RBI Grade B 2019 Booster Series - Part 3

Question 1: 

The insolvency and Bankruptcy Board of India (IBBI) has signed a Cooperation Agreement with which of the following Organizations to build the capacity of Insolvency Professionals, and insolvency professional agencies for the purposes of the Code?

a. International Bank for Reconstruction and Development
b. International Finance Corporation
c. International Development Association
d. International Centre for Settlement of Investment Disputes
e. None of the above


Solution:  b. International Finance Corporation

• The Insolvency and Bankruptcy Board of India (IBBI) has signed a Cooperation Agreement with the International Finance Corporation (IFC), a member of the World Bank Group (WBG).
• The Cooperation Agreement envisages technical assistance up to June 30, 2021 by the IFC to IBBI and covers assistance in Workshops and Training for Insolvency Professionals and Officers of the IBBI
• Train the Trainers for Workshops for Insolvency Professionals
• Development of National Insolvency Programme
• Insolvency and valuation examination

Question 2: 

Karur Vysya Bank announced that the Capital Raising Committee of the Board has allotted 48,700 Basel III compliant unsecured, redeemable, non-convertible Tier II Bonds in the nature of debentures of Rs 1 lakh each aggregating Rs 487 crore on private placement basis.

Which of the following statements is/are true regarding Tier II Bonds?
(i) Tier two bonds have a minimum three-year maturity
(ii) Tier two bonds are not subject to regular amortization.
(iii) Tier two bonds give ownership or voting rights and also offer interest earnings to bondholders or owners.

a. None is correct
b. All are correct
c. Only (i) is correct
d. Only (ii) is correct
e. Only (i) and (iii) are correct 

Solution: a. None is correct

• Tier II bonds have a minimum five-year maturity and they are subject to regular amortization. These bonds are sometimes issued as a part of asset-backed securities, or securities that are backed by an underlying pool of assets, and collateralized mortgage obligations, a concept where mortgages are transformed into bonds in order to sell them to investors.
• Tier 2 bonds are components of tier 2 capital, primarily for banks. These are debt instruments like loans, more than they are equity features like stocks. As with all bonds and other debt instruments, they do not give ownership or voting rights, but they do offer interest earnings to bondholders or owners

Question 3: 

The Reserve Bank of India (RBI) has recently named three banks as Domestic Systemically Important Banks (D-SIBs), which of these are the three D-SIBs?
(i) State Bank of India
(ii) HDFC bank
(iii) ICICI bank
(iv) Axis Bank
(v) Bank of India

a. (i), (ii) and (iii)
b. (i), (ii) and (iv)
c. (i), (iii) and (iv)
d. (ii), (iii) and (v)
e. (i), (ii) and (v) 

Solution:  a. (i), (ii) and (iii)

• The Reserve Bank of India (RBI) named State Bank of India (SBI), ICICI Bank and HDFC Bank as Domestic Systemically Important Banks (D-SIBs), which in other words mean banks that are too big to fail. As per the norms, these banks will have to set aside more capital for their continued operation. RBI comes with the list every year since 2015. Inclusion in D-SIB indicates that failure of any of these banks would have a cascading effect on Indian financial system

Question  4: 

The Reserve Bank of India has reduced mandatory hedging requirement for borrowers raising overseas funds to________________
a. 50%
b. 55%
c. 60%
d. 70%
e. None of the above 

Solution: d. 70%

• The Reserve Bank of India has reduced mandatory hedging requirement for borrowers raising overseas funds to 70 percent from 100 percent.
• The circular comes amid the liquidity crunch in the country among the non-banking financial companies (NBFCs), which can be helped by reducing their hedging costs during overseas fundraising amid some stability in the rupee movement.

Question 5:

Who would be the first Lokpal of India?
a. Justice Pinaki Chandra Ghose
b. Justice Pinaki Chandra Chatterjee
c. Justice Pinaki Chandra Bandopadhya
d. Justice Pinaki Chandra Banerjee

e. None of the above

Solution: a. Justice Pinaki Chandra Ghose

Features of the Lokpal Act 2013:

• The Lokpal Act provides for setting up of an anti-corruption ombudsman called Lokpal at the Centre and Lokayukta at the State-level.
• The Lokpal would consist of a chairperson and a maximum of eight members of which 50 per cent shall be judicial members.
• 50 per cent of members of Lokpal shall be from SC/ST/OBCs, minorities and women.
• The ambit of Lokpal would cover all categories of public servants, including the Prime Minister with the exception of armed forces.
• The Lokpal Act mandated the states to institute Lokayukta within one year of the commencement of the Act.
• Lokpal will also have powers of superintendence and direction over any investigation agency including CBI for cases referred to them by the Lokpal.
• Lokpal is appointed based on the recommendation of the five-member panel comprising the Prime Minister, the Lok Sabha Speaker, the Leader of the Opposition the Chief Justice of India and an eminent jurist nominated by the President.
• President would appoint the eminent jurist based on the recommendations of the other members of the panel.