Skip to content

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

Vistara Finserve Ltd, a newly incorporated company in Pune, plans to accept deposits from the public and lend the money, and proposes to start operations next month. It has not yet approached the Reserve Bank. Which statement is correct under Section 22 of the Banking Regulation Act, 1949?

The company must apply in writing to the Reserve Bank for a licence before it commences banking business in India. Under Section 22, no company may carry on banking business without an RBI licence. The six-month grace period applied only to banking companies existing when the Act commenced.

  1. AIt may begin banking business and apply for a licence within six months afterwards
  2. BIt must apply in writing to the Reserve Bank for a licence before commencing banking business in IndiaCorrect
  3. CIt needs a licence only if it opens more than one branch
  4. DIt needs the Central Government's licence, not the Reserve Bank's

Explanation

Section 22(1) bars any company from carrying on banking business in India without a Reserve Bank licence. Section 22(2) requires every other company to apply in writing before commencing banking business. The six-month window applied only to companies already in existence at the commencement of the Act, so option A is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Overview of Indian Banking System shows your real accuracy, how long you take and where you lose marks.

Practise Overview of Indian Banking SystemFree diagnostic mock

More Overview of Indian Banking System questions