General Studies · Bank Risk and Insurance
If a bank branch holds cash in its vault beyond its sanctioned 'Retention Limit' or 'Vault Limit' without prior approval, what is the major risk-related consequence regarding insurance?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The branch manager can personally hold the cash at home under the Duty of Care clause.
- 2Holding excess cash automatically improves the branch liquidity coverage score without operational risk.
- 3The cash amount exceeding the sanctioned limit is not covered under the bank's 'Cash-in-Safe' insurance policy unless endorsed.✓
- 4The Reserve Bank of India imposes a penalty rate of interest on the excess cash balance.
Correct answer
The cash amount exceeding the sanctioned limit is not covered under the bank's 'Cash-in-Safe' insurance policy unless endorsed.
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