CS Professional · Banking and Insurance - Laws and Practice · Banking Operations
Mehta Commercial Bank Ltd holds an RBI licence under the Banking Regulation Act, 1949. It stops carrying on banking business in India altogether. Which statement about the Reserve Bank's power is correct?
RBI may cancel the licence because the company has ceased to carry on banking business in India. That is an independent ground in section 22(4)(i). The proviso about giving time to comply applies only to condition-based grounds, and no government approval is needed beforehand.
- ARBI may cancel the licence because the company has ceased to carry on banking business in IndiaCorrect
- BRBI may cancel the licence only after giving the bank an opportunity to comply with the conditions
- CRBI cannot cancel the licence unless the Central Government first approves
- DRBI may only suspend the licence for thirty days
Explanation
Section 22(4)(i) allows cancellation if the company ceases to carry on banking business in India. The opportunity-to-comply proviso applies only to cancellation under clauses (ii) and (iii), so it does not apply here. No prior Central Government approval is needed.
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