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

The Reserve Bank is examining an application for a banking licence from Kaveri Capital Ltd. Which of the following is a condition the Reserve Bank may require to be satisfied about under Section 22(3) of the Banking Regulation Act, 1949?

The Reserve Bank may require satisfaction that the company has adequate capital structure and earning prospects. This is one of the conditions in Section 22(3), alongside ability to pay depositors in full and proper management character. Listing history or branch counts are not statutory conditions.

  1. AThat the company's promoters hold a majority of shares in public sector banks
  2. BThat the company has adequate capital structure and earning prospectsCorrect
  3. CThat the company has at least 100 branches in rural areas at the time of application
  4. DThat the company has been listed on a stock exchange for five years

Explanation

Section 22(3)(d) lists that the company has adequate capital structure and earning prospects. The other options are not conditions stated in the section. Branch numbers and listing history are not in the statutory list.

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