Which of the following best describes a 'repo transaction' in banking?
AA transaction where securities are sold and repurchased at a future date
BA direct loan given by one bank to another
CA transaction involving physical commodity exchange
DA long-term investment in mutual funds
Correct Answer:
A. A transaction where securities are sold and repurchased at a future date
EXPLANATION
A repo (repurchase agreement) is a short-term borrowing instrument where a seller sells securities with an agreement to repurchase them at a higher price. It's a key liquidity management tool for banks.
Under the RBI's regulatory framework, what is the minimum Statutory Liquidity Ratio (SLR) that banks must maintain?
A15%
B18%
C20%
D25%
Correct Answer:
B. 18%
EXPLANATION
As per RBI guidelines (2024-2025), the statutory minimum SLR is 18% of net demand and time liabilities. This ensures banks maintain sufficient liquid assets.
What does the Basel III framework primarily focus on?
AImproving bank transparency and disclosure standards
BStrengthening bank capital requirements and liquidity standards
CRegulating cryptocurrency transactions
DManaging inflation rates across countries
Correct Answer:
B. Strengthening bank capital requirements and liquidity standards
EXPLANATION
Basel III is an international regulatory framework that aims to strengthen bank capital adequacy, stress testing, and market liquidity risk. It was developed post-2008 financial crisis to prevent systemic risks.
Which regulatory body oversees the functioning of Non-Banking Financial Companies (NBFCs) in India?
ASEBI
BRBI
CIRDA
DPFRDA
Correct Answer:
B. RBI
EXPLANATION
The Reserve Bank of India (RBI) is responsible for regulating and supervising NBFCs. SEBI oversees capital markets, IRDA handles insurance, and PFRDA manages pension funds.
