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RBI Report on Trend & Progress of Banking in India – December 2025 + Monetary Policy Report – April 2026 | 80 MCQs ⏳ Published: Sep 2026 | 🎯 80 MCQs
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Which of the following was not a part of the key aspects which was put forth by RBI in its discussion paper published on August 21, 2025, inviting public comments as part of review of the monetary policy framework that was due in March 2026.
Explanation:
Correct: A
Direct Answer: choice between headline and baseline inflation.
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What was the policy action undertaken by the MPC during its meeting in April 2025?
Explanation:
Correct: C
Direct Answer: Policy Repo rate cut by 25 bps and stance changed from neutral to accommodative.
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GST rates were rationalised by the Govt. during September 2025 to boost domestic manufacturing and to lower the cost of living.
Which of the following action was taken by the govt to achieve this?
Explanation:
Correct: C
Direct Answer: The slabs of 12% and 28% were repealed and 40% demerit rate introduced on sin goods.
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The interest rate channel is central to the conduct of monetary policy under inflation targeting. The central bank influences the price of credit (interest rates) through its control over
Explanation:
Correct: B
Direct Answer: the price of bank reserves
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Headline inflation has seen significant moderation during H1:2025-26 (up to August), mainly due to?
Explanation:
Correct: C
Direct Answer: Correction in the prices of food items
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Non-tax revenue of the central government posted a high growth of 33.7 per cent during April-July 2025, mainly on account of?
Explanation:
Correct: B
Direct Answer: large surplus transfer by the RBI
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Which one of the following recommendations was not made by the IWG constituted by RBI to review the extant liquidity management framework?
Explanation:
Correct: D
Direct Answer: daily minimum requirement of 90 per cent of the prescribed cash reserve ratio (CRR) reduced to 85 per cent.
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The aggregate limit available to Standalone Primary Dealers under the Standing Liquidity Facility was increased from ___________ to ________ beginning April 2, 2025
Explanation:
Correct: A
Direct Answer: ₹10,000 crore to ₹15,000 crore
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The average daily absorption by RBI under the LAF facility amounted to ₹2.31 lakh crore in H1 of 2025-26 due to
which of the following reasons?
Explanation:
Correct: D
Direct Answer: All of the above
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Maintenance of higher SDF balances by the Banks with RBI indicate
Explanation:
Correct: C
Direct Answer: surplus liquidity in the banking system
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The persistent hovering of the overnight market rates near the floor of the LAF corridor for a longer duration reflects?
Explanation:
Correct: B
Direct Answer: Surplus of durable liquidity in the banking system
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Which of the following entities were the major lenders in the tri-party repo market segment during the H1: 2025-26?
Explanation:
Correct: C
Direct Answer: Mutual Funds
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The decision of Reserve Bank to reverse risk weights on bank lending to NBFCs effective from April 1, 2025 had led to
Explanation:
Correct: B
Direct Answer: increased the overall credit availability to NBFCs from the banking system.
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Which entity dominated the issuance in CP primary market with an average share of 48 per cent for H1:2025-26?
Explanation:
Correct: C
Direct Answer: Corporates
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The 10-year G-sec yield softened during the beginning of the H1: 2025-26 due to the following reasons?
Reserve Bank undertook the following measures as part of active debt consolidation of Central Govt Debt during the H1: 2025-26?
The share of the external benchmark-based lending rate linked loans in total outstanding floating rate loans of scheduled commercial banks increased to 62.9 per cent as at end-June 2025 from 61.6 per cent as at end-March 2025 indicates
which of the following?
During H1:2025-26, banks have increased their spreads (charged over and above the benchmark rate), for external benchmark-based lending rate loans. The spread on fresh rupee loans was the highest for
which of the following sectors?
The Government of India reviewed the interest rates on various small savings instruments, which are linked to secondary market yields on G-secs of comparable maturities and kept them unchanged. What are the likely outcomes of this decision to market rates?
During H1: 2025-26 the MSME segment showed a significant acceleration in growth due to improved credit flow to the MSME segment on account of?
The Reserve Bank's regulatory framework is primarily guided by
which of the following set of principles?
Consider the following statements regarding the proposed Expected Credit Loss (ECL) framework:
1. It replaces the incurred loss approach to provisioning.
2. It is proposed to become applicable from April 1, 2027.
3. It is intended to improve transparency and credit pricing.
Which of the statements given above is/are correct?
The Standardised Approach for Counterparty Credit Risk (SA-CCR) is proposed mainly because it:
With reference to Unified Lending Interface (ULI),
which of the following is NOT a feature mentioned in the report?
Consider the following statements:
1. Digital Public Infrastructure (DPI) has become a foundation for rapid financial innovation.
2. FinTechs help bridge the digital divide. RBI also conducts regular interactions with innovators and entrepreneurs through structured platforms such as FInnovate and FinConnect.
3. RBI's HaRBInger initiative encourages development of innovative financial solutions.
Which of the above statements is/are correct?
Consider the following statements regarding Artificial Intelligence (AI) in the financial sector: 1. AI can improve fraud detection through continuous learning. 2. AI has overcome risks like Automation complacency and poor model explainability which can lead to systemic errors or errors in credit assessments. 3. RBI constituted the FREE-AI Committee to encourage responsible adoption of AI.
Which of the above statements is/are correct?
Which of the following has been identified as a major downside risk to the global growth outlook?
Consider the following statements:
1. Inflation is expected to converge to target earlier in Advanced Economies (AEs) than in Emerging Market and Developing Economies (EMDEs).
2. Softer energy prices have contributed to the moderation of global inflation.
3. Inflation in AEs is projected to remain higher than in EMDEs during 2026.
Which of the statements given above are correct?
Which one of the following best explains the concern regarding the increasing role of Non-Bank Financial Intermediaries (NBFIs)?
Which of the following emerging developments is/are identified as requiring enhanced regulatory and supervisory attention? 1. Artificial Intelligence 2. Stablecoins and crypto-assets 3. Interconnectedness between banks and non-banks
Which one of the following best captures the overall policy message?
During 2025, the Monetary Policy Committee (MPC) reduced the policy repo rate by a cumulative:
To improve monetary policy transmission and maintain adequate liquidity, the Reserve Bank employed
which of the following measures? 1. Open Market Operations (OMOs) 2. USD/INR Buy-Sell Swaps 3. Reduction in Cash Reserve Ratio (CRR)
The Framework for Formulation of Regulations, issued in May 2025, primarily seeks to:
Which of the following measures was introduced under the Digital Lending Directions, 2025? 1. Lending Service Providers (LSPs) partnering with multiple REs must present loan offers in an unbiased manner. 2. Creation of a central directory of digital lending applications. 3. Encouraging blockchain-based lending for all banks.
The FREE-AI Framework released by the Reserve Bank primarily aims to:
Which of the following initiatives was introduced specifically to curb cyber fraud through exclusive internet domains?
Under the revised Priority Sector Lending (PSL) guidelines effective from April 1, 2025, which one of the following changes was introduced for Urban Co-operative Banks (UCBs)?
Consider the following statements regarding payment system initiatives: 1. Continuous cheque clearing under CTS replaces batch processing with near real-time processing. 2. Non-KYC Prepaid Payment Instruments (PPIs) can now be linked to third-party UPI applications. 3. RBI continues to promote international expansion of UPI.
Which of the above statements are correct?
The Reserve Bank's Master Direction on Regulation of Payment Aggregators (PAs), issued in September 2025, aims to achieve
which of the following? 1. Establish a comprehensive regulatory framework for both bank and non-bank payment aggregators. 2. Prescribe minimum capital, governance standards and fit-and-proper criteria for Payment Aggregators. 3. Require Payment Aggregators to conduct KYC and AML due diligence on merchants. Select the correct answer using the code below:
In an economy experiencing asymmetric global shocks, how does an intensification of an external regional conflict primarily manifest as a risk to the domestic macroeconomic outlook?
When global disinflation is described as proceeding at an "uneven pace" across advanced and emerging economies, it conceptually signifies that:
In the context of monetary transmission, what is a primary reason commercial banks might aggressively raise term deposit rates even during a policy easing cycle?
In decomposing monetary policy transmission to bank lending rates, the term "composition effect" in the Weighted Average Lending Rate (WALR) refers to:
When an economy exhibits robust credit growth alongside an expansion in non-bank financing sources, it typically indicates:
Why are adjustments to term deposit rates generally stickier or subject to more friction during a policy easing cycle compared to overnight money market rates?
What distinguishes a Variable Rate Repo (VRR) from a Variable Rate Reverse Repo (VRRR) from the perspective of systemic liquidity management?
Central banks warn that maintaining an excessive liquidity surplus over a prolonged period runs the risk of:
From a conceptual standpoint, how does a reduction in the Cash Reserve Ratio (CRR) affect the banking system's money multiplier, assuming all other structural variables are constant?
An economy's reserve money (M0) growth can accelerate significantly even if bank deposit expansion is moderate if there is a sharp increase in which component?
Which combination of factors would typically cause a steepening of a sovereign bond yield curve at the longer end?
In debt consolidation and sovereign liability management strategies, the primary objective of conducting "switch auctions" is to:
How does a widening of the "inter-state spread" of cut-off yields on state government securities conceptually reflect market dynamics?
If a central bank deliberately reduces the weighted average maturity (WAM) of fresh sovereign debt issuances, it is most likely responding to:
An increase in the corporate bond risk premium—defined as the spread of corporate bond yields over government securities of comparable maturities—is typically driven by:
In corporate debt markets, if the primary issuance of listed bonds in the domestic market declines due to rising costs, what structural substitution typically occurs?
Why does an escalation in a major regional geopolitical conflict typically put depreciation pressure on emerging market currencies?
How do central banks typically use asymmetric fan charts, scenario analysis, and sensitivity templates in their official policy communications?
On the supply side of an aggregate economy, if the services sector remains buoyant and manufacturing strengthens while agricultural activity moderates due to transient weather disruptions, the overall growth outlook is best described as:
Which macroeconomic combination is most effective at supporting private consumption and fostering resilient domestic growth during a period of global trade frictions?
Which statements correctly describe monetary transmission to banks' rates?
1. During tightening, the weighted average term deposit rate of SCBs rose by more than the repo-rate increase.
2. During easing, the weighted average term deposit rate declined by slightly more than the repo-rate cut up to October 2025.
3. Transmission to fresh lending rates was complete during the tightening phase.
4. Transmission to fresh lending rates during the easing phase was lower than the repo-rate cut.
5. Public sector banks showed relatively higher transmission to deposit rates than private-sector banks.
Which statements on maturity profile are correct?
1. Short-term deposits increased across all bank groups.
2. Short-term deposits were dominant for every bank group including payments banks.
3. Loans and advances of PSBs and PVBs were concentrated in the medium-term category.
4. PSB investments were typically long-term, while other bank groups preferred short-term exposures.
5. The short-term maturity mismatch widened during 2024-25 but remained below pre-pandemic levels.
Which statements about SCB profitability and provisioning are correct?
1. The interest-expense-to-interest-income ratio increased in 2024-25.
2. SCB NIM moderated to 3.1%.
3. The provision coverage ratio remained stable at 76.3% at end-March 2025.
4. PCR of PVBs was higher than PCR of PSBs at end-March 2025.
5. SFBs continued to record the widest spread.
Which statements correctly describe capital, leverage and liquidity conditions?
1. SCBs' CRAR rose to 17.4% at end-March 2025.
2. SCBs' Tier 1 capital ratio improved to 15.5%.
3. The minimum CRAR for banks in India is 9%, or 11.5% including the capital conservation buffer.
4. SCBs' LCR and NSFR both remained above the 100% regulatory requirement.
5. SCBs' leverage ratio fell below the minimum requirement.
Which statements about stress and large borrowal accounts are correct?
1. Large borrowal accounts are defined as accounts with exposure of Rs. 5 crore and above.
2. Their share in total SCB advances remained broadly unchanged at 43.9% at end-March 2025.
3. For SCBs, SMA-0, SMA-2 and NPA ratios declined for both overall and large borrowal accounts.
4. SMA-1 ratio increased for SCBs, driven by PSBs.
5. Restructured standard advances ratio increased sharply in 2024-25.
Which fraud-related statements are correct?
1. By reporting date, the number of frauds declined but the amount involved increased in 2024-25.
2. The rise in amount was partly linked to 122 earlier cases reported afresh after re-examination.
3. By occurrence date, card/internet frauds had the largest share in number of cases.
4. By occurrence date, advances-related frauds had the largest share in amount involved.
5. PVBs had the largest share of amount involved in reported frauds.
Which statements about sectoral composition and industrial credit are correct?
1. The shares of services and personal loans in total bank credit increased.
2. The shares of agriculture and industry in total bank credit declined.
3. Medium industries witnessed acceleration in credit growth.
4. Micro and small industries and large industries recorded moderation in credit growth.
5. Personal loans ceased to be a significant part of bank credit.
In a risk-review meeting, a supervisor says: 'Asset quality improved, but fraud amount rose; therefore the banking sector's credit risk worsened.' Which is the best analytical response? Co-operative Banks
A salary-earners' UCB has deposits above Rs. 10,000 crore. Under the four-tier framework, how is it classified?
Which statements on UCB profitability and soundness are correct?
1. UCB net profit after tax grew by 14.2% in 2024-25.
2. Scheduled UCBs' operating profits contracted, while non-scheduled UCBs' operating profits increased.
3. UCB NIM moderated because interest expenditure grew faster than interest income.
4. UCB CRAR improved to 18.0%.
5. UCB GNPA ratio worsened to double digits at end-March 2025.
Which statement correctly describes large borrowal accounts in UCBs?
Which statements correctly compare RCCs, UCBs, StCBs and DCCBs?
1. RCCs rely much more on borrowings than UCBs.
2. UCBs rely predominantly on deposits.
3. StCBs had a credit-deposit ratio above 100% at end-March 2025.
4. DCCBs had a higher CASA share than StCBs.
5. DCCBs had a lower GNPA ratio than StCBs.
Which rural co-operative technology/governance developments are correctly stated?
1. RBI accorded regulatory approval for a shared service entity for rural co-operative banks in April 2025.
2. Sahakar Sarathi Private Limited is being established to provide centralised technological, operational and support services.
3. The RBI Integrated Ombudsman Scheme was extended to StCBs and DCCBs from November 1, 2025.
4. PACS computerisation aims to onboard nearly 80,000 PACS onto a unified ERP platform.
5. PACS are being phased out as rural service institutions.
Which statements on long-term rural credit co-operatives are correct?
1. SCARDBs primarily borrow from NABARD.
2. PCARDBs receive financial assistance from SCARDBs.
3. SCARDBs' net profit turned negative during 2023-24.
4. SCARDB GNPA ratio increased to 38.3% at end-March 2024.
5. PCARDB GNPA ratio worsened from 39.7% to above 40%.
Which entities are placed in the base layer under the framework described?
1. NBFC-Account Aggregator
2. NBFC-P2P
3. NBFC-Non-Operative Financial Holding Company
4. Standalone Primary Dealer
5. NBFC-Infrastructure Debt Fund
Which ownership-pattern statements are correct?
1. Government-owned NBFCs held 36.5% of NBFC-sector assets.
2. Government-owned NBFCs held 51.5% of NBFC-ML assets.
3. All NBFC-UL assets belonged to non-government companies.
4. Private limited companies had a 33.0% asset share in the NBFC sector.
5. NBFC-UL entities that are not already listed must get listed within three years.
Which statements about NBFC funding and balance-sheet expansion are correct?
1. NBFC balance sheets maintained double-digit expansion at end-March 2025.
2. Growth in borrowings from banks moderated, especially for NBFC-ML.
3. NBFCs compensated by increasing reliance on market borrowings.
4. Risk weights on SCB lending to NBFCs, increased in November 2023, were restored from April 1, 2025.
5. Bank borrowings ceased to be significant for NBFCs.
Which asset-quality statements about NBFCs are correct?
1. The NBFC-sector GNPA ratio declined to 2.9% at end-March 2025.
2. The NBFC-sector NNPA ratio declined to 1.0%.
3. NBFC-MFI GNPA ratio increased to 4.1%.
4. NBFC-ML improved in both GNPA and NNPA ratios.
5. NBFCs needed to remain vigilant about rising SMA-1 and SMA-2 categories.
Which statements about NBFC capital and sensitive-sector exposures are correct?
1. NBFC-sector CRAR was 25.9% at end-March 2025, above the 15% regulatory prescription.
2. NBFC-MFIs raised their CRAR as a precautionary measure.
3. Sensitive-sector exposure was 25% of NBFCs' total assets.
4. Real estate exposure accounted for 26.8% of total sensitive-sector exposure.
5. Capital-market exposure increased because internal limits under SBR were removed.
Which HFC statements are correct?
1. RBI took over regulation of HFCs from NHB in August 2019, while HFCs are supervised by NHB.
2. Two HFCs converted into NBFC-IFC and NBFC-ICC in 2024-25.
3. HFCs' share in total housing-sector credit declined to 18.8% at end-March 2025.
4. Housing loans accounted for 73.8% of credit extended by HFCs.
5. All 91 HFCs were permitted to accept public deposits.
Completed!
Final Score: 0/80