Banking & Finance MCQs

The framework introduces a 'Resolution Plan' that lenders must invoke within 30 days of a default for large value loans. This plan outlines the steps for resolving the stressed asset, promoting a proactive approach.

The new framework emphasizes early identification of stressed assets and provides a systematic, time-bound mechanism for their resolution, aiming to improve the efficiency of the resolution process and reduce the accumulation of non-performing assets (NPAs).

The RBI's framework aims to prevent predatory lending practices. Charging undisclosed upfront fees is a prohibited practice as it lacks transparency and can mislead borrowers about the true cost of the loan.

The Key Fact Statement (KFS) is designed to provide borrowers with a clear and concise summary of all essential loan information, including costs, tenure, and repayment schedule, thereby promoting informed decision-making and consumer protection.

The RBI's enhanced digital lending framework mandates transparency regarding loan terms, fees, and lender identity. However, it does not require DLAs to disclose the borrower's credit score history for the past five years as a mandatory pre-agreement disclosure.

The Account Aggregator framework enables individuals to securely and digitally share their financial data (with consent) across different financial institutions. This helps in better credit assessment, personalized financial advice, and overall access to a wider range of financial services, thereby promoting inclusion.

The Regulatory Sandbox allows innovators to test new products and services in a live, controlled environment. This often leads to the development of innovative digital solutions that address financial inclusion challenges, such as low-cost payment systems or credit models for underserved populations.

UPI 123PAY was launched by the RBI to allow feature phone users to make UPI payments without an internet connection, significantly boosting financial inclusion for a large segment of the population who do not own smartphones.

The RBI mandated a cooling-off period during which borrowers can exit the loan by paying the principal amount without any penalty interest. This allows borrowers to reconsider their decision and ensures they are not coerced into taking loans.

The RBI permitted FLDG arrangements, subject to certain conditions, including that the FLDG cover provided by the LSP to the RE cannot exceed 5% of the underlying loan portfolio. This was aimed at balancing innovation with risk management.