<<12345678910111213141516171819202122232425262728293031323334353637>> 1. When is erosion in the value of security considered significant for classification as a doubtful category asset?When the realisable value of the security is less than 10% of the outstanding amountWhen the realisable value of the security is less than 25% of the outstanding amountWhen the realisable value of the security is less than 50% of the assessed value by the bank or accepted by RBIWhen the realisable value of the security is less than the original loan amountQuestion 1 of 37 2. How is an asset classified if the realisable value of the security is less than 10% of the outstanding amount?Classified as a doubtful assetIgnored in asset classification due to negligible security valueStraightaway classified as a loss assetTransferred to a separate account for revaluationQuestion 2 of 37 3. How does income recognition vary for projects under implementation classified as 'standard' and 'substandard' assets?Income recognition on accrual basis for 'standard' assets; cash basis for 'substandard' assetsRecognition of income on accrual basis for both 'standard' and 'substandard' assetsIncome recognition on cash basis for 'standard' assets; accrual basis for 'substandard' assetsRecognition of income on cash basis for both 'standard' and 'substandard' assetsQuestion 3 of 37 4. What action should banks take if they wrongly recognized income on projects under implementation?Make a provision for an equivalent amount if it was recognised as income in the current yearReverse the interest if it was recognised as income in the previous yearRecognize income on projects under implementation without any adjustmentsKeep the recognition unchanged until the project is completedQuestion 4 of 37 5. How should banks treat income recognition from the conversion of interest into equity or other instruments in NPAs?Recognize income fully without any provisions for depreciationMake a provision for the amount of income recognized to offset the effect of such income recognitionClassify the equity as 'available for sale' without making provisionsClassify the debentures as NPAs but avoid provisions as they're converted from interestQuestion 5 of 37 6. What defines Takeout Finance in the context of long-term infrastructure projects?A method where banks finance infrastructure projects with no predetermined arrangementsAn arrangement where institutions transfer outstanding project financing to another institution based on predetermined termsA process where institutions keep long-term project finances indefinitelyAn arrangement where financial institutions exclusively finance short-term projectsQuestion 6 of 37 7. How should the lending institution treat income recognition on assets transferred under Takeout Finance?Recognize income on accrual basis even if the account is classified as NPAAccount for income only upon payment by the borrower or the taking over institution as per the arrangementRecognize income irrespective of the NPA status of the transferred assetIgnore income recognition for assets under Takeout FinanceQuestion 7 of 37 8. When should the taking over institution make provisions for an asset under Takeout Finance?It should make provisions only when the asset is transferred completelyProvisions are made based on the date the asset becomes NPA, even if it wasn't in the institution's books at that timeProvisions are made after the asset's completion dateNo provisions are necessary for the taking over institutionQuestion 8 of 37 9. What does the guarantee-cum-refinance program introduced by EXIM Bank offer concerning post-shipment credit extended by banks for exports?Immediate payment to the bank without invoking the guaranteePayment within 30 days to the bank after the exporter files a claim with ECGCNo guarantee or financial support for post-shipment creditPayment to the bank within 15 days after invoking the guaranteeQuestion 9 of 37 10. How does receiving payment from EXIM Bank impact the treatment of the advance for asset classification and provisioning purposes?The advance is always treated as a non-performing asset regardless of EXIM Bank's paymentThe advance remains a non-performing asset irrespective of EXIM Bank's paymentThe advance may not be treated as a non-performing asset if payment is received from EXIM BankPayment from EXIM Bank has no impact on the asset's classificationQuestion 10 of 37 11. What condition allows an extension of asset classification in cases of Export Project Finance affected by political developments?The asset is classified after three months of non-remittanceThe asset is classified after six months of non-remittanceThe asset is classified after one year from the date the amount was deposited by the importerThe asset is classified immediately upon non-remittance due to political reasonsQuestion 11 of 37 12. How is a credit card account treated concerning non-performing asset classification?Classified as non-performing asset if the minimum amount due is not paid fully within 30 daysClassified as non-performing asset if the minimum amount due is not paid fully within 60 daysClassified as non-performing asset if the minimum amount due is not paid fully within 90 daysClassified as non-performing asset if the minimum amount due is not paid fully within 120 daysQuestion 12 of 37 13. What is the recommended action for "loss assets" according to the provisioning norms?Partial provisioningFull provisioningWriting offNo action requiredQuestion 13 of 37 14. In case loss assets are retained in the books, what percentage of outstanding should be provisioned for?25%50%75%100%Question 14 of 37 15. For banks to benefit from lower provisioning, what conditions should they meet regarding cash flows from certain assets?No specific conditions requiredEscrow the cash flows and have a claim on themNo need for a clear claim on cash flowsNo requirement for an appropriate mechanismQuestion 15 of 37 16. What is the provisioning requirement for unsecured "doubtful" assets?25%50%75%100%Question 16 of 37 17. What type of assets would demand 100% provisioning if they are unsecured and categorized as "doubtful"?Standard assetsSubstandard assetsLoss assetsNone of the aboveQuestion 17 of 37 18. How are provisions on standard assets treated concerning net NPAs?They are deducted from NPAsThey are not considered for net NPAsThey are shown separately from NPAsThey are treated as gross NPAsQuestion 18 of 37 19. Where should provisions towards Standard Assets be reflected in the balance sheet?Deducted from gross advancesShown as 'Contingent Provisions against Standard Assets' under liabilitiesNot required to be reportedIncluded in the assets sectionQuestion 19 of 37 20. What rate of standard asset provisioning applies to Medium Enterprises?0.20%0.30%0.40%0.50%Question 20 of 37 21. Why are banks required to estimate the riskiness of unhedged positions of their borrowers, as per RBI instructions?To reduce currency volatilityTo comply with foreign exchange regulationsTo calculate NPAs accuratelyTo make incremental provisions on exposures to such entitiesQuestion 21 of 37 22. What impact can a high level of unhedged foreign currency exposures have on the probability of default?Decrease default probabilityNo impact on default probabilityIncrease default probabilityStabilize currency volatilityQuestion 22 of 37 23. What does the Provisioning Coverage Ratio (PCR) represent?The ratio of capital to gross non-performing assetsThe ratio of provisioning to net profitsThe extent of funds set aside to cover loan lossesThe ratio of loan disbursements to provisioningQuestion 23 of 37 24. When is it recommended for banks to build up provisioning and capital buffers?During economic downturnsWhen profits are decliningIn good times, when profits are goodWhen there is high loan demandQuestion 24 of 37 25. What was the advised minimum total Provisioning Coverage Ratio (including floating provisions) for banks regarding Gross NPA position?50%60%70%80%Question 25 of 37 26. When were banks instructed to achieve the recommended PCR norm?By the end of September, 2010By the end of December, 2015Within five years of the directiveBy the end of the fiscal yearQuestion 26 of 37 27. Where should the PCR of a bank be disclosed according to the provided information?On the bank's websiteIn the annual reportIn the Notes to Accounts to the Balance SheetIn the bank's press releasesQuestion 27 of 37 28. What is the purpose of Special Mention Accounts (SMA)as per RBI norms?To identify accounts before they turn into NPATo categorize NPAs based on severityTo manage accounts with high profitsTo determine loan interest ratesQuestion 28 of 37 29. What action is expected from banks regarding reporting SMA status to CRILC?No specific reporting requiredReporting after accounts turn into NPAReporting only on request from RBIReporting before accounts turn into NPAQuestion 29 of 37 30. What consequences might banks face if they fail to report SMA status accurately or conceal account status?Lower interest ratesRBI will conduct auditsAccelerated provisioning and/or supervisory actions by RBIIncreased loan limitsQuestion 30 of 37 31. What is the purpose of accelerated provisioning for accounts where SMA status is not reported accurately?To increase bank profitsTo penalize the bank for non-reportingTo cover potential losses from those accountsTo discourage banks from reporting SMA statusQuestion 31 of 37 32. How does RBI categorize provisioning requirements for non-performing accounts based on SMA status?Only a single provisioning requirement existsDifferentiated provisioning based on specific account detailsAccelerated provisioning for all accountsNo provisioning required for such accountsQuestion 32 of 37 33. What is the primary function of a bad bank?To generate profits by selling Non-Performing Assets (NPAs)To buy and manage Non-Performing Assets (NPAs)To provide loans to commercial banksTo invest in stressed assets of commercial banksQuestion 33 of 37 34. How does a bad bank aim to ease the burden on commercial banks?By reducing their interest ratesBy increasing government guaranteesBy buying their stressed assetsBy providing financial aidQuestion 34 of 37 35. What is the objective of the bad bank structure known as NARCL-IDRCL?To acquire stressed assets and keep them indefinitelyTo restructure and sell assets to investorsTo facilitate government financial support to commercial banksTo solely make profits from the sale of NPAsQuestion 35 of 37 36. How will the bad bank, NARCL, pay for the purchased bad loans from commercial banks?100% cash payment85% cash and 15% in Security Receipts15% cash and 85% in Security ReceiptsNo cash payment, entirely in Security ReceiptsQuestion 36 of 37 37. What happens if the bad bank is unable to sell the acquired bad loans or sells them at a loss?Government intervention to increase the loan priceThe bad bank takes the lossInvocation of government guarantee to cover the differenceThe commercial banks absorb the lossQuestion 37 of 37 Loading...
