A bank processed 50,000 digital transactions in Q1 2024 out of 200,000 total transactions. In Q2, digital transactions increased by 20% while total transactions increased by 10%. What is the new percentage of digital transactions?
Answer: C
Q1: Digital = 50,000; Total = 200,000. Q2: Digital = 50,000 × 1.2 = 60,000; Total = 200,000 × 1.1 = 220,000. New percentage = (60,220000,000) × 100 = 27.27%. However, correct calculation: 60,220000,000 = 0.2727 = 27.27%. Re-checking: Actually 29.41% is derived from different base. The answer is 27.27%.
Q.62Easy
Which of the following is NOT a function of the Deposit Insurance and Credit Guarantee Corporation (DICGC) as per 2024 guidelines?
Answer: B
DICGC insures deposits but does not set monetary policy—that is the RBI's function. DICGC covers deposits up to ₹5 lakh including principal and accrued interest.
Q.63Medium
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.64Medium
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.65Medium
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.
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Q.66Medium
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.67Medium
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.68Medium
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.69Medium
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.70Hard
Under the RBI's Prompt Corrective Action (PCA) framework (2024), a bank is placed under PCA if its Capital Adequacy Ratio falls below which threshold?
Answer: C
Under the PCA framework, a bank is placed under regulatory action if its CAR falls below 9%, which is below the minimum requirement of 10.5%.
Q.71Medium
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?
If a bank's Net Interest Margin (NIM) increased from 2.8% to 3.2% year-on-year, which factors are most likely responsible?
Answer: B
NIM improves when lending rates increase (higher interest income) or deposit rates decrease (lower interest expense), or both. This widens the spread.
Q.73Hard
In 2024, the RBI introduced new guidelines for Cyber Risk Management. Banks must allocate what minimum percentage of IT budget for cybersecurity?
Answer: C
RBI guidelines recommend banks allocate at least 10% of their IT budget for cybersecurity measures and infrastructure resilience.
Q.74Easy
Bank S's Gross NPA ratio was 2.5% in March 2024 and increased to 2.8% by June 2024. If total advances were ₹1,00,000 crore in June, what was the approximate gross NPA amount?
Answer: B
Gross NPA = NPA Ratio × Total Advances = 2.8% × ₹1,00,000 crore = ₹2,800 crore.
Q.75Hard
Which of the following is a characteristic of Tier 1 capital under Basel III that distinguishes it from Tier 2 capital?
Answer: B
Tier 1 capital (Common Equity Tier 1 and Additional Tier 1) can absorb losses and is the highest quality capital. Tier 2 capital may have maturity dates and subordination features.
Q.76Medium
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.77Hard
According to RBI's 2024 guidelines, what is the primary objective of implementing the Unincorporated Non-Banking Financial Company (UNBFC) framework?
Answer: B
The UNBFC framework aims to bring informal financial service providers under regulatory oversight to protect consumers and ensure financial stability.
Q.78Medium
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.79Easy
If Bank A's Capital Adequacy Ratio (CAR) is 15.5%, what is its excess capital above the RBI's minimum requirement of 10.5%?
Answer: A
Excess capital = Current CAR - Minimum CAR = 15.5% - 10.5% = 5%
Q.80Medium
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.
