Banking & Finance MCQs - 2026-09-25

Improvement in AQR metrics signifies that banks have been successful in resolving their stressed assets, reducing the stock of non-performing assets, and implementing better lending practices (underwriting standards) to prevent future asset quality deterioration.

Government initiatives like recapitalization provide capital infusion, strengthening the banks' balance sheets, while governance reforms aim to improve decision-making, risk management, and overall operational efficiency, leading to greater financial stability.

Strong performance in banks is typically driven by healthy credit growth, indicating increased lending activity, and improved asset quality, which means a reduction in non-performing assets (NPAs) leading to lower provisioning requirements and higher profitability.

The framework mandates that a Key Fact Statement (KFS) must be provided to the borrower before the execution of the loan contract, which includes a detailed Annual Percentage Rate (APR) encompassing all costs associated with the digital loan.

The RBI framework clarifies that any fees, charges, etc., payable to LSPs must be paid by the Regulated Entity (RE) and not by the borrower directly.

The RBI framework mandates that the loan disbursement and repayment must be executed only between the borrower's bank account and the Regulated Entity (RE) without any pass-through/pool account of the Lending Service Provider (LSP) or any third party.