Which Indian bank was accorded the status of a 'Domestic Systemically Important Bank' (D-SIB) in the latest RBI classification (2024)?
AICICI Bank, HDFC Bank, Axis Bank, State Bank of India
BOnly SBI and HDFC Bank
CIDBI Bank and Union Bank of India
DAll Scheduled Commercial Banks
Correct Answer:
A. ICICI Bank, HDFC Bank, Axis Bank, State Bank of India
EXPLANATION
ICICI Bank, HDFC Bank, Axis Bank, and State Bank of India are classified as D-SIBs and required to maintain higher capital buffers due to systemic importance.
What does the 'Net Interest Margin (NIM)' indicate in a bank's financial analysis?
AThe difference between interest earned and interest paid, expressed as a percentage of assets
BThe total loan portfolio of a bank
CThe bank's market share in the industry
DThe regulatory compliance score of a bank
Correct Answer:
A. The difference between interest earned and interest paid, expressed as a percentage of assets
EXPLANATION
NIM is calculated as (Interest Income - Interest Expenses) / Average Earning Assets. It measures the bank's core profitability from lending and borrowing operations, crucial for assessing operational efficiency.
Under the RBI's Liquidity Coverage Ratio (LCR) requirement, what percentage of high-quality liquid assets must banks maintain?
A20%
B50%
C75%
D100%
Correct Answer:
D. 100%
EXPLANATION
As per Basel III, the LCR requirement mandates that banks maintain high-quality liquid assets at least equal to 100% of their net cash outflows over 30 days under stress scenarios.
Under Pillar 2 of Basel III, what is primarily assessed?
AMinimum capital requirements
BSupervisory review of banks' risk management and capital adequacy
CMarket discipline and public disclosure
DCryptocurrency regulations
Correct Answer:
B. Supervisory review of banks' risk management and capital adequacy
EXPLANATION
Pillar 2 of Basel III involves supervisory review, where regulators assess banks' internal capital adequacy processes, stress testing mechanisms, and risk management frameworks.
What is the significance of the 'Marginal Standing Facility (MSF)' in RBI's monetary policy?
AIt's a long-term loan facility for retail customers
BIt allows banks to borrow funds from RBI at a penal rate during liquidity shortfalls
CIt's used to regulate insurance sector operations
DIt manages government securities trading
Correct Answer:
B. It allows banks to borrow funds from RBI at a penal rate during liquidity shortfalls
EXPLANATION
MSF is an overnight borrowing facility for banks available at a penal rate (typically 100-200 bps above the repo rate) to manage temporary liquidity mismatches. It forms the upper end of the RBI's interest rate corridor.
Which of the following ratios measures a bank's profitability relative to its total assets?
AReturn on Assets (ROA)
BNet Interest Margin (NIM)
CCost-to-Income Ratio
DCapital Adequacy Ratio (CAR)
Correct Answer:
A. Return on Assets (ROA)
EXPLANATION
ROA (Return on Assets) measures net income as a percentage of total assets, indicating how efficiently a bank uses its assets to generate profits. Higher ROA indicates better profitability.
