: C
Refer Page: 31, Topic: 2.11.
Explanation: Reserve Bank's approach: Following the formal policy
announcement in regard to corporate governance, in the mid-term review
of the Monetary and Credit Policy in October, 2001, the Reserve bank
constituted a Consultative Group in November, 2001 under the
chairmanship of Dr. A.S. Ganguly with a view to strengthen the internal
supervisory role of the boards of banks.
Earlier, an advisory group on corporate governance under the
chairmanship of Dr. R.H. Patil had submitted its report in March, 2001
which examined the issues relating to corporate governance in banks in
India, including the public sector banks and made recommendations to
Join CAIIB WITH ASHOK on YouTube & App
bring the governance standards in India on par with the best international
standards.

Q14. What is the minimum denomination for a Commercial paper (CP)?

a) Rs. 11 Lakh. b) Rs. 5 Lakh.
c) Rs. 7 Lakh. d) Rs. 12 Lakh.

Answer: B
Refer Page: 50, Topic: 3.9.
Explanation: In the primary market, CDs shall be issued only in
dematerialized form and held with a depository registered with Securities
and Exchange Board of India with a minimum denomination of Rs. 5 lakh
and in multiples of Rs. 5 lakhs thereafter.
Other Conditions:
• A CP shall be issued in the form of a promissory note at a discount to
face value and held in a dematerialized form through any of the
depositories approved by and registered with SEBI.
• Minimum denomination of CP shall be Rs. 5 lakh and multiples thereof.
• No issuer shall have the issue of a CP underwritten or co-accepted.
• Options (call/put) are not permitted on a CP.
• Eligible issuers, whose total CP issuance during a calendar year is Rs.
1000 crore or more, shall obtain credit rating for issuance of CPs from at
Join CAIIB WITH ASHOK on YouTube & App
least two CRAs registered with SEBI and should adopt the lower of the
two ratings.
Where both ratings are the same, the issuance shall be for the lower of the
two amounts for which ratings are obtained.

• The minimum credit rating for a CP shall be 'A3' as per rating symbol and
definition prescribed by SEBI.
• The buyback offer can be made at prevailing price and the same may not
be made before 7 days from the date of issue.

One liner:
1. Where money is borrowed or lend for period between 2 days and 14
days it is known as Notice Money.
2. Funds borrowed or lent for a single day (overnight), it is known as Call
Money.
3. Funds borrowed or lent for a mature duration exceeding 14 days
(typically up to one year), it is known as Term Money.
4. The minimum Paid – up Capital for Small Finance Banks is 200 crores.
5. DAKSH is related to Reserve Bank’s Advanced Supervisory Monitoring
System.
Join CAIIB WITH ASHOK on YouTube & App
Q15. According to Section 24(3) of the Banking Regulation Act, 1949, when
is a banking company required to submit a return of its liquid assets to the
Reserve Bank of India?
a) Within Ten Days from the End of the Month.
b) Within Fifteen Days from the End of the Month.
c) Within Twenty - five Days from the End of the Month.
d) Within Twenty Days from the End of the Month.

Answer: D
Refer Page: 67, Topic: 4.4.
Explanation: Return on Liquid Assets: Every banking company has to
submit a return of its liquid assets under Section 24(3) of the Banking
Regulation Act.
The return has to be submitted within twenty days from the end of the
month to which it relates.
The return has to be in the form prescribed under Rule 13A of the Banking
Regulation (Companies) Rules, 1949.
The return should contain particulars of assets and the demand and time
liabilities, as at the close of business of each alternate Friday or when such
a Friday is a holiday, as at the close of business of the preceding working
day.
Join CAIIB WITH ASHOK on YouTube & App
Q16. What is the prudential limit for outstanding borrowing in the Call and
Notice Money Markets that Small Finance Bank may have at the end of any
given day?
a) 125% of Total Capital Funds. b) 130% of Tier 1 Capital Funds.
c) 135% of Tier 1 Capital Funds. d) 120% of Total Capital Funds.

Answer: A
Refer Page: 49, Topic: 3.9.
Explanation:
Table 1: Prudential limits for outstanding borrowing transactions in Call, Notice and
Term Money Markets

Sr. Participant
Prudential Limit
No. Category

1 Scheduled Call, Notice and Term Money: Internal board approved limits
Commercial Banks within the prudential limits for inter-bank liabilities
prescribed by Department of Regulation.
Join CAIIB WITH ASHOK on YouTube & App
2 Small Finance
Call and Notice Money:
Banks
(i) 100% of capital funds, on a daily average basis in a
reporting fortnight, and
(ii) 125% of capital funds on any given day.
Term Money:
(i) Internal board approved limit within the prudential limits
for inter-bank liabilities.

3 Payment Banks, Call, Notice and Term Money:

and Regional Rural
Banks (i) 100% of capital funds, on a daily average basis in a
reporting fortnight, and
(ii) 125% of capital funds on any given day.

4 Co-operative Banks Call, Notice and Term Money:

(i) 2.0% of aggregate deposits as at the end of the previous

financial year.

5 Primary Dealers Call and Notice Money:

(i) 225% of Net Owned Fund (NOF) as at the end of the
previous financial year on a daily average basis in a reporting
fortnight.
Term Money:
(i) 225% of Net Owned Fund (NOF) as at the end of previous
financial year.

[Link]
Join CAIIB WITH ASHOK on YouTube & App
Q17. Which of the following is not included in the Marginal Cost of Funds
Based Lending Rate (MCLR)?
a) Marginal Cost of Funds and Nominal costs.
b) Positive Carry-on account of CRR.
c) Operating Costs and Nominal costs.
d) Maximum Tenor Premium.

Answer: B
Refer Page: 44, Topic: 3.6.
Explanation: The MCLR shall comprise of:
1. Marginal Cost of funds:
The marginal cost of funds shall comprise of Marginal cost of borrowings
and return on net worth.
The detailed methodology for computing marginal cost of funds is given in
the RBI website.
2. Negative Carry-on account of CRR:
Negative carry on the mandatory CRR which arises due to return on CRR
balances being nil, will be calculated as under:
Required CRR x (marginal cost)/ (1- CRR)
The marginal cost of funds arrived at (iii) above shall be used for arriving at
negative carry on CRR.
Join CAIIB WITH ASHOK on YouTube & App
3. Operating Costs:
All operating costs associated with providing the loan product including
cost of raising funds shall be included under this head.
It shall be ensured that the costs of providing those services which are
separately recovered by way of service charges do not form part of this
component.
4. Tenor premium:
These costs arise from loan commitments with longer tenor.
The change in tenor premium should not be borrower specific or loan class
specific.
In other words, the tenor premium will be uniform for all types of loans for
a given residual tenor.

Q18. Which of the following statements correctly describes the

relationship between Paid-up Capital and Subscribed Capital?
a) Paid-up Capital shall be equal to its Subscribed Capital.
b) Paid-up Capital shall be always greater than its Subscribed Capital.
c) Paid-up capital shall not be less than one- fourth of its subscribed
capital.
d) Paid-up capital shall not be less than half of its subscribed capital.

Answer: D
Refer Page: 22, Topic: 2.3.
Join CAIIB WITH ASHOK on YouTube & App
Explanation: Paid-up Capital, Subscribed Capital and Authorized Capital:
Apart from the above, Section 12(1) of the Banking Regulation Act
stipulates that the subscribed capital of a banking company shall not be
less than half of its authorized capital, and the paid-up capital shall not be
less than half of its subscribed capital.
If capital is increased, this requirement has to be complied within a period
not exceeding two years as allowed by the Reserve Bank.
In terms of Section 12 (1) (i) (ii) of the Banking Regulation Act, Banking
Companies are permitted to issue equity shares or equity shares and
preference shares (whether perpetual or irredeemable or redeemable).

Q19. What power does the newly inserted Section 45MAA grant to the
Reserve Bank of India with respect to the auditors of RBI-regulated
entities?
a) The power to appoint auditors for CBI – Regulated entities.
b) The power to suspend an Auditor for a period of 2 years for non –
compliance with RBI Directions.
c) The power to remove or debar an auditor for 3 years for non –
compliance with RBI Directions.
d) The Power to audit SBI – regulated entities directly.

Answer: C
Refer Page: 9, Topic: 1.4.
Join CAIIB WITH ASHOK on YouTube & App
Explanation: The new section 45MAA introduced, gives the RBI the power
to remove or debar an auditor from exercising duties as an auditor for an
RBI regulated entity for a period of 3 years, if, the RBI is satisfied that such
auditor has failed to comply with its directions.
Further for providing resolution in NBFCs after inspecting the books of
accounts of the NBFC, the RBI may, in the public interest or in the interest
of financial stability, frame schemes to preserve the continuity of the
NBFC.

Q20. Ombudsman shall not have the power to pass an Award directing
payment by way of compensation, an amount which is more than the
consequential loss suffered by the complainant or ₹___ lakh whichever is
lower?
a) 10 Lac. b) 15 Lac.
c) 20 Lac. d) 25 Lac.

Answer: C
Refer page: 54, Topic: 3.10.
Explanation: Ombudsman shall not have the power to pass an Award
directing payment by way of compensation, an amount which is more than
the consequential loss suffered by the complainant or ₹20 lakh whichever
is lower.
1. The Scheme integrates the existing three Ombudsman schemes of RBI
namely.
Join CAIIB WITH ASHOK on YouTube & App
i) the Banking Ombudsman Scheme, 2006.
ii) the Ombudsman Scheme for Non-Banking Financial Companies, 2018.
iii) the Ombudsman Scheme for Digital Transactions, 2019.
This Notification shall come into force with effect from November 01,
2025.
The Scheme covers the following regulated entities:
1. All Commercial Banks, Regional Rural Banks, State Co-operative Banks,
Central Co-operative Banks, Scheduled Primary (Urban) Co-operative
Banks, and Non-Scheduled Primary (Urban) Co-operative Banks with
deposits size of ₹50 crore and above as on the date of the audited balance
sheet of the previous financial year.
2. All Non-Banking Financial Companies (excluding Housing Finance
Companies) which
(a) Are authorized to accept deposits; or
(b) have customer interface, with an assets size of ₹100 crore and above as
on the date of the audited balance sheet of the previous financial year;
3. All System Participants as defined under the Scheme.
4. Credit Information Companies.

[Link]
Join CAIIB WITH ASHOK on YouTube & App
Q21. What is the maximum age of person can continue as MD&CEO or
WTD?
a) 50 years. b) 60 years.
c) 70 years. d) 65 years.

Answer: C
Refer page: 33, Topic: 2.12.
Explanation: No person can continue as MD&CEO or WTD beyond the age
of 70 years.
RBI vide notification dated 26th April 2022 has further clarified that subject
to the statutory approvals required from time to time, the post of the
MD&CEO or WTD cannot be held by the same incumbent for more than 15
years.
Thereafter, the individual will be eligible for re-appointment as MD&CEO
or WTD in the same bank, if considered necessary and desirable by the
board, after a minimum gap of three years, subject to meeting other
conditions.
During this three-year cooling period, the individual shall not be appointed
or associated with the bank or its group entities in any capacity, either
directly or indirectly.
It is clarified that the extant instructions on upper age limit for MD&CEO
and WTDs in the private sector banks would continue and no person can
continue as MD&CEO or WTD beyond the age of 70 years.
Join CAIIB WITH ASHOK on YouTube & App
Within the overall limit of 70 years, as part of their internal policy,
individual bank's Boards are free to prescribe a lower retirement age for
the WTDs, including the MD&CEO.
MD&CEO or WTD who is also a promoter/major shareholder, cannot hold
these posts for more than 12 years.
However, in extraordinary circumstances, at the sole discretion of the
Reserve Bank such MD&CEO or WTDs may be allowed to continue up to 15
years. While examining the matter of re-appointment of such MD&CEOS or
WTDs within the 12/15 years period, the level of progress and adherence
to the milestones for dilution of promoters' shareholding in the bank shall
also be factored in by the Reserve Bank.

Q22. The minimum amount, out of the net profit which is transferable to
the reserve fund each year after adjustment/provision towards bonus to
staff by the banks incorporated in India is _______?
a) 25 per cent. b) 20 per cent.
c) 10 per cent. d) There are no specifications.

Answer: A
Refer page: 55, Topic: 3.11.1.
Explanation: Reserve Funds
The transfer to Reserve Fund was increased, by RBI, to 25% of net profits
after tax from 31st RBI vide its circular [Link].24/ 21.04.018/
2000-2001 dated September 23, 2000 instructed that all scheduled
Join CAIIB WITH ASHOK on YouTube & App
commercial banks (excluding Foreign Banks) operating in India should
mandatorily transfer not less than 25% of the net profit (before
appropriation) to the Reserve fund with effect from the year ending 31
March 2001.
Foreign banks are allowed to remit their net profits earned from Indian
operations back to their global head offices. However, no remittance of
profits is permitted unless the mandatory 20% statutory transfer to the
local reserve fund is completed first for that financial year.

Q23. Banks should ensure that documents/records on customer

identification/address are preserve for at least -------- after the business
relationship with the customer has ended.
a) Five years. b) Twelve Years.
c) Fifteen Years. d) Ten Years.

Answer: A
Refer page: 70, Topic: 4.5.
Explanation: Retrieval:
It is also required that Banks should ensure that documents/records on
customer identification/ address (e.g. copies of documents like passports,
identity cards, driving licenses, PAN card, utility bills etc.) which have to be
mandatorily obtained while opening the account and periodically renewed
thereafter during the course of business relationship, are properly
Join CAIIB WITH ASHOK on YouTube & App
preserved for at least 5 years after the business relationship with the
customer has ended for retrieval whenever required.

Q24. The area of operation of an LAB is usually restricted to a maximum

of_____ geographically contiguous districts?
a) Four. b) Two.
c) Six. d) Three.

Answer: D
Refer page: 103, Topic: 5.10.
Explanation: LOCAL AREA BANKS (LAB):
Area of operation: The area of operation of an LAB is usually restricted to a
maximum of three geographically contiguous districts.
The activities of an LAB are also focused on local customers predominantly
in rural and semi-urban areas so as to bridge the credit gap in these areas.

Q25. From 1st October 2022, Standalone Primary Dealers (SPDs) will be
treated as part of which of the following classifications as defined under
Scale Based Regulations of NBFC?
a) BL. b) UL.
c) ML. d) TL.
Join CAIIB WITH ASHOK on YouTube & App
Answer: C
Refer page: 112, Topic: 6.5.
Explanation: Middle Layer (ML): The Middle Layer would consist of
a) All deposit taking NBFCs (NBFC-Ds), irrespective of asset size,
b) Non-deposit taking NBFCs with asset size of Rs. 1000 crore and above
and
c) NBFCs undertaking the following activities
• Standalone Primary Dealers (SPDs),
• Infrastructure Debt Fund - Non-Banking Financial Companies (IDF-
NBFCs),
• Core Investment Companies (CICs),
• Housing Finance Companies (HFCs) and
• Infrastructure Finance Companies (NBFC-IFCs).

Q26. What is the minimum regulatory Net Owned Funds (in INR Crores)
prescription for IDF-NBFC?
a) 200. b) 500.
c) 600. d) 300.

Answer: D
Refer page: 111, Topic: 6.4.
Explanation: APPLICABLE NBFCs:
Join CAIIB WITH ASHOK on YouTube & App
6. NBFC- Infrastructure Finance Company (NBFC-IFC) registered with the
RBI and having an asset size of Rs. 500 crore and above and which fulfills
the requirements as-
(a) a minimum of 75 per cent of its total assets deployed in "infrastructure
loans".
(b) Net owned funds of Rs. 300 crore or above.
(c) minimum credit rating of 'A' issued by any of the SEBI-registered Credit
Rating Agencies.
(d) CRAR of 15 per cent (with a minimum Tier I capital of 10 per cent).

Q27. Which of the following is not the objective of FSDC (Financial Sector
Development Council)?
a) To strengthen financial stability.
b) Promoting financial sector development.
c) To promote competition.
d) Maintaining Financial stability.

Answer: C
Refer page: 132, Topic: 7.7.
Explanation: FINANCIAL SECTOR DEVELOPMENT COUNCIL
The primary objective of FSDC is to strengthen and institutionalize the
mechanism for maintaining financial stability, promoting financial sector
development and enhancing internal regulatory co-ordination.
Join CAIIB WITH ASHOK on YouTube & App
Q28. Which statement is correct?
a) The top ten eligible NBFC's in terms of their asset size shall always reside
in the upper layer, irrespective of any other factor.
b) The top ten eligible NBFC's in terms of their asset size shall always reside
in the middle layer, irrespective of any other factor.
c) The top ten eligible NBFC's in terms of their asset size shall always reside
in the base layer, irrespective of any other factor.
d) The top hundred eligible NBFC's in terms of their asset size shall always
reside in the upper layer, irrespective of any other factor.

Answer: A
Refer page: 112, Topic: 6.5.
Explanation: The top ten eligible NBFC's in terms of their asset size shall
always reside in the upper layer, irrespective of any other factor.

Q29. There shall be a ceiling of ---------- per borrower for financing

subscription to Initial Public Offer (IPO) by NBFC?
a) Rs. 4 crores. b) Rs. 3 crores.
c) Rs. 2 crores. d) Rs. 1 crore.

Answer: D
Refer page: 114, Topic: 6.6.
Join CAIIB WITH ASHOK on YouTube & App
Explanation: There shall be a ceiling of Rs. 1 crore per borrower for
financing subscription to Initial Public Offer (IPO). NBFCs can fix more
conservative limits.

Q30. How many branches are mandated to adopt Core Banking Solution
(CBS) to NBFCs?
a) 4. b) 6.
c) 8. d) 10.

Answer: D
Refer page: 118, Topic: 6.9.
Explanation: Core Banking Solution:
NBFCs with 10 and more branches are mandated to adopt Core Banking
Solution (CBS).
A glide path of three years with effect from October 01, 2022 is being
provided.

Q31. The Chairman and Managing Directors are appointed for a period not
exceeding ------- and are eligible for reappointment in SBI?
a) 2 years. b) 3 years.
c) 4 years. d) 5 years.
Join CAIIB WITH ASHOK on YouTube & App
Answer: D
Refer page: 85, Topic: 5.2.
Explanation: The Chairman and Managing Directors are appointed for a
period not exceeding 5 years and are eligible for reappointment.
Maximum Single Term: Limited to 5 years per individual appointment.
Reappointment: Fully eligible for renewal when the term expires.

Q32. The Reserve Bank of India Act, 1934 was enacted to constitute the
Reserve Bank of India and came into force from?
a) 6th march 1934. b) 7th march 1934.
c) 8th march 1934. d) 7th march 1935.

Answer: A
Refer page: 7, Topic: 1.4.
Explanation: The Reserve Bank of India Act, 1934 was enacted to constitute
the Reserve Bank of India and came into force from 06-03-1934.

Q33. Within ------- days may a banking company, aggrieved by the

cancellation of its license by the Reserve Bank of India, file an appeal to the
Central government? [Answer will be given in whole number]

Answer: 30
Join CAIIB WITH ASHOK on YouTube & App
Refer page no.: 20, Topic: 2.2
Explanation: Any banking company aggrieved by the decision of the
Reserve Bank cancelling a license under this section may, within thirty days
from the date on which such decision is communicated to it, appeal to the
Central Government.
(6) The decision of the Central Government where an appeal has been
preferred to it under sub-section (5) or of the Reserve Bank where no such
appeal has been preferred shall be final."

Q34. Eligible issuers, whose total Commercial Paper (CP) issuance during a
calendar year is ____ crore or more shall obtain credit ratings for the
issuance of CPs from at least two CRAs registered with SEBI, and must
adopt the lower of the two ratings?
a) 500 crores. b) 1000 crores.
c) 1500 crores. d) 700 crores.

Answer: B
Refer page no.: 51, Topic: 3.9
Explanation: Eligible Investors:
Eligible issuers, whose total CP issuance during a calendar year is Rs. 1000
crore or more, shall obtain credit rating for issuance of CPs from at least
two CRAs registered with SEBI and should adopt the lower of the two
ratings.
Join CAIIB WITH ASHOK on YouTube & App
Where both ratings are the same, the issuance shall be for the lower of the
two amounts for which ratings are obtained.
The minimum credit rating for a CP shall be 'A3' as per rating symbol and
definition prescribed by SEBI.

Q35. Clause 41 of the SEBI Listing Agreement requires listed Companies

(which includes listed Banking Companies) to furnish unaudited financial
results on a _______basis with effect from the Quarter ending on March
31, 2000 in format provided therein, after a limited review conducted by
the auditors?
a) Quarterly. b) Half yearly.
c) Yearly. d) None of these.

Answer: A
Explanation: Moreover Clause 41 of the SEBI Listing Agreement requires
listed Companies (which includes listed Banking Companies) to furnish
unaudited financial results on a quarterly basis with effect from the
Quarter ending on March 31, 2000 in format provided therein, after a
limited review conducted by the auditors.

Q36. Under which statutory returns is the maintenance of SLR required to

be reported to the Reserve Bank of India for Schedule Commercial Bank?
a) Form VIII. b) Form A.
c) Form B. d) Form II.
Join CAIIB WITH ASHOK on YouTube & App
Answer: A
Refer page no: 59, Topic: 3.11.3.
Explanation: The maintenance of SLR shall be reported to Reserve Bank of
India under the following statutory returns:
i. Form VIII Return (for SLR) for Scheduled Commercial Banks (including
Regional Rural Banks), Small Finance Banks, Payments Banks and Local
Area Banks;
ii. Form I Return (for SLR) for all Co-operative Banks under Section 24 of the
Banking Regulation Act, 1949, (read with Section 56 thereof).
Penalty for Default: If the balance on any alternate Friday (or the preceding
working day, when such Friday is a holiday) falls below the minimum
requirement, the banking company is liable to pay to the Reserve Bank
penal interest at the rate of three per cent above bank rate on the shortfall
for the day.

Q37. What is the maximum balance holding limit per individual customer
in Payment banks?
a) 1 lakh. b) 2 lakhs.
c) 3 lakhs. d) 5 lakhs.

Answer: B
Refer page no: 101, topic: 5.9.
Explanation: Payments Banks
Join CAIIB WITH ASHOK on YouTube & App
Scope of activities:
(a) Acceptance of demand deposits.
Payment’s bank were initially restricted to holding a maximum balance of
Rs. 1,00,000 per individual customer.
However, this maximum balance holding limit per individual customer at
the end of the day has undergone revision to Rs. 2,00,000/- (Rupees Two
Lakh only) vide RBI notification dated 8th April 2021.
(b) Issuance of ATM/debit cards. Payments banks, however, cannot issue
credit cards.
(c) Payments and remittance services through various channels.

Q38. According to Banking Regulation Act, 1949, In how much duration

should banking companies apply for license after the incorporation?

a) Six months. b) Twenty months.

c) Nine Months. d) Twenty-Five months.

Answer: A
Refer page no.: 16, Topic: 2.2
Explanation:
LICENSING OF BANKING COMPANIES (INCLUDING RBI LICENCING POLICY
FOR UNIVERSAL BANKS AND SMALL FINANCE BANKS/BRANCH LICENSING):
Join CAIIB WITH ASHOK on YouTube & App
(i) License Requirement from RBI: To commence or carry on, the banking
business in India, a company requires a license from the Reserve Bank under
Section 22 of the Banking Regulation Act, 1949.
Commencing or carrying on a banking business without a license is
prohibited.
When the Act came into force in 1949, the banking companies, which were
then in existence were required to apply for license within six months from
the commencement of the Act.
But such banking companies were permitted to continue business, unless
and until their applications for license were rejected by the Reserve Bank.

Q39. What is the minimum deposit required for foreign banks as prescribed
under the Banking Regulation Act, 1949?
a) 20 lakhs. b) 15 lakhs.
c) 25 lakhs. d) 30 lakhs.

Answer: B
Refer page no.: 21, Topic: 2.3
Explanation: Foreign Banks: Under sub-Section (2) of Section 11 of the BR
Act, a foreign bank (banking company incorporated outside India) operating
in India, has to deposit and keep deposited with the Reserve Bank, an
amount of Rs. 15 lakh and if it has a place of business in Mumbai or Kolkata
or both, Rs. 20 lakhs.
Join CAIIB WITH ASHOK on YouTube & App
The amount has to be kept in cash or unencumbered approved securities or
partly in both.

Q40. What is the minimum and maximum tenure of Certificate of Deposits?

a) Mini. 7 days and max. 1 year.
b) Mini. 10 days and max. 2 years.
c) Mini. 20 days and max. 3 years.
d) Mini. 30 days and max. 4 years.

Answer: A
Refer page no.: 50, Topic: 3.9
Explanation: Certificate of Deposits: CDs can be issued as discounted
instrument and may be issued to all person’s resident in India.
In the primary market, CDs shall be issued only in dematerialized form and
held with a depository registered with Securities and Exchange Board of
India with a minimum denomination of Rs. 5 lakhs and in multiples of Rs. 5
lakhs thereafter.
Minimum tenor shall not be less than 7 days and shall not exceed one year.
CDs shall be issued on a T+1 basis.
Banks are not allowed to grant loans against CDs, unless specifically
permitted by the Reserve Bank.
Join CAIIB WITH ASHOK on YouTube & App
Q41. Within how many days must an appropriation from the reserve fund
or share premium account be reported to the Reserve Bank?

a) 30 days. b) 20 days.

c) 21 days. d) 25 days.

Answer: C

Refer page no.: 55, Topic: 3.11.1

Explanation: Appropriation from Reserve Fund/Share Premium Account: As
per Section 17(2) of the BR Act appropriation of any amount from the
reserve fund or the share premium account has to be reported to the
Reserve Bank within twenty-one days of such appropriation. The banking
company has also to explain the circumstances in which such appropriation
was made.
It is open to the Reserve Bank in any particular case to extend the period for
submitting the report or to condone the delay in making the report.
Join CAIIB WITH ASHOK on YouTube & App
Q42. Banks shall report the maintenance of CRR to the Reserve Bank of
India through the following statutory returns, match the correct one:

Column A Column B

i. Form (A) x) Return for Scheduled Co-operative Banks.

ii. Form (B) y) Return for non-scheduled Co-operative Banks

under Section 18 of the Banking Regulation Act,
1949.

iii. Form (I) z) Return for Scheduled Commercial Banks (including

Regional Rural Banks (RRBs)), Small Finance Banks,
Payments Banks and Local Area Banks

a) i-z, ii-x, iii-y. b) i-y, ii-x, iii-z.

c) i-y, ii-z, iii-x. d) i-x, ii-y, iii-z.

Answer: A
Refer page no.: 57, Topic: 3.11.2
Explanation: The maintenance of CRR shall be reported to Reserve Bank of
India under the following statutory returns:
i. Form A Return for Scheduled Commercial Banks (including Regional Rural
Banks (RRBs)), Small Finance Banks, Payments Banks and Local Area Banks
ii. Form B Return for Scheduled Co-operative Banks
Join CAIIB WITH ASHOK on YouTube & App
iii. Form I Return for non-scheduled Co-operative Banks under Section 18 of
the Banking Regulation Act, 1949 (read with Section 56).
Every scheduled bank, small finance bank and payments bank shall maintain
minimum CRR of not less than ninety per cent of the required CRR on all
days during the reporting fortnight, in such a manner that the average of
CRR maintained daily shall not be less than the CRR prescribed by the
Reserve Bank.

Q43. Within what time period must a banking company publish its balance
sheet and profit and loss account in newspapers?

a) After completion of one full year of the company’s operations.

b) After earning sufficient profits from the market and other sources.

c) Within a period of six months from the end of the financial year.

d) Within a period of nine months from the end of the financial year.

Answer: C
Refer page no.: 65-66, Topic: 4.2
Explanation: Publication of Accounts and Balance Sheet: The accounts and
balance sheet prepared under Section 29 of the Banking Regulation Act
along with the auditors' report have to be published, as provided in Section
31 thereof read with Rule 15 of the Banking Regulation (Companies) Rules,
1949.
Join CAIIB WITH ASHOK on YouTube & App
Accordingly, the publication has to be made in a newspaper, which is in
circulation at the place where the banking company has its principal office,
within a period of six months from the end of the period to which the
account and balance sheet relate.

Q44. How many years of imprisonment can a banking company face for
failing to properly furnish returns, statements, and comply with regulations
of RBI Act 1934?
a) 4 years. b) 3 years.
c) 5 years. d) 8 years.

Answer: B
Refer page no.: 79, Topic: 4.11
Explanation: PENALTIES FOR OFFENCES:
A banking company has to abide by the requirements of the Reserve Bank
of India Act and the Banking Regulation Act and the subordinate legislation
there under, namely statutory rules, directions, etc., issued under these
Acts. Failure to do so invites penalties.
i. Penalties under the RBI Act: Chapter V of the Reserve Bank of India Act
deals with penalty for violation of the Act.
Banking companies have to make applications and furnish returns,
statements, etc., under different provision of the Act, regulations, orders,
directions, etc.
Join CAIIB WITH ASHOK on YouTube & App
While doing so, the making of any statement which is false in any particular
material, knowing it to be false or willfully omitting to make any material
statement, is punishable with imprisonment up to a period of three years
and also a fine.
Failure to produce any books, accounts or other documents or statements,
or information which a person is duty bound to make under the Act, or any
order, regulation or direction is punishable with fine up to Rs. 1,00,000 for
each offence.
For continuing offences, there is a provision for fine of Rs. 5,000 for each
day when the offence continues.

Q45. What is the correct distribution of the issued capital of Regional Rural
Banks (RRBs)?
a) 50% – Government of India, 15%- Concerned State Government and 35%
-Sponsor Bank.

b) 75% – Government of India 15%- Concerned State Government and 10%

-Sponsor Bank.

c) 50% – Government of India 25%, Concerned State Government and 10%

-Sponsor Bank.

d) 85% – Government of India, 10%- Concerned State Government and 5% -

Sponsor Bank.

Answer: A
Join CAIIB WITH ASHOK on YouTube & App
Refer page no.: 86, Topic: 5.3

Explanation: Establishment of RRBs: Section 3 of the Act authorizes the

Central Government to establish Regional Rural Banks by notification in
the official gazette, at the request of a sponsor bank, to operate within
specified local limits.

'Sponsor Bank' is a bank by which a regional rural bank is sponsored and it

holds 35 per cent of the issued capital of the RRB, while the Central
Government holds 50 per cent and the State Government holds the
remaining 15 per cent of the issued capital.
Every RRB is a body corporate with perpetual succession and common seal
with power to acquire, hold and dispose of property and to sue and be sued
in its name.

Q46. Match the following merger of Public Sector Banks have come into
force with effect from 1st April 2020:
Column A Column B
i) Oriental Bank of Commerce (OBC) and t) Bank of Baroda.
United Bank of India.
ii) Syndicate Bank. w) Indian Bank.
iii) Allahabad Bank. x) Union Bank of India.
iv) Andhra Bank and Corporation Bank. y) Canara Bank.
v) Vijaya Bank and Dena Bank. z) Punjab National Bank (PNB).
Join CAIIB WITH ASHOK on YouTube & App
a) i-t, ii-w, iii-x, iv-y, v-z. b) i-z, ii-y, iii-w, iv-x, v-t.
c) i-z, ii-w, iii-y, iv-x, v-t. d) i-t, ii-y, iii-x, iv-w, v-z.

Answer: B
Refer page no.: 92, Topic: 5.6
Explanation: The mega merger of the following PSBs have come into force
with effect from 1st April 2020:
(1) Oriental Bank of Commerce (OBC) and United Bank of India merged into
Punjab National Bank (PNB).
(2) Syndicate Bank merged into Canara Bank.
(3) Allahabad Bank merged with Indian Bank.
(4) Andhra Bank and Corporation Bank merged with Union Bank of India
(5) Vijay Bank and Dena Bank merged with Bank of Baroda
Customers, including depositors of merging banks will be treated as
customers of the banks into which these banks have been merged with
effect from 1 April 2020.
After the merger, there are 12 PSBS
There is now a move in the Government of India, to privatize certain Public
Sector Banks.
Join CAIIB WITH ASHOK on YouTube & App
Q47. What is the total percentage of lending and investment for single
party and also for Single Group of Parties as applicable for NBFC-ML and
NBFC-UL?
a) 30% and 50%. b) 35% and 70%.

c) 25% and 40%. d) 45% and 75%.

Answer: C

Refer page no.: 115, Topic: 6.8

Explanation: PRUDENTIAL GUIDELINES:

As applicable for NBFC-ML and NBFC-UL:

(a) Concentration of credit/ investment - The extant credit concentration
limits prescribed for NBFCs separately for lending and investments shall be
merged into a single exposure limit of 25% for single borrower/ party and
40% for single group of borrowers/ parties.
Further, the concentration limits shall be determined with reference to the
NBFC's Tier 1 capital instead of their Owned Fund. The revised norms are
indicated in the table below:
Join CAIIB WITH ASHOK on YouTube & App
Existing Limit Revised limit (as a percentage
(as a percentage of Owned Fund) of Tier I Capital)

Lending Investment Total Exposure

Single 15 15 25 Single 25
Borrower/Party Borrower/Party

Single Group of 25 25 40 Single Group of 40

Borrowers/Parties Borrowers/Parties

Q48. What is the composition of Financial Sector Development Council

(FSDC)?
i) Heads of Financial sectors Regulators (RBI, SEBI, IRDAI, & PFRDA)
ii) Finance Secretary and/or Secretary
iii) Chairman of the Insolvency and Bankruptcy Board of India (BBI)
iv) Chief Economic Adviser.
v) Ministry of Electronics and Information Technology (MeitY).
a) ii, iii, iv and v. b) i, ii, iii, and v.
c) i, ii, iii and iv. d) All of the above.

Answer: D
Refer page no.: 132, Topic: 7.7
Join CAIIB WITH ASHOK on YouTube & App
Explanation: FINANCIAL SECTOR DEVELOPMENT COUNCIL
Financial sector regulation is vital for developing a healthy and efficient
financial system in the economy.
Financial Sector Development Council (FSDC) was constituted in Dec. 2010.
There are different regulators for various segments of financial sectors, like
the RBI for commercial banks and NBFCs, SEBI for capital market, IRDA for
insurance, PFRDA for pension funds, etc.
The primary objective of FSDC is to strengthen and institutionalize the
mechanism for maintaining financial stability, promoting financial sector
development and enhancing internal regulatory co-ordination.
Composition of FSDC: -
The Chairman of the Council is the finance minister and its members
include:
• Heads of financial sector Regulators (RBI, SEBI, IRDAI, & PFRDA);
• Finance Secretary and/or Secretary;
• Secretaries from Department of Economic Affairs (DEA), Department of
Financial Services (DFS),
Revenue Department and Ministry of Information Technology (MeitY);
• Chairman of the Insolvency and Bankruptcy Board of India (BBI); and
• Chief Economic Adviser.
Join CAIIB WITH ASHOK on YouTube & App
Q49. When the Reserve Bank passes a removal order, the concerned person
ceases to hold their office. For what period are they prohibited from directly
or indirectly participating in the management of any banking company?
a) 5 years. b) 10 years.
c) 6 years. d) 7 years.

Answer: A
Refer page no.: 29, Topic: 2.10
Explanation: Effect of the order of removal: On the Reserve Bank passing a
removal order, the person concerned ceases to hold office which he/she
was holding till then.
Further, he/she is prohibited, from directly or indirectly taking part in the
management of any banking company for a period not exceeding five years
as may be specified in the order. Contravention of the order is punishable
with a fine of Rs. 250 for each day during which the contravention
continues.

Q50. In how many months banks should reset their External Benchmark
interest rate?
a) Within 6 months. b) Within 3 months.
c) Within 4 months. d) Within 9 months.

Answer: B
Join CAIIB WITH ASHOK on YouTube & App
Refer page no.: 45, Topic: 3.6
Explanation: Spread under External Benchmark
Banks are free to decide the spread over the external benchmark. However,
credit risk premium may undergo change only when borrower's credit
assessment undergoes a substantial change, as agreed upon in the loan
contract. Further, other components of spread including operating cost
could be altered once in three years.
Reset of Interest Rates under External Benchmark
The interest rate under external benchmark shall be reset at least once in
three months.

Q51. Within what period must a banking company submit its balance sheet
and profit and loss account to the Reserve Bank of India, and how many
copies are required?
a) 5 copies and within nine months.
b) 3 copies and within three months.
c) 8 copies and within ten months.
d) 9 copies and within five months.

Answer: B
Refer page no.: 66, Topic: 4.2
Explanation: Submission to Reserve Bank: Every banking company has to
submit three copies of its balance sheet and profit and loss account to the
Join CAIIB WITH ASHOK on YouTube & App
Reserve Bank within three months from the end of the period to which
they relate.
This period may be extended by the Reserve Bank by a further period not
exceeding three months.

Q52. In the event of amalgamation of Bank A, with Bank B, what will be

the salary payable to the workmen and other employees?
a) It should be decreased after amalgamation.
b) It should be increased after amalgamation.
c) It should remain the same as in the respective banks prior to
amalgamation.
d) It should remain the more than in the respective banks prior to
amalgamation.

Answer: C
Refer page no.: 76, Topic: 4.9
Explanation: The scheme has to provide for the continuance of all
workmen and other staff (excepting those specifically excluded by name in
terms of the scheme) on the same terms and conditions of service as
before.
The scheme should also provide that within three years; these employees
have to be given the same pay and terms and conditions as are applicable to
the other employees of the transferee bank of corresponding rank or status
of equivalent qualifications and experience.
Join CAIIB WITH ASHOK on YouTube & App
One liner:
1. There were seven subsidiary banks of SBI.
2. The minimum paid-up equity capital for payments banks shall be Rs. 100
crores.
3. Government of India appoints Governor of RBI and the members of the
Central Board of the Reserve Bank of India.
4. The minimum paid-up capital required to carry on business banking by a
cooperative bank is 1 lakh.
5. The full form of the name given to the reform program “EASE” is
Enhanced Access & Service Excellence which introduced in January 2018.

Q53. Within ------- weeks must the Annual General Meeting (AGM) be held
after sending the balance sheet to the Central Government and the Reserve
Bank of India? [answer to be given in whole number]

Answer: 6

Refer page no.: 85, Topic: 5.2

Explanation: Accounts and Audit: The State Bank has to close its books and
balance accounts each year as on 31 March or such other date as may be
specified by the Central Government.

Within three months of the closing date, it has to furnish to the Central
Government and the Reserve Bank its balance sheet and profit and loss
Join CAIIB WITH ASHOK on YouTube & App
account together with auditors' report and a report by the Central Board on
the working and activities of the bank.
The appointment of auditors is done by the State Bank with the previous
approval of the Reserve Bank.
The auditors' report and report of the Central Board have to be placed
before the Parliament.
The State Bank has also to transmit to the Central Government and the
Reserve Bank within two months of the date of annual closing of accounts,
the particulars of its shareholders as on that date.
The balance sheet and Profit and loss account, auditor's report and report of
the Central Board shall be open for discussion by the shareholders at the
annual general meeting.
The annual general meeting has to be held within six weeks of the date of
sending the balance sheet, etc., to the Central Government and the Reserve
Bank.

Q54. How many times board meeting held in a year at least in public sector
banks?
a) Seven. b) Six.
c) Nine. d) Ten.

Answer: B
Refer page no.: 90, Topic: 5.4
Join CAIIB WITH ASHOK on YouTube & App
Explanation:
Meetings of the Board
As per Section 12 of the 'The Nationalized Banks (Management and
Miscellaneous Provisions) Scheme, 1970/1980" -
(1) Meetings of the Board shall ordinarily be held at least six times in a year
and at least once in each quarter.
(2) The Board shall meet at such time and place and shall observe such rules
of procedure in regard to transaction of business at its meetings as may be
specified.

Q55. The quorum for a meeting of the Board of Bank shall be _______ of the
total number of directors holding office on the date of the meeting.
a) One-fourth. b) Two-third.
c) Third-fourth. d) One-third.

Answer: D
Refer page no.: 90, Topic: 5.4
Explanation: No business, other than that for which the meeting was
convened shall be transacted at meeting of the Board except with the
consent of the Chairman of the meeting and a majority of the directors
present, unless one week's notice of such business has been given in
writing to the Chairman."
Join CAIIB WITH ASHOK on YouTube & App
The quorum of a meeting of the Board shall be one-third of the number of
directors holding office as such directors of the Board on the day of the
meeting, subject to certain terms and conditions detailed in the section.

Q56. What percentage of liquid assets must a cooperative bank maintain?

a) It is being not less than thirty per cent or such other percentage not
exceeding sixty per cent as the Reserve Bank.
b) It is being not less than fifteen per cent or such other percentage not
exceeding thirty per cent as the Reserve Bank.
c) It is being not less than twenty-five per cent or such other percentage
not exceeding forty per cent as the Reserve Bank.
d) It is being not less than thirty-five per cent or such other percentage not
exceeding fifty per cent as the Reserve Bank.

Answer: C
Refer page no.: 95, Topic: 5.7
Explanation: In the case of the Central co-operative banks, balances
maintained with the state co-operative bank concerned and in the case of
primary co-operative banks the balances maintained with Central co-
operative banks or the state co-operative bank concerned shall be
accounted.
The co-operative banks have also to maintain as specified in Section 24(2A)
liquid assets being not less than 25% or such other percentage not
Join CAIIB WITH ASHOK on YouTube & App
exceeding 40% as the Reserve Bank may stipulate by notification in the
Gazette.

Q57. Which entity is not the eligible for being promoters of payments
banks?
a) Non-Banking Finance Companies.
b) Corporate Business Correspondents.
c) Mobile Telephone Companies.
d) Large Industrial Companies.

Answer: D
Refer page no.: 101, Topic: 5.9
Explanation: Payments Banks
i) Eligible promoters:
(a) Existing non-bank Pre-paid Payment Instrument (PPI) issuers; and other
entities such as individuals/ professionals; Non-Banking Finance Companies
(NBFCs), corporate Business Correspondents (BCS), mobile telephone
companies, super-market chains, companies, real sector cooperatives; that
are owned and controlled by residents; and public sector entities may apply
to set up payments banks.
(b) A promoter/promoter group can have a joint venture with an existing
scheduled commercial bank to set up a payments bank. However, scheduled
Join CAIIB WITH ASHOK on YouTube & App
commercial bank can take equity stake in a payments bank to the extent
permitted under Section 19 (2) of the Banking Regulation Act, 1949.
(c) Promoter/promoter groups should be 'fit and proper' with a sound track
record of professional experience or running their businesses for at least a
period of five years in order to be eligible to promote payments banks.

One liner:
1. The maximum imprisonment period for making the false statement
under the Reserve Bank of India Act is 3 years.
2. The Minimum Set-up Capital required for a Local Area Bank is 5 Crore.
3. CAMELS Acronym Stands for:
C - Capital Adequacy.
A - Asset Quality.
M - Management Quality.
E - Earnings Performance.
L - Liquidity Position.
S - Sensitivity to Market Risk.
Join CAIIB WITH ASHOK on YouTube & App
Q58. Who serves as the ex-officio Chairperson of the Financial Stability and
Development Council (FSDC) in India?
a) The Prime Minister of India.
b) Governor of the Reserve Bank of India.
c) The Union Minister of Finance.
d) The Cabinet Finance Secretary.

Answer: C
Refer page no.: 132, Topic: 7.7
Explanation: Composition of FSDC:
The Chairman of the Council is the finance minister and its members
include:
• Heads of financial sector Regulators (RBI, SEBI, IRDAI, & PFRDA);
• Finance Secretary and/or Secretary;
• Secretaries from Department of Economic Affairs (DEA), Department of
Financial Services (DFS), Revenue Department and Ministry of Information
Technology (MeitY);
• Chairman of the Insolvency and Bankruptcy Board of India (BBI); and
• Chief Economic Adviser.
Join CAIIB WITH ASHOK on YouTube & App
Q59. Financial Sector Legislative Reforms Commission (FSLRC), headed by--
------, was set up by Ministry of Finance in March 2011 to review, simplify
and rewrite the legal and institutional structures of the financial sector?
a) Justice B.N. Srikrishna.
b) Dr. Raghuram Rajan
c) Justice Markandey Katju.
d) Dr. Urjit Patel

Answer: A
Refer page no.: 126, Topic: 7.2
Explanation: Financial Sector Legislative Reforms Commission (FSLRC),
headed by Justice B.N. Srikrishna, was set up by Ministry of Finance in
March 2011 to review, simplify and rewrite the legal and institutional
structures of the financial sector, which submitted its report in March
2013.

Q60. According to the Reserve Bank of India (RBI) guidelines, which of the
following asset classes must be collectively reckoned as "Sensitive Sector
Exposures" for Non-Banking Financial Companies (NBFCs)?
a) Infrastructure projects and Micro-finance lending.
b) Capital market exposure and Commercial Real Estate.
c) Agricultural credit and MSME manufacturing loans.
d) Retail housing loans and Auto vehicle financing.
Join CAIIB WITH ASHOK on YouTube & App
Answer: B
Refer page no.: 116, Topic: 6.8
Explanation:
Sensitive Sector Exposure (SSE) - Exposure to capital market (direct and
indirect) and commercial real estate shall be reckoned as sensitive
exposure for NBFCs.
NBFCs shall fix Board-approved internal limits for SSE separately for capital
market and commercial real estate exposures.

Q61. According to the Reserve Bank of India (RBI), how many Local Area
Banks (LABs) are currently active and functioning in the private sector in
India?
a) 5. b) 6.
c) 12. d) 2.

Answer: D
Refer page no.: 105, Topic: LET US SUM UP
Explanation:
There are 2 Local Area Banks operating in the country though their
importance has become limited due to the regulator granting of licenses to
certain differentiated banks such as small finance banks etc. having
decided advantages as compared to the Local Area Banks.
Join CAIIB WITH ASHOK on YouTube & App
Q62. Which of the following is not an example of differentiated Banks?
a) Fintech Banks.
b) Digital Banks.
c) Local Area Bank.
d) Payments Banks.

Answer: C
Refer page no.: 105, Topic: LET US SUM UP
Explanation:
'Differentiated Bank' is the name given to those banks which cater to the
needs of a specific sector of society or a certain demographic segment of
the population.
Fintech Banks, Digital Banks, Small Finance Banks and Payments Banks are
examples of differentiated Banks.
Join CAIIB WITH ASHOK on YouTube & App
Q63. Which of the following is/are false?
(i) The State Bank can make statutory regulations for carrying out the
purposes of the State Bank of India Act, in consultation with Reserve Bank
and with previous approval of the Central Government.
(ii) The Central Government is not authorized to give any directions to the
State Bank in matters of policy involving public interest.
(iii) The provisions of Section 42 of the Reserve Bank of India Act relating to
cash reserve apply to State Bank.
(iv) The State Bank has to transmit to the Central Government and the
Reserve Bank within three months of the date of annual closing of account,
the particular of its shareholders as on that date.
a. (i) (ii) and (iii). b. (ii) (iii) and (iv).
c. (iii) and (iv). d. (ii) and (iv).

Answer: D
Refer page no.: 85, Topic: 5.2
Explanation:
The State Bank has to transmit to the Central Government and the Reserve
Bank within two months of the date of annual closing of account, the
particular of its shareholders as on that date.
Join CAIIB WITH ASHOK on YouTube & App
Q64. Which of the following is true?
(i) RRBs are established under Regional Rural Banks Act, 1976.
(ii) The chairman holds office on whole-time basis and is removable by the
sponsor bank.
(iii) A director absence from two meetings consecutively without leave of
the board results in vacation of office.
(iv) The chairman holds office on whole-time basis and is removable by the
RBI.
a. (i), (ii) and (iii). b. (i) and (ii).
c. (iii) and (iv). d. (ii) and (iv).

Answer: B
Refer page no.: 85, Topic: 5.2
Explanation: The Central Government is empowered to give directions to
RRBs on matters of policy involving public interest.
The board consists of a chairman appointed by the sponsor bank from
among its officers in consultation with NABARD, or otherwise in
consultation with the Central Government.
The chairman holds office on whole-time basis and is removable by the
sponsor bank, where the chairman is an officer of the sponsor bank, in
consultation with NABARD and in other cases in consultation with the
Central Government.
Join CAIIB WITH ASHOK on YouTube & App
A person who is adjudged insolvent or is convicted of an offence involving
moral turpitude is disqualified to be a director and has to vacate office.
Absence from three meetings consecutively without leave of the board
also results in vacation of office.

Q65. Which committee came up with two broad designs for the banking
system in the country the Horizontally Differentiated Banking System
(HDBS) and the Vertically Differentiated Banking System (VDBS)?
a) Urjit Patel Committee.
b) Nachiket Mor Committee.
c) Raghuram Rajan Committee.
d) Bimal Jalan Committee.

Answer: B
Refer page no.: 100, Topic: 5.8
Explanation: More thought was given to this model by the Committee
headed by Shri Nachiket Mor, on 'Comprehensive Financial Services for
Small Businesses and Low-Income Households' which was set up to look
into the issues relating to 'Financial Inclusion'.
The committee came up with two broad designs for the banking system in
the country the Horizontally Differentiated Banking System (HDBS) and the
Vertically Differentiated Banking System (VDBS) based on the most basic
functions of banks in India being that of payments, deposits and credit.
Join CAIIB WITH ASHOK on YouTube & App
In a HDBS model, the basic design of the bank remains one of it being a
full-service bank giving the entire gamut of services pertaining to
payments, deposits, and credit but is differentiated primarily on the
dimension of size or geography or sectoral focus.
In the VDBS model, the banks specialize in one or more of payments,
deposits, and credit.