Question 3:
Directions: Read the following passage and answer the following questions. Some words are highlighted to help you answer some of the questions.
Banking is one of the very few sectors in India still subject to a licensing regime. The Reserve Bank of India has often been criticised, not just for setting overly stringent eligibility criteria that pose formidable entry barriers to new aspirants, but also for frequently shifting goalposts on the desirable ownership structure and shareholding for established players. The RBI’s decision to selectively adopt the recommendations of its Internal Working Group (IWG) to streamline licensing, ownership and control norms for private banks is therefore a welcome reform move.
RBI regulations have so far appeared quite conflicted, on whether it prefers high promoter skin-in-the-game in private banks to ensure good governance or favours widely dispersed shareholding to check promoter influence. Extant regulations try to do a bit of both, by mandating that private bank promoters hold at least a 40 per cent equity stake in the first five years, but dilute their voting rights to below 20 per cent and 15 per cent within 10 and 15 years, respectively. Private banks promoted at different times are subject to different rules, leading to some promoters using non-equity routes to infuse capital and others legally challenging the regulator on the inconsistency of its rules. IWG recommendations now adopted by the RBI clear the air, by requiring all private bank promoters to hold a minimum 40 per cent equity stake in the first five years while diluting to 26 per cent within 15 years. These norms, by enforcing fairly high skin-in-the-game for promoters throughout the bank’s life, will facilitate timely equity infusions for stressed banks. But to ensure that individuals don’t exercise undue influence over lending decisions, high promoter stakes may need to be counter-balanced by stronger bank boards and compliance functions. The RBI’s decision to insist on a 10-year track record and initial capital requirement of ₹1,000 crore (instead of ₹500 crore) for aspirants to universal bank licences, will help weed out non-serious players and allow only entities with sufficient fund-raising ability into the fray.
While adopting the IWG’s views on promoter holdings and organisational structure of banks, it is noteworthy that RBI hasn’t taken a call on its most hotly debated recommendation — that of offering bank licences to large corporates, industrial houses and NBFCs. But the regulator may not be wrong to bide its time on this contentious decision. (A) Most banking frauds in India have had its origins in connected lending and diversion of funds to group entities. Both internal checks such as statutory audits, and external ones such as RBI’s supervisory mechanism, have so far proved unequal to detecting such cases early. Having recently taken on the oversight of co-operative banks, small finance banks and proliferating digital lenders in addition to legacy universal banks, the RBI today has its hands full in terms of regulatory capacity. It is therefore _________ of the regulator to want to set its own house in order, before inviting unknown entities into it.
Which of the following words means the SAME as DILUTE, as highlighted in the passage?
Directions: Read the following passage and answer the following questions. Some words are highlighted to help you answer some of the questions.
Banking is one of the very few sectors in India still subject to a licensing regime. The Reserve Bank of India has often been criticised, not just for setting overly stringent eligibility criteria that pose formidable entry barriers to new aspirants, but also for frequently shifting goalposts on the desirable ownership structure and shareholding for established players. The RBI’s decision to selectively adopt the recommendations of its Internal Working Group (IWG) to streamline licensing, ownership and control norms for private banks is therefore a welcome reform move.
RBI regulations have so far appeared quite conflicted, on whether it prefers high promoter skin-in-the-game in private banks to ensure good governance or favours widely dispersed shareholding to check promoter influence. Extant regulations try to do a bit of both, by mandating that private bank promoters hold at least a 40 per cent equity stake in the first five years, but dilute their voting rights to below 20 per cent and 15 per cent within 10 and 15 years, respectively. Private banks promoted at different times are subject to different rules, leading to some promoters using non-equity routes to infuse capital and others legally challenging the regulator on the inconsistency of its rules. IWG recommendations now adopted by the RBI clear the air, by requiring all private bank promoters to hold a minimum 40 per cent equity stake in the first five years while diluting to 26 per cent within 15 years. These norms, by enforcing fairly high skin-in-the-game for promoters throughout the bank’s life, will facilitate timely equity infusions for stressed banks. But to ensure that individuals don’t exercise undue influence over lending decisions, high promoter stakes may need to be counter-balanced by stronger bank boards and compliance functions. The RBI’s decision to insist on a 10-year track record and initial capital requirement of ₹1,000 crore (instead of ₹500 crore) for aspirants to universal bank licences, will help weed out non-serious players and allow only entities with sufficient fund-raising ability into the fray.
While adopting the IWG’s views on promoter holdings and organisational structure of banks, it is noteworthy that RBI hasn’t taken a call on its most hotly debated recommendation — that of offering bank licences to large corporates, industrial houses and NBFCs. But the regulator may not be wrong to bide its time on this contentious decision. (A) Most banking frauds in India have had its origins in connected lending and diversion of funds to group entities. Both internal checks such as statutory audits, and external ones such as RBI’s supervisory mechanism, have so far proved unequal to detecting such cases early. Having recently taken on the oversight of co-operative banks, small finance banks and proliferating digital lenders in addition to legacy universal banks, the RBI today has its hands full in terms of regulatory capacity. It is therefore _________ of the regulator to want to set its own house in order, before inviting unknown entities into it.
Which of the following words means the SAME as DILUTE, as highlighted in the passage?
Question 5:
Direction: Read the passage given below and answer the following question.
NATO constitutes a system of collective security, whereby its independent member states agree to mutual defense in response to an attack by any external party. The NATO headquarters are located in Brussels, Belgium, while the headquarters of Allied Command Operations is near Mons, Belgium. Since its founding, the admission of new member states has increased the alliance from the original 12 countries to 30. The most recent member state to be added to NATO was North Macedonia on 27 March 2020. NATO currently recognizes Bosnia and Herzegovina, Georgia, and Ukraine as aspiring members. An additional 20 countries participate in NATO's Partnership for Peace programme, with 15 other countries involved in institutionalized dialogue programmes. The combined military spending of all NATO members in 2020 constituted over 57% of the global nominal total. Members agreed that their aim is to reach or maintain the target defence spending of at least 2% of their GDP by 2024.
Find the correct options which is nearest in meaning to the given word.
Alliance
Direction: Read the passage given below and answer the following question.
NATO constitutes a system of collective security, whereby its independent member states agree to mutual defense in response to an attack by any external party. The NATO headquarters are located in Brussels, Belgium, while the headquarters of Allied Command Operations is near Mons, Belgium. Since its founding, the admission of new member states has increased the alliance from the original 12 countries to 30. The most recent member state to be added to NATO was North Macedonia on 27 March 2020. NATO currently recognizes Bosnia and Herzegovina, Georgia, and Ukraine as aspiring members. An additional 20 countries participate in NATO's Partnership for Peace programme, with 15 other countries involved in institutionalized dialogue programmes. The combined military spending of all NATO members in 2020 constituted over 57% of the global nominal total. Members agreed that their aim is to reach or maintain the target defence spending of at least 2% of their GDP by 2024.
Find the correct options which is nearest in meaning to the given word.
Alliance
