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

Q.71 Medium

Bank R has Tier 1 capital of ₹5,000 crore, Tier 2 capital of ₹2,000 crore, and total risk-weighted assets of ₹70,000 crore. What is the bank's CAR?

A 8.57%

B 10%

C 12.5%

D 15%

Correct Answer: B. 10%

Explanation:

CAR = (Tier 1 + Tier 2 capital) / Risk-weighted assets = (5,000 + 2,000) / 70,000 = 7,000 / 70,000 = 10%.

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Q.72 Hard

If a bank's Net Interest Margin (NIM) increased from 2.8% to 3.2% year-on-year, which factors are most likely responsible?

A Decrease in lending rates and increase in deposit rates

B Increase in lending rates and decrease in deposit rates

C Both rates increased equally

D Change in asset composition only

Correct Answer: B. Increase in lending rates and decrease in deposit rates

Explanation:

NIM improves when lending rates increase (higher interest income) or deposit rates decrease (lower interest expense), or both. This widens the spread.

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Q.73 Hard

In 2024, the RBI introduced new guidelines for Cyber Risk Management. Banks must allocate what minimum percentage of IT budget for cybersecurity?

A 5%

B 8%

C 10%

D 12%

Correct Answer: C. 10%

Explanation:

RBI guidelines recommend banks allocate at least 10% of their IT budget for cybersecurity measures and infrastructure resilience.

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Q.74 Easy

Bank S's Gross NPA ratio was 2.5% in March 2024 and increased to 2.8% by June 2024. If total advances were ₹1,00,000 crore in June, what was the approximate gross NPA amount?

A ₹2,500 crore

B ₹2,800 crore

C ₹2,700 crore

D ₹3,000 crore

Correct Answer: B. ₹2,800 crore

Explanation:

Gross NPA = NPA Ratio × Total Advances = 2.8% × ₹1,00,000 crore = ₹2,800 crore.

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Q.75 Hard

Which of the following is a characteristic of Tier 1 capital under Basel III that distinguishes it from Tier 2 capital?

A It has a predetermined maturity date

B It can be written down to absorb losses before other capital

C It carries a coupon payment obligation

D It can be subordinated to customer deposits

Correct Answer: B. It can be written down to absorb losses before other capital

Explanation:

Tier 1 capital (Common Equity Tier 1 and Additional Tier 1) can absorb losses and is the highest quality capital. Tier 2 capital may have maturity dates and subordination features.

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Q.76 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%

Correct Answer: B. 14.4%

Explanation:

ROE = ROA × Equity Multiplier = 1.2% × 12 = 14.4%. This relationship is derived from the DuPont analysis.

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Q.77 Hard

According to RBI's 2024 guidelines, what is the primary objective of implementing the Unincorporated Non-Banking Financial Company (UNBFC) framework?

A To increase bank lending capacity

B To regulate and supervise informal lending and financial services

C To promote cryptocurrency adoption

D To replace commercial banking operations

Correct Answer: B. To regulate and supervise informal lending and financial services

Explanation:

The UNBFC framework aims to bring informal financial service providers under regulatory oversight to protect consumers and ensure financial stability.

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Q.78 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.

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Q.79 Easy

If Bank A's Capital Adequacy Ratio (CAR) is 15.5%, what is its excess capital above the RBI's minimum requirement of 10.5%?

A 5%

B 5.5%

C 4.5%

D 6%

Correct Answer: A. 5%

Explanation:

Excess capital = Current CAR - Minimum CAR = 15.5% - 10.5% = 5%

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Q.80 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.

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