What are the key parameters to consider when analyzing a bank's performance?

Revenue sources, capital adequacy, asset quality, deposits, loan book, and liquidity Number of branches, number of employees, stock price, and CEO's salary Marketing budget, advertising campaigns, social media presence, and customer reviews Number of ATMs, website traffic, mobile app downloads, and online banking features

What does CASA stand for in the context of banking?

Current Account-Savings Account Certificate of Asset and Share Allocation Comprehensive Assessment of Savings and Assets Consolidated Account Statement and Analysis

Why do banks prefer a higher CASA ratio?

CASA deposits are a cheaper source of funds compared to other borrowing options. CASA deposits offer higher interest rates to customers, attracting more deposits. CASA deposits are subject to fewer regulations and restrictions from the RBI. CASA deposits are easier to manage and track compared to other types of deposits.

What is the purpose of the Cash Reserve Ratio (CRR) mandated by the RBI?

To ensure banks maintain a minimum level of cash to meet depositors' withdrawal demands To encourage banks to invest in government bonds and other liquid securities To limit the amount of loans banks can disburse to control inflation To provide funds for the RBI to manage the country's foreign exchange reserves

What does the Statutory Liquidity Ratio (SLR) require banks to do?

Maintain a certain percentage of net deposits in liquid assets like gold or government bonds Set aside provisions for potential bad loans based on their loan portfolio Increase their capital adequacy ratio by issuing new shares or retaining earnings Reduce their exposure to risky assets and focus on safer lending practices

What is the significance of digitalization in the banking sector?

It has become a hygiene factor, essential for growth and customer engagement It is a niche aspect, relevant only for tech-savvy customers and online businesses It is a temporary trend, likely to be replaced by traditional banking methods It is a costly investment with limited impact on a bank's overall performance

Which of the following is a key indicator of a bank's asset quality?

Gross Non-Performing Assets (GNPA) Ratio Return on Equity (ROE) Earnings per Share (EPS) Price-to-Earnings (P/E) Ratio

What does a high Provision Coverage Ratio (PCR) indicate about a bank?

The bank is prudent and conservative in managing potential loan losses The bank is aggressive in its lending practices and takes on higher risks The bank has a high proportion of retail loans compared to corporate loans The bank relies heavily on CASA deposits as its primary source of funds

What is the primary function of banks in the financial system?

Taking deposits and giving loans Providing investment advice and managing portfolios Facilitating payments and currency exchange Regulating financial markets and enforcing compliance

What is the advantage of a bank having a diversified retail loan book?

Defaults by individual borrowers have a negligible impact on the bank's balance sheet Retail loans offer higher interest rates compared to corporate loans Retail customers are less likely to default on their loans compared to businesses Retail loans are easier to recover in case of default compared to corporate loans