A bank guarantee in favour of a private company is valid up to 31 March 2027, with a claim period ending 31 March 2028. The beneficiary makes a valid demand on 10 February 2028. The bank's customer asks it to withhold payment because of a quality dispute, and the bank refuses the claim on 20 February 2028. Which is correct?

Correct answer: The bank should have paid without delay and demur; the 3-year period to sue runs from 20 February 2028. A claim-period clause of at least one year after expiry is valid under Section 28 Exception 3 of the Contract Act, so a demand on 10 February 2028 is in time. An ordinary contract dispute is not egregious fraud or irretrievable injustice, so RBI's Master Circular requires payment without delay and demur. For a private beneficiary the 3-year limitation (Article 55) runs from the date the bank wrongly refuses, here 20 February 2028, not from the demand or expiry date.

Consider the following statements about the RBI MPC decision of 7 October 2026: I. All six MPC members voted for the 25 bps increase in the repo rate. II. The change of stance from neutral to calibrated tightening was also adopted unanimously. III. It was the first increase in the repo rate since February 2023. Which of the statements given above is/are correct?

Correct answer: I and III only. On 7 October 2026 the rate vote was 6-0 for the 25 bps hike to 5.50%, and it was the first repo increase since February 2023. The stance vote was 4-2, not unanimous: Dr. Nagesh Kumar and Prof. Ram Singh wanted the stance to stay neutral, so statement II is wrong.

Mr. P is a director of a bank. In Omega Ltd (paid-up capital Rs 18 crore), Mr. P holds shares worth Rs 1.10 crore, his wife Rs 45 lakh, his adult son Rs 70 lakh and his minor daughter Rs 20 lakh. Applying Section 5(ne) of the BR Act as amended from 1 August 2025, which conclusion is correct?

Correct answer: No; the countable holding is Rs 1.75 crore, which does not exceed the lower test of Rs 1.8 crore. Only the holdings of the person, the spouse and minor children are added, so the adult son's Rs 70 lakh is excluded: 1.10 crore + 45 lakh + 20 lakh = Rs 1.75 crore. The test is Rs 2 crore or 10% of paid-up capital (Rs 1.8 crore), whichever is lower, so the line is Rs 1.8 crore and it is not crossed. Adding the adult son's shares, or using the old Rs 5 lakh figure, is the common trap.

Consider the following statements: I. A bank that is not a D-SIB, with Tier 1 capital of Rs 760 crore and total exposure of Rs 23,000 crore, is below its minimum leverage ratio. II. A bank with CRAR of 10.9%, CET1 of 8.6%, net NPA of 4.5% and a leverage ratio of 4.2% falls under PCA at Risk Threshold 1. III. A bank breaching only the leverage-ratio indicator cannot be placed under PCA, because the capital and asset-quality indicators must also be breached. Which of the above is/are correct?

Correct answer: I and II only. Statement I: 760/23,000 = 3.30%, below the 3.5% minimum for a non-D-SIB. Statement II: the PCA reference CRAR includes the CCB (9% + 2.5% = 11.5%), so 10.9% is a 60 bps shortfall, inside the 'up to 250 bps' band of Risk Threshold 1. Statement III is wrong: a breach of any one indicator (capital, net NPA or Tier 1 leverage) is enough to trigger PCA.

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