Question

Explain the rules and regulation covered by commercial banks

Answer 1

Commercial bank are covered by banking regulation act and there are many rules and regulation applicable for them. There is a requirement to maintain the reserve ratio with the central banks. They have to create privision for the non performing assets. There is cap on the maximum investment that a commercial bank can do in other securities. There is provision to sell the assets which are not used by bank within specified time period. They have deduct tax on the interest income credited to depositor.