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CHAPTER 11

MANAGEMENT OF NON-BANKING FINANCIAL COMPANIES OBJECTIVE QUESTIONS

Complete the sentences by filling the gap using the right word/phrase from the choices given under each question. 1. The Task Force on NBFCs was appointed by the Government of India in_________ (a) 1958 (b) 1968 (c) 1988 (d) 1998

2. The minimum net owned funds prescribed for non-deposit taking NBFCs is ________________.. (a) Rs. 25 lakhs (b) Rs. 25 crore (c) Rs.50 lakh (d) Rs.100 lakh

3.Minimum net owned funds prescribed for registering deposit taking financial companies with RBI is ___________ (a) Rs.100 lakh (b) Rs. 200 Lakh (c) Rs.250 lakh (d) Rs.500 lakh

4. A director on the board of an NBFC can be considered for appointment as director on the board of the bank if he/she is not the owner of the NBFC if the shareholdings (singly or jointly with relatives, associates etc) do not exceed____________, he is not the owner, not related to the promoter and not full-time employee of the NBFC. (a) 10% (b) 20% (c ) 50% (d) 25%

5. Those who are likely to pose a higher than average risk to the bank are _________customers. (a) Medium risk (b) High risk (c) Moderate risk (d) Low risk

6. NBFCs are required to maintain proper record of all cash transactions ( deposits and withdrawals) of _______________________ (a) Less than Rs.5 lakhs (d) Less than Rs.10 lakhs (b) More than Rs. 5 lakhs (c) More than Rs.10 lakhs

7. Section 45-IC of the RBI Act requires NBFCs to transfer at least _____of its profits to a Reserve Fund (a) 50% (b) 20% (c ) 10% (d) 25% 1

8. NBFCs are permitted to pay brokerage not exceeding _______to brokers (a) 0.5% (b) 1% (c) 1.5% (d) 2%

9 NBFC are required to file its annual return before ______________ with reference to its position as on the 31st of March of each year . (a) 30th June (b) 30th September (c) 30th April (d) 31st July

10. The NBFC Prudential Norms stipulate that NBFCs should not lend more than ________of its owned funds to any single borrower (a) 50% (b) 25% (c) 10% (d) 15%

11. The composite limit of credit to and investments in a group of entities by NBFCs has been fixed at___________ of the owned fund of the concerned NBFC.

(a) 25%

(b) 30%

(c) 40%

(d) 50%

12. NBFCs with asset size over ___________should submit the ALM return to the Regional office of RBI under whose jurisdiction their registered office is situated. (a) Rs.100 crore (b)Rs.100 lakhs (c) Rs.500 crore (d) Rs.500 lakhs

13. Generally, customers are given a time limit of ____________for preferring their complaints/grievances against NBFCs (a) 30 days (b) 60 days (c) 75 days (d) 90 days

14. Investment by a bank in a financial services company should not exceed ________of the banks paid-up share capital and reserves. (a) 10% (b) 20% (c) 25% (d) 30%

15. All NBFCs with an asset size of Rs.100 crore and more are required a minimum Capital to Risk-weighted Asset Ratio (CRAR) of ___________ (a) 12% (b) 10% (c) 15% (d) 20%

16. The Non Deposit-taking Systematically Important NBFCs shall not end to any single borrower exceeding _______of its owned fund

(a) 25%

(b) 50%

(c) 15%

(d) 10%

17. Banks in India, including foreign banks operating in India, shall not hold more than __________of the paid up equity capital of an NBFC (Deposit-taking). (a) 10% (b) 15% (c) 20% (d) 25%

18.The aggregate exposure of a bank to all NBFCs should not exceed _________of the banks capital funds (a) 20% (b) 40% (c) 25% (d) 50%

19. Assets leased under finance lease have to be disclosed as Assets given on lease under the head _______________________in the balance sheet of the lessor (a) Current Asset (b) Contingent Asset (c) Fixed Asset (d) None of the above

20. In case of receipt of request for transfer of borrower account, either from the borrower or from a lender which proposes to take over the account, the consent or otherwise i.e. objection of the NBFC, if any, should be conveyed within ____________from the date of receipt of request. (a) 21 days (b) 15 days (c) 30 days (d) 7 days

State whether the following statements are TRUE or FALSE 21. All NBFCs can accept deposits from the public 22. All NBFCs are required to register with RBI irrespective of whether they are already registered with other regulatory agencies such as SEBI, IRDA etc.. 23. All NBFCs are required to maintain statutory reserve with RBI. 24. The requirement of CoR (Certificate of Registration) from the Reserve bank would be compulsory for all financial companies, irrespective of the fact that whether the companies accept public deposit or not 25. The NBFCs provide loans, credit facilities, support investments in property, fund private education.

Answer Key 1. (d) 5. (a) 9.(b) 13 (b) 17 (a) 2. (a) 6. (c) 10.(d) 14.(a) 18 (b) 3. ( b) 7. (b) 11. (c) 15 (b) 19 (c) 4. (c) 8 (d) 12. (a) 16 (c) 20.(a)

21. FALSE 25. TRUE

22. FALSE

23. FALSE

24. TRUE

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