UPSC Prelims Practice Questions — ‘Keeping eye on Tata Group developments’

Q1. With reference to how the Reserve Bank of India identifies NBFCs for the Upper Layer under its Scale-Based Regulation, consider the following statements: Which of the statements given above is/are correct?

  1. Identification relies on a set of parameters and a scoring methodology, so supervisory judgement as well as quantitative data shapes the outcome.
  2. The very largest NBFCs by asset size are placed in the layer regardless of how they score on the other parameters.
  3. The Upper Layer list, once notified, stays fixed permanently and is not revisited in later reviews.
  • A. 1 and 2 only
  • B. 1, 2 and 3
  • C. 2 and 3 only
  • D. 2 only

Q2. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Under the RBI's current framework, two NBFCs neither of which accepts public deposits can nonetheless be subjected to very different intensities of regulation.
  2. The RBI's Scale-Based Regulation calibrates regulatory requirements to factors such as an NBFC's size, its interconnectedness and the potential systemic risk it poses.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. The RBI requires every NBFC identified in its Upper Layer to list on the stock exchanges within a fixed period after identification. With reference to the design of this requirement, consider the following statements: Which of the statements given above is/are correct?

  1. It seeks to bring large NBFCs under market discipline through continuous public disclosure and scrutiny by investors.
  2. Once such an NBFC is listed, its prudential regulation passes from the RBI to SEBI.
  3. Disclosures on the lines of a listed company are expected from such an NBFC even before it actually lists.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1, 2 and 3
  • D. 1 only

Q4. With reference to NBFCs placed in the Upper Layer under the RBI's Scale-Based Regulation, consider the following statements: Which of the statements given above is/are correct?

  1. They are subject to a large exposure framework that limits how much of their credit can be concentrated in a single counterparty or group.
  2. Their enhanced requirements continue for a minimum period after classification, even if the NBFC no longer meets the identification criteria in a later review.
  3. An NBFC can be placed in this layer even though it does not accept public deposits.
  • A. 2 and 3 only
  • B. 1 and 2 only
  • C. 1 only
  • D. 1, 2 and 3

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The RBI requires NBFCs identified in the Upper Layer to get their shares listed on a stock exchange within a specified period after identification.
  2. NBFCs in the Upper Layer, other than Core Investment Companies, must maintain Common Equity Tier 1 capital of at least nine per cent of their risk-weighted assets.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q6. With reference to Core Investment Companies (CICs) in India, consider the following statements: Which of the statements given above is/are NOT correct?

  1. A CIC is an NBFC that holds the bulk of its net assets as investments in the shares, debt or loans of its group companies.
  2. Because a CIC does not lend to the public, it lies outside the RBI's regulatory perimeter and is regulated by SEBI instead.
  3. A CIC above a specified asset size that raises or holds public funds must obtain a certificate of registration from the RBI.
  • A. 1, 2 and 3
  • B. 2 and 3 only
  • C. 2 only
  • D. 1 and 2 only

Q7. With reference to SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations, 2015, consider the following statements: Which of the statements given above is/are NOT correct?

  1. They impose continuing obligations on a listed entity for as long as its securities remain listed, not merely at the time of the issue.
  2. They require listed entities to disclose material events or information to the stock exchanges.
  3. Promoters of a listed company fall outside their scope, since only the listed entity itself has obligations under them.
  • A. 2 and 3 only
  • B. 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q8. A company's board approves the reappointment of its chairman by a 4:1 vote. A shareholder holding about two-thirds of the shares argues that the decision is invalid because the company's Articles of Association require the assent of a majority of the directors it has nominated. In this context, consider the following statements: Which of the statements given above is/are correct?

  1. A board resolution backed by a majority of the directors present is necessarily valid, whatever additional conditions the Articles may impose.
  2. The Articles of Association can give directors nominated by a particular shareholder special rights, such as a required affirmative vote, on specified matters.
  3. A member who complains that the company's affairs are being conducted in an oppressive manner can apply to the National Company Law Tribunal under the Companies Act, 2013.
  • A. 1, 2 and 3
  • B. 1 and 3 only
  • C. 2 only
  • D. 2 and 3 only