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Financial Stability Report December 2025 ⏳ Published: Sep 2026 | 🎯 40 MCQs
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Which of the following is not true with regards to Indian rupee movement in 2025?
Explanation:
Correct: B
Direct Answer: The trade weighted real effective exchange rate index (40-currency basket) for India has trended lower, falling below 100 level, signalling overvaluation of Indian Rupee as against its trade partners.
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Which of the following contributed to the easing of domestic financial conditions in July- November 2025?
1. Gains in equity markets
2. Depreciation of Indian Rupee
3. Rise in government bond yields
4. Decrease in corporate bond spreads
Explanation:
Correct: B
Direct Answer: 1 and 4
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Compared to FSR Dec-24,
which of the following indices have risen?
Explanation:
Correct: A
Direct Answer: Trade Policy Uncertainty and Economic Policy Uncertainty
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Which of the following is correct regarding Fintech firms?
1. More than half of personal loans are extended to borrowers under 35 years of age.
2. Within personal loans, impairment in small ticket loans were relatively higher compared to other NBFCs.
3. Personal loans account for more than half of their outstanding consumer segment loan portfolio.
Explanation:
Correct: C
Direct Answer: 2 and 3
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How do Stablecoins differ from unbacked crypto assets?
Explanation:
Correct: C
Direct Answer: Stablecoins are designed to maintain a stable value
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Which of the following are the risks associated with stablecoins?
1. They can lead to high inflation and exchange rate fluctuations in sending and receiving economies.
2. They have the potential to become a key medium for on-chain clearing and settlement with expansion in tokenisation of securities and real-world assets.
3. Their rapid growth could adversely affect credit intermediation.
Explanation:
Correct: C
Direct Answer: 3 only
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Regarding India’s fiscal sector, consider the following statements.
1. The supply of Central Government Securities (G-Sec) and State Government Securities (SGS) has risen considerably.
2. The weighted-average maturity (WAM) of outstanding debt and annual issuances of both central and state government debt has risen.
3. The demand for long-term sovereign debt among the largest investors, viz., insurance companies and pension funds has risen.
Which of the above statements are correct? (Page no. – 7, Para no. – 1.14 and 1.15)
Explanation:
Correct: B
Direct Answer: 1 and 2
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Which of the following is not a component of committed expenditure of states?
Explanation:
Correct: C
Direct Answer: Salaries
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With reference to India’s capital and financial account,
select the incorrect option
Explanation:
Correct: D
Direct Answer: Overall, financial account turned negative in H1:2025-26.
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Despite steady foreign investor outflows, and persistent global economic uncertainty, the Indian equity market has displayed resilience. In this context,
which of the following statements is correct:
Explanation:
Correct: D
Direct Answer: Over 5-year horizon, Indian equity markets have performed better than China equity markets as per Sharpe ratio
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Which probable development is most likely to materially worsen equity market stability in the near term according to the FSR December 2025?
Which structural shift has reduced the impact of US equity corrections on Indian markets?
What has primarily underpinned the resilience of Indian equities despite FPI outflows?
Despite record highs in global equity prices, which trend signals rising vulnerability?
How the funding composition of banks evolved when compared to the previous year (Sep 2025 vis-à-vis Sep 2024).
With respect to consumer segment loans, choose the correct option:
Consider the following statements regarding the Banking Stability Indicator (BSI):
1. A lower value of the BSI indicates improvement in the overall stability of the banking system.
2. The BSI in September 2025 remained below its long-term average, despite some weakening in liquidity and profitability indicators.
3. Improvement in asset quality and soundness fully offset the deterioration in liquidity and profitability.
4. The BSI is constructed such that movement away from the centre in the Banking Stability Map indicates a reduction in risk.
Which of the statements given above is/are correct?
With reference to MSME credit trends in India, as discussed in the FSR December 2025, consider the following statements:
1. MSME credit growth outpaced overall bank credit growth and the share of MSME credit in total non-food bank credit is about one-fifth.
2. The improvement in MSME asset quality has been broad-based across industry and services, although micro enterprises continue to exhibit relatively higher delinquency levels.
3. MSME credit to sectors exposed to higher US tariffs has shown a sharp deterioration in asset quality, reflected in higher SMA (Special mention accounts) and GNPA (gross non-performing asset) ratios compared to overall MSME credit.
Which of the statements given above is/are correct?
Which segment of NBFCs has recorded a sharp increase in credit cost?
Despite a downward trend in the GNPA ratio, stress within the NBFC sector remains evident, as reflected by:
With reference to the financial position of September 2025, stress tests on UCBs were conducted on:
In the joint solvency-liquidity contagion analysis (Sep 2025), failure of the bank with the maximum capacity to cause contagion losses would cause:
In the macro stress test’s adverse scenarios, which scenario assumes that the central bank has limited policy space to ease the policy rate to boost growth?
Under the hypothetical adverse scenario 1 and 2 of macro stress test, how many of the 46 major SCBs may need to dip into the capital conservation buffer (CCB) by March 2027, assuming no additional capital infusion?
Under the severe credit risk shock (2 SD), the depletion in system-level CRAR for SCBs stood at around:
In September 2025, the MTM impact of interest rate shocks on derivatives portfolios ________, compared to March 2025:
The Financial Stability Report (December 2025) notes that during the period under review, the insurance sector exhibited:
For
which of the following sources of funds do NBFC-UL have a higher dependence than NBFC-ML.
What proportion of borrowings of NBFC-ML is secured?
What indicators of NBSI improved in September 2025 vis-à-vis March 2025?
Which of the following entity is both the largest providers of funds to AIFIs and also largest receiver of funds from AIFI (AIFI- All India Financial Institutions)
Which of the following interpretations best explains why sizeable unrealised gains in banks’ investment portfolios do not necessarily prevent CRAR and CET1 depletion under a 250 basis points parallel upward shift in the INR yield curve?
Which of the following interpretations best captures the systemic implication of growing interconnectedness between banks and non-bank financial institutions, as reflected in bilateral exposure patterns?
Despite strong capital adequacy and improving asset quality, the Financial Stability Report (December 2025) notes a marked deceleration in profit growth for scheduled commercial banks (SCBs) in 2025. Which explanation best captures the internal earnings dynamics highlighted in the report?
Credit Concentration Risk Index (CCRI) assesses systemic vulnerability arising from borrower concentration.
Which of the following statements most accurately reflects both the construction and interpretation of CCRI?
With the present deposit insurance limit of ₹5 lakh, ___ per cent of the total number of deposit accounts were fully insured and ______ per cent of the total value of all assessable deposits were insured as on September 30, 2025. deposits were insured as on September 30, 2025.
COP 30, the 2025 United Nations Climate Change Conference took place in ____ in November 2025.
Complaints related to ________ formed the highest number of complaints received during the Q2 2025-26 by the SEBI with respect to the Indian Securities Markets.
The FREE-AI Committee constituted by the Reserve Bank of India has formulated seven Sutras to guide AI adoption in the financial sector.
Which of the following are included in the seven sutras?
1. Dynamic Adaptability
2. Fairness and Equity
3. Understandable by design
4. Safety, Resilience and Sustainability
According to the Reserve Bank’s directions on investment in Alternative Investment Funds (AIFs) by Regulated Entities (REs),
what is the maximum percentage of an AIF scheme’s corpus that a single RE may invest in?
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