Bank T's Return on Assets (ROA) is 1.2% and its Equity Multiplier is 12x. What is the bank's Return on Equity (ROE)?
Answer: B
ROE = ROA × Equity Multiplier = 1.2% × 12 = 14.4%. This relationship is derived from the DuPont analysis.
Q.42Medium
If the Reserve Ratio (RRR) is reduced by the RBI, which immediate effect is most likely on the banking system?
Answer: B
A reduction in the Reserve Ratio means banks need to hold less in reserves, freeing up capital for lending, which increases money supply and lending capacity.
Q.43Medium
Which of the following is NOT a component of Tier 1 Capital under Basel III norms?
Answer: C
Subordinated Debt is part of Tier 2 Capital, not Tier 1. Tier 1 comprises CET1 and AT1 components.
Q.44Medium
Under the RBI's latest guidelines (2024), what is the maximum Loan-to-Value (LTV) ratio for residential property loans?
Answer: A
RBI's 2024 guidelines stipulate a maximum LTV of 80% for residential property loans to manage credit risk.
Q.45Medium
Which ratio measures a bank's ability to meet its short-term obligations from liquid assets?
Answer: B
Liquidity Ratio measures short-term solvency and ability to meet immediate obligations using liquid assets.
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Q.46Medium
Bank E reports a Deposit Growth Rate of 12% YoY and current deposits of ₹80,000 crore. What were deposits in the previous year?
Answer: A
If growth is 12%, current deposits = previous deposits × 1.12. 80,000 = previous × 1.12. Previous = 80,1000.12 ≈ ₹71,428 crore
Q.47Medium
According to Basel III, what is the minimum Common Equity Tier 1 (CET1) capital requirement for banks?
Answer: A
Basel III mandates a minimum CET1 ratio of 4.5% of Risk-Weighted Assets (RWA).
Q.48Medium
Bank F's Interest Income is ₹5,000 crore and Total Income is ₹7,500 crore. What is its Interest Income Ratio?
Answer: B
Interest Income Ratio = (Interest Income / Total Income) × 100 = (5,7000,500) × 100 = 66.67%
Q.49Medium
Which of the following comes under Statutory Liquidity Ratio (SLR) compliance as per RBI norms?
Answer: A
SLR compliance includes Gold, Cash, and Approved Government Securities as per RBI's Liquidity Coverage Ratio framework.
Q.50Medium
Bank G's Provision Coverage Ratio (PCR) is 68% in March 2024. If NPA is ₹500 crore, what is the provision amount?
