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RBI | BR | FEMA | PSS ⏳ Published: Sep 2026 | 🎯 96 MCQs
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If you wanted to know the definitions of terms like Regional Rural Bank, Co-
operative Society and Pisciculture, which statutory act you would refer to?
Explanation:
Correct: A
Direct Answer: National Bank for Agriculture and Rural Development Act, 1981
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Central Government may from time to time give such directions to the Bank as it may
Explanation:
Correct: C
Direct Answer: After consultation with the Governor of the Bank
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RBI may establish Offices/Branches abroad……..
Explanation:
Correct: B
Direct Answer: with the previous sanction of the Central Government
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If Governor of the Bank has completed first term of 3 years, he/she will be eligible for
re-appointment for another term not exceeding
Explanation:
Correct: D
Direct Answer: 5 years
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If there is any defect in the constitution of the Central Board of the Bank……
Explanation:
Correct: C
Direct Answer: the act or proceeding of the Board shall not be questioned
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The nomination as
Director or member of a Local Board
of
any
person
who is a member of Parliament or the Legislature of any state shall be void, unless
within _______ of the date of his nomination, he ceases to be such member
Explanation:
Correct: A
Direct Answer: two months
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A Local Board shall be constituted for each of the four areas specified in the First
Schedule -
1. shall consist of five members to be appointed by the Central Government to
represent, as far as possible, territorial interests and the interests of Regional
Rural Banks.
2. members of Local Board are eligible for only continuous reappointment.
3. Local Board shall perform duties delegated by Central Government and
Governor.
Select the correct option:
Explanation:
Correct: C
Direct Answer: All are incorrect
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If the Deputy Governor is rendered incapable of executing his/her duties, Central
Government may appoint another person to officiate for him/her considering
recommendations of ____________ and such person will hold office for__________
Explanation:
Correct: D
Direct Answer: Central Board; the residual period of the term of previous incumbent
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As per the RBI Act,
1. The Bank can accept money as deposits, repayable with interest from banks or
any other person under the Standing Deposit Facility Scheme for the purpose of
economic stability.
2. The Bank can make loans and advances to Warehousing Corporation, repayable
on expiry of fixed periods not exceeding 60 days, against securities of the
Central Government or any State Government.
Select the correct option:
Explanation:
Correct: D
Direct Answer: Both are incorrect
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As part of its regulatory mandate, the Bank can extend loans and advances to
various institutions. If the Bank has extended such facility to EXIM Bank against
security of promissory notes, the prescribed maturity period for such instrument is
Explanation:
Correct: B
Direct Answer: within five years from the date of such loan or advance
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As per the RBI Act,
1. the Bank may issue demand drafts, telegraphic transfers and other kinds of
remittances made payable at its own offices or agencies;
2. the Bank may deal in derivatives, and, with the approval of the Central
Government, in any other financial instrument;
Select the correct option:
Explanation:
Correct: B
Direct Answer: Only 1 is correct
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As per RBI Act, the Bank can keep deposits with _________ for such specific
purposes as may be approved by ______
Explanation:
Correct: C
Direct Answer: State Bank, Central Government
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Bank may overlook limitations placed by RBI Act for purchase, sell or discount any
ineligible bill of exchange or promissory note on account of regulating credit in the
interest of
Explanation:
Correct: A
Direct Answer: agriculture
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With respect to transacting Government Business in India, if there is any failure to
reach agreement on the conditions, the decision of _________ shall prevail.
Explanation:
Correct: D
Direct Answer: Central Government
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The Bank has decided to print notes of denomination of ₹9000. Who has the
authority to issue advisory for the same?
Explanation:
Correct: B
Direct Answer: Central Government
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What is the only exception citing which the Bank may issue excessively soiled
notes?
Explanation:
Correct: D
Direct Answer: Bank is not authorized to issue excessively soiled notes
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If the Bank fails to carry out any of the obligations imposed on it under RBI Act
1. Central Government may declare the Central Board to be superseded.
2. Agency may be appointed to run the affairs of the Bank having powers of the
Central Board.
3. Central Government shall place a full report before Parliament within 6 months.
Select the correct option:
Bank is not authorized to carry which of these functions?
Assets of Issue Department (ID):
a
Gold coin, Gold bullion and Domestic securities not less than ₹200 crores
b
Gold coin and Gold bullion shall be held in India not less than 80%
c
Maturity Period of Foreign Securities held
within 10 years
Select the correct option:
Bank may appoint eligible Bank as its agent at all/any place in India, considering,
1. public interest, financial inclusion, convenience of banking, banking
development.
2. other factors which in its opinion are relevant.
Select the correct option:
Bank may levy fees for furnishing credit information to Banking Companies. What
is the upper ceiling for application of such fee?
As per RBI Act, Bank may determine the policy and give directions to all or any of
the NBFCs. In reference to this,
which of the following is not one of the prescribed
Policy Areas?
Who is the Vice Chairperson of the Joint Committee dealing with instrument
jurisdiction matters of the various Financial Regulators?
Which of the following is not a member of the search-cum-selection committee
created for the appointment of external members of MPC?
As per the RBI Act,
1. Statutory Auditors hold office for a term of 1 year.
2. Controller General of Accounts may examine and report upon the accounts of
the Bank
3. Statutory Auditors may examine any Director or officer of the Bank in relation to
accounts of the Bank
Select the correct option:
Section 10A(2) of the BR Act mandates that not less than what percentage of the
total number of members of the Board of Directors of a banking company shall consist
of persons with special knowledge or practical experience (e.g., accountancy, law,
finance)?
Under Section 17 of the BR Act, every banking company incorporated in India shall
transfer to its reserve fund a sum equivalent to not less than what percentage of its
profits before any dividend is declared?
Which section of the BR Act states that the rates of interest charged by banking
companies shall not be subject to scrutiny by courts?
For a banking company incorporated outside India, what specific item must it
deposit and keep deposited with the RBI under Section 11(2) of BR Act?
Section 12 of BR Act regulates a bank's capital structure. It mandates that a banking
company's paid-up capital shall not be less than:
What is the maximum commission, brokerage, or discount a banking company can
pay (as a percentage of the issue price) on the sale of its shares under Section 13 of
BR Act?
Under Section 10B of BR Act, a whole-time chairman of a banking company shall
hold office for a maximum period of:
As per Section 12B of BR Act, no person shall acquire shares or voting rights in a
banking company, which would take their total holding to or above what percentage,
without the prior approval of the RBI?
Which section of BR Act gives the RBI the power to "caution or prohibit banking
companies... against entering into any particular transaction or class of transactions"?
Under Section 46(1) of BR Act, if a person wilfully makes a false statement in any
return or balance sheet, they shall be punishable with:
•
Assertion (A): The Banking Laws (Amendment) Act, 2024/2025, requires Public
Sector Banks to transfer unclaimed bond interest to the Depositor Education and
Awareness Fund (DEAF).
•
Reason (R): The amendment expanded the scope of unclaimed funds to be
transferred, but it directs them to the Investor Education and Protection Fund (IEPF),
not the DEAF.
Section 10A(2)(a) specifies that a bank's board must have directors with special
knowledge or practical experience.
Which of the following fields are explicitly
mentioned? (Select all that apply)
1. Agriculture and Rural Economy
2. Information Technology
3. Law
4. Marketing and Human Resources
•
Statement: A banking company should be allowed to set up a subsidiary that
exclusively trades in agricultural commodities like wheat and sugar.
•
Argument I: No, Section 8 explicitly prohibits banks from directly or indirectly dealing
in the buying or selling of goods.
•
Argument II: Yes, Section 19 allows a bank to form a subsidiary for any business
mentioned in Section 6(1), and Section 6(1) is very broad.
For an amalgamation of two banking companies under Section 44A, which of the
following conditions are mandatory? (Select all that apply)
1. The scheme must be approved by the Central Government before being sent to shareholders.
2. The scheme must be approved by a resolution passed by a majority in number representing two-thirds in value of the shareholders of each company.
3. The scheme must be sanctioned by the Reserve Bank of India.
4. The scheme must also be approved by the Competition Commission of India.
Part V (Section 56) applies the BR Act to co-operative banks with modifications.
Which of the following are valid modifications? (Select all that apply)
1. References to "memorandum of association" are construed as references to "byelaws".
2. The power of RBI to supersede the Board of Directors (Sec 36AAA) is applicable to co-operative banks.
3. Co-operative banks are fully exempt from maintaining a cash reserve (Section 18).
4. Provisions relating to minimum paid-up capital (Section 11) are modified for co-operative banks.
Question: Match the concept in Column I with its corresponding numerical limit
or percentage from the Act in Column II.
Column I (Concept)
Column II (Limit)
Question: Match the recent amendment (2024-2025) in Column I with its primary
implication in Column II.
Column I (Amendment)
Column II (Implication)
Question: A banking company is prohibited from granting any loans or advances on the
security of its (a) ____ ____. Furthermore, it cannot grant unsecured loans to any firm in which
any of its directors is interested as a (b) ____ or (c) ____. These restrictions are specified in
Section (d) ____.
Question: Under Section 35A, the RBI may issue directions to banking companies in the
Case Study: Mr. Sharma, a depositor, dies in October 2025. He had a nomination
form from 2023 naming his son as the sole nominee. His daughter claims that in
September 2024, Mr. Sharma visited the bank and verbally instructed the manager to
add her as a 50% nominee. The bank's records do not show this.
Question:
Which of the following represents the bank's correct legal position based on
Section 45ZA and the 2024/2025 amendments?
Case Study: 'Apex Bank Ltd.' wants to appoint Ms. Das to its Board of Directors in
November 2025. Her spouse holds shares in 'Apex Bank Ltd.' with a paid-up value of
₹1.8 Crores (INR 18 million).
Question: Based on the Banking Laws (Amendment) Act, 2025 (effective Aug 1, 2025),
which analysis is correct?
Case Study: As of November 2025, Mr. Reddy has been a director on the board of
'Mandya District Central Co-operative Bank' for 9 consecutive years. In the same month,
he is also elected to the board of the 'Karnataka State Co-operative Bank', of which the
Mandya bank is a member.
Question: Based on the Banking Laws (Amendment) Act, 2024/2025, which analysis is
correct?
Analytical Question: A large commercial bank (Bank A) is in default. A large Urban
Co-operative Bank (Bank B) is severely mismanaged.
Question: Which option correctly contrasts the RBI's powers under Section 35AA (for
Bank A) and Section 36AAA (for Bank B)?
Case Study: During FY 2024-25, 'City Co-operative Bank' repeatedly fails to comply
with KYC norms and fraud reporting, contravening RBI directions.
Question: Based on RBI's documented actions in 2024-2025,
what is the specific power
and process for penalizing the bank?
Case Study: 'Jaipur Banking Company' (a non-scheduled bank) calculates its
Cash Reserve under Section 18 for October 1-15, 2025, based on its liabilities from the
"fortnight" of "Saturday, Sept 20 to Friday, Oct 3".
Question: Why is this calculation incorrect, according to the Banking Laws
(Amendment) Act, 2024/2025?
Anagram Puzzle: The New Manager
Question: Unscramble the anagram ROAM STRAD IN IT. This is the person appointed
by the RBI under Section 36AAA (for co-op banks) to manage a bank whose board has
been superseded. Which option correctly identifies the key power of this person?
Logical Puzzle: The Prohibited Connection
Question: Section 5(ne) defines "substantial interest." This definition is the legal "glue"
that connects a director's governance eligibility (Section 10A) with a bank's lending
restrictions (Section 20). Which option best describes this link?
Riddle: "Who Am I?"
Question: I am a power under the BR Act.
•
The Reserve Bank applies for me.
•
The Central Government grants me.
•
I provide a "time-out" for a distressed bank, staying all legal proceedings.
•
I am the necessary first step before the RBI can prepare a scheme of
amalgamation
for
that
bank.
Which option correctly identifies me, my section, and my maximum duration?
Odd One Out: The "Impostor" Director
Question: According to Section 10A(2)(a), a bank's board must have directors with
special knowledge.
Which of the following candidates is the "impostor" (not explicitly
listed), and why?
The Two-Act Problem: A Tale of Two Banks
Question:
•
'Alpha Commercial Bank' is in default. The RBI uses its power under Section [X]
of the BR Act to direct it to initiate a resolution process under the [Y] Act, 2016.
•
'Beta Co-operative Bank' is severely mismanaged. The RBI uses its power under
Section [Z] (as applied by Sec 56) to directly supersede its Board of Directors.
Which option correctly identifies [X], [Y], and [Z]?
The Reserve Bank may, on an application made to it in this behalf, authorise any
person to be known as authorised person to deal in foreign exchange or in
foreign securities, as an authorised dealer, money changer or offshore banking
unit or in any other manner as it deems fit. Under which section of the FEMA
ACT 1999 does RBI grants authorisation to entities for undertaking foreign
exchange business in India.
Which of the following entities have the powers to ensure enforcement of laws
under the FEMA Act?
Which of the following statements are true?
Which of the following statements are correct?
RBI has granted permission to settle International Trade transaction in INR
subject to
which of the following conditions: -
1. In terms of Regulation 7(1) of Foreign Exchange Management (Deposit)
Regulations, 2016, AD banks in India have been permitted to open Rupee Vostro
Accounts. Accordingly, for settlement of trade transactions with any country,
AD bank in India may open Special Rupee Vostro Accounts of correspondent
bank/s of the partner trading country.
2. Indian importers undertaking imports through this mechanism shall make
payment in INR which shall be credited into the Special Vostro account of the
correspondent bank of the partner country, against the invoices for the supply
of goods or services from the overseas seller /supplier.
3. Indian exporters, undertaking exports of goods and services through this
mechanism, shall be paid the export proceeds in INR from the balances in the
designated Special Vostro account of the correspondent bank of the partner
country.
4. The export / import undertaken and settled in this manner shall be subject to
usual documentation and reporting requirements.
The Surplus balances in the Special Rupee Vostro Accounts can be used for
which the following purposes?
1. ‘Set-off’ of export receivables against import payables in respect of the overseas
buyers and suppliers.
2. Banks shall ensure that available funds in these accounts are first used towards
payment obligations arising out of already executed export orders / export
payments in the pipeline.
3. Payments for projects and investments and export/import advance flow
management.
4. Investment in Government Treasury Bills, Government securities, etc. in terms
of extant guidelines and prescribed limits, subject to FEMA and similar statutory
provision.
As per the Foreign Exchange Management (Debt Instruments Regulations 2019
1. any investment made by a person resident outside India shall be subject to the
entry routes, the investment limits and the attendant conditionalities for such
investment as laid down in these regulations.
2. The regulation permits Indian entities, mutual funds, venture capital funds, etc.,
to receive investment from persons resident outside India subject to conditions,
as prescribed.
3. A person resident outside India may trade in exchange-traded derivative
contracts approved by RBI, subject to prescribed limits and conditions.
4. A person resident outside India, permitted for the purpose by the Reserve Bank
in consultation with Central Government, may purchase or sell debt instruments
in the manner and subject to the terms and conditions specified.
Which of the following guidelines were issued in October 2025 Monetary Policy
regarding the Merchanting Trade Transactions?
As per the recent amendment to the Foreign Exchange Management (Foreign
Currency Accounts by a Person Resident in India) Regulations, 2015 a “Startup”
would mean an entity recognised as a start-up by which department of Govt. of
India?
A person resident in India, being an exporter, may open, hold and maintain a
Foreign Currency Account with a bank outside India, for realisation of full export
value and advance remittance received by it towards export of goods or
services.
Which of the following statements are true regarding the funds
available in the above account?
1. Funds in this account may be utilised by the exporter for paying for its imports
into India.
2. Funds in this account may be repatriated into India within a period not
exceeding the end of two month from the date of receipt of the funds.
3. Funds in this account may not be repatriated and can be maintained in an
interest-bearing account outside India.
4. Funds in this account may be repatriated into India within a period not
exceeding the end of three months in case of accounts maintained with banks
in an IFSC.
In the wake of signing of Memorandum of Understanding (MoU) between RBI
and which country in November 2024 that it was decided that India’s bilateral
trade transactions with that country would be settled in INR and/or the local
currency of that country in addition to the ACU mechanism?
As per the compounding matrix what will be fixed amount and the variable
amount in case of non-allotment of shares or allotment/refund after the
stipulated period for foreign investment if the period of delay / non-submission
is less than 1 year?
As per the compounding matrix what will be fixed amount and the variable
amount in case of contraventions pertaining to issuance of any guarantee (other
than reporting contraventions) if the duration of the contravention is less that 1
year?
As per the compounding matrix what will be fixed amount and the variable
amount in case of contraventions pertaining to non-reporting if the duration of
contravention is less than 1 year?
Which of the following statements are true regarding the warehouses in “Bharat
Mart”?
1. multimodal logistics network-based marketplace in United Arab Emirates (UAE)
that will provide Indian traders, exporters, and manufacturers access to the
markets in UAE as well as worldwide
2. AD banks may allow exporters to realise and repatriate full export value of
goods exported to ‘Bharat Mart’ within nine months from the date of sale of the
goods from the warehouse.
3. AD banks may allow without any pre-conditions, Opening/hiring of a
warehouse by an Indian exporter with a valid Importer Exporter Code.
4. AD banks may allow remittances by the Indian exporter for initial as well as
recurring expenses for setup and continuing business operations of its offices.
Which of the following statements are False?
Which of the following transactions does not require RBI permission under
normal circumstances?
A resident Indian purchases shares of a foreign Company through remittance
under the LRS. Which FEMA rule governs this?
An NRI wants to open a rupee account jointly with a resident Indian relative.
Under FEMA this is: -
An Indian software exporter receives payment in foreign currency but keeps it
in a foreign bank account without repatriation. What FEMA provision is
violated?
A non-bank fintech company launches a mobile payment app allowing P2P
transfers without RBI authorization, citing "small transaction volumes." The app
uses a third-party bank’s settlement infrastructure. Is this compliant with the
PSS Act?
A CCP fails to settle a large trade due to a member bank’s insolvency. The CCP
invokes its default fund but still has a shortfall. What does the Act prioritize?
A London-based payment aggregator processes INR transactions for Indian
merchants via a local partner. It claims it’s exempt as it "has no physical
presence in India. “
What is the RBI’s stance?
An entity collects OTC derivative data from Indian participants but stores it in
Singapore. It argues data localization isn’t required. Does this violate the Act?
A stock exchange launches a "real-time settlement layer" for equity trades,
claiming it’s a settlement system exempt from PSS Act. Is this valid?
An Indian company uses a foreign CCP for USD settlements. The CCP’s rules
allow reversal of settled transactions under "force majeure." Does this comply
with the PSS Act?
RBI revokes a system’s authorization due to repeated settlement failures. The
operator claims, "no prior notice was given." What procedural safeguard
applies?
A bank fails to meet its settlement obligation, causing a chain failure. The
system provider claims, "it’s solely the bank’s fault." What does the PSS Act
imply?
A major payment app freezes transactions for 12 hours during a festival sale,
affecting 50 million users. Does this constitute "systemic risk" under PSS Act?
A blockchain-based remittance startup claims it doesn’t need authorization
because "it uses decentralized ledgers."
What is the RBI’s view?
A system participant complains the dispute panel took 90 days to issue a ruling,
violating "reasonable time" norms. What does the Act specify?
A court orders reversal of a settled transaction in a fraud case. The system
provider complies. Is this legally permissible?
Under PSS Act, the finality of settlement applies even if:
The "duty to keep documents confidential" under Section 22 of PSS Act is
supplemented by the applicability of:
The term "settlement" under Section 2(n) of PSS Act includes settlement of:
A system provider misses the 3-month deadline for submitting annual return as
per PSS Regulations 2008 but applies for extension after the deadline. Can the
RBI grant an extension under Regulation 6(2)?
In Form A, the applicant states the payment system will cover "the whole
country" but later operates only in Maharashtra.
What is the consequence under
the Regulations?
A PSS applicant claims in Form A to use "gross settlement" but implements net
settlement post-authorization. How does this affect authorization validity?
A Singapore-based payment system processes INR transactions for Indian
users but fails to appoint a resident officer in India as required under Regulation
4(3) (implied by Form B’s display requirements). Is this compliant with PSS
Regulations?
After getting authorization, a PSS provider shifts from card-based to UPI-based
processing without informing RBI. What does Regulation 6(3) of PSS act require
it to do?
The RBI seeks to use the security deposit to cover consumer losses from a
provider’s operational failure. Is this permitted under the PSS Regulations?
Completed!
Final Score: 0/96