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    Question

    Section 8 of the Banking Regulation Act, 1949 prohibits

    a banking company from doing which of the following?
    A Accepting term deposits for periods exceeding 10 years from its customers Correct Answer Incorrect Answer
    B Opening more than 5 branches in a single state without prior RBI approval Correct Answer Incorrect Answer
    C Directly or indirectly dealing in buying or selling of goods, except in connection with the realisation of security given to or held by it Correct Answer Incorrect Answer
    D Granting unsecured loans to any individual exceeding тВ╣25 lakhs without board approval Correct Answer Incorrect Answer

    Solution

    Section 8 of the Banking Regulation Act, 1949 expressly prohibits a banking company from directly or indirectly engaging in trading, i.e., buying or selling of goods, except in connection with the realisation of security given to or held by it. This ensures that banks remain in the business of banking and do not engage in commercial trading activities that could expose depositors' funds to trading risk.

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