Banking & Finance MCQs

The Repo Rate is the interest rate at which the RBI provides short-term loans to commercial banks. It is a key monetary policy tool used to manage liquidity and influence interest rates in the economy. Fiscal policy, government spending, and taxation policy are instruments of the government's fiscal policy, not RBI's monetary policy.

The primary objective of the Monetary Policy Committee (MPC) of the RBI is to maintain price stability while keeping in mind the objective of growth. This is enshrined in the RBI Act, 1934.

The guidelines apply to all Regulated Entities (REs), which include commercial banks, cooperative banks, and NBFCs, including those operating through digital lending apps.

The norms were introduced to address concerns regarding data privacy, unethical recovery practices, and the lack of transparency in digital lending.

RBI guidelines mandate that all loan disbursals and repayments must be executed only between the bank accounts of the borrower and the Regulated Entity (RE).

Repo rate is the rate at which the central bank lends money to commercial banks. If it remains unchanged, the cost of borrowing for banks from RBI remains stable.

The primary objective of the RBI's monetary policy is to maintain price stability while keeping in mind the objective of growth.

The Monetary Policy Committee (MPC) is a statutory body under the RBI Act, 1934, responsible for fixing the benchmark interest rate in India.

The framework covers all Regulated Entities (REs) of the RBI (banks and NBFCs) and Lending Service Providers (LSPs) engaged by them to extend digital lending, ensuring a comprehensive regulatory oversight.

A key provision of the new framework mandates that all loan disbursements and repayments must be executed directly between the borrower's bank account and the Regulated Entity (RE) without any pass-through to Lending Service Providers (LSPs).