What does the Basel III framework primarily focus on?
AImproving bank transparency and disclosure standards
BStrengthening bank capital requirements and liquidity standards
CRegulating cryptocurrency transactions
DManaging inflation rates across countries
Correct Answer:
B. Strengthening bank capital requirements and liquidity standards
Explanation:
Basel III is an international regulatory framework that aims to strengthen bank capital adequacy, stress testing, and market liquidity risk. It was developed post-2008 financial crisis to prevent systemic risks.
Under the RBI's regulatory framework, what is the minimum Statutory Liquidity Ratio (SLR) that banks must maintain?
A15%
B18%
C20%
D25%
Correct Answer:
B. 18%
Explanation:
As per RBI guidelines (2024-2025), the statutory minimum SLR is 18% of net demand and time liabilities. This ensures banks maintain sufficient liquid assets.
Which of the following best describes a 'repo transaction' in banking?
AA transaction where securities are sold and repurchased at a future date
BA direct loan given by one bank to another
CA transaction involving physical commodity exchange
DA long-term investment in mutual funds
Correct Answer:
A. A transaction where securities are sold and repurchased at a future date
Explanation:
A repo (repurchase agreement) is a short-term borrowing instrument where a seller sells securities with an agreement to repurchase them at a higher price. It's a key liquidity management tool for banks.
Which RBI initiative aims to facilitate real-time, 24/7 interbank fund transfers?
ANational Electronic Funds Transfer (NEFT)
BReal Time Gross Settlement (RTGS)
CUnified Payments Interface (UPI)
DImmediate Payment Service (IMPS)
Correct Answer:
C. Unified Payments Interface (UPI)
Explanation:
UPI allows real-time, 24/7 peer-to-peer and peer-to-merchant fund transfers. While RTGS is real-time for bulk transfers and NEFT/IMPS have specific timings, UPI provides true round-the-clock service.
What is the primary feature of a 'Floating Rate Savings Account' offered by banks?
AInterest rate remains fixed throughout the account tenure
BInterest rate changes based on RBI's policy rate or market conditions
CNo interest is provided to the account holder
DInterest is paid quarterly instead of monthly
Correct Answer:
B. Interest rate changes based on RBI's policy rate or market conditions
Explanation:
Floating rate accounts have interest rates that fluctuate based on changes in the RBI's benchmark rates or market conditions, unlike fixed-rate accounts where the rate remains constant.
