Mastery: RBI Grade B Practice Test 2026

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Q1Domain Verified

Within the "Industry Foundation" module, the concept of "Priority Sector Lending (PSL)" is analyzed not just as a regulatory target but as a structural tool. From a systemic stability perspective, which of the following represents the most sophisticated critique of the current PSL framework?

It diverts bank funds away from more profitable corporate loans, impacting bank profitability.

The ever-increasing overall target percentage forces banks to take on excessive risk, directly threatening their solvency.

It creates an artificial segmentation of the credit market, discouraging innovation in financial products for non-priority sectors.

Its broad categories and lack of sub-targets for critical sub-sectors like renewable energy within the overall target limit its effectiveness in directing precise credit flow.

Q2Domain Verified

When the "Industry Foundation" module discusses "Asset Liability Management (ALM)" in banks, it frames it as a dynamic defense against interest rate risk. If a bank's ALM report shows a positive duration gap, what specific action would a specialist Treasury manager take in a rising interest rate environment predicted by the RBI?

Shift towards shorter-term or floating-rate assets and try to secure more stable, long-term liabilities.

Hedge the position using Interest Rate Swaps to receive fixed and pay floating rates.

Actively seek to lengthen the maturity profile of liabilities, perhaps by issuing more long-term certificates of deposit.

Increase the proportion of long-term fixed-rate loans on the asset side to lock in higher yields.

Q3Domain Verified

The module explains "Non-Performing Assets (NPAs)" through the lens of the "Income Recognition and Asset Classification (IRAC)" norms. A specialist analyzing a bank's portfolio must understand the subtle trigger for classification. According to IRAC norms, which scenario would most definitively and immediately classify a standard term loan as a Non-Performing Asset?

The bank's internal risk rating for the borrower is downgraded to "Sub-Standard" based on a quarterly review.

The principal or interest payment is overdue for more than 90 days as of the balance sheet date.

The borrower has reported two consecutive quarters of net losses, indicating financial stress.

The borrower's debt-service coverage ratio (DSCR) falls below 1.0 for the last completed financial year.

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Advanced intelligence on the 2026 examination protocol.

This domain protocol is rigorously covered in our 2026 Elite Framework. Every mock reflects direct alignment with the official assessment criteria to eliminate performance gaps.