Banking System, NPA & IBC — Set 16
Economy Advanced · बैंकिंग प्रणाली, NPA और IBC · Questions 151–160 of 160
The Related Party Transactions require special approval to prevent conflicts of interest. What approvals are needed for large RPTs in India?
Correct Answer: B. Board and shareholder approval
Large related party transactions require both board and shareholder approval in India to ensure transparency and prevent conflicts of interest.
The Audit Committees oversee financial reporting and internal controls. How often should audit committees meet in Indian companies?
Correct Answer: A. Quarterly
Audit committees in Indian companies must meet at least quarterly to review financial statements, internal controls, and audit findings.
The Whistleblower Protection mechanisms encourage reporting of unethical practices. What is protected under whistleblower laws in India?
Correct Answer: B. Good faith reporting of violations
Whistleblower protection laws in India protect good faith reporting of violations, frauds, and unethical practices without fear of retaliation.
The Internal Audit function evaluates effectiveness of internal controls. What is the primary role of internal auditors?
Correct Answer: B. Assess control effectiveness and risks
Internal auditors assess the effectiveness of internal controls, risk management systems, and governance processes to ensure organizational efficiency and compliance.
The External Auditor provides independent assurance on financial statements. Who appoints external auditors of public companies in India?
Correct Answer: C. Shareholders
External auditors of public companies in India are appointed by shareholders at the annual general meeting (AGM) to ensure independent audit of financial statements.
The Risk Management Framework helps organizations identify and mitigate risks. What are the key types of risks addressed?
Correct Answer: B. Credit, market, operational, and other risks
Comprehensive risk management frameworks address credit risk, market risk, operational risk, liquidity risk, and other organizational risks holistically.
The Operational Risk Management protects against losses from failed processes or systems. What is a common example of operational risk?
Correct Answer: B. System failures or fraud
Operational risks include system failures, fraud, human errors, and failed processes. Banks manage these through controls, training, and monitoring systems.
The Liquidity Risk Management ensures banks have sufficient funds to meet obligations. What is systemic liquidity risk?
Correct Answer: B. System-wide liquidity shortage affecting all banks
Systemic liquidity risk occurs when liquidity shortage affects the entire banking system, requiring RBI intervention through special liquidity measures.
The Concentration Risk in lending arises when banks have significant exposure to limited sectors or borrowers. How is concentration risk managed?
Correct Answer: B. Diversifying loans across sectors and borrowers
Concentration risk is managed through diversification across sectors, geographies, and borrower types to reduce exposure to specific risks.
The Regulatory Compliance ensures financial institutions adhere to all applicable laws and regulations. What is the cost of non-compliance?
Correct Answer: B. Fines, penalties, and loss of license
Non-compliance with regulatory requirements can result in hefty fines, penalties, loss of banking license, and reputation damage for financial institutions.