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CMA Foundation · Fundamentals of Business Economics and Management · Money and Banking

Which of the following is correctly classified as a scheduled bank in the Indian banking system?

A bank included in the Second Schedule of the RBI Act, 1934 is a scheduled bank. It must satisfy prescribed conditions on capital and reserves and gets facilities such as borrowing from the RBI. Money lenders and unregulated entities are outside this category.

  1. AA bank included in the Second Schedule of the Reserve Bank of India Act, 1934Correct
  2. BA bank that deals only in foreign exchange and is not regulated
  3. CA money lender operating in a local market
  4. DA cooperative credit society not meeting any statutory criteria

Explanation

Scheduled banks are those included in the Second Schedule of the RBI Act, 1934, and they meet conditions on paid-up capital and reserves. They can borrow from the RBI. Money lenders and unregulated entities are not scheduled banks.

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