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CS Professional · Banking and Insurance - Laws and Practice · Control over Organization of Banks

Malwa Bank Ltd increases its authorised capital, so that its existing subscribed and paid-up capital no longer satisfy the Section 12(1)(i) ratios. Within what period may the Reserve Bank allow it to comply with the conditions?

The Reserve Bank may allow a period not exceeding two years. Section 12(1)(i) says that where capital is increased, the bank must satisfy the subscribed and paid-up ratio conditions within such period, not exceeding two years, as the Reserve Bank allows.

  1. ANot exceeding one year
  2. BNot exceeding two yearsCorrect
  3. CNot exceeding three years
  4. DNot exceeding five years

Explanation

Section 12(1)(i) provides that if capital is increased, the bank must comply within such period, not exceeding two years, as the Reserve Bank may allow. The other periods are not stated in the provision.

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