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CAIIB · Banking Regulations and Business Laws · Module A — Regulations and Compliance
One-linersLegal Framework of Regulation of Banks
28 quick-revision questions · downloaded 18 Jun 2026
1.
Which two acts primarily govern banking in India?
→ Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934.
2.
Define banking under Section 5(b) of the Banking Regulation Act.
→ Acceptance of deposits from public for lending or investment, repayable on demand or otherwise.
3.
What does Section 7 mandate regarding use of word 'bank'?
→ Only banking companies can use words 'bank', 'banker', 'banking' in their name.
4.
Under Section 49A, who can accept deposits withdrawable by cheque?
→ Only banks are authorized to accept deposits withdrawable by cheque.
5.
What licence is mandatory to commence banking business in India?
→ Licence from Reserve Bank under Section 22 of Banking Regulation Act.
6.
List two permitted businesses under Section 6 besides banking.
→ Borrowing money; lending or advancing money with or without security.
7.
What types of instruments can banks deal in under Section 6?
→ Bills of exchange, hundis, promissory notes, coupons, drafts, debentures, securities.
8.
Name two additional businesses specified by Central Government for banks.
→ Leasing and factoring.
9.
What are the three constitutional categories of banks in India?
→ Body corporate under special act; company under Companies Act; co-operative society.
10.
Under which act were banks nationalised in India?
→ Banking Companies (Acquisition and Transfer of Undertakings) Acts, 1970 and 1980.
11.
What is the capital requirement for Scheduled banks under RBI Act Section 2(e)?
→ Paid-up capital and reserves of not less than Rs. 5 lacs.
12.
Which section of RBI Act grants sole right to issue bank notes?
→ Section 22 grants RBI sole right to issue bank notes.
13.
What is the security requirement for Issue Department under Section 23?
→ Gold coins, bullion, rupee coins, foreign securities up to Rs. 200 crore.
14.
Name denominations of currency notes issued by RBI.
→ 2, 5, 10, 20, 50, 100, 200, 500, 1000, 2000, 5000, 10000 rupees.
15.
What does Section 31 prohibit regarding bearer instruments?
→ No person except RBI or Central Govt. can issue bills/promissory notes payable to bearer.
16.
What are minimum asset requirements for RBI's Issue Department under Section 33?
→ Gold coins, bullion, foreign securities: Rs. 200 crore aggregate; gold alone: Rs. 115 crore.
17.
What is the CRR maintenance period as per Section 42(1)?
→ Fortnightly basis: Saturday to following Friday, 14 days.
18.
When must borrowers with secured credit ≥Rs. 10 lac furnish credit information?
→ Half-yearly on last Friday of April and October.
19.
What is the reporting frequency for outstanding loans of Rs. 100 lac and above?
→ Half-yearly in March and September.
20.
Define BSR-1 and its applicability threshold.
→ Basic Statistical Return for borrower accounts exceeding Rs. 2 lacs.
21.
What information does BSR-II contain?
→ Deposit details broken into current, savings, and term deposits.
22.
Which section governs NBFC regulations?
→ Section 45-H-T.
23.
Under which section does RBI publish bank rate?
→ Section 49.
24.
What is the primary function of bank rate publication?
→ To announce standard rate for buying/re-discounting Bills of Exchange and eligible commercial paper.
25.
Who has authority to determine and publish bank rate?
→ Reserve Bank of India (RBI).
26.
What instruments are eligible for RBI purchase under bank rate mechanism?
→ Bills of Exchange and other commercial paper as per Act.
27.
Is bank rate publication frequency specified as fixed or discretionary?
→ RBI publishes 'from time to time'—discretionary, not fixed schedule.
28.
Distinguish BSR-1 from BSR-II reporting scope.
→ BSR-1 covers borrower accounts; BSR-II covers deposit composition.