Banking · Regulatory Framework of Ancillary Services
Statement 1: Under SEBI regulations, a bank must have a separate license to act as a Category I Merchant Banker to handle public issues. Statement 2: Electronic Benefit Transfer (EBT) utilizes specialized banking systems to route payments based on unique identification links to bank accounts for welfare delivery. Statement 3: Portfolio Management Services (PMS) provided by banks are strictly governed by SEBI, which enforces transparency rules, including a specified minimum investment ticket size. Considering the regulatory environment, which statement correctly identifies the nature of these diverse ancillary services?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement 2 is correct but Statement 1 and Statement 3 are incorrect because SEBI has banned banks from participating in the capital markets.
- 2Only Statement 3 is correct while the first two statements describe services that are no longer classified as ancillary in modern banking.
- 3All three statements are correct as they provide a factual representation of merchant banking, EBT/DBT services, and the regulatory framework for PMS.✓
- 4Statement 1 and Statement 2 are correct while Statement 3 is incorrect because banks are not allowed to charge performance-based fees for PMS.
Correct answer
All three statements are correct as they provide a factual representation of merchant banking, EBT/DBT services, and the regulatory framework for PMS.
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