Banking & Finance MCQs

The Information Security Committee, often a sub-committee of the IT Strategy Committee or a dedicated board-level committee, is primarily responsible for overseeing the implementation and effectiveness of the Information Security Policy as per RBI guidelines.

The RBI guidelines explicitly prohibit the automatic increase of a borrower's credit limit without their explicit consent, aiming to protect borrowers from unsolicited debt.

The 'cooling-off' or 'look-up' period allows borrowers to exit the loan by paying the principal and proportionate Annual Percentage Rate (APR) without any penalty, providing them with a window to reconsider their decision.

The RBI guidelines explicitly state that all loan disbursements and repayments must be executed only between the borrower's bank account and the RE's bank account, without any pass-through/pool account of the LSP or any third party. This ensures transparency and accountability.

Reviews of the PCA framework typically focus on refining the triggers and thresholds based on key financial ratios (like capital adequacy, asset quality, profitability) to ensure timely intervention.

The Reserve Bank of India (RBI) is the central bank and the primary regulator for cooperative banks in India, including the implementation and monitoring of the PCA framework.

The PCA framework is designed to act as a supervisory tool that allows regulators to intervene and guide UCBs when their financial health deteriorates, preventing potential systemic risks.

The guidelines emphasize transparency by requiring DLAs and their partners to clearly disclose their data privacy policies and the names of the entities they partner with for lending activities.

The guidelines stipulate that all loan disbursals and repayments must be routed through bank accounts of the borrower and the lender, typically managed via an escrow account maintained by a bank, to ensure proper tracking and transparency.

The primary aim of the RBI's digital lending guidelines is to safeguard borrowers by ensuring complete transparency regarding all costs associated with loans, preventing hidden charges and unfair practices.