Banking & Finance MCQs

The framework mandates that all loan disbursements and repayments must be executed directly between the borrower and the Regulated Entity (RE) without any pass-through or pooling of funds by the Lending Service Provider (LSP) or any third party.

The primary objective of the RBI's new framework is to protect borrowers from unethical practices, enhance transparency, and ensure responsible lending in the digital space.

Under the Scale Based Regulation (SBR) framework, NBFCs in the Upper Layer (NBFC-UL) are required to maintain a minimum CRAR of 15%.

The Upper Layer (UL) comprises NBFCs identified by the Reserve Bank as warranting enhanced regulatory requirements based on a set of parameters, including their size, interconnectedness, complexity, and nature of activity. These NBFCs are subject to the most stringent norms.

The enhanced prudential norms for NBFCs, introduced by the RBI, primarily aim to strengthen their financial health, governance, and risk management, thereby contributing to overall financial stability.

As a digital form of fiat currency, CBDC represents a liability of the central bank, just like physical currency notes and coins.

Pilot programs are crucial for testing the technology, identifying potential challenges, and understanding the economic and financial implications of a CBDC in a controlled environment.

Expanding the pilot to Tier-2 cities allows the RBI to test CBDC's functionality, security, and user acceptance in a broader range of urban environments beyond major metropolitan areas.

Stronger earnings and improved asset quality enhance a bank's financial stability, strengthen its capital base, and can lead to higher returns for shareholders through dividends.

Improved asset quality means that fewer loans are becoming NPAs, and banks are recovering more of their outstanding loans, leading to better financial health.