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WorksheetsRisk management master quiz
Total questions: 60
Worksheet time: 48mins
Which among the following is a tool to measure the Credit Risk embedded in a loan asset ?
Invocation of Insurance
Credit Risk Rating
Loan Pricing
None of the above
Which among the following is a Credit Risk Mitigant ?
Pricing of Loan assets
Legal Action
Insurance of assets
None of the above.
One of your Borrower Customer failed to service monthly interest in his working capital account. Which among the following is correct about the type of risk the Bank is facing in this context ?
Fraud Risk
Interest Rate Risk
Market Risk
Credit Risk
Which among the following is a not a Credit Risk ?
Default Risk
Counterparty Risk
Fraud Risk
Portfolio Risk
Which among the following is NOT part of the building blocks of an effective Credit Risk Management in a Bank ?
Organisational Structure
Operations & Systems
Policy and Strategy
Credit monitoring framework
Which among the following is not a Parameter used for Credit Risk Rating architecture ?
Industry Risk
Basis Risk
Business Risk
Management Risk
In working capital accounts which among the given ratios is used to assess Financial Risk ?
Debt Equity Ratio
Debt Service Coverage Ratio
Current Ratio
All of the Above
Which among the following is not a Credit Information Company in India ?
CIBIL
Moodys
Experian
Equifax
Reputation and Standing of a Promoter is assessed as part of which Parameter under Credit Risk Rating ?
Management Risk
Industry Risk
Business Risk
Financial Risk
Which among the following is not a Credit Risk Mitigant ?
ECGC Guarantee
Insurance of Assets
Collaterals
Pricing of Loan assets
As per Regulatory Guidelines, upto which level in a Rating Scale, the rating shall represent an acceptable level of Credit Risk ?
Levels 1 to 3
Levels 1 to 4
Levels 1 to 5
Levels 1 to 7
Rules of Delegation in a Bank's Credit Policy represents one among the following. Identify ?
Powers to sanction Loans by various functionaries
Loan Monitoring Mechanism
Exposure Levels
Risk Rating Architecture
Among the borrowers who had the below external credit ratings who is more likely to get a loan sanctioned?
BBB
BB
B
C
Incidents of LC devolvement and BG invocation are examples of credit risk of
Direct lending
Non-funded loans
Securities trading
Cross-border exposure
Having a upper limit for lending to a borrower or a sector is part of
Prudential norms
Credit appraisal
Risk rating
Conditional sanction
Which of the following is not a part of the 5 Cs?
Credit score
Collateral
Capacity
Conditions
Which of the following is not part of the retail score card for risk rating?
Utilization of facility
Employment
No. of dependents
Education
Pick the borrower with the least financial risk
Current ratio = 1.3
TOL/TNW = 3
PAT/Sales = 40%
Current ratio = 1.15
TOL/TNW = 1.5
PAT/Sales = 60%
Current ratio = 1.8
TOL/TNW = 3.8
PAT/Sales = 55%
Current ratio = 1.33
TOL/TNW = 2
PAT/Sales = 45%
Which of the following is NOT a parameter in business/industry risk assessment?
Technology adopted
Consistency in quality
Product profile
Experience in the industry
Which of the following options is part of facility risk assessment?
Collateral securities available
Repayment commitments
Incidents of LC devolvement
Attainment of BEP
A term loan is annually reviewed whereas a working capital advance is annually
Revised
Renewed
Reviewed
Reassessed
Which of the following parameters would assess distribution network, product profile, and regulatory risk?
Business/industry risk
Facility risk
Management risk
Financial risk
Which of the following actions can be termed as risks?
Banks giving loans with the hope that they would be repaid
Banks avoiding giving loans to farmers
Banks having a shortage of liquid funds
Daily operations of a bank
Risk is known as (a) of an event
Which of the following actions can comes under the process of identifying a risk?
Asking for a collateral security from the loan applicant
Getting the details of the number of dependents of a loan applicant
Getting information on the existing loans of a loan applicant
Fixing a higher rate of interest for a borrower
Which of the following actions of a bank would come under the process of analyzing the risk?
Calculating the risk rating of a borrower based on the loan application
Receiving the loan application
Deciding to give the loan at a higher rate of interest
Determining the value of a collateral security
Which of the following is NOT a risk mitigation strategy?
Transfer
Avoid
Reassign
Accept
Select the correct order of actions in the risk management process.
Identify - monitor - analyze - mitigate - report
Analyze - identify - monitor - mitigate - report
Identify - analyze - mitigate - monitor - report
Identify - analyze - report - mitigate - monitor
A shopkeeper fixes CCTV in the premises of his shop. This action pertains to
Risk identification
Risk mitigation
Risk control
Risk reporting
A, B, and C are three borrowers who apply for a loan. After receiving all the documents and going through them the bank finds that
i) A is least risky,
ii) B is slightly risky but he is willing to give a collateral, and
iii) C is a highly risky borrower
This action of the bank falls under
Risk identification
Analyzing the risk
Controlling the risk
Reporting the risk
Banks have to disclose their NPA position to RBI and other credit monitoring institutions like CRILC. This action falls under
Risk monitoring
Risk reporting
Risk analyzing
Risk identification
Which of the following risks is/are peculiar to the banking business?
Liquidity risk
Market risk
Operational risk
Credit risk
Pick the right order of the institution and year of establishment
Bank for International Settlements - 1925
RBI - 1935
BASEL Committee - 1960
BASEL Accord III - 1988
Capital Conservation Buffer is to be maintained at
2.5% above CRAR as part of Tier I capital
0.25% above CRAR as part of Tier I capital
2.5% above CRAR as part of overall capital
0.25% above CRAR as part of overall capital
Countercyclical capital buffer is
An extension of capital conservation buffer
To be maintained between 0-0.25% over and above capital conservation buffer
An optional buffer to be maintained by the bank
to be maintained to protect the banking sector from periods of excess credit growth
The implementation of BASEL III in India was completed in
2021
2019
2015
2023
RBI became a member of BIS in the year
2003
2013
2020
2023
Which among the following is the least risky of the assets in the bank?
Cash
Credit cards
Exposure to capital markets
Corporate loans
To address the liquidity risk, BASEL recommended a
minimum liquidity ratio intended to provide enough cash to cover funding needs over a 30 day period of stress
longer term ratio Net Stable Funding Ratio intended to address maturity mismatches over entire balance sheet
capital conservation buffer above the CRAR
counter-cyclical buffer above the CRAR and capital conservation buffer
Which of the following is NOT among the three pillars of BASEL II?
Minimum capital requirements
Supervisory review
Market discipline
Liquidity requirements
Which of the following is not a reason for the failure of BASEL I?
Limited differentiation of risk
Static measure of default risk
Simplified calculation of potential future counterparty risk
Mandating a very less CRAR
Find the false statement.
When compared to BASEL I and BASEL II, BASEL III
increased the minimum capital requirements of banks
focused on different types of risks in a systematic manner
is less stricter
will reduce the liquidity in banks
RBI has levied monetary penalties on five cooperative banks for various regulatory violations in July 2024. The
penalties totaling Rs. 7.25 lakh were imposed on Mahabaleshwar Urban Co-operative Bank Ltd., Nagarik Sahakari
Bank Ltd., Krishna Sahakari Bank Ltd., Abasaheb Patil Rendal Sahakari Bank Ltd., and Sivagangai District Central
Cooperative Bank Ltd. following statutory inspections and findings of non-compliance with RBI directives on
regulatory limits and operational guidelines. Identify the core risk.
(a)
Lakshmi Vilas Bank was placed under the prompt corrective action framework in September 2019 to regularize three
parameters - CRAR, NPA, and ROA (return on assets). This action was necessary after the bank’s net worth
underwent a steady decline with continuous losses over the previous three years. Almost one-fourth of the bank’s
advances have turned bad assets. Identify the core risk
(a)
The RBI pumped one trillion rupees through a variable repo rate into Indian banks. This was done to reduce the
widening deficit faced by the Indian banking system in 2023. This deficit spiked to a level that was last seen in 2016. Identify the core risk.
(a)
Infrastructure Leasing & Financial Services (ILFS) an Indian company that provided finance and infrastructure
development services was a firm affected by maturity mismatch with its deposits maturing much earlier than its
loans creating an asset-liability mismatch. It defaulted on repayment of commercial paper (bonds it issued to the
public) and inter-corporate deposits worth Rs. 450 crore. This led to its failure in 2018. Identify the core risk
(a)
In 2023, Bank of Baroda’s mobile app BoB World was involved in a series of scams that led to RBI banning the app
from onboarding new customers. The employees of the bank were found to onboard fake customers, with some
agents siphoning (taking money) from customer’s accounts amounting to 22 lakh and creating severe security risks. Identify the core risk.
(a)
Starting from May 2022, RBI kept increasing the key lending rates to control inflation in the country, after two years
of maintaining status quo. This continuous increase led to the banks increasing their home loan lending rates
resulting in increased loan EMIs for the customers. This development discouraged people from taking new loans. Identify the core risk.
(a)
Global Trust Bank was found to be involved in lending extensively to speculating activities in the market. With the
market crash in the early 2000s it suffered heavy losses. This was one of the reasons along with its name being linked
to stock market scams and inflated prices by its promoters all of which led to its failure in 2004. Identify the core risk.
(a)
Silicon Valley Bank invested a large amount of bank deposits in long-term US treasuries and agency mortgage-backed
securities. They did not invest in short-term securities which can be quickly liquidated. When the tech market was hit
in the US, many depositors started to withdraw their deposits from the banks. The bank did not have cash on hand
to liquidate these deposits and pay its customers. This caused panic among the depositors who rushed to withdraw
all their deposits fearing collapse of the bank which was exactly what happened. Identify the core risk.
(a)
Following several years of scandals, Switzerland’s Credit Suisse bank collapsed in March 2023. It had faced multiple
high-profile risk and governance-related incidents over many years that had severely damaged the bank’s
profitability and reputation. Identify the core risk.
(a)
In March 2020, YES bank came very close to a collapse due to multiple reasons. One of the significant reasons was
that its loan book revealed that YES bank was involved in providing a lot of stressed loans to companies who had
defaulted on payments of prior loans. Most of these additional loans too had become NPAs. Identify the core risk.
(a)
Which of the following deals with checking the existing risks and the control measures at various levels?
Self-assessment
Event management
Benchmarking and comparative analysis
Scenario analysis
Which of the following deals with high and low probability events?
Metrics
Control monitoring
Scenario analysis
Event management
What is the expansion of ALCO?
Asset Liability Committee
Asset Liability Management Committee
Asset Liasion Management Committee
Asset Liability Code
Which of the following is not used by the banks to place the assets in their balance sheet?
Trading book
Banking book
Asset book
Balance book
Which of the following deals with an estimate of potential loss?
Stress testing
Value At Risk models
Standard deviation
Event management
LCR should provide a coverage that could atleast last for _____ days period of acute liquidity stress
7
14
30
90
NSFR should atleast be more than or equal to ______ on an ongoing basis.
70%
100%
50%
25%
___________ is used to check the differences between projected liquidity stress and actual liquidity stress.
Variance analysis
Calculation of surplus or deficit on an particular maturity date
Maturity ladder
Ranking of cash flows
