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

Godavari Banking Co. had its licence cancelled by the RBI under Section 22. It has since repaid all deposits in full. What may the RBI do under Section 36A?

Once satisfied that all deposits have been repaid or adequately provided for, the RBI may publish a notice in the Official Gazette declaring that the company has ceased to be a banking company. The Act's provisions then stop applying to it, except for earlier acts or omissions.

  1. ANothing; the company remains a banking company permanently
  2. BRestore the licence automatically after repayment
  3. CBy notice published in the Official Gazette, notify that the company has ceased to be a banking company under the ActCorrect
  4. DDirect the company to apply to the Central Government for a fresh licence

Explanation

Section 36A(2) allows the RBI, once satisfied that deposits have been repaid or adequately provided for, to notify in the Official Gazette that the company has ceased to be a banking company. Thereafter the Act's provisions cease to apply, except for things done or omitted earlier.

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