Financial Awareness - Risk, Stability & Emerging Finance
Which of the following banks is NOT eligible to be classified as a Scheduled Bank under the RBI Act, 1934?
Which of the following banks is NOT eligible to be classified as a Scheduled Bank under the RBI Act, 1934?
medium Q5 of 15
Step-by-Step Solution
Step 1: Understand Scheduled Bank criteria
Scheduled Banks must be included in the Second Schedule of the RBI Act, 1934, and meet criteria like minimum paid-up capital and reserves.Step 2: Analyze Local Area Banks
Local Area Banks operate in limited areas and are NOT included in the Second Schedule, hence are Non-Scheduled Banks.Step 3: Check other options
Private Sector Banks with adequate capital, Public Sector Banks, and Foreign Bank branches included in the Second Schedule are Scheduled Banks.Final Answer:
Local Area Bank with limited area of operation → Option CQuick Check:
Local Area Banks = Non-Scheduled Banks ✅
Quick Trick: Local Area Banks are always Non-Scheduled Banks.
Common Mistakes:
- Confusing Local Area Banks with Scheduled Banks due to banking functions.
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