What is the primary objective of the Pradhan Mantri Mudra Yojana (PMMY) launched in 2015?
Answer: B
PMMY aims to provide collateral-free loans to micro and small enterprises through banks, supporting the growth of small businesses and self-employment.
Q.22Medium
If a bank's Net Interest Margin (NIM) is 2.8% and its total assets are ₹5,00,000 crores, what is the approximate Net Interest Income in crores?
Answer: A
NIM = (Net Interest Income / Total Assets) × 100. Therefore, NII = (2.1008) × 5,00,000 = ₹14,000 crores
Q.23Medium
Which of the following is NOT a component of the RBI's Financial Stability Report assessment framework?
Answer: C
The RBI's Financial Stability Report focuses on asset quality, capital adequacy, profitability, and liquidity. Customer Satisfaction Index is not part of the formal FSR framework.
Q.24Medium
A bank offers 8.5% p.a. interest on deposits compounded quarterly. What will be the effective annual rate (EAR)?
Which banking regulation requires banks to maintain a minimum Statutory Liquidity Ratio (SLR)?
Answer: B
Section 24 of the Banking Regulation Act, 1949 mandates the maintenance of SLR, which is currently set at 18% of NDTL as per RBI guidelines.
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Q.26Medium
A bank's Capital Adequacy Ratio (CAR) is 15.2%. Under Basel III, which tier of capital primarily contributes to this ratio?
Answer: C
CAR = (Tier 1 + Tier 2 + Tier 3 Capital) / Risk-Weighted Assets. Basel III requires minimum CAR of 10.5% (including capital conservation buffer) for Indian banks.
Q.27Medium
If a bank's Cost-to-Income ratio is 42%, what does this indicate about its operational efficiency?
Answer: B
A Cost-to-Income ratio of 42% is considered healthy (lower is better). Ratios above 50% indicate inefficiency. This suggests the bank is controlling costs well relative to its income.
Q.28Medium
Which of the following is a feature of India's Insolvency and Bankruptcy Code (IBC), 2016?
Answer: B
The IBC, 2016 is a comprehensive legislation applicable to individuals and corporates. It mandates a resolution within 180 days (extendable to 270 days) through a structured process involving creditors, including banks.
Q.29Medium
Under the RBI's Digital Rupee (e₹) initiative, which of the following is a primary objective?
Answer: B
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.
Q.30Medium
If a bank's Return on Equity (ROE) is 18% and its Equity Capital is ₹5,000 crores, what is its Net Profit?
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?
Answer: B
Market share increase = 9.8% - 8.5% = 1.3%. Value increase = 1.3% of ₹50,00,000 = ₹6,500 crores
Q.32Medium
Bank Z's Interest Coverage Ratio (ICR) is 8.5x. What does this indicate regarding the bank's debt servicing capability?
Answer: C
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.
Q.33Medium
Bank M's Loan-to-Deposit Ratio (LDR) increased from 78% to 85% over one year. What does this trend indicate?
Answer: B
An increase in LDR from 78% to 85% indicates the bank is lending a higher proportion of its deposits, suggesting more aggressive lending strategy. Optimal LDR is typically 78-80%.
Q.34Medium
If Bank N's Asset Quality Ratio (percentage of standard assets to total assets) declined from 96% to 93% in one quarter, which of the following is the most likely reason?
Answer: C
A decline in the Asset Quality Ratio indicates a higher proportion of non-standard assets (NPAs), meaning the percentage of problem loans has increased.
Q.35Medium
According to the RBI's Liquidity Coverage Ratio (LCR) framework for 2024, banks must maintain liquid assets sufficient to survive how many days of stressed cash outflow?
Answer: B
The LCR under Basel III requires banks to maintain high-quality liquid assets sufficient to survive at least 30 days of stressed cash outflows.
Q.36Medium
Bank O's Advances grew by 15% while Deposits grew by 10% in 2024. If this trend continues, what risk does the bank face?
Answer: B
When advances grow faster than deposits, it creates a liquidity mismatch. The bank may struggle to fund its loan portfolio, potentially violating LDR and LCR norms.
Q.37Medium
In a Data Interpretation question, Bank P's quarterly profit was ₹500 crore in Q1, ₹600 crore in Q2, and ₹720 crore in Q3 2024. What is the average quarterly growth rate?
Answer: B
Q1 to Q2: (600-500)/500 = 20%. Q2 to Q3: (720-600)/600 = 20%. Average growth rate = 20%.
Q.38Medium
Which RBI framework requires banks to maintain a minimum percentage of deposits as Statutory Liquidity Ratio (SLR)?
Answer: A
As of 2024, the RBI has mandated a minimum SLR of 18% of net demand and time liabilities (NDTL) for scheduled commercial banks.
Q.39Medium
Bank Q's Cost-to-Income Ratio (CIR) is 42%. What does this indicate about its operational efficiency?
Answer: A
A CIR of 42% (lower is better) indicates the bank spends ₹42 to earn ₹100, which is considered efficient. Industry average for Indian banks is around 40-45%.
Q.40Medium
Bank R has Tier 1 capital of ₹5,000 crore, Tier 2 capital of ₹2,000 crore, and total risk-weighted assets of ₹70,000 crore. What is the bank's CAR?
