Economics · Banking Regulation and Corporate Law
In the modern corporate banking landscape, banks offer liquidity management suites featuring both Notional Pooling and Physical Sweeping. When a domestic corporate group consisting of multiple legally distinct entities wishes to implement a 'Notional Pooling' structure to offset credit balances against debit balances and minimize interest outgo, which of the following regulatory or operational constraints must be factored in under RBI guidelines and the Companies Act, 2013?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Operational constraints require that all entities in a notional pool must maintain their accounts within the same physical branch to allow for manual interest calculation.
- 2The Reserve Bank of India mandates that notional pooling can only be offered to Public Sector Undertakings and is completely unavailable for private limited companies.
- 3Banks must ensure that any cross-guarantee or inter-corporate loan implied by the pooling arrangement complies with Section 186 of the Companies Act, 2013 regarding inter-corporate investments.✓
- 4Notional pooling is strictly prohibited for all domestic entities because it violates the fundamental accounting principle of offsetting assets and liabilities on a bank's balance sheet.
Correct answer
Banks must ensure that any cross-guarantee or inter-corporate loan implied by the pooling arrangement complies with Section 186 of the Companies Act, 2013 regarding inter-corporate investments.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Banking Regulation and Corporate Law MCQs →Want more practice questions on Banking Regulation and Corporate Law?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Banking Regulation and Corporate Law