Banking & Finance MCQs - 2026-05-08

The government's consolidation drive, particularly in 2019-2020, led to the merger of several PSBs, significantly reducing their total number from 27 in 2017 to 12 by April 2020.

Recapitalization involves injecting fresh capital into banks to strengthen their balance sheets, ensure compliance with capital adequacy norms (like Basel III), absorb potential losses from NPAs, and enable them to lend more, thereby supporting economic growth.

The primary objective of the PSB mergers was to consolidate smaller, weaker banks into larger, more robust entities capable of competing globally, improving efficiency, and enhancing their lending capacity.

The guidelines cover all Regulated Entities (REs) of the RBI (banks and NBFCs) and the Lending Service Providers (LSPs) engaged by them to extend digital loans. It aims to bring clarity and regulation to the entire digital lending ecosystem.

The RBI guidelines emphasize transparency by mandating the disclosure of the Annual Percentage Rate (APR) and providing a 'cooling-off' or 'look-up' period during which borrowers can exit the loan by paying the principal and proportionate APR without penalty.

The RBI guidelines mandate that the loan disbursement should be made directly from the Regulated Entity's (RE) account to the borrower's bank account, without any pass-through to the LSP's account.