Daily JAIIB Quiz 22 Oct 2026

The 1991 Narasimham Committee recommended financial-sector reforms intended to improve the efficiency, competition and soundness of the banking system. Key measures included reducing excessive pre-emption of bank resources through CRR and SLR, introducing prudential norms for income recognition, asset classification and provisioning, and strengthening competition. It did not recommend abolishing prudential standards or replacing the RBI.

A scheduled bank is a bank included in the Second Schedule to the Reserve Bank of India Act, 1934, subject to the statutory eligibility conditions. Scheduled status is not determined solely by government ownership. Banks, including eligible private-sector banks, may be scheduled. Banking regulation and supervision remain primarily within the RBI‘s remit, not SEBI‘s.

Small Finance Banks are intended to promote financial inclusion by providing savings facilities and credit to underserved groups, including small business units, small and marginal farmers, micro and small industries, and other unorganised-sector entities. Unlike Payment Banks, SFBs can undertake lending. They can offer deposit products subject to applicable RBI directions.

Payments Banks can accept demand deposits within the limit prescribed by the RBI and provide payment, remittance and related services. They are not permitted to undertake lending activities like ordinary commercial banks. Their permitted activities and investment of deposit balances are subject to the RBI‘s licensing conditions and directions.

Section 22 of the Banking Regulation Act, 1949 requires a company to obtain a licence from the Reserve Bank of India to carry on banking business in India. SEBI regulates the securities market, IRDAI regulates insurance, and NABARD has a development and supervisory role in specified rural and cooperative banking areas; none of them grants the general banking licence under Section 22.

CRR requires banks to maintain a prescribed percentage of their Net Demand and Time Liabilities (NDTL) as a cash balance with the RBI. It is a monetary and liquidity management tool. CRR is distinct from SLR, which requires banks to maintain eligible liquid assets. CRR does not insure deposits or directly prescribe every lending rate.

The RBI Act, 1934 provides the statutory basis for the establishment, constitution and key functions of the Reserve Bank of India, including monetary and currency-related functions. The Banking Regulation Act, 1949 contains important provisions for regulating banking companies, including licensing, management, branch operations and other supervisory requirements. The other options assign these Acts functions they do not perform.

The National Bank for Agriculture and Rural Development (NABARD) is the apex development financial institution focused on agriculture and rural development. Its functions include refinance support to eligible rural financial institutions, development initiatives and specified supervisory responsibilities. EXIM Bank focuses on export-import finance, SIDBI on the micro, small and medium enterprise sector, and NHB on housing finance development.

NaBFID was established as a development financial institution to support long-term infrastructure financing and help develop the infrastructure finance market in India. It is not the universal regulator for commercial banks, does not provide deposit insurance, and does not regulate pension fund managers. Those functions fall under different statutory or regulatory frameworks.

The SHG-Bank Linkage Programme connects self-help groups, commonly formed by members who save together, with formal banks. Group savings, mutual support and collective processes can help members access savings and credit services, particularly in underserved communities. It is not a grant-only programme and does not require SHGs to become financial-market institutions.

Grameen-style microfinance commonly uses small loans and group-based methods that encourage peer support, regular repayment and mutual accountability. The precise group-liability design can vary by institution and programme, so it should not be assumed that every microfinance loan is secured by property or that every arrangement has identical legal liability terms.

An NBFC is a company engaged in specified financial activities, such as lending or certain investment and financing activities, subject to the applicable law and RBI framework. An NBFC does not become a bank simply because it provides loans. NBFCs generally cannot issue cheques drawn on themselves as banks do, and only certain categories may accept public deposits subject to regulatory conditions.

Net Owned Fund is a regulatory measure calculated from an NBFC‘s owned funds after applying specified deductions under the relevant RBI framework. It is used for regulatory purposes, including certain registration and category-specific requirements. It is not the same as customer deposits, overdue loans or annual profit; the exact calculation follows the applicable directions.

The RBI‘s Scale Based Regulation framework classifies NBFCs into layers, with regulatory intensity generally increasing with size, complexity and systemic risk. The aim is to apply proportionate oversight and address risks posed by different NBFCs. It does not eliminate regulation for large entities or impose a completely identical regime regardless of risk.

The Insurance Regulatory and Development Authority of India (IRDAI) regulates and promotes the orderly growth of the insurance sector under the applicable insurance laws. SEBI regulates the securities market, PFRDA regulates the pension sector within its remit, and NABARD focuses on agriculture and rural development.

Reinsurance is insurance purchased by an insurer from another insurer or reinsurer. It allows the original insurer to transfer or share part of the risks it has accepted, helping manage exposure and underwriting capacity. It does not guarantee every policyholder a return and is distinct from retail banking products.

The Securities and Exchange Board of India (SEBI) regulates the securities market, including stock exchanges and many securities-market intermediaries, under its statutory framework. RBI is the central bank and banking regulator, IRDAI oversees insurance, and PFRDA oversees the pension sector within its remit.

The Pension Fund Regulatory and Development Authority (PFRDA) regulates and develops the pension sector within its statutory remit, including the National Pension System framework. SIDBI supports the MSME sector, EXIM Bank supports export-import finance, and DICGC provides deposit insurance under its governing law rather than regulating pension funds.

An Asset Reconstruction Company acquires eligible financial assets, often non-performing or stressed assets, from lenders and works on their reconstruction, resolution or recovery using methods permitted by law and regulation. The term ‘bad bank‘ is often used more broadly for arrangements designed to isolate and manage stressed assets; it does not mean an ARC prints currency, insures all deposits or regulates insurance.

EASE is a reform agenda associated with improving the performance of public sector banks. Its themes have included customer responsiveness, responsible banking, credit and recovery processes, governance, technology-enabled services and operational efficiency. It is not intended to abolish digital banking, transfer monetary policy to branches or replace banks with insurers.