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Latest CAIIB Elective Paper Central Banking Exam Question (Objective Questions), MCQ in English

Subjects : Elective Paper (Central Banking)

Question Bank CAIIB Elective Paper (Central Banking) Exam - English
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Elective Paper (Central Banking)

Question 1Single Answer
What is the primary objective of liquidity management in banks?
  1. A
    Maximize loan defaults
  2. B
    Ensure adequate cash flow for obligations
  3. C
    Increase fiscal deficits
  4. D
    Promote speculative investments
Question 2Single Answer
Which RBI tool supports banks’ liquidity management?
  1. A
    Liquidity Adjustment Facility (LAF)
  2. B
    Fiscal subsidies
  3. C
    Stock market regulations
  4. D
    Import tariffs
Question 3Single Answer
What is a key liquidity management strategy for banks?
  1. A
    Ignore cash reserves
  2. B
    Maintain liquid asset buffers
  3. C
    Increase risky loans
  4. D
    Reduce deposit inflows
Question 4Single Answer
Which Basel Norm focuses on liquidity risk?
  1. A
    Basel I
  2. B
    Basel II
  3. C
    Basel III
  4. D
    Basel IV
Question 5Single Answer
What is the Liquidity Coverage Ratio (LCR) under Basel III?
  1. A
    Ratio of risky assets to capital
  2. B
    High-quality liquid assets to net cash outflows
  3. C
    Total loans to deposits
  4. D
    Fiscal deficit to GDP
Question 6Single Answer
What is the Net Stable Funding Ratio (NSFR) designed to ensure?
  1. A
    Short-term liquidity
  2. B
    Long-term funding stability
  3. C
    High loan defaults
  4. D
    Speculative investments
Question 7Single Answer
How does the RBI supervise bank liquidity?
  1. A
    By reducing regulations
  2. B
    Through Statutory Liquidity Ratio (SLR)
  3. C
    By increasing fiscal spending
  4. D
    By suspending monetary policy
Question 8Single Answer
What is a key risk management practice in banks?
  1. A
    Ignore credit risks
  2. B
    Implement robust credit appraisal
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 9Single Answer
Which Basel Norm introduced capital adequacy requirements?
  1. A
    Basel I
  2. B
    Basel II
  3. C
    Basel III
  4. D
    Basel IV
Question 10Single Answer
What is the minimum Capital Adequacy Ratio (CAR) under Basel III?
  1. A
    4%
  2. B
    8%
  3. C
    5%
  4. D
    12%
Question 11Single Answer
What is a prudential norm for asset classification?
  1. A
    Ignore loan defaults
  2. B
    Classify loans as standard or NPA
  3. C
    Increase risky loans
  4. D
    Reduce deposit inflows
Question 12Single Answer
How does the RBI enforce risk management in banks?
  1. A
    By reducing supervision
  2. B
    Through on-site inspections
  3. C
    By increasing fiscal deficits
  4. D
    By suspending credit policies
Question 13Single Answer
What is a key liquidity risk for banks?
  1. A
    Stable deposit base
  2. B
    Sudden deposit withdrawals
  3. C
    Low loan demand
  4. D
    Balanced fiscal budgets
Question 14Single Answer
Which tool helps banks manage short-term liquidity?
  1. A
    Marginal Standing Facility (MSF)
  2. B
    Long-term bonds
  3. C
    Fiscal subsidies
  4. D
    Stock market investments
Question 15Single Answer
What is the purpose of Basel II’s Pillar 1?
  1. A
    Ignore risk management
  2. B
    Set minimum capital requirements
  3. C
    Reduce banking supervision
  4. D
    Promote speculative lending
Question 16Single Answer
What is a key component of Basel II’s Pillar 2?
  1. A
    Fiscal policy coordination
  2. B
    Supervisory review process
  3. C
    Stock market regulations
  4. D
    Foreign exchange controls
Question 17Single Answer
What does Basel II’s Pillar 3 emphasize?
  1. A
    Reduce transparency
  2. B
    Market discipline through disclosures
  3. C
    Increase risky loans
  4. D
    Suspend banking operations
Question 18Single Answer
What is a prudential norm for provisioning?
  1. A
    Ignore bad loans
  2. B
    Set aside funds for NPAs
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 19Single Answer
How does the RBI manage liquidity risks in crises?
  1. A
    By increasing interest rates
  2. B
    Through emergency liquidity support
  3. C
    By reducing banking supervision
  4. D
    By promoting risky investments
Question 20Single Answer
What is a key risk management practice for credit risk?
  1. A
    Ignore borrower profiles
  2. B
    Conduct credit risk assessments
  3. C
    Increase unsecured loans
  4. D
    Reduce deposit inflows
Question 21Single Answer
What is the purpose of Basel III’s capital conservation buffer?
  1. A
    Promote risky lending
  2. B
    Absorb losses during stress
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 22Single Answer
What is a key liquidity management strategy during stress?
  1. A
    Reduce liquid assets
  2. B
    Maintain contingency funding plans
  3. C
    Increase risky loans
  4. D
    Suspend deposit inflows
Question 23Single Answer
Which prudential norm limits bank exposure?
  1. A
    Ignore large borrowers
  2. B
    Set exposure limits
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 24Single Answer
How does the RBI supervise risk management practices?
  1. A
    By reducing regulations
  2. B
    Through Risk-Based Supervision (RBS)
  3. C
    By increasing fiscal spending
  4. D
    By suspending monetary policy
Question 25Single Answer
What is a market risk for banks?
  1. A
    Stable interest rates
  2. B
    Volatility in asset prices
  3. C
    Low loan demand
  4. D
    Balanced fiscal budgets
Question 26Single Answer
What is a key risk management practice for market risk?
  1. A
    Ignore market trends
  2. B
    Use Value-at-Risk (VaR) models
  3. C
    Increase speculative trading
  4. D
    Reduce capital reserves
Question 27Single Answer
What is the role of Basel III’s countercyclical buffer?
  1. A
    Promote excessive lending
  2. B
    Mitigate credit booms
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 28Single Answer
What is a key liquidity management tool for banks?
  1. A
    Reduce cash reserves
  2. B
    Maintain high-quality liquid assets
  3. C
    Increase risky loans
  4. D
    Suspend deposit inflows
Question 29Single Answer
Which prudential norm addresses income recognition?
  1. A
    Ignore loan repayments
  2. B
    Recognize income on accrual basis
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 30Single Answer
How does the RBI address operational risks in banks?
  1. A
    By reducing regulations
  2. B
    Through robust IT audits
  3. C
    By increasing fiscal spending
  4. D
    By suspending credit policies
Question 31Single Answer
What is an operational risk for banks?
  1. A
    Stable IT systems
  2. B
    Cybersecurity breaches
  3. C
    Low loan demand
  4. D
    Balanced fiscal budgets
Question 32Single Answer
What is a key risk management practice for operational risk?
  1. A
    Ignore system vulnerabilities
  2. B
    Implement strong internal controls
  3. C
    Increase risky operations
  4. D
    Reduce capital reserves
Question 33Single Answer
What is the purpose of Basel III’s leverage ratio?
  1. A
    Promote excessive borrowing
  2. B
    Limit excessive leverage
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 34Single Answer
What is a key liquidity management strategy for long-term stability?
  1. A
    Reduce funding sources
  2. B
    Diversify funding base
  3. C
    Increase risky loans
  4. D
    Suspend deposit inflows
Question 35Single Answer
Which prudential norm addresses NPAs?
  1. A
    Ignore bad loans
  2. B
    Classify and provision for NPAs
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 36Single Answer
How does the RBI supervise liquidity in NBFCs?
  1. A
    By reducing regulations
  2. B
    Through liquidity coverage norms
  3. C
    By increasing fiscal spending
  4. D
    By suspending monetary policy
Question 37Single Answer
What is a key risk management practice for interest rate risk?
  1. A
    Ignore rate fluctuations
  2. B
    Use interest rate swaps
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 38Single Answer
What is the role of Basel III’s liquidity ratios?
  1. A
    Promote risky lending
  2. B
    Ensure liquidity resilience
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 39Single Answer
What is a key liquidity risk indicator for banks?
  1. A
    Stable loan-to-deposit ratio
  2. B
    High funding concentration
  3. C
    Low loan demand
  4. D
    Balanced fiscal budgets
Question 40Single Answer
How does the RBI address liquidity risks in crises?
  1. A
    By increasing interest rates
  2. B
    Through special liquidity windows
  3. C
    By reducing banking supervision
  4. D
    By promoting risky investments
Question 41Single Answer
What is a key risk management practice for forex risk?
  1. A
    Ignore currency fluctuations
  2. B
    Use forex hedging tools
  3. C
    Increase speculative trading
  4. D
    Reduce capital reserves
Question 42Single Answer
What is the purpose of Basel III’s stress testing?
  1. A
    Promote risky lending
  2. B
    Assess resilience to shocks
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 43Single Answer
What is a prudential norm for large exposures?
  1. A
    Ignore borrower concentration
  2. B
    Limit exposure to single borrowers
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 44Single Answer
How does the RBI supervise risk management in cooperatives?
  1. A
    By reducing regulations
  2. B
    Through regular audits
  3. C
    By increasing fiscal spending
  4. D
    By suspending credit policies
Question 45Single Answer
What is a key liquidity management strategy for NBFCs?
  1. A
    Reduce liquid assets
  2. B
    Maintain liquidity buffers
  3. C
    Increase risky loans
  4. D
    Suspend deposit inflows
Question 46Single Answer
What is a key risk management practice for liquidity risk?
  1. A
    Ignore funding gaps
  2. B
    Conduct liquidity stress tests
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 47Single Answer
What is the role of Basel III’s capital buffers?
  1. A
    Promote risky lending
  2. B
    Absorb unexpected losses
  3. C
    Reduce banking supervision
  4. D
    Increase fiscal deficits
Question 48Single Answer
What is a prudential norm for loan restructuring?
  1. A
    Ignore stressed assets
  2. B
    Restructure viable loans
  3. C
    Increase speculative lending
  4. D
    Reduce capital reserves
Question 49Single Answer
How does the RBI address market risks in banks?
  1. A
    By reducing regulations
  2. B
    Through capital charges for risks
  3. C
    By increasing fiscal spending
  4. D
    By suspending credit policies
Question 50Single Answer
What is a key risk management practice for cybersecurity?
  1. A
    Ignore IT vulnerabilities
  2. B
    Implement robust firewalls
  3. C
    Increase risky operations
  4. D
    Reduce capital reserves
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