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CA Final Special Features of Audit of Banks and Non-Banking Financial Companies — practice questions

Explore 80 free Special Features of Audit of Banks and Non-Banking Financial Companies questions in CA Final Auditing. Open each question or exercise to read its content, reference answers and available explanation.

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Special Features of Audit of Banks and Non-Banking Financial Companies questions and exercises with answers

Showing questions 1–30 of 80.

A term loan has had interest and principal overdue for 90 days or more. How is it classed?Read the answer and worked solution →Why are non-performing loans a major concern for the banking sector?Read the answer and worked solution →Prudential rules on non-performing loans require a bank to do what?Read the answer and worked solution →Which incentive can make reported NPL figures unreliable?Read the answer and worked solution →What is another name for an Asset Management Company set up to take over bad loans?Read the answer and worked solution →The SLR is fixed as a percentage of which base?Read the answer and worked solution →In which form must Indian banks hold their statutory liquidity ratio assets?Read the answer and worked solution →Which deposit is a demand liability of a bank?Read the answer and worked solution →A six-month fixed deposit is best described as which type of liability?Read the answer and worked solution →A bank has liquid assets of 270 and demand plus time liabilities of 1,500. What is its SLR?Read the answer and worked solution →What penal interest above the bank rate applies to a bank's SLR shortfall for a day?Read the answer and worked solution →Mandating SLR compels commercial banks to invest in which asset?Read the answer and worked solution →Why do gold and gilts count towards SLR?Read the answer and worked solution →What happened to the SLR floor after the 2017 amendment?Read the answer and worked solution →Which other abbreviation is used for the Capital Adequacy Ratio?Read the answer and worked solution →The capital adequacy ratio compares a bank's capital with which measure?Read the answer and worked solution →What is the main purpose of enforcing minimum CAR levels?Read the answer and worked solution →A bank has 200 of government bonds (0%), 500 of mortgages (50%) and 750 of other loans (100%). Its RWA is?Read the answer and worked solution →A bank has total capital of 100 and risk-weighted assets of 1,000. Its CAR is?Read the answer and worked solution →Which items make up Tier I capital?Read the answer and worked solution →How is an off-balance sheet item's exposure first found for CAR?Read the answer and worked solution →What mainly distinguishes a non-bank financial company from a bank?Read the answer and worked solution →Which service do NBFCs typically not offer?Read the answer and worked solution →How do non-bank firms fund themselves without public deposits?Read the answer and worked solution →How do NBFIs differ from banks that sell services as one package?Read the answer and worked solution →Who in 1999 stressed that NBFIs act as backup if the main form of intermediation fails?Read the answer and worked solution →Which financial sectors fall under the RBI's consolidated supervision?Read the answer and worked solution →The BFS Audit Sub-Committee seeks to upgrade which functions?Read the answer and worked solution →Who chairs the audit sub-committee of the Board for Financial Supervision?Read the answer and worked solution →Which RBI department supervises non-banking finance companies?Read the answer and worked solution →

Worked practice questions

A term loan has had interest and principal overdue for 90 days or more. How is it classed?

  1. Contingent liability
  2. Standard asset
  3. Non-performing loan
  4. Capital reserve
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Correct answer: C. Non-performing loan

Interest and principal past due by 90 days or more is the usual test for a loan to be treated as non-performing.

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Why are non-performing loans a major concern for the banking sector?

  1. They raise the bank's fee income
  2. They lower reserve requirements
  3. They reduce the bank's profitability
  4. They shorten deposit maturities
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Correct answer: C. They reduce the bank's profitability

Loans that are not repaid stop earning interest and force provisions, which cuts into the bank's profit.

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Prudential rules on non-performing loans require a bank to do what?

  1. Write off all such loans at once
  2. Sell the loans to depositors
  3. Reserve a portion against losses
  4. Stop reporting them to RBI
Show answer and solution

Correct answer: C. Reserve a portion against losses

Regulators ask banks to set aside a specific portion of non-performing loans as a provision against likely losses.

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More Auditing topics

Auditor's ReportOverview of Audit of Public Sector UndertakingsInternal AuditStandards on Auditing and Professional EthicsInternational Ethics Standards Board for AccountantsRisk Assessment and Internal ControlAuditor's Report on Financial StatementsAudit Planning Strategy and Execution