Module: | HFT Presumptive List & RBI Powers
Q16: Consider the following statements regarding Supervisory Powers over investment classification:
Assertion (A) - The RBI may require a bank to reclassify an instrument out of Held for Trading (HFT) even if it is on the presumptive list.
Reason (R) - If the RBI believes the instrument customarily would not belong to HFT or the bank has not provided enough evidence of HFT intent, it can enforce reclassification.
Reason (R) - If the RBI believes the instrument customarily would not belong to HFT or the bank has not provided enough evidence of HFT intent, it can enforce reclassification.
✅ Correct Answer: A
The RBI retains supervisory power to override classifications.
Even if an instrument is on the presumptive list, the RBI can require evidence of HFT intent.
If the bank fails to provide this, it can mandate reclassification, a scenario often tested in Investment Classification MCQs.
Even if an instrument is on the presumptive list, the RBI can require evidence of HFT intent.
If the bank fails to provide this, it can mandate reclassification, a scenario often tested in Investment Classification MCQs.