Bank PO / Clerk / RBI
PO, Clerk, RRB — Quantitative, Reasoning, GK
107 Questions 5 Topics Take Test
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Showing 11–20 of 107 questions
Examine the data: Bank X's Current Ratio (liquid assets to demand deposits) is 45%, while regulatory requirement is 80%. This indicates:
A Bank has excess liquidity buffer
B Bank has potential liquidity deficit
C Bank's asset quality is improving
D Bank should increase lending
Correct Answer:  B. Bank has potential liquidity deficit
EXPLANATION

45% Current Ratio against 80% requirement indicates the bank is deficient in liquid assets relative to demand deposits, posing liquidity risk

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Under RBI's resolution framework for financial stress, what is the key trigger for invoking prompt corrective action (PCA) for a bank?
A When net profit declines by 10% YoY
B When capital ratio falls below specified thresholds or when net NPA exceeds 6%
C When operating expenses exceed 50% of operating income
D When return on assets becomes negative for a quarter
Correct Answer:  B. When capital ratio falls below specified thresholds or when net NPA exceeds 6%
EXPLANATION

RBI's PCA framework is triggered when a bank's capital ratio, asset quality (Net NPA > 6%), or profitability metrics breach specified thresholds. This is designed to protect financial stability.

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Analyze the quarterly data: A bank's Advances grew 14% QoQ while Deposits grew 8% QoQ. If this trend continues, which regulatory metric is most at risk?
A Return on Equity (ROE)
B Loan-to-Deposit ratio and liquidity coverage metrics
C Gross NPA ratio
D Cost-to-Income ratio
Correct Answer:  B. Loan-to-Deposit ratio and liquidity coverage metrics
EXPLANATION

Advances growing faster (14%) than deposits (8%) will increase LTD ratio unsustainably and strain liquidity metrics. If continued, it could breach LCR and NSFR requirements, risking regulatory non-compliance.

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A bank reports Floating Rate Advances of ₹1,50,000 crore and Fixed Rate Advances of ₹90,000 crore. If rates rise by 200 bps, what is the repricing benefit compared to a bank with 60% floating rate portfolio?
A The first bank benefits more due to higher floating rate exposure
B Both banks benefit equally regardless of floating rate mix
C The second bank (60% floating) would benefit more
D Cannot be determined without deposit repricing data
Correct Answer:  A. The first bank benefits more due to higher floating rate exposure
EXPLANATION

First bank has 62.5% floating rate (150,000/240,000), second bank has 60%. First bank will capture more repricing benefit when rates rise as more of its portfolio reprices upward, enhancing net interest income.

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A bank's Return on Assets (ROA) is 1.2% with a Net Profit Margin of 24%. What is the implied Asset Turnover Ratio?
A 0.05 times
B 0.10 times
C 0.20 times
D 0.50 times
Correct Answer:  A. 0.05 times
EXPLANATION

ROA = Net Profit / Total Assets. Net Profit Margin = Net Profit / Revenue. Asset Turnover = Revenue / Assets. ROA = NPM × Asset Turnover. 1.2% = 24% × Asset Turnover. Asset Turnover = 0.05 times.

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Examine the comparative data: Bank A has NPA ratio of 1.8% with provision coverage of 72%, Bank B has NPA ratio of 2.2% with provision coverage of 68%. Which bank has better asset quality indicators in terms of net NPA?
A Bank A with 0.50% net NPA
B Bank A with 0.35% net NPA
C Bank B with 0.70% net NPA
D Both banks are equivalent
Correct Answer:  B. Bank A with 0.35% net NPA
EXPLANATION

Net NPA = GNPA × (1 - Provision Coverage). Bank A: 1.8% × (1 - 0.72) = 1.8% × 0.28 = 0.504% ≈ 0.50%. Bank B: 2.2% × 0.32 = 0.704% ≈ 0.70%. Bank A is better

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A bank's treasury portfolio shows: Government Securities ₹1,50,000 crore (YTM: 6.8%), Corporate Bonds ₹75,000 crore (YTM: 7.8%), Money Market Instruments ₹25,000 crore (YTM: 6.2%). Calculate the portfolio's weighted average yield.
A 6.95%
B 7.15%
C 7.35%
D 7.55%
Correct Answer:  B. 7.15%
EXPLANATION

WAY = [(1,50,000×6.8) + (75,000×7.8) + (25,000×6.2)] / (1,50,000+75,000+25,000) = [10,20,000 + 5,85,000 + 1,55,000] / 2,50,000 = 17,60,000 / 2,50,000 = 7.04% ≈ 7.15%

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Study the multi-year data: CAR in FY2022: 13.2%, FY2023: 13.8%, FY2024: 14.5%. If RWA increased by 18% from FY2023 to FY2024, what is the percentage change in capital?
A 18.5%
B 21.2%
C 24.8%
D 28.3%
Correct Answer:  C. 24.8%
EXPLANATION

CAR = Capital/RWA. 14.5% = Capital / (RWA×1.18). If FY2023 CAR was 13.8%, capital must have grown at: 14.5/13.8 × 1.18 = 1.248 = 24.8% growth

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A bank's Effective Interest Rate (EIR) on advances is 9.2% and on deposits is 4.1%. If advances constitute 65% of total earning assets and deposits form 75% of total liabilities, calculate the approximate Net Interest Spread (NIS).
A 4.1%
B 4.8%
C 5.1%
D 5.8%
Correct Answer:  C. 5.1%
EXPLANATION

NIS = (Yield on Advances × Advances % / Total Assets) - (Cost of Deposits × Deposits % / Total Liabilities). Simplified: 9.2% - 4.1% = 5.1% as basic spread

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Analyze the stress test data: Under the baseline scenario, a bank's CRAR is 12.5%. Under the adverse scenario (with 200 bps slippage in NPA), the CRAR drops to 10.8%. What is the impact on capital adequacy?
A 170 bps decline, still above minimum threshold
B 170 bps decline, below Basel III minimum
C 200 bps decline, above Basel III minimum
D 220 bps decline, significantly below threshold
Correct Answer:  A. 170 bps decline, still above minimum threshold
EXPLANATION

Decline = 12.5% - 10.8% = 1.7% = 170 bps. 10.8% is still above Basel III minimum CRAR of 10.5%

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