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Annual Report & Financial Stability Report ⏳ Published: Sep 2026 | 🎯 80 MCQs
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India’s macroeconomic fundamentals remain strong as compared to many of its peers during the ongoing West Asia crisis and in comparison, to previous crisis episodes due to.
1. A strong bank and non-bank balance sheets of the financial intermediaries.
2. The potential for external shocks to generate financial stress remain elevated.
3. adequate capital and liquidity buffers in the banking system
Which of the above statements are strongly corelated?
Explanation:
Correct: A
Direct Answer: 1 & 3
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The rollover risks have increased amid rising global debt levels as the governments have started
Explanation:
Correct: D
Direct Answer: None of the above
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Questions are being raised about the safe asset status of government bonds.
Which of the following, as per the FSR 2026, is indicative of the above statement?
Explanation:
Correct: D
Direct Answer: None of the above
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During periods of market stress, fragilities in the sovereign bond markets could transmit faster and may lead to broader market spillovers on account of?
Explanation:
Correct: D
Direct Answer: All of the above
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As per the FSR 2026, NBFIs pose significant risk to the financial stability globally. The major reason identified by the report are
1. Strong interlinkages between banks and non-banks
2. highly leveraged and quantitative investment strategies
3. use of repo funding and smaller margins for undertaking trades
4. Lightly regulated and opaque with no access to central bank liquidity facilities
Explanation:
Correct: D
Direct Answer: All of the above
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The share of short-term debt on residual maturity basis stood at what percentage of foreign exchange reserves as at the end of March 2026?
Explanation:
Correct: B
Direct Answer: 47.3%
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The higher energy prices and other commodities due to the geopolitical issues would adversely impact the fiscal deficit due to the limited pass-through of oil price increases, excise duty cuts and higher outgo on account of fuel subsidies and would lead to the hardening of Bond yields. However, the pressure on yields are expected to be eased due to fall in the energy prices along with?
Explanation:
Correct: C
Direct Answer: revival of FPI debt inflows
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The INR has been under depreciation over the last several months due to elevated trade uncertainty, weakening of capital flows and deteriorating investor sentiments. Meanwhile the depreciation of the INR was amplified with the increased hedging demand from?
Explanation:
Correct: B
Direct Answer: Importers
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RBI took
which of the following measures to arrest the excessive volatility in the exchange rate of INR caused by the onshore-offshore basis arbitrage trades by the market participants leading to continued depreciation of INR?
Explanation:
Correct: D
Direct Answer: None of the above
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Flows to passive funds witnessed a sharp increase during H2:2025-26 with cumulative inflows rising by 109% vis-a-viz H1:2025-26 due to increased investments in?
Explanation:
Correct: B
Direct Answer: Gold ETFs
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The banking system resilience in India remains intact, however funding is emerging as a key challenge as the Bank’s liability profile is shifting from low cost _________ deposits to higher cost _______ deposits pushing up the marginal cost of funds.
Explanation:
Correct: B
Direct Answer: CASA, CDs
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A Special Mention account (SMA) is defined as, for loans with revolving facilities (Cash Credits /overdraft), if the outstanding balance remain continuously more than the sanctioned limits or drawing power whichever is lower for a period of 61-90 days.
Explanation:
Correct: D
Direct Answer: SMA-2
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Name the non-interest benefit which a depositor gets from holding money in the current and savings account (CASA) with bank even if the deposit interest rates are low?
Explanation:
Correct: B
Direct Answer: Convenience yield
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As per the Banking Stability indicator (BSI) the overall risk in the banking sector has reduced as on March 2026, supported by improvements in all dimensions except__________?
Explanation:
Correct: D
Direct Answer: Liquidity
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The Overall risk in the NBFC sector during 2025-26 as indicated by the Non-Banking Stability Indicator (NBSI) saw a moderate increase, reflecting a slight weakening in ________ and ________ metrics?
Which of the following statements are correct
1. The HTM portfolio for both Public sector Banks (PSBs) and Private sector banks (PVBs) increased their holding of State Govt. securities (SGS) while reducing their holding of Central Govt. securities (G.sec).
2. The Foreign banks increased their share of other securities in their HTM portfolio.
3. In the quarter ending March 2026 both G-sec and SGS holdings in the HTM book exhibited unrealised gains
Which of the following statements are true?
1. The aggregate credit growth of NBFCs (Upper and Middle Layer) decelerated y-o-y in March 2026.
2. NBFC credit growth accelerated in industry and services sector while it slowed down in agriculture and retail loan segment.
3. Credit growth of NBFC-MFIs turned positive and accelerated to 14.5% y-o-y in March 2026.
4. Dependence on bank borrowings decreased for both NBFC-Upper Layer & NBFC- Middle Layer in March 2026 compared to the previous year.
Which of the following statements are incorrect?
1. Inter-bank exposures as a percentage of the total assets of the banking system edged up over the last two quarters of 2025-26
2. The increase was primarily due to fund-based exposures while non-fund based exposures remained stable.
3. Private sector banks continue to dominate the inter-bank market accounting for 57.8% of the total inter-bank exposures.
The Reserve bank has comprehensively reviewed and amended the instructions of Investment Fluctuation Reserve (IFR) for various bank categories. With these amendments RBI has discontinued the IFR requirements for which category of Banks?
RBI had issued instructions on Unique Transaction Identifier (UTI) to improve the quality and accuracy of financial data and strengthen systemic risk monitoring through entry-level and transaction level traceability and monitoring of which data.
A bank provides leverage, clearing, market-making and underwriting services to several NBFIs. During market stress, it responds by raising margin calls, cutting loans and selling assets. Which risk transmission mechanism is best reflected here?
Which of the following correctly explain why IOSCO revised its liquidity risk management recommendations for open-ended funds?
1. Some funds offered daily redemption despite holding illiquid assets.
2. Such structures can create first-mover advantage for redeeming investors.
3. Liquidity mismatch may generate dilution effects and systemic spillovers.
4. The recommendations aim to align redemption terms with actual asset liquidity.
5. The objective was to prohibit all open-ended funds from offering redemptions.
Which of the following correctly reflect the RBI’s directions on investment in AIFs by regulated entities?
1. An individual RE may not invest more than 10 per cent of the corpus of an AIF scheme.
2. Collective investment by all REs is capped at 20 per cent of the corpus of an AIF scheme.
3. The directions aim to prevent misuse of AIF structures for evergreening or circumvention of exposure norms.
4. Mandatory 100 per cent provisioning applies in specified cases involving downstream investment in debtor companies.
5. REs are encouraged to use AIF structures to bypass exposure norms.
Which of the following were identified as vulnerabilities in government bond-backed repo markets?
1. Leverage build-up through repo-funded positions
2. Demand-supply imbalances during asset-liability mismatches
3. High concentration in the repo market
4. Complete absence of any role in sovereign bond market liquidity
5. Persistent need to preserve core market-functioning role while addressing vulnerabilities
Which elements correctly reflect the international regulatory shift on AI supervision described in the report?
1. Movement from high-level AI principles towards operational supervisory practices
2. Focus on governance and risk management
3. Focus on third-party and outsourcing risk management
4. Complete withdrawal of disclosure and recordkeeping requirements for AI systems
5. Concern over concentration risk arising from common AI providers
Which statements correctly reflect the Risk-Based Premium Framework introduced by DICGC?
1. It allows differential premium rates across categories of insured banks.
2. It links premia more closely with the underlying risk profile of insured institutions.
3. It incorporates a vintage discount mechanism for banks with sustained contribution to the DIF without claim payouts.
4. It ensures all banks permanently pay the same uniform premium of 12 paise per ₹100 of assessable deposits.
5. Better-managed banks may become eligible for lower premium rates.
A bank argues that all swap positions arising from FCNR(B), ECB and OFCB facilities should automatically be counted against its NOP-INR limit. Which response is most aligned with the chapter?
The new Directions on asset classification, provisioning and income recognition are conceptually important because they:
Which changes are part of the revised Standardised Approach framework for capital charge for credit risk?
1. More granular and risk-sensitive risk-weighting of credit exposures
2. External credit rating-based approach for claims on counterparty banks
3. Greater coverage of unrated MSMEs for relatively lower risk-weight
4. Inclusion of transactors under the regulatory retail category
5. Complete removal of credit conversion factors for off-balance sheet exposures
Which option most accurately captures the chapter’s assessment of CIRP outcomes?
During the 2025-26 period, the Monetary Policy Committee (MPC) transitioned the policy stance from neutral to accommodative and back to neutral. What was the primary macroeconomic driver behind this specific sequence of adjustments?
Based on the recent review of the Flexible Inflation Targeting (FIT) framework, consider the following statements:
1. A significant majority of stakeholders supported retaining the 4 per cent inflation target.
2. There was a consensus to replace Headline CPI with Core CPI as the formal nominal anchor.
3. Nearly one-third of respondents favoured a narrower tolerance band to build policy credibility.
Which of the above are correct?
The Reserve Bank's liquidity management framework was recently adjusted to account for structural changes in the financial system.
Which of the following best describes the current role of 14-day variable rate repo (VRR) auctions?
Which of the following factors contributed to the 'Goldilocks' period observed in the Indian economy during Q2:2025-26?
1. Real GDP growth reaching a six-quarter high.
2. Headline inflation falling below the lower tolerance threshold.
3. Resolution of the US government shutdown and trade deal progress.
4. A sharp decrease in the policy repo rate to enhance demand.
Select the correct combination:
How does the transmission of monetary policy typically differ between Private Sector Banks (PVBs) and Public Sector Banks (PSBs) in the current Easing Cycle?
Regarding the National Strategy for Financial Inclusion (NSFI) 2025-30,
identify the correct components of the 'Panch-Jyoti' objectives:
1. Leveraging financial education for discipline.
2. Adopting a gender-sensitive approach for women-led inclusion.
3. Mandatory shifting of all rural accounts to digital-only mode.
4. Strengthening customer protection and grievance redressal.
Select the correct option:
The FI-Index improved to 67.0 in March 2025. Which sub-index has historically shown negative contribution during specific periods due to external disruptions, such as reduced literacy activities?
A significant policy change was made to the collateral requirements for Micro and Small Enterprises (MSEs) to improve credit flow.
What is the new limit for collateral-free loans effective from April 1, 2026?
Consider the following statements regarding the Kisan Credit Card (KCC) trends in 2025-26:
1. The number of operative KCCs witnessed a double-digit percentage decline.
2. Total outstanding KCC loans increased due to higher animal husbandry demand.
3. The decline in operative accounts was partly due to bank reclassification of exposures.
Which of the above are correct?
The SORR benchmark, authorized in July 2025, is designed to reflect conditions in which segment of the money market?
Regarding the investment regime for Foreign Portfolio Investors (FPIs),
which of the following regulatory changes were implemented in 2025-26?
1. Concentration limits for corporate debt securities were withdrawn.
2. FPIs are now prohibited from investing in Treasury Bills.
3. VRR investments will be reckoned under the general FPI limit from April 2026.
4. Surplus balances in Vostro accounts can now be invested in G-Secs.
Select the correct combination:
What is the primary objective of the newly introduced Unique Transaction Identifier (UTI) in the OTC derivative markets?
The 'Aapki Poonji, Aapka Adhikar' campaign was launched to address which specific issue in the banking sector?
Consider the following statements about the revised FEM (Guarantees) Regulations 2026:
1. It enables guarantees issued by non-resident entities under the automatic route.
2. The underlying transaction must not be prohibited under FEMA 1999.
3. Mandatory monthly reporting of all invoked guarantees has been introduced.
Which of the above are correct?
Which benchmark serves as the operating target of monetary policy in India, and how did it perform relative to the policy repo rate in 2025-26?
Evaluate these statements regarding Priority Sector Lending (PSL) achievement in 2025-26:
1. SCBs as a whole achieved a PSL percentage of 45.0 per cent.
2. Small Finance Banks (SFBs) had the highest achievement at 78.8 per cent.
3. Every bank group failed to reach the prescribed 40 per cent individual target.
4. Private Sector Banks achieved a higher PSL percentage than Public Sector Banks.
Which combination is correct?
What is the significance of the 'Just-in-Time' fund release system mentioned in the context of the Reserve Bank's liquidity operations?
In the period 2025-26, the Reserve Bank intervened in the foreign exchange market to manage the NOP-INR position.
What is the newly mandated limit for Authorised Dealers at the end of each business day?
Consider the strategic goals for 2026-27.
Which of the following are part of the Department of Monetary Policy's agenda?
1. Estimating the natural real rate of interest.
2. Reviewing and improving GDP growth forecasting.
3. Mandatory conversion of all PSU loans to EBLR.
4. Reviewing the quarterly projection model.
Select the correct combination:
The introduction of the External Benchmark-based Lending Rate (EBLR) has been a significant reform. Which sector showed the highest share of EBLR-linked loans as of December 2025?
Regarding the implementation of the EDDPE programme,
what is the milestone achieved as of March 31, 2026?
Which of the following describes the current status of the FX-Retail platform as of October 2025?
1. It has been linked with Bharat Connect.
2. Sole proprietorships can facilitate purchases of US Dollars.
3. It also allows individuals to sell British Pounds now.
4. It was initially facilitating purchases of US Dollars against the Rupee.
Select the correct combination:
The Reserve Bank's durable liquidity augmenting measures in 2025-26 included a variety of tools. Which tool provided the largest single injection of liquidity (Rs. 2.5 lakh crore)?
Regarding the Lead Bank Scheme (LBS) review,
what is the primary goal of the upcoming changes for 2026-27?
Consider these statements about the MPC's inflation projections for 2025-26:
1. Projections were consistently revised upwards due to food inflation spikes.
2. Normal monsoon was a key assumption in the early projections.
3. By October 2025, headline inflation was revised down to 2.6 per cent.
4. Core inflation was stable around 4 per cent despite gold price volatility.
Which of the above are correct?
A pilot project for certificates of deposit (CDs) has commenced using
which of the following technological combinations?
What prompted the MPC to frontload a 50-bps rate cut in June 2025, according to the report?
The steepening of the G-sec yield curve in 2025-26 — short-term yields softening while long-term yields hardened — is best explained by which combination?
1. Monetary easing and surplus systemic liquidity pulling down the shorter end
2. Global uncertainty, receding expectations of further rate cuts, and demand-supply mismatches pushing up the longer end
3. A parallel downward shift across the entire curve driven uniformly by the repo rate cuts
The Reserve Bank's revised framework for Foreign Exchange operations in 2025-26 emphasized
which of the following goals?
Encouraging states to adopt a "Benchmark Issuance Strategy" for market borrowings is best understood as addressing which specific market friction?
What are the components of the Bank’s Economic Capital?
Forward contracts entered into by the Reserve Bank are revalued on a _____basis.
The size of the Bank’s Balance Sheet for a particular Financial Year is ₹90,00,000 crore. As per the guidelines on ECF, it was decided to keep the Available Realized Equity (ARE) at upper threshold of 6.5% of the Balance Sheet size. The Unrealized Revaluation Balance for the year stood at ₹15,00,000 crore. If Capital is ₹5 crore, Reserve Fund is ₹6500 crore and Asset Development Fund (ADF) is ₹22,000 crore, find the amount of Contingency Fund.
Bank’s Foreign Currency Assets undergoes periodic revaluation, and resultant unrealized gains are parked in the Balance Sheet. Which instruments are exception to this policy?
Consider the following statements regarding household financial savings in 2024-25:
1. Net household financial saving increased compared to the previous year.
2. Gross household financial saving increased over the previous year.
3. Household financial liabilities declined significantly.
Which of the statements given above is/are correct?
Which of the following best reflects the relationship between government capital expenditure and private investment, as discussed in the report?
Which sector recorded the highest real GVA growth during 2025-26?
Which of the following best explains the moderation in headline inflation during 2025-26?
Consider the following statements regarding Payments Vision 2028:
1. It outlines the roadmap for digital payments up to December 2028.
2. It explores the introduction of electronic cheques.
3. It proposes a shared responsibility framework involving only the issuing bank.
Which of the statements given above is/are correct?
Which of the following best explains the objective of the proposed Digital Payment Intelligence Platform (DPIP)?
During 2025-26, UPI accounted for approximately what share of total retail payment transactions (by volume)?
Which of the following is the primary purpose of introducing the '.bank.in' domain?
Consider the following statements about India's international payment initiatives:
1. UPI QR-code acceptance is operational in France and the UAE.
2. Deployment of UPI-like infrastructure is underway in Namibia and Peru.
3. RuPay stack deployment has been completed in Singapore.
Which of the statements given above is/are correct?
The Reserve Bank proposes introducing a 'Kill Switch' for digital payments primarily to:
RBI launched its official podcast series 'RBI Talks: From Paisa to Policy' with the inaugural episode on:
With reference to RBI's international engagements during 2025-26, consider the following statements:
1. India assumed the BRICS Chair from January 1, 2026.
2. RBI signed Memoranda of Understanding with Banque de France and the European Central Bank.
3. RBI discontinued the currency swap arrangement for SAARC countries.
Which of the statements given above is/are incorrect?
Phase-I of continuous clearing in the Cheque Truncation System (CTS), implemented from October 4, 2025, reduced the settlement period for Government cheques from:
The Department of Economic and Policy Research (DEPR) undertook approximately how many research projects during 2025-26?
RBI's Department of Statistics and Information Management (DSIM) used Large Language Models (LLMs) primarily to:
Consider the following initiatives undertaken by the Legal Department during 2025-26:
1. Preparation of a research paper on leveraging AI for enhancing legal functions.
2. Organisation of training programmes on Regulation Drafting in collaboration with leading law universities.
3. Publication of amendments to the RBI Act, 1934.
Which of the statements given above is/are correct?
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