151 MCQs on BR Act 1949

Correct Answer: C. Applies all over India. The Act extends to the whole of India, covering all scheduled and non-scheduled banks.

Correct Answer: C. 16th March 1949. Section 1(3) provides the commencement date of the Act.

Correct Answer: C. The law expressly provided to prevail in the banking regulation act will prevail. This section states that other laws apply unless expressly derogated by this Act.

Correct Answer: C. The Companies Act, 2013. This section states that this act is in addition to the Companies act, 2013 and other laws.

Correct Answer: C. Certain co-operative societies. Section 3 specifies which co-operative societies are exempted and which may be subject to the Act.

Correct Answer: B. Primary agricultural credit societies. Section 3 explicitly exempts these societies.

Correct Answer: C. The Central Government. Section 4 explicitly grants this power to the Central Government.

Correct Answer: C. When it is satisfied that it is in the public interest to do so. Section 4 specifies that the suspension must be in the public interest.

Correct Answer: B. Accepting deposits for lending or investment. This is the core definition of banking under the Act.

Correct Answer: B. Any company that transacts the business of banking in India. This definition focuses on the core banking business.

Correct Answer: B. Any place of business where deposits are received, cheques cashed, or money lent. This defines a branch as any location where core banking activities occur.

Correct Answer: B. The excess of current assets over current liabilities. This defines working capital as the difference between liquid assets and short-term debts.

Correct Answer: B. The Banking Regulation Act, 1949. Section 5A explicitly states that the Act overrides other documents.

Correct Answer: C. The memorandum of association, articles of association, and resolutions of the banking company. Section 5A covers these specific documents.

Correct Answer: C. Accepting deposits from the public. This is a core function of banking as defined in Section 6(1).

Correct Answer: B. The prohibited forms of business for banking companies. This subsection restricts banks from engaging in non-specified activities.

Correct Answer: C. Governments or local authorities. This is specifically stated in section 6(1).

Correct Answer: B. Acquire the business of any other banking company (subject to RBI approval). Section 6A specifically grants this power.

Correct Answer: B. Any company, association, or individual not authorized to carry on banking business. This section targets unauthorized use of banking-related terms.

Correct Answer: B. Authorization from the Reserve Bank of India to carry on banking business. This is the key requirement for using banking-related terms.

Correct Answer: C. Trading in goods. Section 8 explicitly prohibits trading in goods.

Correct Answer: C. In connection with the realization of security held by it. This is the only exception allowed under Section 8.

Correct Answer: C. 7 years. Section 9 specifies a seven-year limit.

Correct Answer: C. The Reserve Bank of India. The RBI can grant extensions under certain conditions.

Correct Answer: C. 5 years. The RBI can extend the period by a maximum of five years.

Correct Answer: B. Has been adjudicated an insolvent. This is a specific condition listed in Section 10(1).

Correct Answer: B. An offense involving moral turpitude. This refers to offenses that are considered morally reprehensible.

Correct Answer: B. Their remuneration cannot take the form of commission or a share in the profits of the banking company. This aims to prevent conflicts of interest.

Correct Answer: C. Three months. This is the maximum period allowed under Section 10(2).

Correct Answer: C. Not less than 51%. This is the minimum percentage specified in the Act.

Correct Answer: B. Accountancy or Agriculture and Rural Economy. This subsection specifically mentions these two fields.

Correct Answer: C. The Reserve Bank of India. The RBI has the authority to grant exemptions.

Correct Answer: B. With the previous approval of the Reserve Bank of India. The RBI’s approval is mandatory for the appointment of the Chairman.

Correct Answer: C. Either a full-time director or a part-time director. The section allows for both types of appointments.

Correct Answer: B. Order the banking company to elect a Chairman within a specified period. The RBI can direct the bank to appoint a chairman.

Correct Answer: B. A graduate with experience in banking, economics, business, finance, or related fields. This specifies the required qualifications.

Correct Answer: C. The Reserve Bank of India. The RBI determines the chairman’s term.

Correct Answer: B. If the RBI believes it is necessary to protect the interests of depositors. This is the core condition specified in Section 10BB.

Correct Answer: C. Either a Chairman or a Director. The RBI can appoint either of these positions.

Correct Answer: C. For such period or periods as may be specified in the order. The RBI decides the tenure of the appointed individual.

Correct Answer: B. The previous approval of the Reserve Bank. Section 10C explicitly requires RBI approval.

Correct Answer: B. When the Board persistently fails to comply with RBI directions or when it is in the public interest. This is the condition specified in Section 10D(1).

Correct Answer: C. 12 months. This is the initial maximum period.

Correct Answer: C. An administrator. The RBI appoints an administrator to manage the bank.

Correct Answer: B. Reconstitute the Board of Directors. The RBI must ensure a new board is in place.

Correct Answer: C. Up to 12 months in aggregate. The RBI can extend the period by up to an additional 12 months. maximum initial period 12 months and then it can be extended for maximum 12 months.

Correct Answer: C. ₹5 lakhs. This is the amount specified for banks operating in multiple states.

Correct Answer: C. ₹15 lakhs. This is the minimum requirement for foreign banks, including a deposit with the RBI.

Correct Answer: B. ₹1 lakh. This applies to banks operating within a single district.

Correct Answer: C. The Reserve Bank of India. The RBI has the authority to grant exemptions.

Correct Answer: C. The Reserve Bank of India. The RBI has the authority to set capital requirements.

Correct Answer: B. The deposit liabilities of the banking company. The RBI considers deposit liabilities when setting capital requirements.

Correct Answer: C. 2.5% of the paid-up value. This is the maximum limit specified in Section 13.

Correct Answer: B. Charge on unpaid calls on shares. This section specifically prohibits charges on unpaid share capital.

Correct Answer: B. When it has capitalized expenses that have not been completely written off. This is the core condition specified in Section 14A.

Correct Answer: B. Preliminary expenses, organization expenses, share-selling commission, brokerage, losses, and intangible expenditures. This lists the expenses covered by the restriction.

Correct Answer: B. To reduce the value of an asset to zero in the company’s books. This clarifies the accounting term used in the section.

Correct Answer: C. 2.5% of the paid-up value. This is the maximum limit specified in Section 15.

Correct Answer: C. Being a director of another company, with certain exceptions.

Correct Answer: C. A subsidiary of the banking company.

Correct Answer: C. 20%. This is the minimum percentage specified in the Act.

Correct Answer: B. Net profits before dividend declaration. The transfer is made before any dividends are paid out.

Correct Answer: B. If the bank is not in a position to comply with the 20% requirement. The RBI can allow a lower transfer in such cases.

Correct Answer: C. Only non-scheduled banks. This section specifically applies to non-scheduled banks.

Correct Answer: C. 3%. This is the minimum percentage specified in the Act.

Correct Answer: C. 30% of the other company’s paid-up share capital or 30% of its own paid-up share capital and reserves, whichever is less. This is the limit specified.

Correct Answer: B. When the shares are held as security for a debt. This is one of the exempted cases.

Correct Answer: C. 7 years. This is the standard disposal period.

Correct Answer: C. Any of its directors or related entities. This section specifically targets loans to directors and connected parties.

Correct Answer: B. Against government securities. This is one of the exempted cases.

Correct Answer: C. No. Section 20(1)(a) of the Banking Regulation Act, 1949, explicitly prohibits this.

Correct Answer: D. No. Such loans are prohibited under Section 20(1)(b)(ii) of the Banking Regulation Act, 1949.

Correct Answer: D. No. This is prohibited under Section 20(1)(b)(iv) of the Banking Regulation Act, 1949.

Correct Answer: C. Directions pertaining to the purposes, margins, amounts, and terms of advances. Section 21(2) details the scope of these directions.

Correct Answer: D. No. Section 21A explicitly states that such transactions cannot be reopened by courts solely on the ground of excessive interest rates.

Correct Answer: B. Usurious Loans Act, 1918. Section 21A specifically mentions that it overrides the Usurious Loans Act, 1918.

Correct Answer: B. No, banks must still adhere to RBI guidelines. While Section 21A protects banks from certain court interventions, they are still subject to regulatory oversight by the RBI.

Correct Answer: B. Section 22. This section deals with the licensing of banking companies.

Correct Answer: C. Being able to pay its present or future depositors in full as their claims accrue. This is one of the key conditions specified in Section 22(3)(a) of the Banking Regulation Act, 1949.

Correct Answer: C. Yes, under certain conditions specified in Section 22(4) of the Banking Regulation Act, 1949. The RBI has the power to cancel licenses under specific circumstances.

Correct Answer: C. Yes, the company can appeal to the Central Government. Section 22(5) of the Banking Regulation Act, 1949, allows for an appeal to the Central Government.

Correct Answer: B. That the company’s carrying on banking business in India will be in the public interest and that the Government or law of the country in which it is incorporated does not discriminate in any way against banking companies registered in India. These are specific requirements under Section 22(3A) of the Banking Regulation Act, 1949.

Correct Answer: C. For opening a temporary place of business within a city for a period not exceeding one month. This is a specific exemption provided in Section 23(1).

Correct Answer: C. The National Bank (Now known as NABARD). Section 23(4A) of the Banking Regulation Act, 1949, specifies that the application must be forwarded through the National Bank.

Correct Answer: B. To ensure that banking companies maintain a sufficient percentage of liquid assets. Section 24 focuses on the maintenance of assets to meet liabilities.

Correct Answer: C. Both scheduled and non-scheduled banks. Section 24(2A) applies to both scheduled banks and other banking companies.

Correct Answer: B. 3% above the bank rate. Section 24(4)(a) of the Banking Regulation Act, 1949, specifies the initial penal interest rate.

Correct Answer: B. 14 days. Section 24(6)(a) states that the penalty must be paid within fourteen days.

Correct Answer: C. 75%. As per Section 25(1) of the Banking Regulation Act, 1949, the assets in India shall not be less than 75% of its demand and time liabilities in India.

Correct Answer: C. The close of business on the preceding working day. Section 25(1) specifies that if the Friday is a public holiday, it should be the preceding working day.

Correct Answer: C. Within one month from the end of every quarter. Section 25(2) of the Banking Regulation Act, 1949, states that the return must be submitted within one month from the end of every quarter.

Correct Answer: C. Paid-up capital. Section 25 states that liabilities in India shall not include the paid-up capital or the reserves or any credit balance in the profit and loss account of the banking company.

Correct Answer: C. 30 days. Section 26 of the Banking Regulation Act, 1949, specifies that the return must be submitted within thirty days after the close of each calendar year.

Correct Answer: C. 10 years. An account is considered unclaimed if it has not been operated upon for ten years.

Correct Answer: C. Date of expiry of the fixed period. For fixed deposits, the ten-year period is counted from the expiry date of the deposit.

Correct Answer: B. Depositor Education and Awareness Fund. This is the name of the fund as specified in Section 26A(1).

Correct Answer: B. Within three months from the expiry of the unclaimed period. Section 26A(2) states this clearly.

Correct Answer: B. To promote depositors’ interests. Section 26A(4) of the Banking Regulation Act, 1949, indicates that the fund is to be utilized for this purpose.

Correct Answer: C. An authority or committee specified by the Reserve Bank of India. The RBI is responsible for specifying the administrative body.

Correct Answer: B. Yes, depositors can claim their deposits even after the transfer. The proviso in Section 26A(2) of the Banking Regulation Act, 1949, clarifies this.

Correct Answer: B. Any information relating to the business or affairs of the banking company. The Reserve Bank has broad powers to request information.

Correct Answer: B. If they consider it is in the public interest. The Reserve Bank or the National Bank (NABARD) can publish information if they deem it to be in the public interest. Under Section 28 of the Banking Regulation Act, 1949, RBI has the power to publish such information.

Correct Answer: C. The manager or principal officer and at least three directors. This is specified in Section 29(2)(a) of the Banking Regulation Act, 1949.

Correct Answer: B. The Reserve Bank. Section 30(1A) clearly states that the Reserve Bank’s approval is necessary.

Correct Answer: C. Three months. The accounts must be submitted within three months from the end of the relevant period.

Correct Answer: C. Three months. The Reserve Bank can extend the period by an additional three months.

Correct Answer: C. They need to submit returns to both the Reserve Bank and the National Bank. Regional rural banks must submit returns to both.

Correct Answer: D. The accounts, balance sheet, and auditor’s report. All three documents are required.

Correct Answer: C. To submit the documents to both the Reserve Bank and the registrar. Banking companies must provide copies of these documents to both entities.

Correct Answer: C. Three copies. Banking companies are required to send three copies of the accounts and balance-sheet to the registrar.

Correct Answer: B. By the first Monday in August. This is the specific deadline for displaying these documents as mentioned in the Section 33 of the Banking Regulation Act, 1949.

Correct Answer: A. If the company claims the documents are confidential and their disclosure would reveal information about reserves not in the balance sheet. This is a specific condition mentioned in Section 34A of the Banking Regulation Act, 1949, under which a banking company can refuse to produce documents.

Correct Answer: D. It may inspect at any time or when directed to do so by the Central Government. Under Section 35 of the Banking Regulation Act, 1949, The Reserve Bank may inspect a banking company at any time and also it is obligated to inspect when directed by the Central Government

Correct Answer: C. It grants the Reserve Bank the authority to issue directions to banking companies in the interest of the public, banking policy, preventing detrimental affairs, or securing proper management, and allows the Reserve Bank to modify or cancel such directions. This option accurately reflects the core purpose and content of Section 35A.

Correct Answer: A. The Reserve Bank, with authorization from the Central Government. The Central Government authorizes the Reserve Bank.

Correct Answer: C. Both A and B. The RBI can issue directions and specify advisory bodies for stressed asset resolution.

Correct Answer: C. Previous approval of the Reserve Bank. Section 35B explicitly requires the Reserve Bank’s prior approval for such appointments.

Correct Answer: B. An annual report on the trend and progress of banking. The RBI must provide an annual report to the Central Government.

Correct Answer: D. All of the above. The RBI can remove a director under any of these conditions.

Correct Answer: B. A maximum of 5 years. The restriction period is specified in the order but cannot exceed five years.

Correct Answer: B. Three years. Additional directors can hold office for up to three years at a time.

Correct Answer: D. All of the above. The RBI has the power to supersede the board under these conditions.

Correct Answer: B. Six months. The initial period of supersession cannot exceed six months.

Correct Answer: B. Obstructing any person from lawfully entering a banking company. This is explicitly prohibited under Section 36AD(1).

Correct Answer: D. Both B and C. The High Court can order a stay if the company is unable to meet obligations and the Reserve Bank supports it.

Correct Answer: B. Six months. The total moratorium period cannot exceed six months.

Correct Answer: C. Both A and B. The High Court is mandated to order winding up under these conditions.

Correct Answer: D. All of the above. The Reserve Bank, the State Bank of India, any other bank notified by the Central Government, or any individual, as stated in the application, may be appointed.

Correct Answer: C. Unless the High Court is satisfied that an arrangement has been made whereby the company can pay its depositors in full as their claims accrue. This is the specific condition outlined in the Act.

Correct Answer: B. Certification by the Reserve Bank. The compromise or arrangement must be certified by the Reserve Bank.

Correct Answer: B. If the Reserve Bank believes there is good reason to do so. The RBI’s judgment is the key condition.

Correct Answer: D. All of the above. The RBI may prepare a scheme under any of these circumstances.

Correct Answer: C. Yes, they are admissible in all legal proceedings. The Act explicitly states their admissibility.

Correct Answer: C. Both A and B. The entries can be proved by producing either the original books or a certified copy.

Correct Answer: B. The Central Government. The authority to make these rules is given to the Central Government.

Correct Answer: B. To specify the periods for which banking companies must preserve their records. This is the main purpose of this section.

Correct Answer: C. Make and keep a true copy of all relevant parts of such instrument. This is a mandatory requirement before returning the instrument.

Correct Answer: B. Yes, the banking company is entitled to recover these costs from the customer. The Act allows for the recovery of these costs.

Correct Answer: B. The depositor or all depositors. The depositor(s) has the right to make the nomination.

Correct Answer: B. The right to be paid the deposit amount, subject to any existing debt of the deceased depositor(s) to the banking company.

Correct Answer: B. To the appointee of the depositor(s) or the court appointed guardian.

Correct Answer: A. The banking company is discharged from any further liability.

Correct Answer: C. The person who left the articles in safe custody.

Correct Answer: B. Prepare an inventory of the articles.

Correct Answer: B. The nominee becomes entitled to receive the articles, unless the nomination is varied or cancelled.

Correct Answer: C. Imprisonment for a term which may extend to three years and a fine which may extend to one crore rupees.

Correct Answer: B. A fine which may extend to twenty lakh rupees.

Correct Answer: B. Upon a complaint in writing made by an officer of the Reserve Bank or the NABARD. The Act specifies that a written complaint by an authorized officer from these entities is required.

Correct Answer: B. No, the powers of the Reserve Bank do not extend to such centers.

Correct Answer: C. The International Financial Services Centres Authority

Correct Answer: C. The Act applies to co-operative societies with specific modifications. Section 56 details the modifications under which the Act applies to co-operative societies.