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CS Professional · Banking and Insurance - Laws and Practice · Banking Operations

Before deciding Mandakini Bank Ltd's application to open a new branch, RBI wishes to examine the bank. Which matter is one that RBI may require to be satisfied about under section 23(2) of the Banking Regulation Act, 1949?

RBI may require to be satisfied that public interest will be served by the opening, along with the bank's financial condition and history, management character, and capital adequacy and earning prospects. Section 23(2) lists these matters; branch profit comparisons or shareholder unanimity are not among them.

  1. AWhether the proposed branch will earn more than the bank's existing branches
  2. BWhether the Central Government has approved the bank's name
  3. CWhether public interest will be served by the opening of the branch, along with the bank's financial condition and historyCorrect
  4. DWhether the bank's shareholders have unanimously approved the branch

Explanation

Section 23(2) allows RBI to require satisfaction, by inspection under section 35 or otherwise, about the financial condition and history of the company, the general character of its management, the adequacy of its capital structure and earning prospects, and that public interest will be served. Comparative branch profitability, name approval and unanimous shareholder approval are not listed.

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