Correct Option (d)
Explanation
The Reserve Bank of India (RBI) exercises extensive regulatory and supervisory powers over commercial banks in India, encompassing all the aspects mentioned:
- Liquidity of assets: The RBI mandates commercial banks to maintain specific levels of liquid assets through instruments such as the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) to ensure financial stability and solvency.
- Branch expansion: Commercial banks are required to obtain prior approval from the RBI for opening new branches, relocating existing ones, or closing branches, as per the Branch Authorisation Policy. This ensures balanced growth and financial inclusion.
- Merger of banks: Any scheme for the amalgamation or merger of banking companies requires mandatory sanction from the RBI under the provisions of the Banking Regulation Act, 1949, to safeguard depositors' interests and maintain systemic stability.
- Winding-up of banks: The RBI plays a crucial role in the winding-up process of commercial banks. It can recommend the winding-up of a bank to the High Court or initiate a moratorium in cases of severe financial distress, insolvency, or when a bank's operations are detrimental to public interest or depositors.
Incorrect Options
- Option (a) is incorrect because it states "1 & 4 only," which omits the RBI's regulatory functions concerning branch expansion and merger of banks.
- Option (b) is incorrect because it states "2, 3 & 4 only," thereby excluding the RBI's critical role in regulating the liquidity of assets of commercial banks.
- Option (c) is incorrect because it states "1, 2 & 3 only," which does not include the RBI's regulatory authority over the winding-up of banks.