Top 25 MCQs on

Banking Laws
By Dr. Pushpak Pandav
Top 25 MCQs on
Banking Laws
By Dr. Pushpak Pandav
▪ The Reserve Bank of India Act, 1934
▪ The Banking Regulation Act, 1949
▪ The State Bank of India Act, 1955
▪ The Industrial Finance Corporation of India Act, 1948
▪ Negotiable Instrument Act, 1881
▪ The Regional Rural Banks Act, 1976
▪ The Deposit Insurance and Credit Guarantee Corporation Act, 1961
▪ The Export-Import Bank of India Act, 1981
▪ Payment and Settlement Systems (Amendment) Act, 2007
▪ Foreign Exchange Management Act 1999 (FEMA)
▪ Insolvency & Bankruptcy Act 2016
▪ The Securitisation and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002
1. The section 19 of the Reserve Bank of India Act, 1934 states that
the Reserve Bank of India has been prohibited from?
a) making loans or advances.
b) drawing or accepting bills payable otherwise than on demand.
c) allowing interest on deposits or current accounts.
d) all of the above.
e) None of the above
2. Drawing accepting, making or issuing of any promissory note, hundi
or bill of exchange expressed to be payable to bearer on demand by a
person other than the Reserve Bank of India or the Central Government
is prohibited under?
a) Banking Regulation Act, 1949
b) Section 31 (1) of the Reserve Bank of India Act, 1934
c) Indian Contract Act,1872
d) None of the above
3. Rupee coins are the legal tender in India under

the provisions of?

a) The Reserve Bank of India Act, 1934

b) Negotiable Instrument Act, 1881

c) Banking Regulation Act, 1949

d) Indian Coinage Act, 1906

4. According to provisions of Insolvency and Bankruptcy Code 2016
(IBC, 2016), who can initiate insolvency resolution process (IRP)?
a) Debtor
b) Creditor
c) Government
d) Reserve Bank of India
Select the correct answer from the options given below:
A. Both a and b
B. Both b and c
C. Only a, b and c
D. All are correct
5. Which of the following is not the feature of FEMA?

A. There is a simplification of Foreign Exchange Transactions.

B. There was a discharge provisions of criminal proceedings in

case of default cases.

C. It came into force on 01.01.2004.

D. None of the Above

6. Which of the following correctly define India’s Foreign Exchange
rate system?
[A] Fixed
[B] Free float
[C] Managed float
[D] Fixed target of band
7. What is Section 7 of the RBI Act 1934?
[A] It allows RBI to buy and sell Foreign currency
[B] It empowers the government to issue directions to the RBI
[C] It allows the RBI to appoint its own staff
[D] None
8. Which section of the RBI Act allows the RBI to form rules regarding

the exchange of damaged and imperfect notes?

[A] 17

[B] 21

[C] 28

[D] 42(1)
9. Which section of RBI is not correctly matched?
[A] Section 26 – describes the legal tender character of Indian bank
notes.
[B] Section 18 – manner in which RBI can conduct business
[C] Both a and b
[D] None
10. Which section was added in the Banking regulation Act to include

the Cooperative Banks under its purview?

[A] Section 61

[B] Section 56

[C] Section 35

[D] Section 28
11. The Banking Regulation Act was initially passed by what name?

[A] Banking Firms Act, 1949

[B] Banking Companies Act, 1949

[C] Banking Units Act, 1949

[D] None
12. In which year the Banking Regulation Act 1949 was amended to

make it applicable to cooperative banks?

[A] 1962

[B] 1964

[C] 1965

[D] 1969
13. Which of the following entities are not covered under the
Banking Regulation Act 1949?
[A] Public Sector banks
[B] Cooperative Banks
[C] Primary Agricultural Credit Society
[D] All of the above
14. Who will act as regulator under IBC, 2016?
A. Reserve Bank of India
B. Insolvency and Bankruptcy Board of India (IBBI)
C. National Company Law Tribunal (NCLT)
D. All of these
15. During insolvency resolution process, how much percentage of
creditors must agree for revival plan to make revival options
applicable?
A. 25%
B. 50%
C. 60%
D. 75%
16. Which of the following is not a condition that is considered by the
RBI in case of application for registration or carrying on business by
an Asset Reconstruction Company (ARC):
A. that the ARC has not incurred losses in any of the three preceding
financial years
B. that the directors of ARC have not entered into related party
transactions
C. that the directors of ARC have adequate professional experience in
matters related to finance, securitisation and re-construction
D. That a sponsor of an ARC is a fit and proper person in accordance with
the criteria issued by RBI
17. ______ of Banking Regulation Act, 1949 deals with use of words

“Banker”,”Bank”, “Banking” or “Banking Company”

A. Section 6

B. Section 7

C. Section 8

D. Section 9

E. Section 10
18. Which of the following section of Banking Regulation Act, 1949

deals with maintenance of a percentage of assets?

A. Section 24

B. Section 21

C. Section 20

D. Section 23
19. Section 18 of Banking Regulation Act, 1949 deals with _______

A. Reserve Fund

B. Cash Reserve

C. Audit

D. Assets in India

E. None of these
20. Section 30 of Banking Regulation Act, 1949 deals with _______

A. Reserve Fund

B. Cash Reserve

C. Audit

D. Assets in India
21. Who will acts as adjudicating authority in case of insolvency

resolution for companies?

A. National Company Law Tribunal (NCLT)

B. Debt Recovery Tribunal (DRT)

C. Insolvency and Bankruptcy Board of India (IBBI)

D. Supreme Court
22. What is India’s ranking in World Bank’s index on the case of resolving

insolvencies?

100th

125th

131st

136th
23. Under Section 17 of Reserve Bank of India Act, 1934 the central

bank involves in _______

A. Selling of Government Securities

B. Issuing & accepting of Promissory notes

C. Emergency loans to banks

D. Issuing of Currency notes

24. Section 18 of Reserve Bank of India Act, 1934 deals with _______

A. Selling of Government Securities

B. Issuing & accepting of Promissory notes

C. Emergency loans to banks

D. Issuing of Currency notes

25. Which out of the following is/are correct regarding Statutory Liquidity
Ratio (SLR)?
a) Section 42 of RBI Act, 1934 lays foundation for maintaining SLR by scheduled
commercial bank with RBI.
b) Section 24 of the Banking Regulations Act, 1949 provide powers to RBI to
specify SLR on banks
c) At present SLR is 19.50 per cent of NDTL
d) Qualified liquid assets for purpose of SLR are: unencumbered government and
other approved securities, gold, cash and excess CRR balance
Select the correct answer from following options:
1. Only a, b and c
2. Only b, c and d
3. Only a, c and d
4. All are correct
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