Which RBI initiative aims to provide affordable credit to the unbanked and underbanked population through banks?
APriority Sector Lending (PSL)
BKnow Your Customer (KYC) Framework
CCredit Guarantee Scheme
DSukanya Samriddhi Yojana
Correct Answer:
A. Priority Sector Lending (PSL)
Explanation:
Priority Sector Lending mandates that banks lend at least 40% of their Adjusted Net Bank Credit (ANBC) to priority sectors including agriculture, MSMEs, and weaker sections, promoting financial inclusion.
A retail bank's Gross Non-Performing Assets increased by 120 basis points from 2.5% to 3.7% in a year. If total advances are ₹80,000 crores, what is the approximate increase in absolute NPA amount in crores?
A₹960 crores
B₹1,200 crores
C₹1,440 crores
D₹2,960 crores
Correct Answer:
A. ₹960 crores
Explanation:
Increase in basis points = 120 bps = 1.2%. Increase in NPA amount = 1.2% of ₹80,000 crores = ₹960 crores
Under the RBI's Digital Rupee (e₹) initiative, which of the following is a primary objective?
AReplace all physical currency immediately
BProvide a secure, efficient digital payment alternative while maintaining the role of physical currency
CEliminate private cryptocurrencies completely
DRemove the need for banks in financial transactions
Correct Answer:
B. Provide a secure, efficient digital payment alternative while maintaining the role of physical currency
Explanation:
The RBI's Digital Rupee (CBDC) aims to offer a digital alternative for payments and settlements while maintaining physical currency circulation. It enhances payment efficiency and financial security.
Which government scheme provides deposit insurance coverage up to ₹5 lakh per depositor per bank?
APradhan Mantri Jan Dhan Yojana
BDeposit Insurance and Credit Guarantee Corporation (DICGC) Scheme
CPradhan Mantri Suraksha Bima Yojana
DCredit Guarantee Fund Trust for Micro and Small Enterprises
Correct Answer:
B. Deposit Insurance and Credit Guarantee Corporation (DICGC) Scheme
Explanation:
DICGC, established under the RBI, provides deposit insurance covering up to ₹5 lakh per depositor per bank per financial year, protecting depositors' interests in case of bank failure.
In data interpretation, if Bank P's market share increased from 8.5% to 9.8% and total market size is ₹50,00,000 crores, what is the increase in Bank P's market share value in crores?
A₹5,000 crores
B₹6,500 crores
C₹7,500 crores
D₹8,000 crores
Correct Answer:
B. ₹6,500 crores
Explanation:
Market share increase = 9.8% - 8.5% = 1.3%. Value increase = 1.3% of ₹50,00,000 = ₹6,500 crores
What is the primary purpose of the Basel III accord's countercyclical capital buffer (CCyB) requirement for banks?
ATo increase bank profits during economic downturns
BTo build additional capital during periods of excessive credit growth to absorb losses during downturns
CTo eliminate the need for regulatory oversight
DTo reduce banks' lending capacity permanently
Correct Answer:
B. To build additional capital during periods of excessive credit growth to absorb losses during downturns
Explanation:
The CCyB is a macroprudential tool requiring banks to hold additional capital (0-2.5% of RWA) during periods of rapid credit expansion, enabling them to lend counter-cyclically during downturns.
Bank Z's Interest Coverage Ratio (ICR) is 8.5x. What does this indicate regarding the bank's debt servicing capability?
AVery weak; unable to service debt
BWeak; marginal debt servicing capability
CStrong; comfortable debt servicing capability
DCannot be determined without additional data
Correct Answer:
C. Strong; comfortable debt servicing capability
Explanation:
An ICR of 8.5x means earnings are 8.5 times the interest obligations, indicating strong capacity to service debt. ICR > 2.5x is generally considered healthy; 8.5x is excellent.
If Bank X's Current Ratio is 1.8 and its Quick Ratio is 1.2, what can be inferred about the bank's liquidity position?
AThe bank has excessive inventory relative to current liabilities
BThe bank's liquid assets are insufficient to cover short-term obligations
CThe bank maintains adequate liquidity with a cushion for unexpected withdrawals
DThe bank's current liabilities exceed its current assets
Correct Answer:
C. The bank maintains adequate liquidity with a cushion for unexpected withdrawals
Explanation:
A Current Ratio of 1.8 and Quick Ratio of 1.2 indicates the bank can cover current liabilities 1.8 times with all current assets and 1.2 times with only the most liquid assets, suggesting healthy liquidity.
In 2024, the RBI mandated that banks maintain a minimum Capital Adequacy Ratio (CAR) of what percentage under Basel III framework?
A9.5%
B10.5%
C11.5%
D12.5%
Correct Answer:
B. 10.5%
Explanation:
Under Basel III, banks must maintain a minimum CAR of 10.5%, which includes a 4.5% Tier 1 capital ratio, a 6% Tier 1 capital plus Tier 2 ratio, and a 2.5% capital conservation buffer.
