UPSC Prelims Practice Questions — Gross NPAs of Scheduled Commercial Banks (SCBs) for domestic operations reach a historic low of 2.15% as of September, 2025

Q1. The prudential norms on income recognition and asset classification that determine when a bank loan is to be treated as a non-performing asset are prescribed and enforced by which one of the following?

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

Q2. With reference to the Reserve Bank of India's Asset Quality Review (AQR), consider the following statements. Which of the above is/are NOT correct?

  1. It was initiated by the Reserve Bank of India in 2015.
  2. Its purpose was the transparent recognition of stressed assets on bank balance sheets.
  3. It was undertaken while Raghuram Rajan was the Governor of the RBI.
  4. It was essentially a scheme for the recapitalisation of public sector banks by the Government.
  • A. 1 and 2
  • B. 2 and 3
  • C. 4 only
  • D. 3 and 4

Q3. Consider the following statements comparing the Asset Quality Review with subsequent developments. Which of the statements given above is/are correct?

  1. The RBI launched the Asset Quality Review in 2015.
  2. Following the AQR, the gross NPA ratio of Public Sector Banks peaked at 14.58% in March 2018.
  3. The Asset Quality Review was launched in the same year in which the Insolvency and Bankruptcy Code was enacted.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q4. The Government adopted a '4R' strategy to address the problem of rising NPAs. Which of the following are correctly identified as components of this strategy?

  1. Recognition
  2. Restructuring
  3. Recapitalisation
  4. Reforms
  • A. 1, 2 and 3
  • B. 1, 3 and 4
  • C. 2, 3 and 4
  • D. 1, 2 and 4

Q5. Within the Government's 4R strategy for public sector banks, which one of the four R's specifically refers to the Government infusing fresh capital into public sector banks?

  • A. Recognition
  • B. Resolution
  • C. Recapitalisation
  • D. Reforms

Q6. With reference to the Insolvency and Bankruptcy Code, 2016, which of the following are correctly identified?

  1. It was enacted in the year 2016.
  2. It shifted the underlying approach from 'debtor-in-possession' to 'creditor-in-control'.
  3. The National Company Law Tribunal (NCLT) is the adjudicating authority for corporate insolvency.
  4. The Securities and Exchange Board of India is the regulator established under the Code.
  • A. 1, 2 and 3
  • B. 1, 2 and 4
  • C. 2, 3 and 4
  • D. 1, 3 and 4

Q7. Under the Insolvency and Bankruptcy Code, 2016, the adjudicating authority for the insolvency resolution and liquidation of corporate persons is —

  • A. the National Company Law Tribunal
  • B. the Debt Recovery Tribunal
  • C. the Insolvency and Bankruptcy Board of India
  • D. the Securities Appellate Tribunal

Q8. Consider the following statements regarding the mega consolidation of public sector banks that took effect from 1 April 2020. Which of the statements given above is/are correct?

  1. It consolidated ten public sector banks into four anchor banks.
  2. After the consolidation, the number of public sector banks was reduced to 12.
  3. Syndicate Bank and Corporation Bank emerged as two of the four anchor banks.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3

Q9. The following statements give the gross NPA ratios (domestic operations) of different bank groups as on 30 September 2025. Which of the above is/are NOT correct?

  1. For Scheduled Commercial Banks as a whole, the gross NPA ratio was 2.15%.
  2. For Public Sector Banks, the gross NPA ratio was 2.50%.
  3. For Private Sector Banks, the gross NPA ratio was 1.73%.
  4. Foreign Banks recorded the highest gross NPA ratio among all bank groups, at 2.80%.
  • A. 1 and 2
  • B. 3 only
  • C. 4 only
  • D. 2 and 4

Q10. As per the latest official data, the Provision Coverage Ratio (PCR) of Public Sector Banks rose to its highest level of approximately which of the following in September 2025?

  • A. 46.04%
  • B. 94.63%
  • C. 49.31%
  • D. 16.60%

Q11. The pre-2015 restructuring frameworks such as Corporate Debt Restructuring (CDR), Strategic Debt Restructuring (SDR) and the Scheme for Sustainable Structuring of Stressed Assets (S4A) were introduced by which one of the following?

  • A. Reserve Bank of India
  • B. Insolvency and Bankruptcy Board of India
  • C. Ministry of Corporate Affairs
  • D. Securities and Exchange Board of India