INDIAN BANKING RADAR (IBR) - IBPS PO MAINS — BANKING INTELLIGENCE MOCK

🔥 PLATINUM SERIES 2.0 | VOL. 215

📅 FRIDAY, 30 OCTOBER 2026

🎯 TARGET EXAMINATIONS

IBPS PO Mains • SBI PO • Other Banking Examinations

📝 QUESTIONS: 20

🎯 MAXIMUM MARKS: 20

⏱️ SUGGESTED TIME: 15 MINUTES

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BANKING INTELLIGENCE MOCK — 20 MCQs

Q1. A commercial bank has ANBC of ₹20,000 crore and credit equivalent of off-balance-sheet exposures of ₹22,000 crore. Assuming the general priority sector lending target of 40% applies, what is the minimum overall target based on the prescribed higher base?

A. ₹8,000 crore

B. ₹8,800 crore

C. ₹9,200 crore

D. ₹10,000 crore

E. ₹11,000 crore

Q2. A bank faces difficulty raising funds at reasonable rates during a period of market stress, even though some of its assets remain sound. Which risk is most directly illustrated?

A. Operational risk

B. Settlement risk

C. Foreign exchange risk

D. Funding liquidity risk

E. Reputational risk

Q3. When a bank's lending rates do not immediately reflect a change in the policy rate, which factor can explain the delay?

A. Differences in the repricing schedules of loans and liabilities

B. Automatic elimination of interest-rate risk

C. Immediate maturity of every deposit

D. Complete absence of market competition

E. Mandatory conversion of all loans into fixed-rate loans

Q4. Which statement correctly distinguishes the leverage ratio from the capital adequacy ratio?

A. Both ratios measure only credit losses on agricultural loans.

B. The leverage ratio measures only liquidity, while CRAR measures profitability.

C. The leverage ratio is a non-risk-based capital measure, whereas CRAR relates capital to risk-weighted assets.

D. CRAR excludes regulatory capital from its calculation.

E. The leverage ratio is calculated by dividing deposits by branch numbers.

Q5. Which statement about NEFT is correct?

A. It is exclusively a paper-based transfer system.

B. It can be used only during normal branch working hours.

C. Every NEFT transaction must be settled individually in real time.

D. It is restricted to transfers between accounts held at the same bank.

E. It operates through a deferred net settlement mechanism in batches and is available round the clock.

Q6. What is the principal purpose of Priority Sector Lending Certificates (PSLCs)?

A. To transfer ownership of a bank's branches

B. To enable eligible banks to meet priority sector lending targets through the purchase and sale of certificates without transferring the underlying loan assets

C. To insure deposits above the prescribed DICGC limit

D. To replace statutory capital requirements

E. To provide an unconditional government guarantee for every priority sector loan

Q7. What does the Liquidity Coverage Ratio (LCR) primarily seek to ensure?

A. That every loan is fully collateralised

B. That a bank earns a minimum return on equity

C. That all deposits carry identical interest rates

D. That a bank holds sufficient high-quality liquid assets to withstand a prescribed short-term liquidity stress scenario

E. That a bank maintains zero non-performing assets

Q8. Which feature distinguishes RTGS from NEFT?

A. RTGS settles qualifying transactions individually in real time, whereas NEFT uses batch-based settlement

B. RTGS is available only for international remittances

C. NEFT can be used only by corporate customers

D. RTGS does not transfer funds between banks

E. NEFT is exclusively a cheque-clearing mechanism

Q9. A borrower obtains a business loan by declaring that the funds will be used for purchasing machinery but instead diverts the funds to an unrelated purpose. Which banking concern is most directly involved?

A. Currency risk

B. Reinvestment risk

C. Diversion of funds and possible misuse of credit facilities

D. Market-price risk alone

E. Interest-rate transmission

Q10. Under the Reserve Bank–Integrated Ombudsman Scheme, 2026, which statement correctly describes the prescribed compensation limits?

A. All complaints automatically qualify for compensation of ₹30 lakh.

B. Compensation is restricted to ₹5 lakh for every type of loss.

C. Compensation for consequential loss is capped at ₹3 lakh, with no separate provision for other specified harm.

D. The Ombudsman can award unlimited compensation in every complaint.

E. Compensation may be up to ₹30 lakh for consequential loss and, separately, up to ₹3 lakh for loss of time, expenses, harassment or mental anguish, subject to the Scheme.

Q11. What is the primary purpose of restructuring a viable borrower's loan under applicable regulatory requirements?

A. To automatically waive the entire outstanding loan

B. To modify the facility's terms, such as repayment schedule, where permitted, to address the borrower's financial difficulties

C. To convert every stressed account into a standard asset automatically

D. To eliminate the bank's requirement to assess repayment capacity

E. To remove all credit information relating to the borrower

Q12. Under the Insolvency and Bankruptcy Code, 2016, what is the principal objective of the corporate insolvency resolution process?

A. To guarantee repayment of every creditor in full

B. To provide automatic immunity from all legal proceedings

C. To transfer every corporate debtor to the government

D. To facilitate time-bound resolution of insolvency, with liquidation possible where resolution does not succeed under the Code

E. To replace the Reserve Bank's monetary policy framework

Q13. An Indian importer agrees today with a bank to purchase US dollars at a fixed exchange rate for delivery on a specified future date. Which instrument is being used?

A. Foreign exchange forward contract

B. Overnight call money loan

C. Treasury bill

D. Cash reserve instrument

E. Certificate of deposit

Q14. What is the principal purpose of the Central Repository of Information on Large Credits (CRILC)?

A. To calculate the statutory liquidity ratio of every bank

B. To insure small savings accounts

C. To collect credit information on large exposures to help lenders and the Reserve Bank monitor credit risk and stress

D. To settle retail digital payments

E. To issue currency notes to the public

Q15. An individual maintains eligible deposits of ₹4 lakh in Bank A and ₹3 lakh in Bank B, in the same right and capacity within each bank. Assuming both banks are DICGC-insured and the stated balances include principal and interest, what is the maximum amount covered across the two banks?

A. ₹5 lakh in total

B. ₹4 lakh in total

C. ₹3 lakh in total

D. ₹10 lakh in total

E. ₹7 lakh in total

Q16. What is the primary role of the Trade Receivables Discounting System (TReDS)?

A. To insure export cargo against physical damage

B. To facilitate financing of eligible trade receivables, particularly those of micro, small and medium enterprises, through a digital platform

C. To determine the repo rate

D. To issue government currency notes

E. To replace all bank guarantees with equity shares

Q17. The Kisan Credit Card (KCC) scheme primarily aims to:

A. Provide housing loans exclusively to urban salaried employees

B. Finance only the purchase of tractors above a prescribed value

C. Replace all agricultural insurance schemes

D. Provide timely and simplified credit support for eligible agricultural and allied activities

E. Provide unsecured credit without any eligibility or assessment requirements

Q18. A bank funds long-term assets largely through short-term deposits. If depositors withdraw funds unexpectedly, the bank may be unable to meet its obligations promptly. This is an example of:

A. Liquidity risk arising from maturity mismatch

B. Equity-price risk

C. Foreign exchange translation risk alone

D. Sovereign default risk alone

E. Technology obsolescence risk

Q19. Which statement best describes risk-based supervision of banks?

A. Every bank is supervised only through its annual profit figure.

B. Supervision is limited to verifying the number of branches.

C. Supervisory intensity and attention are guided by the institution's risk profile and potential impact, alongside applicable regulatory requirements.

D. Banks with higher risks are exempt from inspections.

E. Risk-based supervision eliminates the need for internal controls.

Q20. Which statement correctly describes NABARD's role in India's rural financial system?

A. It is the sole authority responsible for setting the policy repo rate.

B. It exclusively insures all commercial bank deposits.

C. It operates as the country's only stock exchange.

D. It is responsible for issuing all Indian currency notes.

E. It supports agriculture and rural development through development, refinance and related functions, and has a supervisory role for specified cooperative banks and regional rural banks under applicable arrangements.

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📘 ANSWER KEY

Q1.B

Q2.D

Q3.A

Q4.C

Q5.E

Q6.B

Q7.D

Q8.A

Q9.C

Q10.E

Q11.B

Q12.D

Q13.A

Q14.C

Q15.E

Q16.B

Q17.D

Q18.A

Q19.C

Q20.E

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📚 DETAILED EXPLANATIONS & LEARNING POINTS

Q1. Correct Answer: B — ₹8,800 crore

The general PSL target for applicable domestic commercial banks is 40% of the higher of ANBC or the credit equivalent of off-balance-sheet exposures.

Higher base = ₹22,000 crore.

Target = 40% × ₹22,000 crore = ₹8,800 crore.

Exam tip: Read whether the question asks for the higher base, a specific sub-target or a bank-category-specific target. Different categories of banks may have different requirements.

Q2. Correct Answer: D — Funding liquidity risk

Funding liquidity risk arises when a bank cannot obtain sufficient funds to meet its payment obligations when due, or can do so only at an unacceptably high cost.

Remember: Liquidity risk concerns the availability of funds; solvency concerns whether the institution's assets and capital can support its liabilities.

Q3. Correct Answer: A — Repricing schedules

Interest-rate changes do not necessarily pass through immediately because deposits and loans may reprice at different times. Contractual terms, benchmark arrangements, funding costs and competitive conditions also affect transmission.

Learning point: Repricing mismatch can affect a bank's net interest income and economic value.

Q4. Correct Answer: C — Non-risk-based versus risk-weighted capital

CRAR compares eligible regulatory capital with risk-weighted assets. The leverage ratio provides a complementary, non-risk-based measure of capital relative to an exposure measure.

Exam trap: A bank's CRAR may appear strong while leverage and concentration risks still require attention.

Q5. Correct Answer: E — NEFT batch settlement

NEFT processes transactions through deferred net settlement in batches and is available 24×7. It does not require every transaction to be settled individually in real time.

Differentiate: NEFT uses batch-based settlement; RTGS settles qualifying transactions individually in real time.

Q6. Correct Answer: B — Priority Sector Lending Certificates

PSLCs allow eligible banks to purchase or sell certificates to manage priority sector target achievement. The underlying loan assets are not transferred merely because a PSLC is traded.

Remember: A PSLC is a mechanism for target achievement, not a deposit-insurance product or a substitute for credit appraisal.

Q7. Correct Answer: D — Short-term liquidity resilience

The LCR requires banks to maintain sufficient high-quality liquid assets to cover prescribed net cash outflows over a 30-calendar-day stress period. The general minimum is 100%, subject to applicable regulatory provisions.

Formula:

LCR = Stock of high-quality liquid assets ÷ Total net cash outflows over the next 30 calendar days × 100.

Q8. Correct Answer: A — Real-time individual settlement

RTGS stands for Real Time Gross Settlement. Qualifying transactions are settled individually in real time. NEFT uses a batch-based settlement mechanism.

Exam tip: Do not confuse real-time settlement with the operating hours of a payment system.

Q9. Correct Answer: C — Diversion of funds

Using a loan for a purpose materially different from the sanctioned purpose may indicate diversion or misuse of funds. Banks must examine the facts, documentation and applicable prudential and legal requirements before classifying the conduct.

Learning point: End-use monitoring is an important component of credit risk management.

Q10. Correct Answer: E — Ombudsman compensation limits

The Reserve Bank–Integrated Ombudsman Scheme, 2026 came into effect on 1 July 2026. It provides for compensation of up to ₹30 lakh for consequential loss and, separately, up to ₹3 lakh for loss of time, expenses, harassment or mental anguish, subject to the Scheme's conditions. These are maximum limits, not automatic entitlements.

Exam trap: Distinguish the amount involved in a complaint from the compensation that may be awarded.

Q11. Correct Answer: B — Modification of loan terms

Restructuring may involve changes to repayment schedules or other facility terms, where permitted. It does not automatically waive the debt or guarantee standard-asset classification.

Learning point: Regulatory asset classification and provisioning must follow the applicable norms.

Q12. Correct Answer: D — Insolvency resolution

The IBC provides a framework for time-bound insolvency resolution. If resolution is unsuccessful or the statutory conditions for liquidation are met, liquidation may follow under the Code.

Remember: Resolution seeks to address insolvency; it does not guarantee full repayment to every creditor.

Q13. Correct Answer: A — Foreign exchange forward

A forward contract fixes an exchange rate today for an exchange of currencies on an agreed future date.

Use case: Importers and exporters may use eligible foreign exchange contracts to manage currency risk, subject to applicable rules and documentation.

Q14. Correct Answer: C — Large-credit information

CRILC supports the collection and sharing of information on large credit exposures, helping lenders and the Reserve Bank identify borrower stress and monitor credit risk.

Exam tip: CRILC is a credit-information and supervisory mechanism, not a payment settlement system.

Q15. Correct Answer: E — ₹7 lakh

DICGC insurance coverage is generally up to ₹5 lakh per depositor per insured bank, including principal and interest, in the same right and capacity.

- Bank A: ₹4 lakh eligible deposit → ₹4 lakh covered.

- Bank B: ₹3 lakh eligible deposit → ₹3 lakh covered.

- Total coverage across the two banks = ₹7 lakh.

The limit applies separately to each insured bank; deposits in different branches of the same bank are aggregated for the limit.

Exam trap: Do not apply the ₹5 lakh limit to the depositor's combined deposits across different insured banks.

Q16. Correct Answer: B — Trade receivables financing

Q17. Correct Answer: D — Agricultural and allied credit

Q18. Correct Answer: A — Liquidity risk from maturity mismatch

Q19. Correct Answer: C — Risk-based supervision

Q20. Correct Answer: E — NABARD's development role

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