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

🔥 PLATINUM SERIES 2.0 | VOL. 209

📅 SATURDAY, 24 OCTOBER 2026

🎯 TARGET: IBPS PO • Banking Officers • Banking Aspirants

📝 20 MCQs | 20 MARKS | 20 MINUTES

⚠️ Negative marking: 0.25 mark for each incorrect answer.

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SECTION 1 — ADVANCED BANKING & FINANCIAL AWARENESS MOCK

Q1. A scheduled commercial bank has Adjusted Net Bank Credit (ANBC) of ₹18,000 crore and Credit Equivalent of Off-Balance-Sheet Exposures (CEOBE) of ₹20,000 crore. Assuming the applicable overall Priority Sector Lending (PSL) target is 40% of the higher of these two bases, what is the target amount:

A. ₹7,200 crore

B. ₹7,600 crore

C. ₹8,000 crore

D. ₹8,200 crore

E. ₹8,400 crore

Q2. A term loan has principal instalments overdue for 95 days. Assuming the general RBI IRAC norms apply and no special exception changes the outcome, how should the account generally be classified:

A. Standard asset, because the overdue period is below 180 days

B. Non-performing asset (NPA), because the overdue period exceeds 90 days

C. SMA-1, because every overdue account below 180 days is SMA-1

D. SMA-2, regardless of whether the NPA threshold has been crossed

E. Loss asset automatically, solely because the overdue period exceeds 90 days

Q3. A bank purchases a 91-day Treasury Bill with a face value of ₹10 lakh for ₹9.80 lakh and holds it until maturity. Ignoring transaction costs, what is the gain at maturity:

A. ₹10,000

B. ₹15,000

C. ₹18,000

D. ₹20,000

E. ₹25,000

Q4. The RBI sells Government securities to banks under an Open Market Operation (OMO). Assuming other factors remain unchanged, what is the immediate intended liquidity effect:

A. Liquidity is absorbed from the banking system as buyers pay for the securities

B. Liquidity is injected because the RBI pays banks for the securities

C. Banks' capital adequacy ratios automatically increase

D. The Government's fiscal deficit immediately becomes zero

E. The market value of every Government security automatically rises

Q5. A bank has eligible regulatory capital of ₹1,200 crore and risk-weighted assets of ₹10,000 crore. What is its Capital to Risk-Weighted Assets Ratio (CRAR):

A. 8%

B. 9%

C. 10%

D. 11%

E. 12%

Q6. Which statement correctly describes NABARD's refinance function:

A. NABARD guarantees repayment of every agricultural loan sanctioned by banks

B. NABARD replaces the credit appraisal responsibility of cooperative banks

C. NABARD provides refinance to eligible lending institutions for qualifying agricultural and rural credit activities, subject to applicable conditions

D. NABARD automatically waives overdue agricultural loans

E. NABARD determines the RBI's policy repo rate

Q7. A customer's KYC records are available in the Central KYC Records Registry (CKYCR). Which statement best describes the benefit to a regulated financial institution:

A. It can approve every loan without assessing repayment capacity

B. It can retrieve the customer's KYC record, subject to applicable identification, access and due-diligence requirements

C. It can permanently dispense with all future KYC updates

D. It obtains ownership of the customer's bank deposits

E. It is exempt from all customer due-diligence obligations

Q8. During a financial year, India's merchandise imports increase by ₹150 crore while merchandise exports increase by ₹90 crore. Assuming all other factors remain unchanged, how does the merchandise trade balance change:

A. It improves by ₹240 crore

B. It improves by ₹60 crore

C. It remains unchanged

D. It deteriorates by ₹60 crore

E. It deteriorates by ₹150 crore

Q9. A bank holds a fixed-rate bond. Market yields rise substantially, while the bond's credit quality and other relevant factors remain unchanged. What is the most likely effect on its market price:

A. It rises because the coupon becomes more attractive

B. It remains unchanged because the coupon is fixed

C. It rises in the same proportion as the yield

D. It becomes independent of the remaining maturity

E. It generally falls because the fixed coupon is less attractive relative to prevailing market yields

Q10. A loan account is classified as an NPA, but the bank continues recognising unrealised interest as ordinary interest income on an accrual basis. Which treatment is generally required under the RBI IRAC framework:

A. Stop recognising unrealised interest on the NPA as income and reverse or provide for previously recognised unrealised interest, as applicable

B. Continue recognising interest income until the account is written off

C. Capitalise all unrealised interest and treat it as cash received

D. Transfer the entire loan balance to the profit and loss account immediately

E. Recognise interest solely because the borrower has acknowledged the debt

Q11. A bank's risk-weighted capital ratio remains satisfactory, but its leverage ratio deteriorates because total exposures grow faster than Tier 1 capital. What does this indicate:

A. Every advance has automatically become an NPA

B. The bank is exempt from minimum capital requirements

C. Its liquidity risk has necessarily disappeared

D. A possible increase in balance-sheet leverage that warrants attention even if risk-weighted capital ratios remain satisfactory

E. The bank's total assets have become risk-free

Q12. Three banks jointly finance a large corporate borrower under a consortium arrangement. Which statement is correct:

A. The lead bank automatically assumes 100% of every participating bank's credit exposure

B. The borrower is exempt from providing financial information to participating lenders

C. Consortium lending eliminates the need for individual lender credit appraisal

D. Consortium loans are exempt from prudential asset-classification requirements

E. Participating lenders coordinate financing and monitoring arrangements while retaining their respective credit exposures and responsibilities

Q13. The principal purpose of an inflation target in India's monetary policy framework is to:

A. Guarantee zero inflation in every month

B. Fix the exchange rate permanently against the US dollar

C. Provide a nominal anchor for monetary policy and help guide inflation expectations

D. Determine the Government's fiscal deficit automatically

E. Require every bank to offer identical lending rates

Q14. A bond portfolio has a modified duration of 4.0. Using the duration approximation and ignoring convexity, what is the approximate price change if its yield increases by 0.50 percentage point:

A. An increase of 2%

B. A decrease of 2%

C. An increase of 0.5%

D. A decrease of 0.5%

E. No change in price

Q15. Which statement correctly distinguishes a bank guarantee from a documentary letter of credit:

A. Both instruments are payable immediately upon issuance, regardless of their terms

B. A bank guarantee always finances the beneficiary's purchase of goods

C. A documentary letter of credit guarantees the physical quality of goods independently of documents

D. A bank guarantee can never create a contingent liability for the issuing bank

E. A bank guarantee operates according to its stipulated demand or conditions, whereas a documentary credit primarily requires honouring a complying presentation under its terms

Q16. A resident individual proposes to remit funds abroad under India's Liberalised Remittance Scheme (LRS). Which statement is generally correct:

A. The general limit is USD 250,000 per financial year for permitted transactions, subject to applicable FEMA/RBI conditions and restrictions

B. The limit is USD 250,000 for each overseas bank account separately

C. Every remittance is permitted regardless of its purpose

D. Only companies can use LRS

E. All LRS remittances are exempt from applicable tax and reporting requirements

Q17. A bank sanctions a cash-credit facility against stock and book debts. The sanctioned limit is ₹5 crore, but eligible drawing power calculated from current stock and receivables is only ₹3.8 crore. Ignoring other restrictions, what is the maximum amount drawable under the facility:

A. ₹5 crore, because the sanctioned limit always prevails

B. ₹4.5 crore, being the average of the sanctioned limit and drawing power

C. ₹3.8 crore, being the lower drawing power available against the security

D. ₹8.8 crore, being the aggregate of the sanctioned limit and drawing power

E. Any amount requested by the borrower if interest is paid regularly

Q18. A DCCB observes that deposit interest rates are repricing upwards faster than the yields on its floating-rate advances. If the mismatch persists, what is the most immediate profitability risk:

A. An automatic increase in net interest margin

B. Elimination of liquidity risk

C. An automatic improvement in capital adequacy

D. Pressure on net interest income and net interest margin

E. Elimination of interest-rate risk

Q19. A customer reports that the same electronic payment has resulted in two debit entries, although only one transaction was initiated. Which response best reflects sound banking operations and customer protection:

A. Ask the customer to approach the RBI before the bank investigates

B. Investigate transaction and settlement records, reconcile the entries, resolve any established duplicate debit, and follow applicable timelines and compensation requirements

C. Retain both entries until the next annual audit

D. Treat both debits as authorised merely because they appear in the account statement

E. Close the customer's account without investigating the complaint

Q20. A customer wants to locate an old, unclaimed bank deposit that may have been transferred to the Depositor Education and Awareness (DEA) Fund. Which RBI facility helps search for unclaimed deposits across participating banks:

A. Central KYC Records Registry

B. Trade Receivables Discounting System

C. Central Registry of Securitisation Asset Reconstruction and Security Interest of India

D. Public Credit Registry

E. UDGAM — Unclaimed Deposits–Gateway to Access inforMation

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SECTION 2 — ANSWER KEY

Q1. C

Q2. B

Q3. D

Q4. A

Q5. E

Q6. C

Q7. B

Q8. D

Q9. E

Q10. A

Q11. D

Q12. E

Q13. C

Q14. B

Q15. E

Q16. A

Q17. C

Q18. D

Q19. B

Q20. E

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SECTION 3 — EXPLANATIONS AND CALCULATIONS

Q1. C — Priority Sector Lending

Higher base = ₹20,000 crore.

Target = 40% × ₹20,000 crore = ₹8,000 crore.

The applicable target and calculation base must be confirmed for the bank category and reporting period.

Q2. B — NPA classification

Under the general IRAC framework, a term loan is normally classified as an NPA when principal or interest remains overdue for more than 90 days, subject to applicable exceptions and account-specific rules.

Q3. D — Treasury Bill calculation

Gain = Redemption value − Purchase price.

= ₹10,00,000 − ₹9,80,000 = ₹20,000.

Treasury Bills are short-term Government securities issued at a discount and redeemed at face value.

Q4. A — OMO sale

When the RBI sells Government securities, buyers pay funds to the RBI. This generally absorbs banking-system liquidity. An OMO purchase generally injects liquidity, other factors remaining unchanged.

Q5. E — CRAR calculation

CRAR = Regulatory capital ÷ Risk-weighted assets × 100.

= ₹1,200 crore ÷ ₹10,000 crore × 100 = 12%.

Q6. C — NABARD refinance

NABARD provides refinance support to eligible lending institutions for qualifying agricultural and rural credit activities. The lender retains responsibility for appraisal, monitoring and recovery.

Q7. B — CKYCR

The Central KYC Records Registry facilitates centralised storage and retrieval of KYC records. Regulated entities must continue complying with applicable identification, due-diligence and updating requirements.

Q8. D — Merchandise trade balance

Change in trade balance = Change in exports − Change in imports.

= ₹90 crore − ₹150 crore = −₹60 crore.

The merchandise trade balance deteriorates by ₹60 crore.

Q9. E — Bond price and yield

Bond prices generally move inversely to market yields. When prevailing yields rise, an existing fixed-rate bond usually becomes less attractive, causing its market price to decline.

Q10. A — Interest on NPAs

Under the standard IRAC framework, unrealised interest on an NPA is not recognised as ordinary income on an accrual basis. Previously recognised unrealised interest must be reversed or provided for, as applicable.

Q11. D — Leverage ratio

Risk-weighted capital ratios reflect prescribed risk weights. The leverage ratio provides a non-risk-based backstop and can highlight balance-sheet expansion relative to Tier 1 capital.

Q12. E — Consortium lending

Consortium lending coordinates multiple lenders' financing and monitoring of a common borrower. Participating banks retain their respective exposures and must follow applicable credit appraisal and prudential requirements.

Q13. C — Inflation targeting

An inflation target provides a nominal anchor for monetary policy and helps guide expectations. It does not guarantee zero inflation or mechanically determine every monetary policy decision.

Q14. B — Modified duration

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

= −4.0 × 0.005 = −0.02.

Therefore, the approximate price decline is 2%, ignoring convexity.

Q15. E — Bank guarantee versus letter of credit

A bank guarantee is governed by its stipulated terms and demand or conditions. A documentary letter of credit requires honouring a complying presentation under its terms; it does not independently guarantee the physical quality of goods.

Q16. A — LRS

The general LRS limit is USD 250,000 per resident individual per financial year for permitted transactions, subject to applicable FEMA/RBI conditions, purpose-based restrictions and tax or reporting requirements.

Q17. C — Drawing power

The sanctioned limit is ₹5 crore, but eligible drawing power is ₹3.8 crore. The maximum drawable amount is therefore ₹3.8 crore, assuming no other restriction imposes a lower limit.

Q18. D — NIM pressure

If deposit costs rise faster than lending yields, interest expenses can increase more rapidly than interest income. This can reduce net interest income and net interest margin.

Q19. B — Duplicate electronic debit

The bank should investigate transaction and settlement records, reconcile the entries, resolve any confirmed duplicate debit and comply with applicable customer-protection timelines and compensation rules.

Q20. E — UDGAM

The RBI's UDGAM portal helps users search for unclaimed deposits across participating banks. Finding a deposit does not itself settle the claim; the customer must follow the relevant bank's claim process.

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SECTION 5 — CHECK YOUR SCORE

🏆 Maximum marks: 20

Scoring formula: Correct answers × 1 − incorrect answers × 0.25.

Unattempted questions carry zero marks.

🏅 18–20: Excellent — strong command of the tested concepts.

🥈 15–17.75: Very good — revise missed concepts.

🥉 12–14.75: Good foundation — improve application and regulatory precision.

📘 Below 12: Revisit the explanations and attempt the mock again.