Which of the following best describes 'Basel III' in banking?
Answer: B
Basel III is an international regulatory framework developed by the Basel Committee on Banking Supervision for bank capital and risk management.
Q.62Hard
Which RBI initiative aims to provide a framework for facilitating cross-border payments in rupees?
Answer: D
RBI has been promoting the internationalization of the rupee to facilitate cross-border payments and reduce dependence on foreign currencies.
Q.63Hard
Under which regulation must banks maintain a minimum Tier 1 capital ratio?
Answer: B
Basel III framework mandates minimum Tier 1 capital ratio of 8.5% for banks' regulatory compliance.
Q.64Hard
What is the significance of ISIN in securities market operations?
Answer: A
ISIN (International Securities Identification Number) uniquely identifies individual securities across global markets.
Q.65Hard
Which RBI initiative promotes cross-border payment transactions through blockchain technology?
Answer: C
RBI's e-Rupee (Digital Rupee) project explores Central Bank Digital Currency (CBDC) for domestic and cross-border transactions.
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Q.66Hard
What is the reverse repo rate primarily used for in RBI's monetary policy operations?
Answer: A
The reverse repo rate is the interest rate at which RBI borrows from banks to absorb excess liquidity from the financial system.
Q.67Hard
What does the term 'haircut' mean in the context of banking and securities?
Answer: A
A haircut is a percentage discount applied to the market value of collateral to account for potential market volatility and protect the lender. For example, if a security worth Rs. 100 has a 10% haircut, it's valued at Rs. 90.
Q.68Hard
Which of the following ratios measures a bank's profitability relative to its total assets?
Answer: A
ROA (Return on Assets) measures net income as a percentage of total assets, indicating how efficiently a bank uses its assets to generate profits. Higher ROA indicates better profitability.
Q.69Hard
What is the significance of the 'Marginal Standing Facility (MSF)' in RBI's monetary policy?
Answer: B
MSF is an overnight borrowing facility for banks available at a penal rate (typically 100-200 bps above the repo rate) to manage temporary liquidity mismatches. It forms the upper end of the RBI's interest rate corridor.
Q.70Hard
Under Pillar 2 of Basel III, what is primarily assessed?
Answer: B
Pillar 2 of Basel III involves supervisory review, where regulators assess banks' internal capital adequacy processes, stress testing mechanisms, and risk management frameworks.
Q.71Hard
Under the RBI's Liquidity Coverage Ratio (LCR) requirement, what percentage of high-quality liquid assets must banks maintain?
Answer: D
As per Basel III, the LCR requirement mandates that banks maintain high-quality liquid assets at least equal to 100% of their net cash outflows over 30 days under stress scenarios.
Q.72Hard
What does the 'Net Interest Margin (NIM)' indicate in a bank's financial analysis?
Answer: A
NIM is calculated as (Interest Income - Interest Expenses) / Average Earning Assets. It measures the bank's core profitability from lending and borrowing operations, crucial for assessing operational efficiency.
Q.73Hard
Under the RBI's directive, what is the maximum tenure for which a bank can provide a Masala Bond?
Answer: D
Masala Bonds are rupee-denominated bonds issued overseas with no fixed maximum tenure restriction, governed by FEMA guidelines.
Q.74Hard
As per the latest RBI guidelines on cyber security (2024), what is the minimum frequency for conducting security audits by banks?
Answer: A
RBI mandates that banks conduct comprehensive security audits at least annually, with more frequent assessments for critical systems.
Q.75Hard
Which Indian bank was accorded the status of a 'Domestic Systemically Important Bank' (D-SIB) in the latest RBI classification (2024)?
Answer: A
ICICI Bank, HDFC Bank, Axis Bank, and State Bank of India are classified as D-SIBs and required to maintain higher capital buffers due to systemic importance.
Q.76Hard
Under the Priority Sector Lending norms, what percentage of advances must be directed to agriculture by commercial banks?
Answer: B
RBI mandates that commercial banks allocate at least 18% of total advances to agriculture.
Q.77Hard
What is the statutory Liquidity Ratio (SLR) requirement for banks as per RBI guidelines (2024)?
Answer: B
RBI maintains the SLR requirement at 18% with recent adjustments around 20% for specific instruments.
Q.78Hard
Which of the following factors is NOT considered while calculating the Credit Risk Weight of an asset under Basel III?
Answer: D
Branch location is not a factor in risk weighting. Nature of borrower, maturity, and collateral are key factors.
Q.79Hard
Under Unified Payments Interface (UPI) 2.0, what is the new feature introduced for offline transactions?
Answer: B
UPI 2.0 introduced offline transaction capability allowing payments without internet connectivity.
Q.80Hard
What is the implementation timeline for the Indian Banks' Association (IBA) model on stress testing for credit risk?
Answer: A
Banks conduct stress tests on a quarterly basis as per RBI guidelines and IBA framework.
