Module: General Practice
Q78: Scenario: An entity is authorized by the RBI to deal in foreign exchange for "specified purposes" but it is neither a Bank nor a full-fledged financial institution. It is primarily a company running a money changing business that has been upgraded. This entity is most likely classified as:
✅ Correct Answer: B
1. Identification: AD Category-I: These are Banks (Commercial/State/Urban Co-op). The scenario says "neither a Bank". AD Category-III: These are Financial Institutions (EXIM, SIDBI). The scenario excludes this.
AD Category-II: These are often Upgraded FFMCs (companies running money changing) or Co-operative banks that don't qualify for AD-I. They deal in "specified purposes" (Non-trade remittances). 2. Context: The progression path for a successful FFMC is to upgrade to AD Category-II to offer more services (like wire transfers for education) beyond just cash exchange, requiring higher capitalization (₹10 Cr).
AD Category-II: These are often Upgraded FFMCs (companies running money changing) or Co-operative banks that don't qualify for AD-I. They deal in "specified purposes" (Non-trade remittances). 2. Context: The progression path for a successful FFMC is to upgrade to AD Category-II to offer more services (like wire transfers for education) beyond just cash exchange, requiring higher capitalization (₹10 Cr).