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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework of Banks

A difference of opinion over a hybrid instrument was referred to the Joint Committee under Section 45Y of the RBI Act, 1934 on 10 March. Which statement is correct?

The Joint Committee must give its decision to the Central Government within three months of the reference, and the decision is binding on the RBI, SEBI, IRDAI and PFRDA under Section 45Y(4) and (5).

  1. AThe Committee must give its decision to the Central Government within three months of the reference, and it binds RBI, SEBI, IRDAI and PFRDACorrect
  2. BThe Committee decision is only advisory to the regulators
  3. CThe Committee must decide within six months and report to Parliament
  4. DThe decision binds only the regulator that made the reference

Explanation

Section 45Y(4) requires the decision within three months from the date of reference, given to the Central Government. Section 45Y(5) makes it binding on RBI, SEBI, IRDAI and PFRDA. The advisory and single-regulator options contradict sub-section (5).

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