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

🔥 PLATINUM SERIES 2.0 | VOL. 219

📅 TUESDAY, 3 NOVEMBER 2026

🎯 TARGET EXAMINATIONS

IBPS PO Mains • SBI PO • Other Banking Examinations

📝 20 QUESTIONS | 20 MARKS | 15 MINUTES

📊 Basel III • Liquidity Risk • Asset-Liability Management • NPA Management • Credit Administration • Treasury • International Banking • Profitability • Insolvency • Regulatory Supervision

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SECTION I — ADVANCED BANKING INTELLIGENCE MCQs

Q1. A bank reports the following capital and risk-weighted assets:

CET1 Capital: ₹70 crore

Additional Tier 1 Capital: ₹20 crore

Tier 2 Capital: ₹30 crore

Risk-Weighted Assets: ₹1,000 crore

Assuming all stated capital qualifies for regulatory recognition, what is the bank's total Capital to Risk-Weighted Assets Ratio (CRAR):

A. 7%

B. 9%

C. 10%

D. 12%

E. 15%

Q2. A bank has eligible High Quality Liquid Assets (HQLA) of ₹720 crore and total net cash outflows of ₹600 crore over the prescribed 30-day stress period. If the bank's HQLA falls by ₹120 crore while net cash outflows remain unchanged, what will its revised Liquidity Coverage Ratio (LCR) be:

A. 80%

B. 90%

C. 100%

D. 110%

E. 120%

Q3. A bank reports Available Stable Funding of ₹1,080 crore and Required Stable Funding of ₹900 crore. Which interpretation of its Net Stable Funding Ratio (NSFR) is correct:

A. 83.33%, indicating a shortfall against the 100% minimum.

B. 90%, indicating a funding deficit.

C. 100%, exactly meeting the minimum standard.

D. 110%, indicating a stable funding surplus of 10% over required stable funding.

E. 120%, indicating that all liabilities are long-term.

Q4. A bank's ALM statement shows interest-sensitive assets of ₹500 crore and interest-sensitive liabilities of ₹680 crore in a particular repricing bucket. Assuming a parallel increase in interest rates and that liabilities reprice faster than assets, which outcome is most likely:

A. Positive repricing gap of ₹180 crore and automatic profit growth.

B. Negative repricing gap of ₹180 crore, potentially putting downward pressure on net interest income.

C. Zero repricing gap because both assets and liabilities are interest-sensitive.

D. Positive repricing gap of ₹1,180 crore.

E. Elimination of all liquidity and market risks.

Q5. A term-loan instalment remains overdue for 95 days. The account is not covered by any applicable exception to the general prudential norms. What is the appropriate asset classification:

A. Standard asset.

B. SMA-0.

C. SMA-1.

D. SMA-2.

E. Non-Performing Asset (NPA).

Q6. A secured creditor issues a demand notice under Section 13(2) of the SARFAESI Act, 2002. The borrower does not discharge the liability within the statutory period. Subject to applicable legal and procedural requirements, what is the prescribed notice period before measures under Section 13(4) may be considered:

A. 15 days.

B. 30 days.

C. 60 days.

D. 90 days.

E. 120 days.

Q7. A bank finances a company's inventory. The borrower retains physical possession of the stock, while the bank obtains a charge over it. Which security arrangement is most appropriate:

A. Pledge.

B. Mortgage.

C. Assignment of the borrower's entire business.

D. Hypothecation.

E. Transfer of ownership to the bank.

Q8. Three banks jointly finance a large infrastructure project. They agree on a common appraisal process, coordinated documentation, defined lending shares and joint monitoring. What is the most appropriate description of this arrangement:

A. Uncoordinated multiple banking.

B. Consortium lending.

C. Bill discounting.

D. Factoring.

E. Retail loan securitisation.

Q9. A project-finance agreement requires all project receipts to be deposited into a designated account. Operating expenses are paid first, followed by debt servicing and reserve funding, with residual cash distributed only afterwards. Which mechanism is being used:

A. Nostro arrangement.

B. Vostro arrangement.

C. Escrow arrangement with a payment waterfall.

D. General suspense account.

E. Cash credit limit.

Q10. A bank issues an unconditional demand guarantee. The beneficiary submits a demand complying with its terms, but the applicant disputes the quality of the underlying work. What is the general position of the issuing bank:

A. It should ordinarily honour a complying demand, subject to the guarantee's terms and recognised legal exceptions.

B. It must reject the demand whenever the applicant disputes the underlying contract.

C. It must wait until the commercial dispute is finally decided by a court.

D. It must obtain fresh consent from the applicant in every case.

E. It must automatically convert the guarantee into a funded loan.

Q11. An Indian bank maintains a US-dollar account with a correspondent bank in New York. The account is used to settle international transactions. From the Indian bank's perspective, the account is called:

A. Vostro account.

B. Loro account.

C. Escrow account.

D. Suspense account.

E. Nostro account.

Q12. A manufacturer holds a bill of exchange payable after 90 days. To obtain funds immediately, it sells the bill to a bank after deduction of the applicable discount. The bank collects the amount at maturity. Which facility has the manufacturer used:

A. Bill discounting.

B. Loan syndication.

C. Debt-equity conversion.

D. Capitalisation of reserves.

E. Securitisation of retail loans.

Q13. A bank calculates its Marginal Cost of Funds Based Lending Rate (MCLR). Which set contains the principal components used in determining MCLR:

A. Dividend payout, capital gains and stock market returns.

B. Property valuation, collateral value and borrower turnover alone.

C. Fiscal deficit, foreign-exchange reserves and GDP growth alone.

D. Marginal cost of funds, negative carry on CRR, operating costs and tenor premium.

E. Average savings deposit rate alone.

Q14. A bank extends a floating-rate retail loan governed by the applicable external benchmark-based lending framework. The bank proposes to reset the interest rate only once every six months. Which statement is correct under the established RBI framework:

A. Every floating-rate loan must be reset only once a year.

B. The interest rate is generally required to be reset at least once in three months.

C. The bank may change the benchmark without informing the borrower.

D. External benchmark-linked loans cannot have periodic resets.

E. The bank can reset the rate only with the borrower's consent at every review.

Q15. A bank reports the following annual figures:

Interest income: ₹960 crore

Interest expenditure: ₹720 crore

Average interest-earning assets: ₹6,000 crore

Calculate its Net Interest Margin (NIM):

A. 2%

B. 3%

C. 4%

D. 5%

E. 6%

Q16. A bank has total deposits of ₹3,000 crore, comprising current account deposits of ₹450 crore and savings bank deposits of ₹900 crore. What is its CASA ratio:

A. 30%

B. 35%

C. 40%

D. 45%

E. 50%

Q17. A bank has a negative repricing gap in a particular ALM time bucket. Interest-sensitive liabilities exceed interest-sensitive assets by ₹250 crore. If interest rates rise and liabilities reprice faster than assets, which conclusion is most appropriate:

A. Net interest income must increase by ₹250 crore.

B. The bank's CRAR automatically increases.

C. The bank's entire deposit base becomes interest-free.

D. The bank may experience pressure on net interest income because funding costs can rise faster than asset yields.

E. The bank's liquidity risk automatically disappears.

Q18. A corporate debtor is admitted into the Corporate Insolvency Resolution Process (CIRP). During the Section 14 moratorium, a secured creditor proposes to enforce its security interest against the corporate debtor's assets independently. Which statement is generally correct:

A. Every secured creditor is free to enforce its security during the moratorium.

B. The moratorium permanently extinguishes the creditor's claim.

C. The creditor automatically acquires ownership of the corporate debtor's assets.

D. Enforcement is permitted whenever the borrower disputes the debt.

E. Enforcement of security interests against the corporate debtor's assets is generally prohibited during the moratorium, subject to the Code's provisions and exceptions.

Q19. Under RBI's Commercial Banks – Miscellaneous Supervisory Directions, 2026, a scheduled commercial bank is being assessed under the Prompt Corrective Action (PCA) framework. Which set correctly identifies the three key monitoring areas:

A. Profitability, branch expansion and deposit growth.

B. Capital, asset quality and leverage.

C. Customer complaints, digital transactions and employee productivity.

D. Credit growth, deposit growth and foreign-exchange earnings.

E. Profitability, liquidity and market share.

Q20. A bank reports total deposits of ₹2,400 crore and total advances of ₹1,800 crore. What is its Credit-Deposit Ratio:

A. 60%.

B. 65%.

C. 70%.

D. 75%.

E. 80%.

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SECTION II — ANSWER KEY

Q1.D

Q2.C

Q3.D

Q4.B

Q5.E

Q6.C

Q7.D

Q8.B

Q9.C

Q10.A

Q11.E

Q12.A

Q13.D

Q14.B

Q15.C

Q16.D

Q17.D

Q18.E

Q19.B

Q20.D

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SECTION III — DETAILED EXPLANATIONS

Q1. CRAR — Option D

Total regulatory capital = CET1 + Additional Tier 1 + Tier 2

= ₹70 crore + ₹20 crore + ₹30 crore

= ₹120 crore.

CRAR = Total Regulatory Capital / Risk-Weighted Assets × 100

= 120 / 1,000 × 100

= 12%

CET1 and Additional Tier 1 form part of Tier 1 capital. Eligible Tier 2 capital is included in total regulatory capital.

Q2. LCR — Option C

Revised HQLA = ₹720 crore − ₹120 crore = ₹600 crore.

LCR = HQLA / Total Net Cash Outflows × 100

= 600 / 600 × 100

= 100%

LCR measures a bank's capacity to withstand a prescribed 30-day liquidity stress scenario. A 100% ratio meets the Basel III minimum standard, subject to applicable regulatory requirements.

Q3. NSFR — Option D

NSFR = Available Stable Funding / Required Stable Funding × 100

= 1,080 / 900 × 100

= 120%

The ratio is 20 percentage points above the 100% minimum standard. It promotes stable funding and reduces excessive reliance on short-term wholesale funding.

Q4. Asset-Liability Management — Option B

Repricing gap = Interest-Sensitive Assets − Interest-Sensitive Liabilities

= ₹500 crore − ₹680 crore

= −₹180 crore

The negative gap means interest-sensitive liabilities exceed interest-sensitive assets in the specified bucket.

If liabilities reprice faster than assets when interest rates rise, funding costs may increase more quickly than interest income, putting pressure on net interest income.

Q5. NPA Classification — Option E

Under the general prudential norms, a term-loan account is ordinarily classified as an NPA when principal or interest remains overdue for more than 90 days.

- SMA-0: Up to 30 days overdue.

- SMA-1: More than 30 days and up to 60 days overdue.

- SMA-2: More than 60 days and up to 90 days overdue.

- NPA: More than 90 days overdue.

Specific agricultural lending norms and other applicable exceptions must be considered where relevant.

Q6. SARFAESI Act — Option C

Section 13(2) of the SARFAESI Act, 2002 provides a 60-day demand notice period.

Q7. Hypothecation — Option D

Hypothecation creates a charge over movable assets without transferring possession to the lender.

Examples include stock, inventory, raw materials and finished goods.

- Pledge: Possession is transferred to the creditor.

- Hypothecation: Possession generally remains with the borrower.

- Mortgage: Security interest over immovable property.

Q8. Consortium Lending — Option B

Consortium lending involves multiple banks jointly financing a borrower or project under a coordinated financing arrangement.

Key features include shared exposure, coordinated appraisal, agreed documentation and monitoring.

It differs from multiple banking, where a borrower obtains finance from several banks without necessarily having the same degree of coordinated arrangements.

Q9. Escrow Mechanism — Option C

An escrow arrangement channels specified receipts into a designated account and applies them according to contractual conditions.

Q10. Bank Guarantee — Option A

An unconditional demand guarantee is generally independent of the underlying commercial contract.

If the beneficiary submits a demand complying with the guarantee's terms, the issuing bank is ordinarily required to honour it, subject to recognised legal exceptions.

The applicant's disagreement with the underlying contract does not, by itself, automatically invalidate a complying demand.

Q11. Nostro Account — Option E

Nostro means "our account with you".

Q12. Bill Discounting — Option A

Bill discounting provides immediate funds against a bill of exchange before its maturity.

The bank deducts the applicable discount and collects the amount from the drawee at maturity, subject to the transaction's terms.

It is an important short-term working-capital financing mechanism.

Q13. MCLR — Option D

MCLR stands for Marginal Cost of Funds Based Lending Rate.

Its principal components are:

1. Marginal cost of funds.

2. Negative carry on account of CRR.

3. Operating costs.

4. Tenor premium.

The applicable spread is added to the benchmark to determine the lending rate.

Q14. External Benchmark-Based Lending Rate — Option B

Under the established RBI framework, specified floating-rate retail and MSME loans are linked to external benchmarks.

The interest rate is generally required to be reset at least once in three months under the applicable framework.

Q15. NIM — Option C

NIM = (Interest Income − Interest Expenditure) / Average Interest-Earning Assets × 100

= (₹960 crore − ₹720 crore) / ₹6,000 crore × 100

= ₹240 crore / ₹6,000 crore × 100

= 4%

Q16. CASA Ratio — Option D

CASA Ratio = (Current Account Deposits + Savings Bank Deposits) / Total Deposits × 100

= (₹450 crore + ₹900 crore) / ₹3,000 crore × 100

= ₹1,350 crore / ₹3,000 crore × 100

= 45%

Q17. Negative Repricing Gap — Option D

A negative repricing gap occurs when interest-sensitive liabilities exceed interest-sensitive assets in a particular time bucket.

If rates rise and liabilities reprice faster than assets, the bank's cost of funds may rise more quickly than its interest income.

The actual effect depends on repricing schedules, customer behaviour and the bank's interest-rate risk management.

Q18. IBC Moratorium — Option E

Section 14 of the Insolvency and Bankruptcy Code, 2016 provides for a moratorium after admission of CIRP.

The moratorium generally restricts specified proceedings and enforcement of security interests against the corporate debtor's assets, subject to the Code's provisions and exceptions.

Its objective is to preserve the corporate debtor's assets and facilitate an orderly resolution process.

Q19. PCA Framework — Option B

Q20. Credit-Deposit Ratio — Option D

🔥 IBR PLATINUM CHALLENGE

Attempt all 20 questions in 15 minutes without referring to the answer key.

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