UPSC Prelims Practice Questions — Gross Non-Performing Assets (GNPA) of Public Sector Banks (PSBs) at historic low of 1.9% in FY 2025–26, achieve highest-ever net profit of ₹ 1.98 lakh crore; aggregate business reaches over ₹283 lakh crore

Q1. Under the Reserve Bank of India's prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to advances, a non-performing asset is placed in how many categories?

  • A. Two — sub-standard and doubtful, every other impaired advance being written off in full
  • B. Three — sub-standard, doubtful and loss
  • C. Four — standard, sub-standard, doubtful and loss, since every advance necessarily falls in one class of NPA
  • D. Five — standard, special mention, sub-standard, doubtful and loss

Q2. Consider the following pairings of a component of the 4R's strategy with the instrument through which it was operationalised. Which of the above is/are correctly identified?

  1. Recognition — the Asset Quality Review initiated by the Reserve Bank of India in 2015.
  2. Resolution — the Insolvency and Bankruptcy Code, 2016 read with adjudication by the National Company Law Tribunal.
  3. Recapitalisation — infusion of capital by the Government, made entirely through budgetary support without recourse to any bond issuance.
  4. Reforms — the EASE Agenda, which is drawn up and steered exclusively by the Reserve Bank of India in its capacity as banking regulator.
  • A. 1 and 2
  • B. 2 and 3
  • C. 1, 3 and 4
  • D. 2 and 4

Q3. Consider the following milestones in India's post-2015 asset-quality cycle. Which of the above is/are correctly identified?

  1. 2015 — the Reserve Bank of India initiated the Asset Quality Review, under which the special treatment extended to restructured loans was withdrawn.
  2. September 2024 — the gross NPA ratio of public sector banks stood at 3.12%.
  3. March 2025 — the gross NPA ratio of scheduled commercial banks fell to 2.31%, the lowest in twenty years.
  4. September 2025 — the gross NPA ratio of scheduled commercial banks stood at 2.15%, a level never before attained by any bank group in India.
  • A. 1, 2 and 3
  • B. 1 and 4
  • C. 2 and 3 only
  • D. 1, 3 and 4

Q4. The common reforms agenda for public sector banks that was first launched in January 2018 is finalised at the start of every financial year under the guidance of a Steering Committee of member banks functioning under the aegis of which one of the following?

  • A. The Department of Supervision of the Reserve Bank of India
  • B. The Indian Institute of Banking and Finance
  • C. The Indian Banks' Association
  • D. The National Bank for Financing Infrastructure and Development

Q5. The annual assessment of public sector banks' asset quality, recovery and capital adequacy for FY 2025-26 was released by the nodal department for the banking sector in India. Which one of the following is that department?

  • A. The Department of Economic Affairs, Ministry of Finance
  • B. The Department of Financial Services, Ministry of Finance
  • C. The Department of Public Enterprises, Ministry of Finance
  • D. The Department of Investment and Public Asset Management, Ministry of Finance

Q6. With reference to the public sector bank recapitalisation package announced by the Government in October 2017, consider the following. Which of the above is/are correctly identified?

  1. The package announced was of the order of ₹2.11 lakh crore.
  2. Recapitalisation bonds accounted for about ₹1.35 lakh crore of the package.
  3. About ₹18,000 crore of the package was to be provided through budgetary support.
  4. The entire remaining amount was to be infused by the Government itself, public sector banks being barred from raising capital from the market.
  • A. 1 and 4
  • B. 2 and 4 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q7. As per the Reserve Bank of India's Report on Trend and Progress of Banking in India, 2024-25, which one of the following accounted for the largest share of the amount recovered by scheduled commercial banks through the various recovery channels?

  • A. Action taken under the SARFAESI Act, 2002
  • B. Decrees obtained from the Debt Recovery Tribunals
  • C. Proceedings under the Insolvency and Bankruptcy Code, 2016
  • D. Settlements arrived at through Lok Adalats

Q8. Consider the following amalgamations of public sector banks that took effect from 1 April 2020. Which of the above is/are correctly identified?

  1. Oriental Bank of Commerce and United Bank of India into Punjab National Bank.
  2. Syndicate Bank into Canara Bank.
  3. Andhra Bank and Corporation Bank into Bank of Baroda.
  4. Allahabad Bank into Indian Overseas Bank.
  • A. 2 and 3
  • B. 1 and 2
  • C. 1, 3 and 4
  • D. 3 and 4