A bank processed 50,000 digital transactions in Q1 2024 out of 200,000 total transactions. In Q2, digital transactions increased by 20% while total transactions increased by 10%. What is the new percentage of digital transactions?
A27.27%
B28.33%
C29.41%
D30.50%
Correct Answer:
C. 29.41%
Explanation:
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%.
Which of the following is NOT a function of the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per 2024 guidelines?
AInsuring deposits up to ₹5 lakh per depositor per bank
BSetting monetary policy for commercial banks
CProviding insurance coverage for both principal and accrued interest
DManaging claims and payouts to depositors during bank failures
Correct Answer:
B. Setting monetary policy for commercial banks
Explanation:
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.
Bank M's Loan-to-Deposit Ratio (LDR) increased from 78% to 85% over one year. What does this trend indicate?
AThe bank is reducing its lending activity
BThe bank is becoming more aggressive in loan disbursement relative to deposits
CThe bank's deposit base has shrunk significantly
DThe bank is improving its profitability margins
Correct Answer:
B. The bank is becoming more aggressive in loan disbursement relative to deposits
Explanation:
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%.
If Bank N's Asset Quality Ratio (percentage of standard assets to total assets) declined from 96% to 93% in one quarter, which of the following is the most likely reason?
AIncrease in standard assets
BDecrease in non-performing assets (NPAs)
CIncrease in non-performing assets (NPAs)
DImprovement in asset recovery
Correct Answer:
C. Increase in non-performing assets (NPAs)
Explanation:
A decline in the Asset Quality Ratio indicates a higher proportion of non-standard assets (NPAs), meaning the percentage of problem loans has increased.
According to the RBI's Liquidity Coverage Ratio (LCR) framework for 2024, banks must maintain liquid assets sufficient to survive how many days of stressed cash outflow?
A15 days
B30 days
C45 days
D60 days
Correct Answer:
B. 30 days
Explanation:
The LCR under Basel III requires banks to maintain high-quality liquid assets sufficient to survive at least 30 days of stressed cash outflows.
Bank O's Advances grew by 15% while Deposits grew by 10% in 2024. If this trend continues, what risk does the bank face?
AIncreasing profitability due to higher lending
BLiquidity mismatch and potential breach of regulatory ratios
CEnhanced market competitiveness
DReduced operational costs
Correct Answer:
B. Liquidity mismatch and potential breach of regulatory ratios
Explanation:
When advances grow faster than deposits, it creates a liquidity mismatch. The bank may struggle to fund its loan portfolio, potentially violating LDR and LCR norms.
In a Data Interpretation question, Bank P's quarterly profit was ₹500 crore in Q1, ₹600 crore in Q2, and ₹720 crore in Q3 2024. What is the average quarterly growth rate?
A18%
B20%
C22%
D25%
Correct Answer:
B. 20%
Explanation:
Q1 to Q2: (600-500)/500 = 20%. Q2 to Q3: (720-600)/600 = 20%. Average growth rate = 20%.
Bank Q's Cost-to-Income Ratio (CIR) is 42%. What does this indicate about its operational efficiency?
AThe bank spends ₹42 to generate ₹100 of income, indicating good efficiency
BThe bank spends ₹42 to generate ₹100 of income, indicating poor efficiency
CThe bank's operational costs are ₹42 crore annually
DThe bank's profit margin is 42%
Correct Answer:
A. The bank spends ₹42 to generate ₹100 of income, indicating good efficiency
Explanation:
A CIR of 42% (lower is better) indicates the bank spends ₹42 to earn ₹100, which is considered efficient. Industry average for Indian banks is around 40-45%.
