Loan Management Regulations Quiz

Questions and Answers

What is the maximum value of a Gift PPI?

Rs.5,000/-

Rs.7,500/-

Rs.3,000/-

Rs.10,000/- (correct)

Which of the following statements about PPI-MTS is true?

They can be used for cash withdrawal.

They require KYC verification.

They have a maximum balance of Rs.10,000/-.

They are reloadable. (correct)

What must a PPI issuer do when a customer files a grievance?

Respond to it within 48 hours. (correct)

Provide a temporary refund.

Resolve it within one month.

Complete the resolution within 24 hours.

Which PPI type is exempt from interoperability requirements?

PPI-MTS Signup and view all the answers

What is the minimum validity period for all PPIs issued in the country?

One year from the last loading. Signup and view all the answers

What type of transactions are permitted with Gift PPIs?

Funds transfer back to the source account Signup and view all the answers

What is the maximum allowable outstanding amount for PPI-MTS?

Rs.3,000/- Signup and view all the answers

How long must PPI holders be able to generate past account statements?

6 months Signup and view all the answers

What happens if a RTGS member fails to repay any IDL before the Cut-off is executed?

The IDL is reversed using the Current Account balance. Signup and view all the answers

What is the penalty if the IDL availed is greater than the Current Account balance?

Securities get transferred to the Investment Account of the RBI. Signup and view all the answers

How soon must the originating member release the payment message after debiting a customer's account?

Within 30 minutes Signup and view all the answers

What compensation is the beneficiary bank required to pay if there is a delay in crediting the beneficiary's account?

Current repo rate plus 2% Signup and view all the answers

How long does the recipient member have to return the funds to the originating member if unable to credit the beneficiary's account?

Within 1 hour Signup and view all the answers

What interest rate must a participant pay when the IDL is not repaid?

Twice the Repo Rate Signup and view all the answers

What should the beneficiary banks provide in the passbook/account statement of the originator?

Name of the beneficiary Signup and view all the answers

What happens if there is a delay in returning the payment to the originating member?

The recipient member pays compensation at current repo rate plus 2%. Signup and view all the answers

What is one primary purpose of establishing an IT Steering Committee?

To oversee the processes for business continuity and disaster recovery Signup and view all the answers

What qualifications should the Head of IT Function possess?

A senior level with technical competence and experience Signup and view all the answers

How often must the IT Steering Committee meet?

Quarterly Signup and view all the answers

What specific responsibility does the Head of IT Function have regarding IT controls?

Ensure effective assessment and management of IT controls and risks Signup and view all the answers

Which of the following describes a component of the IT Service Management Framework required by REs?

Support operational resilience of information systems and infrastructure Signup and view all the answers

What is the maximum number of transactions for which transaction history must be provided by a PPI issuer?

10 transactions Signup and view all the answers

What kind of PPIs can be issued to foreign nationals visiting India?

INR denominated full-KYC PPIs Signup and view all the answers

What must be verified at the point of issuance of PPIs to foreign nationals?

Passport and Visa Signup and view all the answers

Which of the following is true regarding the status of PPIs issued to NRIs?

They can be linked to UPI for merchant payments Signup and view all the answers

What category do online payment transactions belong to?

Remote payment transactions Signup and view all the answers

When must banks send SMS alerts regarding electronic banking transactions?

Mandatorily for every transaction Signup and view all the answers

What type of transactions require the physical presence of a payment instrument?

Proximity payment transactions Signup and view all the answers

What is essential for customers to do regarding unauthorized transactions?

Register for SMS alerts Signup and view all the answers

What must REs do regarding their DLAs and LSPs?

Ensure the list of their DLAs and LSPs is available on their website with details of activities. Signup and view all the answers

Which of the following is true regarding the communication of recovery agent details?

Details of the LSP acting as a recovery agent must be communicated at loan sanctioning and changes thereof. Signup and view all the answers

What information must be accessible on REs' websites?

Links to customer care, privacy policies, and loan product details. Signup and view all the answers

What is the role of the grievance redressal officer?

To handle FinTech/digital lending related complaints raised by borrowers. Signup and view all the answers

What happens if a complaint is not resolved within the stipulated period?

The borrower may lodge a complaint over the Complaint Management System portal under the RB-IOS. Signup and view all the answers

What information must be captured to assess a borrower's creditworthiness?

Borrower's economic profile including age, occupation, and income. Signup and view all the answers

Where must contact details of grievance redressal officers be displayed?

On the websites of REs, its LSPs, and also in the KFS provided to the borrower. Signup and view all the answers

What is required at the time of loan execution?

The loan agreement and all details should be sent to borrowers via email/SMS. Signup and view all the answers

What is the Mobile Money Identifier (MMID) used for in IMPS transactions?

To facilitate fund transfer when combined with a mobile number Signup and view all the answers

Which of the following is NOT a requirement for transferring funds through UPI?

Registration of a beneficiary Signup and view all the answers

What is the transaction limit for IMPS as of 1st February 2024 without adding beneficiary details?

Rs. 5 lakh Signup and view all the answers

Which method can unbanked customers use to initiate IMPS transactions?

Through the services of a Pre-Paid Payments instrument issuer Signup and view all the answers

What type of requests can UPI handle besides direct payments?

Peer to Peer collect requests Signup and view all the answers

Which of the following is true regarding the MMID?

Multiple MMIDs can be linked to a single mobile number Signup and view all the answers

How does the UPI-PIN function in the UPI system?

It acts as a security code required for every transaction Signup and view all the answers

Which of the following statements best describes the IMPS transaction process?

It allows for transactions using either Beneficiary Account number and IFS code or Beneficiary Mobile number and MMID Signup and view all the answers

What is a primary function of the UPI Circle-Delegate Payments feature?

To enable primary users to set transaction limits for secondary users. Signup and view all the answers

Which payment method is available for users without internet connectivity according to UPI 123Pay?

IVR (Interactive Voice Response) systems. Signup and view all the answers

What is the maximum transaction limit for a user using BHIM for a single transaction?

Rs 1,00,000 Signup and view all the answers

What is the maximum limit for person-to-person payments when using UPI 123Pay in a single transaction?

Rs 1,000 Signup and view all the answers

How many languages is the BHIM app currently available in?

20 Signup and view all the answers

Which of the following methods can be used to collect money using the BHIM app?

Mobile number and Virtual Payment Address. Signup and view all the answers

What transaction limit applies to new users of the BHIM app during their first 24 hours?

Rs 5,000 Signup and view all the answers

What feature allows users to send and receive money using a unique identifier?

Virtual Payment Address (VPA) Signup and view all the answers

What is the primary limitation on Small PPIs regarding funds transfer?

Funds transfer from Small PPIs is strictly prohibited. Signup and view all the answers

What is the maximum amount that can be debited from Small PPIs in a month?

Rs.10,000/- Signup and view all the answers

Which requirement is necessary for issuing Full-KYC PPIs?

Completion of KYC for the PPI holder. Signup and view all the answers

What is the maximum amount that can be loaded onto Small PPIs within a financial year?

Rs.1,20,000/- Signup and view all the answers

What distinguishes Small PPIs from Full-KYC PPIs in terms of usability?

Small PPIs can be used only at specific merchant locations. Signup and view all the answers

How long do Small PPIs have to convert into Full-KYC PPIs?

24 months Signup and view all the answers

What type of transactions are allowed with Full-KYC PPIs?

Funds transfer and cash withdrawal Signup and view all the answers

What is the PPI holder requirement involving documentation for Small PPIs?

A self-declaration of name and unique identification number is required. Signup and view all the answers

What is the primary condition for issuing full-KYC PPIs to foreign nationals or NRIs in India?

Physical verification of Passport and Visa Signup and view all the answers

What is the maximum outstanding limit for PPIs issued to foreign nationals visiting India?

It must not exceed the limit for full-KYC PPIs Signup and view all the answers

Which of the following is a key aspect of customer protection for unauthorized electronic banking transactions?

Criteria for customer liability were reviewed and updated Signup and view all the answers

How should banks ensure customers are informed about unauthorized transactions?

Customers should mandatorily register for SMS alerts Signup and view all the answers

What type of transactions does the term 'face-to-face payment' refer to?

Transactions that require physical payment instruments Signup and view all the answers

Which of the following is true regarding the loading and reloading of PPIs for foreign nationals?

Funds can only be loaded against receipt of foreign exchange Signup and view all the answers

What defines a 'remote payment transaction'?

Transactions that do not require presenting physical instruments Signup and view all the answers

What must PPI issuers do to maintain compliance with regulatory standards?

Ensure proper record-keeping of customer verification information Signup and view all the answers

What is the maximum percentage of total assets that a UCB can grant as unsecured loans and credit card limits combined?

10 percent Signup and view all the answers

Which type of credit cards are UCBs prohibited from issuing?

Co-branded credit cards Signup and view all the answers

What must card-issuers provide along with the credit card application?

One-page Key Fact Statement Signup and view all the answers

What font size is required for the Most Important Terms and Conditions (MITC)?

Arial-12 Signup and view all the answers

When should a card-issuer communicate the reasons for rejecting a credit card application?

In writing after rejection decision Signup and view all the answers

What is required from card-issuers regarding the review of their credit card operations?

Half-yearly review by Audit Committee of the Board Signup and view all the answers

Which of the following can NOT issue credit cards without RBI approval?

Non-Banking Financial Companies Signup and view all the answers

What optional service may card-issuers consider introducing for customers?

Insurance coverage for lost cards Signup and view all the answers

Study Notes

IDL Facility and Member Obligations

IDL facility activates automatically when members lack funds for transactions.
RTGS reverses availed IDL when member's settlement account exceeds a threshold.
Failure to repay IDL before Cut-off leads to balance deduction from Current Account.
Securities not repaid beyond Current Account balance transfer to RBI's Investment Account.
Interest on unpaid IDL is twice the prevailing Repo Rate.

Payment Transaction Obligations

Originating members must send payment messages to RTGS within 30 minutes of debiting customer accounts.
Beneficiary banks should credit accounts within 30 minutes of message receipt.
Delays in crediting accounts require compensation at current Repo Rate plus 2% for each day of delay to beneficiaries.
Funds not credited must be returned to the originating member within one hour of receipt.

Gift PPIs and PPI-MTS

Gift PPIs are non-reloadable with a maximum value of Rs.10,000; cash-out not allowed.
Funds can be returned to the source account with PPI holder's consent.
Banks and non-banks can issue PPI-MTS encompassing automated fare collection for public transport and parking.
PPI-MTS operates without KYC verification, has a reloadable nature, and a maximum outstanding limit of Rs.3,000.

Interoperability and Redemption of PPIs

Interoperability for KYC-compliant PPIs is mandatory through authorized networks and UPI.
PPI-MTS is exempt from this, while Gift PPI issuers can opt for interoperability.
All PPIs must have a minimum validity of one year from the last reload date.

Customer Protection and Grievance Redressal

PPI issuers should resolve customer complaints within 48 hours, and no later than 30 days.
Account statements for the past six months and transaction history for up to 10 transactions must be available.
Full-KYC PPIs can be issued to foreign nationals/NRIs, with restrictions on outstanding amounts.

Unauthorized Electronic Banking Transactions

Regulations established to protect customers from unauthorized electronic transactions.
Categories of transactions include remote/online payments and face-to-face transactions.
Banks must require customers to register for SMS and email alerts for electronic banking transactions.

Recovery Agents and Grievance Mechanism

Recovery entities must inform borrowers about engaged recovery agents and their details.
Grievance redressal officers need to be assigned to address complaints regarding FinTech/digital lending.
If complaints remain unresolved, borrowers can escalate through the RBI Integrated Ombudsman Scheme (RB-IOS).

Borrower Creditworthiness Assessment

Recovery entities must evaluate borrowers’ economic profiles before loan approval.
A senior-level IT Steering Committee to oversee IT alignment with business needs and compliance.
Appointment of a qualified Head of IT Function responsible for managing IT risks and internal controls.

IT Service Management Framework

Establishment of a robust IT Service Management Framework ensures operational resilience in IT infrastructure.

IMPS (Immediate Payment Service)

Mobile Banking Registration is mandatory for the sender to initiate transactions via mobile; not required for internet, ATM, or bank branch transactions.
The receiver must obtain their MMID (Mobile Money Identifier) from the bank to share with the sender, or can provide their Account number and IFS code or Aadhaar number for money transfer.
Both banked and unbanked customers can use IMPS; unbanked customers can initiate transactions through Pre-Paid Payments Instrument issuers (PPI).
MMID is a 7-digit number used alongside the mobile number for fund transfers; multiple MMIDs can be linked to one mobile number.
IMPS transactions have a per transaction limit of Rs. 5 lakh (except SMS and IVR transactions).
New rules effective from February 1, 2024, allow customers to transfer up to Rs. 5 lakh without adding beneficiary details; only the recipient’s mobile number and bank name are required.

Unified Payments Interface (UPI)

UPI integrates multiple bank accounts into a single mobile application for seamless fund transfers and merchant payments.
UPI allows instant payments 24/7, regardless of bank working hours, and is facilitated by NPCI.
UPI-PIN (4-6 digit passcode) is created during the initial registration.
No beneficiary registration is needed; funds can be transferred using Virtual ID, Account number/IFS code, Aadhaar number, or QR Code.
UPI Circle-Delegate Payments feature allows primary users to set transaction limits for secondary users on their account.

Bharat Interface for Money (BHIM)

Developed by NPCI for easy banking transactions using UPI, available in 20 languages.
Users can send money via Virtual Payment Address (UPI ID), Account number, or QR code; funds can also be collected using the same methods.
Transaction limits: Rs. 1,00,000 per transaction and per day for individual bank accounts; bill payment limit is Rs. 1,00,000.
New users are restricted to Rs. 5,000 for the first 24 hours.

UPI123Pay

Designed for feature phone users and those with limited or no internet access, allowing UPI transactions via any phone.
IVR (Interactive Voice Response) enables UPI transactions conducted through phone calls.
Transaction limits: Rs. 5,000 for person-to-person payments and Rs. 1,00,000 for merchant payments per day.

Pre-Paid Payment Instruments (PPIs)

Classified into Small PPIs (limited to purchases) and Full-KYC PPIs (allow transfers and withdrawals).
Small PPIs are limited to a maximum balance of Rs. 10,000 at any time and Rs. 10,000 monthly; must convert to Full-KYC within 24 months.
Full-KYC PPIs are available for goods/services and launching funds transfer options.

PPIs for Foreign Nationals/NRIs

Authorized entities can issue INR-denominated Full-KYC PPIs to foreign nationals/NRIs, conditional on verifying passport and visa.
PPIs linked to UPI can only be used for merchant payments, with reloading allowed against foreign exchange.

Customer Liability in Unauthorized Transactions

RBI guidelines define customer liability concerning unauthorized electronic banking transactions.
Two transaction types: Remote/online transactions (e.g., internet banking) and face-to-face/proximity transactions (e.g., ATMs).
SMS and email alerts are mandatory for customers to monitor their electronic banking transactions.

Governance Framework for Credit Cards

Issuers must have a documented policy for credit card issuance and operations, reviewed semi-annually.
Key Fact Statements must accompany credit card applications, explaining important card aspects.
Rejection of applications must be communicated with reasons.
Most Important Terms and Conditions (MITC) must be clearly presented to customers in an understandable format.
Insurance options may be offered to cover liabilities from lost cards or fraud.
Business credit cards can be issued for business expenses.

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Description

Test your knowledge on the regulations surrounding loan management, including borrower communication, DLA details, and recovery agents. This quiz will cover essential concepts and requirements that financial institutions must follow when dealing with loans.