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

Under section 45L of the Reserve Bank of India Act, 1934, when giving directions to a financial institution about the conduct of its business, the Bank must have due regard to which of the following?

The Bank must consider the conditions and objects for which the institution was established, its statutory responsibilities, and the likely effect of its business on money and capital market trends. Dividend history, shareholder wishes or borrower turnover are not listed factors.

  1. AOnly the dividend history of the institution over the last five years
  2. BThe conditions and objects for which the institution was established, its statutory responsibilities, and the likely effect on money and capital market trendsCorrect
  3. CThe wishes of the institution's majority shareholders
  4. DThe turnover of the institution's largest borrower

Explanation

Section 45L(3) requires the Bank to have due regard to the conditions and objects of establishment, statutory responsibilities, if any, and the likely effect of the institution's business on trends in the money and capital markets. The other options are not factors listed there.

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