Caiib single link for all recollected questions

CAIIB ABM TODAY EXAM 55 QUESTIONS RECOLLECTED by Srinivas Kante

1.Hicks -Hansen synthesis
2.Basic difference between IS and LM curve
3.Increase in money supply Lowe interest rate and raising inflation
4.NDP @factor cost
5.Demand –pull inflation means
6.Erosion as per the role
7.Climate Survey
8.Case study one related to Budget
9.Central limit theorem
10.sampling methods .
11. job erosion
12 curreneaccountdefficit
13 Gross deficit etc.
case
14..standard deviations mean related
15 .Case 3 Xyz jewellery shop
Related
But the level oh complexity is very high..n ..
16 fiscal policy ,monetary policy
17.demand supply curve etc...
18.Correlation and regression numerical
19.NNP @ factor cost
20working capital
21. bank guarantee
22.Performance Appraisal
23. Halo effect Tendency..
24.NNP at market price
25.In correct characteristics in Business cycle
26 Notional income also known as..
27.Least squre method used in..
28.Fctoring of services the factor
29.Lender to sensitising test and scenerion analysis..Type of loans
30. Debt to equity of enter prises raatio is.05 its...
31.Bank Gaurantee to commoidity brokarage (margin %)..
32.find P(x bar >/85) ?
33Std error of the mean is????
34 Estimate of the population proportion is..
35 Commericial paper issued multiples of..
36.Commericial paper issued maximum period
37.Find P(88|
39.HRM
40.monetary policy
41.Annuity due prblems
42. Future Value problem
43.Estimation
44.Bond price
45.Revenue dediciat problem
46.Job evealution Job specfication case study
47. Turn over methodeapplied on leass than 5 cr
48. Factor of Supply schedule
49.Lional econmic statement.
50. GDP calculation
51. GNP at amrket price calculation
52. Sampling Methodes
53.Hallo effect
54 Cov(X,Y)=150 mean X=20 mean Y=10 standard deviation x=25 then equation of regression line is
55. 3 questions from HRM 5 marks each



Today CAIIB BFM Recollected questions by Srinivas Kante June 10 , 2018



1.Most of the questions from foreign exchange numericals

2. case study on DGAP, Leverage ratio

3. case study on LC

4. Risk weight on Housing loan

5.Diffence between basis risk, gap risk, and yield curve risk

6. Letter of credit related

7.Capital charge for PR questions

8.Problems on NII

9.YIELD On T BILL

10 .Tier 1 CRAR

11.Call risk

12.NRE ,NRO, FCNR account related

13 Beta factor and basic indicator approach

14.The main object of the LRM loan review mechanism

15.The notional transit period permitted ..

16. One case study on asset liability management

17. Exchange fluctuation risk of ecgc

18. Rupee account... nostro,vostro,loro,mirror are in option

19. case study on TT buying, selling

20. RAROC,Who decide maximum limit of risk

21.Corporate debt instrument characteristics

22.Basel 3 bank apply – for computing capital requirement from existing risk..

23.residual risk also known as..

24.Elements of common equity Tier 1 cap

25.In repo transaction in G-sec , the settlement carried in first leg is ------------ basis

26. BASEL 3 going concern capital is

27.Liqidity risk is a type of time risk??

28.GOI not issue T bill with ------------maturity days

29.Notice money market period is…

30Duration is the elasticity of the bond

31.In CP Buy bank offer may not be made before ----days

32.Features of hedging , Int, Arbitrage ,trading , Investment

33.Nostro Accounts are – accounts

34.Emp option risk about pre closure

35. Feature of CCB BASEL 3

36.FX clear is a forex dealing sym developed by

37.Features of CRR

38.Calculation of LCR under level1 Asset

39.Cross rate

40.Charactristics of foreign exchange market

41.Temporary Asset--- revaltion not present

42.Calculation of capital for General market risk

43.In stock of HQLA for the purpose of cap liquidity coverage ratio…

44. BCBS introduced new approach called..

45.Instrument having lower demand and trading…

46 In india short position allowd..

47.Features of LCR

48.Rapid Growth period bank can make…

49. RAROC,Who decide maximum limit of risk

50. case study on TT buying

51. what does CRR impact

52. no.of key priniciples in Supervising review process

53. Features of CCB in BASEL 3

54..5 marks case study from CALL and PUT option

55.Rupee account Vostro or Mirror?

56. Calculate price for a 270day CP having face value 100/- when yield is 7.57%?

a. 94.6970,a. 94.6770, c. 94.6570, d. 94.6370

57. Calculate yield on a 182 day T bill issued at 97.30/-?

a. 7.57,b. 7.75, c. 5.57, d. 5.75%

58.no.of key priniciples in Supervising review process

59. Features of CCB in BASEL 3

60. 1.yield in tBill

61.rwa

62. Case study o. Nii and nim

63. Case study on rwa and capital charge

64.case study on leverage ratio

65. Case study on lc , advising bank confirming bank etc

66 case study on foreign exchange

67. yield to maturity 02 questions asked

68.call money Nd term money

69. Approach basic indicator approach , advance approach

70. M duration

71. piller 3 ,spr

72. 5 marks case study from CALL and PUT option

73. NII - 5marks

74.CRAR - 5marks

75.FEDAI - 5marks

76.Exchnge rates- 5marks

(USD to INR)

77.Exchange rates - 5marks

(USD - Jap yen - GBpound)

78. Lc - 5 marks

79 DGAP nd Levarage ratio - 5marks

80.5 questions on USD JPY against foreign person returning to India 





CAIIB Retail Recollected 2018 June ::

Recalled questions



Bbps

Case study on hl income tax claim

Fv n pv

Fsi

NFS details

Credit card

Free charge

Emi Calculation, Rule 72, Questions on CIBIL, SLM and WDV

 housing loan cs education loan cs bbps cs ekyc depriciation cs question on time value of money and also more and more question on theory part



 Case study on

BBPS

HL income tax

CKYC

Depriciation

Case study on

Bcsbi 5 que

 Imps,UPI, *99#,mmid

[Credit card 5 que

 Sarfasi,, lokadalak, drt 5 que

Car loan new oold car 5; questions

Housing loan tax benefits 5 que

 Slm , wdv depreciation 3 que

Fund transfer mobile banking maximum per transaction and max per month per beneficiary

[Sub prime loan

[Bank charges under charge against future receivable cersai form 1 or 2 or not applicable

 Mortgage act

[ RTGS and neft

 Method of valuation of land and buildings which is to be attached as security for bank

 Product development stages

Rule 72 compounded annually doubles in 7 yrs and 6 months option 9 .6,10, 9.3,9



 Demat account can be opened in banks or DPS or brokers

If a bank issue card to customer and 10 lakh insurance cover what type of card bank issue rupay, visa, master, mastro

 If credit card a person purchases for 12000 at 37.20 annually. Per month interest. Per day ,, if he pays within time limit what is the interest charged



How can a bank protect themselves if he is relieving information about the customer

Ombudsman settlement



Kyc aml



Dispute between banks and reconstruction company securitization


[Back loading emi

 If a person wants to invest in a 10 yrs pention plan plan name?? Pmjsy, pmvvy, Jay,jsy

[Machinery value 1200 lakhs salvage value 300. End of 6 yrs under wdv method 15%

When salvage value become zero



Dep under straight line method

Cumulative depreciation value of 3rd 4th year under wdv





CAIIB HRM Recollected questions


Organic structure organization definition


Definitions for norming and performing (stages of group development)


Questions on six leadership styles (5 questions asked)


Definition of process diagnosis(in bpr implementation)


Identify best practices in change management


Key factors for successful implementatition of change within organization


Chief insecurity of most staff is change itself


Identify steps to successful change propsed by John p kotter


Responsibility charting is foundation for strong delegation


Forecasting activities in human resource planning include


What are two types of knowledge


In RAKID R stands for


Commonly used knowledge management tools are online discussion forums, online conferencing, communities of practice


Employees and managers can be classified in 4 categories. Identify-activist, reflector, theorist and pragmatist


Characteristics of training new generation - it should be short, entertaining, allows freedom


Problem on ROI


Definition of ROI


Types of motivation


Definition of motivation


Lowest need in need hierarchy theory


Which of the following is not hygiene factor-recognition


Goal efficiency is effected by- proximity, difficulty and specificity


According to Steven reiss motivation theory, how many basic desires? 16


Status is defined as need for social standing and importance


Human resource implications


Augmented learning-learning where learners interact with e learning environment


What are 3 domains of learning - cognitive. Psychomotor and affective


Psychomotor involves what characteristics


Principles of learning - readiness, exercise. Intensity and recency


One question on perception


Adult learning feature identify the wrong one


Definition of functional comptency


External factor effecting demand forecasting


One of the following is not advantage of external recruitment


Question on body language


What are the legislation on working conditions. Identify wrong act


Registering trade union gives then legal status


One of the following is not a social security act






BFM Recollected questions::





Daily votality is 5% 2.5 Find modified duration - Ans is 2.38

STRIPS (Separate Trading of Registered Interest and Principal Securities) is a ...... zero-coupon securities

Which is not a derivative product ? - Repo (Swap, Option, Forward, Repo)

ECB limit - USD 500 mn up to minimum period of 5 years and USD 20 mn up to minimum period of 3 years without prior approval of RBI

ECB is denominated in which currencies.....USD, Euro or JPY

Consessive rate of interest on postshipment rupee export credit to gold card status holder can be extended maximum - 365 days

One importer want import one machine from China.He has to open lc. The exporter wants advance payment. What type lc - red clause

Value at risk is a measure of? Gap risks in foreign exchange operations

Which office not under treasury ? Options given r Mid office, back office, front office, legal office*,

Under standard assets, provision for loss, RSV should be?? Ans - less than 10%

If interest of principle is not serviced for 90 days, what is the position of account? ans- outof order

Basel 3 teir 1 components. (Plz remember that Revaluation reserve is also now under Teir 1)

If treasury assets r withdrawn before maturity, what type of risk is it? ,

A 91 Day T bill of 93.21 wl have yield of?

If 91 days treasury is 88., then its implied yield is?

ICAAP is related to?

ADR related question

Double forward is called what ?

Related to Nro account

Nro account can be opened as sb,CA,FD type

Derivatives also lot of questions

Advising bank roles ... Like what he can do what can't

INCOTERM

IRS

Swap

Risk weightage

Lot of RWAs questions

Which is not included in calculation of NDTL/DTL for CRR/SLR

Component of tier 1

Rwa as per Basel III for housing loan based on LTV

Many questions sellect correct or incorrect about NRO NRE FCNR ECB EEFC CCIL

Estimated occurence of probability

Questions on currency derivatives, forwards, swaps

Forex market characteristics

One question related to embedded option risk

As per basic indicator approach calculation of capital charge 15% of average gross income over there years given but one of the year is having negative one that we have to ignore.

8.83GS2023price100.49 with yield 8.75 .....just it is given and based on this statement he asked for 5marks

Crystallization period for export

One question on American and europian option

Capital charge on operational risk based on standardized approach and basic indicator approach

Questions on ADR AND GDR

Questions on option and forward contact, future

Loan To Value Ratio

Risk Weight %

Swap Defination , ADR and INCOTERMS



RWA calculation for operational risk under Standardized approach

DGAP

Conceptual question on FCNR, RFC, NRO, NRE

Operational risk calculation all approaches

Modified duration

Tier 1 n tier 2 numerical

LC based case studies for 5 marks

Basic inducater appoach market risk 5 number

Modified duration of equity5 ques

Calculations of capital adequacy ratio quite a few questions

10 questions at from various risks associated with Treasury operations

Interest rate swap 5 questions

Bill buying 5 questions

EXCHANGE RATE

AAA A BB Rating Chart Questions for Risk Weighted Calculations

Yield Calculation

W RSA,RSL NUMERICAL

RATED BOND NUMERICAL

Yeild of bond numerical

BASIC INDICATOR APPROACH NUMERICAL

BPV

Forex t.bill

Leverage

Forward contact

CRAR

Operational risk

Treasury theoritical

60question theory easy

No ques from volatility and bpv

Call risk problems

packing credit problems

Rsl. Rsa.. Md problems

Leveage ratio related case study

BASEL III Tier 1 Tier 2 capital Minimum equity ratio related

BFM Book page no 415 ICCAP related question

BFM Book page no 443 stock approach related 05 question

BFM Book page no 477 - RSL/RSA/DGAP/Modified Duration Gaps

BFM Book page no 20 - Export Bill 5 marks

BFM Book page no 295 - Estimated level of Operational Risk



Case study numerical-TEIR 1 TEIR 2 CAPITAL CONVERSION BUFFER QUESTION BASEL ON BASEL3

Case study on RFC account 5 marks

Case study on forex exchange buying commission etc 5marks

Case study on mkdified duration gap 5marks

VAR - 1 QUESTION

TEIR 1 COMPONENT-2 QUESTION

CBLO- 1 QUESTIOn



Case Studies on

1. Cancellation of contract

2. NRE/NRO POA

3. RWA

4. MEAN & SD

5. SLR

6. YTM

7. SHORT LERM & LONG TERM GAP ASSET VS Liabilities

8. NII & NIM

9. Tier1, Tier2

10. Capital adequecy

11. Nostro Vostro Loro

12. Daily volatilty

13. Stop loss limit

14. Operational risk case study

15. Foreign exchange numericals

16. Swap numericals

17. Liquidity case study

18. Forward rate agreement 25 crore 3 month swap, three year three business line calculate yield and risk weightage

19. Calculate CET Basel 3

20. Calculate Aadditional tier 1

...........................................

2 to 3 question duration

5 question export bill(cancellation of contract rate, margin amount,rebook rate,etc)

5 question on capital adequacy (balance sheet provided, compute equity capital, tier 1 capital, total rw, capital adequacy, buffer capital)

5 question on nostro,loro vostro

5 question on FRA

5 question on net interest margin

2-3 question on bonds

3-4 question on LC

some 2-3 sums on bpv

...........................................

1. Rate qoute 1 ques

2.LC partial delivery UCPDC rule

3.FRA 6*9 dates of delivery and maturity

4.case study on rules and guidelines regarding NRE, NRO and FCNR accounts- amt of loan,POA,remittance,fund transfer limit etc

5.coupon swaps,forward contracts

6.securitization-SPV or Commercial bank allocation of assets

7.Case study on NII,NIM,EER

8.Case study on Cash flows,deviation during years,SD/mean

9.ECGC insurance premium bear by?

10.CHIPS-USA

11.treasury risk management 4-5 ques

12.European put option

13.Authorises person categ 2

14. ques on BOP expansion

15.bank margin calculation from rates

16.Stop loss given- asked whether buy or sell at what rate to book profit or stop loss

17.monthly volatility given-calculate daily volatility

18.modified duration calculation

19.case study on Nostro Vostro and Loro and Mirror accounts

20.which is not an off balance sheet item of following

21.crystallisation of sight bills 30 days

22.LC date expired due to bank closed due to hurricane UCPDC rule

23.standard ECGC policy cover-political risk

24.basel III - tier 2 capital req of total risk wtd assets, pillar 3 def

25.standardised approach and basic indicator approach and AMA all methods for operational risk calcualtion

24. volatility can also be measured by?

25.price volatility depends on yield volatility,BPV,Yield and price

26.VaR related 2 ques theoretical

27.derivatives hedge underlying risks

28.call risk

29.Maturity ladder or baskets case study

30.provision coverage ratio def

31.asset liability mismatch


32. Bond ytm,current yield 2-3 ques



CAIIB RETAIL BANKING PREVIOUS YEARS RECOLLECTED QUESTIONS BY Srinivas Kante


1. Sukanya samridhi yojana

2. Atal pension yojana

3. Basic saving ac - 1 qtn

4. Customer relationship management

5. Full form of CIA

6. one on IMPS

7. future value 2 qtn

8. BCSBI 7 qtn

9. Education loan 5 qtn

10. Who give subsidy on mudra loans?

11. One question on rule 72?

12. Ordinary annuity one question?

13. Product stage

14. Mobile banking limits?

15. Safety esteem self actualization

16. Reliability responsiveness

17. ROC pulling

18. Max limit for prepaid instruments, expiry of prepaid instruments

19. Mudra loan - It is 50000 to 10 lakhs

20. 80c rebate? - Rs. 1.5 lakhs

21. Withdrawal allowed in ATM's?

22. CERSAI is formed under which act?

23. Many questions from retail banking services

24. Reverse mortgage

25. Para banking

26. 80C limit

27. PM fosol bima yojona

28. CTR

29. CERSAI - which act

30. PMSBY - claim amout after losing one eye or one leg or hand

31. PMEGP - implemented through

32. POS

33. EWS_size

34. RML

35. CRM gap-iii between

36. Merchant banking means

37. Closed ended fund

38. APY

39. Advantage and disadvantage of retail banking

40. Limit of cash withdrawn from other bank ATM. Option 5000, 100000, 20000, 2500

How many neft settlements in a day?

Tax benefit in Home loan

Credit card cycle

NEFT/RTGS max n min limit

Basic diff.b/w rtgs n neft

Benefit of pvt. Banking

Wealth mgmt for corporates

Education loan repayment/defaults

EMI

Income tax

Rule 72

Essence of crm

Bharat bill paymnt systm

Priority of charge in mortgage

Brown label atm

Purpose of securitisation

Conditions for pension fund mgmt

Mutual fund conditions for bank

Approval for insurance

Propagate model

7Ps

ATM transactions in metro cities

SARFAESI

DRT

Internet banking

Mobile banking

Internet Banking- strategy adaptation

Depreciation by both methods

Capital gain

Annuity

FSI Calculations

Full form of CDO

Product meaning??

Airline company used which model..SBU..INTEGRATED MODEL???

RUPAY card is issued by NPCI

Case study related to Internet banking 5 questions

Case study related to credit card charges and other

Register mortgage date and deposit of title deed

Implementation model related

WRBR.. Full form??

Date of execution of documents.. 4 months

Augmented product...

Expected product...

Under NEFT, number of settlement on week days are..12

RTGS minimum and maximum amout...

Disadvantages of Retail banking...

Mobile banking maximum amout per txn and monthly threshold related 5 questions

IFSC CODE TOTAL ALPHA..and numerics

SFMS

Question on hni, super hni, ultra hni category..

Wether the cibil report can be given to customer after levying some charge or not..

Whether moratorium is given for second hand car...

Moslow theory : Case study on needs

RTGS : when processing

Education loan : case study about margin

On college fee hostel fee computer fee other expenses..

WDV : Case Study on Depreciation l

Credit Card : Case study on interest , risk , overdue amount....

Valuation of urban land ,agriculture land Method criteria etc.....

NEFT : 12 batches

Super affluent : 50-400 Lakhs

Case study on wdv method

Three questions on rent capitalization method

Case study on maslow hierarchy

Case study on tangibles..assurance..responsivess wale 5 factors

Emi calculation 2 questions

Theory was easy

Sbu 1 question

Horizontally organized model

credit card bill (case study 5 qus.)

Three questions on rent capitalization method

Neft batches - 12 batches

depreciation numerical...

case study on gift card...

Fullform of USP - Unique Selling Proposition

case study on education loan for abroad...

1. 2 Case studies on priority charge on mortgage

2. Problem on depreciation(By WDV)... eg. Wht will be the book value after 3 years?

3. Calculating future value

4. Diff between NEFT and RTGS

5. Questions on DSA

6. Case study on tax exemptions ( both interest and principal repayment)?

7. Prob on Depriciation by straight through method?

8. What does securitisation means?

9. Risk involved with DSA?

10. Questions on Potential product PROPAGATE?

11. EMI Calculation

12. Questions on vertical, horizantal model

13. How Many NEFT settlement on weekdays and saturday

14. How many characters in UTR?

15. Question on WRBR

16. Case study on education loan... all the fig are given ( eg. Hostel fee, tution fee,

other expenses and bank margin).... we have to calculate max permissible bank loan

17. One critical case study on credit card... credit card limt, free int period, int rate, over

limit penalty, due date and purchase date are given... We have to calculate int chraged

a. if the customer pays the amt due after 18 days from due date

b. If he pays half amt before due date then calculate int charged for remaining amt on a

particular date?

C. If the amt cro sses the limit then calculate the amt he has to pay

18. If we allow overdraft in CC a/c and the customer does not repay it, then can we

approach DRT ? There are four options and we have to choose the correct one

How many neft settlements in a day?

Tax benefit in Home loan

Credit card cycle

NEFT/RTGS max n min limit

Basic diff.b/w rtgs n neft

Benefit of pvt. Banking

Wealth mgmt for corporates

Education loan repayment/defaults

EMI

Income tax

Rule 72

Essence of crm

Bharat bill paymnt systm

Priority of charge in mortgage

Brown label atm

Purpose of securitisation

Conditions for pension fund mgmt

Mutual fund conditions for bank

Approval for insurance

Propagate model

7Ps

ATM transactions in metro cities

SARFAESI

DRT

Internet banking

Mobile banking


1. Case study on Prepaid instrument

2. Case study on Depreciation WDV and SLM methods

3. Case study on Bharat Bill Payment System

4. Case study on CERSAI

5. Case study on ekyc

6. Case study on car loan?

7. Case study on 'housing loan for all' by newly launched scheme

8. Case study on Vehicle loan

9. Case study on Credit card billing

10. Case study on Education loan problem

11. Case study on Future value of ordinary annuity

12. Case study on BCSBI - 10 questions (theory based)

13. Case study on Future value of bond/annuity

14. Case study on Maslow Needs

15. Case study on CRM

16. Case study on EMI

17. Case study on Capital gain

18. Case study on Calculate Present value

19. Case study on RML


Question on hni, super hni, ultra hni category..

Wether the cibil report can be given to customer after levying some charge or not..

Whether moratorium is given for second hand car...

Moslow theory : Case study on needs

RTGS : when processing

Education loan : case study about margin

On college fee hostel fee computer fee other expenses..

WDV : Case Study on Depreciation l

Credit Card : Case study on interest , risk , overdue amount....

Valuation of urban land ,agriculture land Method criteria etc.....

NEFT : 12 batches

Super affluent : 50-400 Lakhs

Case study on wdv method

Three questions on rent capitalization method

Case study on maslow hierarchy

Case study on tangibles..assurance..responsivess wale 5 factors

Emi calculation 2 questions

Theory was easy

Sbu 1 question

Horizontally organized model

credit card bill (case study 5 qus.)

Three questions on rent capitalization method

Neft batches - 12 batches

depreciation numerical...

case study on gift card...

Fullform of USP - Unique Selling Proposition

case study on education loan for abroad...

Numericals from book about

Encumberence ratio

Tax saving on HL

Case studies under IBA education loan

Calculation of PV FV

Case study on reliability, tangibility, assurance (customer expectations)

Masala bond

Prepaid instrument

MSME act

Full form of USP

Who heads DRAT?

Sum on WDV and SLM

................................. ......

Case study on UPI

AEPS

REVERSE MORTGAGE FOR SENIOR CITIZENS[RLEAC]

problems on straight line

WDV method

Educational loan on foreign study

5q on empathy,responsiveness,assurance

2q on augmented, core product

Reverse mortgage equity linked case study

FSI construction cost based

UPI based

80c/24(b) ICT act 1961 based

Priority sector in different sector with perc of ANBC

PROGATE full form

BBPS component

fraud in operation risk

straight line method

written down value method

encumbrance value

Home loan

Service quality based case study

PPI based case study

Total compound interest applicable

EMI

Present value and future value

Full form of MMID ?

UPI transaction max limit ?

Mobile banking per day and per month limit?

Housing loan % of priority sector?



Margin for RML (Reverse Mortgage Loan) with annuity ?

Emotional intelligence

Emotional intelligence

As per Daniel Goleman link between IQ test scores and the achievements in life is dwarfed (dusted) by the

totality of other characteristics that one brings to life. These characteristics are called emotional intelligence

(i.e. abilities such as being able to -motivate oneself and persist in the face of frustration, to control the impulse

and dealy gratification, to regulate one's moods and keep away distress from swamping the ability to think.

There are five components of emotional intelligence:

Self awareness: ability to recognize, understand, emotions and their effect on others.

Self regulation:ability to control disruptive impulse, to think before acting.

Motivation:Passion to work for reasons that go beyond money or status.

Empathy: Ability to understand emotions of others and treat people according to their

emotional reactions.

Social skills:Proficiency in managing relationships and building networks and ability to fund

common ground and build rapport.

Theories of motivation very important for CAIIB ABM exam

Theories of motivation very important for CAIIB ABM exam



There are various theories of motivation such as:



Scientific management or Rational EconomicView



FW Taylor contributed much to this theory. Theory states that:

-Physical work could be scientifically studied to determine the optimal method of

performing a job.

-Workers can be made efficient by giving prescription.

-Workers would be willing to accept these prescriptions, if paid on a differential piece

work basis.





Human Relations Model





As per Elton Mayo, social contracts at workplace are important in addition to money.

Workers can be motivated by acknowledging their social needs and making them feel

useful and important.



Abraham

Maslow's

Need

Hierarchy Theory

He identified five levels of needs:

1:Physiological needs: Food, rest, exercise, shelter etc.

2:Safety needs: Protection against danger, threat, deprivation.

3:Social needs: Need for belonging, for association, for acceptance, for giving

and receiving friendship and love.

4:Ego/esteem needs: Need For self confidence, for dependence, for achievement,

for knowledge and need for status, recognition, appreciation.

5:Self-fulfillment or self-actualisation needs: To realise one's own potentialities, to

experience continued self-development, to be creative.



Frederick Herzberg's

Two Factor Theory

It states that there are two sets of motivating factors i.e. hygiene or maintenance

factors relating to job environment and other the motivators relating to contents of the

job.

Motivational factors include recognition, advancement, responsibility, achievement,

possibility of growth & work itself.

Maintenance factors include company policy and administration, technical

supervision, salary, job security, personal life, working conditions, status, interpersonal

relations with peers and supervisors.

It is based on existence, relatedness and growth (ERG). People have needs in a

hierarchy and these-needs determine the human behaviour. ERG theory has three

levels of needs compared to 5 in case of Maslow. As per ERG theory, more than oneneed

may be operative at one point of time rather than only one need as per Maslow

theory.





Clayton Alderfer's

ERG Theory



It is based on existence, relatedness and growth (ERG). People have needs in a

hierarchy and these-needs determine the human behaviour. ERG theory has three

levels of needs compared to 5 in case of Maslow. As per ERG theory, more than oneneed

may be operative at one point of time rather than only one need as per Maslow

theory.



Achievement

Motivation Theory



According to DC McCelland, there are three needs i.e. for achievement, for power and

for affiliation.



Victor H Vroom's

Expectancy Model



This theory is known by other names also such as instrumentality theory, path-goal

theory, valence-instrumentality-expectancy theory. As per theory, motivation is

determined by the nature of reward people expect to get as a result of their job. Man

being rational tries to maximize his perceived value of such rewards. There are three

elements in the model i.e. expectancy, instrumentality and valence (value a person

assigns to the desired reward).



James Stacy Adams'

Equity Theory



Theory proposes that motivation to act, develops after the person compares the

inputs / outcomes with the identical ratio in comparison to the other person. Upon

feeling inequity, the person is motivated to reduce it.





Lyman W Porter and

Edward E Lawler—

Performance

satisfaction Model

It states that the motivation does not equal satisfaction and performance. These are

all separate variables. Effort does not lead to performance directly. The reward that

follows will determine the satisfaction.





Reinforcement Theory. The consequences of an individual's behaviour in one situation influences that

individual's behaviour in a similar situation.

FATF recommendations

THE FATF RECOMMENDATIONS:: Total 40

A – AML/CFT POLICIES AND COORDINATION

1 - Assessing risks & applying a risk-based approach *
2 - National cooperation and coordination

B – MONEY LAUNDERING AND CONFISCATION

3 Money laundering offence *
4 Confiscation and provisional measures *

C – TERRORIST FINANCING AND FINANCING OF PROLIFERATION

5 Terrorist financing offence *
6 Targeted financial sanctions related to terrorism & terrorist financing *
7 Targeted financial sanctions related to proliferation *
8 Non-profit organisations *

D – PREVENTIVE MEASURES

9 Financial institution secrecy laws
Customer due diligence and record keeping
10 Customer due diligence *
11 Record keeping
Additional measures for specific customers and activities
12 Politically exposed persons *
13 Correspondent banking *
14 Money or value transfer services *
15 New technologies
16 Wire transfers *

Reliance, Controls and Financial Groups

17 Reliance on third parties *
18 Internal controls and foreign branches and subsidiaries *
19 Higher-risk countries *
Reporting of suspicious transactions
20 Reporting of suspicious transactions *
21 Tipping-off and confidentiality

Designated non-financial Businesses and Professions (DNFBPs)

22 DNFBPs: Customer due diligence *
23 DNFBPs: Other measures *

THE FATF RECOMMENDATIONS
INTERNATIONAL STANDARDS ON COMBATING MONEY LAUNDERING AND THE FINANCING OF TERRORISM & PROLIFERATION
 2012 OECD/FATF 5

E – TRANSPARENCY AND BENEFICIAL OWNERSHIP
OF LEGAL PERSONS AND ARRANGEMENTS

24 Transparency and beneficial ownership of legal persons *
25 Transparency and beneficial ownership of legal arrangements *

F – POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES
AND OTHER INSTITUTIONAL MEASURES
Regulation and Supervision

26 Regulation and supervision of financial institutions *
27 Powers of supervisors
28 Regulation and supervision of DNFBPs
Operational and Law Enforcement
29 Financial intelligence units *
30 Responsibilities of law enforcement and investigative authorities *
31 Powers of law enforcement and investigative authorities
32 Cash couriers *
General Requirements
33 Statistics
34 Guidance and feedback

Sanctions

35 Sanctions

G – INTERNATIONAL COOPERATION

36 International instruments
37 Mutual legal assistance
38 Mutual legal assistance: freezing and confiscation *
39 Extradition
40 Other forms of international cooperation

Current affair s on 28.05.2019

Today's Headlines from www:

*Economic Times*

📝 Google invests $670 million to expand its data centre in Finland

📝 Government likely to introduce electronic invoice system under GST

📝 Airtel submits Rs 644 crore bank guarantee in TDSAT for Tata Tele merger

📝 ArcelorMittal, Resurgent said to mull joint bid for Essar plant

📝 Imports to halve as Coal India increases supplies to power plants

📝 RCom posts a consolidated loss of Rs 7,964 crore

📝 GoDaddy's new solution targets small businesses in India

📝 Digital battle for kiranas to get tough with Jio’s PoS

*Business Standard*

📝 NBFCs show fresh interest in on-tap licences, initiate talks with RBI

📝 RBI may relax norms for shareholders' vote on corporate debt restructuring

📝 Zee Entertainment logs 18.7% rise in revenues in FY19; ad income up 20%

📝 IndiGo Q4 profit up 400% to Rs 590 crore, rules out slowdown fears

📝 New H1B visa norms may affect Indian IT companies' margins in FY20

📝 HAL logs life high turnover of Rs 19,705 cr; PAT at Rs 2,282 cr in FY19

📝 Tech Mahindra bags $100-mn outsourcing contract from Vodafone New Zealand

📝 Anil Ambani to sell BIG FM for Rs 1,050 cr to Jagran's Music Broadcast

📝 10-yr govt bond slips by 7 bps to 7.17% amid FPI flow, fall in oil prices

*Financial Express*

📝 Indian Overseas Bank bets big on ‘bank on wheels’

📝 India Cements Q4 profit rises to Rs 43.85 crore

📝 Avendus fund buys minority stake in Bikaji Foods International

📝 Bitcoin jumps towards $9,000 in best-performing month since 2017

📝 DLF cuts net debt by 34 per cent in Q4 to Rs 4,483 cr

📝 Govt weighing scheme for fast refund of levies to exporters

📝 India Inc revenue growth in Q4 hits six-quarter low of 10.7 per cent

📝 Sistema.bio raises $12 million in Series A round of funding

*Mint*

📝 Singapore startup Trax raising funds at $1.1 billion value

📝 Lenders set two-week deadline to revive Jet Airways

📝 Samunnati raises $55 million from US-based Nuveen

📝 GDP growth in Q4 likely to moderate to 5.9%; may lead RBI to cut rates: Report

📝 Govt proposes WTO-compliant schemes to boost Make in India

📝 Colgate-Palmolive Q4 net sales up 6% to ₹1,146.6 crore

📝 NHPC Q4 net up over two-fold at ₹492 crore

📝 Patnajali expands dairy products to take on Amul and Mother Dairy.

IT security recollected questions on 25.05.2019

It security recollected questions 25/05/19 shared by member
 OECD 1992
PILLARS OF IS
ISP/NSP INTERMEDIARIES SEC 79 PTOTECTION
ITA 2000 PROVIDES LEGAL RECOGNITION TO ELEC.RECORDS
CISO TO REPORT TO HIRM
PGP IN EMAIL
DOWNSTREAM LIABILITY
SALAMI TECHNIQUE
TROZAN HORSE
SPLIT TESTING
CLOUD COMPUTING
DIGITAL INDIA INITIATIVE
PERIMETER SECURITY
IPS BIOMETRIC
IDS CCTV
GREEN SERVEE
SCAVENGING
BLADE SERVER
IP ADDRESS N MAC ADDRESS
VSAT
LOAD BALANCING SERVER
ROUTER
SWITCHES
ISO 14000, 27000 SERIES
ISO/IEC 12207
ISO 90003:2004
COBIT VERSION
SOX 2002
PXI/DSS
RFID/BAR CODE
PSEUDO CODE
PPI
OSI MODEL LAYERS
TCP/IP MODEL LAYERS
NAT
TUNELLING
IP SEC
FTP PORT NO
DNS ATTACK
FIREWALLS
66D SOCIAL ENGG
DOS ATTACK
APT
STUXNET
VIRUS/WORM
SLA
POLYMORPHIC THREAT
RTO N RPO
CLOUD BACKUP
ROBO BACKUP
PDC N SDC
BCDRP
HOT SITE
SPF
RESIDUAL RISK
AUDIT AROUND/THROUGH COMPUTER

CCP recollected questions on 25.05.2019

Credit professional Recollected questions 25/05/19
Shared by member
4 to 5 Questions on
1)LC Assessment
2) 1st And 2nd Method of Lending
3) PSLC Certificate
4) LC CIF Value
5) New restructuring upto 25 crore

Other single marker were like
Altzman Score use,
payback period,
Syndication (Club),
Diff types of LC,
 PMJDY,
exposure norms,
banks capital market exposure,
AoA, MoA,
 easy questions on DER,
Current Ratio

Current affair s as on 25.05.2019

Today's Headlines from www:

*Economic Times*

📝 Airtel's paid-up share capital rises to Rs 2,565 cr after rights issue

📝 States' share of market borrowing up at 91% in FY19: Report

📝 Ashok Leyland plans Rs 2,000 crore capex over 2 years

📝 EY back on job for Air India sale, EoI to be ready soon

📝 Looking forward to working with new govt of PM Modi: IMF

📝 GoAir offers one million seats for fares starting at Rs 899

📝 CCI approves GSK, Pfizer consumer healthcare JV formation

 📝 US deadline ends, India stops purchasing Iranian oil

*Business Standard*

📝 From investment cap to pension funds, Sebi moots changes to FPI rules

📝 RBI pushes crisis-hit NBFCs to maintain more high-quality liquid assets

📝 In a first, Titan goes for in-house movements to boost premium range

📝 Cement volume growth at 9-year high as govt schemes boost housing demand

📝 Grasim Industries plans to invest additional Rs 6,400 crore to add capacity

📝 Tech firms to woo new govt for boosting start-ups, help ease of business

📝 RBI to buy Rs 15,000 crore of bonds from secondary market on June 13

📝 UK set for a new PM as tearful Theresa May quits over Brexit stalemate

*Financial Express*

📝 Crackdown on shell firms: Rules amended to ensure stricter compliance

📝 Adani Green to raise 500 million dollar in green bonds

📝 Forex reserves decline by $2.05 billion to $417.99 billion

📝 REC net profit rises 50 pc to Rs 1,256 crore in March quarter

📝 Public sector banks recover Rs 1.2 lakh cr from bad loans in 2018-19

📝 Facebook deletes record 2.2 billion fake accounts

📝 Hindustan Infralog acquires 76 percent stake in KRIBHCO Infrastructure

*Mint*

📝 SpiceJet, Vistara add planes to make the most of Jet Airways’ slots

📝 Electrical switch maker Salzer Electronics buys 72.32% stake In Kaycee

📝 HDFC sells 6.1% in subsidiary Gruh to comply with RBI directive

📝 Grasim Industries Q4 net profit at ₹1,531.86 crore

📝 Bata India Q4 profit jumps 69.47% to ₹88.26 crore

📝 Ashok Leyland Q4 net dips 12% at ₹653 crore

📝 JSW Steel profit halves to ₹1,495 crore in Q4

📝 Whirlpool of India Q4 net up 14% at ₹104 crore

📝 Infosys completes acquisition of 75% stake in ABN AMRO Bank subsidiary Stater.

Current affair s on 24.05.2019

Today's Headlines from www:

*Economic Times*

📝 Expect government to bring down corporate tax: Adi Godrej

📝 Promoter stake in Adani Green Energy down at 80.9% after OFS

📝 Hindustan Copper plans to raise borrowing limit to Rs 2,500 crore

📝 Nikkei drops as US-China trade tensions hit tech shares

📝 Industry welcomes NDA win; seeks more reforms to accelerate growth

📝 Tata Sons plans to borrow $2 billion from overseas market

📝 I&B ministry asks channels to adhere to news and non-news categories

*Business Standard*

📝 Telcos fight to keep network costs in check; Voda Idea spends highest

📝 Domestic pharma companies eye robust growth from US market in FY20

📝 GIC Q4 PAT down 19.7% at Rs 603 cr on provisioning for IL&FS exposure

📝 Western Digital's investment in Indian markets at Rs 1,400 crore a year

📝 Pvt banks back to drawing board, expand branch network to boost efficiency

📝 Nippon Life, Reliance Capital sign deal for sale of mutual fund arm

📝 Oil prices plunge over 5% to $67 as US-China trade tensions intensify

📝 Morgan Stanley sees Sensex at 45,000; Nifty at 13,500 by June 2020

*Financial Express*

📝 Private banks’ Q4 profit declines 14% amid rise in provisions

📝 Fund-raising set to be cheaper for top NBFCs

📝 Centre looking to ‘insulate’ discoms from payment delays

📝 Ola Fleet Tech gets Rs 40-crore loan from Tata Motors Finance

📝 Google deploys AI to clean ‘trashy videos’ from YouTube homepage

📝 Further leverage build-up at parent firm Volcan could derail Vedanta’s debt-reduction plan, warns India-Ratings

📝 Domestic air traffic in April sees sharpest drop in 5 yrs

📝 Volatile imported coal prices, lower merchant sales may hit JSW Energy margins in FY20

📝 Adani’s coal hopes finds new opposition; now BHP joins naysayers

*Mint*

📝 Taco Bell plans big India expansion as it steps up overseas push

📝 L&T buys shares of Mindtree worth Rs44 crore through open market

📝 Form 15H amended, senior citizens to get higher TDS exemption on interest income

📝 Netflix pushing into smaller towns with new shows, lower charges

📝 Credit view on India hinges on policies of new govt: Moody's.

Basel III...10 questions we should know answers to

What was the paradigm shift from Basel I to Basel II?
The paradigm shift was that while Basel I had a ‘one-size-fits-all’ approach, Basel II introduced risk sensitive capital regulation. The main charge against Basel II is that it is precisely this risk sensitivity that made it blatantly procyclical. In good times, when banks are doing well, and the market is willing to invest capital in them, Basel II does not impose significant additional capital requirement on banks. On the other hand, in stressed times, when banks require additional capital and markets are wary of supplying that capital, Basel II requires banks to bring in more of it. As we saw during the crisis, it was the failure to bring in capital when under pressure that forced major international banks into a vicious cycle of deleveraging, thereby hurtling global financial markets into seizure and economies around the world into recession.
The second charge against Basel II was that even as it made capital regulation more risk sensitive, it did not bring in corresponding changes in the definition and composition of regulatory capital to reflect the changing market dynamics. The market risk models failed, in particular, to factor in the risk from the complex derivative products that were coming on to the market in a big way. These models demanded less capital against trading book exposures on the premise that trading book exposures could be readily sold, and positions rapidly unwound. This gave a perverse incentive for banks to park banking book exposures in the trading book to optimize capital. And as we now know, much of the toxic assets and their securitized derivatives, which were the epicenter of the crisis were parked in the trading book.
So, the second charge against Basel II was that even as it was supposedly risk sensitive, it failed to promote modelling frameworks for accurate measurement of risk and to demand sufficient loss absorbing capital to mitigate that risk.
The third charge against Basel II concerns leverage. Note that Basel II did not have any explicit regulation governing leverage. It assumed that its risk based capital requirement would automatically mitigate the risk of excessive leverage. This assumption, as it turned out, was flawed as excessive leverage of banks was one of the prime causes of the crisis. Similarly, Basel II did not explicitly cover liquidity risk. Since liquidity risk, if left unaddressed, could cascade into a solvency risk, this proved to be the undoing of virtually every bank that came under stress in the depth of the crisis.
Finally, Basel II was also seen to be guilty of focusing exclusively on individual financial institutions, ignoring the systemic risk arising from the interconnectedness across institutions
which, as we now know with the benefit of hindsight, was the culprit for ferociously spreading the crisis across financial markets.
Is all this criticism against Basel II valid? As I said before, only partly valid. Note that Basel II, which became operational in June 2006, was still largely work in progress as the crisis began unfolding in August 2007. It is possible that the failure of the market risk framework underlying Basel II may have abetted the crisis, but to claim that the risk sensitivity of Basel II caused the crisis would be extreme.
2nd Question: How is Basel III an improvement over Basel II?
Basel III represents an effort to fix the gaps and lacunae in Basel II that came to light during the crisis as also to reflect other lessons of the crisis. What is important though is that Basel III does not jettison Basel II; on the contrary, it builds on the essence of Basel II - the link between the risk profiles and capital requirements of individual banks. In that sense, Basel III is not a negation, but an enhancement of Basel II.
The enhancements of Basel III over Basel II come primarily in four areas: (i) augmentation in the level and quality of capital; (ii) introduction of liquidity standards; (iii) modifications in provisioning norms; and (iv) better and more comprehensive disclosures. Let me discuss each of these briefly.
Higher Capital Requirement
Table 1: Capital Requirements Under Basel II and Basel III
As a percentage of risk weighted assets
BaselII
Basel III (as on January 1, 2019)
A = (B+D)
Minimum Total Capital
8.0
8.0
B
Minimum Tier 1 Capital
4.0
6.0
C
of which: Minimum Common Equity Tier 1 Capital
2.02
4.5
D
Maximum Tier 2 Capital (within Total Capital)
4.0
2.0
E
Capital Conservation Buffer (CCB)
-
2.5
F = C+E
Minimum Common Equity Tier 1 Capital + CCB
2.0
7.0
G = A+E
Minimum Total Capital + CCB
8.0
10.5
As can be seen from the comparative data in aqbove Table, Basel III requires higher and better quality capital. The minimum total capital remains unchanged at 8 per cent of risk weighted assets (RWA). However, Basel III introduces a capital conservation buffer of 2.5 per cent of RWA over and above the minimum capital requirement, raising the total capital requirement to 10.5 per cent against 8.0 per cent under Basel II. This buffer is intended to ensure that banks are able to absorb losses without breaching the minimum capital requirement, and are able to carry on business even in a downturn without deleveraging. This buffer is not part of the regulatory minimum; however, the level of the buffer will determine the dividend distributed to shareholders and the bonus paid to staff.
There are also other prescriptions regarding the quality of capital within the minimum total so that capital is able to absorb losses, and calling upon taxpayers to bear the burden of bail out becomes absolutely the last resort.
In addition to the capital conservation buffer, Basel III introduces another capital buffer - the countercyclical capital buffer - in the range of 0 - 2.5 per cent of RWA which could be imposed on banks during periods of excess credit growth. Also, there is a provision for a higher capital surcharge on systemically important banks.
To mitigate the risk of banks building up excess leverage as happened under Basel II, Basel III institutes a leverage ratio as a backstop to the risk based capital requirement. The Basel Committee is contemplating a minimum Tier 1 leverage ratio of 3 per cent (33.3 times) which will eventually become a Pillar 1 requirement as of January 1, 2018.
As we noted earlier, Basel II failed to demand adequate loss absorbing capital to cover market risk. To remedy this, Basel III strengthens the counterparty credit risk framework in market risk instruments. This includes the use of stressed input parameters to determine the capital requirement for counterparty credit default risk. Besides, there is a new capital requirement known as CVA (credit valuation adjustment) risk capital charge for OTC derivatives to protect banks against the risk of decline in the credit quality of the counterparty.
To mitigate liquidity risk, Basel III addresses both potential short-term liquidity stress and longer-term structural liquidity mismatches in banks’ balance sheets (Table - 2). To cover short-term liquidity stress, banks will be required to maintain sufficient high-quality unencumbered liquid assets to withstand any stressed funding scenario over a 30-day horizon as measured by the liquidity coverage ratio (LCR). To mitigate liquidity mismatches in the longer term, banks will be mandated to maintain a net stable funding ratio (NSFR). The NSFR mandates a minimum amount of stable sources of funding relative to the liquidity profile of the assets, as well as the potential for contingent liquidity needs arising from off-balance sheet commitments over a one-year horizon. In essence, the NSFR is aimed at encouraging banks to exploit stable sources of funding.
Liquidity Standards
Table 2: Liquidity Standards
Ratio
Basel II
Basel III
Liquidity Coverage Ratio (LCR) (to be introduced as on January 1, 2015)
-
Stock of high-quality liquid assets = 100% Total net cash outflows over the next 30 calendar days
Net Stable Funding Ratio (NSFR) (to be introduced as on January 1, 2018)
-
Available amount of stable funding > 100% Required amount of stable funding
Provisioning Norms
The Basel Committee is supporting the proposal for adoption of an “expected loss” based measure of provisioning which captures actual losses more transparently and is also less
procyclical than the current “incurred loss” approach. The expected loss approach for provisioning will make financial reporting more useful for all stakeholders, including regulators and supervisors.
Disclosure Requirements
The disclosures made by banks are important for market participants to make informed decisions. One of the lessons of the crisis is that the disclosures made by banks on their risky exposures and on regulatory capital were neither appropriate nor sufficiently transparent to afford any comparative analysis. To remedy this, Basel III requires banks to disclose all relevant details, including any regulatory adjustments, as regards the composition of the regulatory capital of the bank.
3rd Question: What is the additional capital that Indian banks have to mobilize to conform to Basel III? What are the options for, and challenges in, raising this size of capital?
Admittedly, Indian banks already meet the minimum capital requirements of Basel III at an aggregate level, even though some individual banks may have to top up. But capital adequacy today does not mean capital adequacy going forward. Currently, the bank credit - GDP ratio in India is around 55 per cent. If we want growth to accelerate, this ratio will have to go up as a necessary pre-condition. Besides, as our economy goes through a structural transformation, as it should, the share of the industry sector will increase and the credit-GDP ratio will rise even further. What this means is that Indian banks would have been required to raise additional capital even in the absence of Basel III. In estimating the net additional burden on account of Basel III, we have to take this factor into account.
What is the size of the additional capital required to be raised by Indian banks? It depends on the assumption made, and there are various estimates floating around.
The Reserve bank has made some quick estimates based on the following two conservative assumptions covering the period to March 31, 2018: (i) risk weighted assets of individual banks will increase by 20 per cent per annum; and (ii) internal accruals will be of the order of 1 per cent of risk weighted assets.
Reserve Bank’s estimates project an additional capital requirement of Rs. 5 trillion, of which non-equity capital will be of the order of `3.25 trillion while equity capital will be of the order of `1.75 trillion (Table - 3).
Table 3: Additional Common Equity Requirements of Indian Banks under Basel III
(Rs. billion)
Public Sector Banks
Private Sector Banks
Total
A
Additional Equity Capital Requirements under Basel III
1400-1500
200-250
1600-1750
B
Additional Equity Capital Requirements under Basel II
650-700
20-25
670-725
C
Net Equity Capital Requirements under Basel III (A-B)
750-800
180-225
930-1025
D
Of Additional Equity Capital Requirements under Basel III for Public Sector Banks (A)
Government Share (if present shareholding pattern is maintained)
880-910
-
-
Government Share (if shareholding is brought down to 51 per cent)
660-690
-
-
Market Share (if the Government’s shareholding pattern is maintained at present level)
520-590
-
-
The additional equity capital requirement of the order of Rs. 1.75 trillion raises two questions. First, can the market provide capital of this size? Second, what will be the burden on the Government in capitalizing public sector banks (PSBs) and what are its options?
Let us turn to the first question, whether the market will be able to provide equity capital of this size. The amount the market will have to provide will depend on how much of the recapitalization burden of PSBs the Government will meet. Data in Table - 3 indicate that the amount that the market will have to provide will be in the range of Rs. 700 billion - Rs. 1 trillion depending on how much the Government will provide. Over the last five years, banks have revised equity capital to the tune of Rs. 520 billion through the primary markets.
Raising an additional Rs. 700 billion - Rs. 1 trillion over the next five years from the market should therefore not be an insurmountable problem. The extended period of full Basel III implementation spread over five years gives sufficient time to banks to plan the time-table of their capital rising over this period.
Moving on to the second question of the burden on the Government which owns 70 per cent of the banking system. If the Government opts to maintain its shareholding at the current level, the burden of recapitalization will be of the order of Rs. 900 billion; on the other hand, if it decides to reduce its shareholding in every bank to a minimum of 51 per cent, the burden reduces to under Rs. 700 billion.
Clearly, providing equity capital of this size in the face of fiscal constraints poses significant challenges. A tempting option for the Government would be to issue recapitalization bonds against common equity infusion. But this will militate against fiscal transparency. In the alternative, would the Government be open to reducing its shareholding in PSBs to below 51 per cent? If the Government decides to pursue this option, an additional consideration is whether it will amend the statute to protect its majority voting rights.
4th Question: Will Basel III hurt growth?
One major criticism against Basel III has been that it will hurt growth. Even though we do not have a precise quantitative estimate of the impact on growth, the main concern is that the higher capital requirements under Basel III will kick in at a time when credit demand in the economy will be on the rise.
In a structurally transforming economy with rapid upward mobility, credit demand will expand faster than GDP for several reasons. First, India will shift increasingly from services to manufactures, and the credit intensity of manufacturing is higher per unit of GDP than that for services. Second, we need to at least double our investment in infrastructure which will place enormous demands on credit. Finally, financial inclusion, which both the Government and the Reserve Bank are driving, will bring millions of low income households into the formal financial system with almost all of them needing credit.
What all this means is that we are going to have to impose higher capital requirements on banks as per Basel III at a time when credit demand is going to expand rapidly. A crucial question is this. Will this raise the cost of credit and hence militate against growth? Put differently, how much growth are we willing to sacrifice in order to buy insurance against financial instability? At its core, this boils down to the tension between short-term compulsions and long term growth prospects. Comfortingly, empirical research by BIS economists shows that even if Basel III may impose some costs in the short-term, it will secure medium to long term growth prospects.
5th Question: How will Basel III affect the profitability of banks? Will it alter their incentive structure?
Let me attempt an answer. As we noted, Basel III requires higher and better quality capital. Admittedly, the cost of equity capital is high. It is also likely that the loss absorbency requirements on the non-equity regulatory capital will increase its cost.
The average Return on Equity (RoE) of the Indian banking system for the last three years has been approximately 15 per cent. Implementation of Basel III is expected to result in a decline in Indian banks’ RoE in the short-term. However, the expected benefits arising out of a more stable and stronger banking system will largely offset the negative impact of a lower RoE in the medium to long term. It is also fair to assume that investors will perceive the benefits of having less risky and more stable banks, and will therefore be willing to trade in higher returns for lower risks.
A related question is whether banks will bear the increased cost of capital themselves or pass it to their depositors and borrowers. This trade off has to be assessed in the context of the relatively higher level of net interest margins (NIMs) of Indian banks, of approximately 3 per cent. This higher NIM suggests that there is scope for banks to improve their efficiency, bring down the cost of intermediation and ensure that returns are not overly compromised even as the cost of capital may increase.
Having dealt with capital requirements, let us now turn to the Liquidity Standards under Basel III. Will the mandate to maintain a higher quantum of liquid assets encourage banks to resort to the passive option of lending to the Government, thereby crowding out credit to the private sector? Hopefully, this question will resolve itself as the savings rate of the economy improves and the fiscal deficit comes down.
A related question is about the extent banks’ holding of government securities that should be taken into account for assessing compliance with liquidity standards. One view is that since the Statutory Liquidity Ratio (SLR) securities are required to be held on an ongoing basis, they should not be reckoned for calculating liquidity requirements under Basel III. An alternate view is that since the Reserve Bank is expected to provide liquidity against these securities under stressed conditions as part of its lender of last resort (LoLR) obligation, at least a pre-specified portion of these securities should be taken into account for assessing compliance with Basel III’s Liquidity Standards. The Reserve Bank will take a view on this in due course.
So, the answer to the question of whether Basel III will affect the profitability of banks and alter their incentive structure is that the competitive dimensions of our banking sector should ensure that banks are able to deliver efficient financial intermediation without compromising the interests of depositors and borrowers.
6th Question: Does India really need Basel III? Don’t the costs outweigh the benefits?
The last three questions, if you noticed, dealt with the putative negative consequence of Basel III - the burden of raising additional capital and the costs of complying with the new liquidity standards, their impact on banks’ profitability, and on the overall growth prospects of the economy.
One view, although not explicitly spelt out in that form, is that India need not adopt Basel III, or should adopt only a diluted version of it, so as to balance the benefits against the putative costs. To buttress this view, it is argued that Basel III is designed as a corrective for advanced economy banks which had gone astray, oftentimes taking advantage of regulatory gaps and regulatory looseness, and that Indian banks which remained sound through the crisis should not be burdened with the ‘onerous’ obligations of Basel III.
The Reserve Bank does not agree with this view. Our position is that India should transit to Basel III because of several reasons. By far the most important reason is that as India integrates with the rest of the world, as increasingly Indian banks go abroad and foreign banks come on to our shores, we cannot afford to have a regulatory deviation from global standards. Any deviation will hurt us both by way of perception and also in actual practice.
The ‘perception’ of a lower standard regulatory regime will put Indian banks at a disadvantage in global competition, especially because the implementation of Basel III is subject to a ‘peer group’ review whose findings will be in the public domain.
Deviation from Basel III will also hurt us in actual practice. We have to recognize that Basel III provides for improved risk management systems in banks. It is important that Indian banks have the cushion afforded by these risk management systems to withstand shocks from external systems, especially as they deepen their links with the global financial system going forward.
I must also add, as I complete my answer to this question, that some of the prescriptions of Basel III have already been in existence in India, and the net additional burden will be lower than we tend to imagine.
7th Question: The Reserve Bank has already rolled out the implementation of Basel III even as many countries are yet to do so. Why did you have to frontrun and why are some of your regulations more onerous than required under Basel III?
The Reserve Bank issued final guidelines on Basel III capital regulation in May 2012 to be implemented from January 1, 2013 to March 31, 2018 even as many other jurisdictions have yet to do so. We have been criticized for being unduly proactive in this regard. Let me respond to this criticism.
First, on the start and end dates. We have not advanced the start date. It is the same as the internationally agreed date of January 1, 2013. However, we have advanced the end date from the internationally agreed date of December 31, 2018 by nine months to March 31, 2018. We did this to align our date with the close of the Indian fiscal year, which is March 31. We could have gone up to March 31, 2019, but that would have overshot the Basel III prescription by three months and would have attracted adverse notice. Our assessment is that the cost of that adverse notice will far exceed the marginal burden of a slightly earlier close date. So, we settled for March 31, 2018.
Third, major global banks often engage themselves in the Basel Committee’s consultative process which is not the case with Indian banks. We moved early since we had completed the consultative process, and thought that we must give our banks a head start in transiting to Basel III.
47. Let me then move to the more weighty question of why the Reserve Bank has prescribed higher capital and leverage norms for Indian banks than the Basel III minimum. Table-4 summarises the Basel III (international) prescriptions alongside the current requirements in India under Basel II, and as required under Basel III when fully implemented.
Table 4: Minimum Regulatory Capital Prescriptions (as percentage of risk weighted assets) Basel III (as on January 1, 2019) Reserve Bank’s Prescriptions Current (Basel II) Basel III (as on March 31, 2018)
A = (B+D)
Minimum Total Capital
8.0
9.0
9.0
B
Minimum Tier 1 capital
6.0
6.0
7.0
C
of which: Minimum Common Equity Tier 1 capital
4.5
3.6
5.5
D
Maximum Tier 2 capital (within Total Capital)
2.0
3.0
2.0
E
Capital Conservation Buffer (CCB)
2.5
-
2.5
F = C+E
Minimum Common Equity Tier 1 capital + CCB
7.0
3.6
8.0
G = A+E
Minimum Total Capital + CCB
10.5
-
11.5
H
Leverage Ratio (ratio to total assets)
3.0
-
4.5
What is the rationale for our more ‘onerous’ capital standards? Note that banks in India follow the Standardised Approaches under Basel II. The higher prescription is intended to address any judgemental error in capital adequacy viz. wrong application of standardised risk weights, misclassification of asset quality etc. Also, while advanced approaches under Basel II have been strengthened, the calibration of standardised risk weights is yet to be comprehensively effected. And more importantly, Indian banks have not so far been subjected to Pillar 2 capital requirement under Basel II. Thus, the higher prescription addresses any potential concerns relating to undercapitalisation of risky exposures. It should also be noted in this context that even under the Basel I and Basel II regimes, the Reserve Bank’s prescriptions were a percentage point higher than the international norms. Experience shows that this prudence on our part had been helpful and was positive on the cost-benefit calculus.
Please note that India has not been an outlier in prescribing higher capital standards. Several other jurisdictions, particularly Asian countries, have proposed higher capital adequacy ratios under Basel III as may be seen from Table-5 below.
Table 5: Sample of Countries with Higher Capital Adequacy Norms Than India Country Minimum Common Equity Ratio (including capital conservation buffer) (percentage) Minimum Total Capital Ratio (percentage)
Basel III
7.0
10.5
India
8.0
11.5
Philippines
8.5
12.5
Singapore
9.0
12.5
China
7.5
10.5
South Africa
9.0
12.5
Similarly, a question has been raised about why the Reserve Bank prescribed a higher leverage ratio, 4.5 per cent, against the Basel III norm of 3 per cent.It is a matter of supervisory comfort that the Indian banking system is only moderately leveraged on an aggregate basis (22 times of Tier 1 capital approximately). We thought it prudent not to dilute this ‘comfortable’ position during the parallel run period of the leverage ratio. The Basel Committee is monitoring and analysing the potential impact of the leverage ratio. As indicated in our Basel III framework, we will finalize the leverage ratio requirement taking into account the final proposal of the Basel Committee.
8th Question: What are the potential challenges in implementing the countercyclical capital buffer?
As we noted earlier, a critical component of the Basel III package is a countercyclical capital buffer which mandates banks to build up a higher level of capital in good times that could be run down in times of economic contraction, consistent with safety and soundness considerations. This is conceptually neat, but is challenging in operational terms, as indeed evidenced by Spain’s recent experience. The foremost challenge is identifying the inflexion point in an economic cycle which should trigger the release of the buffer. It is quite evident
that both tightening too early or too late can be costly in macroeconomic terms. The identification of the inflexion point therefore needs to be based on objective and observable criteria. It also needs long series data on economic cycles. So, what we need is both a better database and more refined statistical skills in analyzing economic cycles.
The countercyclical capital buffer as prescribed in Basel III was initially based on the credit / GDP metric. Is this a good economic indicator from the Indian perspective? A study undertaken by the Reserve Bank shows that the credit to GDP ratio has not historically been a good indicator of buildup of systemic risk in our banking system.
Furthermore, some economic sectors such as real estate, housing, micro finance and consumer credit are relatively new in India, and banks have only recently begun financing them in a big way. The risk build up in such sectors cannot accurately be captured by the aggregate credit to GDP ratio. The Reserve Bank has so far calibrated countercyclical policies at the sectoral level, and I believe we need to continue to use that approach. The Basel Committee also has now recognized that no single variable can fully capture the dynamics of the economic cycle. Appropriate calibration of the buffer requires country specific judgement backed by a broad range of other simple indicators used in financial stability assessments.
9th Question: What are D-SIBs? Will any Indian bank be classified as a D-SIB?
The moral hazard relating to too-big-to-fail institutions which encourages risky behaviour by larger banks has been a huge issue on the post-crisis reform agenda. Basel III seeks to mitigate this externality by identifying global systemically important banks (G-SIBs) and mandating them to maintain a higher level of capital dependent on their level of systemic importance. The list of G-SIBs is to be reviewed annually. Currently, no Indian bank appears in the list of G–SIBs.
Separately, the Basel Committee is working on establishing a minimum set of principles for domestic systemically important banks (D-SIBs), and also on the norms for prescribing higher loss absorbency (HLA) capital standards for them. Besides, it is also necessary to evolve a sound resolution mechanism for D-SIBs.
The moral hazard issue of too big to fail and the regulatory endeavour to address that raise a question about the optimal size of a G-SIB, and the optimal size of a D-SIB relative to the size of the economy. Admittedly, larger banks offer certain benefits such as economies of scale in operation and capacity to finance large infrastructure projects which are typically considered more risky. In India, we also need large banks with potential capacity to become significant global players. Nevertheless, we have to balance the benefits that large banks extend with the moral hazard costs they entail.
10th Question: What sort of capacity building is required in the implementation of Basel III, especially in the area of risk management? What should banks do and what should the Reserve Bank do in this regard?
There are no two views about the need for building capacity within the banks, and also in the Reserve Bank which is the regulator, to efficiently implement Basel III.
By far the most important reform is that there should be a radical change in banks’ approach to risk management. Banks in India are currently operating on the Standardized Approaches of Basel II. The larger banks need to migrate to the Advanced Approaches, especially as they expand their overseas presence. The adoption of advanced approaches to risk management will enable banks to manage their capital more efficiently and improve their profitability.
This graduation to Advanced Approaches requires three things. First and most importantly, a change in perception from looking upon the capital framework as a compliance function to seeing it as a necessary pre-requisite for keeping the bank sound, stable, and therefore profitable; second, deeper and more broad based capacity in risk management; and finally adequate and good quality data.

Most imp CAIIB BFM 150 MCQs

Most imp CAIIB BFM 150 MCQs

1. A company has four branches at Bangalore, Chennai, Delhi and Mumbai. IEC number should be
obtained by.
A. all bran ches simultaneously.
B. each branch separately.
C. any one branch, which c an be used by all branches.
D. the head office, which can be used by all branches.
ANSWER: D
2. An exporter who deals in multi products should get Registration-cum-Membership Certificate from.
A. all export promotion councils relevant to the products dealt in.
B. export promotion council nearest to the head office of the expo rter.
C. export promotion council of main line of activity or FIEO.
D. none of the above.
ANSWER: D
3. An exporter cannot obtain details about prospective buyers from.
A. yellow pages.
B. web sites.
C. Indian em bassy abroad.
D. none of the above.
ANSWER: D
4. A thorough buyer evaluation may be waived in case of.
A. buyers from advanced countries.
B. buyers from countries having bil ateral relations with India.
C. buyers having import licences.
D. transactions covered by full ad vance payment.
ANSWER: D
5. Force majuere clause in an export .
A. relates to penalty for non-fulfilm ent of contract.
B. exempts the exporter from liability from non-ful filment of contract due to reasons beyond his control.
C. provides for enforcing the contract compulsorily.
D. none of the above.
ANSWER: B
6. Obtaining quality certification is compulsory for.
A. export of commodities falling under mandator y inspection requirements of the government.
B. export of items meant for human consumption
C. all exports.
D. none of the above.
ANSWER: A
7. Booking of shipping space in advance is helpful to an exporter in.
.
A. saving in freight charges.
B. availing bank finance.
C. getting priority on inla nd movement of cargo by rail.
D. none of the above.
ANSWER: C
8. Under advance remittance as a method of payment the credit risk is borne by.
A. the importer.
B. the exporter.
C. importers ba nk
D. none.
ANSWER : A
9. Open account when used as a method of payment indicates.
A. the transactions are legal
B. the buyer has no money t o pay immediately.
C. the seller wants to sell desperately.
D. none of the above.
ANSWER: D
10. Open account method of payment is beneficial to
A. the buyer.
B. the seller.
C. the buying agent.
D. both the buyer an d the seller.
ANSWER: A
11. Cash on delivery method is normally used for.
A. bulk cargo with immediate market.
B. small but valuable items sent by po st.
C. slow moving items.
D. exports to countries with balance of payments problems.
ANSWER: B
12. Documents against payment term indicates
A. the documents are sent by post.
B. the export is risky.
C. the collecting bank will hand the documents to the buyer against payment.
D. the exporter delivers the documents to the bank against advance.
ANSWER: C
13. The best form of method of payment for an importer would be.
A. advance remittance.
B. letter of credit.
C. documents aga inst payment.
D. open account.
ANSWER: D
14. When goods are sent to an agent of an exporter in the importing country, the method of payment
adopted is.
A. open account.
B. letter of credit .
C. consignment sa le.
D. documents agains t acceptance.
ANSWER: C
15. The method of payment where the exporter relies on the undertaking of a bank to pay is.
A. bank guarantee.
.

B. letter of credit.
C. letter of comfo rt.
D. none of the above .
ANSWER: B
16. Letter of credit transactions are generally governed by the provisions of.
A. Uniform customs and Procedures for Documentary Credits.
B. United Conference on Practices for Documentary Credits.
C. Uniform Customs and Practice for Documentary Credits.
D. Uniform Code and Procedure for Documentary Credits.
ANSWER: C
17. A letter of credit for a commercial transaction is.
A. a guarantee by the issuing bank to the exporter that bills drawn by the latter will be met.
B. undertaking by the issuing bank to the exporters bank that the exporters bills will be met by the
issuing bank.
C. undertak ing by the issuing bank to the exporter that documents conforming to the requirements of the
credit will be negotiated/paid against by the bank.
D. none of the above
ANSWER: C
18. The beneficiary under a letter of credit is.
A. the bank opening the credit.
B. the customer of the opening bank.
C. the confirming bank.
D. the exporter.
ANSWER: B
19. A letter of credit is opened on behalf of.
A. exporter customers.
B. importer customers.
C. any party wishing to make payment abroad.
D. none of the above.
ANSWER: B
20. A letter of credit is addressed to.
A. the beneficiary.
B. the negotiating bank.
C. the reimbursing bank .
D. the importer.
ANSWER: A
21. Bank B of Baroda nrgotiated on 12.3.2005 documents ynder a recovable letter of credit opened by
Bank C of California. On 13.3.2005 before the documents were dispatched by Bank B to Bank C, it
receives a notice from the latter, dated 11.3.2005 cancelling the letter of credit.
A. Bank B cannot get reimbursement from Bank C since the documents are n egotiated after the
cancellation of the letter of credit.
B. Bank B cannot get reimburse ment from Bank C, but have recourse to the exporter.
C. Bank B can get reimbursement from Bank C because the documents were negotiat ed before the
notice of cancellation could reach it.
D. Bank B can get reimbursement from Bank C since the notice of cancellation is invalid.
ANSWER: D
22. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as.
A. revocable.
B. irrevocable .
C. revocable or irrevocable at the option of the beneficiary.
D. revocable or irrevocable at the option of the negotiating bank.
.

ANSWER: B
23. Payment for bills drawn under letter of credit should be made by the negotiating bank.
A. immediately in all cases.
B. after the documents are a pproved by the issuing bank.
C. immediately or on a future date depending upon the te rms of credit.
D. only in foreign currency.
ANSWER: C
24. Under an acceptance letter of credit, the responsibility of the issuing bank is.
A. only to accept the bill.
B. to pay against the bill.
C. to accept the immediat ely and also to pay the amount of the bill on its due date.
D. to get the acceptance of the importer on the bill.
ANSWER: C
25. A confirmed letter of credit is one.
A. confirmed by a bank (other than t he opening bank) in the exporters country.
B. confirmed by the importer to be correct.
C. confirmed by the exporter that he agrees to the conditions.
D. confirmed to be authentic.
ANSWER: A
26. Under the confirmed letter of credit the undertaking the confirming bank is.
A. in addition to that of the opening bank.
B. in substitution of the undertaking of the opening bank.
C. subject to government policies to the exporter country.
D. none of the above.
ANSWER: A
27. A credit which provides for reinstatement of the amount as and when bills are drawn under it is called.
A. reinstatement credit.
B. reimbursement credi t
C. revolving credit.
D. back-to-back cre dit.
ANSWER: C
28. A transferable credit is one.
A. . which can be negotiated.
B. which can be transferred b y the importer to any other person.
C. which can be transferred by the beneficiary to any other perso n.
D. which provides for transfer of liability to another bank.
ANSWER: C
29. A transferable credit can be transferred.
A. once.
B. twice .
C. thrice.
D. any nu mber of times.
ANSWER: A
30. A transferable credit can be transferred to a third person in.
A. the same country.
B. a third country.
C. the same countr y or any third country.
D. none of the above.
ANSWER: C
.
31. A transferable letter of credit.
A. can be transferred to more th an one person even if partial shipment is prohibited.
B. can be transferred to more than one person only if partial shipment is allowed.
C. is one which contains words such as fractionable, assignable, etc.
D. . is transferred free of charge.
ANSWER: B
32. A back to back letter of credit.
A. is always an inland letter of c redit.
B. is a new letter of credit issued on th e strength of the letter of credit which is not transferable.
C. can be issued only when the original letter of credit is transferable.
D. can also be transferred.
ANSWER: B
33. A letter of credit that provides for granting of pre-shipment finance as well as storage of goods in the
name of the bank is.
A. a red clause let ter of credit.
B. a standby letter of credit.
C. a green clause letter of cr edit.
D. a secured letter of credit.
ANSWER: C
34. A letter of credit carries an undertaking of the opening bank to pay up to a specified amount in case of
non-performance of certain obligation by the applicant. This letter of credit is.
A. invalid.
B. an antic ipatory letter of credit.
C. standby letter of credit.
D. performance letter of cr edit.
ANSWER: C
35. The responsibility of an advising bank of a letter of credit is to.
A. vouch the genuineness of the letter of credit.
B. negotiate documents under the letter of credi t.
C. negotiate documents under the letter of credit, if the opening bank fails.
D. none of the above
ANSWER: A
36. Bank of Mumbai receives a bill under letter of credit opened by it. The importer instructs the bank not
to pay because he says the goods received are defective. The bank should.
A. return the bill with the reason payment refused.
B. seek clarification from the drawer; meanwhile k eep the bill with it.
C. refer the matter to International Chamber of Commerce.
D. make payment to the negotiating bank since the importe rs reason is untenable.
ANSWER: D
37. While scrutinizing the documents tendered under a letter of credit, the negotiating bank and issuing
bank should apply the doctrine of.
A. strict compliance
B. force majeure.
C. indemnity.
D. major com pliance.
ANSWER: A
38. Bank A has opened a letter of credit on behalf of its customers Imports India. When a bill under the
letter of credit is presented for payment by the negotiating bank it is found that Imports India do not have
sufficient balance in the account to pay the bill. The bank should.
A. intimate the negotiating bank by cable.
B. sue the customer for non-compliance w ith the letter of credit terms.

C. defer payment to the negotiating bank.
D. make payment to the negotiating bank immediately if documents are in order.
ANSWER: D
39. The expiry date of a letter of credit falls on 1st November, a bank holiday at exporters place.
A. The documents can be presented for negotiation the next working day.
B. The documents should be negotiated latest by the preceding working d ay.
C. Last date of negotiation and last date of shipment get postponed by a day.
D. The last date for shipment gets postponed but not the last date of negotiati on.
ANSWER: A
40. A letter of credit stipulates that the shipment should be made at the beginning og August 2005. It
means, the shipment can be made.
A. only on 1st August 2005.
B. during the first week of A ugust 2005.
C. any date between 1st and 10th of Aug ust 2005.
D. before the commencement of April 2005.
ANSWER: C
41. The letter of credit provides that shipment shall be made during the first half of February 2006. It
means the shipment can be made on any date between.
A. 1st and 4th of February 2006.
B. 1st and 15th of February 2006 .
C. 1st and 14th of February 2006; generally, with discretion to the negotiating bank to accept on 15th
February 2006 also.
D. 1st and 14th of February 2006; on 15th only if the port did not work on 14th.
ANSWER: B
42. If the letter of credit indicates the amount as about a specified amount, the drawing under the credit can
be.
A . 30% more than the specified amount.
B. 30% more or less than the Specified a mount.
C. 10% more than the specified amount.
D. 10% more or less than the specified a mount.
ANSWER: D
43. A letter of credit is opened for 100 kg of coffee for GBP 800. Documents for 102 kg of coffee for GBP
800 is presented for negotiation.
A. The bill cannot be accepted because quantity exceeds the letter of credit limit.
B. The bill cannot be accepted as the unit price get varied.
C. The bill can be accepted as it is beneficial to the import er.
D. The bill can be accepted since a tolerance of $5% in quant ity is allowed under UCP.
ANSWER: D
44. A teletransmission will be considered an operative instrument where.
A. it states full details to follow
B. it states mail confirmation w ill be the operating instrument.
C. it states airmailing our irrevocable letter of credit
D. none of the above.
ANSWER: D
45. A bank which issues a preliminary advice of issuance of an irrevocable credit.
A. A bank which issues a preliminary advice of issuance of an irrevocable credi t.
B. can later convert it as operative instrument.
C. may issue the operative instrument with dif ferent terms.
D. may issue the operative instrument with different terms.
ANSWER: A

46. A letter of credit is required to be completer and precise. It means.
A. it should not contain excessive details.
B. it should not refer to a previous credit w hich was amended.
C. both 1 and 2.
D. none of the a bove.
ANSWER: C
47. Expiry date of a letter of credit refers to.
A. the last date for shipment.
B. the last date for negotiatio n.
C. the last date for presentation of documents to issuing bank.
D. the last date of the month in which shipment can be made.
ANSWER: B
48. Unless otherwise required by the credit, the authentication of a document cannot be indicated by.
A. facsimile signature.
B. mark or stamp.
C. electronic meth od of authentication.
D. none of the above.
ANSWER: D
49. The obligation of the applicant of the credit to the beneficiary is.
A. to get the letter of credit opened confirming to terms of sale con tract.
B. to remain liable for the payment if the issuing bank fails to pay.
C. both 1 and 2 options.
D. only to get the credit opened.
ANSWER: C
50. Applicant for a letter of credit is not liable to the issuing bank.
A. for the charges of the issuing bank when collectable from the beneficiary, but he fails to pay.
B. actions of the intermediary bank.
C. the obligations imposed by foreig n laws and usages.
D. none of the above.
ANSWER: D
51. The responsibility of an accepting bank in a letter of credit is to.
A. accept bills drawn under the credit.
B. pay bills drawn under the credit.
C. accept and pay bills drawn under the credit.
D. accept the bill and get the payment from the issuing bank.
ANSWER: C
52. The responsibility of a negotiating bank is to.
A. verify that it negotiating only bills drawn und er credit advised by it.
B. the goods covered by the bill are safe and properly insured.
C. the documents tendered are as per the terms of credit.
D. both 2 and 3 above.
ANSWER: C
53. The responsibility of the confirming bank of a letter of credit is.
A. to negotiate and pay documents drawn under the credit.
B. vouchsafe the authenticity of the credit.
C. pay, if the issuing bank fails to pay docu ments that are in order.
D. pay, if the payment cannot be made by issuing bank due to gove rnment action.
ANSWER: A
54. Reimbursing bank under a letter of credit.
A. same as the issuing bank.
.

B. the paying bank.
C. the bank from wh ich the negotiating bank can claim reimbursement.
D. branch of the issuing bank in the exporters country.
ANSWER: C
55. Under UCP, the banks involved in a letter of credit transaction are responsible for.
A. genuineness of documents submitted by the beneficiary.
B. non-fulfillment of obligations by the other banks.
C. delay in transmission of messages.
D. none of the above.
ANSWER: D
56. Under a letter of credit, the bill of exchange should be drawn on.
A. the issuing bank.
B. the issuing bank or any other bank as indicated in the credit.
C. the issuing bank or the importer as indicated in the credit.
D. any party as indicated in the credit.
ANSWER: B
57. As per Negotiable Instruments Act, the following will be a foreign bill.
A. A bill drawn in Mumbai on a party in New York and payable at Delhi .
B. A bill drawn in Chennai on a party in Kolkata and payable at Colombo .
C. A bill drawn in Bangalore on a party in Sydney and payable there.
D. none of the above.
ANSWER: C
58. As per UCP, the minimum amount for which marine insurance should be effected is.
A. FOB value.
B. CIF value.
C. FOB value plus 10%.
D. CIF value plus 10%.
ANSWER: D
59. The following document is not acceptable under a letter of credit unless specifically authorized by the
credit.
A. m arine insurance policy.
B. insurance document whic h specifies that the cover is subject to a excess.
C. certificate of insurance.
D. cover notes issued by br okers.
ANSWER: D
60. The currency in which the insurance policy is obtained should be the currency of .
A. the importers country.
B. the exporters country.
C. the letter of credit.
D. any country, which is easily exchangeable.
ANSWER: C
61. The date from which the marine insurance policy should be effective should be.
A. same as the date of the transport document.
B. same or later than the date of the transport d ocument.
C. same or earlier than the date of the transport documen t.
D. earlier than the date of the transport document.
ANSWER: C
62. General Average loss under marine insurance is.
A. the basis for calculation of premium.
B. losses suffered to compensate extraor dinary sacrifice made to save the property in common.

C. risks for which only average cost will be reimbursed.
D. none of the above.
ANSWER: B
63. Marine policy clause that currently gives widest coverage against risks is.
A. Institute Cargo Clause A.
B. Institute Cargo Clause B.
C. Institute Cargo Clause C.
D. All Risks Clause.
ANSWER: C
64. For Claiming under marine policy, the claimant should have insurable interest.
A. at the time of taking the policy.
B. when damage to or loss of good s occurs.
C. both at the time of taking the policy and o ccurrence of damage/loss.
D. either at the time of taking the policy or at the time of occurrence of damage/loss.
ANSWER: B
65. The description of goods in the following document should agree exactly with the description in the
letter of credit.
A. Bill of lad ing.
B. Commercial in voice.
C. Packing list.
D. all the above .
ANSWER: B
66. A certified invoice is one.
A. certified as correct by th e importers agent in the exporters country.
B. certified as correct by the consul of the importers country
C. certified as correct by Chamber of Commerce.
D. which includes a certificate of origin.
ANSWER: B
67. Certificate of origin indicates.
A. the country of shipment of g oods.
B. the place of manufacturer/product ion of goods.
C. the country of manufacturer/production of good s.
D. whether the product belongs to plant or animal ki ngdom.
ANSWER: C
68. Details about the exact contents of each package can be found in.
A. packing list.
B. packing cert ificate.
C. commercial invoice .
D. none of the above.
ANSWER: A
69. The following invoice does not evidence sale.
A. consular invoice.
B. certified invoice.
C. visaed invoice.
D. proforma invoi ce.
ANSWER: D
70. The following transport document is a document of title to goods.
A. bill of lading.
B. multimodal tr ansport document.
C. airway bill.
.

D. none of the above.
ANSWER: A
71. A bill of lading is.
A. a non-negotiable instrument.
B. a quasi-negotiable.
C. fully negotiable ins trument.
D. partly negotiable instrument .
ANSWER: B
72. A mates receipt is.
A. Document signed by an officer of a vessel evidencing receipt of a shipment on board the vessel.
B. a substitute bill of lading.
C. bill of lading evidencing g oods carried on deck.
D. a draft bill of lading.
ANSWER: A
73. In a bill of lading the consignees name is mentioned as to order. It means the goods will be delivered to
the order of.
A. consign or.
B. the bank.
C. the consig nee.
D. the shipping ag ent.
ANSWER: A
74. As per UCP, unless specifically authorized in the letter of credit, a bank will not accept.
A. through bill of lading.
B. short form bill of ladin g.
C. bill of lading indicating t hat the carrying vessel is propelled by sail only.
D. none of the above.
ANSWER: D
75. In the absence of specific mention in the letter of credit, under UCP a transport document is considered
stale.
A. if presented for negotiation 21 days after its issue.
B. if presented for negotiation after its issue.
C. if presented after expiry of the letter of cre dit.
D. if presented for negotiation after the goods rea ch the destination.
ANSWER: A
76. A straight bill of lading is one.
A. covering both land and water transport.
B. the goods covered by which are delivera ble to the consignee.
C. which is sent directly to the consignee.
D. none of the above.
ANSWER: B
77. Freight to pay bill of lading is acceptable if.
A. the contact term is CIF.
B. the contract term is CFR .
C. the contract term is FOB.
D. goods are carried by a for eign vessel.
ANSWER: C
78. The drawback of non-negotiable sea waybill is.
A. . it does not evidence contract of affreightmen t.
B. it increases the incidence of fraud.
C. goods will not be delivered withou t the waybill even if indemnity is executed.
.

D. the buyer cannot sell the goods in transit by surrendering a paper document to a new buyer.
ANSWER: D
79. The following transport document is acceptable under a letter of credit.
A. house air waybill
B. house bill of ladin g.
C. warehouse receipt.
D. tramp bill of lading .
ANSWER: A
80. According to the Multimodal Transportation of Goods Act, a multimodal transport document cannot
be.
A . a bearer instrument.
B. an order instrument.
C. a non-negotiable inst rument.
D. none of the above.
ANSWER: D
81. Air waybill is prepared in.
A. three originals.
B. quadruplicate.
C. as many copie s as required by the exporter.
D. one original only.
ANSWER: A
82. Incoterms cover.
A. trade in intangi bles.
B. ownership and trans fer rights.
C. contracts of carriage
D. rights and obligation s of parties to contract of sales.
ANSWER: D
83. The following incoterms cannot be used for contracts providing for transportation of goods by sea.
A. CFR.
B. DDP.
C. DES.
D. DEQ.
ANSWER : B
84. The incoterm providing least responsibility to seller is.
A. EXW.
B. DDP.
C. FOB.
D. CIF.
ANSWE R: B
85. The group of incoterms under which the sellers responsibility is to obtain freight paid transport
document for main carriage is.
A. E terms.
B. C terms.
C. D terms.
D. F terms.
ANSWER: B
86. The incoterm should indicate the place of shipment in case of.
A. F terms
B. E terms .
C. C terms.
D. Dterms.
ANSWER: A
87. Incoterm is specific about the responsibility for marine insurance in case of.
A. FOB and EXW.
B. FOB and CIF.
C. CIF and CIP.
D. CPT and DD P.
ANSWER: C
88. The importer under FOB terms requests the exporter to book shipping space on vessel convenient to
the exporter. The exporter.
A. is bound to book the shipping space as it is his duty under FOB term.
B. Should refuse the request as it is the duty of the importer to book the shipping space.
C. may accept the request, but cannot recover the additional cost from the importer.
D. may accept and execute the request at the cost of the importer.
ANSWER: D
89. The group of terms arranged in order of increasing responsibility of exporter is.
A. C, D, E and E terms.
B. D, E, F and C terms.
C. E, F, C and D terms.
D. F, C, E and D terms.
ANSWER: C
90. The price quoted by the seller for the product.
A. Will vary depending upon the incoterm chos en.
B. is irrespective of the incoterm.
C. Will be the base price; the effe ct of incoterm to be added later.
D. none of the above.
ANSWER: A
91. Adoption of incoterms is.
A. compulsory for all intern ational contracts.
B. compulsory for all letter of credit transacti ons.
C. optional for the parties to the contract.
D. mandatory for transactions with Europ e.
ANSWER: C
92. Packing credit is.
A. an advance mad e for packing goods for export.
B. pre-shipment finance for export.
C. a priority sector advance.
D. none of the above.
ANSWER: B
93. The amount of packing credit should not normally exceed.
A. the local cost of manufacture for the exporter.
B. FOB value of the export contract.
C. CIF value of the export contract.
D. The cost of manufacture or the F OB value of the export contract, whichever is lower.
ANSWER: D
94. The following person is not eligible for packing credit.
A. merchant exporter.
B. a person making de emed exports.
C. sub-supplier to manufacturer expo rter.
D. supplier to sub-supplier to manufactur er exporter.
.
ANSWER: D
95. The running account facility for packing credit is available for.
A. status holders only.
B. exporters of specifi ed goods.
C. exporters with good track rec ord.
D. exporters with orders above Rs.10 0 crores.
ANSWER: C
96. The advantage to the exporter of running account facility of packing credit is.
A. production of letter of credit or firm order is completely waived.
B. the period of facility need not be adhered to.
C. production of letter of credit or firm order is waived immediately; they must be produced within
reasonable time.
D. the rate of i nterest is low.
ANSWER: C
97. The exemption from the condition that packing credit should not exceed domestic cost of production is
not waived for.
A. commodit y eligible for duty drawback.
B. commodity imported under advance lic ence.
C. HPS groundnuts.
D. agro based produ cts like tobacco.
ANSWER: B
98. The substitution of commodity/fresh export for adjustment of packing credit is not available for.
A. advance against sensitive commodities.
B. transactions of sister/associate/group co ncerns.
C. exporters availing running account facility.
D. none of the above.
ANSWER: B
99. Normally the maximum period for which packing credit advances are made in.
A. 90 days.
B. 135 days .
C. 180 days.
D. 360 days.
ANSWER: C
100. A per-shipment advance is not expected to be adjusted by .
A. proceeds of export bill.
B. export incentives.
C. post shipment fina nce.
D. local funds.
ANSWER: D
101. A packing credit was granted against an export order, but the export could not take place.
A. It should be reported to Reserve Bank of India.
B. The exporter should be blacklisted
C. Claim should preferred with ECGC .
D. Interest at domestic rate should be ch arged on the advance from the date of advance.
ANSWER: D
102. For direct exporters, the packing credit should normally be granted only against.
A. a letter of credit.
B. firm order.
C. export licen ce.
D. a letter of credi t or firm order.
.

ANSWER: D
103. For packing credit in rupees, the interest for the period up to 180 days is chargeable at.
A. BPLR minus 2.5%.
B. BPLR minus 3%.
C. not exceeding BP LR minus 2.5%.
D. . not less than BPLR minus 2.5%.
ANSWER: C
104. Pre shipment Credit in Foreign Currency is available for a period of.
A. maximum 180 days.
B. minimum 180 days.
C. maximum 270 days.
D. maximum 360 days.
ANSWER: A
105. Pre-shipment Credit in Foreign Currency can be availed in.
A. US dollar only.
B. The currency of export only.
C. The currency of import only.
D. any permitted currency.
ANSWER: D
106. Advising of letter of credit will be done by the bank.
A. only to its customers.
B. to any person provide d the letter of credit is issued by its correspondent bank.
C. free of charge to its customers and for a cost to others.
D. . to any beneficiary and from any issuing bank.
ANSWER: B
107. The following is not a post-shipment advance.
A. Negotiation of bill under letter of credit.
B. Purchase of foreign bill.
C. Advance against bill for collection.
D. None of the above.
ANSWER: D
108. A bill drawn under the letter of credit contains discrepancies.
A. the bank should refuse to negotiate the documents.
B. take the bill on collection basis only.
C. must negotiate irrespective of the dis crepancies.
D. may purchase it or take it for collection, but sho uld not refuse to handle the bill.
ANSWER: D
109. The following is a must for an exporter
A. IEC number.
B. Exporters cod e number allotted by Reserve Bank.
C. A minimum local turnover of Rs 50 lakhs.
D. an export licence.
ANSWER: A
110. An export to Pakistan by post parcel should be declared in.
A. GR form.
B. EP form.
C. PP form.
D. GRX For m.
ANSWER: C

111. Realization of export proceeds in a period of 15 months from the date of shipment is allowed in the
case of.
A. all consignment exports.
B. exports on deferred paym ents terms.
C. exports to Nepal.
D. exports to Indian owned warehouses in Europe.
ANSWER: D
112. Generally, on exports the proceeds are to be realized within.
A. six months from the date of shipment.
B. one year from the date of shipment.
C. six months from the date of negotiat ion of documents.
D. one year from the date of negotiation of documents.
ANSWER: A
113. Availment of post shipment credit in foreign currency is compulsory for.
A. exports who have not availed packing credit.
B. all exporters who have availed packing credit .
C. exporters who have availed pre-shipment cred it in foreign currency.
D. none.
ANSWER : C
114. Post-shipment credit in foreign currency can be availed by.
A. use of on-shore foreign currency funds.
B. banks raising foreign currency funds ab road.
C. exporters arranging funds abroad.
D. Any of the above methods.
ANSWER: D
115. Advance remittance from the importer can be accepted by an exporter in India provided
A. the advance does not carry interest payment.
B. shipment will be made only after one year fro m the date of receipt of advance payment.
C. the advance does not exceed 25% of the export value.
D. the rate of interest, if payable, does not exceed Libor p lus 1%.
ANSWER: D
116. A bank may refuse to accept an export bill for collection.
A. when the customer has sufficient limits under bill discoun ting facility.
B. when the documents have discrepancies as compared to letter of credit requirements.
C. when the documents are received from a non-customer.
D. none of the above.
ANSWER: C
117. If the importer refuses to accept the bill drawn on him the exporter.
A. should reimport the goods.
B. must find an alternate buye r.
C. may reimport or sell to altern ate buyer depending upon commercial expediency.
D. sue the importer.
ANSWER: C
118. If export cargo is lost in transit, the exporter should.
A. claim under marine insurance.
B. claim with ECGC
C. seek write off of p ost-shipment credit.
D. forseek refund of customs duty.
ANSWER: A
119. Deferred payment export is a form of.
.
A. sellers credit.
B. buyers credit.
C. mutual credit.
D. market credit.
ANSWER: A
120. Buyers credit takes the form of.
A. exporters bank financing the bu yer directly.
B. exporters bank financing the buyers bank
C. both (a) and (b) above.
D. neither (a) nor (b) abov e.
ANSWER: C
121. Deferred payment exports refer to contracts where.
A. payment is to be made by the importer over 3 years and above.
B. payment is to be made by the importer after 6 months from the date of shipment.
C. the export for which the exporter avails deferred payment credit
D. lending in international markets on long-term basis.
ANSWER: B
122. Working Group for approval of project exports does not include.
A. Reserve Bank of India.
B. Financing bank.
C. Exim bank.
D. DGFT.
ANSWER: D
123. For project exports fulfilling norms for period of credit, in principle sanction can be given by.
A. the financing bank.
B. Exim bank.
C. The financin g bank for contracts worth up to Rs 25 crores and Exim bank for contracts worth up to
RS 100 crores.
D. the financ ing bank for contracts worth up to Rs 100 crores and Exin bank for contracts worth up to
Rs 25 crores.
ANSWER: C
124. Export of services on deffered payment terms requires clearance of the Working Group for.
A. contracts beyond Rs 5 crores.
B. all contracts.
C. contracts bey ond 20 crores
D. contracts beyond 10 crores .
ANSWER: B
125. In case of failure of the exporter, the liability of the bank which has issued the performance guarantee
is to.
A. c ompel the exporter to fulfil his obligation.
B. find alternative contractor who can execute the contract.
C. financially compensate the beneficiary up to the value of the contract.
D. financially compensate the beneficiary up to the guaranteed amount.
ANSWER: D
126. Advance payment guarantee assures.
A. the beneficiary that the exporter will make advance payments.
B. the exporter that the importer will make advance payments.
C. the importer to refund the money he has advanced to the exp orter, if the latter fails.
D. the exporter that the bank will extend credit for the contract
ANSWER: C
.

127. Indian parties are prohibited from making investment in foreign entity engaged in the business of.
A. real estate.
B. real estate or banking.
C. real estate or banking or agriculture.
D. none of the above.
ANSWER: B
128. Export Credit Guarantee Corporation(ECGC) policies do not cover risk against.
A. buyers protracted default to pay for the goods.
B. war in buyers country.
C. buyers failure to obtain necessary import licence or exchange authorization from authorities in his
country
D. ca ncellation of export licence. Answer:C
ANSWER: C
129. The standard policy of ECGC covers risk of.
A. buyers failure to obtain import licence.
B. cancellation of import license in the bu yers country.
C. insolvency of the collecting bank.
D. all the above.
ANSWER: B
130. The standard policy of ECGC protects loss to the extent of.
A. 90% for political risk and 60% for commercial risk.
B. 90% for both political and commercial risks.
C. 60% for political risk and 90% for commerci al risk.
D. 60% for both political and commercial risks.
ANSWER: B
131. The maximum amount of claim against an individual buyer that ECGC will accept under its standard
policy issued to an exporter is known as.
A. maximum liability.
B. credit limit.
C. individual li mit.
D. there is no such ceiling.
ANSWER: B
132. The standard policy of ECGC is issued.
A. on whole turnover for 12 months.
B. on whole turnover basis for 24 mo nths.
C. against each consignment separately.
D. on monthly basis.
ANSWER: B
133. The Small Exporters Policy of ECGC is issued to.
A. any exporter in the SSI category.
B. any exporter who is exempt from excise duty.
C. an exporter with an anticipated turnover in the next 12 months not exceeding 1 crore.
D. an exporter with an anticipated turnover in the next 12 months not exceeding 25 lakhs .
ANSWER: D
134. Which of the following information about the Small Exporters Policy is wrong?
A. Risk coverage is 95% for commercial risk and 100 % for political risk.
B. The policy is issued for a period of 12 months.
C. The premium payable is lower than under the s tandard policy.
D. All the above.
ANSWER: D
.
135. Under its maturity factoring facility ECGC offers which of the following services?
A. Credit protection and sales ledger maintenance.
B. Credit protection, sales ledger maintenance and collection.
C. Financing exports.
D. Invoice discountin g and sales ledger maintenance.
ANSWER: B
136. The maturity factoring of ECGC protects the exporter against.
A. failure of the buyer to obtain authority as per the regulations o f his country.
B. risk normally covered by General Insurers.
C. failure of the buyer to pay.
D. none of the above.
ANSWER: C
137. Cover under the guarantee of ECGC is available to.
A. the bank against the default of the importer.
B. the bank against the default of the exporter.
C. the exporter against the failure of the export er.
D. the bank and the exporter against the failure of the buyer.
ANSWER: B
138. Pre-shipment advances granted in excess of the FOB value of contract in anticipation of duty
drawback can be covered under.
A. Packing Credit Guarantee.
B. Whole Turnover Packing C redit Guarantee.
C. Export Production Finance Guarantee.
D. Export Finance Guarantee.
ANSWER: C
139. . Export Finance(Overseas Lending) Guarantee of ECGC protects.
A. banks providing foreign currency loans to their correspondents.
B. banks providing foreign currency loans to contractors executing projects abroad.
C. overseas branches financing Indian exports.
D. none of the above.
ANSWER: B
140. Post-shipment advances against export incentives can be covered under.
A. Post-shipment Export Credit Guarantee.
B. Whole Turnover Post-shipment Credit G uarantee.
C. Export Production Finance Guarantee.
D. Export Finance Guarantee.
ANSWER: D
141. The rate of premium payable to ECGC for eligible advances covered under Whole Turnover Packing
Credit Guarantee is.
A. 6 paise per Rs 100 p.a. on daily average products.
B. 6 paise per Rs 100 p.m. on monthly average produ cts.
C. 6 paise per Rs 100 p.m. on yearly average products.
D. 6% per annum.
ANSWER: A
142. The risk to a bank in confirming a letter of credit is covered by ECGC under
A. Export Performance Guarantee.
B. Transfer Guarantee.
C. Export Finance Gua rantee.
D. none of the above.
ANSWER: B

143. Under Exchange Fluctuation Risk Cover, the ECGC provides cover.
A. to the exporters on deferred payment terms against exchange fluctua tions.
B. to banks for advances made in foreign currency to importers abroad.
C. to banks against advances for deferred payments exports.
D. none of the above.
ANSWER: A
144. . In case of exports to countries placed by ECGC in its restricted cover categories.
A. the risk will be covered by ECGC only if specific applications from exporters are approved by them.
B. The corporation will not cover the exports.
C. the risk will be covered on intimation to EC XGC.
D. none of the above.
ANSWER: A
145. The Board of Trade is.
A. a wing of the board of Directors in companies engaged in foreign trade.
B. the authority that appraises foreign investment in India.
C. a consultative and advisory body for the Government if India on foreign trade policy.
D. an organization of exporters from India.
ANSWER: C
146. Commodity Boards do not differ from Exports Promotion Councils in respect of the following.
A. Commodity Boards deal with problems relating to production also.
B. . Commodity Board is a statutory body.
C. Commodity Board covers a specific pro duct.
D. none of the above.
ANSWER: C
147. Which of the following organization does not specialize in training activity?
A. Indian Institute of Foreign Trade.
B. Indian Trade Promotion Organisa tion
C. Indian Institute of Packaging.
D. none of the above.
ANSWER: B
148. The institution specializing in organizing fairs and exhibitions is.
A. Indian Institute of Foreign Trade.
B. Federation of Indian Export Orga nisations.
C. Indian Trade Promotion Oraganisations.
D. none of the above.
ANSWER: C
149. Market Access Initiative is not available for.
A. conducting market studies.
B. participation in internationa l trade fairs.
C. testing charges for engineering products .
D. none of the above.
ANSWER: D
150. Market Development Assistance is available to.
A. exporters with annual turnover up to Rs 10 cror es.
B. exporters with annual turnover up to Rs 5 crores.
C. exporters with annual turnover above Rs 10 crore s.
D. all exporters.
ANSWER: A
.