Bank PO / Clerk / RBI — MCQ Practice Questions & Answers

Question 1

Which committee's recommendations led to the implementation of Basel III norms in Indian banking?

Accepted Answer

Correct answer: D. Basel Committee on Banking Supervision — Basel III norms were developed by the Basel Committee on Banking Supervision and adopted globally to strengthen banking sector resilience post-2008 financial crisis.

Answer

A. Narasimham Committee

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B. Patel Committee

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C. Chakrabarty Committee

Question 2

Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required for banks?

Accepted Answer

Correct answer: A. 4.5% — Basel III mandates a minimum CET1 ratio of 4.5% of risk-weighted assets, along with additional capital buffers for systemically important banks.

Answer

B. 5.5%

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C. 6.5%

Answer

D. 7.5%

Question 3

What is the concept of 'Too Big to Fail' in banking regulation?

Accepted Answer

Correct answer: B. Some banks are systemically important and their failure could destabilize the entire financial system — The 'Too Big to Fail' concept recognizes that systemically important banks require stricter regulation and capital requirements because their failure could trigger a financial crisis.

Answer

A. Large banks always make profits

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C. Only large banks should be regulated

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D. Large banks should not be subject to stress testing

Question 4

In a situation where a bank's Core Banking Solution (CBS) faces a system failure, which RBI regulation requires it to have a business continuity plan?

Accepted Answer

Correct answer: D. All of the above — RBI's multiple guidelines including IT Risk Management and Operational Risk frameworks mandate banks to have robust business continuity and disaster recovery plans to ensure service continuity.

Answer

A. Master Direction on Payment Systems

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B. Operational Risk Management Framework

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C. IT Risk Management Guidelines

Question 5

What is the Standing Liquidity Facility (SLF) introduced by RBI?

Accepted Answer

Correct answer: A. A permanent lending facility for scheduled banks to borrow funds at specified rates — SLF is a standing facility introduced by RBI allowing scheduled banks to borrow funds against government securities, providing liquidity at a specified spread over the policy rate.

Answer

B. A deposit scheme for retail customers

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C. A government borrowing mechanism

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D. A credit rating system for NBFCs

Question 6

Under the RBI's regulatory framework, what is the maximum loan amount that comes under Priority Sector Lending (PSL)?

Accepted Answer

Correct answer: B. Rs. 10 lakh for agriculture, Rs. 1 crore for micro-enterprises — RBI guidelines specify Rs. 10 lakh limit for agriculture sector and Rs. 1 crore for micro-enterprises under Priority Sector Lending (as of 2024).

Answer

A. Rs. 5 lakh for agriculture, Rs. 10 lakh for micro-enterprises

Answer

C. Rs. 20 lakh for agriculture, Rs. 2 crore for micro-enterprises

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D. No maximum limit, it depends on bank discretion

Question 7

Which of the following best describes 'Securitization' in banking?

Accepted Answer

Correct answer: A. Converting illiquid assets into tradable securities backed by cash flows — Securitization is the process of converting illiquid assets (like loans) into tradable securities that are backed by the underlying cash flows of those assets.

Answer

B. A method of encrypting bank data

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C. Insurance against operational risks

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D. A process of merging two banks

Question 8

Under Basel III, what is the minimum Common Equity Tier 1 (CET1) capital ratio required?

Accepted Answer

Correct answer: A. 4.5% — Basel III requires a minimum CET1 capital ratio of 4.5%, with an additional capital conservation buffer of 2.5%, bringing the total to 7%.

Answer

B. 6%

Answer

C. 8%

Answer

D. 10%

Bank PO / Clerk / RBI - MCQ Practice Questions