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