money supply, banking & financial institutions section 1 MCQ Questions & Answers Detailed Explanation

Answer: (a)

Answer: (a)

Answer: (d)

RBI lends to banks @repo rate but only up to 0.25% of banks NDTL. RBI further lends from time to time above the repo rate up to 0.75% of the overall NDTL in the system. And in this case, the interest rate is decided by auction

i.e. if more banks want money, the interest rate will go higher, if fewer banks are competing for RBI money then the interest rate will be less but it will always be above the repo rate (actually RBI puts a condition that all the bids at or below the repo rate will be rejected).

This is called "term repo" which means RBI gives money for a fixed long term. Term Repo is also called Variable Term Repo Operations.

Answer: (b)

Answer: (b)

Section 227 of IBC 2016 says that "Notwithstanding anything to the contrary examined in this Code or any other law for the time being in force, the Central Government may, if it considers necessary, in consultation with the appropriate financial sector regulators, notify financial service providers or categories of financial service providers for the purpose of their insolvency and liquidation proceedings, which may be conducted under this Code.”

And the rules also say that to initiate resolution of FSPs under IBC 2016, the appropriate regulator should make an application. This is not applicable in other cases wherein the case of default, either the creditor or the debtor (company), anyone can move for resolution under IBC 2016.

Since section 227 got notified, the Ministry of Corporate Affairs (GoI) (using the powers under section 227) consulted the regulator (RBI) and said that those NBFCs with asset size of more than Rs. 500 crores can be brought under the IBC code for resolution.

This has been done only for those NBFCs which are regulated by RBI and not for those NBFCs which are regulated by other regulatory bodies like SEBI, IRDAI etc.

Answer: (d)

Monetary transmission is the pass-through of RBI’s monetary policy decisions to the economy at large in terms of interest rates, asset prices, or other economic parameters etc. And monetary transmission may result in any direction i.e. interest rates or asset prices moving up or down.