Q.41
Medium
Bank T's Return on Assets (ROA) is 1.2% and its Equity Multiplier is 12x. What is the bank's Return on Equity (ROE)?
A
10%
B
14.4%
C
13.2%
D
15.6%
Explanation:
ROE = ROA × Equity Multiplier = 1.2% × 12 = 14.4%. This relationship is derived from the DuPont analysis.
Q.42
Medium
If the Reserve Ratio (RRR) is reduced by the RBI, which immediate effect is most likely on the banking system?
A
Reduction in bank lending capacity
B
Increase in money supply and bank lending capacity
C
Immediate increase in deposit rates
D
Mandatory increase in loan rates
Correct Answer:
B. Increase in money supply and bank lending capacity
Explanation:
A reduction in the Reserve Ratio means banks need to hold less in reserves, freeing up capital for lending, which increases money supply and lending capacity.
Q.43
Medium
Which of the following is NOT a component of Tier 1 Capital under Basel III norms?
A
Common Equity Tier 1 Capital
B
Additional Tier 1 Capital
C
Subordinated Debt
D
Share Capital and Reserves
Correct Answer:
C. Subordinated Debt
Explanation:
Subordinated Debt is part of Tier 2 Capital, not Tier 1. Tier 1 comprises CET1 and AT1 components.
Q.44
Medium
Under the RBI's latest guidelines (2024), what is the maximum Loan-to-Value (LTV) ratio for residential property loans?
Explanation:
RBI's 2024 guidelines stipulate a maximum LTV of 80% for residential property loans to manage credit risk.
Q.45
Medium
Which ratio measures a bank's ability to meet its short-term obligations from liquid assets?
A
Solvency Ratio
B
Liquidity Ratio
C
Capital Adequacy Ratio
D
Asset-to-Liability Ratio
Correct Answer:
B. Liquidity Ratio
Explanation:
Liquidity Ratio measures short-term solvency and ability to meet immediate obligations using liquid assets.
Q.46
Medium
Bank E reports a Deposit Growth Rate of 12% YoY and current deposits of ₹80,000 crore. What were deposits in the previous year?
A
₹71,428 crore
B
₹89,600 crore
C
₹70,000 crore
D
₹72,000 crore
Correct Answer:
A. ₹71,428 crore
Explanation:
If growth is 12%, current deposits = previous deposits × 1.12. 80,000 = previous × 1.12. Previous = 80,000 / 1.12 ≈ ₹71,428 crore
Q.47
Medium
According to Basel III, what is the minimum Common Equity Tier 1 (CET1) capital requirement for banks?
Explanation:
Basel III mandates a minimum CET1 ratio of 4.5% of Risk-Weighted Assets (RWA).
Q.48
Medium
Bank F's Interest Income is ₹5,000 crore and Total Income is ₹7,500 crore. What is its Interest Income Ratio?
A
60%
B
66.67%
C
75%
D
80%
Correct Answer:
B. 66.67%
Explanation:
Interest Income Ratio = (Interest Income / Total Income) × 100 = (5,000 / 7,500) × 100 = 66.67%
Q.49
Medium
Which of the following comes under Statutory Liquidity Ratio (SLR) compliance as per RBI norms?
A
Gold, Cash, and Approved Securities
B
Only Cash Reserves
C
Only Government Securities
D
Only Gold Holdings
Correct Answer:
A. Gold, Cash, and Approved Securities
Explanation:
SLR compliance includes Gold, Cash, and Approved Government Securities as per RBI's Liquidity Coverage Ratio framework.
Q.50
Medium
Bank G's Provision Coverage Ratio (PCR) is 68% in March 2024. If NPA is ₹500 crore, what is the provision amount?
A
₹340 crore
B
₹320 crore
C
₹300 crore
D
₹360 crore
Correct Answer:
A. ₹340 crore
Explanation:
PCR = Provisions / NPA. 68% = Provisions / 500. Provisions = 0.68 × 500 = ₹340 crore
