Banking System, NPA & IBC — Set 10
Economy Advanced · बैंकिंग प्रणाली, NPA और IBC · Questions 91–100 of 160
The External Commercial Borrowings (ECB) policy regulates foreign borrowing by Indian entities. What is the average maturity required for ECB?
Correct Answer: B. 5 years
ECB requires a minimum average maturity of 5 years. This ensures that foreign borrowings support long-term investments and not short-term speculative flows.
The Trade Finance instruments including Letters of Credit facilitate international trade. What is the typical validity of an LC?
Correct Answer: B. 6 months
Letters of Credit typically have 6 months validity, though can be extended. They serve as guarantees of payment in international transactions.
The Domestic Systemically Important Banks (D-SIBs) face additional regulatory requirements. How many Indian banks are currently designated as D-SIBs?
Correct Answer: B. 5
RBI has designated 5 Indian banks as D-SIBs (including SBI, ICICI Bank, HDFC Bank, Axis Bank, and Kotak Mahindra Bank) requiring higher capital standards.
The Fintech companies are disrupting traditional banking with digital innovations. What is the regulatory framework for Fintech in India?
Correct Answer: B. RBI provides sandbox framework for testing
RBI provides a regulatory sandbox framework allowing Fintech companies to test innovations in a controlled environment before full-scale deployment.
The Cryptocurrency regulations in India have evolved significantly. What is RBI's stance on cryptocurrencies?
Correct Answer: B. Discourages crypto as they lack intrinsic value
RBI has discouraged cryptocurrencies citing concerns about financial stability, lack of backing, and risks to monetary policy transmission mechanisms.
The Central Bank Digital Currency (CBDC) is being explored globally. What is India's CBDC project called?
Correct Answer: A. Digital Rupee
India's CBDC project is called 'Digital Rupee' (e-Rupee). RBI has initiated pilot programs to test its viability and implementation.
The Basel Committee on Banking Supervision sets international banking standards. How often are Basel standards revised?
Correct Answer: C. As needed for financial stability
Basel standards are revised as needed to address emerging risks and financial market developments. Basel III is the current framework (since 2013).
The Value-at-Risk (VaR) is used to measure market risk in financial institutions. What does VaR quantify?
Correct Answer: B. Maximum potential loss at confidence level
VaR measures the maximum potential loss at a given confidence level (e.g., 99%) over a specific time period. It helps banks manage market risk exposure.
The Interest Rate Swap allows parties to exchange fixed and floating rate obligations. What is the primary benefit of interest rate swaps?
Correct Answer: B. Reduce interest rate risk exposure
Interest rate swaps allow banks and corporates to convert their interest rate exposure. A bank with floating rate liabilities can swap to fixed rates, reducing risk.
The Loan Syndication allows banks to share large credit exposure. What is the typical loan amount that requires syndication?
Correct Answer: C. Depends on bank's appetite
Loan syndication is based on individual bank's risk appetite and regulations. Large loans (typically over Rs. 500 crore) are often syndicated to manage concentration risk.