Banking & Financial Awareness Mixed Quiz: Set 31

The correct answer is C, one hundred crore rupees. The Fugitive Economic Offenders Act of 2018 applies where a warrant of arrest has been issued for a scheduled offence involving a value of one hundred crore rupees or more and the person has left India to avoid prosecution, or refuses to return to face it. A Special Court designated under the Prevention of Money Laundering Act may then declare the person a fugitive economic offender, after which the central government may confiscate both the proceeds of crime and other property of the offender, including benami property, and the person may be barred from pursuing civil claims. Option A is wrong because one crore rupees is far below the statutory threshold. Option B is wrong because ten crore rupees is likewise below it. Option D is wrong because one thousand crore rupees would exclude almost every case the Act was meant to reach.

The correct answer is B, three working days. Under the Reserve Bank's circular of 6 July 2017, where the fault lies neither with the bank nor with the customer but somewhere else in the system, the customer's liability is nil if the unauthorised transaction is reported within three working days of receiving the bank's communication about it. The day on which that communication was received is excluded from the count, and working days follow the home branch's schedule.

Option A, one working day, is stricter than the rule and would leave many genuine victims uncovered. Option C, seven working days, is the outer edge of the limited liability window, where the customer does bear a capped amount, so it is the most attractive wrong answer. Option D, fifteen working days, has no place in the framework; a report after seven working days is dealt with under the bank's own board-approved policy. Fix the pair in mind: three days for zero liability, four to seven days for capped liability.

The correct answer is A, NABARD. The National Bank for Agriculture and Rural Development prepares a Potential Linked Credit Plan for each district, estimating sector by sector how much credit the district can absorb, taking account of its soil, irrigation, cropping pattern, livestock, infrastructure and non-farm activity. The banks build their branch plans on that estimate, the Block Level Bankers' Committee aggregates them into a block plan, and the District Consultative Committee adopts the Annual Credit Plan. Option B is wrong because the Reserve Bank frames the policy and monitors the scheme but does not prepare district potential estimates. Option C is wrong because SIDBI refinances small industry and does not draw up district credit plans. Option D is wrong because the lead bank coordinates and consolidates the plan but works on NABARD's potential estimate rather than making it. The chain NABARD, branch, block, district, state is the point to remember.

The correct answer is B, 2014. The Reserve Bank of India issued the D-SIB framework on 22 July 2014, setting out how banks would be picked for the sample, how their systemic importance score would be computed from size, interconnectedness, substitutability and complexity, and how much additional Common Equity Tier 1 capital each bucket would attract. The first names under the framework were disclosed the following year.

Option A, 2011, is the year the Financial Stability Board began publishing the global list of Systemically Important Banks, which is a different exercise carried out at the world level, so it is a classic distractor. Option C, 2017, is the year the earlier Prompt Corrective Action framework for banks was issued, not the D-SIB framework. Option D, 2021, is the year the revised PCA framework was notified. Candidates who mix up these three dates lose an easy mark, so remember 2014 for D-SIBs and 2021 for revised PCA.

The correct answer is C, State Bank of India. In the 2025 list State Bank of India sits in bucket 4 and must hold an extra Common Equity Tier 1 cushion of 0.80 per cent of its risk weighted assets, over and above the normal minimum and the capital conservation buffer. It is the only bank in a bucket higher than bucket 2, which reflects its size relative to the Indian economy.

Option A, HDFC Bank, is a D-SIB but sits in bucket 2 with a surcharge of 0.40 per cent. Option B, ICICI Bank, is in bucket 1 with the lowest surcharge of 0.20 per cent. Option D, Punjab National Bank, is a large public sector bank but has not been identified as a D-SIB, so it carries no surcharge. Buckets 3 and 5 are empty, which is itself a frequently asked detail.

The correct answer is A, F. K. F. Nariman. After the Gadgil Study Group recommended the area approach, the Reserve Bank appointed a Committee of Bankers under F. K. F. Nariman, which agreed with the area approach and added the mechanism that gave the scheme its name: each district should be allotted to one bank, which would act as the leader and coordinate the work of all banks and development agencies there. The Reserve Bank accepted both reports and launched the scheme in December 1969. Option B is wrong because the R. V. Gupta Committee of 1998 dealt with agricultural credit delivery and simplifying crop loan procedures. Option C is wrong because the A. Ghosh Committee looked at frauds and malpractices in banks. Option D is wrong because M. Narasimham headed the banking sector reform committees of the 1990s. Gadgil and Nariman are the standard pair asked for this scheme.

The correct answer is C, ten working days. A shadow reversal is a provisional credit of the disputed amount into the customer's account. The circular requires the bank to make it within ten working days of the customer's notification, and specifically says the bank may not wait for any insurance claim of its own to be settled first. The idea is that the customer should not be out of pocket while the investigation runs.

Option A, three working days, is the reporting window for zero liability, not a bank deadline. Option B, seven working days, is the end of the limited liability window for the customer. Option D, thirty working days, is close to the thirty day period after which an unresolved complaint can be taken to the Reserve Bank's ombudsman, but it is not the shadow reversal deadline. Keep three timelines apart: three days and seven days for the customer, ten working days for the shadow reversal and ninety days for final resolution.

The correct answer is C, 300 to 900. TransUnion CIBIL computes its score for individual borrowers on a scale from 300 at the lowest to 900 at the highest, and a few months of credit history are needed before any score can be generated; a person who has never borrowed is shown with a no history marker rather than the lowest score. Option A is wrong because 0 to 100 is a percentage scale and is not used for credit scores in India. Option B is wrong because 100 is not the floor of the scale, though the distractor is tempting because the ceiling of 900 is right. Option D is wrong because 300 to 850 is the range of the FICO score used in the United States, which is the most plausible wrong answer of the four. Lenders in India commonly treat a score of about 750 and above as comfortable.

The correct answer is B, it coordinates the credit planning of all banks in the district. The lead bank is a coordinator, not a monopolist. It prepares the district credit plan, convenes the district forums through its Lead District Manager, brings banks and government departments to one table, watches for blocks and villages left without banking and reports progress to the state government and the Reserve Bank. Option A is wrong because every bank remains free to open branches and lend in the district; nothing in the scheme reserves business for the lead bank. Option C is wrong because the lead bank is a commercial bank, generally a public sector bank and in some districts a private bank, while the Reserve Bank's regional office supervises the scheme from outside. Option D is wrong because the district central cooperative bank continues to work alongside and is itself a member of the district forums.

The correct answer is B, the Enforcement Directorate. The Directorate, which works under the Department of Revenue in the Ministry of Finance and traces its origin to the Enforcement Unit set up on the first of May 1956, registers cases under the Act, attaches property provisionally, arrests, and files prosecution complaints in the Special Court. It also enforces the Foreign Exchange Management Act and the Fugitive Economic Offenders Act. Option A is wrong because the Financial Intelligence Unit only receives, processes, analyses and disseminates reports from banks; it has no power to arrest or prosecute. Option C is wrong because the Central Bureau of Investigation investigates the predicate or scheduled offence, such as corruption or cheating, and the money laundering case that follows is taken up by the Enforcement Directorate. Option D is wrong because the Reserve Bank supervises compliance by banks and may penalise them, but does not prosecute laundering.

The correct answer is C, Regional rural banks. The revised framework applies to all scheduled commercial banks but expressly leaves out three categories: small finance banks, payments banks and regional rural banks. Regional rural banks are sponsored by commercial banks and are supervised through a separate arrangement, so they stay outside this framework.

Option A, public sector banks, are squarely covered, and several of them have been placed under PCA in the past. Option B, private sector banks, are also covered, and a private bank can be placed under PCA exactly like a public sector bank. Option D, foreign banks operating through branches in India, are covered too; for them the framework specifically contemplates the parent being asked to bring in capital at Risk Threshold 1. The exclusion list of three is what the question is testing.

The correct answer is B, the Financial Information Provider. An FIP is the institution that already holds the customer’s data — a bank, a non-banking finance company, an insurer, a mutual fund or a pension fund — and releases it when a valid consent artefact is presented. Option A is wrong because the Financial Information User is the institution at the receiving end, which needs the data to give a service, such as a lender appraising a loan. Option C is wrong because the consent manager is the Account Aggregator itself, the data-blind pipe that may not store, use or sell what passes through it. Option D is wrong because a Lending Service Provider is an agent that sources or services loans for a regulated lender under the digital lending guidelines of 2022; it is part of the lending chain and not of the Account Aggregator framework at all.

The correct answer is C, 90 days from the complaint. The circular requires every bank to have a board-approved policy fixing its own resolution period, and caps that period at ninety days from the date the complaint is received. If the bank cannot complete the exercise within ninety days, it must still compensate the customer as the circular prescribes, so delay does not work in the bank's favour.

Option A, 30 days, is the period after which a complaint not resolved by the bank can be taken to the Reserve Bank's ombudsman, which is a different deadline and a common source of confusion. Option B, 60 days, does not appear in this framework. Option D, 180 days, is far longer than the rule allows. Pairing helps: ten working days for the provisional credit, ninety days for the final decision, and thirty days of bank inaction before the ombudsman can be approached.

The correct answer is B, SBI. Ecowrap is the research report of the State Bank of India, brought out by its economic research department.

Ecowrap is written by the team of the group chief economic adviser at SBI and comments on growth, inflation, bank credit, government finances and the state of households. It is widely quoted in the press because it often carries an early estimate of GDP growth or of the fiscal position before the official figures appear. The edition of May 2020 studied the damage the Covid-19 lockdown was doing to incomes and to economic activity. SBI is the country's largest commercial bank, with its headquarters in Mumbai.

A is wrong: the Reserve Bank publishes its own Monetary Policy Report, Financial Stability Report and Annual Report, not Ecowrap. C is wrong: HDFC Bank brings out no report of this name. D is wrong: nor does ICICI Bank.

Exam tip: Ecowrap belongs to SBI Research, while the best known Reserve Bank reports are the Financial Stability Report and the Monetary Policy Report.

The correct answer is B, Net non-performing assets ratio. Under the revised framework the three indicators are the capital to risk weighted assets ratio or the Common Equity Tier 1 ratio for capital, the net non-performing assets ratio for asset quality, and the Tier 1 leverage ratio for leverage. The net figure is used because it shows the bad loans left uncovered after provisions, which is the amount that can still eat into capital.

Option A, gross non-performing assets ratio, is widely reported and widely quoted in the press, which makes it the most tempting wrong answer, but the framework uses the net ratio. Option C, slippage ratio, measures fresh additions to bad loans during a year and is an analytical measure, not a PCA trigger. Option D, provision coverage ratio, shows how much has been provided against bad loans and is a supervisory expectation rather than a threshold parameter here.

The correct answer is A, working capital finance to industry. The study group chaired by P. L. Tandon reported in 1974 on the norms for bank lending for working capital, fixing acceptable levels of inventory and receivables for each industry and setting out methods of lending that limited how much of a borrower's working capital gap a bank would finance; the Chore Committee of 1979 then reviewed the cash credit system that grew out of it. Option B, priority sector lending, is governed by targets set by the Reserve Bank after bank nationalisation, not by this committee. Option C, capital adequacy, came with the Narasimham reports and the Basel norms. Option D, customer service, belongs to the Goiporia Committee of 1991 and the Damodaran Committee of 2011. Remember Tandon and Chore as a pair on working capital.

The correct answer is B, on the bank. The circular places the burden of proof squarely on the bank: if a bank says the customer is liable, it must establish that, rather than asking the customer to prove innocence. This matters because the bank holds the logs, the device records and the transaction trail, while the customer holds almost nothing, so putting the burden on the customer would make the protection meaningless.

Option A is the intuitive but wrong answer, and banks sometimes behave as though it were true, which is why the question is set. Option C is wrong because the police investigate the criminal offence; liability between the bank and its customer is a civil matter settled under the Reserve Bank's rules. Option D is wrong because a payment system operator such as a card network or the retail payments organisation is not a party to the customer's account relationship for this purpose.

The correct answer is A, Risk Threshold 1. The first set of mandatory actions, applied as soon as a bank crosses Risk Threshold 1, is a restriction on dividend distribution or remittance of profits, together with a requirement that the promoters, owners or the parent of a foreign bank infuse capital. The logic is simple: money that could strengthen capital should not leave the bank.

Option B, Risk Threshold 2, carries all the Threshold 1 actions plus a restriction on opening branches in India or abroad, so the dividend curb is included there but did not begin there. Option C, Risk Threshold 3, carries everything above plus limits on capital expenditure other than board-approved technology upgrades. Option D is wrong because a moratorium under the Banking Regulation Act is a far later and rarer step, used when a bank is being reconstructed or amalgamated, and PCA restrictions start long before that point.

The correct answer is C, the customer bears the loss till reporting and the bank bears the loss after reporting. Sharing a PIN, password or one-time password is treated as customer negligence, and in that case the circular makes the customer bear the whole loss up to the time the fraud is reported. The moment the report is made, the bank is on the hook for every further rupee, because it is then the bank's job to block the account and the instrument.

Option A is wrong because a customer who hands over a credential cannot pass the whole loss to the bank. Option B is the harsher reading that many candidates choose, but it ignores the second half of the rule and is the main trap in this question. Option D is wrong because the framework never prescribes an automatic equal split; liability depends on who was at fault and on how quickly the report came. The practical lesson is to report at once even when the mistake was one's own.

The correct answer is C, Four. Withdrawal of PCA restrictions is considered when no parameter has breached a risk threshold across four continuous quarterly financial statements, and one of those four must be the audited annual financial statement. The audited statement is insisted upon so that the improvement is confirmed by an auditor and not only by provisional numbers.

Option A, two, and option B, three, are too short a run for the supervisor to be convinced that the turnaround is real rather than the result of one good quarter. Option D, six, overstates the requirement. Note also that four clean quarters are necessary but not by themselves sufficient: the Reserve Bank additionally looks for supervisory comfort, including an assessment of whether the bank's profitability is sustainable, before taking it out of the framework.