Central Govt Exam Preparation — SSC, UPSC, Bank, Railway

Q.21 Hard

A bank grants a ₹50 lakh personal loan at 9.5% p.a. for 7 years. If the borrower makes a part-payment of ₹10 lakhs after 2 years, how much principal remains? (Assume no prepayment penalty)

A ₹40 lakh

B Less than ₹40 lakh

C Exactly ₹40 lakh

D Cannot be determined

Correct Answer: B. Less than ₹40 lakh

Explanation:

After 2 years of EMI payments, the principal balance is reduced. A ₹10 lakh part-payment further reduces this, resulting in less than ₹40 lakh remaining.

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Q.22 Hard

A bank offers a Fixed Deposit at 6.2% p.a. compounded quarterly for 2 years on ₹1 lakh. What is the maturity amount? (Use: (1.0155)^8 ≈ 1.128)

A ₹1,12,800

B ₹1,12,700

C ₹1,13,600

D ₹1,14,500

Correct Answer: A. ₹1,12,800

Explanation:

Quarterly rate = 6.2%/4 = 1.55%, n = 8 quarters. Amount = 1,00,000 × (1.0155)^8 ≈ 1,00,000 × 1.128 = ₹1,12,800.

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Q.23 Hard

Which of the following is a correct statement about RBI's Standing Deposit Facility (SDF) as per 2024 norms?

A It offers higher returns than repo operations

B It is a facility for banks to deposit funds at a fixed rate

C It provides overnight liquidity at a fixed rate below repo

D It is mandatory for all banks

Correct Answer: C. It provides overnight liquidity at a fixed rate below repo

Explanation:

The Standing Deposit Facility allows banks to place funds with RBI at a fixed rate (typically 25-50 bps below repo) to manage liquidity surplus.

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Q.24 Hard

A bank's Asset Quality Indicator shows Net NPA ratio of 0.8% with Gross NPA ratio of 2.5%. What is the Provision Coverage Ratio?

A 32%

B 68%

C 75.2%

D Cannot be determined

Correct Answer: B. 68%

Explanation:

PCR = (Gross NPA - Net NPA) / Gross NPA × 100 = (2.5 - 0.8) / 2.5 × 100 = 1.7/2.5 × 100 = 68%.

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Q.25 Hard

A bank identifies a stressed asset with ₹10 crore outstanding. It makes a provision of 60%. Later, it recovers ₹2 crore. What is the net impact on profit & loss?

A Loss of ₹4 crore

B Gain of ₹2 crore

C Loss of ₹6 crore

D Gain of ₹4 crore

Correct Answer: B. Gain of ₹2 crore

Explanation:

Provision made: ₹6 crore (charged as loss). Recovery: ₹2 crore (credited to P&L). Net impact: ₹2 crore gain (recovery > provision reversal applicable).

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Q.26 Hard

A bank's Gross NPA declined from 4.2% to 3.1%, while Slippage ratio increased from 2.8% to 3.5%. What is the likely scenario?

A The bank recovered old NPAs while new stress indicators worsened

B The bank's credit quality improved uniformly

C The bank reduced its advance portfolio

D The bank increased provisioning levels

Correct Answer: A. The bank recovered old NPAs while new stress indicators worsened

Explanation:

Declining Gross NPA with increasing Slippage ratio suggests recovery of old NPAs but deteriorating new loan quality, indicating mixed asset quality trends.

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Q.27 Hard

Under the Basel III framework, what is the maximum leverage ratio (Tier 1 capital to total assets) for Indian banks as mandated by RBI in 2024?

A 2%

B 3%

C 4%

D 5%

Correct Answer: B. 3%

Explanation:

RBI mandates a minimum leverage ratio of 3% (Tier 1 capital divided by total assets) for banks to prevent excessive leverage under Basel III.

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Q.28 Hard

Which RBI tool is used to control inflation by reducing money supply in the economy?

A Open Market Operations (OMO) - sale of securities

B Reduction in Cash Reserve Ratio (CRR)

C Quantitative Easing (QE)

D Increase in Reserve Repo Rate

Correct Answer: A. Open Market Operations (OMO) - sale of securities

Explanation:

OMO sales of securities reduce liquidity and money supply. CRR reduction increases liquidity. QE and reverse repo rate cuts are expansionary measures.

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Q.29 Hard

A bank receives deposits of ₹10 lakh with a CRR of 4% and SLR of 18%. What is the maximum amount the bank can lend?

A ₹7.8 lakh

B ₹8.0 lakh

C ₹7.2 lakh

D ₹6.8 lakh

Correct Answer: A. ₹7.8 lakh

Explanation:

CRR requirement = 4% of ₹10 lakh = ₹0.4 lakh. SLR requirement = 18% of ₹10 lakh = ₹1.8 lakh. Maximum lending = ₹10 lakh - ₹0.4 lakh - ₹1.8 lakh = ₹7.8 lakh

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Q.30 Hard

A bank's Provision Coverage Ratio (PCR) is 65%. Which interpretation is accurate?

A The bank has recovered 65% of NPA

B 65% of Gross NPA is covered by provisions made by the bank

C The bank's profitability margin is 65%

D The bank maintains 65% capital adequacy

Correct Answer: B. 65% of Gross NPA is covered by provisions made by the bank

Explanation:

PCR = (Total Provisions / Gross NPA) × 100. A 65% PCR means the bank has made provisions equivalent to 65% of its gross NPA.

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