Practice Risk Management in Banks Questions and Answers

• When an asset is upgraded from an NPA status back to a Standard Asset, what is the regulatory requirement regarding the restoration of its classification?
• To prevent banks from utilizing overly optimistic internal statistical software to under-provision under the ECL guidelines, the regulator introduces which...
• Under the revised PCA framework for commercial banks, which three specific areas are monitored as the core financial parameters?
• In a Cash Credit account, the outstanding balance is within the sanctioned limit, but there have been no credits in the account for 90 days as on the date ...
• To prevent a severe initial shock to regulatory capital adequacy upon transitioning to ECL, banks can "add back" provisions to which capital layer?
• What is the standard regulatory provisioning requirement for a general, unsecured asset that has been explicitly identified as a "Loss Asset" but is not ye...
• What does a higher Provisioning Coverage Ratio (PCR) directly indicate about a commercial banking institution?
• When a Urban Co-operative bank breaches financial metrics and is placed under "Risk Threshold 2" of the PCA framework, what is the mandatory corrective act...
• Under the transitional rules of the Expected Credit Loss (ECL) framework starting April 1, 2027, banks are permitted to "add back" a fraction of their addi...
• In which year was the SARFAESI Act enacted by the Parliament of India?
• What is the primary objective of the SARFAESI Act, 2002?
• Which type of creditors are completely excluded from using the SARFAESI Act?
• Under SARFAESI, a bank can initiate action only after the loan account is classified as:
• What is the minimum default amount required to initiate corporate insolvency under the IBC since 2020?
• Who regulates the overall system and the licensed insolvency professionals under the IBC?
• If a borrower wants to challenge a bank's action under the SARFAESI Act, where must they file an application?
• What is the primary approach or philosophy behind the IBC?
• Within how many days must a borrower challenge the bank's enforcement action before the DRT under SARFAESI?
• Which body serves as the primary Adjudicating Authority for companies and LLPs under the IBC?
• Which of the following is completely exempted from the application of the SARFAESI Act?
• Under which Section of the IBC can a "Financial Creditor" initiate the corporate insolvency resolution process?
• Under the IBC, who takes over the active management of the debtor company once the application is admitted?
• What happens when a moratorium is declared under Section 14 of the IBC?
• Under the liquidation waterfall mechanism of IBC (Section 53), who is paid last?
• What is the strict statutory time limit specified under the IBC for completing the entire insolvency resolution process, including legal proceedings?
• How long is the mandatory written notice period that a bank must serve to a borrower under SARFAESI before enforcing its security interest?
• What voting threshold is required by the Committee of Creditors (CoC) to approve a corporate resolution plan under the IBC?
• If a bank initiates recovery actions under Section 13(4) of the SARFAESI Act, which of the following actions is NOT authorized by the law?
• Who forms the Committee of Creditors (CoC) under the corporate insolvency process of the IBC?
• What happens if no resolution plan is approved by the CoC within the maximum time frame permitted under the IBC?
• Which regulatory authority governs the operations of Asset Reconstruction Companies (ARCs) acting under the SARFAESI Act?
• For which of the following categories of debtors does the Debt Recovery Tribunal (DRT) act as the Adjudicating Authority under the IBC?
• Under Section 53 of the IBC (Liquidation Waterfall), which of the following shares equal priority with the dues of secured creditors who choose to relinqui...
• Which statement is correct regarding the role and rights of unsecured creditors under the SARFAESI Act versus the IBC?
• What is the primary risk management objective of implementing a Large Exposure Framework (LEF)?
• To which specific structural layer of Non-Banking Financial Companies (NBFCs) are standard LEF mandates fully applicable?
• According to exposure monitoring guidelines, large exposures must be measured and tracked at which of the following operational tiers?
• When evaluating large counterparty exposures at the Standalone Solo level, what forms the baseline calculation matrix?
• When compiling data for regulatory calculations at the Consolidated Group level, which types of subsidiaries are fundamentally EXCLUDED?
• For a standard Upper Layer NBFC (other than an Infrastructure Finance Company), what is the baseline exposure limit on a single counterparty?