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CS Executive · Setting Up of Business, Industrial and Labour Laws · Financial Services Organization

Sunrise Fincorp Ltd, an NBFC, is a financial institution within the meaning of the RBI Act, 1934. The Reserve Bank, to regulate the credit system of the country to its advantage, wants it to submit statements about its paid-up capital, investments and the rates of interest charged on loans. Under the official text, what power does the Bank use?

The Reserve Bank relies on section 45L of the RBI Act. It allows the Bank, to regulate the credit system to its advantage, to call for statements on paid-up capital, investments and interest rates, and to give directions on the conduct of business by financial institutions.

  1. APower under section 45L to call for information from financial institutions and to give directionsCorrect
  2. BPower under section 45MBA to frame a resolution scheme with a Bridge Institution
  3. CPower under section 57A to hand regulation to the IFSCA
  4. DPower under section 51A of the Banking Regulation Act to cancel the licence

Explanation

Section 45L of the RBI Act lets the Bank, to regulate the credit system to its advantage, require financial institutions to furnish statements on paid-up capital, reserves, investments and interest rates. Section 45MBA deals with resolution of an NBFC and is not a routine information-gathering power, so option B is wrong.

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