The RBI announced a reduction in the Standing Deposit Facility (SDF) rate by 25 basis points to 6.50%. What is the immediate market implication?
Answer: B
SDF rate reduction makes RBI deposits less attractive, incentivizing banks to deploy liquidity in market lending rather than parking with RBI, potentially increasing money supply and lending.
Q.22Medium
Examine the data: A bank's foreign exchange earnings increased from ₹2,400 crore to ₹2,850 crore while forex outflows increased from ₹1,900 crore to ₹2,100 crore. Calculate the change in net forex earnings.
Answer: A
Previous net forex = 2,400 - 1,900 = ₹500 crore. Current net forex = 2,850 - 2,100 = ₹750 crore. Change = 750 - 500 = ₹250 crore increase.
Q.23Medium
Under the Basel III framework as per RBI guidelines (2024), what is the total capital requirement (Tier-1 + Tier-2) for a non-SIB scheduled commercial bank?
Answer: C
Basel III requires minimum CET1 of 4.5%, Tier-1 capital of 6%, and Total capital of 9% plus Capital Conservation Buffer of 2.5%, totaling 11.5% for non-SIB banks.
Q.24Medium
A bank's Dividend Payout Ratio increased from 35% to 48% despite a 12% decline in net profit. What is the strategic implication?
Answer: A
Higher payout ratio (48%) despite lower profit indicates the bank is distributing more of its earnings as dividends, retaining less capital for growth and strengthening reserves. This can impact future capital buffers.
Q.25Medium
A bank's provision coverage ratio (PCR) on Gross NPAs increased from 58% to 67% YoY. What does this signify?
Answer: B
PCR measures provisions made against Gross NPAs. An increase from 58% to 67% indicates the bank has provisioned more of its NPAs, improving its capacity to absorb potential losses and reducing future profit volatility.
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Q.26Medium
A bank's Deposit Growth Rate was 12% and Advances Growth Rate was 15% in FY2024. What does this scenario suggest?
Answer: B
When advances grow faster than deposits (15% > 12%), the Loan-to-Deposit ratio increases, indicating higher credit expansion relative to deposit mobilization
Q.27Medium
Analyze the quarterly data: Bank A's Non-Performing Assets decreased from ₹18,000 crore to ₹15,000 crore, while its Gross Advances remained ₹3,00,000 crore. Calculate the change in Gross NPA ratio:
Answer: C
Previous NPA ratio = (18,3000,00,000) × 100 = 6%. New NPA ratio = (15,3000,00,000) × 100 = 5%. The ratio decreased.
Q.28Medium
A bank's Return on Equity (ROE) improved from 12% to 14.5% while its Net Profit Margin decreased from 28% to 26%. This suggests:
Answer: B
Improved ROE despite lower NPM indicates higher financial leverage (more debt relative to equity), amplifying returns to equity holders
Q.29Medium
A bank's Asset Quality Indicator shows 8% Gross NPAs. If total Advances are ₹4,00,000 crore, and Provision Coverage Ratio is 65%, calculate the Net NPA ratio approximately:
Which of the following is NOT a component of Basel III Tier-I Capital?
Answer: C
Subordinated Debt is part of Tier-II Capital. Tier-I Capital comprises CET1 and AT1 Capital only
Q.31Medium
A bank's Return on Assets (ROA) decreased from 1.2% to 0.95% while maintaining constant total assets of ₹8,00,000 crore. Calculate the decrease in Net Profit in rupees:
According to RBI's latest guidelines 2024, what is the maximum Loan-to-Value (LTV) ratio for retail housing loans to individual borrowers?
Answer: C
RBI permits maximum 80% LTV for retail housing loans to individuals as per macroprudential guidelines to manage credit risk
Q.33Medium
A bank's Consumer Advances increased by ₹35,000 crore while Total Advances grew by ₹80,000 crore in FY2024. Calculate the share of Consumer Advances in total advances growth:
Answer: B
Share = (₹35,000 / ₹80,000) × 100 = 43.75% of total advances growth came from consumer segment
Q.34Medium
Bank A reported a Net Interest Margin (NIM) of 2.8% in Q3 2024. If the bank's total interest income was ₹15,000 crores, what was the approximate net interest income?
Answer: A
NIM = Net Interest Income / Total Assets. Given NIM of 2.8% and interest income of ₹15,000 cr, net interest income approximates to ₹4,200 crores using the relationship between these metrics.
Q.35Medium
Examine the data: Bank X reported ₹5,000 crores in gross advances with ₹150 crores in gross NPAs. The bank maintained a provision coverage ratio of 65%. Calculate the net NPA amount.
Answer: A
Gross NPAs = ₹150 crores. Provisions made = 65% of ₹150 = ₹97.5 crores. Net NPA = ₹150 - ₹97.5 = ₹52.5 crores.
Q.36Medium
Under RBI's revised norms for 2024, what is the minimum Common Equity Tier 1 (CET1) ratio that banks must maintain?
Answer: B
As per Basel III implementation in India, RBI mandates a minimum CET1 ratio of 6.5% (including capital conservation buffer of 1.875%), increased from the earlier 5.5%.
Q.37Medium
Bank C's Loan-to-Deposit Ratio (LDR) increased from 78% to 83% in Q3 2024. What risk does this indicate?
Answer: A
LDR of 83% means the bank is deploying 83% of deposits as loans. An increase towards the upper threshold (80% is regulatory comfort zone) indicates higher liquidity risk if deposits decline.
Q.38Medium
Bank D's Earning Per Share (EPS) grew from ₹45 to ₹54 between FY2023 and FY2024. The stock price remained at ₹1,080. What is the Price-to-Earnings (P/E) ratio for FY2024?
Answer: B
P/E Ratio = Stock Price / EPS = ₹1,080 / ₹54 = 20x. This indicates the market values the bank at 20 times its annual earnings.
Q.39Medium
According to RBI's latest circular on Liquidity Coverage Ratio (LCR) for 2024, what is the minimum percentage?
Answer: C
RBI mandates a minimum LCR of 100% for all banks, meaning banks must maintain high-quality liquid assets to cover net cash outflows over 30 days under stress scenarios.
Q.40Medium
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?
Answer: A
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.
