Quiz on Payments Bank

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Topic: Quiz on Payments Bank

Number of Questions: 20

Pre-Readings: All about Payments Bank

1. What is the maximum balance allowed in accounts of Payments Bank?
   A) Rs 50,000
   B) Rs 2 lakh
   C) Rs 1 lakh
   D) Rs 10 lakh
   
   View answer

     Option C
   Explanation: Maximum balance of Rs. 100,000 per individual customer.
2. Which of the following cannot be issued by Payments Bank?
   A) Debit Card
   B) QR Card
   C) Credit card
   D) RuPay Card
   
   View answer

     Option C
   Explanation: Payments Bank can issue ATM/Debit Cards. Payments banks, however, cannot issue credit cards.
3. Which of the following activity is restricted for Payments Bank?
   A) Opening of Current Account
   B) Internet Banking
   C) Granting of Loans
   D) Business Correspondent (BC) of another bank
   
   View answer

   Option C
   Explanation: The payments bank cannot undertake lending activities. The payments bank cannot set up subsidiaries to undertake non-banking financial services activities.
4. What is the maximum permitted share of scheduled commercial bank in Payments Bank?
   A) 20%
   B) 50%
   C) 30%
   D) 75%
   
   View answer

   Option C
   Explanation: Maximum share of Scheduled Commercial Bank can be 30 per cent of the paid –up share capital of the Payments Bank or 30 per cent of its own paid-up share capital whichever is less.
5. What is the minimum SLR requirement for Payments Bank?
   A) 19.5%
   B) 75%
   C) 25%
   D) 100%
   
   View answer

   Option B
   Explanation: SLR for Payments Bank is 75%.
6. Payments Bank are required to invest minimum 75 per cent of its “demand deposit balances” in Statutory Liquidity Ratio(SLR) eligible Government securities/treasury bills with maturity up to ____ year(s).
   A) one
   B) five
   C) three
   D) ten
   
   View answer

   Option A
   Explanation: It will be required to invest minimum 75 per cent of its “demand deposit balances” in Statutory Liquidity Ratio(SLR) eligible Government securities/treasury bills with maturity up to one year.
7. What is the minimum paid-up equity capital for payments banks?
   A) Ra 100 crore
   B) Rs 500 crore
   C) Rs 1000 crore
   D) Rs 50 crore
   
   View answer

   Option A
   Explanation: The minimum paid-up equity capital for payments banks shall be Rs. 100 crore.
8. The minimum paid up capital of Rs 100 crore in Payments Bank is prescribed to cover which type of risk?
   A) Market Risk
   B) Credit Risk
   C) Reputational Risk
   D) Operational Risk
   
   View answer

   Option D
   Explanation: The payments bank will not have significant credit and market risks. However, it will be exposed to operational risk. The payments bank will also be required to invest in technological infrastructure for its operations. Capital will be needed to buffer against operational risk and also utilised for creation of such fixed assets. Therefore, the minimum paid-up equity capital of the payments bank shall be Rs. 100 crore.
9. What is the FDI Limit in Payments Bank?
   A) 49%
   B) 74%
   C) 26%
   D) 100%
   
   View answer

   Option B
   Explanation: 74% (As of Private Banks)
10. Promoter’s contribution in Payments Bank shall be at least be ____ per cent for the first ____ years from the commencement of its business.
    A) 26 ; five
    B) 40; three
    C) 40 ; five
    D) 26 ; three
    
    View answer

    Option C
    Explanation: The promoter’s minimum initial contribution to the paid-up equity capital of such payments bank shall at least be 40 per cent for the first five years from the commencement of its business.
11. Payments Bank are registered under which Act?
    A) Banking Regulation Act, 1949
    B) Reserve Bank of India Act, 1934
    C) Payment and Settlement Systems Act, 2007
    D) Companies Act, 2013
    
    View answer

    Option D
    Explanation:
12. Payments Bank can hold maximum _____ per cent in current and time/fixed deposits with other scheduled commercial banks for operational purposes and liquidity management.
    A) 10
    B) 25
    C) 26
    D) 75
    
    View answer

    Option B
    Explanation: Remember: 75% as SLR in Govt security; rest 25% as deposits in SCBs
13. Payments Bank are licensed under which Act?
    A) Banking Regulation Act, 1949
    B) Reserve Bank of India Act, 1934
    C) Payment and Settlement Systems Act, 2007
    D) Companies Act, 2013
    
    View answer

    Option A
    Explanation: Banking Regulation Act, 1949
14. Payments Bank are licensed under which section of Banking Regulation Act, 1949?
    A) Section 20
    B) Section 21
    C) Section 22
    D) Section 23
    
    View answer

    Option C
    Explanation: Under Section 22 of the Banking Regulation Act, 1949
15. The voting rights of shareholder in Payments bank are capped at ____ per cent.
    A) 5
    B) 10
    C) 26
    D) 49
    
    View answer

    Option B
    Explanation: Any shareholder’s voting rights in private sector banks are capped at 10 per cent. This limit can be raised to 26 per cent in a phased manner by the RBI.
16. The voting rights of shareholder in Payments bank are capped at 10 per cent. This limit can be raised to ____ per cent in a phased manner by the RBI.
    A) 25
    B) 50
    C) 26
    D) 49
    
    View answer

      Option C
    Explanation: Any shareholder’s voting rights in private sector banks are capped at 10 per cent. This limit can be raised to 26 per cent in a phased manner by the RBI.
17. The payments bank will be required to use which words in its name in order to differentiate it from other banks.
    A) “Payment Bank Limited”
    B) “Payment Bank”
    C) “Payments Branch”
    D) “Payments Bank”
    
    View answer

    Option D
    Explanation: The payments bank will be required to use the words “Payments Bank” in its name in order to differentiate it from other banks.
18. Which of the following is the first operational Payments Bank in India?
    A) India Post Payments Bank
    B) Paytm Payments Bank
    C) Airtel Payments Bank
    D) FINO Payments Bank
    
    View answer

    Option C
    Explanation:
19. Payments Bank will be systematically important when it reaches the net worth of _____.
    A) Rs 1000 crore
    B) Rs 5000 crore
    C) Rs 500 crore
    D) Rs 750 crore
    
    View answer

    Option C
    Explanation: When the payments bank reaches the net worth of Rs.500 crore, and therefore becomes systemically important, diversified ownership and listing will be mandatory within three years of reaching that net worth.
20. RBI does not envisage payments banks to be ______ banks or branchless banks.
    A) “public”
    B) “virtual”
    C) “credit”
    D) “general”
    
    View answer

    Option B
    Explanation: RBI does not envisage payments banks to be “virtual” banks or branchless banks.

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