Study the data: A private bank's customer deposits grew from ₹8,50,000 crore (Q1 FY2024) to ₹9,25,000 crore (Q4 FY2024). What is the percentage growth in deposits?
If a bank's Statutory Liquidity Ratio (SLR) requirement is 18% and total deposits are ₹6,00,000 crore, what is the minimum amount it must invest in specified securities?
A bank maintains a Cash Reserve Ratio (CRR) of 4.5% as per RBI mandate. If its total liabilities are ₹10,00,000 crore, calculate the minimum cash reserve required.
A bank's Loan-to-Deposit (LTD) ratio increased from 78% in FY2023 to 82% in FY2024. What does this indicate?
AThe bank is advancing more loans relative to deposits received
BThe bank's deposit base has increased significantly
CThe bank's profitability has improved
DThe bank's liquidity coverage ratio has strengthened
Correct Answer:
A. The bank is advancing more loans relative to deposits received
Explanation:
LTD ratio measures advances as a percentage of deposits. An increase from 78% to 82% means the bank is lending more aggressively relative to deposits, which could indicate higher credit expansion or lower deposit growth.
A bank's Total Income grew by 18% YoY while Operating Expenses grew by 24% YoY. What does this indicate about Cost-to-Income Ratio?
ACost-to-Income Ratio has improved
BCost-to-Income Ratio has deteriorated
CCost-to-Income Ratio remains constant
DCannot be determined without absolute figures
Correct Answer:
B. Cost-to-Income Ratio has deteriorated
Explanation:
When operating expenses grow faster (24%) than total income (18%), the Cost-to-Income Ratio deteriorates, indicating reduced operational efficiency. A lower C/I ratio is preferable.
A bank's Liquidity Coverage Ratio (LCR) for the quarter is reported as 145%. What does this indicate about regulatory compliance?
AThe bank is non-compliant; LCR must be above 200%
BThe bank is compliant; minimum LCR requirement is 100%
CThe bank has excess liquidity that should be deployed
DThe bank faces immediate liquidity stress
Correct Answer:
B. The bank is compliant; minimum LCR requirement is 100%
Explanation:
RBI's minimum LCR requirement is 100%, to be maintained on a daily basis. At 145%, the bank is compliant with a comfortable liquidity buffer of 45% above the minimum.
A bank's Interest Earned increased by ₹850 crore while Interest Expended increased by ₹620 crore. What is the impact on Net Interest Income (NII)?
ANII increases by ₹230 crore
BNII decreases by ₹230 crore
CNII increases by ₹1,470 crore
DCannot be determined without prior year figures
Correct Answer:
A. NII increases by ₹230 crore
Explanation:
NII = Interest Earned - Interest Expended. If Interest Earned increases by ₹850 crore and Interest Expended increases by ₹620 crore, the net increase in NII = 850 - 620 = ₹230 crore.
A bank's efficiency ratio (operating expenses to operating income) is 42%. What does this indicate about the bank's operational health?
AThe bank is highly efficient; below 45% is considered strong
BThe bank is inefficient; efficiency ratio should be below 30%
CThe bank's cost structure is unsustainable
DThe bank must immediately reduce staff costs
Correct Answer:
A. The bank is highly efficient; below 45% is considered strong
Explanation:
Efficiency ratio of 42% (operating expenses/operating income) indicates strong operational efficiency. Industry benchmark for healthy banks is typically 40-50%. Lower ratios indicate better cost management.
