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.
The RBI regulates the commercial banks in matters of liquidity of assets
- 2.
The RBI regulates the commercial banks in matters of branch expansion
- 3.
The RBI regulates the commercial banks in matters of merger of banks
- 4.
The RBI regulates the commercial banks in matters of 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 Reserve Bank of India (RBI) acts as the central bank and regulator of the Indian banking system. It regulates commercial banks comprehensively across all four areas mentioned: (1) Liquidity of assets - RBI mandates Statutory Liquidity Ratio (SLR) and maintains Capital Adequacy Ratio (CAR) norms; (2) Branch expansion - RBI grants permission for opening new branches under Priority Sector Lending guidelines; (3) Merger of banks - RBI approval is required for bank mergers to ensure financial stability; (4) Winding-up of banks - RBI manages the liquidation process when banks fail. All four regulatory functions are core responsibilities of RBI under the Banking Regulation Act. > RBI's four key regulatory functions: SLR/CAR (liquidity), branch licensing (expansion), M&A approval (mergers), and bank resolution (winding-up). Answer: (d).
Question details
Year
2014
Paper
GS Paper 1
Question
Q42
Subject
Economy
Sub-topic
Banking and Monetary Policy
Type
Statement-based
Difficulty
Medium
Nature
Static
Source hint
NCERT Economics - Money and Banking
See all questions on Banking and Monetary Policy
Browse every tagged question across all years