Skip to content

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

Greenfield Bank Ltd's licence is under review because it has failed to fulfil a Section 22(3) condition. Unless delay would prejudice depositors or the public, what must the Reserve Bank do before cancelling the licence?

The Reserve Bank must give the company, on terms it specifies, an opportunity to take the necessary steps to comply with or fulfil the condition, unless delay would prejudice depositors or the public. The Central Government hears only appeals after cancellation, not before.

  1. AObtain prior approval of the Central Government
  2. BGive the company, on terms it specifies, an opportunity to take necessary steps to comply with the conditionCorrect
  3. CWait for three years before taking any action
  4. DIssue a notice in the Official Gazette declaring the company has ceased to be a banking company

Explanation

The proviso to Section 22(4) requires the Reserve Bank, unless delay would prejudice depositors or the public, to give the company on specified terms an opportunity to comply before cancelling under clause (ii) or (iii). Central Government comes in only as the appellate authority after cancellation.

Did you get it right without looking?

One question tells you little. A timed set on Banking Operations shows your real accuracy, how long you take and where you lose marks.

Practise Banking OperationsFree diagnostic mock

More Banking Operations questions