The Reserve Bank of India (RBI) mandates all Non-Banking Financial Companies (NBFCs) to formulate and implement a Fair Practices Code (FPC). Which of the following is NOT a primary objective of the FPC for NBFCs?
A To ensure transparency in lending operations.
B To protect the interests of the borrowers.
C To standardize interest rates across all NBFCs.
D To promote good corporate governance and ethical conduct.
Answer: C
The Fair Practices Code (FPC) for NBFCs aims to ensure transparency, protect borrower interests, and promote ethical conduct in lending. It does NOT aim to standardize interest rates across all NBFCs, as interest rates are typically determined by market forces, risk assessment, and the NBFC's own cost of funds, subject to regulatory guidelines on transparency and reasonableness.
152.
As part of its efforts to strengthen the regulatory framework for Non-Banking Financial Companies (NBFCs), the RBI has often emphasized the harmonization of asset classification and provisioning norms. What is the primary objective behind aligning these norms for NBFCs with those applicable to commercial banks?
A To reduce the operational costs for NBFCs.
B To encourage NBFCs to diversify their lending portfolio.
C To mitigate regulatory arbitrage and enhance financial stability across the financial system.
D To increase the lending capacity of NBFCs.
Answer: C
Harmonizing asset classification and provisioning norms for NBFCs with those of commercial banks is a key step taken by the RBI to reduce regulatory arbitrage opportunities, ensure a level playing field, and enhance the overall financial stability of the system by ensuring consistent risk recognition and provisioning across similar financial activities.
153.
Which of the following frameworks was introduced by the Reserve Bank of India (RBI) to categorize Non-Banking Financial Companies (NBFCs) into different layers based on their size, activity, and perceived risk, thereby aligning regulatory intensity with their systemic significance?
A Prompt Corrective Action (PCA) Framework
B Scale-Based Regulation (SBR) Framework
C Basel III Framework
D Ind AS Framework
Answer: B
The Scale-Based Regulation (SBR) framework for NBFCs was introduced by the RBI to create a graded regulatory structure, categorizing NBFCs into four layers: Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), and Top Layer (NBFC-TL). This framework aims to align regulatory requirements with the systemic importance and risk profile of NBFCs.
154.
According to the 2026 RBI guidelines, what is the role of the 'Digital Lending App' in relation to the lending institution?
A The app can act as a principal lender.
B The app must clearly state that it is only a technology service provider and not a lender.
C The app is allowed to collect fees directly from borrowers without passing through the lender.
D The app can hold customer data indefinitely.
Answer: B
The guidelines mandate that digital lending apps must clearly disclose their role as technology/facilitation service providers and cannot act as lenders themselves. They must also adhere to data privacy norms.
155.
The new RBI guidelines for digital lending platforms aim to protect borrowers from unfair practices. Which of the following is a prohibited practice?
A Offering loans with a fixed interest rate.
B Charging a penalty for late payment of EMI.
C Automated credit scoring based on borrower data.
D Re-loaning or extension of loan without explicit consent and full disclosure of additional charges.
Answer: D
The guidelines explicitly prohibit practices like re-loaning or extending loans without the borrower's explicit consent and full disclosure of all associated costs.
156.
As per the latest guidelines issued by the RBI in 2026 for digital lending platforms, what is a key requirement regarding the upfront disclosure of charges?
A Charges can be disclosed only after loan disbursal.
B All charges, including fees, penalties, and interest rates, must be disclosed upfront to the borrower.
C Only the interest rate needs to be disclosed upfront.
D Disclosure of charges is optional for lenders.
Answer: B
The RBI's guidelines emphasize transparency, mandating that all charges, fees, penalties, and interest rates must be clearly and upfront disclosed to the borrower before loan disbursal.
157.
Which of the following is NOT a characteristic of the e-Rupee (CBDC) as per current understanding?
A It is a legal tender.
B It earns interest for the holder.
C It is a liability of the central bank.
D It is transferable.
Answer: B
Currently, the e-Rupee is designed not to earn interest for the holder, distinguishing it from bank deposits. It is a legal tender, a liability of the RBI, and is transferable.
158.
What is a primary objective behind the RBI's exploration and pilot of the e-Rupee?
A To completely replace physical cash in circulation.
B To enhance financial inclusion and reduce the cost of financial transactions.
C To facilitate faster international remittances by bypassing SWIFT.
D To provide a new avenue for government borrowing.
Answer: B
Key objectives include improving financial inclusion, making payments more efficient and cost-effective, and fostering innovation in the payment system.
159.
As of 2026, the pilot program for India's Central Bank Digital Currency (CBDC), the e-Rupee, has expanded to include which of the following segments?
A Wholesale segment only
B Retail segment only
C Both wholesale and retail segments
D Cross-border transactions only
Answer: C
The RBI has been progressively expanding the e-Rupee pilot program to cover both the wholesale and retail segments, involving a growing number of banks and users.
160.
The Monetary Policy Committee (MPC) is responsible for setting the policy repo rate. How many members does the MPC have?
A Four
B Six
C Eight
D Ten
Answer: B
The Monetary Policy Committee (MPC) consists of six members: the Governor of the RBI (Chairperson), the Deputy Governor of the RBI, one officer of the Reserve Bank of India nominated by the Central Board, and three external members appointed by the Central Government.
