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

🔥 PLATINUM SERIES 2.0 | VOL. 211

 📅 MONDAY, 26 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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 Q1. A bank's Common Equity Tier 1 (CET1) capital is ₹480 crore, Additional Tier 1 capital is ₹120 crore, and risk-weighted assets are ₹6,000 crore. What is its CET1 capital ratio:

A. 10%

B. 6%

C. 8%

D. 12%

E. 15%

Q2. A borrower has failed to pay a term-loan instalment for 45 days. Assuming the amount remains continuously overdue and standard RBI prudential norms apply, which Special Mention Account (SMA) classification is generally applicable:

A. SMA-1

B. SMA-0

C. SMA-2

D. NPA in every case

E. Written-off account

Q3. Under the RBI's revised investment portfolio framework for commercial banks, which category is a subcategory of Fair Value through Profit and Loss (FVTPL):

A. Held to Maturity (HTM)

B. Available for Sale (AFS)

C. Statutory Liquidity Ratio (SLR)

D. Investment Reserve Account

E. Held for Trading (HFT)

Q4. A bank grants a loan against goods stored in a warehouse. Which factor is most relevant when assessing the goods as security for the facility:

A. The borrower's residential address alone

B. The existence, ownership, quality and marketability of the goods

C. The number of savings accounts maintained by the borrower

D. The bank's dividend payout ratio

E. The maturity date of unrelated government securities

Q5. Under the Basel III framework, what is the primary purpose of the Capital Conservation Buffer (CCB):

A. To replace the requirement to maintain regulatory capital

B. To guarantee a fixed return on equity investments

C. To eliminate the need for credit appraisal

D. To provide an additional capital cushion to absorb losses during periods of stress

E. To replace all liquidity-risk management requirements

Q6. A borrower's current assets are ₹240 lakh, inventory is ₹80 lakh, and current liabilities are ₹160 lakh. What is the quick ratio, excluding inventory and using total current liabilities as the denominator:

A. 2.0:1

B. 1.0:1

C. 1.5:1

D. 0.75:1

E. 0.5:1

Q7. A bank has eligible regulatory capital of ₹720 crore and risk-weighted assets of ₹6,000 crore. If risk-weighted assets increase by ₹1,200 crore while regulatory capital remains unchanged, what will be the revised Capital Adequacy Ratio (CAR):

A. 12%

B. 11%

C. 9%

D. 10%

E. 8%

Q8. A bank discovers that an MSME borrower has sold a substantial portion of the inventory declared in its stock statements, but the sale proceeds have not been credited to the cash-credit account. What is the most appropriate immediate response:

A. Verify the stock position, investigate the non-credit of proceeds, reassess drawing power and examine possible diversion of funds

B. Continue permitting drawings without further verification

C. Automatically classify the account as fraud without investigation

D. Increase the sanctioned limit to compensate for the shortfall

E. Ignore the discrepancy if collateral is available

Q9. A company reports earnings before interest and tax (EBIT) of ₹36 lakh and annual interest expense of ₹9 lakh. What is its interest coverage ratio:

A. 2 times

B. 3 times

C. 4 times

D. 5 times

E. 6 times

Q10. A bank has gross advances of ₹2,000 crore, gross NPAs of ₹100 crore and relevant provisions of ₹30 crore. Assuming provisions are the only deductions for this simplified calculation, what is the Net NPA ratio using the advances net of provisions as the denominator:

A. 5.00%

B. 4.50%

C. 3.68%

D. 3.00%

E. Approximately 3.55%

Q11. A bank holds a conventional fixed-rate government security. Market interest rates rise, while its cash flows and credit quality remain unchanged. What is the usual immediate effect on the security's market price:

A. It generally falls

B. It necessarily rises

C. It remains unchanged in every case

D. Its coupon rate automatically increases

E. Its face value is automatically reduced

Q12. A bank's deposits mature predominantly within three months, while a significant portion of its loan portfolio is recoverable only after several years. Which risk is most directly associated with this maturity mismatch:

A. Foreign-exchange translation risk alone

B. Equity-price risk alone

C. Liquidity risk arising from asset-liability mismatches

D. Sovereign credit risk alone

E. Securities settlement risk alone

Q13. What is the principal purpose of Priority Sector Lending Certificates (PSLCs) in India's banking system:

A. To transfer ownership of the underlying priority-sector loans to another bank

B. To help eligible banks meet priority-sector lending targets without transferring the underlying loans

C. To guarantee repayment of every priority-sector loan

D. To exempt banks from priority-sector lending obligations

E. To replace credit appraisal of priority-sector borrowers

Q14. A bond has a modified duration of 5. If its yield increases by 0.50 percentage points, what is the approximate percentage change in its price, ignoring convexity:

A. An increase of 2.5%

B. A decrease of 5.0%

C. An increase of 5.0%

D. A decrease of 1.0%

E. A decrease of 2.5%

Q15. Which statement best describes a Credit Default Swap (CDS):

A. It guarantees that the reference borrower will never default

B. It automatically converts a bank deposit into equity capital

C. It eliminates every market risk associated with a bond

D. It transfers specified credit risk from the protection buyer to the protection seller under the contract

E. It replaces statutory audit requirements

Q16. During a KYC review, a bank discovers transactions inconsistent with a customer's known business profile that cannot be satisfactorily explained. What is the appropriate compliance response:

A. Conduct appropriate scrutiny, document the assessment and report to FIU-IND when the prescribed reporting criteria are met

B. Inform the customer that a suspicious transaction report will be filed

C. Ignore the transactions because the account has operated for more than five years

D. Automatically declare the customer guilty of money laundering

E. Publish the customer's account details

Q17. A bank has average interest-earning assets of ₹4,000 crore, interest income of ₹320 crore and interest expenses of ₹200 crore for the same annual period. What is its Net Interest Margin (NIM):

A. 2%

B. 2.5%

C. 3%

D. 4%

E. 5%

Q18. A bank proposes to recognise a guarantee as credit risk mitigation for capital adequacy purposes. Which statement is correct:

A. Every guarantee automatically reduces the exposure's risk weight to zero

B. Recognition depends on applicable regulatory eligibility conditions, including the guarantee's terms and the guarantor's eligibility

C. A guarantee eliminates the need to monitor the borrower

D. Oral guarantees always qualify for credit risk mitigation

E. Documentary evidence is unnecessary

Q19. A bank's opening advances are ₹800 crore and closing advances are ₹1,000 crore. Its annual interest income from advances is ₹90 crore. Using the simple average of opening and closing advances, what is the approximate yield on advances:

A. 7.5%

B. 8.0%

C. 9.0%

D. 10.0%

E. 11.25%

Q20. A bank has a loan portfolio of ₹1,200 crore, of which ₹1,140 crore comprises standard assets. Assuming the entire remaining balance represents non-standard assets for this calculation, what percentage of the portfolio comprises non-standard assets:

A. 2%

B. 3%

C. 4%

D. 6%

E. 5%

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✅ ANSWER KEY

Q1. C

Q2. A

Q3. E

Q4. B

Q5. D

Q6. B

Q7. D

Q8. A

Q9. C

Q10. E

Q11. A

Q12. C

Q13. B

Q14. E

Q15. D

Q16. A

Q17. C

Q18. B

Q19. D

Q20. E

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 📖 EXPLANATIONS & LEARNING POINTS

Q1. CET1 Capital Ratio

CET1 ratio = CET1 capital ÷ Risk-weighted assets × 100

= ₹480 crore ÷ ₹6,000 crore × 100

= 8%

CET1 is the highest-quality regulatory capital. Additional Tier 1 capital is excluded from the CET1 numerator.

Q2. SMA Classification

- SMA-0: Overdue for up to 30 days.

- SMA-1: Overdue for more than 30 days and up to 60 days.

- SMA-2: Overdue for more than 60 days and up to 90 days.

At 45 days overdue, the account generally falls under SMA-1.

Q3. Investment Classification

Under the revised RBI framework, commercial banks classify investments under HTM, AFS and FVTPL. HFT is a separate subcategory within FVTPL.

Q4. Loan Against Warehouse Goods

The bank should verify the existence, ownership, quality, marketability and insurance of the goods. Collateral reduces potential losses but does not eliminate credit risk.

Q5. Capital Conservation Buffer

The CCB provides additional capital protection against losses. Applicable restrictions on distributions may arise when capital falls within specified buffer ranges.

Q6. Quick Ratio

Quick assets = Current assets − Inventory

= ₹240 lakh − ₹80 lakh = ₹160 lakh

Quick ratio = ₹160 lakh ÷ ₹160 lakh

= 1.0:1

Q7. Capital Adequacy Ratio

Revised risk-weighted assets = ₹6,000 crore + ₹1,200 crore = ₹7,200 crore.

CAR = ₹720 crore ÷ ₹7,200 crore × 100

= 10%

The ratio falls because risk-weighted assets increase while regulatory capital remains unchanged.

Q8. Cash-Credit Irregularity

The bank should verify stock, investigate the non-credit of sale proceeds, reassess drawing power and examine potential diversion of funds. Further action should follow the findings and applicable policy.

Q9. Interest Coverage Ratio

Interest coverage ratio = EBIT ÷ Interest expense

= ₹36 lakh ÷ ₹9 lakh

= 4 times

A higher ratio generally indicates greater capacity to meet interest obligations from operating earnings.

Q10. Net NPA Ratio

Net NPAs = Gross NPAs − Relevant provisions

= ₹100 crore − ₹30 crore = ₹70 crore.

Net advances = ₹2,000 crore − ₹30 crore = ₹1,970 crore.

Net NPA ratio = ₹70 crore ÷ ₹1,970 crore × 100

= Approximately 3.55%

This is a simplified calculation; actual regulatory reporting must follow the applicable RBI methodology.

Q11. Bond Price and Yield

For a conventional fixed-rate bond, market price generally moves inversely to yield. Rising market yields normally reduce the present value of its fixed future cash flows.

Q12. Asset-Liability Management

Funding long-term assets with short-term liabilities can expose a bank to liquidity pressure when deposits mature before loan repayments are received. ALM helps manage maturity mismatches and funding requirements.

Q13. Priority Sector Lending Certificates

PSLCs enable eligible banks to buy or sell certificates to help meet applicable priority-sector lending targets. The underlying loans remain with the originating bank.

Q14. Modified Duration

Approximate percentage price change = −Modified duration × Change in yield × 100

= −5 × 0.005 × 100

= −2.5%

The estimated price decline is 2.5%, ignoring convexity.

Q15. Credit Default Swap

A CDS transfers specified credit risk under a contractual arrangement. Payment depends on the contractually defined credit event and the terms of the agreement.

Q16. Suspicious Transaction Reporting

Banks must investigate unusual transactions and maintain appropriate records. Reports should be submitted to FIU-IND when the prescribed criteria are met, without tipping off the customer.

Q17. Net Interest Margin

Net interest income = ₹320 crore − ₹200 crore = ₹120 crore.

NIM = ₹120 crore ÷ ₹4,000 crore × 100

= 3%

Q18. Credit Risk Mitigation

A guarantee qualifies for regulatory credit risk mitigation only when applicable eligibility, documentation and prudential requirements are satisfied. It does not automatically eliminate credit risk.

Q19. Yield on Advances

Average advances = (₹800 crore + ₹1,000 crore) ÷ 2

= ₹900 crore.

Yield = ₹90 crore ÷ ₹900 crore × 100

= 10%

Q20. Non-Standard Assets

Non-standard assets for this exercise = ₹1,200 crore − ₹1,140 crore

= ₹60 crore.

Percentage = ₹60 crore ÷ ₹1,200 crore × 100

= 5%

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 📢 YOUR BANKING EXAM SUCCESS STARTS HERE!

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