Which of the following is a payments bank NOT permitted to do?
- A.Accept demand deposits up to a prescribed ceiling
- B.Issue debit cards
- C.Grant loans and issue credit cards
- D.Remit money and make payments
Correct answer
Explanation
The correct answer is C, grant loans and issue credit cards. A payments bank is a differentiated bank licensed on the lines suggested by the Nachiket Mor Committee to carry payments and small savings to people the branch network had not reached. It is deliberately kept out of lending, so it takes no credit risk and must invest its deposits in safe government securities and bank deposits.
Option A is allowed, subject to a ceiling on the balance per customer that the Reserve Bank fixes. Option B is allowed, and a payments bank may issue debit or ATM cards although not credit cards. Option D is its core business, since remittances and payments are the purpose for which the class was created. India Post Payments Bank, which began on 1 September 2018, is the best known example. A small finance bank, by contrast, is allowed to lend and must direct most of its lending to small borrowers.
Read the full article: Types of Banks in India: Classification, Functions and MCQs
Practice Questions
View allWhat is the primary function of a commercial bank?
- A.Issuing currency notes and coins
- B.Conducting monetary policy
- C.Granting loans and accepting deposits
- D.Regulating the money supply
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A commercial bank exists to gather savings from those who have a surplus and lend them to those who need funds, and it earns from the gap between the interest it pays depositors and the interest it charges borrowers.
Read the full explanation →Which among the following is a public sector bank?
- A.Axis Bank
- B.ICICI Bank
- C.Bank of Baroda
- D.Yes Bank
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It was founded in 1908 by Maharaja Sayajirao Gaekwad III, nationalised in the first round of July 1969, and the Government of India still holds the majority of its shares, which is what makes a bank a public sector bank.
Read the full explanation →SEWA (Self-Employed Women's Association) Bank, a cooperative bank in Gujarat, was launched in India in ______.
- A.1974
- B.1894
- C.1994
- D.1874
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Women of the Self-Employed Women's Association at Ahmedabad, who worked as vendors, headloaders and home-based workers, pooled their own share capital and registered a cooperative bank of their own in 1974 because ordinary banks would not deal with borrowers who had no collateral and no paperwork.
Read the full explanation →Which of the following functions of Reserve Bank of India are correct? I. Banker to Banks II. Currency Issuer
- A.Only I
- B.Neither I nor II
- C.Both I and II
- D.Only II
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The Reserve Bank is banker to banks: every scheduled bank keeps an account with it, holds its cash reserve ratio there, settles payments with other banks through those accounts and can borrow from it when short of funds.
Read the full explanation →Scheduled banks in India are those banks which are included in which schedule of which Act?
- A.First Schedule of the Banking Regulation Act, 1949
- B.Second Schedule of the Reserve Bank of India Act, 1934
- C.Second Schedule of the Banking Regulation Act, 1949
- D.Seventh Schedule of the Constitution
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A bank is placed in that Schedule once it has the prescribed paid-up capital and reserves and satisfies the Reserve Bank that its affairs are not conducted in a manner harmful to depositors.
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