Examine the data: Bank X's Current Ratio (liquid assets to demand deposits) is 45%, while regulatory requirement is 80%. This indicates:
Answer: B
45% Current Ratio against 80% requirement indicates the bank is deficient in liquid assets relative to demand deposits, posing liquidity risk
Q.462Hard
A bank's Commercial Advances showed CAR of 18.5%, Agricultural Advances CAR of 15.2%, and Consumer Advances CAR of 11.8%. Which segment carries the highest credit risk as per risk weighting?
Answer: A
Higher CAR for a segment indicates higher risk weights assigned. Commercial Advances at 18.5% CAR carries highest risk weighting under Basel III norms
Q.463Hard
Analyze quarterly trends: Bank Y's Net Interest Income grew 8% while Total Assets grew 12% QoQ. This implies:
Answer: B
When assets grow faster (12%) than NII (8%), it indicates NIM is compressing as the bank is earning lower interest on incremental assets
Q.464Hard
Under RBI's Prompt Corrective Action (PCA) framework 2024, at what Capital Adequacy Ratio threshold does a bank enter PCA supervision?
Answer: B
Under RBI's PCA framework, SCBs with CAR below 8.5% (along with other indicators) trigger supervisory action and corrective measures
Q.465Hard
A bank's Statutory Liquidity Ratio (SLR) requirement is 18%. If deposits are ₹10,00,000 crore and current SLR maintenance is ₹1,95,000 crore, calculate the deficit/surplus:
Which regulatory body in India is responsible for issuing Unified Payment Interface (UPI) guidelines and overseeing digital banking infrastructure?
Answer: B
The Reserve Bank of India (RBI) is the primary regulator responsible for UPI guidelines, digital banking infrastructure, and payment system oversight
Q.467Hard
Analyze the complex scenario: Bank Z has CAR of 16%, NPA ratio of 6.5%, and ROA of 0.8%. It wants to increase lending by ₹50,000 crore. What is the primary constraint?
Answer: B
With 16% CAR (closer to Basel III minimum), and planned lending increase, the bank's capital adequacy becomes the binding constraint for expansion
Q.468Medium
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.469Easy
Which of the following is NOT a component of Basel III capital framework adopted by RBI?
Answer: C
Basel III framework comprises CET1, Tier 1, and Tier 2 capital. Tier 3 Capital was part of Basel II but has been eliminated in Basel III. RBI has adopted Basel III norms.
Q.470Easy
A bank's Asset Quality Ratio improved from 2.1% to 1.8% in FY 2024. What does this indicate?
Answer: B
Asset Quality Ratio (NPA ratio) measures gross NPAs as percentage of gross advances. A decrease from 2.1% to 1.8% indicates improvement in overall loan quality and reduced stressed assets.
Q.471Easy
Bank B's Cost-to-Income Ratio decreased from 48% to 44% between Q2 and Q3 2024. What is the implication for operational efficiency?
Answer: B
Cost-to-Income Ratio shows operating costs as percentage of operating income. A decrease from 48% to 44% indicates that the bank is spending less to generate each rupee of income, showing improved operational efficiency.
Q.472Medium
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.473Medium
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.474Medium
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.475Easy
Which regulatory body is responsible for regulating Cooperative Banks in India?
Answer: B
Cooperative Banks are regulated jointly by RBI (for scheduled cooperative banks) and respective State Governments under dual regulatory framework in India.
Q.476Medium
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.477Hard
Bank E's Return on Equity (ROE) decreased from 16.2% to 14.8% in Q3 2024 despite profit increase. What is the most likely reason?
Answer: B
ROE = Net Profit / Shareholders' Equity. A decrease in ROE despite profit increase suggests equity capital increased (through capital infusion or retained earnings), diluting the ROE metric.
Q.478Medium
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.479Medium
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.
Q.480Easy
What is the primary objective of Basel III framework implementation in Indian banking?
Answer: B
Basel III aims to strengthen bank resilience to financial stress through enhanced capital requirements, improved risk management, and better liquidity standards, thereby enhancing overall financial stability.
