UPSC Prelims Practice Questions — ‘HDFC Bank review finds no major governance concerns’

Q1. In the context of the Reserve Bank of India's prudential framework, which of the following best describes a 'Domestic Systemically Important Bank' (D-SIB)?

  • A. A bank whose failure or distress would cause significant disruption to essential services and the real economy, and which is therefore required to maintain an additional Common Equity Tier-1 capital surcharge
  • B. A bank notified by the Government of India as the principal banker to the Central Government and required to maintain a higher Statutory Liquidity Ratio
  • C. A scheduled commercial bank holding more than 25% of total banking-system deposits and operating in at least five jurisdictions abroad
  • D. A bank that has been placed under the RBI's Prompt Corrective Action framework owing to a breach of risk thresholds on capital, asset quality or profitability

Q2. With reference to the Reserve Bank of India's latest list of Domestic Systemically Important Banks (D-SIBs), consider the following statements: 1. HDFC Bank has been placed in a higher D-SIB bucket than ICICI Bank. 2. The additional Common Equity Tier-1 surcharge applicable to HDFC Bank from April 1, 2025 is higher than that of ICICI Bank but lower than that of the State Bank of India. 3. ICICI Bank and HDFC Bank were both added to the D-SIB list in the same year as the framework was introduced. Which of the statements given above is/are correct?

  1. HDFC Bank has been placed in a higher D-SIB bucket than ICICI Bank.
  2. The additional Common Equity Tier-1 surcharge applicable to HDFC Bank from April 1, 2025 is higher than that of ICICI Bank but lower than that of the State Bank of India.
  3. ICICI Bank and HDFC Bank were both added to the D-SIB list in the same year as the framework was introduced.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q3. As per the Reserve Bank of India's most recent annual disclosure, how many banks stand identified as Domestic Systemically Important Banks (D-SIBs) in India?

  • A. Two
  • B. Three
  • C. Four
  • D. Five

Q4. Which of the following authorities is responsible for identifying and notifying Domestic Systemically Important Banks in India and prescribing the additional capital surcharge applicable to them?

  • A. Reserve Bank of India
  • B. Securities and Exchange Board of India
  • C. Ministry of Finance, Department of Financial Services
  • D. Financial Stability and Development Council

Q5. The Reserve Bank of India's power to approve the appointment, reappointment or removal of the Chairman and the Managing Director/CEO of a private sector bank such as HDFC Bank is primarily derived from which of the following statutes?

  • A. The Banking Regulation Act, 1949
  • B. The Reserve Bank of India Act, 1934
  • C. The Companies Act, 2013
  • D. The Securities and Exchange Board of India Act, 1992