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Banking Awareness October 2025 to February 2026 – 326 Most Expected Questions ⏳ Updated: Sep 2026 | 🎯 326 MCQs
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Consider the following statements regarding the Overall and Sectoral Priority Sector Lending (PSL) Target Percentages:
1. Regional Rural Banks are mandated to achieve a 75% overall priority sector target, while Small Finance Banks now have a revised target of 60% of ANBC or CEOBE, whichever is higher.
2. The Agriculture sector target is uniformly set at 18% of ANBC, within which a strict 10% sub-target is exclusively prescribed for Small and Marginal Farmers.
3. Primary (Urban) Co-operative Banks must achieve an overall priority sector lending target of exactly 60% of ANBC or CEOBE.
4. Domestic Commercial Banks must achieve a Micro Enterprises sub-target of 10% and a Weaker Sections sub-target of 15% of ANBC.
Which of the statements given above is/are correct?
Explanation:
Correct: A
The correct answer is A. Statement 1 is correct: As per the June 2025 RBI revisions, Small Finance Banks (SFBs) now have a reduced overall PSL target of 60%, while Regional Rural Banks (RRBs) remain at 75%. Statement 4 is incorrect: Domestic Commercial Banks have a Micro Enterprises sub-target of 7.5% and a Weaker Sections sub-target of 12% of ANBC. The 15% Weaker Sections target is specifically applicable only to RRBs. Statements 2 and 3 accurately reflect the Master Direction statutory limits, including the 18% agriculture target with a strict 10% SMF sub-target, and the 60% overall target for UCBs.
| Small Finance (SFB) & Urban Co-op (UCB) | 60% | 🌾 Agri: 18% (SMF: 10%) |
| Regional Rural Banks (RRB) | 75% | 🤝 Weaker Sections: 15% |
| Domestic Commercial Banks | Standard | 🏭 Micro: 7.5% | 🤝 Weaker: 12% |
🧠 Real-World Scenario:
Imagine Village First RRB (a Regional Rural Bank) has exactly ₹100 Crore in total lending funds for the year. Suddenly, a massive city corporation wants to borrow ₹80 Crore in one single loan, which would be very easy for the bank to process.
According to the rules, the bank must say no. Because they are an RRB, they have a strict target of 75%. This means exactly ₹75 Crore MUST be lent to priority sectors. Out of that money, they are legally forced to give 15% (₹15 Crore) specifically to Weaker Sections and 10% (₹10 Crore) strictly to Small and Marginal Farmers (SMF).
This means the bank cannot ignore vulnerable borrowers to chase easy corporate money; they must meet their strict rural lending quotas first.
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Consider the following statements regarding the PSL District Weightage Framework intended to address regional disparities:
1. An incentivized higher weight of 125% is assigned to incremental priority sector credit in identified districts where the per capita PSL flow is less than ₹9,000.
2. A disincentive lower weight of 90% is assigned to incremental priority sector credit in identified districts where the per capita PSL flow is strictly greater than ₹42,000.
3. The regional disparity weightage framework for incremental priority sector credit is valid only up to the financial year 2026-27, subject to review thereafter.
4. Regional Rural Banks and Primary (Urban) Co-operative Banks are entirely exempted from the district-wise weightage adjustments due to their currently limited area of operation.
Which of the statements given above is/are correct?
Explanation:
Correct: D
The correct answer is D. All statements are correct. The RBI framework assigns an incentivized 125% weightage for incremental credit in credit-starved districts (per capita PSL < ₹9,000) and a disincentivized 90% weightage for credit-heavy districts (per capita PSL > ₹42,000). This framework is valid until FY 2026-27. Niche banks with limited areas of operation, specifically Regional Rural Banks (RRBs), Primary (Urban) Co-operative Banks (UCBs), Local Area Banks (LABs), and Foreign Banks (Wholly Owned Subsidiaries), are explicitly exempted from these weightage adjustments.
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Regarding asset classification for agricultural advances,
which of the following are correct?
1. NPA classification is linked to "crop seasons" rather than a fixed 90-day period.
2. For short duration crops, an account is NPA if the instalment remains overdue for two crop seasons.
3. For long duration crops, an account is NPA if the instalment remains overdue for one crop season.
4. This crop-season norm applies to all agricultural loans including those for allied activities like poultry.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. Statement 1 is correct: Under RBI guidelines, NPA classification for agricultural advances is uniquely linked to "crop seasons" rather than the standard 90-day delinquency period. Statement 2 is correct: A loan granted for short duration crops is treated as NPA if the installment remains overdue for two crop seasons. Statement 3 is correct: A loan for long duration crops is treated as NPA if it remains overdue for one crop season. Statement 4 is strictly incorrect: The relaxed crop-season norm does not universally apply to all agricultural loans; allied activities like poultry, dairy, and apiary generally follow the standard 90-day overdue norm unless explicitly linked to crop cycles by specific notification.
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Which of the following product-specific rules for Non-Performing Asset (NPA) classification are correct?
1. A Credit Card account is treated as NPA if the minimum amount due is not paid within 90 days from the payment due date.
2. A Working Capital account is classified as NPA if "irregular drawings" are permitted for a continuous period of 90 days.
3. Overdue receivables representing positive Mark-to-Market (MTM) values in derivative contracts are treated as NPA if they remain unpaid for 90 days.
Which of the statements given above is/are correct?
Explanation:
Correct: D
The correct answer is D. All three statements correctly state the product-specific RBI regulations for Non-Performing Assets. Statement 1 is correct: For credit cards, the NPA trigger is strictly based on the failure to pay the Minimum Amount Due within 90 days from the specified payment due date. Statement 2 is correct: In working capital facilities, if "irregular drawings" (drawings beyond the sanctioned limit or drawing power) are permitted continuously for 90 days, the account must be downgraded to NPA. Statement 3 is correct: For derivative contracts, overdue receivables representing positive Mark-to-Market (MTM) values must be classified as NPA if they remain unpaid for a period of 90 days from the specified due date for payment.
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Which of the following best defines the 'Cash Reserve Ratio' (CRR)?
1. The share of Net Demand and Time Liabilities (NDTL) that banks must maintain in liquid assets like gold and government securities.
2. The share of Net Demand and Time Liabilities (NDTL) that banks must maintain as cash balances with the Reserve Bank of India.
3. The percentage of total deposits that banks must lend to priority sectors.
4. The portion of deposits that banks must keep in their own vaults as emergency cash.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. The Cash Reserve Ratio (CRR) is a monetary policy tool used by the Reserve Bank of India (RBI) to regulate liquidity in the banking system. It is defined as the mandatory portion or percentage of a bank's Net Demand and Time Liabilities (NDTL) that must be maintained as a liquid cash balance with the RBI. This requirement is legally mandated under Section 42(1) of the Reserve Bank of India Act, 1934. The RBI currently pays zero interest on these CRR balances. Option A is incorrect because maintaining liquid assets like gold and government securities describes the Statutory Liquidity Ratio (SLR), not CRR. Option C is incorrect as the percentage of deposits mandated for priority sectors refers to Priority Sector Lending (PSL) targets, which are entirely separate from cash reserves. Option D is incorrect because cash kept in the bank's own vaults ("Cash in Hand") does not qualify as CRR; CRR must exclusively be parked with the RBI.
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What is the 'Statutory Liquidity Ratio' (SLR) in the context of Indian banking?
1. The mandatory cash balance banks must hold with the RBI to ensure solvency.
2. The percentage of NDTL that banks must maintain with themselves in the form of liquid assets like cash, gold, or unencumbered securities.
3. The ratio of liquid assets to total assets that a bank must report to the stock exchange.
4. The interest rate at which the RBI lends money to commercial banks for short-term needs.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. The Statutory Liquidity Ratio (SLR) is the minimum percentage of deposits (NDTL) that commercial banks must maintain with themselves in the form of highly liquid assets. These approved assets exclusively include Cash, Gold, and unencumbered Government Securities (G-Secs) or State Development Loans (SDLs). This mandate is governed by Section 24(2A) of the Banking Regulation Act, 1949. The maximum permissible limit for SLR is 40%. Option A describes the Cash Reserve Ratio (CRR), which is maintained with the RBI, not the bank itself. Option C is a fabricated statement regarding stock exchange reporting, which has no bearing on SLR compliance. Option D describes the Repo Rate or MSF Rate, which is the interest rate charged by the RBI when lending to banks, completely unrelated to the reserve holding requirements.
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How is the "Video based Customer Identification Process (V-CIP)" treated for the purpose of Customer Due Diligence (CDD)?
Explanation:
Correct: C
The bank shall treat such processes (V-CIP) complying with prescribed standards and procedures on par with face-to-face CIP for the purpose of this Direction.
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Which of the following documents is NOT included in the specific definition of "Officially Valid Document" (OVD) for the purpose of verifying identity and address?
Explanation:
Correct: C
"Officially Valid Document (OVD)" means the passport, the driving licence, proof of possession of Aadhaar number, the Voter's Identity Card, the job card issued by NREGA, and the letter issued by the National Population Register. The PAN Card is not listed in this specific definition of OVDs.
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Consider the following statements regarding the operational framework and utilization of Green Deposits by Commercial Banks:
1. Commercial banks are strictly required to denominate all green deposits exclusively in Indian Rupees (INR) and are prohibited from offering differential interest rates compared to regular deposits.
2. Any unallocated proceeds from green deposits must be temporarily parked in Level 1 High Quality Liquid Assets (HQLA) for a maximum permitted tenure of exactly one year.
3. A bank can raise green deposits without a prior Board-approved Financing Framework, provided the funds are exclusively directed toward large-scale hydropower projects exceeding 25 MW.
4. Projects involving the extraction of fossil fuels, nuclear power generation, and waste incineration are explicitly placed on the negative list and are prohibited from receiving green finance.
Which of the statements given above is/are correct?
Explanation:
Correct: C
The correct answer is Option C. Statement 1 is correct: RBI mandates that Green Deposits must be denominated exclusively in INR, and banks are strictly prohibited from offering a higher or lower differential interest rate on them compared to standard deposits of the exact same tenor. Statement 2 is correct: To prevent fund mismanagement and idle capital risk, any unspent or unallocated green deposit proceeds must be temporarily parked in Level 1 High Quality Liquid Assets (HQLA), capped at a maximum parking duration of exactly one year. Statement 4 is correct: The RBI framework includes a strict "Negative List" of explicit exclusions; activities such as fossil fuel extraction, nuclear power generation, and waste incineration are permanently banned from receiving green deposit funds. Statement 3 is incorrect for two critical reasons: First, a comprehensive Board-approved Financing Framework is a mandatory prerequisite that must be in place before raising any green deposits. Second, hydropower plants with a capacity larger than 25 MW are explicitly placed on the negative list and are excluded from the eligible green activities framework. Therefore, Option C is the only mathematically correct combination.
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Consider the following statements regarding the regulatory ceilings and compliance mandates for the declaration of dividends by banks:
1. Commercial Banks, Small Finance Banks, and Payments Banks are subject to a strict maximum dividend payout ceiling of 75% of their Adjusted Profit After Tax.
2. Regional Rural Banks and Local Area Banks are granted an elevated maximum dividend payout cap of exactly 80% of their Adjusted Profit After Tax.
3. Banks are required to report the details of the declared dividend to the RBI's Department of Supervision within a strict 14-day timeline following the declaration.
4. A bank is permitted to declare a restricted, limited dividend even if it is currently operating under the Prompt Corrective Action framework, provided it obtains prior RBI approval.
Which of the statements given above is/are correct?
Explanation:
Correct: A
The correct answer is A. Statement 1 is Correct: The RBI enforces a strict maximum dividend payout cap of 75% of the Adjusted PAT. This ceiling applies universally across Commercial Banks, Small Finance Banks (SFBs), and Payments Banks (PBs). Statement 2 is Correct: As a specific carve-out in the regulations, Regional Rural Banks (RRBs) and Local Area Banks (LABs) are allowed a slightly higher maximum dividend payout ceiling, capped at 80% of their Adjusted PAT. Statement 3 is Correct: The regulatory compliance timeline mandates that all banks must report their dividend declarations to the RBI's Department of Supervision within a fortnight (14 days) of the action. Statement 4 is Incorrect: There is an absolute regulatory override regarding PCA. Banks are strictly prohibited from declaring any dividend if they are under the Prompt Corrective Action (PCA) framework or under any other specific restriction from the RBI or other regulatory authorities regarding dividend declaration.
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Consider the following statements regarding the revised RBI guidelines on collateral mandates for credit facilities extended to Capital Market Intermediaries (CMIs):
1. All credit facilities extended by banks to CMIs must now be provided on a fully secured basis, with 100% collateral coverage maintained on a continuous basis.
2. Partial unsecured guarantees and promoter-only guarantees are permanently discontinued, and will no longer suffice for CMI credit lines.
3. Unsecured or partially secured funding lines are entirely abolished across the board, under the new regulatory framework.
4. Facility agreements must contain explicit provisions for immediate margin calls, in the event of collateral value shortfalls.
Which of the statements given above is/are correct?
Explanation:
Correct: D
The correct answer is D. Under the RBI's 'Credit Facilities to Capital Market Intermediaries (CMIs)' directions, strictly effective from April 1, 2026, the regulatory framework shifts to a zero-tolerance policy for unsecured CMI lending. All credit facilities must be 100% fully secured on a continuous basis, making Statement 1 absolutely correct. Consequently, the older practices of relying on partial unsecured guarantees or promoter guarantees are permanently banned, making Statement 2 correct. Unsecured and partially secured funding lines are entirely abolished across all exposure types without exception, validating Statement 3. To ensure the 100% collateral coverage never breaches limits during market volatility, banks are mandated to include explicit margin call provisions in their facility agreements to address any drop in collateral valuation instantly, making Statement 4 correct. Options A, B, and C fail to recognize the validity of all the listed regulatory mandates.
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Consider the following statements regarding Responsible Lending Conduct and the Key Facts Statement (KFS):
1. The mandate to provide a Key Facts Statement (KFS) applies to all retail and MSME term loan products, explicitly including credit card receivables.
2. The KFS shall have a minimum validity period of 3 working days for loans with a tenor of 7 days or more.
3. Charges recovered by the bank on behalf of third-party service providers, such as insurance or legal charges, must form a component of the Annual Percentage Rate (APR).
4. Banks are required to convey in writing the main reasons for loan rejection exclusively for retail loans exceeding ₹5 Lakhs.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. Statement 1 is incorrect because the lending conduct guidelines mandate the Key Facts Statement (KFS) for retail and MSME term loans but explicitly EXEMPT credit card receivables from this specific requirement. Statement 2 is correct: The framework establishes a validity period of 3 working days for loans with a tenor of 7 days or more, and 1 working day for shorter loans. Statement 3 is correct: The rules strictly require that third-party charges routed through the bank, such as insurance premiums or legal fees, must be factored into the Annual Percentage Rate (APR) computation. Statement 4 is incorrect: The regulations dictate that banks must convey the reasons for loan rejection in writing for ALL categories of loans, irrespective of any arbitrary threshold limits like ₹5 Lakhs.
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Consider the following statements regarding the baseline capital ratios and Capital Conservation Buffer (CCB) mandated for commercial banks under the RBI Basel III framework:
1. The minimum Common Equity Tier 1 (CET1) capital and the minimum Tier 1 capital requirements are strictly mandated at 5.5% and 7.0% of Risk-Weighted Assets, respectively.
2. The Capital Conservation Buffer (CCB) is set at 2.5% of Risk-Weighted Assets and must consist entirely of Common Equity Tier 1 capital.
3. Banks are required to maintain a minimum Total Capital Ratio (CRAR) of 9.0%, which increases to a strict 11.5% when the mandatory Capital Conservation Buffer is fully incorporated.
4. The Capital Conservation Buffer can be maintained using a flexible combination of both Additional Tier 1 (AT1) capital and Tier 2 subordinated debt instruments.
Which of the statements given above is/are correct?
Explanation:
Correct: A
The correct answer is A. Statement 1 is correct: Under the RBI Basel III framework, banks must maintain a minimum CET1 of 5.5% and a minimum Tier 1 capital of 7.0% of Risk-Weighted Assets (RWAs). Statement 2 is correct: The Capital Conservation Buffer (CCB) is mandated at exactly 2.5% of RWAs and must be met exclusively with Common Equity Tier 1 (CET1) capital. Statement 3 is correct: The baseline minimum Total Capital Ratio (CRAR) is 9.0%, but banks must maintain an aggregate of 11.5% to satisfy both the CRAR and the 2.5% CCB requirements. Statement 4 is incorrect: The CCB cannot be funded using Additional Tier 1 (AT1) or Tier 2 subordinated debt; regulatory guidelines explicitly restrict CCB composition to pure CET1 capital to ensure maximum loss absorbency.
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Consider the following statements regarding the Leverage Ratio and Additional Capital Buffers prescribed by the Reserve Bank of India:
1. Domestic Systemically Important Banks (D-SIBs) must maintain a minimum Leverage Ratio of 4.0%, while standard commercial banks are subject to a minimum requirement of 3.5%.
2. The Countercyclical Capital Buffer (CCCB) framework operates within a range of 0% to 2.5% of Risk-Weighted Assets, though the currently activated rate stands at 0%.
3. D-SIBs are mandated to maintain an additional CET1 capital surcharge ranging from 0.20% to 0.80% based on their specific systemic importance bucket.
4. The capital adequacy framework requires banks to compute capital charges exclusively for Credit Risk and Market Risk, entirely exempting Operational Risk calculations.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. Statement 1 is correct: To restrict the build-up of leverage, the RBI mandates a strict 4.0% minimum Leverage Ratio for Domestic Systemically Important Banks (D-SIBs) and a 3.5% minimum for all other commercial banks. Statement 2 is correct: The Countercyclical Capital Buffer (CCCB) is designed to restrict credit supply during boom phases; it can range from 0% to 2.5%, but the RBI has currently maintained the active rate at 0%. Statement 3 is correct: D-SIBs face tighter regulations and must maintain an additional CET1 surcharge between 0.20% and 0.80% of their RWAs depending on their assigned bucket. Statement 4 is incorrect: The Basel III capital adequacy framework mandates that commercial banks rigorously calculate and hold capital charges for three distinct pillars: Credit Risk, Market Risk, and Operational Risk. Operational risk is never exempted.
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Which of the following statements regarding credit card billing, payment terms, and interest calculations are correct?
1. The "Interest-Free Credit Period" is applicable only if the cardholder pays the entire outstanding amount on or before the due date, not just the Minimum Amount Due.
2. To prevent "negative amortization," the Minimum Amount Due (MAD) must be calculated to cover at least the interest and other charges preventing the balance from increasing.
3. Card-issuers must ensure a gap of at least one fortnight (14-15 days) between the date of billing statement generation and the payment due date.
4. Late payment charges must be levied on the total amount due, irrespective of any partial payments made.
Which of the statements given above is/are correct?
Explanation:
Correct: B
The correct answer is B. Statement 1 is correct: The "Interest-Free Credit Period" is strictly applicable only if the cardholder pays the entire outstanding amount on or before the due date. Paying just the Minimum Amount Due revokes this privilege. Statement 2 is correct: To prevent "negative amortization" (where the debt grows despite payments), the Minimum Amount Due (MAD) must be calculated to cover at least the interest and other charges levied during the cycle. Statement 3 is correct: RBI Directions mandate that card-issuers must ensure a gap of at least one fortnight (14-15 days) between the date of billing statement generation and the payment due date to give customers adequate time to pay. Statement 4 is incorrect: Late payment charges must be levied ONLY on the outstanding amount after adjusting for any partial payments made, not on the total amount due.
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Which of the following limitations apply to a "Small Account"?
1. The aggregate of all credits in a financial year does not exceed Rupees One Lakh.
2. The aggregate of all withdrawals and transfers in a month does not exceed ₹10,000.
3. The balance at any point of time does not exceed ₹50,000.
4. The account can only be opened at Core Banking Solution (CBS) linked branches.
Explanation:
Correct: D
Small accounts entail: aggregate credits ≤ ₹1 Lakh/year, withdrawals ≤ ₹10,000/month, balance ≤ ₹50,000, and must be opened at CBS linked branches (or branches where manual monitoring is possible).
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Regarding "Money Mules," if it is established that an account opened and operated is that of a Money Mule, but the concerned bank failed to file a Suspicious Transaction Report (STR),
what is the specific regulatory consequence?
Explanation:
Correct: B
If a Money Mule account is found and no STR was filed, the bank shall be deemed to have not complied with the KYC Directions.
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Consider the following statements regarding the regulatory framework and operational timelines of the Depositor Education and Awareness (DEA) Fund:
1. Banks must transfer credit balances remaining unclaimed for 10 years or more, including unadjusted NEFT credit balances and undrawn prepaid cards, to the DEA Fund exclusively during the last 5 working days of the subsequent month.
2. The interest payable by a bank to claimants on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021.
3. Any unclaimed amount payable in foreign currency shall be converted into Indian Rupees at the exchange rate prevailing on the date of the customer's claim, and the Fund shall refund the eligible amount in foreign currency.
4. Banks are mandated to preserve records of accounts credited to the Fund permanently, and in cases where a refund is claimed from the Fund, the records must be preserved for at least 5 years from the date of refund.
Which of the statements given above is/are correct?
Explanation:
Correct: A
The correct answer is A. Statement 1 is correct: Banks are required to credit the Fund with any deposit or credit balance (including unadjusted NEFT balances and prepaid cards with no maturity) remaining unoperated for 10 years or more, and this transfer must be executed through the e-Kuber system during the last 5 working days of the subsequent month. Statement 2 is correct: As per the tiered interest calculation guidelines, the interest payable on the principal amount of unclaimed interest-bearing deposits transferred to the Fund is rigidly fixed at 3 percent with effect from May 11, 2021, calculated from the date of transfer to the date of payment. Statement 3 is incorrect: Any unclaimed amount payable in foreign currency must be converted into Indian Rupees at the exchange rate prevailing strictly on the date of transfer to the Fund, not the date of the customer's claim. Furthermore, irrespective of whether the bank pays the customer in INR or foreign currency, the bank is entitled to claim the refund from the Fund in Indian Rupees only. Statement 4 is correct: Banks must permanently preserve documents containing details of accounts credited to the Fund. For accounts where a refund has been claimed from the Fund, the preservation period is strictly at least 5 years from the date of refund.
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Consider the following statements, regarding the governance and classification framework of a Digital Banking Unit (DBU):
1. For regulatory compliance, a DBU is treated as being opened in a centre from where it proposes to source more than 51 percent of its customers and business.
2. The catchment area for monitoring the progress of digital financial services education by a DBU is the specific district where the DBU is located.
3. The DBU must be headed by an officer designated as the DBU-Chief Operating Officer (D-COO).
4. The operational governance structure of the DBU must be aligned with the Digital Banking Segment of the bank.
Explanation:
Correct: D
The correct answer is D. All statements are correct. According to the RBI master directions on Digital Banking Units (DBUs), a DBU is technically treated as being opened in a specific geographical centre from where it proposes to source more than 51 percent of its customers and business. The designated catchment area for aggressively monitoring the progress of digital financial services education and literacy by a DBU is strictly the specific district where it is located. Furthermore, the DBU must be headed by a designated senior officer officially known as the DBU-Chief Operating Officer (D-COO), and its overall operational governance and reporting structure must be strictly aligned with the overarching Digital Banking Segment of the parent bank.
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According to the general permission for opening banking outlets,
what is the minimum percentage of total 'Banking Outlets' opened during a financial year that a domestic scheduled commercial bank must open in Unbanked Rural Centres (URCs)?
Explanation:
Correct: C
The correct answer is C. The regulatory guidelines explicitly stipulate that domestic scheduled commercial banks (excluding Regional Rural Banks) must open at least 25 percent of the total number of 'Banking Outlets' opened during a financial year in Unbanked Rural Centres (URCs). This mandate is designed to aggressively push financial inclusion and ensure that banking services reach remote areas that lack foundational financial infrastructure. Options A, B, and D represent mathematically incorrect thresholds that do not align with the master directions on branch authorisation.
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Regarding the "Customer Acceptance Policy," banks are explicitly prohibited from opening accounts in
which of the following manners?
According to the Customer Acceptance Policy, how should a bank handle a situation where an existing KYC-compliant customer desires to open another account or avail of a new product?
1. The bank must conduct a fresh Customer Due Diligence (CDD) exercise for the new account.
2. The bank must verify the customer's identity again using a third-party auditor.
3. There is no need for a fresh CDD exercise, as far as identification of the customer is concerned.
4. The CDD procedure should be applied at the Unique Customer Identification Code (UCIC) level.
If a bank forms a suspicion of money laundering and reasonably believes that performing the Customer Due Diligence (CDD) process will "tip-off" the customer, it must proceed with the CDD process cautiously.
Which of the following correctly matches the "Risk Category" with the mandatory minimum periodicity for KYC updation?
1. High-risk customers: Once in every two years
2. Medium risk customers: Once in every eight years
3. Low-risk customers: Once in every ten years
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, a "large defaulter" must have an outstanding amount of at least ₹1 crore.
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According to the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions,
what is the minimum outstanding amount for a "wilful defaulter"?
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, the bank must classify a borrower as a wilful defaulter within what timeframe?
Which statements regarding penal measures against wilful defaulters are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. New ventures are barred from credit facilities for five years after removal from the LWD.
2. Additional credit facilities are barred for one year after removal from the LWD.
3. The bar on new ventures applies for ten years.
4. The bar on additional credit applies for three years.
Which of the following statements regarding Asset Classification norms and definitions are correct?
1. A "Substandard Asset" is one that has remained NPA for a period less than or equal to 12 months.
2. An exposure is defined as "unsecured" if the realisable value of the security is not more than 10 percent of the outstanding exposure.
3. The RBI's system-based asset classification norms apply only to corporate loans above ₹5 crore.
4. "Loss assets" are those considered uncollectible and of such little value that their continuance as a bankable asset is not warranted.
Which of the statements given above is/are correct?
Which of the following rules governing the mechanics of Asset Classification and Provisioning are correct?
1. An NPA account can be upgraded to 'Standard' only if the entire arrears of interest and principal are paid by the borrower.
2. If the realizable value of security is less than 50% of the assessed value, the asset is straightaway classified as Doubtful.
3. If the realizable value of security is less than 10% of the outstanding balance, the asset is straightaway classified as Loss.
4. For Substandard assets with an unsecured portion, an additional 10% provision is required on the unsecured exposure (over and above the base 15%).
Which of the statements given above is/are correct?
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Which of the following rules govern Income Recognition and Appropriation of Recoveries?
1. For Non-Performing Assets (NPAs), income must be recognized on a cash basis (actual receipt) rather than accrual.
2. If an account turns NPA, any interest previously accrued but not realized must be reversed.
3. The appropriation of recoveries (towards Principal vs. Interest) is determined strictly by the RBI's "Interest First" mandate.
4. The appropriation of recoveries must follow the uniform and consistent Board-approved policy of the bank.
Which of the statements given above is/are correct?
Which of the following statements regarding "Fixed Rate Loans" are correct?
1. A "Fixed rate loan" is defined as a loan on which the interest rate is fixed for the entire tenor of the loan.
2. If the interest rate does not remain fixed for the entire tenor, the loan is defined as a "Floating rate loan".
3. Interest rates on fixed rate loans with a tenor below 3 years, must not be less than the benchmark rate for a similar tenor.
4. Fixed rate loans are prohibited for any tenor exceeding 10 years.
Regarding the calculation methodology of the Marginal Cost of Funds based Lending Rate (MCLR),
which of the following statements are correct?
1. The four explicit components of MCLR are Marginal cost of funds, Negative carry on account of CRR, Operating costs, and Tenor premium.
2. The "Negative carry on mandatory CRR" is calculated as: `Required CRR x (marginal cost) / (1 - CRR)`.
3. The "Operating Costs" component must include costs of providing services, even if they are separately recovered by way of service charges.
4. The change in "Tenor premium" must be uniform for all types of loans for a given residual tenor, and cannot be borrower specific.
According to the RBI (Commercial Banks - Interest Rate on Deposits) Directions, 2025,
which of the following pairs regarding minimum deposit tenors are correctly matched?
1. Domestic Term Deposits: Minimum 7 days.
2. NRE Term Deposits: Minimum 1 year.
3. NRO Term Deposits: Minimum 7 days.
4. Recurring Deposits: Minimum 14 days.
Which of the statements given above is/are correct?
What is the interest rate applicable to a Term Deposit that matures and proceeds are left unclaimed with the bank?
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Which of the following statements is/are correct regarding the legal framework and applicability of the Reserve Bank of India (Commercial Banks - Internal Ombudsman) Directions, 2026?
1. These directions are issued by the Reserve Bank of India, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949.
2. The directions apply to every Commercial Bank having 10 or more banking outlets in India, as on March 31, 2025.
3. Under these directions, a "Deficiency in service" is valid only if it results in a quantifiable financial loss to the customer.
4. "Banking Outlet" is defined as a fixed-point service delivery unit.
Which of the following statements is/are correct regarding the resolution timelines and communication protocols under the Internal Ombudsman (IO) Scheme in banks?
1. For complaints where a specific resolution timeline is prescribed by the RBI or NPCI, the bank must auto-escalate the complaint to the IO sufficiently in advance, to allow at least 10 days for review.
2. In cases where no specific timeline is prescribed, the complaint must be auto-escalated to the IO within 20 days of receipt.
3. The final decision must be communicated to the complainant within 45 days of receiving the complaint.
4. The final reply to the complainant must explicitly state that the complaint has been reviewed by the IO, and include the URL of the RBI's Complaint Management System (CMS).
Which of the following statements regarding credit information reporting timelines and data rectification are correct?
1. Credit Institutions must submit credit information on the 9th, 16th, 23rd, and last day of the month.
2. For weekly submissions (9th, 16th, 23rd), only 'incremental accounts' need to be reported within 4 calendar days.
3. If data is rejected by a CIC, the Credit Institution must rectify and re-submit it before or along with the data for the subsequent reporting reference date.
4. The 'full file' containing all active accounts must be submitted by the 10th day of the next month.
Which of the statements given above is/are correct?
Which of the following statements regarding the Framework for Compensation to Customers for delayed updation of credit information are correct?
1. Complainants are entitled to a compensation of ₹100 per calendar day if the complaint is not resolved within 30 calendar days.
2. A Credit Institution is liable for compensation if it fails to update the CIC within 21 days of being informed.
3. If multiple banks cause the delay, the compensation is shared equally among them.
4. If a Credit Institution resolves the complaint on the 31st day, the compensation payable is ₹100.
Which of the statements given above is/are correct?
Which of the following statements, regarding the classification of 'Banking Outlets' under branch authorisation directions, are correct?
1. A fixed point service delivery unit is classified as a full-fledged 'Banking Outlet', if it provides services for a minimum of four hours per day for at least five days a week.
2. Mobile Branches and Cash Deposit Machines (CDMs) are explicitly excluded from being treated as 'Banking Outlets'.
3. Extension Counters and Satellite Offices are treated as independent 'Banking Outlets', provided they satisfy the minimum service hours criteria.
4. Any fixed point unit providing services for less than the minimum prescribed duration, is classified as a 'Part-time Banking Outlet'.
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Consider the following statements regarding the MSME, Start-ups, and Export Credit Thresholds under priority sector guidelines:
1. Loans up to ₹50.00 crore to Start-ups are eligible for priority sector classification under both the Micro, Small and Medium Enterprises (MSME) and 'Others' categories.
2. All bank loans extended to units situated in the Khadi and Village Industries sector shall be exclusively categorised as lending to Micro Enterprises.
3. For Domestic Banks, Export Credit is capped at 2% of Adjusted Net Bank Credit subject to a strict sanctioned limit of ₹50.00 crore per borrower, and this provision is fully applicable to Regional Rural Banks.
4. Bank loans to Non-Banking Financial Companies (NBFCs) for the purpose of on-lending to Micro and Small Enterprises are strictly capped at ₹20.00 lakh per borrower.
Which of the statements given above is/are correct?
Consider the following statements regarding the Housing and Education Priority Sector Lending Ceilings:
1. Education loans granted to individuals for educational purposes, including vocational courses, are strictly eligible up to ₹25.00 lakh per borrower.
2. In centres with a population of 50 lakh and above, housing loans are eligible up to ₹50.00 lakh provided the overall cost of the dwelling unit does not exceed ₹63.00 lakh.
3. Housing repair loans are capped at ₹15.00 lakh in metropolitan centres with a population of 50 lakh and above, and ₹10.00 lakh in centres with a population of less than 10 lakh.
4. Bank loans for slum clearance and affordable housing projects are eligible subject to the dwelling units having a strict carpet area of not more than 90 sq.m.
Which of the statements given above is/are correct?
Consider the following statements regarding Social Infrastructure, Renewable Energy limits, and specific exclusions:
1. Loans up to a strict limit of ₹8.00 crore per borrower are eligible for setting up schools, drinking water facilities, and sanitation facilities under Social Infrastructure.
2. Loans up to ₹12.00 crore per borrower for building health care facilities under Social Infrastructure are universally eligible across all population tiers, including Tier I metropolitan centres.
3. Under Renewable Energy, loans up to ₹35.00 crore are eligible for power generators, while loans to individual households are strictly capped at ₹10.00 lakh per borrower.
4. Housing loans extended by banks to their own employees are strictly excluded and not eligible for classification under the priority sector.
Which of the statements given above is/are correct?
Consider the following statements regarding the "Weaker Sections" and "Others" category classifications:
1. Loans provided to distressed persons, other than farmers, to prepay their debt to non-institutional lenders are eligible up to ₹1.00 lakh per borrower.
2. Artisans and units in village and cottage industries qualify as Weaker Sections provided their individual credit limits do not exceed ₹2.00 lakh.
3. Individual women beneficiaries qualify under Weaker Sections up to a limit of ₹2.00 lakh per borrower, and this specific ₹2.00 lakh limit is universally applicable to all bank types, including UCBs.
4. Loans not exceeding ₹2.00 lakh provided by banks to Joint Liability Groups (JLGs) for activities other than agriculture or MSME are eligible under the 'Others' category.
Which of the statements given above is/are correct?
Consider the following statements regarding the regulatory caps and conditions for On-Lending via NBFCs, HFCs, MFIs, and the NCDC:
1. Bank credit to NBFCs, HFCs, and the National Co-operative Development Corporation (NCDC) for on-lending is strictly subject to an overall cap of 5% of the individual bank's total priority sector lending of the previous financial year.
2. Bank loans to NBFCs for on-lending to Agriculture term lending are capped at ₹10.00 lakh per borrower, while on-lending to Micro and Small enterprises is capped at ₹20.00 lakh per borrower.
3. Small Finance Banks are permitted to lend to registered MFIs for on-lending provided the MFI has a Gross Loan Portfolio up to ₹500.00 crore, subject to a 10% overall cap of the bank's total PSL.
4. Housing Finance Companies (HFCs) are permitted to receive bank loans for on-lending under the 'Housing' category up to an aggregate loan limit of ₹50.00 lakh per borrower.
Which of the statements given above is/are correct?
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Consider the following statements regarding the applicability and core definitions under the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Directions, 2025:
1. The classification of 'Consumer Credit' explicitly excludes education loans, loans for the creation of immovable assets, and consumption loans to farmers under the KCC scheme.
2. An account is mandatorily classified as an 'Inoperative Account' if there are no customer-induced transactions for a continuous period exceeding two years.
3. The Unclaimed Deposit Reference Number (UDRN) is a unique CBS-generated number assigned to each unclaimed deposit transferred to the DEA Fund to ensure account number anonymity.
Which of the statements given above is/are correct?
Consider the following statements regarding the institutional framework and Customer Service Committees mandated for Commercial Banks:
1. A detailed memorandum reviewing customer service and customer care aspects must be placed before the Board of Directors exactly once every quarter.
2. The Standing Committee on Customer Service must be chaired by the CMD/CEO or Executive Director and must include non-officials to ensure independent feedback.
3. Branch Level Customer Service Committees are mandated to convene at least once a month to actively study local complaints and suggestions.
4. Banks must provide entirely separate enquiry counters at their large or bigger branches in addition to the regular reception counter.
Which of the statements given above is/are correct?
Consider the following statements regarding mandated business hours and rural branch operational guidelines:
1. A bank must function for public transactions for a minimum duration of four hours on weekdays and two hours on Saturdays.
2. Banks are required to extend business hours for non-cash banking transactions up to exactly two hours before the close of working hours.
3. Branches located in centers with a population of 10,000 or less may designate one day of the week as a non-public working day exclusively for field visits.
4. The designated non-public working day for rural branch managers must strictly fall between two active working days.
Which of the statements given above is/are correct?
Scenario: A third-party security breach occurs at a bank, resulting in unauthorized transactions across multiple customer profiles. None of the customers shared their payment credentials. Based on RBI guidelines, consider the following statements regarding the correct regulatory actions to determine customer liability:
1. A customer who reports the unauthorized transaction within three working days of receiving the communication is entitled to zero liability.
2. A Basic Savings Bank Deposit (BSBD) account holder who reports the transaction on the fifth working day faces a maximum capped liability of ₹10,000.
3. A standard Savings Bank account holder who reports the transaction on the sixth working day faces a maximum capped liability of ₹10,000.
4. The bank must credit the shadow reversal of the involved amount to the customer's account within 10 working days from the date of notification.
Which of the statements given above is/are correct?
Scenario: Mr. Sharma falls victim to a bona fide electronic banking fraud of ₹40,000. He reports the incident to the National Cyber Crime Portal and his bank within 3 calendar days. He has never claimed such compensation before. Based on the 2026 Limiting Liability amendments, consider the following statements regarding the compensation metrics and cost apportionment:
1. Mr. Sharma is eligible for a maximum compensation of ₹25,000 since it is the lower of 85% of the net loss or ₹25,000, and he reported within the strict 5 calendar days timeline.
2. Out of the ₹25,000 compensation paid, the Reserve Bank of India (RBI) will bear a calculated contribution of exactly ₹19,118.
3. The customer's bank and the beneficiary bank will each contribute exactly ₹2,941 towards the ₹25,000 compensation payout.
4. The bank is granted a maximum of 10 calendar days to credit this specific compensation amount to his account after receiving the application.
Which of the statements given above is/are correct?
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Consider the following statements regarding the Basic Savings Bank Deposit (BSBD) Account framework under the April 2026 amendments:
1. Banks are mandated to provide a minimum of 25 cheque leaves per year free of charge upon customer request.
2. Digital payment transactions such as NEFT, RTGS, and UPI must be strictly excluded from the mandated limit of four free withdrawals per month.
3. A bank must execute the conversion of a standard savings account into a BSBD account within exactly 7 days from the receipt of a customer's request.
4. Customers holding a BSBD account are permitted to maintain one additional standard savings account in the same bank for term deposit linkages.
Which of the statements given above is/are correct?
Consider the following statements regarding banking facilities for senior citizens and differently-abled persons:
1. Banks must mandatorily offer doorstep banking services, including cash delivery and KYC submission, to all senior citizens above 70 years of age.
2. A fully KYC-compliant account must be automatically converted into a 'Senior Citizen Account' based on the date of birth available in the bank's records.
3. Where an incapacitated customer uses a thumb impression for withdrawal, it must be identified by two independent witnesses, one of whom must be a responsible bank official.
4. Banks have the discretion to insist on the physical presence of differently-abled persons at the home branch for the issuance of cheque books.
Which of the statements given above is/are correct?
Consider the following statements regarding the allotment and infrastructural security guidelines for safe deposit lockers:
1. To ensure prompt payment, banks can demand a Term Deposit covering exactly three years' rent plus break-open charges from both new and existing locker hirers.
2. In the event of the surrender of a locker, the bank must proportionately refund any advance rent collected from the customer.
3. The bank's vault officer is strictly prohibited from remaining present when the locker is actually opened by the hirer after the first key is unlocked.
4. CCTV recordings of entry and exit to the locker strong room must be preserved by the bank for a minimum period of 180 days.
Which of the statements given above is/are correct?
Scenario: A bank branch suffers a severe burglary, resulting in the loss of contents from several safe deposit lockers. Additionally, the bank plans to break open certain lockers due to prolonged non-payment of rent. Based on RBI guidelines, consider the following statements:
1. For locker losses arising from burglary, theft, or internal employee fraud, the bank's maximum liability is strictly capped at an amount equivalent to 100 times the prevailing annual rent of the locker.
2. The bank has the discretion to legally break open a locker if the customer has not paid the rent for 3 consecutive years, after following due notice procedures.
3. If a locker remains inoperative for 7 years and the hirer cannot be located, the bank can dispose of the articles even if the rent is being paid regularly.
4. During any break-open procedure due to a lost key or unpaid rent, the inventory must be prepared in the presence of at least two independent witnesses.
Which of the statements given above is/are correct?
Consider the following statements regarding the settlement of claims in respect of deposit accounts of deceased customers:
1. Access and payment granted to a nominee or survivor strictly constitutes full discharge of the bank's liability, as they receive the funds purely as a "trustee" of the legal heirs.
2. For deceased accounts without a nominee, the "threshold limit" for a simplified claim settlement without requiring a Succession Certificate is strictly fixed at ₹1 Lakh across all banks.
3. A bank must settle a claim in respect of deposit accounts within a maximum period of 15 calendar days from the receipt of all required documents.
4. If the bank delays the settlement of a deposit claim beyond the mandated timeline, it must pay compensation at a rate not less than the prevailing Bank Rate plus 4 percent per annum.
Which of the statements given above is/are correct?
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If an Officially Valid Document (OVD) presented by a foreign national does not contain address details, which specific combination of documents is accepted as proof of address?
When conducting a Video-based Customer Identification Process (V-CIP) using offline verification of Aadhaar via an XML file or Aadhaar Secure QR Code,
what is the maximum validity period of the XML file or QR code generation date?
Regarding the "Digital KYC Process,"
which of the following statements correctly describe the requirements for capturing the customer's live photograph?
1. The background behind the customer must be of white color.
2. No other person shall come into the frame while capturing the photograph.
3. The system must watermark the photograph with GPS coordinates and a timestamp.
4. The photograph must be captured using a printed or video-graphed image if the customer is not physically present.
Consider the following statements regarding "Shell Banks":
Assertion (A): The existence of a local agent or low-level staff in a country constitutes "physical presence" for a bank incorporated in that country.
Reason (R): A Shell Bank is defined as a bank that has no physical presence in the country of incorporation and is unaffiliated with a regulated financial group.
For a domestic wire transfer of less than ₹50,000, where the originator is not an account holder of the ordering bank, what information is sufficient to include, if the full originator information can be made available by other means?
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All cross-border wire transfers must be accompanied by accurate and meaningful originator information.
Which of the following fields are mandatory?
1. Name of the originator.
2. The originator account number (where used).
3. The originator’s address, or national identity number, or customer identification number, or date and place of birth.
4. The purpose of the transaction.
When an intermediary bank in a wire transfer chain cannot retain the originator or beneficiary information with a related domestic wire transfer due to technical limitations, how long must it keep the record of the information received from the ordering financial institution?
Any remittance of funds by way of demand draft, mail/telegraphic transfer, NEFT/IMPS, or any other mode for a value of …… and above, shall be effected by debit to the customer's account or against cheques, and not against cash payment.
Regarding the sale of "Third Party Products" by a bank acting as an agent,
which of the following compliance measures are mandatory?
1. The identity and address of walk-in customers must be verified for transactions above ₹50,000.
2. Transactions involving ₹50,000 and above must be undertaken only by debit to customers' accounts or against cheques.
3. The bank must obtain and verify the PAN given by walk-in customers for transactions of ₹50,000 and above.
4. The bank must maintain transaction details and related records for at least five years.
Since September 15, 2018, what specific detail must a bank incorporate on the face of a Demand Draft, Pay Order, or Banker's Cheque?
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Banks must put in place an adequate screening mechanism as an integral part of their personnel recruitment process. What is this specific policy called?
For a Sole Proprietary firm, if a bank decides to accept only one document as proof of business (instead of the standard two) due to the firm's inability to furnish two, what additional measure is mandatory?
Regarding "Assisted V-CIP,"
which of the following statements correctly describes the role of Business Correspondents (BCs)?
1. BCs can conduct the entire V-CIP process on behalf of the bank.
2. BCs can facilitate the process only at the customer end.
3. The bank must maintain the details of the BC assisting the customer.
4. The ultimate responsibility for customer due diligence rests with the BC.
Which of the following authorities is mandatory to conduct the Vulnerability Assessment, Penetration Testing, and Security Audit of the V-CIP infrastructure?
For opening an account of a Company,
which of the following documents is mandatory to obtain as a certified copy?
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During periodic updation of KYC for an individual customer, if there is a change only in the address details, the bank must verify the declared address through "positive confirmation" within what timeframe?
When an account holder who was a minor at the time of account opening becomes a major, the bank is required to obtain fresh photographs and ensure that Customer Due Diligence (CDD) documents are available as per current standards.
Regarding the "Due Notices for Periodic Updation of KYC,"
what is the minimum number of advance intimations and subsequent reminders a bank must send to a customer before the due date and after the due date, respectively?
In the context of customers unable to provide PAN or Form No. 60, "temporary ceasing of operations" in relation to an account is defined as:
For accounts opened in non-face-to-face mode (subject to Enhanced Due Diligence), the first transaction must necessarily be a credit from an existing KYC-complied bank account of the customer.
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Regarding the "Simplified norms for Self Help Groups (SHGs),"
which of the following statements are correct?
1. The bank must perform Customer Due Diligence (CDD) on all members while opening the savings bank account of the SHG.
2. The CDD of all the office bearers shall suffice for opening the savings account.
3. The bank may undertake CDD of all the members of an SHG at the time of credit linking.
4. SHGs are not permitted to open savings accounts without PAN cards for all members.
When a bank opens a Non-Resident Ordinary (NRO) account for a foreign student pending address verification,
what is the cap on the aggregate withdrawal from such an account during the 30-day period?
Regarding the maintenance and preservation of records,
which of the following timeframes are correct?
1. Records of transactions must be maintained for at least five years from the date of the transaction.
2. Records pertaining to the identification of customers must be preserved for at least five years after the business relationship has ended.
3. Records of transactions must be preserved for ten years from the date of the audit.
4. Identification records must be destroyed immediately upon account closure.
Regarding Suspicious Transaction Reports (STRs), banks are explicitly prohibited from taking
which of the following actions?
According to the guidelines on Secrecy Obligations, in
which of the following circumstances is a bank permitted to disclose customer information?
1. Where disclosure is under compulsion of law.
2. Where there is a duty to the public to disclose.
3. Where the interest of the bank requires disclosure.
4. Where the disclosure is made with the express or implied consent of the customer.
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Consider the following:
Assertion (A): An increase in the Cash Reserve Ratio (CRR) typically leads to a rise in lending rates in the economy.
Reason (R): When CRR is increased, the lendable resources of banks decrease, increasing their cost of funds.
The 'Net Demand and Time Liabilities' (NDTL) is the base for calculating CRR and SLR. What does the term 'Net' specifically refer to in this context?
For the purpose of CRR maintenance, the relevant NDTL figure is taken from which specific reporting day?
Which of the following items is NOT included in the calculation of NDTL for the purpose of CRR/SLR maintenance?
Consider the following liabilities of a bank. Which of these are classified as "Time Liabilities"?
1. Fixed Deposits (FDs).
2. Staff Security Deposits.
3. Current Account balances.
4. Demand Drafts (DDs) payable.
Which of the statements given above is/are correct?
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Identify the INCORRECT statement regarding the daily maintenance of CRR:
Evaluate the following statements regarding 'Incremental CRR' (I-CRR):
1. I-CRR is a temporary measure used by RBI to drain excess liquidity from the system during specific periods (e.g., demonetization).
2. Balances maintained under I-CRR are always eligible for interest payments from the RBI.
Consider the following:
Assertion (A): Inter-bank term deposits with a maturity of less than 1 year are NOT deducted while calculating Net Demand and Time Liabilities (NDTL).
Reason (R): Liabilities to the banking system are only netted off if they are pure call money borrowings.
Scenario: A Scheduled Commercial Bank has a required CRR of ₹100 Crore for the current fortnight. On Tuesday (a working day within the fortnight), the bank's actual balance with the RBI stands at ₹88 Crore.
What is the regulatory implication?
Under Section 24 of the Banking Regulation Act, 1949, banks must maintain SLR in specific forms.
Which of the following is NOT a valid form for maintaining SLR?
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When valuing Gold for the purpose of Statutory Liquidity Ratio (SLR) compliance, which pricing methodology must banks strictly follow?
Regarding "State Development Loans" (SDLs) in the context of banking liquidity:
1. SDLs are issued by State Governments to manage their fiscal deficits.
2. SDLs are considered "Approved Securities" for SLR maintenance.
3. SDLs carry a sovereign guarantee, similar to Central Government securities.
Which of the statements given above is/are correct?
Generally, pledging SLR securities to borrow money reduces a bank's SLR compliance. However, there is a specific facility under which banks are permitted to "dip" into their SLR portfolio up to a certain limit to borrow funds without attracting a default penalty. What is this facility called?
Identify the INCORRECT statement regarding the classification of securities for SLR:
Consider the following:
Assertion (A): The Statutory Liquidity Ratio (SLR) acts as a solvency buffer for banks.
Reason (R): In the event of a bank run, SLR assets (like G-Secs and Gold) can be easily liquidated to repay depositors.
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Evaluate the following statements regarding the "Cash" component of SLR:
1. Cash kept in a bank's own ATMs is eligible to be counted under SLR.
2. Foreign currency cash held by the bank in India is NOT eligible for SLR.
Scenario: 'Bank Beta' has an SLR requirement of ₹200 Crore. It holds ₹198 Crore in unencumbered G-Secs, and ₹5 Crore in G-Secs that it has pledged to the RBI to borrow funds under the standard Repo window (LAF).
What is the bank's SLR status?
If a bank fails to maintain the required Cash Reserve Ratio (CRR) on any day, it is liable to pay penal interest to the RBI.
What is the penal rate for the first day/instance of such default?
Which specific return/form must Scheduled Commercial Banks submit to the RBI, to report their CRR maintenance status on a fortnightly basis?
Regarding the reporting of Statutory Liquidity Ratio (SLR), consider the following:
1. Banks must submit Form VIII to the RBI.
2. The return is submitted on a monthly basis, not fortnightly.
3. The return indicates the position of assets maintained under Section 24 of the BR Act.
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If a bank persists in defaulting on its CRR maintenance after the first instance, the RBI imposes stricter penalties.
Which of the following consequences is NOT prescribed for the immediate subsequent days of continued default?
Identify the INCORRECT statement regarding the liability of bank officers in case of CRR/SLR default:
Consider the following:
Assertion (A): The penalty for CRR default is not treated as a business expenditure for tax purposes.
Reason (R): Penalties paid for infraction of law are generally not deductible expenses under the Income Tax Act.
Evaluate the following statements regarding 'Holidays' and Reporting:
1. If the 'Reporting Friday' is a public holiday under the Negotiable Instruments Act, the NDTL figures of the previous working day are used.
2. Banks do not have to maintain CRR on holidays.
Scenario: The current Bank Rate is 6.50%. 'Bank Gamma' fails to maintain its required CRR for three consecutive days.
Day 1 Shortfall: ₹100 Crore.
Day 2 Shortfall: ₹150 Crore.
Day 3 Shortfall: ₹200 Crore.
At what rate will the penal interest be calculated for the shortfall on Day 3?
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In the context of Monetary Policy, if the RBI decides to increase the Cash Reserve Ratio (CRR),
what is the immediate expected impact on the banking system?
The "Money Multiplier" in an economy is inversely related to the Reserve Ratios. Mathematically, if banks were required to keep 100% of deposits as reserves (CRR = 100%), what would be the value of the money multiplier?
Consider the impact of a high Statutory Liquidity Ratio (SLR) on the economy:
1. It ensures a captive market for Government Securities.
2. It can lead to the "crowding out" of private sector credit.
3. It generally increases the cost of borrowing for the Government.
Consider the following:
Assertion (A): The Cash Reserve Ratio (CRR) is often referred to as a "blunt instrument" of monetary policy.
Reason (R): Unlike Open Market Operations (OMO), a change in CRR affects every single bank uniformly and instantly impacts the entire liquidity structure without nuance.
Evaluate the relationship between Reserve Ratios and Bank Margins:
1. A hike in CRR typically puts pressure on a bank's Net Interest Margin (NIM).
2. Banks can use the interest earned on CRR balances to offset the cost of deposits.
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During a period of high inflation, the RBI adopts a "Tightening" or "Hawkish" stance.
Which of the following actions would be inconsistent (NOT align) with this stance?
Identify the INCORRECT statement regarding the "Operating Procedure" of Monetary Policy:
An 'Unbanked Rural Centre' (URC) is defined as a rural centre that lacks a CBS-enabled 'Banking Outlet', and falls under which specific population tier classifications?
For the purpose of disclosure under Accounting Standard 17 (AS-17), the 'Digital Banking Segment' is classified as a sub-segment of which existing segment?
Which of the following statements, regarding the functions and restrictions of an "Administrative Office" or "Controlling Office" of a bank, are correct?
1. It is permitted to carry out general banking and business transactions.
2. It exercises control or oversight functions on units falling under its jurisdiction.
3. It includes internal administrative functions such as the oversight of the bank's own staff.
4. It is permitted to have direct interface with customers for grievance redressal.
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Consider the following statements, regarding the mandated frequency of Board reviews for various banking channels:
1. The operations of Business Correspondents (BCs) must be reviewed at least once every six months.
2. The review of BCs aims to ensuring that prefunding requirements for Corporate BCs progressively taper down.
3. The operation of doorstep banking facilities must be reviewed on a quarterly basis during the first year of operation.
4. After the first year, the review of doorstep banking facilities is to be conducted on an annual basis.
According to the general permission for opening banking outlets,
what is the minimum percentage of total 'Banking Outlets' opened during a financial year that a domestic scheduled commercial bank must open in Unbanked Rural Centres (URCs)?
According to the population-group wise classification based on the 2011 Census, a 'Rural Centre' is defined as a centre with a population of:
Which of the following statements, regarding compliance with the 25 percent Unbanked Rural Centre (URC) norm, are correct?
1. Part-time banking outlets are counted toward the norm on a pro-rata basis (e.g., 20 hours/week equals 1 full outlet).
2. Outlets opened in Tier 3 to Tier 6 centres of North-Eastern States, Sikkim, and LWE affected districts are treated as equivalent to URCs.
3. The benefit of opening excess outlets in URCs can be carried forward for a period of two years.
4. Outlets opened in Union Territories of Southern India are automatically treated as deemed URCs, regardless of population tier.
Consider the following statements, regarding the role of the State Level Banker Committee (SLBC):
Assertion (A): The SLBC plays a proactive role in facilitating the identification of Unbanked Rural Centres (URCs) for banks.
Reason (R): The SLBC is required to compile, update, and display a list of all URCs in the State on its website.
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Which of the following statements regarding the membership and registration of Credit Information Companies (CICs) are correct?
1. A Credit Institution (CI) must become a member of all the CICs registered with the Reserve Bank of India.
2. The maximum annual fee a CIC can charge a Credit Institution is ₹5,000.
3. FICO India Credit Services Private Limited is one of the four CICs registered under the CICRA, 2005.
4. The maximum one-time membership fee a CIC can charge a Credit Institution is ₹10,000.
Which of the statements given above is/are correct?
Which of the following statements regarding credit information reporting timelines and data rectification are correct?
1. Credit Institutions must submit credit information on the 9th, 16th, 23rd, and last day of the month.
2. For weekly submissions (9th, 16th, 23rd), only 'incremental accounts' need to be reported within 4 calendar days.
3. If data is rejected by a CIC, the Credit Institution must rectify and re-submit it before or along with the data for the subsequent reporting reference date.
4. The 'full file' containing all active accounts must be submitted by the 10th day of the next month.
Which of the statements given above is/are correct?
Which of the following statements regarding Customer Service and Best Practices for Credit Institutions are correct?
1. Credit Institutions must send alerts via SMS or email to customers regarding defaults or 'days past due' (DPD).
2. Any change in the nodal official for grievance redressal must be intimated to the CICs within five calendar days.
3. Loan applications from first-time borrowers may be rejected solely due to the absence of credit history.
4. Credit Institutions must inform customers of the specific reasons for the rejection of their data correction requests.
Which of the statements given above is/are correct?
Which of the following statements regarding the Framework for Compensation to Customers for delayed updation of credit information are correct?
1. Complainants are entitled to a compensation of ₹100 per calendar day if the complaint is not resolved within 30 calendar days.
2. A Credit Institution is liable for compensation if it fails to update the CIC within 21 days of being informed.
3. If multiple banks cause the delay, the compensation is shared equally among them.
4. If a Credit Institution resolves the complaint on the 31st day, the compensation payable is ₹100.
Which of the statements given above is/are correct?
What requirement is specified for all Credit Institutions (CIs) regarding their membership with Credit Information Companies (CICs)?
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In the event of a cancellation of a Credit Institution's (CI) Certificate of Registration (CoR) or licence, what action are Credit Information Companies (CICs) required to take?
Credit Institutions (CIs) shall rectify the rejected data and upload the same with the Credit Information Companies (CICs) within ...... of receipt of such rejection report.
How frequently are Credit Information Companies (CICs) required to undertake periodic exercises or checks to identify identifier inconsistencies in their databases?
For which three distinct segments are Credit Information Companies (CICs) required to prepare and provide a Data Quality Index (DQI)?
Which of the following statements regarding the Data Quality Index (DQI) are correct?
1. CICs must provide DQI scores to member CIs on an annual basis.
2. CIs are advised to undertake a half-yearly review of the DQI for all segments.
3. The DQI score for the Consumer segment is computed as a weighted average of file level DQI scores.
4. A report on DQI issues identified and corrective steps taken must be placed before the CI's top management for review.
Which of the statements given above is/are correct?
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Which of the following statements is/are correct regarding the legal framework and applicability of the Reserve Bank of India (Commercial Banks - Internal Ombudsman) Directions, 2026?
1. These directions are issued by the Reserve Bank of India, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949.
2. The directions apply to every Commercial Bank having 10 or more banking outlets in India, as on March 31, 2025.
3. Under these directions, a "Deficiency in service" is valid only if it results in a quantifiable financial loss to the customer.
4. "Banking Outlet" is defined as a fixed-point service delivery unit.
Consider the following statements regarding the eligibility and independence criteria for the appointment of an Internal Ombudsman (IO) under the 2026 Directions, and
select the correct option.
1. The Internal Ombudsman must be a retired or serving officer, not below the rank of General Manager or its equivalent.
2. The candidate must possess a minimum of seven years of working experience, in areas such as banking, regulation, or consumer protection.
3. A candidate is ineligible if they have previously been employed by the bank, its holding company, or any subsidiary company.
4. The appointee must not be over 70 years of age before the completion of the tenure.
Which of the following statements correctly differentiates the roles and requirements of the Internal Ombudsman (IO) versus the Deputy Internal Ombudsman (Dy. IO) under the RBI Directions, 2026?
1. Rank: The IO requires a minimum rank of General Manager, whereas the Dy. IO requires a minimum rank of Deputy General Manager.
2. Experience: The IO requires a minimum of seven years of relevant experience, whereas the Dy. IO requires a minimum of five years.
3. Concurrent Employment: While an IO may work in more than one Regulated Entity (RE) simultaneously (at the REs' discretion), a Dy. IO is strictly prohibited from being employed in more than one RE simultaneously.
Which of the following statements is/are correct regarding the tenure, removal, and service conditions of the Internal Ombudsman (IO) under the 2026 Directions?
1. The tenure of the IO shall be a fixed term of not less than three years, and the total tenure (including any extension) shall not exceed five years.
2. The emoluments and facilities of the IO are determined by the Customer Service Committee (CSC) of the Board and cannot be changed adversely during the tenure.
3. The Internal Ombudsman cannot be removed before the completion of the term without the explicit approval of the Reserve Bank of India.
4. The number of Internal Ombudsmen to be appointed is determined by the Customer Service Committee, based on the volume of complaints.
Consider the following statements regarding the reporting lines and administrative governance of the Internal Ombudsman (IO) office, and
select the correct option.
1. Reporting Matrix: The IO reports administratively to the Competent Authority (Head of Customer Service Vertical), and functionally to the Customer Service Committee of the Board.
2. Vacancy Protocol: In case of a vacancy due to resignation or death, the bank must inform the Reserve Bank of India within 10 working days.
3. Location: The office of the IO is preferably placed in the Head Office or Corporate Office of the bank.
4. Support: The bank is mandated to provide necessary officers, staff, and information technology support to the IO.
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Which of the following statements accurately describes the operational boundaries and provisions for temporary arrangements regarding the Internal Ombudsman (IO)?
1. The office of the IO is explicitly prohibited from handling complaints received directly from complainants or the public.
2. In a rare case where both the IO and Deputy IO are absent, the bank may appoint a temporary IO for a period not exceeding one month.
3. A temporary IO must be a serving official, equivalent to the rank of General Manager.
4. During the temporary tenure, the official acts as the IO and shall not have any reporting relationship with business verticals.
Which of the following statements is/are correct regarding the governance, reporting, and administrative powers of the Internal Ombudsman (IO) as per the Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2026?
1. The Internal Ombudsman (IO) is explicitly prohibited from representing the regulated entity (bank) in legal cases before any court or forum.
2. The decision of the IO can be overruled only by the "Competent Authority", defined as the Whole Time Director or Executive Director in charge of Customer Service.
3. Every instance where the Competent Authority overrules the IO's decision must be mandatorily placed before the Customer Service Committee (CSC) of the Board for review.
4. The IO is required to furnish reports on their activities to the CSC of the Board, preferably at quarterly intervals, but not less than half-yearly.
Consider the following statements regarding the operational scope, compensation powers, and complaint classification protocols of the Internal Ombudsman (IO).
Which of the following statements is incorrect?
Which of the following statements is/are correct regarding the resolution timelines and communication protocols under the Internal Ombudsman (IO Scheme in banks?
1. For complaints where a specific resolution timeline is prescribed by the RBI or NPCI, the bank must auto-escalate the complaint to the IO sufficiently in advance, to allow at least 10 days for review.
2. In cases where no specific timeline is prescribed, the complaint must be auto-escalated to the IO within 20 days of receipt.
3. The final decision must be communicated to the complainant within 45 days of receiving the complaint.
4. The final reply to the complainant must explicitly state that the complaint has been reviewed by the IO, and include the URL of the RBI's Complaint Management System (CMS).
Consider the following statements regarding the operational constraints and procedural mandates for the Internal Ombudsman (IO) in banks.
Which of the following is/are correct?
1. Banks are strictly prohibited from providing the contact details of the IO in the public domain.
2. The IO is authorized to handle complaints received directly from customers, if the bank fails to resolve them initially.
3. The IO is required to record a "reasoned decision" in every case reviewed.
4. If a complaint is escalated to the RBI Ombudsman without prior IO review, the bank must necessarily seek the IO's comments, and submit them to the RBI Ombudsman.
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Which of the following best describes the reporting and performance monitoring requirements for the Internal Ombudsman (IO) mechanism in banks?
1. The bank must submit a periodic report on the IO's functioning to the RBI on a half-yearly basis.
2. The periodic report must be submitted on or before the 15th day of the month following the relevant period.
3. The Customer Service Committee must specifically analyze cases where there is a substantive difference between the IO's decision, and the decision subsequently given by the RBI Ombudsman.
To facilitate understanding and interpretation, credit scores shall be calibrated from ...... by all Credit Information Companies (CICs).
How frequently are individuals entitled to receive one Free Full Credit Report (FFCR), including a credit score, from Credit Information Companies (CICs)?
Consider the following statements:
Assertion (A) - Information relating to loans that were previously declined to a customer shall not be reported by Credit Information Companies (CICs).
Reason (R) - Reporting such information could be prejudicial to the interests of the customer, as a rejection by one Credit Institution (CI) might be used as a ground for rejection by another CI.
Which of the following statements regarding the retention of credit information by third-party entities (obtained via consent) are correct?
1. Information must be stored only for the time to satisfy the purpose, until consent is withdrawn, or for six months, whichever is earliest.
2. If the purpose is not fulfilled within six months, the entity must seek fresh consent from the individual to retain the information.
3. The maximum period information can be stored, even with extensions, is twelve months.
4. If the purpose is not fulfilled in six months, the entity must delete the data and cannot request it again.
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One of the sub-fields in the enquiry module of Credit Information Companies (CICs) must be invariably designated as 'Business Loan Director Search ......'.
When a Credit Information Company (CIC) shares credit information of an individual with a third-party entity based on consent, where must that information be processed and stored?
Who is responsible for appointing the CISA certified auditor to conduct the Information System (IS) audit of entities that receive credit information based on individual consent?
When a Credit Institution (CI) corrects erroneous data, who is responsible for updating that data in the Credit Information Company's (CIC) database?
If a correction is carried out in a Credit Information Report (CIR), to whom must the Credit Information Company (CIC) provide a free copy of the corrected report?
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Credit Institutions (CIs) must include in their ...... suitable provisions for obtaining Credit Information Reports (CIRs) from one or more CICs for credit decisions.
Credit Institutions (CIs) that are secured creditors under the SARFAESI Act, 2002, must display information about borrowers whose secured assets have been possessed. How often must this list be updated on their website?
Which of the following statements regarding the Technical Working Group (TWG) are correct?
1. The TWG is required to review data reporting formats at least once a year and make recommendations.
2. The four Credit Information Companies act as the convenor of the TWG by rotation, in alphabetical order, for each calendar year.
3. The TWG's primary function is to set the annual membership fees for Credit Institutions.
4. The convenor of the TWG is appointed by the RBI for a two-year term.
Which of the statements given above is/are correct?
Which of the following statements regarding the Standing Sub-Group of the Technical Working Group (TWG) are correct?
1. The Sub-Group functions as an advisory and collaborative body on technical aspects of credit information reporting.
2. The Sub-Group is required to meet at least on a half-yearly basis.
3. The Sub-Group's primary role is to publish the annual Data Quality Index (DQI).
4. The Sub-Group is required to meet at least once in a quarter.
Which of the statements given above is/are correct?
When are Credit Information Companies (CICs) required to send alerts via SMS or email to customers?
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When are Credit Institutions (CIs) required to send alerts via SMS or email to their customers?
Credit Institutions (CIs) must inform Credit Information Companies (CICs) of any changes in their nodal point/official within ...... of such a change.
What action must a Credit Institution (CI) take if it rejects a customer's request for data correction?
Which of the following statements regarding Root Cause Analysis (RCA) and algorithm reviews are correct?
1. CIs must undertake RCA of customer grievances at least on a half-yearly basis.
2. CIs must undertake RCA of customer grievances at least on an annual basis.
3. CICs must conduct a periodic review of their 'Search & Match' logic algorithm at least on a half-yearly basis.
4. CICs must conduct a periodic review of their 'Search & Match' logic algorithm at least on an annual basis.
Which of the statements given above is/are correct?
What is the compensation amount a complainant is entitled to if their complaint regarding credit information is not resolved within thirty calendar days?
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With reference to agricultural advances,
which of the following statements are correct?
1. The specific "crop season" for each crop in a State is determined by the State Level Bankers' Committee (SLBC).
2. "Long duration" crops are defined as those with a crop season longer than one year.
3. "Short duration" crops are those with a crop season of 18 months or less.
Consider the following statements regarding asset classification categories:
1. A "doubtful asset" is one that has remained in the substandard category for a period exceeding 12 months.
2. A "loss asset" is an asset where loss has been identified by the bank or auditors, but the amount has not been written off wholly.
Which of the statements given above is/are correct?
Which of the following statements regarding fundamental banking definitions are correct?
1. A Non-Performing Asset (NPA) is defined as a loan or advance which has ceased to generate income for the bank.
2. An amount due to a bank is treated as "overdue" if it is not paid on the due date fixed by the bank.
Which of the statements given above is/are correct?
Which of the following conditions characterize a Cash Credit/Overdraft (CC/OD) account as "out of order"?
1. Outstanding balance remains continuously in excess of the sanctioned limit/drawing power for 90 days.
2. Outstanding balance is within the limit, but there are no credits continuously for 90 days.
3. Credits in the account are insufficient to cover the interest debited during the previous 90 days.
4. The limit has not been reviewed within 30 days of the due date.
Which of the statements given above is/are correct?
The "Provisioning Coverage Ratio (PCR)" is the ratio of provisioning to:
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Which of the following statements regarding Asset Classification norms and definitions are correct?
1. A "Substandard Asset" is one that has remained NPA for a period less than or equal to 12 months.
2. An exposure is defined as "unsecured" if the realisable value of the security is not more than 10 percent of the outstanding exposure.
3. The RBI's system-based asset classification norms apply only to corporate loans above ₹5 crore.
4. "Loss assets" are those considered uncollectible and of such little value that their continuance as a bankable asset is not warranted.
Which of the statements given above is/are correct?
Consider the following norms regarding Credit Monitoring and Review of Limits:
1. Stock statements relied upon for determining drawing power should not be older than three months.
2. Regular credit limits must be reviewed within 3 months from the due date.
3. An account is classified as NPA immediately if the limit is not reviewed within 90 days of the due date.
4. An account is classified as NPA if the limit remains unreviewed for 180 days from the due date.
Which of the statements given above is/are correct?
For Non-Performing Assets (NPAs) with a balance of ₹5 crore and above,
which of the following due diligence measures are mandatory?
1. Annual stock audit by external agencies.
2. Quarterly stock audit by internal auditors.
3. Valuation of immovable properties by appointed valuers once in every 3 years.
4. Valuation of immovable properties by appointed valuers once in every 5 years.
Which of the statements given above is/are correct?
If a loan account has a due date of March 31 and remains unpaid, it becomes overdue on March 31. If it remains continuously overdue, on which date must it be classified as NPA (upon completion of 90 days)?
Which of the following statements regarding exceptions and exemptions in Asset Classification are correct?
1. Advances against Term Deposits, National Savings Certificates (NSCs), and Life Insurance Policies are exempt from NPA classification, provided adequate margin is available.
2. Credit facilities backed by Central Government Guarantees are classified as NPA only if the Government repudiates the guarantee when invoked.
3. Under the "borrower-wise" classification rule, bills discounted under a Letter of Credit (LC) favouring the borrower are NOT treated as NPA even if the borrower's other facilities are NPA.
4. Advances against Gold Ornaments and Government Securities are also exempt from NPA classification norms.
Which of the statements given above is/are correct?
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Which of the following statements regarding Provisioning Rates for Standard and Doubtful assets are correct?
1. For Standard Assets in the Farm Credit and SME sectors, the provisioning rate is 0.25%.
2. For Standard Assets in the Commercial Real Estate (CRE) sector, the provisioning rate is 1.00%.
3. For the unsecured portion of Doubtful Assets, the provisioning requirement is 100%.
4. For the secured portion of Doubtful Assets remaining doubtful for more than 3 years, the provisioning requirement is 100%.
Which of the statements given above is/are correct?
Which of the following rules governing the mechanics of Asset Classification and Provisioning are correct?
1. An NPA account can be upgraded to 'Standard' only if the entire arrears of interest and principal are paid by the borrower.
2. If the realizable value of security is less than 50% of the assessed value, the asset is straightaway classified as Doubtful.
3. If the realizable value of security is less than 10% of the outstanding balance, the asset is straightaway classified as Loss.
4. For Substandard assets with an unsecured portion, an additional 10% provision is required on the unsecured exposure (over and above the base 15%).
Which of the statements given above is/are correct?
Which of the following statements regarding special provisioning norms are correct?
1. For fraud accounts, the bank must generally provide for the entire amount (100%) immediately, though this can be spread over 4 quarters.
2. Provisioning for "Country Risk" is mandatory only if the bank's net funded exposure to that country is 1.00% or more of its total assets.
3. Housing loans at "teaser rates" attract a higher standard asset provisioning of 2.00%, which reverts to the normal rate only after 1 year of satisfactory performance post-reset.
4. Fraud accounts are treated as Standard assets until the police investigation is complete.
Which of the statements given above is/are correct?
Which of the following rules govern Income Recognition and Appropriation of Recoveries?
1. For Non-Performing Assets (NPAs), income must be recognized on a cash basis (actual receipt) rather than accrual.
2. If an account turns NPA, any interest previously accrued but not realized must be reversed.
3. The appropriation of recoveries (towards Principal vs. Interest) is determined strictly by the RBI's "Interest First" mandate.
4. The appropriation of recoveries must follow the uniform and consistent Board-approved policy of the bank.
Which of the statements given above is/are correct?
The current prudential norms on Income Recognition, Asset Classification, and Provisioning (IRAC) in the Indian banking system are primarily based on the recommendations of which committee?
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An "advance against own deposit" includes advances granted against Rupee/FCNR(B) term deposits standing in the name of
which of the following?
1. The borrower (singly or jointly)
2. One of the partners of a partnership firm (where the advance is made to said firm)
3. The proprietor of a proprietary concern (where the advance is made to such concern)
4. A ward whose guardian is competent to borrow (where the advance is made to the guardian)
Which of the following is NOT listed as a component of the "External benchmark rate"?
The "Benchmark Prime Lending Rate (BPLR)" is defined as the internal benchmark rate used to determine interest rates on advances/loans sanctioned up to which date?
Which of the following statements regarding "Fixed Rate Loans" are correct?
1. A "Fixed rate loan" is defined as a loan on which the interest rate is fixed for the entire tenor of the loan.
2. If the interest rate does not remain fixed for the entire tenor, the loan is defined as a "Floating rate loan".
3. Interest rates on fixed rate loans with a tenor below 3 years, must not be less than the benchmark rate for a similar tenor.
4. Fixed rate loans are prohibited for any tenor exceeding 10 years.
While the general rule mandates that interest shall be charged on all advances at monthly rests, which specific category of advances is exempted and governed by separate circulars?
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Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, a "large defaulter" must have an outstanding amount of at least ₹1 crore.
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, the term "suit filed account" includes pending proceedings under which Acts?
1. The Insolvency and Bankruptcy Code, 2016.
2. The SARFAESI Act, 2002.
3. Acts governing co-operative societies.
4. The Indian Contract Act, 1872.
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, when is a "wilful default" deemed to have occurred?
1. A borrower defaults despite having the capacity to honour the obligations.
2. A guarantor refuses to honour the guarantee despite having sufficient means.
3. A borrower defaults due to verifiable market volatility.
4. A guarantor defaults but holds no assets in their name.
According to the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions,
what is the minimum outstanding amount for a "wilful defaulter"?
Which statements regarding the classification process are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. The borrower has 21 days to reply to the show-cause notice.
2. The borrower has the right to be represented by a lawyer during the hearing.
3. The Review Committee conducts the personal hearing.
4. The classification process is an in-house proceeding.
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Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, when is a non-whole-time director considered a wilful defaulter?
1. The default took place with their consent.
2. The default took place with their connivance.
3. They were aware of the default but did not record an objection in the minutes.
4. They hold more than 10% equity in the borrowing company.
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, the bank must classify a borrower as a wilful defaulter within what timeframe?
Which statements regarding penal measures against wilful defaulters are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. New ventures are barred from credit facilities for five years after removal from the LWD.
2. Additional credit facilities are barred for one year after removal from the LWD.
3. The bar on new ventures applies for ten years.
4. The bar on additional credit applies for three years.
Which statements regarding guarantor liability are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. Liability is co-extensive with the principal debtor under Section 128 of the Indian Contract Act.
2. The lender must exhaust all remedies against the principal debtor first.
3. The lender can proceed against the guarantor without exhausting remedies against the principal.
4. Liability is secondary and contingent upon the principal's insolvency.
Which statements regarding the reporting of "Large Defaulters" are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. Banks must submit the list to credit information companies (CICs) monthly.
2. Banks must submit the list to CICs annually.
3. For suit-filed accounts, the ₹1 crore threshold relates to the suit amount.
4. For suit-filed accounts, the threshold relates to the original sanctioned limit.
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Which statements regarding the transfer of defaulted loans are correct under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions?
1. The transferor must complete the wilful defaulter classification before transferring the asset.
2. The transferor must report the borrower to CICs before the transfer.
3. The transferee must report the account as a wilful defaulter until the balance falls below ₹25 lakh.
4. The transferee has no reporting obligations for purchased debts.
Under the Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, when should a bank commission a forensic audit of a borrower's affairs?
During periodic updation of KYC for an individual customer, if there is a change only in the address details, the bank must verify the declared address through "positive confirmation" within what timeframe?
When an account holder who was a minor at the time of account opening becomes a major, the bank is required to obtain fresh photographs and ensure that Customer Due Diligence (CDD) documents are available as per current standards.
Regarding the "Due Notices for Periodic Updation of KYC,"
what is the minimum number of advance intimations and subsequent reminders a bank must send to a customer before the due date and after the due date, respectively?
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In the context of customers unable to provide PAN or Form No. 60, "temporary ceasing of operations" in relation to an account is defined as:
For accounts opened in non-face-to-face mode (subject to Enhanced Due Diligence), the first transaction must necessarily be a credit from an existing KYC-complied bank account of the customer.
How are "Politically Exposed Persons" (PEPs) defined for the purpose of the RBI (Commercial Banks – KYC) Directions, 2025?
Regarding the "Simplified norms for Self Help Groups (SHGs),"
which of the following statements are correct?
1. The bank must perform Customer Due Diligence (CDD) on all members while opening the savings bank account of the SHG.
2. The CDD of all the office bearers shall suffice for opening the savings account.
3. The bank may undertake CDD of all the members of an SHG at the time of credit linking.
4. SHGs are not permitted to open savings accounts without PAN cards for all members.
When a bank opens a Non-Resident Ordinary (NRO) account for a foreign student pending address verification,
what is the cap on the aggregate withdrawal from such an account during the 30-day period?
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Consider the following statements regarding the classification of climate risks and associated terminology under the RBI regulatory framework:
1. The Reserve Bank explicitly recognizes climate change not merely as a reputational issue, but as a core Prudential Financial risk that must be evaluated over defined short, medium, and long-term horizons.
2. Physical risks refer to the financial losses arising strictly from policy, legal, or technological shifts while transitioning toward a low-carbon economy.
3. "Greenwashing" is defined as the deceptive practice of marketing a financial product's environmental benefits to artificially attract capital for non-compliant activities.
4. Transition risks encompass the direct economic costs resulting from acute extreme weather events and chronic shifts like sea-level rise.
Which of the statements given above is/are correct?
Consider the following statements regarding the operational framework and utilization of Green Deposits by Commercial Banks:
1. Commercial banks are strictly required to denominate all green deposits exclusively in Indian Rupees (INR) and are prohibited from offering differential interest rates compared to regular deposits.
2. Any unallocated proceeds from green deposits must be temporarily parked in Level 1 High Quality Liquid Assets (HQLA) for a maximum permitted tenure of exactly one year.
3. A bank can raise green deposits without a prior Board-approved Financing Framework, provided the funds are exclusively directed toward large-scale hydropower projects exceeding 25 MW.
4. Projects involving the extraction of fossil fuels, nuclear power generation, and waste incineration are explicitly placed on the negative list and are prohibited from receiving green finance.
Which of the statements given above is/are correct?
Consider the following statements regarding the empanelment, certification, and transparency protocols for recovery agents under the RBI Second Amendment Directions 2026:
1. Regulated Entities must ensure all debt recovery agents hold a mandatory IIBF certification, granting a strict 1-year grace period from the issuance date for existing uncertified agents to obtain it.
2. An up-to-date list of empanelled recovery agents, explicitly detailing the names of individuals and their respective engagement periods, must be prominently displayed on all Regulated Entity customer interface channels.
3. If a Regulated Entity changes the assigned recovery agent during an ongoing recovery process, it is only required to update its internal database and is exempt from notifying the borrower to avoid operational delays.
4. Regulated Entities are required to promptly intimate the termination of any recovery agent to the borrower to prevent any unauthorized future interaction.
Which of the statements given above is/are correct?
Scenario: A borrower defaults on a retail loan from an NBFC. The NBFC assigns a third-party recovery agent. The borrower explicitly requests not to be called between 10:00 hours and 12:00 hours due to ongoing medical treatments. Based on the RBI 2026 Responsible Business Conduct guidelines, consider the following statements regarding the correct regulatory actions:
1. The recovery agent is permitted to contact or visit the borrower strictly within the mandated standard window of 08:00 hours to 19:00 hours, and must explicitly honour the borrower's request to avoid the 10:00 to 12:00 hours slot.
2. If the borrower remains unreachable, the agent is legally authorized to approach the borrower's co-workers and relatives to ascertain their whereabouts and exert recovery pressure.
3. The recovery agent must mandatorily carry and physically present a formal ID card along with a copy of the NBFC official recovery letter upon initiating direct contact with the borrower.
4. The agent is permitted to make anonymous calls outside the 08:00 to 19:00 hours window strictly if the borrower has evaded contact for more than 90 consecutive days.
Which of the statements given above is/are correct?
Consider the following statements regarding the legal definitions of harassment and misrepresentation in loan recovery under the RBI 2026 Amendment Directions:
1. The regulatory framework legally classifies harsh recovery methods to include intimidation, physical threats, and any acts deliberately intended to humiliate borrowers publicly.
2. While physical intimidation is strictly banned, sending inappropriate or abusive messages via mobile SMS and social media platforms is excluded from the formal definition of abusive recovery practices.
3. Recovery agents are strictly prohibited from making any false or misleading representations regarding the actual mathematical extent of the debt or the legal consequences of non-repayment.
4. Regulated Entities must formulate explicit policy procedures ensuring the sensitive handling of recovery processes specifically in the event of the death of a borrower or guarantor.
Which of the statements given above is/are correct?
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Consider the following statements regarding the applicability and core definitions under the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Directions, 2025:
1. The classification of 'Consumer Credit' explicitly excludes education loans, loans for the creation of immovable assets, and consumption loans to farmers under the KCC scheme.
2. An account is mandatorily classified as an 'Inoperative Account' if there are no customer-induced transactions for a continuous period exceeding two years.
3. The Unclaimed Deposit Reference Number (UDRN) is a unique CBS-generated number assigned to each unclaimed deposit transferred to the DEA Fund to ensure account number anonymity.
Which of the statements given above is/are correct?
Consider the following statements regarding the institutional framework and Customer Service Committees mandated for Commercial Banks:
1. A detailed memorandum reviewing customer service and customer care aspects must be placed before the Board of Directors exactly once every quarter.
2. The Standing Committee on Customer Service must be chaired by the CMD/CEO or Executive Director and must include non-officials to ensure independent feedback.
3. Branch Level Customer Service Committees are mandated to convene at least once a month to actively study local complaints and suggestions.
4. Banks must provide entirely separate enquiry counters at their large or bigger branches in addition to the regular reception counter.
Which of the statements given above is/are correct?
Consider the following statements regarding mandated business hours and rural branch operational guidelines:
1. A bank must function for public transactions for a minimum duration of four hours on weekdays and two hours on Saturdays.
2. Banks are required to extend business hours for non-cash banking transactions up to exactly two hours before the close of working hours.
3. Branches located in centers with a population of 10,000 or less may designate one day of the week as a non-public working day exclusively for field visits.
4. The designated non-public working day for rural branch managers must strictly fall between two active working days.
Which of the statements given above is/are correct?
Scenario: A third-party security breach occurs at a bank, resulting in unauthorized transactions across multiple customer profiles. None of the customers shared their payment credentials. Based on RBI guidelines, consider the following statements regarding the correct regulatory actions to determine customer liability:
1. A customer who reports the unauthorized transaction within three working days of receiving the communication is entitled to zero liability.
2. A Basic Savings Bank Deposit (BSBD) account holder who reports the transaction on the fifth working day faces a maximum capped liability of ₹10,000.
3. A standard Savings Bank account holder who reports the transaction on the sixth working day faces a maximum capped liability of ₹10,000.
4. The bank must credit the shadow reversal of the involved amount to the customer's account within 10 working days from the date of notification.
Which of the statements given above is/are correct?
Scenario: Mr. Sharma falls victim to a bona fide electronic banking fraud of ₹40,000. He reports the incident to the National Cyber Crime Portal and his bank within 3 calendar days. He has never claimed such compensation before. Based on the 2026 Limiting Liability amendments, consider the following statements regarding the compensation metrics and cost apportionment:
1. Mr. Sharma is eligible for a maximum compensation of ₹25,000 since it is the lower of 85% of the net loss or ₹25,000, and he reported within the strict 5 calendar days timeline.
2. Out of the ₹25,000 compensation paid, the Reserve Bank of India (RBI) will bear a calculated contribution of exactly ₹19,118.
3. The customer's bank and the beneficiary bank will each contribute exactly ₹2,941 towards the ₹25,000 compensation payout.
4. The bank is granted a maximum of 10 calendar days to credit this specific compensation amount to his account after receiving the application.
Which of the statements given above is/are correct?
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Consider the following statements regarding the Basic Savings Bank Deposit (BSBD) Account framework under the April 2026 amendments:
1. Banks are mandated to provide a minimum of 25 cheque leaves per year free of charge upon customer request.
2. Digital payment transactions such as NEFT, RTGS, and UPI must be strictly excluded from the mandated limit of four free withdrawals per month.
3. A bank must execute the conversion of a standard savings account into a BSBD account within exactly 7 days from the receipt of a customer's request.
4. Customers holding a BSBD account are permitted to maintain one additional standard savings account in the same bank for term deposit linkages.
Which of the statements given above is/are correct?
Consider the following statements regarding banking facilities for senior citizens and differently-abled persons:
1. Banks must mandatorily offer doorstep banking services, including cash delivery and KYC submission, to all senior citizens above 70 years of age.
2. A fully KYC-compliant account must be automatically converted into a 'Senior Citizen Account' based on the date of birth available in the bank's records.
3. Where an incapacitated customer uses a thumb impression for withdrawal, it must be identified by two independent witnesses, one of whom must be a responsible bank official.
4. Banks have the discretion to insist on the physical presence of differently-abled persons at the home branch for the issuance of cheque books.
Which of the statements given above is/are correct?
Calculate the applicable compensation interest rates for the following two independent scenarios based on RBI Directions:
Scenario A: A customer requests a duplicate demand draft of ₹4,000. The bank delays the issuance by 20 days, breaching the mandated fortnight timeline.
Scenario B: A domestic bill lodged by a customer faces delayed collection by the bank.
(Assume the prevailing Savings Bank interest rate is 3.50% p.a., and the applicable Term Deposit rate is 6.50% p.a.).
What are the exact penal interest rates the bank must pay to the customers for Scenario A and Scenario B, respectively?
Consider the following statements regarding penal charges for the non-maintenance of minimum balances in savings accounts:
1. Banks must provide a minimum of 30 days advance notice to account holders before implementing any changes to the prescribed minimum balance limits.
2. If an account balance falls below the threshold, the bank must provide exactly one month's notice to allow the customer to restore the balance before levying penal charges.
3. Penal charges must be levied as a fixed, direct proportion of the actual shortfall observed, rather than a flat, uniform fee across all deficit levels.
4. The savings account balance can eventually turn into a negative balance solely due to the repeated levy of these penal charges over consecutive quarters.
Which of the statements given above is/are correct?
Scenario: Mr. X and Mrs. Y hold a joint term deposit with a 'Former or Survivor' mandate. Mrs. Y (the Survivor) requests a premature withdrawal to cover an emergency while Mr. X is still alive. Later, law enforcement authorities freeze another term deposit held individually by Mr. X, which matures during the freeze period without any renewal instructions from him. Based on RBI guidelines, consider the following statements regarding the correct regulatory actions:
1. The bank must permit Mrs. Y to prematurely withdraw the 'Former or Survivor' term deposit without Mr. X's signature, as she is a joint holder.
2. Premature withdrawal of the 'Former or Survivor' deposit requires the explicit consent and signatures of both Mr. X and Mrs. Y while both are alive.
3. The bank must automatically renew Mr. X's frozen term deposit for a term equal to the original term to prevent loss of interest.
4. The bank must transfer the matured proceeds of the frozen term deposit to a suspense account until the law enforcement freeze is lifted.
Which of the statements given above is/are correct?
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Consider the following statements regarding the classification and activation of inoperative accounts and DEA Fund transfers:
1. Zero-balance accounts opened for Direct Benefit Transfers (DBT) and Scholarships are entirely exempt from the stipulation of being marked inoperative.
2. The classification of an account as inoperative relies strictly on the absence of customer-induced transactions, completely ignoring bank-induced debits or credits.
3. Banks are permitted to levy standard penal charges for the non-maintenance of minimum balances in accounts classified as inoperative.
4. The DEA Fund website search facility must display the claimant's Name, Address (excluding PIN), and the unique UDRN, while strictly hiding the account number.
Which of the statements given above is/are correct?
Consider the following statements regarding the allotment and infrastructural security guidelines for safe deposit lockers:
1. To ensure prompt payment, banks can demand a Term Deposit covering exactly three years' rent plus break-open charges from both new and existing locker hirers.
2. In the event of the surrender of a locker, the bank must proportionately refund any advance rent collected from the customer.
3. The bank's vault officer is strictly prohibited from remaining present when the locker is actually opened by the hirer after the first key is unlocked.
4. CCTV recordings of entry and exit to the locker strong room must be preserved by the bank for a minimum period of 180 days.
Which of the statements given above is/are correct?
Scenario: A bank branch suffers a severe burglary, resulting in the loss of contents from several safe deposit lockers. Additionally, the bank plans to break open certain lockers due to prolonged non-payment of rent. Based on RBI guidelines, consider the following statements:
1. For locker losses arising from burglary, theft, or internal employee fraud, the bank's maximum liability is strictly capped at an amount equivalent to 100 times the prevailing annual rent of the locker.
2. The bank has the discretion to legally break open a locker if the customer has not paid the rent for 3 consecutive years, after following due notice procedures.
3. If a locker remains inoperative for 7 years and the hirer cannot be located, the bank can dispose of the articles even if the rent is being paid regularly.
4. During any break-open procedure due to a lost key or unpaid rent, the inventory must be prepared in the presence of at least two independent witnesses.
Which of the statements given above is/are correct?
Consider the following statements regarding the settlement of claims in respect of deposit accounts of deceased customers:
1. Access and payment granted to a nominee or survivor strictly constitutes full discharge of the bank's liability, as they receive the funds purely as a "trustee" of the legal heirs.
2. For deceased accounts without a nominee, the "threshold limit" for a simplified claim settlement without requiring a Succession Certificate is strictly fixed at ₹1 Lakh across all banks.
3. A bank must settle a claim in respect of deposit accounts within a maximum period of 15 calendar days from the receipt of all required documents.
4. If the bank delays the settlement of a deposit claim beyond the mandated timeline, it must pay compensation at a rate not less than the prevailing Bank Rate plus 4 percent per annum.
Which of the statements given above is/are correct?
Scenario: A customer passes away leaving a safe deposit locker without any nomination. The legal heirs submit all required claim documents. The bank delays processing the claim and fixing the date for inventory by 10 days beyond the mandated RBI timeline. Based on the guidelines, consider the following statements:
1. The bank was legally required to process the claim and fix the date for inventory within exactly 15 calendar days of receiving the documents.
2. The bank must pay a flat compensation of ₹5,000 for each day of delay beyond the mandated timeline, totalling a penalty of ₹50,000 for the 10-day delay.
3. Since there is no nomination, the inventory of the locker contents must be carried out in the presence of an independent valuer and two independent witnesses.
4. The legal heirs are strictly exempt from submitting a Bond of Indemnity under the simplified procedure for locker claims without a nominee.
Which of the statements given above is/are correct?
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Consider the following statements regarding Responsible Lending Conduct and the Key Facts Statement (KFS):
1. The mandate to provide a Key Facts Statement (KFS) applies to all retail and MSME term loan products, explicitly including credit card receivables.
2. The KFS shall have a minimum validity period of 3 working days for loans with a tenor of 7 days or more.
3. Charges recovered by the bank on behalf of third-party service providers, such as insurance or legal charges, must form a component of the Annual Percentage Rate (APR).
4. Banks are required to convey in writing the main reasons for loan rejection exclusively for retail loans exceeding ₹5 Lakhs.
Which of the statements given above is/are correct?
Consider the following statements regarding the reset of floating interest rates and the levy of penal charges:
1. Upon the reset of floating interest rates, banks must ensure that the elongation of the loan tenor does not result in negative amortisation.
2. Penalties for non-compliance of material terms must be levied strictly as 'penal interest' with mandatory capitalisation over the loan tenor.
3. Penal charges levied on individual borrowers for non-business purposes cannot be higher than the penal charges applicable to non-individual borrowers for similar non-compliance.
4. For floating rate loans sanctioned on or after January 1, 2026, banks are strictly prohibited from levying pre-payment charges on loans granted to Micro and Small Enterprises (MSEs) for business purposes.
Which of the statements given above is/are correct?
Scenario: Three borrowers successfully repay their loans, but face distinct issues. Borrower X's original property documents are lost by the bank. Borrower Y is waiting for the release of his pledged gold collateral. Borrower Z defaulted, forcing the bank to auction his gold collateral. Based on RBI guidelines, consider the following regulatory actions:
1. The bank must release Borrower Y's pledged gold collateral on the same day, but in any case, not exceeding a maximum period of 7 working days.
2. For Borrower X's lost property documents, the bank must pay a compensation of ₹5,000 per day, calculated strictly after a total grace period of 60 days.
3. The bank must set the initial reserve price for Borrower Z's gold collateral auction at not less than 85 percent of its current market value.
4. Banks are permitted to mandate legal representation for the release of other assets of deceased borrowers even if there are no disputes.
Which of the statements given above is/are correct?
Consider the following statements regarding the conduct and engagement of recovery agents:
1. Recovery agents for general loans are permitted to contact borrowers strictly between 08:00 hours and 19:00 hours.
2. For microfinance loans, field staff may visit the borrower's residence on the very first day of default without requiring them to visit a central designated place.
3. Persistent telephonic recovery calls for microfinance loans before 09:00 a.m. and after 06:00 p.m. are officially classified as a banned/harsh recovery practice.
4. All engaged Direct Recovery Agents are legally mandated to complete a specific certificate course instituted by the Indian Institute of Banking and Finance (IIBF).
Which of the statements given above is/are correct?
Consider the following statements regarding the July 2026 amendments on Mis-selling and Dark Patterns in digital banking:
1. 'Basket Sneaking' is a banned dark pattern involving the secret inclusion of additional items at checkout without explicit user consent.
2. Compulsory bundling, which makes the availment of a core banking product conditional upon purchasing a third-party product, is legally defined as mis-selling.
3. Bank employees and Direct Selling Agents (DSAs) are permitted to make telephonic sales calls up until 19:00 hours by default.
4. If a mis-selling complaint is established, the bank must refund the entire amount paid by the customer and compensate for any resultant loss.
Which of the statements given above is/are correct?
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Consider the following statements regarding cheque operations and dishonour management guidelines:
1. Banks must print all cheque forms strictly in Hindi and English, but customers are permitted to write cheques in Hindi, English, or the concerned regional language.
2. In the event of a cheque dishonour, the instrument must be returned or dispatched to the customer promptly, and in any case within a strict 24-hour window.
3. The bank's internal policy must specifically address the frequent dishonour of cheques of value less than ₹1 crore, as well as ECS and NACH mandates.
4. Data concerning each dishonoured cheque for an amount of ₹50 Lakhs and above must mandatorily form part of the bank's MIS and be reported to the controlling office.
Which of the statements given above is/are correct?
Consider the following statements regarding customer communication, printed materials, and ATM infrastructure:
1. A bank must ensure that all its automated teller machines (ATMs) are talking ATMs equipped with Braille keypads.
2. A bank must make available all printed material used by retail customers, such as account opening forms and passbooks, strictly in a bilingual format (Hindi and English).
3. In cases of erroneous debits where neither the bank nor the customer is at fault, but the fault lies elsewhere in the system, the bank must compensate the customers up to a specified limit.
4. While printing booklets and informational brochures for retail customers, the bank must ensure that the font size is a minimum of Arial 10.
Which of the statements given above is/are correct?
Based on the Reserve Bank of India guidelines for export finance, consider the following statements regarding processing timelines and decision-making:
1. Banks are mandated to speed up the process of issuing Gold Cards to eligible exporters and ensure the process is completed within a strict period of three months.
2. The sanction of fresh or enhanced export credit limits must be made within exactly 45 days from the receipt of the completed application.
3. The renewal of existing export credit limits must be executed by the bank within 30 days from the receipt of the application.
4. Applications for ad hoc export credit facilities (other than for Gold Card holders) must be processed within 15 days.
5. Banks must reduce intervening layers in the sanctioning process to ensure that the total number of layers involved in decision-making for export finance does not exceed three.
Which of the statements given above is/are correct?
Consider the following statements regarding borrowal accounts, loan modifications, and export bill collections:
1. If a borrower requests the transfer of their borrowal account, the bank must convey its consent or objection within 21 days from the date of receipt of the request.
2. Any modifications or changes in interest rates and associated loan charges must be effected by the bank only on a prospective basis.
3. Banks are permitted to charge borrowers a nominal fee for providing a copy of the loan agreement and its enclosures at the time of sanction or disbursement.
4. For the delayed credit of export bills drawn in a foreign currency, the bank must automatically pay the FEDAI-stipulated compensation to the exporter, without waiting for a demand.
Which of the statements given above is/are correct?
Scenario: A 12-year-old minor opens an independent savings account. A pensioner visits a non-home branch of his bank to submit his annual life certificate. A customer purchases a demand draft for a business transaction. Based on RBI guidelines, consider the following statements:
1. Minors above the age of 10 years are legally permitted to open and operate savings or term deposit accounts independently without a guardian.
2. Accounts of minors, whether operated independently or by a guardian, must never be allowed to be overdrawn and must always remain in a credit balance.
3. The non-home branch receiving the pensioner's life certificate must physically mail the document to the home branch for CBS updation within 3 working days.
4. The demand draft purchased by the customer shall be uniformly valid for a strict period of exactly three months across all commercial banks.
Which of the statements given above is/are correct?
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Consider the following statements regarding the regulatory framework for sales ethics and third-party products under the 2026 Amendments:
1. Any agent or representative of a third party present within bank premises for sales must be clearly distinguishable from bank employees via 'on-person' identification.
2. Banks are permitted to club consents for multiple products and services together into a single master agreement to streamline the onboarding process.
3. Direct Selling Agents (DSAs) must make an upfront disclosure to the customer regarding any difference in fees or interest rates if a product is purchased through them versus directly from the bank.
4. A bank is strictly prohibited from funding the purchase of a product or service out of any loan facility sanctioned to the customer without obtaining explicit consent.
Which of the statements given above is/are correct?
Consider the following statements regarding mis-selling grievances and banned digital 'Dark Patterns':
1. A bank must establish a mechanism to actively seek feedback from customers within exactly 30 days from the sale of any product to ensure the features and risks were understood.
2. If no specific regulator timeline is provided, customers are permitted to lodge a mis-selling complaint within a maximum window of 30 days of receiving the signed terms.
3. The dark pattern of 'Forced Action' exclusively refers to the practice of falsely implying product scarcity using countdown timers to mislead immediate action.
4. 'Subscription Trap' is defined as a deceptive practice involving making cancellation impossible, hiding the cancellation option, or forcing auto-debits for a purportedly free subscription.
Which of the statements given above is/are correct?
Consider the following statements regarding the engagement and authorisation of recovery agents by commercial banks:
1. When forwarding a recovery case to an agent, the bank must inform the borrower via a formal written notice, and any subsequent change of the agent requires immediate notification.
2. A bank is strictly forbidden from forwarding a case to a recovery agent if a grievance is pending, unless there is concrete evidence the complaint is frivolous or vexatious.
3. Recovery agents must carry an authorization letter containing the direct contact details of the bank's grievance redressal officer when initiating the recovery process.
4. The Reserve Bank of India lacks the statutory power to impose a jurisdictional or functional ban on a bank from engaging recovery agents; it can only impose monetary penalties.
Which of the statements given above is/are correct?
Consider the following statements regarding the definitions and boundaries of customer negligence in electronic banking frauds:
1. Customer negligence is explicitly defined to include ignoring specific and clear warnings communicated by the bank regarding ongoing scams.
2. The act of downloading malicious applications resulting in unauthorized access to banking credentials is legally classified as customer negligence.
3. In all cases of established customer negligence, the customer bears the entire financial loss until the unauthorized transaction is officially reported to the bank.
4. The burden of proving customer negligence or liability in fraudulent electronic banking transactions rests entirely on the customer through digital forensic evidence.
Which of the statements given above is/are correct?
Scenario: A high-net-worth individual holds a Current Account with an overdraft limit of ₹40 Lakhs. He falls victim to a third-party electronic banking breach and reports it to the bank on the sixth working day. The bank initiates its investigation and processes the reversals. Based on RBI guidelines, consider the following statements:
1. Because the breach was reported between 4 to 7 working days, the maximum liability for this specific Current Account profile is strictly capped at ₹25,000.
2. If the delay in reporting had extended beyond 7 working days, the customer's liability would be determined strictly as per the bank's Board approved policy.
3. The bank must ensure that the fraud complaint is resolved, liability is established, and a final response is issued within a maximum of 30 calendar days from receipt.
4. Any shadow reversals or compensation credits processed by the bank must be value-dated to the date the complaint was lodged, rather than the original date of occurrence.
Which of the statements given above is/are correct?
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Scenario: A bona fide bank customer suffers an unauthorized electronic banking fraud resulting in a net loss of exactly ₹20,000. The customer promptly reports the fraud to the National Cyber Crime Portal and his bank within 3 calendar days. Based on the March 2026 Limiting Liability amendments, calculate the total compensation payable to the customer and the exact absolute monetary burden borne by the Reserve Bank of India (RBI), the Customer's Bank, and the Beneficiary Bank, respectively.
What are the correct financial allocations for this specific claim?
Consider the following statements regarding Basic Banking Services classification limits and general operational rounding rules:
1. An account qualifies for Basic Banking Services if the maximum ceiling for remittances is up to ₹10,000 and for collections is strictly below ₹10,000.
2. The classification for Basic Banking Services permits foreign exchange transactions up to a maximum limit of $1,000.
3. All transactions, including the charging of interest on advances, must be rounded off to the nearest rupee, ignoring fractions less than 50 paise.
4. Banks are officially permitted to use strict margin and security stipulations as a direct substitute for conducting due diligence on the creditworthiness of a borrower.
Which of the statements given above is/are correct?
Consider the following statements regarding borrower guidance, deceased customer assets, and minor accounts:
1. Minors above the age of 10 years are legally permitted to open and operate savings or term deposit accounts independently.
2. Accounts of minors, when operated independently, are permitted to utilize overdraft facilities up to a maximum limit of ₹5,000.
3. A bank must invariably furnish a copy of the loan agreement and all its enclosures to the borrower at the time of sanction or disbursement.
4. Banks are strictly prohibited from insisting upon legal representation for the release of other assets of deceased borrowers, provided there are no underlying disputes.
Which of the statements given above is/are correct?
Scenario: A customer who previously operated a minor account independently turns 18. Another customer is reported missing for over a year, leaving behind a deposit of ₹80,000. A third deceased customer's account receives a dividend credit after the final claim settlement. Based on RBI guidelines, consider the following required actions:
1. The bank must mandatorily obtain fresh operating instructions and specimen signatures from the minor customer immediately upon them attaining the age of majority.
2. For the missing person's claim of ₹80,000, the bank can settle the claim using a copy of the FIR and a police non-traceable report in lieu of a formal death certificate.
3. The bank must deduct standard TDS from depositors even if they submit a valid declaration in Form 15-G or 15-H.
4. The bank must accept the post-settlement dividend credit into the deceased customer's closed account and notify the legal heirs to initiate a fresh claim.
Which of the statements given above is/are correct?
Consider the following statements regarding the operational management and activation of inoperative accounts:
1. If a customer responds to an inoperative warning alert with valid reasons for non-operation, the bank must classify the account as operative for an 'extended period' of one more year.
2. The financial amounts lying in inoperative accounts and unclaimed deposits must be subjected to a mandatory concurrent audit.
3. A bank is permitted to allow automated bank-induced debit transactions in an inoperative account to recover administrative maintenance charges.
4. Upon the successful activation of an inoperative account, the bank may impose a cooling-off period and must automatically intimate the account holder via SMS or email.
Which of the statements given above is/are correct?
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An "advance against own deposit" includes advances granted against Rupee/FCNR(B) term deposits standing in the name of
which of the following?
1. The borrower (singly or jointly)
2. One of the partners of a partnership firm (where the advance is made to said firm)
3. The proprietor of a proprietary concern (where the advance is made to such concern)
4. A ward whose guardian is competent to borrow (where the advance is made to the guardian)
Which of the following is NOT listed as a component of the "External benchmark rate"?
The "Benchmark Prime Lending Rate (BPLR)" is defined as the internal benchmark rate used to determine interest rates on advances/loans sanctioned up to which date?
Which of the following statements regarding "Fixed Rate Loans" are correct?
1. A "Fixed rate loan" is defined as a loan on which the interest rate is fixed for the entire tenor of the loan.
2. If the interest rate does not remain fixed for the entire tenor, the loan is defined as a "Floating rate loan".
3. Interest rates on fixed rate loans with a tenor below 3 years, must not be less than the benchmark rate for a similar tenor.
4. Fixed rate loans are prohibited for any tenor exceeding 10 years.
While the general rule mandates that interest shall be charged on all advances at monthly rests, which specific category of advances is exempted and governed by separate circulars?
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Consider the following statements regarding pricing of floating rate advances:
Assertion (A) - When floating rate advances are linked to an internal benchmark rate, banks determine the actual lending rate by adding components of spread to the internal benchmark.
Reason (R) - Banks are prohibited from offering advances on floating interest rates and must strictly use fixed rates for all term loans.
Regarding the calculation methodology of the Marginal Cost of Funds based Lending Rate (MCLR),
which of the following statements are correct?
1. The four explicit components of MCLR are Marginal cost of funds, Negative carry on account of CRR, Operating costs, and Tenor premium.
2. The "Negative carry on mandatory CRR" is calculated as: `Required CRR x (marginal cost) / (1 - CRR)`.
3. The "Operating Costs" component must include costs of providing services, even if they are separately recovered by way of service charges.
4. The change in "Tenor premium" must be uniform for all types of loans for a given residual tenor, and cannot be borrower specific.
Which of the following statements accurately reflect the regulations governing the "Base Rate" administration?
1. There can be only one Base Rate for each bank.
2. Banks shall review the Base Rate at least once in a quarter.
3. Banks are generally prohibited from reviewing the Base Rate methodology, for a period of three years from the date of its finalization.
4. Banks that commenced operations after September 2, 2013, are permitted to revise their methodology once within a year from the date of commencement of business.
Banks are required to publish the internal benchmark (MCLR) for specific maturities. These include overnight MCLR, one-month MCLR, three-month MCLR, six-month MCLR, and …… MCLR.
In the case of a takeover of bank branches in rural and semi-urban centres, the existing borrowers are mandatorily required to continue their accounts with the acquiring bank, to ensure financial stability.
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Which of the following statements regarding the operational framework of the "External Benchmark" system are correct?
1. Floating rate loans to Micro and Small Enterprises (MSEs), were required to be benchmarked to an external rate, effective from October 01, 2019.
2. Floating rate loans to Medium Enterprises, were required to be benchmarked to an external rate, effective from April 01, 2020.
3. Banks are permitted to adopt multiple different external benchmarks within the same loan category (e.g., distinct benchmarks for different housing loan products).
4. The interest rate under the external benchmark system, must be reset at least once in three months.
Regarding the regulation of "Spreads" over benchmark rates (MCLR/External),
which of the following statements are correct?
1. The spread charged to an existing borrower under the MCLR system generally cannot be increased except on account of deterioration in the borrower's credit risk profile.
2. The restriction on increasing spreads does not apply to loans under consortium or multiple banking arrangements.
3. Under the External Benchmark system, banks are strictly prohibited from reducing the "other components" of the spread for customer retention purposes earlier than three years.
4. The "Business Strategy" component of the spread must be arrived at without considering market competition.
Which of the following statements accurately reflect the review and reset mechanics of the Marginal Cost of Funds based Lending Rate (MCLR)?
1. Banks must review and publish their MCLR of different maturities once every quarter.
2. The MCLR prevailing on the date of first disbursement applies until the next reset date, irrespective of any changes in the benchmark during the interim.
3. The periodicity of reset for MCLR-linked loans shall be one year or lower.
4. The periodicity of reset must always be exactly equal to the tenor of the loan (e.g., a 20-year reset for a 20-year housing loan).
Which of the following statements, regarding the primary categories of investment classification for banks, are correct?
1. The entire investment portfolio must be classified into three primary categories: Held to Maturity (HTM), Available for Sale (AFS), and Fair Value through Profit and Loss (FVTPL).
2. Held for Trading (HFT) is a distinct fourth primary category, separate from FVTPL.
3. Held for Trading (HFT) is a sub-category within the Fair Value through Profit and Loss (FVTPL) category.
4. Subsidiaries, joint ventures, and associates are included in the investment portfolio for these classification norms.
Which of the following is a mandatory condition for classifying a security under the Available for Sale (AFS) category?
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Which of the following statements regarding the classification of SLR securities are correct?
1. SLR securities acquired to manage everyday liquidity needs must generally be classified under AFS if they meet SPPI criteria.
2. SLR securities acquired for meeting LCR requirements must always be classified under AFS.
3. If a bank requires flexibility to routinely sell securities before maturity, they should be classified under AFS rather than HTM.
4. SLR status automatically mandates HTM classification.
Which of the following statements regarding credit card billing, payment terms, and interest calculations are correct?
1. The "Interest-Free Credit Period" is applicable only if the cardholder pays the entire outstanding amount on or before the due date, not just the Minimum Amount Due.
2. To prevent "negative amortization," the Minimum Amount Due (MAD) must be calculated to cover at least the interest and other charges preventing the balance from increasing.
3. Card-issuers must ensure a gap of at least one fortnight (14-15 days) between the date of billing statement generation and the payment due date.
4. Late payment charges must be levied on the total amount due, irrespective of any partial payments made.
Which of the statements given above is/are correct?
Which of the following statements correctly describe the financial penalties a card-issuer must pay to a customer for non-compliance with RBI Directions?
1. In case of an unsolicited card being activated and billed without consent, the issuer must pay a penalty amounting to twice the value of the charges reversed.
2. If a request for closure of a credit card is not completed within seven working days (subject to no dues), the issuer must pay a penalty of ₹500 per calendar day of delay.
Which of the statements given above is/are correct?
As per the RBI Directions, 2025,
which of the following best defines a "Charge Card"?
A credit card account can be reported as 'past due' to Credit Information Companies (CICs) or levied with penal charges only when the account remains 'past due' for more than how many days?
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In the context of wire transfers, what is a "Cover Payment"?
A "Domestic wire transfer" can involve a payment message transfer system located outside of India, provided the ordering and beneficiary financial institutions are both located in India.
How is the "Video based Customer Identification Process (V-CIP)" treated for the purpose of Customer Due Diligence (CDD)?
Which of the following is NOT one of the four key elements that the Know Your Customer (KYC) policy of a bank must include?
A "Serial Payment" in the context of wire transfers is defined as:
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How frequently must a bank review its internal "Money Laundering (ML) and Terrorist Financing (TF) Risk Assessment"?
Regarding the "Customer Acceptance Policy," banks are explicitly prohibited from opening accounts in
which of the following manners?
Which specific function regarding KYC norms is a bank prohibited from outsourcing?
According to the Customer Acceptance Policy, how should a bank handle a situation where an existing KYC-compliant customer desires to open another account or avail of a new product?
1. The bank must conduct a fresh Customer Due Diligence (CDD) exercise for the new account.
2. The bank must verify the customer's identity again using a third-party auditor.
3. There is no need for a fresh CDD exercise, as far as identification of the customer is concerned.
4. The CDD procedure should be applied at the Unique Customer Identification Code (UCIC) level.
If a bank forms a suspicion of money laundering and reasonably believes that performing the Customer Due Diligence (CDD) process will "tip-off" the customer, it must proceed with the CDD process cautiously.
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To ensure compliance with KYC/AML policies, banks must submit audit notes and compliance reports to the Audit Committee at what periodicity?
When rejecting an application for onboarding or periodic updation of KYC, what specific procedural requirement must the concerned officer fulfill?
Banks are permitted to inform a customer of their specific "Risk Categorization" (Low, Medium, or High) to ensure transparency in the banking relationship.
Under
which of the following circumstances is a bank required to undertake the identification of customers (Customer Identification Procedure)?
1. When carrying out an international money transfer for a person who is not an account holder.
2. When selling third-party products for more than ₹50,000.
3. When a walk-in customer conducts a transaction of ₹50,000 or more.
4. When the bank believes a customer is intentionally structuring transactions below the ₹50,000 threshold.
Regarding the opening of bank accounts,
what is the specific regulatory stance on "Introductions"?
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A bank may rely on Customer Due Diligence (CDD) done by a third party, subject to several conditions.
Which of the following is NOT a valid condition for such reliance?
When a customer submits a "Proof of Possession of Aadhaar Number" where authentication is not required (e.g., voluntarily), what specific action must the bank ensure regarding the Aadhaar number on the document?
When a bank grants an exception for CDD (e.g., offline verification instead of e-KYC) due to a customer's injury, illness, or old age,
which of the following controls must be implemented?
1. An official of the bank shall invariably carry out the CDD.
2. The exception handling must be part of the concurrent audit.
3. The details must be recorded in a centralized exception database.
4. The database must be available for supervisory review.
While opening an account, the bank must verify the Permanent Account Number (PAN) from the verification facility of the issuing authority. If the customer furnishes an Officially Valid Document (OVD) that does not have an updated address, they are required to submit an OVD with the current address within a period of …… months.
Accounts opened using Aadhaar OTP-based e-KYC in non-face-to-face mode are subject to strict aggregate limitations.
What is the maximum allowable aggregate balance in all deposit accounts of the customer?
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Regarding the "Digital KYC Process,"
which of the following statements correctly describe the requirements for capturing the customer's live photograph?
1. The background behind the customer must be of white color.
2. No other person shall come into the frame while capturing the photograph.
3. The system must watermark the photograph with GPS coordinates and a timestamp.
4. The photograph must be captured using a printed or video-graphed image if the customer is not physically present.
In the context of the "Digital KYC Process," how is the customer's signature obtained and validated on the Customer Application Form (CAF)?
Which of the following is NOT a permitted use case for the Video-based Customer Identification Process (V-CIP)?
Which of the following statements regarding the "V-CIP Infrastructure" are incorrect?
1. The technology infrastructure must be housed in the bank's own premises.
2. The V-CIP connection must originate from the bank's own secured network domain.
3. Data storage can be delegated entirely to a cloud service provider without transferring data back to the bank's server.
4. The video recording must contain live GPS coordinates (geo-tagging).
For borrowal accounts opened using OTP-based e-KYC in non-face-to-face mode, the bank shall sanction only term loans, and the aggregate amount of such term loans shall not exceed …… in a year.
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In the Digital KYC process, if a customer does not have their own mobile number, the bank is strictly prohibited from using the mobile number of a family member or relative for the purpose of OTP verification.
If a bank opens a deposit account using OTP-based e-KYC in non-face-to-face mode,
what is the maximum period the account can operate before a full Customer Due Diligence (CDD) procedure is required?
When conducting a Video-based Customer Identification Process (V-CIP) using offline verification of Aadhaar via an XML file or Aadhaar Secure QR Code,
what is the maximum validity period of the XML file or QR code generation date?
During the Video-based Customer Identification Process (V-CIP),
which of the following actions is explicitly invalid or prohibited?
A "Small Account" can be credited with foreign remittances, provided the amount does not exceed ₹10,000 in a month.
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Which of the following limitations apply to a "Small Account"?
1. The aggregate of all credits in a financial year does not exceed Rupees One Lakh.
2. The aggregate of all withdrawals and transfers in a month does not exceed ₹10,000.
3. The balance at any point of time does not exceed ₹50,000.
4. The account can only be opened at Core Banking Solution (CBS) linked branches.
For a Sole Proprietary firm, if a bank decides to accept only one document as proof of business (instead of the standard two) due to the firm's inability to furnish two, what additional measure is mandatory?
Regarding "Assisted V-CIP,"
which of the following statements correctly describes the role of Business Correspondents (BCs)?
1. BCs can conduct the entire V-CIP process on behalf of the bank.
2. BCs can facilitate the process only at the customer end.
3. The bank must maintain the details of the BC assisting the customer.
4. The ultimate responsibility for customer due diligence rests with the BC.
Which of the following authorities is mandatory to conduct the Vulnerability Assessment, Penetration Testing, and Security Audit of the V-CIP infrastructure?
For opening an account of a Company,
which of the following documents is mandatory to obtain as a certified copy?
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According to the guidelines on "Monitoring of Transactions", how frequently must a bank review the risk categorization of customer accounts?
Which of the following correctly matches the "Risk Category" with the mandatory minimum periodicity for KYC updation?
1. High-risk customers: Once in every two years
2. Medium risk customers: Once in every eight years
3. Low-risk customers: Once in every ten years
For the purpose of opening an account,
which of the following entities are explicitly included under the term "Unincorporated Association"?
When opening an account for a Trust,
which of the following parties must be identified as part of the beneficial owner identification process?
1. The author of the trust
2. The trustees
3. The beneficiaries with 10 percent or more interest in the trust
4. Any natural person exercising ultimate effective control over the trust
During periodic updation of KYC for an individual customer, if there is a change only in the address details, the bank must verify the declared address through "positive confirmation" within what timeframe?
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Which of the following statements is/are correct regarding the legal framework and applicability of the Reserve Bank of India (Commercial Banks - Internal Ombudsman) Directions, 2026?
1. These directions are issued by the Reserve Bank of India, in exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949.
2. The directions apply to every Commercial Bank having 10 or more banking outlets in India, as on March 31, 2025.
3. Under these directions, a "Deficiency in service" is valid only if it results in a quantifiable financial loss to the customer.
4. "Banking Outlet" is defined as a fixed-point service delivery unit.
Consider the following statements regarding the eligibility and independence criteria for the appointment of an Internal Ombudsman (IO) under the 2026 Directions, and
select the correct option.
1. The Internal Ombudsman must be a retired or serving officer, not below the rank of General Manager or its equivalent.
2. The candidate must possess a minimum of seven years of working experience, in areas such as banking, regulation, or consumer protection.
3. A candidate is ineligible if they have previously been employed by the bank, its holding company, or any subsidiary company.
4. The appointee must not be over 70 years of age before the completion of the tenure.
Which of the following statements correctly differentiates the roles and requirements of the Internal Ombudsman (IO) versus the Deputy Internal Ombudsman (Dy. IO) under the RBI Directions, 2026?
1. Rank: The IO requires a minimum rank of General Manager, whereas the Dy. IO requires a minimum rank of Deputy General Manager.
2. Experience: The IO requires a minimum of seven years of relevant experience, whereas the Dy. IO requires a minimum of five years.
3. Concurrent Employment: While an IO may work in more than one Regulated Entity (RE) simultaneously (at the REs' discretion), a Dy. IO is strictly prohibited from being employed in more than one RE simultaneously.
Which of the following statements is/are correct regarding the tenure, removal, and service conditions of the Internal Ombudsman (IO) under the 2026 Directions?
1. The tenure of the IO shall be a fixed term of not less than three years, and the total tenure (including any extension) shall not exceed five years.
2. The emoluments and facilities of the IO are determined by the Customer Service Committee (CSC) of the Board and cannot be changed adversely during the tenure.
3. The Internal Ombudsman cannot be removed before the completion of the term without the explicit approval of the Reserve Bank of India.
4. The number of Internal Ombudsmen to be appointed is determined by the Customer Service Committee, based on the volume of complaints.
Consider the following statements regarding the reporting lines and administrative governance of the Internal Ombudsman (IO) office, and
select the correct option.
1. Reporting Matrix: The IO reports administratively to the Competent Authority (Head of Customer Service Vertical), and functionally to the Customer Service Committee of the Board.
2. Vacancy Protocol: In case of a vacancy due to resignation or death, the bank must inform the Reserve Bank of India within 10 working days.
3. Location: The office of the IO is preferably placed in the Head Office or Corporate Office of the bank.
4. Support: The bank is mandated to provide necessary officers, staff, and information technology support to the IO.
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Which of the following statements accurately describes the operational boundaries and provisions for temporary arrangements regarding the Internal Ombudsman (IO)?
1. The office of the IO is explicitly prohibited from handling complaints received directly from complainants or the public.
2. In a rare case where both the IO and Deputy IO are absent, the bank may appoint a temporary IO for a period not exceeding one month.
3. A temporary IO must be a serving official, equivalent to the rank of General Manager.
4. During the temporary tenure, the official acts as the IO and shall not have any reporting relationship with business verticals.
Which of the following statements is/are correct regarding the governance, reporting, and administrative powers of the Internal Ombudsman (IO) as per the Reserve Bank of India (Internal Ombudsman for Regulated Entities) Directions, 2026?
1. The Internal Ombudsman (IO) is explicitly prohibited from representing the regulated entity (bank) in legal cases before any court or forum.
2. The decision of the IO can be overruled only by the "Competent Authority", defined as the Whole Time Director or Executive Director in charge of Customer Service.
3. Every instance where the Competent Authority overrules the IO's decision must be mandatorily placed before the Customer Service Committee (CSC) of the Board for review.
4. The IO is required to furnish reports on their activities to the CSC of the Board, preferably at quarterly intervals, but not less than half-yearly.
Consider the following statements regarding the operational scope, compensation powers, and complaint classification protocols of the Internal Ombudsman (IO).
Which of the following statements is incorrect?
Which of the following statements is/are correct regarding the resolution timelines and communication protocols under the Internal Ombudsman (IO Scheme in banks?
1. For complaints where a specific resolution timeline is prescribed by the RBI or NPCI, the bank must auto-escalate the complaint to the IO sufficiently in advance, to allow at least 10 days for review.
2. In cases where no specific timeline is prescribed, the complaint must be auto-escalated to the IO within 20 days of receipt.
3. The final decision must be communicated to the complainant within 45 days of receiving the complaint.
4. The final reply to the complainant must explicitly state that the complaint has been reviewed by the IO, and include the URL of the RBI's Complaint Management System (CMS).
Consider the following statements regarding the operational constraints and procedural mandates for the Internal Ombudsman (IO) in banks.
Which of the following is/are correct?
1. Banks are strictly prohibited from providing the contact details of the IO in the public domain.
2. The IO is authorized to handle complaints received directly from customers, if the bank fails to resolve them initially.
3. The IO is required to record a "reasoned decision" in every case reviewed.
4. If a complaint is escalated to the RBI Ombudsman without prior IO review, the bank must necessarily seek the IO's comments, and submit them to the RBI Ombudsman.
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Which of the following best describes the reporting and performance monitoring requirements for the Internal Ombudsman (IO) mechanism in banks?
1. The bank must submit a periodic report on the IO's functioning to the RBI on a half-yearly basis.
2. The periodic report must be submitted on or before the 15th day of the month following the relevant period.
3. The Customer Service Committee must specifically analyze cases where there is a substantive difference between the IO's decision, and the decision subsequently given by the RBI Ombudsman.
Which of the following best defines the 'Cash Reserve Ratio' (CRR)?
1. The share of Net Demand and Time Liabilities (NDTL) that banks must maintain in liquid assets like gold and government securities.
2. The share of Net Demand and Time Liabilities (NDTL) that banks must maintain as cash balances with the Reserve Bank of India.
3. The percentage of total deposits that banks must lend to priority sectors.
4. The portion of deposits that banks must keep in their own vaults as emergency cash.
Which of the statements given above is/are correct?
What is the 'Statutory Liquidity Ratio' (SLR) in the context of Indian banking?
1. The mandatory cash balance banks must hold with the RBI to ensure solvency.
2. The percentage of NDTL that banks must maintain with themselves in the form of liquid assets like cash, gold, or unencumbered securities.
3. The ratio of liquid assets to total assets that a bank must report to the stock exchange.
4. The interest rate at which the RBI lends money to commercial banks for short-term needs.
Which of the statements given above is/are correct?
Which of the following pairs correctly identifies the legal provisions governing CRR and SLR respectively?
1. CRR: Banking Regulation Act, 1949; SLR: RBI Act, 1934
2. CRR: RBI Act, 1934; SLR: Banking Regulation Act, 1949
3. CRR: RBI Act, 1934; SLR: RBI Act, 1934
4. CRR: Banking Regulation Act, 1949; SLR: Banking Regulation Act, 1949
Which of the statements given above is/are correct?
To maintain the Statutory Liquidity Ratio (SLR), banks can hold assets in various forms.
Which of the following is NOT an eligible form of asset for SLR maintenance?
1. Cash balances in excess of the CRR requirement
2. Gold valued at a price not exceeding the current market price
3. Dated government securities pledged with the RBI for availing the Repo facility
4. Unencumbered approved securities
Which of the statements given above is/are correct?
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Consider the following statements regarding the maintenance of CRR and SLR:
1. CRR balances maintained with the RBI earn a nominal interest rate.
2. The RBI Act, 1934, does not prescribe any floor (minimum) or ceiling (maximum) for the CRR rate.
3. The Banking Regulation Act prescribes a ceiling of 40% for SLR.
Which of the statements given above is/are correct?
Which specific return/form must Scheduled Commercial Banks submit to the RBI, to report their CRR maintenance status on a fortnightly basis?
Consider the following:
Assertion (A): An increase in the Cash Reserve Ratio (CRR) typically leads to a rise in lending rates in the economy.
Reason (R): When CRR is increased, the lendable resources of banks decrease, increasing their cost of funds.
The 'Net Demand and Time Liabilities' (NDTL) is the base for calculating CRR and SLR. What does the term 'Net' specifically refer to in this context?
For the purpose of CRR maintenance, the relevant NDTL figure is taken from which specific reporting day?
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ATMs installed in Special Economic Zones (SEZs) in India, are permitted to dispense and accept cash in which currency?
Which of the following operational and security conditions apply to the installation of Cash Deposit Machines (CDMs) or Bunch Note Acceptor Machines (BNAMs)?
1. They can be installed at any place identified by the bank that has adequate security.
2. The machine must be configured to automatically impound and confiscate any counterfeit note detected.
3. The machine must not return any note to the customer which is suspect or counterfeit.
4. A complete audit trail of transactions must be preserved, to enable the reporting of specific counterfeit notes to police/regulatory authorities.
Consider the following statements, regarding the governance and classification framework of a Digital Banking Unit (DBU):
1. For regulatory compliance, a DBU is treated as being opened in a centre from where it proposes to source more than 51 percent of its customers and business.
2. The catchment area for monitoring the progress of digital financial services education by a DBU is the specific district where the DBU is located.
3. The DBU must be headed by an officer designated as the DBU-Chief Operating Officer (D-COO).
4. The operational governance structure of the DBU must be aligned with the Digital Banking Segment of the bank.
Which of the following statements, regarding the operational mandates and restrictions for a Digital Banking Unit (DBU), are correct?
1. A DBU must be housed distinctly, with separate entry and exit provisions from any existing Banking Outlet.
2. DBUs are permitted to process cash withdrawals and deposits physically across a counter.
3. A DBU is prohibited from offering any product or service that the bank is not permitted to offer under the Banking Regulation Act, 1949.
4. The minimum bouquet of services offered must include digital onboarding for schemes like Atal Pension Yojana (APY) and digital grievance lodging.
Which of the following entities are permitted to be engaged as 'Business Facilitators' by a bank?
1. NGOs and Self Help Groups (SHGs)
2. Farmers Clubs
3. Post Offices
4. IT enabled rural outlets of corporate entities
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Which of the following statements, regarding the engagement of Non-deposit taking NBFCs (NBFCs-ND) as Business Correspondents (BCs), are incorrect?
1. The bank must ensure there is no co-mingling of bank funds and those of the NBFC-ND.
2. The NBFC-ND is permitted to restrict its BC services specifically to its own existing lending customers.
3. A specific contractual arrangement must be in place to prevent and handle conflicts of interest.
4. The bank must ensure that forced bundling of the NBFC-ND's products with the bank's services takes place to maximize revenue.
Looking for the most important Banking Awareness October 2025 to February 2026 for your upcoming exams? We have analyzed past papers for RBI GRADE B, SBI PO, IBPS PO, SBI CLERK, RBI ASSISTANT, IBPS CLERK & OTHER BANK EXAMS to bring you the 326 most expected questions. Take the live test, review the blueprint, and master the core concepts.
- 🚀 Updated for 2026: Aligned with the latest RBI GRADE B, SBI PO, IBPS PO, SBI CLERK, RBI ASSISTANT, IBPS CLERK & OTHER BANK EXAMS syllabus.
- 🧠 Output & Concept Based: Covers basics to advanced scenarios.
- 📊 Live Gamification: Track your score and time dynamically.
- 📥 Free PDF Notes: Available instantly via our Telegram channel.
Test Blueprint & Topic Weightage
| Capital Adequacy, Basel Norms & Monetary Policy | Q1 – Q40 | Hard |
| Priority Sector, Consumer Protection & Digital Lending | Q41 – Q158 | Easy to Medium |
| KYC, NPAs, Advances & Investment Valuations | Q159 – Q257 | Medium |
| Deposits, Reserve Ratios & Branch Authorisation | Q258 – Q326 | Hard |
⚠️ Examiner Trap Alert: Students frequently confuse the reporting deadlines for the Internal Ombudsman (IO). Remember, the final decision must be communicated to the complainant strictly within 30 days of receiving the complaint, not 45 days. The 45-day rule is an obsolete trap!
Practice Banking Awareness October 2025 to February 2026 (Live Mock Test)
⏱️ Estimated Time: 489 Minutes | 🎯 Target Score: 260+ | 📊 Difficulty: Moderate to Hard
High-Yield Core Concepts
Capital to Risk-Weighted Assets Ratio (CRAR): The standard metric to measure a bank’s financial stability, calculated as Eligible Total Capital divided by Total Risk-Weighted Assets, per the latest banking regulations.
Domestic Systemically Important Banks (D-SIBs): Banks perceived as “Too Big to Fail,” requiring higher capital surcharges based on Size, Interconnectedness, Substitutability, and Complexity—a crucial topic in bank exam current affairs.
Asset Classification (NPAs): An NPA is upgraded to Standard status ONLY if the entire arrears of interest and principal are fully paid by the borrower under RBI master directions.
Cash Reserve Ratio (CRR): Maintained exclusively as a balance with the Reserve Bank of India earning 0% interest; “Cash on Hand” does not count towards CRR compliance in any financial awareness mock test.
Semantic Comparison: Banking Awareness October 2025 to February 2026 vs Static Banking Awareness
| Core Definition | Dynamic, recent financial events and RBI policy updates. | Permanent, foundational banking principles and history. |
| Primary Use Case | Scoring high in the General/Financial Awareness section. | Building base knowledge for interviews and core understanding. |
| Exam Importance | Extremely high (usually covers 70-80% of the section). | Moderate (provides necessary context for current affairs). |
Frequently Asked Questions
Why is Banking Awareness October 2025 to February 2026 critical for RBI GRADE B, SBI PO, IBPS PO, SBI CLERK, RBI ASSISTANT, IBPS CLERK & OTHER BANK EXAMS?
It is a consistently high-scoring area. Examiners frequently repeat core concepts from this section, especially recent RBI circulars, Master Directions, and monetary policy shifts.
Does this mock test cover the full syllabus?
Yes, these 326 questions target the most highly-weighted concepts found in previous years’ papers across 26 distinct regulatory domains.
What are the most repeated topics?
Based on our blueprint, Capital Adequacy (CRAR), NPA classifications, Priority Sector Lending (PSL) limits, and Monetary Policy metrics carry the highest weightage.
Once you are confident with Banking Awareness October 2025 to February 2026, your next logical step for exam preparation is mastering Union Budget 2026-27 & Economic Survey.
👉Take the Union Budget 2026-27 Mock Test Here.