Banking & Finance MCQs

An increase in the Repo Rate makes it more expensive for commercial banks to borrow funds from the RBI. This, in turn, leads to commercial banks increasing their own lending rates, making credit costlier for businesses and consumers, thereby aiming to curb inflation.

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

The Monetary Policy Committee (MPC) consists of six members: three officials from the Reserve Bank of India (including the Governor as ex-officio Chairperson) and three external members nominated by the Central Government.

The RBI's Green Deposits framework specifies that the funds raised must be used for financing projects with clear environmental benefits, aligning with the objective of promoting sustainable finance.

The RBI framework mandates that banks offering Green Deposits must maintain a separate accounting ledger for these deposits to ensure transparency and track the utilization of funds for eligible green activities.

The Green Deposits framework aims to promote environmental sustainability by encouraging banks to mobilize funds for financing green projects, thereby contributing to climate resilience and sustainable development.

The RBI's framework mandates that digital lenders must have a well-defined and accessible grievance redressal mechanism to address customer complaints effectively and transparently.

The RBI framework clearly states that while outsourcing is permitted, the regulated entity (lender) remains fully responsible for the actions of its outsourcing partners and must ensure that all activities comply with the digital lending guidelines.

The RBI's enhanced digital lending framework emphasizes transparency by requiring lenders to disclose the all-in cost of loans upfront and obtain explicit consent for all charges, thereby protecting consumers from hidden fees.

The guidelines mandate that all loan disbursals and repayments for digital loans offered by NBFCs must be routed through the NBFC's own bank account or a designated bank account to ensure proper tracking and transparency.