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Questions and Answers
What power does the Central Government have regarding banking companies in special cases?
What power does the Central Government have regarding banking companies in special cases?
Which body is designated as the official liquidator for banking companies?
Which body is designated as the official liquidator for banking companies?
Which provision allows the High Court to determine all claims related to banking companies?
Which provision allows the High Court to determine all claims related to banking companies?
What happens to deposited credits during the winding-up process of a banking company?
What happens to deposited credits during the winding-up process of a banking company?
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Under which section is the Tribunal granted the powers of a civil court?
Under which section is the Tribunal granted the powers of a civil court?
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What does Section 41A focus on in the winding-up proceedings?
What does Section 41A focus on in the winding-up proceedings?
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Which section specifies that Part IIIA will override other laws?
Which section specifies that Part IIIA will override other laws?
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What is the purpose of Section 39A in relation to liquidators?
What is the purpose of Section 39A in relation to liquidators?
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What action can the Reserve Bank take if a banking company's Board of directors does not meet specified requirements?
What action can the Reserve Bank take if a banking company's Board of directors does not meet specified requirements?
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What happens if a banking company does not comply with the Reserve Bank's order within two months?
What happens if a banking company does not comply with the Reserve Bank's order within two months?
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What is the status of an appointment made under this section?
What is the status of an appointment made under this section?
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How long does a newly appointed director hold office?
How long does a newly appointed director hold office?
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What must happen for a person to be removed from the Board of directors?
What must happen for a person to be removed from the Board of directors?
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What is the implication of a defect in the composition of the Board of directors?
What is the implication of a defect in the composition of the Board of directors?
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What restriction is placed on directors appointed under this section in terms of tenure?
What restriction is placed on directors appointed under this section in terms of tenure?
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What happens if a banking company fails to fulfill the Reserve Bank's requirements?
What happens if a banking company fails to fulfill the Reserve Bank's requirements?
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What percentage of total demand and time liabilities must a non-scheduled banking company maintain as a cash reserve?
What percentage of total demand and time liabilities must a non-scheduled banking company maintain as a cash reserve?
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Which of the following is NOT included in the 'liabilities in India' for a banking company?
Which of the following is NOT included in the 'liabilities in India' for a banking company?
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When must banking companies submit their cash reserve returns to the Reserve Bank?
When must banking companies submit their cash reserve returns to the Reserve Bank?
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What happens if the designated Friday for reporting is a public holiday?
What happens if the designated Friday for reporting is a public holiday?
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What is included in 'time liabilities' for banking companies?
What is included in 'time liabilities' for banking companies?
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Which of the following institutions provides advances that are excluded from a banking company's liabilities?
Which of the following institutions provides advances that are excluded from a banking company's liabilities?
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What is the purpose of maintaining a cash reserve for banking companies?
What is the purpose of maintaining a cash reserve for banking companies?
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Which of the following directly affects the requirement of cash reserve maintenance?
Which of the following directly affects the requirement of cash reserve maintenance?
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What legal grounds does not allow a suit to be maintained against the registered holder of a share in a banking company?
What legal grounds does not allow a suit to be maintained against the registered holder of a share in a banking company?
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Under what circumstances can a transferee initiate legal proceedings against a registered holder?
Under what circumstances can a transferee initiate legal proceedings against a registered holder?
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Which of the following individuals is responsible for providing shareholding details to the Reserve Bank?
Which of the following individuals is responsible for providing shareholding details to the Reserve Bank?
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What is required from stakeholders regarding changes in their shareholding?
What is required from stakeholders regarding changes in their shareholding?
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What does the regulatory requirement specify for reporting shareholdings?
What does the regulatory requirement specify for reporting shareholdings?
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After which act did the requirement for reporting changes in shareholding get updated?
After which act did the requirement for reporting changes in shareholding get updated?
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What specific information must be included in the reporting to the Reserve Bank?
What specific information must be included in the reporting to the Reserve Bank?
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What percentage of shareholding is relevant for particular reporting requirements as amended in legislation?
What percentage of shareholding is relevant for particular reporting requirements as amended in legislation?
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What type of business may a banking company engage in according to the specified provisions?
What type of business may a banking company engage in according to the specified provisions?
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Which of the following activities is NOT permitted for banking companies?
Which of the following activities is NOT permitted for banking companies?
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In terms of property management, banking companies are allowed to:
In terms of property management, banking companies are allowed to:
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Which financial instrument can banking companies deal with?
Which financial instrument can banking companies deal with?
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Which of the following best describes the banking company's role in trust administration?
Which of the following best describes the banking company's role in trust administration?
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Banking companies are explicitly mentioned not to engage in which of the following activities?
Banking companies are explicitly mentioned not to engage in which of the following activities?
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How are the regulations concerning banking companies stated in relation to existing agreements or resolutions?
How are the regulations concerning banking companies stated in relation to existing agreements or resolutions?
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What specific type of business does the Banking Companies (Amendment) Act, 1959, empower banking companies to conduct?
What specific type of business does the Banking Companies (Amendment) Act, 1959, empower banking companies to conduct?
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Which of these forms of business can a banking company NOT engage in?
Which of these forms of business can a banking company NOT engage in?
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For banking companies, what is one of the allowed functions regarding money and securities?
For banking companies, what is one of the allowed functions regarding money and securities?
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Study Notes
Acquisition of Banking Companies
- Central Government has the authority to acquire undertakings of banking companies under specific conditions.
- A scheme for acquisition can be created by the Central Government.
- Shareholders of acquired banks are entitled to compensation.
- Tribunal is established for handling disputes related to acquisitions and has the powers of a civil court.
- Tribunal procedures are outlined for efficient resolution of matters.
Suspension of Business and Winding Up
- High Court plays a significant role in defining banking operations, including the suspension of business.
- The winding-up process of banking companies is conducted by the High Court.
- Reserve Bank is appointed as the official liquidator for affected banks.
- Companies Act applies to liquidators managing the wind-up process.
- Preliminary reports are required from the official liquidator during winding up.
- Preferential payments are established for depositors during liquidation, prioritizing immediate claims.
Special Provisions for Winding Up Proceedings
- Provisions in Part IIIA take precedence over other laws concerning winding up banking companies.
- High Court is empowered to resolve all claims related to banking companies swiftly.
- Ongoing legal proceedings can be transferred for efficiency.
- Public examinations of directors and auditors are mandated.
- Provisions exist for assessing damages against delinquent directors to hold them accountable.
Business Operations of Banking Companies
- Banking companies can engage in a wide array of activities beyond traditional banking, including:
- Borrowing and lending money with or without security.
- Dealing with various financial instruments like bills, notes, and debentures.
- Facilitating letters of credit and foreign exchange transactions.
- Underwriting and issuing public or private loans.
- Conducting guarantee and indemnity businesses.
- Managing and selling assets acquired in satisfaction of claims.
- The scope expands to include administration of estates and supporting employees or their dependents.
Governance and Regulation
- The Reserve Bank can intervene in the composition of a banking company's Board of Directors to ensure compliance with legal requirements.
- Failure to comply with Reserve Bank directives within two months may lead to removal of board members.
- Appointment of new directors must adhere to existing regulations and timelines.
- Acts of the Board are valid despite any detected compositional defects.
- Shareholders must disclose their holdings to the Reserve Bank, ensuring transparency.
Cash Reserve Requirements
- Non-scheduled banks are required to maintain a cash reserve in India daily equivalent to a specified percentage of their total demand and time liabilities.
- This reserve can be held in various forms, including current accounts with the Reserve Bank.
- Returns of held cash reserves must be submitted monthly to the Reserve Bank, detailing amounts on specified Fridays.
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Description
Test your knowledge on the cash reserve requirements for banking companies in India. This quiz covers the regulations related to maintaining cash reserves, current accounts, and the role of the Reserve Bank. Challenge yourself and see how well you understand these important banking concepts!