What is the sole operational function the Unified Lending Interface (ULI) is allowed to perform during the loan approval process?
Direct Answer
It handles data flow for credit assessment without processing the actual loan disbursal.
Quick revision
Review concise direct answers and the essential concept behind each question. Use the original MCQ practice set for exam-style testing.
What is the 'Statutory Liquidity Ratio' (SLR) in the context of Indian banking?
Direct Answer
The percentage of NDTL that banks must maintain with themselves in the form of liquid assets like cash, gold, or unencumbered securities.
What is the quantitative threshold for classifying a person as a "Major Shareholder" of a bank?
Direct Answer
Holding 10% or more of paid-up share capital, or ₹5 crore in paid-up shares, whichever is less.
What condition must a purchasing bank meet to classify Inter-Bank Participation Certificates (IBPCs) under Priority Sector Lending (PSL) targets?
Direct Answer
They must buy the certificates on a risk-sharing basis and absorb losses if the borrower defaults.
Where must a bank deposit its money if it fails to achieve its priority sector lending targets for agriculture?
Direct Answer
The Rural Infrastructure Development Fund (RIDF) managed by the National Bank for Agriculture and Rural Development (NABARD).
Which verification method is required for purchasing banks to ascertain the priority sector status of underlying securitized portfolios as of January 2026?
Direct Answer
A mandatory external auditor certification combined with internal staff sample checks.
What limit dictates the amount a Non-Banking Financial Company (NBFC) can claim for priority sector classification on its existing loans?
Direct Answer
The actual outstanding balance supported by existing underlying assets on the opening balance sheet.
Which past borrowers are granted an exemption to apply for the PM Vishwakarma scheme despite the standard five-year lockout rule?
Direct Answer
Borrowers of MUDRA and PM SVANidhi who have fully repaid their loans and kept standard accounts.
How does the official Udyam registration portal process the upward reclassification of a business that crosses either the investment or turnover threshold?
Direct Answer
The portal automatically bumps the business into the higher category based on data pulled from the GST Network and Income Tax Return databases.
How does the Basel framework specifically define "Operational Risk"?
Direct Answer
The risk of loss resulting from inadequate or failed internal processes, people, and systems, or from external events.
How are informal micro-units, such as street vendors and local mechanics without a commercial tax number, registered on the Udyam Assist Platform?
Direct Answer
Only designated agencies like approved banks or microfinance institutions can generate the certificate for them after verifying their existence.
What is the automatic penal interest rate applied to buyers who fail to pay a micro or small enterprise within the maximum legal deadline?
Direct Answer
Compound interest calculated monthly at three times the prevailing Reserve Bank of India (RBI) Bank Rate.
When does the 18-month lock-in period begin for lending institutions before they can invoke a Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) claim?
Direct Answer
From either the date the last loan installment was disbursed or the date the Annual Guarantee Fee was paid to the Trust, whichever happened later.
What is the mandatory minimum net worth that platform operators must maintain to safely handle real-time tax data integration for verifying corporate invoices?
Direct Answer
A minimum net worth of 25 crore rupees to safely manage the real-time tax data integration.
Which financial obligation remains the responsibility of the farmer under the revised State Level Unit Cost Committee system?
Direct Answer
Paying 15 percent to 25 percent of the total unit cost entirely out of their own pocket
What is the primary pre-condition introduced in the May 2026 update that allows banks to include quarterly accrued profits into their Common Equity Tier 1 (CET1) capital?
Direct Answer
The bank's financial statements must undergo a formal audit or limited review for that specific quarter
How are mandatory Priority Sector Lending (PSL) shortfall deposits treated under the updated Large Exposure Framework (LEF) concentration limits?
Direct Answer
They are fully excluded when calculating the 20 percent Single Counterparty Exposure limits
What happens to a bank if its Common Equity Tier 1 capital drops into the lowest quartile range of 5.5 percent to 6.125 percent?
Direct Answer
The bank faces a 100 percent total ban on distributing any earnings as dividends or bonuses
What financial prerequisite must a bank satisfy before it can perform a technical write-off on a bad loan?
Direct Answer
It must have entirely set aside a 100 percent capital provision against the loan.
Which condition causes a loan account to be automatically condemned to the loss category based on the underlying security?
Direct Answer
The realizable value falls below 10 percent of the total outstanding loan balance.
What action does the Reserve Bank of India (RBI) force all commercial banks to automate during their nightly system run if a borrower misses a payment date by one day?
Direct Answer
Tag the account as Special Mention Account-0 (SMA-0) to prevent branch managers from hiding the late payment.
What accounting shift occurs under modern rules the moment a loan is continuously overdue for 31 days and enters the Special Mention Account-1 (SMA-1) category?
Direct Answer
The loan instantly shifts into Expected Credit Loss (ECL) Stage 2 because it constitutes a significant increase in credit risk.
What penalty do lending banks face if they fail to implement a coordinated resolution plan within 180 days from the end of the initial review period for a large corporate default?
Direct Answer
A severe capital provisioning penalty of up to 35 percent imposed by the Reserve Bank of India (RBI).
What happens to a borrower's other accounts with a single bank the moment one of their term loans remains unpaid for a continuous period exceeding 90 days?
Direct Answer
Every single other loan the borrower holds with that bank automatically turns into a Non-Performing Asset (NPA), regardless of their individual payment status.
How does the Insolvency and Bankruptcy Board of India (IBBI) legally treat the physical collateral value of a doubtful asset if the independent valuation is older than three years?
Direct Answer
The valuation is legally treated as zero, forcing the bank to provide a 100 percent cash reserve against it.
What independent appraisal threshold forces a defaulting loan to bypass all doubtful stages and instantly become classified as a loss asset?
Direct Answer
The real-world value of the pledged collateral drops below 10 percent of the outstanding loan amount.
How does a default on a small credit facility impact the borrower's other separate loans under the absolute contagion mandate?
Direct Answer
It instantly turns the borrower's entire debt footprint into a Non-Performing Asset.
What happens to a healthy loan under the Expected Credit Loss framework when a borrower misses a payment by 31 days?
Direct Answer
It moves to Stage 2 where the bank must lock away cash for the lifetime of the loan.
What happens when an independent civil engineering firm reports that a massive construction project is burning cash 10 percent faster than budgeted?
Direct Answer
The bank must freeze all disbursements until the business owner covers the gap with their personal money
Which action causes the entire consideration of a loan contract to become completely unlawful?
Direct Answer
Utilizing cross-border money transfers that bypass the legal limits of national foreign exchange laws