Entrance Exams
Govt. Exams
A decline in the Asset Quality Ratio indicates a higher proportion of non-standard assets (NPAs), meaning the percentage of problem loans has increased.
An increase in LDR from 78% to 85% indicates the bank is lending a higher proportion of its deposits, suggesting more aggressive lending strategy. Optimal LDR is typically 78-80%.
DICGC insures deposits but does not set monetary policy—that is the RBI's function. DICGC covers deposits up to ₹5 lakh including principal and accrued interest.
Q1: Digital = 50,000; Total = 200,000. Q2: Digital = 50,000 × 1.2 = 60,000; Total = 200,000 × 1.1 = 220,000. New percentage = (60,000/220,000) × 100 = 27.27%. However, correct calculation: 60,000/220,000 = 0.2727 = 27.27%. Re-checking: Actually 29.41% is derived from different base. The answer is 27.27%.
Under Basel III, banks must maintain a minimum CAR of 10.5%, which includes a 4.5% Tier 1 capital ratio, a 6% Tier 1 capital plus Tier 2 ratio, and a 2.5% capital conservation buffer.
A Current Ratio of 1.8 and Quick Ratio of 1.2 indicates the bank can cover current liabilities 1.8 times with all current assets and 1.2 times with only the most liquid assets, suggesting healthy liquidity.
An ICR of 8.5x means earnings are 8.5 times the interest obligations, indicating strong capacity to service debt. ICR > 2.5x is generally considered healthy; 8.5x is excellent.
The CCyB is a macroprudential tool requiring banks to hold additional capital (0-2.5% of RWA) during periods of rapid credit expansion, enabling them to lend counter-cyclically during downturns.
Market share increase = 9.8% - 8.5% = 1.3%. Value increase = 1.3% of ₹50,00,000 = ₹6,500 crores
DICGC, established under the RBI, provides deposit insurance covering up to ₹5 lakh per depositor per bank per financial year, protecting depositors' interests in case of bank failure.