Question
The Reserve Bank of India regulates the commercial banks in matters of
1. liquidity of assets
2. branch expansion
3. merger of banks
4. winding-up of banks
Select the correct answer using the codes given below.
(a) 1 and 4 only
(b) 2, 3 and 4 only
(c) 1, 2 and 3 only
(d) 1, 2, 3 and 4
Answer:
D
To suggest corrections, send feedback using feedback button in top menu.
To suggest corrections, use feedback icon on top menu.
Explanation:
Liquidity of assets: The RBI regulates the liquidity of assets held by commercial banks to ensure their stability and soundness. It sets certain reserve requirements and liquidity ratios that banks must maintain to meet their obligations and safeguard depositors' interests.
Branch expansion: The RBI regulates the establishment of branches by commercial banks. It grants permission for opening new branches and also monitors the network expansion of banks to ensure proper coverage and accessibility of banking services.
Merger of banks: The RBI plays a key role in regulating mergers and acquisitions of commercial banks. It reviews and approves proposals for the merger or amalgamation of banks to maintain a healthy and stable banking system.
Winding-up of banks: The RBI also has authority over the winding-up or liquidation process of commercial banks. It can intervene and initiate appropriate actions if a bank is facing financial distress or unable to meet its obligations.
Hence, all the statements are correct.