Bank F's Advances increased by ₹8,500 crores while Deposits increased by ₹6,200 crores in FY2024. What does this indicate about the bank's funding strategy?
AOver-reliance on external borrowing
BStrong organic growth in advances
CDecline in lending capability
DDeposit mobilization excellence
Correct Answer:
A. Over-reliance on external borrowing
Explanation:
When advances grow faster than deposits, it indicates the bank is funding loan growth through borrowing from money markets, inter-bank lending, or external sources rather than relying on deposits.
Bank G's Interest Coverage Ratio dropped from 8.5x to 6.2x year-on-year. What does this suggest?
AReduced ability to service debt obligations
BImproved profitability
CIncreased operating leverage
DBetter interest rate management
Correct Answer:
A. Reduced ability to service debt obligations
Explanation:
Interest Coverage Ratio = EBIT / Interest Expense. A decline from 8.5x to 6.2x indicates the bank generates less EBIT relative to interest expenses, reducing its capacity to comfortably service debt.
Under RBI's Know Your Customer (KYC) norms 2024, what is the maximum cash deposit limit for new accounts without enhanced documentation?
A₹1 lakh per month
B₹5 lakhs per month
C₹10 lakhs per month
DNo limit if KYC compliant
Correct Answer:
A. ₹1 lakh per month
Explanation:
RBI's KYC guidelines restrict cash deposits to ₹1 lakh per month for new accounts in the first 6 months without enhanced documentation, to curb money laundering and terror financing.
Analyze the scenario: Bank I has ₹50,000 crores in total advances with sector-wise distribution - Agriculture 12%, MSME 18%, Services 35%, Manufacturing 25%, Others 10%. If the bank needs to increase agriculture lending by 5% of total advances, what is the required additional disbursement?
A₹2,500 crores
B₹3,000 crores
C₹2,000 crores
D₹3,500 crores
Correct Answer:
A. ₹2,500 crores
Explanation:
Current agriculture advances = 12% of ₹50,000 = ₹6,000 cr. Required increase of 5% of total = 5% of ₹50,000 = ₹2,500 crores additional disbursement needed.
Bank K's Consumer Advances grew from ₹12,000 crores to ₹14,800 crores while maintaining the same default rate of 1.2%. What was the increase in absolute NPA amount?
A₹33.6 crores
B₹144 crores
C₹178 crores
D₹33.6 crores
Correct Answer:
A. ₹33.6 crores
Explanation:
Original NPA = 1.2% of ₹12,000 = ₹144 cr. New NPA = 1.2% of ₹14,800 = ₹177.6 cr. Increase in NPA = ₹177.6 - ₹144 = ₹33.6 crores.
Bank X's Loan-to-Deposit (LTD) ratio stood at 78% as of March 2024. If the bank's total deposits increased by ₹5,000 crores in Q1 FY2025 while maintaining the same LTD ratio, by how much would the advances increase?
A₹3,900 crores
B₹4,200 crores
C₹3,250 crores
D₹5,000 crores
Correct Answer:
A. ₹3,900 crores
Explanation:
With LTD ratio of 78%, advances are 78% of deposits. If deposits increase by ₹5,000 crores, advances increase by 78% of ₹5,000 = ₹3,900 crores. This tests understanding of key banking ratios and their application in data interpretation.
