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CS Professional · Banking and Insurance - Laws and Practice · Overview of Indian Banking System

The RBI, satisfied that it is necessary in the public interest, issues a written order to Lotus Bank Ltd. Which one of the following actions can NOT be ordered under Section 36(1)(d) of the Banking Regulation Act, 1949?

Requiring the bank to appoint an RBI nominee as chairman of its audit firm is not listed in Section 36(1)(d). That clause covers calling board meetings, deputing officers to watch meetings, notice of meetings, observing branch affairs and requiring management changes.

  1. ARequiring the bank to appoint a person nominated by the RBI as the chairman of its audit firmCorrect
  2. BRequiring the bank to call a board meeting to consider a specified matter
  3. CDeputing RBI officers to watch proceedings of a Board meeting and report to the RBI
  4. DAppointing RBI officers to observe how the affairs of its branches are conducted and report

Explanation

Section 36(1)(d) lists: requiring a directors' meeting or an officer discussion, deputing officers to watch Board or committee proceedings, requiring notices of meetings be sent to a specified officer, appointing officers to observe affairs and report, and requiring management changes. Nominating a person as chairman of the bank's audit firm is not among them.

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