CAIIB RETAIL

 CAIIB RETAIL

01 Retail banking refers to banking in which banking institutions execute transactions directly with

consumers, rather than corporations or other entities

a) Consumers b) corporates c)Business entities d)None of these

02Which of the following is incorrect?

a) Retail Banking is a banking service that is geared primarily toward individual consumers.

b) Retail banking focuses strictly on consumermarkets c)Retail banking is, generally mass-market driven

d)None of these

03 he delivery model of retail banking is both physical and virtual

a) Only physical b) Only virtual c)Both physical and virtual d) None of these

04Which 'of the following is not the advantage of retail banking?

a) Client base will be large and therefore risk is spread over large customer base.

b) Customer Loyalty is strong and customers generally do not change fromone bank to another.

c) There are attractive interest spreads, since customers are too fragmented to bargain effectively.

d) None of these

05 Which of the following is the advantage of retail banking?

a) Credit risk tends to be well diversified, as loan amounts are relatively small

b) There is less volatility in demand compared to large corporates

c) Large numbers of clients can facilitate marketing, mass selling.

d) All of these

06 The study conducted by Capgemini, ING and the European Financial Management Marketing

Association related to which of the following?

a) Pricing of Banking services b)Delivery Channels c) Both (a) and (b) d)None of these

07 Which of the following is not correct about findings of the study conducted by Capgemini, ING and the

European Financial` Management Marketing Association on pricing of banking services?

a) In a given region, prices varied according to usage pattern, with a ratio of up to one to 4.6 between prices paid by

very active and less active users.

b) Banks are increasing remote channel prices in order to drive greater customer use.

c) Price of seldom-used products have steadily increased.

d) For Banking services prices decline with maturity

08Which of the following is not correct about findings of the study conducted by Capgemini, ING and the European

FinancialManagement Marketing Association on Delivery Channel Strategies?

a) Sales through branch format have decreased.

b) Sales through web and phone have increased.

c) Earlier branch used to be the main point of sale but now sales are mainly through internet banking.

d) Selling through the branch channel is still the main format.

09 In US, which of the following is not the characteristic of the traditional Image of the bank?

a) office onMain Street. b) the branch manager does not understand the local market.

c)the manger has strong customer relationships. d) None of these

10What has been the impact of technology and regulatory changes in the 1990s in banking in US?

a) Automated tellermachines(ATMs) proliferated after the national ATMnetworks dropped a ban on surcharges.

b) Banks also developed centralized call centers to handle customer service issues and to initiate transactions,

including deposits and loans.

c) Many banks shifted some activities like small-business loan approval from branch to regional or Head

Offices.

d) The role of the traditional bank branch reduced in the delivery of retail banking services.

e) All of these

11What has been the impact of Deregulation and the Riegle-Neal Act of 1994 & GrammLeach-Bliley Act 1999

regarding banking in US?

a) It contributed to bank consolidation that focused on reducing costs to boost profits

b) It allowed banks to branch and merge across state lines.

c) The declining number of banks and rising number of branches have resulted in greater consolidation of branches

and deposit's in the nation's larger banks.

d) All of these

12 For the banks, the consolidation of brancheswithin large branch networks has implications in terms of :

a) Cost b) business focus c) profitability d) All of these

13Market surveys suggest that customers:

a) place a premiumon convenience i.e. location when choosing a bank. B) are indifferent to location of branch

c) place premium on branches in commercial areas d) None of these

14 The evolution of retail banking in India can be traced back to the entry of:

a) Newprivate sector banks. b)Foreign banks c) Non Banking Finance companies d) All of these

15Which of the following were the pioneers in introducing retail banking products in India?

a) Axis Bank b)ICICI Bank c) HDFC Bank d) Standard Chartered Bank and Grindlays Bank

16 Which of the following were two early players in the credit card business among public sector banks?

a) State Bank of India and PNB b)Bank of Baroda and PNB

c)Bank of Baroda and Andhra Bank d) Andhra Bank and Corporation Bank

17 Which of the following created a new approach to retail banking by banks?

a) Foreign banks b) Non Banking Finance Company

c) Entry of newgeneration private sector banks d)Old private sector banks

18 New private sector banks had a clear positioning for retail banking due to which of the following reasons?

a) Professional and experiencedtop management. b) The advantage of technology right fromstart.

b) They were not equipped for large scale lending. d)None of these

19. In India, now which group of banks have emphasis on retail banking?

a) Foreign banks b) New private sector banks c) Public sector banks d) All of these

20.Which of the following is not the reason for emergence of retail banking in India?

a) Strong economic fundamentals. b) growing rural population

c) higher disposable incomes d) None of these

21. Which of the following is not the reason for emergence of retail banking in India ?

a) emergence of new customer segments b) rise in old population

c) huge untapped potential for retail banking in India d) explosion of service economy

22. The contribution of retail assets to Gross Domestic Product (GDP) of India is and is comparatively lesser than that of

other Asian counterparts likeChina (15%),Malaysia (33%), Thailand (24%) and Taiwan (52%).

a) 3%, b)6%, c)10%, d)12%

23. The retail asset growth slided down to 4%in 2009. The segments which suffered most were:

a) Consumer Durable Loans, b) Auto Loans, c) Housing Loans, d) Both (a) and (b) only, e)None of these

24. During • slowdown of 2008-09, themost affected segment in the retail liabilities space was

a) Term Deposits, b) InstitutionalDeposits c) PurchasedDeposits d) CASA deposits.

25. In case of Indian Banks, the share of interest income has almost remained steady at about%and the share of non

interest income also is almost stable at around %.

a)84%;16% b) 75%;25% c) 65%;35% d) 15%;85%

26. As per a study by Boston Consulting Group, Retail segment brings in nearly % of the

total banking revenues worldwide

a) 30%, b) 40%, c) 50%, d) 60%

27. Which of the following is not the finding fom report by McKinsey & Company on ‘Emerging Challenges to

the Indian Financial System’?

a) With rising income levels, India will not remain attractive market for retail financial products.

b) With rising income levels, India will not remain attractive market for retail financial products

c) There is huge potential available for personal financial services.

d) In addition to consumer credit, payment products such as credit and debit cards will drive growth.

28. As per report by Mc Kinsey & Company on ‘Emerging Challenges to the Indian Financial System’, by

2010, the number of high net worth individuals (annual income greater than US $1 million) in India will grow

to _____

a) 100,000 b) 200,000 c) 300,000 d) 400,000 e) None of These

29. Which of the following statements is not correct in the context of Indian Banking?

a) There has been growth in deposits and credits almost consistently

b) Banking access remains limited to a few sections of the population.

c) There is no disparity in the penetration of banking products among the different classes

d) None of these

30 As per a study by Boston Consulting Group, which of the following is correct?

a) Retail banks are facing tougher competition and continuously decliningmargins.

b) Retail banks are facing tougher competition but continuously increasingmargins

c) Retail banks are facing less competition but continuously declining margins

d) None of these

31 The retail banking objectives of any bank wouldmainly focus on which of the following?

a) Generating superior returns on assets

b) Acquiring sufficient funding

c) Enhancing riskmanagement

d) Understanding customers and regaining their trust , e) All of these

32 The business models for retail banking adopted by banks among the public sector, private sector and

foreign banks:

a) are same, b) vary, c) are almost same, d) are almost same but vary to very little extent.

33. Which of the following approaches are adopted by banks for Retail banking?

a) Strategic Business Unit (SBU) b) Approach Departmental Approach, c) Integrated Approach (part of

the overall business plan), d) Any of these

34. Public Sector Banks in India generally have adopted the Approach as their retail banking business model.

a) Strategic Business Unit (SBU), b) Approach Departmental Approach, c) Integrated Approach (part of the

overall business plan), d) None of these

35.Which approach is adopted by old generation private sector banks for retail banking?

a) Strategic Business Unit (SBU) Approach b) Departmental Approach, c) As a part of overall business plan d)

None of these

36.Which of the following type of banks use Strategic Business Unit Model for Retail Banking with defined

business focus?

a) New Private Banks, b) Foreign Banks, c) All big public sector banks, d) Both (a) and (b)

e) All of these

37. Banks generally structure their retail banking models mainly on a positioning platform and

to be the best/ top among the peer group players or across players.

a) Two, b) three, c) five, d) ten

38. In retail banking, the new generation private banks want to be in the top slot across all

class of banks. These banks have advantage of which of the following?

a) Technology, b) strategy, c) customer and business initiatives, d) aggressive positioning

e) All of these

39.Which of the following banks exited retail and credit card business when it was found that these were not viable?

a) BNP Paribas, b) American Express, c) Bank of Tokyo, d) Both (a) and (b), e) All of These

40 Banks adopt different models for implementing their retail banking initiatives.Which of the following

are themost common strategies?

a) end to end outsourcing b) predominant outsourcing c) partial outsourcing

d) in house sourcing e) Any of these

41 Businessmodel adopted by a particular bank for Retail Banking does not depend on which of the following?

a) product range b) process requirements c) technology preparedness d) delivery capabilities

e) None of these

42 Public sector banks use which of the following models for retail banking?

a) end to end outsourcing b) predominant outsourcing c) partial outsourcing d)in house sourcing

43 Most of the Public sector banks, use only in house resources for retail banking. However, some of the activities

are outsourced.Which of the following type of activities is not outsourced?

a) ATM b) Credit Card c) KYC compliance d) None of these e) All of these

44 In case of new generation private sector banks, which implementation model for retail banking is

adopted?

a) end to end outsourcing b) in house sourcing c) predominant in house sourcing

d)mix of outsourcing and in house, though a little tilted towards outsourcing

45 There are four broadly defined processmodels relating to Retail Banking which are implemented across banks.

Thesemodels are defined based on which of the following?

a) Technology b) Customer interface capabilities of the banks c) Both (a) and (b) d)None of these

46 Which of the following models is not used by banks for retail banking? a) Horizontally Organised

Model, b) Vertically Organised Model c) Diagonally Organised Model d) None of these

47. Which of the following is/are features of Horizontally organised model in retail banking?

a) It is a modular structure using different process models for different products.

b) It offers end to end solutions product wise.

c) It provides functionality across products with customer data base orientation.

d) Centralised customer data base is used across products.

e) Both (a) and (b)

48.Which of the following is/are features of Vertically organisedmodel in retail banking?

a) It provides functionality across products with customer data base orientation.

b) Centralised customer data base is used across products.

c) It is a modular structure using different process models for different products.

d) It offers end to end solutions product wise.

e) Both (a) and (b)

49.Which of the following statements is correct regarding implementationmodels adopted by banks in retail banking?

a) Horizontally organised model is a modular structure using different process models for different products

offering end to end solutions product wise.

b) Vertically organisedmodel provides functionality across products with customer data base orientation and centralised

customer data base is used across products.

c) Predominantly horizontally organisedmodel ismostly product oriented with common customer information for some

products.

d) In predominantly vertically organisedmodel, common information is available formost of the products.

e) None of these

50.Which of the following is incorrect regarding Predominantly horizontally organisedmodel for retail banking?

a) ismostly product oriented with b) It ismostly product oriented.

c) In thismodel common customer information is available for some products.

d) In this model, common information is available for most of the products. e) None of these

51. Which of the following model is generally adopted by public sector banks for retail banking?

a) Vertically organisedmodel, b) Predominantly horizontally organizedmodel, c) Horizontally organizedmodel, d)

Predominantly vertically organizedmodel.

52 Which of the following model is generally adopted by new private sector banks for retail banking?

a) Vertically organised model b) Predominantly horizontally organisedmodel

c)Horizontally organised model d) Predominantly vertically organisedmodel

53 in foreign banks, mostly predominantly vertically organised model is adopted for retail banking which

implies that retail banking initiatives are attempted with:

a) scattered data base b)using different processmodels for different products.

c) customer information with different set of officials. d)common customer information across products.

54 Certain segments constitute the basic structure of retail banking. Which of the following, has emerged as

one of the important constituents of retail banking initiatives of banks?

a) retail asset products b) retail liability products c) marketing of third party products. d) All of these

55 Liability products offered by banks to retail banking customers are which of the following?

a))Saving Accounts, Current Accounts and Term Deposit accounts. b) Saving Accounts, Current Accounts,

Term c)Deposit accounts and Housing Loans. d)Housing Loans, Vehicle Loans and Personal Loans. e) Safe

Deposit Vault, Safe custody

56 Product differentiation amongliability products is achieved by banks by:

a) Attractive packaging b) Attractive branch layout c)Expanding the scope of generic products from a plain

vanilla account to a value enriched account d) None of these

57 In today's context, which of the following can be called as value enrichment to an account?

a) ATM cards b) Debit Cards c) Multi City Cheques d) None of these as all of these have become generic

features

58 Which of the following is considered as enriching the value to a liability product?

a) tagging group insurance products in the life and non life segment at a very competitive premium

b) providing sweep facilities from savings or current accounts to fixed deposit accounts above a certain specified

level resulting in increase in the earning potential of the deposit balances

c) auto overdraft facility d) All of these e)None of these

59 In case of liability products, Internet Banking, Telephone Banking, andMobile Banking are considered as:

a) enriching value to a liability product. b) essential value additions. c) generic feature.

d) None of these

60 In case of liability products, the product differentiation among banks is wafer thin and only value differentiation is the

key factor across banks.Which of the followingmake difference in this regard?

a) Technology b) Process c) Delivery efficiency d) All of these e) Only (a) and (b)

61Which of the following value additions are generally not offered by almost all banks in case of fixed deposits with

banks?

a) provision formonthly, quarterly or cumulative interest payment options.

b) Facility of partial withdrawal without disturbing the entire amount is inbuilt

c) ixed deposits with built in overdraft facilities. d) the group life cover and health cover.

62 For retail assets, which of the following is not a major issue?

a) Product b)price c) process d) delivery innovations e)None of these

63 Which of the following is not a major advantage of retail assets?

a) the stability of the asset base because of the large customer base. b) the better spreads in income.

c) risk diversification. d) scope for capturing additional revenue streams fromother avenues. e) Cheap source

of funds

64 Which of the following is not standard retail asset products offered by banks?

a) Housing loans and consumer loans. b) Car Loans and Personal loans.

c) Credit cards d) Debit cards e) None of these

65 Which of the following is not a retail asset product?

a) loan against rental receivables b) salary overdrafts c) loan against securities

d) loans for traders in the personal segment e) None of these

66 Retail products other than liability products and asset products, which aremeant for providing process and delivery

efficiencies to clients include which of the following?

a) Credit Cards, Debit Cards, and ATM Cards.

b)Telephone Banking, Mobile Banking, Internet Banking. c)Depository Service and Broking

Services. d) Both (a) and (b) only. e) All of these

67 Which of the following products and services are offered with objectives of satisfying customer's multiple

needs and also to augment fee based income?

a) life and non life policies, mutual funds, retail sale of gold coins, bill payment services.

b) payment gateway for rail, air ticket bookings. c) wealthmanagement services, portfoliomanagement services

and private banking. d)Only (a) and (b) e) All of these

68 Banks offer various services like distribution of third party products like life and non life policies, mutual funds,

retail sale of gold coins etc.What is the objective of providing these services?

a) satisfying customer'smultiple needs b)—to augment fee based income c) to augment interest income

d) Both (a) and (b) only e) All of these

69 Which of the following products is offered by almost all public sector banks?

a) Debit Cards b) ATM cards c) Credit Cards d) Both (a) and (b) e) All of these

70 Many Public Sector banks are not in the credit card business. What is the reason for this?

a) It is a big volume game. b) It needs process efficiencies. c) Lack of trained staff.

d)Both (a) and (b) e) All of these

71Which of the following services is generally offered bymost of the public sector banks?

a) Corporate Agency for Life and Non Life Insurance. b) Distribution of mutual funds.

c)Sale of gold coins d)Both (a) and (b) e)All of these

72 Which of the following types of service is generally not offered by ublic Sector Banks?

a) Wealth Management b) Portfolio Management Services c) Bill Payment services

d)Both (a) and (b) e) All of these

73 Product Development is done by banks in different ways. In this regard which of the following is not

correct regarding In house product development strategy?

a) The product is developed independently based on research and on the market dynamics.

b) The best features in the products available in themarket are incorporated along with additional value engineering.

c)No background research is undertaken. d) None of these

74 In case of product development, various strategies are adopted by banks. Which of the following

strategies is generally not relevant?

a) In House product development strategy. b) Follow the leader c)Top Management instructions

d)RBI instructions e) None of these

75 Which of the following is not the feature of 'Follow the leader approach' in product development?

a) In thismethod, product development is based purely onmarket conditions and customer segments.

b) No background research is conducted. c) Product is developed on the same lines as that of leader. d)

None of these

76 In banks, the basis for product development, is on which of the following?

a) The segmentation approach b) Geography based approach c) Classification based approach

d)Approach based on specific customer segments like NRI, HNI, Mass Affluent, Salaried, Professionals,Women etc.

e) Any of these

77Which of the following is not a feature of product development inmost of the PSBs?

a) Product development is done in house incorporating the market dynamics.

b) The market conditions and customer segments of the bank are factored in the development.

c) The views and instructions of the Top Management are the prime drivers of product development in PSBs.

d)Both (a) and (b) e) None of these

78 In the case of public sector banks, which of the following is not given importance for product

development?

a) Geographical area b) Type of branch and centre c) Business potential d) Both (a) and (b)

e)None of these

79 In private sector banks, which of the following factor are considered for product development?

a) Market dynamics. b) Segmentation, classification, customer segments

c)The product positioning adopted by other players. d) All of these

80Which of the following sequence is generally adopted in product development?

a) conducting amarket survey, identifying the needs, pilot testing, getting feed back, fine tuning the product based on

feedback, developing the product, final roll out of the product.

b) identifying the needs, conducting amarket survey, pilot testing, getting feed back, fine tuning the product based

on feedback, developing the product, final roll out of the product

c) conducting a market survey, developing the product, identifying the needs, pilot testing, getting feed

back, fine tuning the product based on feedback, final roll out of the product.

d) conducting a market survey, identifying the needs, developing the product, pilot testing, getting feed

back, fine tuning the product based on feedback, final roil out of the product.

81 In Public sector banks, market survey is generally done through:

a) in house resources b) outsourcing c) through specialists in service industry d) None of these

82 There are various approaches to processing of products and services in retail banking.Which of the following is

not correct in this regard? (i), (ii); (iii)

a) The entire processing is done through in house resources.

b) Some products processed in house and for some products outsourcing is done for process.

c) Outsourcing of entire process subject to prescribing process standards.

d) Outsourcing of entire process without any guideline as it is given to specialists.

e) None of these

83 In Public sector banks and old private banks generally the process for products and services are done

through:

a) Outsourcing b) In house resources c) Major portion is in house with some outsourcing.

d)Major portion is outsourced with some in house processing.

84 What approach is generally adopted in foreign banks, for processing of products and services?

a) The entire process is outsourced and normally happens through a dedicated back office covering the

entire gamut of retail banking services

b) The entire process for products and services is done through in house resources but in some banks, process part

of some products are outsourced.

c) Outsourcing is attempted partially for some process areas.

d) None of these.

85 Banks adopt different process models for retail asset products and the focus is on which of the following?

a) Reducing the risk to maximum possible extent. b)Earningmaximuminterest c) To achieve the best

process efficiencies for capturing the customers. d) None of these

86 For retail assets, the common formof processmodels are Centralised Retail Assets Processing Centres.What are

the features of thismodel?

a) All the retail loans sourced at the branches and marketing team are processed at a single point. b) Retail

loans are financed through that centre only. c) Processing alone is done at the centre and financing can be

done through that centre or at the branches. d) Both (a) and (b) e) Both (a) and (c)

87 In public sector banks, which of the followingmodels is generally adopted for processing of retail asset products?

a) Centralised retail loan processing centre. b) Regional processing centres

c)Standalone processing at branches d) Regional processing centres or branches or a blend of both.

88 In which of the following bank groups, centralised processing is the norm for retail asset processing?

a) Public sector banks b) New Private sector banks c) Foreign banks d) Both (b) and (c)

89 In the centralizedmodel for processing liability products, for opening a saving bank account, which of the following

activities is/are not carried out at a single point?

a) filling the Account opening form b) opening of account, c)Issue of Pass Book and Cheque Book

d)Issuing ATMcard/ Debit card,—PinMailers for the cards. e) None of these

90 In almost all Public sector banks, which of the following method is generally adopted for processing

liability products?

a) Centralized processing model b) Regional Processing Model. c) Stand alone processing model

d)Any one of these

91 In most of the Public Sector banks, which of the following activity is generally done centrally?

a) Opening of accounts. b) KYC compliance c) issue of cheque books

d) issue of ATM/Debit Cards e) None of these

92 Process models differ for products which require single stage process and multi stage process.Which of the

following involves a single stage process?

a) Opening a fixed deposit and issuing receipt. b) Giving car loans c) Housing Loan

d)Both (a) and (b) e)None of these

93. Process models differ for products which require single stage process andmulti stage process.Which of

the following involves a multi stage process?

a) Opening Saving accounts b) Opening Current accounts c) Housing Loans

d)Both (a) and (b) only e) All of these

94.Since process Time is business sensitive and customer sensitive, banks implement process time prescriptions for

different retail asset products. Inmost of the PSBs, the process time is prescribed and varies from days to

days depending upon whether it is processed at the branch or regional hub or centralised processing.

a) 3 days to 7 days b) 5 days to 10 days c) 7 days to 15 days d) 15 days to 30 days

95. Banks consider various factors for designing a Pricing model of products and services.Which of the

following is not considered for pricing?

a) Market dynamics, risk perception, return expectations. b) Tenor or duration

c)RBI guidelines d) Asset Liability Management practices e) None of these

96. In Public sector banks, though pricing is market driven and competitive, in almost all the banks,

pricing is mainly driven on the basis of which of the following?

a) The asset liability management practices of the banks. b) Regulatory advices

c)Feedback fromthe field d) Both (a) and (b) e) All of these

97.Which of the following public sector banks, started implementing aggressive pricing strategies in Housing

Loan segment between 2008 and 2010.

a) Punjab National Bank b) Bank of Baroda c) State Bank of India d) All of these e) None of these

98. Which of the following approach is/are are adopted by banks for Price structuring for products and

services?

a) Stand alone pricing for different products and services is the basic structure.

b) Basic structure is fine tuned as per quantum and volumes.

c) Price preference/ price rebatesmay be given for high value deposits and advances.

d) Both (a) and (b) only e) All of these

99 Which of the following is correct regarding price bundling?

a) Price bundling is a part of price structuring.

b) In price bundling, if a customer avails number of products, then the total price proposition ismade attractive than the

stand alone pricing for the individual products of the bundle.

c) This structuring is a cross selling strategy to entice the customer to availmore products so that profitability per

customer is enhanced. d) All of these e) None of these

100 What is the objective of Price bundling?

a) It is a cross selling strategy. b) 'To entice customer to avail more products.

c) To enhance profitability per customer. d) All of these

ANSWER

1 A 2 D 3 C 4 D 5 D 6 C 7 B 8 C 9 B 10 E

11 D 12 D 13 A 14 A 15 D 16 C 17 C 18 B 19 D 20 B

21 B 22 B 23 D 24 D 25 A 26 D 27 B 28 D 29 C 30 A

31 E 32 B 33 D 34 B 35 B 36 D 37 B 38 E 39 D 40 E

41 E 42 D 43 C 44 D 45 C 46 D 47 E 48 E 49 E 50 C

51 C 52 A 53 D 54 C 55 A 56 C 57 D 58 D 59 B 60 D

61 D 62 E 63 E 64 D 65 E 66 E 67 E 68 D 69 D 70 D

71 D 72 E 73 C 74 D 75 D 76 E 77 E 78 A 79 D 80 D

81 A 82 D 83 C 84 A 85 C 86 E 87 D 88 C 89 E 90 C

91 D 92 D 93 E 94 C 95 E 96 D 97 C 98 E 99 D 100 D