Calculate the EMI for a loan of ₹5,00,000 at 10% p.a. for 5 years (60 months). (Use approximate formula)
Answer: B
Using EMI formula: P[r(1+r)^n]/[(1+r)^n-1] ≈ ₹10,600 (Monthly rate = 10%/12)
Q.2Hard
What is the significance of the 'Basel III' accord in banking?
Answer: A
Basel III sets international standards for bank capital adequacy, stress testing, and market liquidity risk
Q.3Hard
A bank's Return on Assets (ROA) is 1.5% and its net profit is ₹3,000 crores. What is its total asset base?
Answer: B
ROA = (Net Profit / Total Assets) × 100. Therefore, Total Assets = Net Profit / (ROA/100) = 03000.015 = ₹2,00,000 crores
Q.4Hard
In Q1 2024, a bank's advances grew by 15% and deposits grew by 12%. If both started at ₹5,00,000 crores, what is the new Advance-to-Deposit Ratio?
Answer: A
New Advances = 500000 × 1.15 = ₹5,75,000 crores. New Deposits = 500000 × 1.12 = ₹5,60,000 crores. Ratio = 560000575000 = 1.027 ≈ 1.03
Q.5Hard
According to RBI's Monetary Policy 2024-2025, what is the repo rate corridor framework (Repo Rate ± corridor width)?
Answer: C
RBI maintains a corridor with repo rate (policy rate) at the center, with Standing Deposit Facility (SDF) at -50 bps and Marginal Standing Facility (MSF) at +50 bps.
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Q.6Hard
A bank's Customer Acquisition Cost (CAC) is ₹2,500 and the Lifetime Value (LTV) of a customer is ₹50,000. What is the LTV:CAC ratio?
Answer: C
LTV:CAC ratio = 50000:2500 = 20:1, indicating that each customer generates 20 times the acquisition cost in lifetime value.
Q.7Hard
Under the Payment Systems Operator (PSO) framework by RBI, what is the maximum transaction value limit for prepaid payment instruments without KYC?
Answer: A
RBI's guidelines on prepaid payment instruments specify that transactions up to ₹10,000 can be conducted without full KYC verification for semi-closed systems.
Q.8Hard
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?
Answer: A
Increase in basis points = 120 bps = 1.2%. Increase in NPA amount = 1.2% of ₹80,000 crores = ₹960 crores
Q.9Hard
What is the primary purpose of the Basel III accord's countercyclical capital buffer (CCyB) requirement for banks?
Answer: B
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.
Q.10Hard
Under the RBI's Prompt Corrective Action (PCA) framework (2024), a bank is placed under PCA if its Capital Adequacy Ratio falls below which threshold?
Answer: C
Under the PCA framework, a bank is placed under regulatory action if its CAR falls below 9%, which is below the minimum requirement of 10.5%.
Q.11Hard
If a bank's Net Interest Margin (NIM) increased from 2.8% to 3.2% year-on-year, which factors are most likely responsible?
Answer: B
NIM improves when lending rates increase (higher interest income) or deposit rates decrease (lower interest expense), or both. This widens the spread.
Q.12Hard
In 2024, the RBI introduced new guidelines for Cyber Risk Management. Banks must allocate what minimum percentage of IT budget for cybersecurity?
Answer: C
RBI guidelines recommend banks allocate at least 10% of their IT budget for cybersecurity measures and infrastructure resilience.
Q.13Hard
Which of the following is a characteristic of Tier 1 capital under Basel III that distinguishes it from Tier 2 capital?
Answer: B
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.
Q.14Hard
According to RBI's 2024 guidelines, what is the primary objective of implementing the Unincorporated Non-Banking Financial Company (UNBFC) framework?
Answer: B
The UNBFC framework aims to bring informal financial service providers under regulatory oversight to protect consumers and ensure financial stability.
Q.15Hard
Under the RBI's Integrated Ombudsman Scheme 2021, what is the maximum compensation limit for customer grievances?
Answer: A
RBI's Integrated Ombudsman Scheme 2021 provides a maximum compensation limit of ₹10 lakh for customer grievances.
Q.16Hard
Under Basel III regulations (2024 update), if a bank's RWA is ₹80,000 crore and CET1 is ₹4,200 crore, is it compliant with minimum CET1 requirement?
Answer: A
CET1 Ratio = (4,80200,000) × 100 = 5.25%, which exceeds the 4.5% minimum. Bank is compliant.
Q.17Hard
Under Basel III, if a bank's Common Equity Tier 1 (CET1) requirement is 5.5% and it maintains 7.5%, what is the buffer?
