RBI regulation of commercial banks
Question
The Reserve Bank of India regulates the commercial banks in matters of
Select the correct answer using the codes given below.
- 1.
liquidity of assets
- 2.
branch expansion
- 3.
merger of banks
- 4.
winding-up of banks
Options
1 and 4 only
2, 3 and 4 only
1, 2 and 3 only
1, 2, 3 and 4
Explanation
The RBI has comprehensive regulatory authority over commercial banks under the Banking Regulation Act. It regulates: (1) liquidity of assets to ensure banks maintain adequate reserves and liquid assets; (2) branch expansion to control the geographic spread and ensure prudential lending; (3) merger of banks to maintain the health of the banking sector and prevent monopolies; (4) winding-up of banks in case of insolvency or failure. All four statements are correct as the RBI is the apex banking regulator in India. > RBI Acts as: Banker's Bank, Custodian of Forex, Monetary policy maker, Banking Regulator.
Question details
Year
2013
Paper
GS Paper 1
Question
Q42
Subject
Economy
Sub-topic
Monetary policy and banking regulation
Type
Statement-based
Difficulty
Medium
Nature
Static
Source hint
NCERT Economics - Banking system and RBI
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