CAIIB 2020 Advanced Bank Management Mock Tests Set 13

As per RBI guidelines, a ‘wilful default’ would be deemed to have occurred if which of the following events is noted? I) The unit has defaulted in meeting its payment/repayment obligations to the leader even when it has the capacity to honour the said obligations. II) The unit has defaulted in meeting its payment/repayment obligations to the leader and has not utilized the finance from the leader for the specific purposes for which finance was availed of but has diverted the funds for other purposes. III) The unit’s promotors have increased their salary YoY but defaulted on the repayment schedule. IV) The unit has defaulted in meeting its payment/repayment obligations to the leader and has siphoned off the funds so that the funds have not been utilised for the specific purpose for which finance was availed of, nor are the funds available with the unit in the form of other assets.


Options are :

  • Only I,II
  • Only I,II,III
  • Only I,II, IV (Correct)
  • All of the above viz. I,II,III,IV

Answer :Only I,II, IV

Which of the following is not correct regarding term loans by the banks? .


Options are :

  • Asset-liability matching is an important consideration in term financing
  • Installment of the term loan, payable within one year is considered as a current liability
  • Repayment of a term loan can be in equated monthly installments
  • The current ratio is the most important ratio in the appraisal of a term loan (Correct)

Answer :The current ratio is the most important ratio in the appraisal of a term loan

CAIIB 2020 Advanced Bank Management Mock Tests Set 12

Project loans can be given by the bank to .


Options are :

  • Only corporates
  • Only corporates and partnership firms
  • Only corporate, partnership firms and societies (Correct)
  • Any business entity

Answer :Only corporate, partnership firms and societies

In exceptional cases, banks provide term loans for current assets also. This is called ________


Options are :

  • Working Capital term Loan (WCTL). (Correct)
  • Letter of Credit
  • Loan against current assets
  • Business Loan

Answer :Working Capital term Loan (WCTL).

Which of the following statements is not correct for project appraisal?


Options are :

  • Examination of technical feasibility is carried out
  • The contribution of promoters forms a part of the economic appraisal
  • Promoters' background is part of the management appraisal
  • The capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of the economic appraisal. (Correct)

Answer :The capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of the economic appraisal.

CAIIB 2020 Retail Banking Mock Tests Set 17

Which of the following is not a purpose of credit monitoring?


Options are :

  • To ensure end use of the funds by the borrower
  • To detect any deterioration in the security charged to the bank
  • To comply with the guidelines of the RBI (Correct)
  • To ascertain that the business continues to run on the projected lines

Answer :To comply with the guidelines of the RBI

Which of the following is not a tool available to check the bank for credit monitoring?


Options are :

  • Sending regular reminders to the borrower (Correct)
  • Periodic visits to the business place for inspection
  • Analysis of financial statements
  • Examine conduct of borrower's account

Answer :Sending regular reminders to the borrower

Which of the following is not a method for detecting the wrong mention of receivables in a stock statement submitted by the borrower?


Options are :

  • Analysis of financial statements (Correct)
  • Cross check from the balance sheet figure
  • Receivables audit
  • Inspection of books of account

Answer :Analysis of financial statements

CAIIB 2020 Retail Banking Mock Tests Set 18

Which of the following is not a danger sign about the direction of the business of the borrower? .:


Options are :

  • Devolvement of L Cs, invocation of Bank Guarantees
  • Demand for a higher limit
  • Delays in submission of stock/receivables statements
  • Return of cheques or bills (Correct)

Answer :Return of cheques or bills

Which of the following is not an unsatisfactory sign in the conduct of the account of the borrower?


Options are :

  • Delay in payment of interest or installments,
  • routing of transactions with some other bank
  • Frequent over drawings
  • High turnover (Correct)

Answer :High turnover

Which of the following is not the purpose of credit audit? .:


Options are :

  • Improvement in the quality of credit portfolio
  • Review sanction process and compliance status of large loans
  • Feedback on regulatory compliance
  • Stock inspection (Correct)

Answer :Stock inspection

CAIIB 2020 Advanced Bank Management Mock Tests Set 1

Purpose of appointing bank’s nominee on the company’s board of borrowing company is:


Options are :

  • To keep a tab on the important decisions of the board (Correct)
  • To be a part of the management
  • To guide the company for better working
  • To safeguard the securities charged to the bank

Answer :To keep a tab on the important decisions of the board

As per RBI guidelines, a ‘Diversion of Funds’ would be deemed to have occurred if which of the following events is noted? I) utilization of short-term working capital funds for long-term purposes not in conformity with the terms of sanction. II) deploying borrowed funds for purposes/activities or creation of assets other than those for which the loan was sanctioned. III) routing of funds through any bank other than the leader bank or members of consortium without prior permission of the lender. IV) shortfall in deployment of funds vis-à-vis the amounts disbursed/drawn and the difference not being accounted for


Options are :

  • Only I,II
  • Only I,II,III
  • Only I,II, IV
  • All of the above viz. I,II,III,IV (Correct)

Answer :All of the above viz. I,II,III,IV

Which of the following is not a credit risk? .


Options are :

  • The unwillingness of a customer to meet his commitment relating to a financial transaction with the bank
  • The inability of the customer to reimburse the bank in case of invocation of a guarantee or devolvement of an LC
  • The inability of a customer to meet his commitment relating to a financial transaction with the bank
  • The loss to the bank due to fraud (Correct)

Answer :The loss to the bank due to fraud

CAIIB 2020 Bank Financial Management Mock Tests Set 11

Which of the following is an external factor affecting credit risk? .


Options are :

  • Government policies (Correct)
  • Faulty loan and repayment structuring
  • Overexposure (concentration) of credit to a particular segment
  • Lack of an efficient recovery machinery

Answer :Government policies

Which of the following is correct course of action a bank follows in case of a stressed asset?


Options are :

  • Exit from the account ,Rescheduling/Restructuring, Rehabilitation ,Compromise ,Legal action ,Write off. (Correct)
  • Rescheduling/Restructuring, Rehabilitation ,Compromise ,Legal action ,Write off, Exit from the account.
  • Exit from the account , Rehabilitation ,Compromise , Rescheduling/Restructuring ,Legal action ,Write off.
  • Exit from the account ,Rescheduling/Restructuring, Rehabilitation , ,Legal action ,Write off, Compromise.

Answer :Exit from the account ,Rescheduling/Restructuring, Rehabilitation ,Compromise ,Legal action ,Write off.

When the purchaser of a fixed assets does not pay to the supplier immediately, but pays according to an agreed repayment schedule, and the bank guarantees this repayment, the guarantees is called ______


Options are :

  • Deferred Payment Guarantee (Correct)
  • Letter of Credit
  • Conditional Guarantee
  • Post Shipment Guarantee

Answer :Deferred Payment Guarantee

CAIIB 2020 Bank Financial Management Mock Tests Set 13

Which of the following statement is correct w.r.t The Insolvency and Bankruptcy Code, 2016 (IBC)? I) IBC has created a single law for insolvency and bankruptcy. II) The process may be initiated by either the debtor only. III) The Insolvency and Bankruptcy Board of India has been established as the regulator. IV) There are two separate tribunals to oversee the process, (i) the National Company Law Tribunal for Companies and Limited Liability Partnership firms; and (ii) the Debt Recovery Tribunal for individuals and partnerships.


Options are :

  • Only I,II
  • Only I,II,III
  • Only I,III, IV (Correct)
  • All of the above viz. I,II,III,IV

Answer :Only I,III, IV

Which of the following is not correct regarding term loans by the banks?


Options are :

  • Asset-liability matching is an important consideration in term financing
  • Installment of the term loan, payable within one year is considered as current liability
  • Repayment of a term loan can be in equated monthly installments.
  • The current ratio is the most important ratio in the appraisal of a term loan (Correct)

Answer :The current ratio is the most important ratio in the appraisal of a term loan

Which of the following is not a purpose of credit monitoring


Options are :

  • To ensure end use of the funds by the borrower
  • To detect any deterioration in the security charged to the bank
  • To comply with the guidelines of the RBI (Correct)
  • To ascertain that the business continues to run on the projected lines

Answer :To comply with the guidelines of the RBI

CAIIB 2020 Advanced Bank Management Mock Tests Set 3

Which of the following are common guidelines/instructions for lending to MSME sector? I) Banks have to mandatorily acknowledge all loan applications II) Banks are mandated not to accept collateral security in the case of loans up to Rs. 10 lakh extended to units in the MSE sector. III) Government of India, Ministry of Micro, Small and Medium Enterprises has launched Credit Linked Capital Subsidy Scheme (CLSS) for Technology Upgradation of Micro and Small Enterprises for loans up to ?. 1 crore.


Options are :

  • Only I.
  • Only II
  • Only I,II
  • All of the above viz. I,II,III (Correct)

Answer :All of the above viz. I,II,III

Which of the following is not a method of detecting wrong mention of receivables in a statement submitted by the borrower?


Options are :

  • Analysis of financial statements (Correct)
  • Cross check from the balance sheet figure
  • Receivables audit
  • Inspection of books of account

Answer :Analysis of financial statements

Which of the following is not a danger sign about the direction of the business of the borrower?


Options are :

  • Devolvement of LCs, invocation of Bank Guarantees
  • Demand for a higher limit
  • Delays in submission of stock/receivables statements
  • Return of cheques/bills (Correct)

Answer :Return of cheques/bills

CAIIB 2020 Retail Banking Mock Tests Set 2

A branch sanctions ?1 core loan to a borrower, which of the following risks the branch is taking- 1)Liquidity risk 2)Interest rate risk 3)Market risk 4)Credit risk 5)Operational risk


Options are :

  • 1,2 and 3 only
  • 1,4 and 5 only
  • 1,2,4 and 5 only (Correct)

Answer :1,2,4 and 5 only

For computation of Adjusted Net Bank Credit, following components are considered – (1) Bank Credit in India; (2) Bills Rediscounted with RBI and other approved Financial Institutions; (3) Bonds/debentures in Non-SLR categories under HTM category+ other investments eligible to be treated as priority sector +Outstanding Deposits under RIDF and other eligible funds with NABARD, NHB and SIDBI on account of priority sector shortfall + outstanding PSLCs; (4) Eligible amount for exemptions on issuance of long-term bonds for infrastructure and affordable housing; (5) Eligible advances extended in India against the incremental FCNR (B)/NRE deposits, qualifying for exemption from CRR/SLR requirements. Which of the following is correct regarding calculation of ANBC?


Options are :

  • 1–2+3-4-5 (Correct)
  • 1+2+3-4-5
  • 1-2+3+4-5
  • 1-2-3+4+5

Answer :1–2+3-4-5

Which of the following is not part of agricultural advance?


Options are :

  • Loans for setting up of Agriclinics and Agribusiness Centres.
  • Bank loans to Primary Agricultural Credit Societies (PACS), Farmers’ Service Societies (FSS) and Large-sized Adivasi Multi-Purpose Societies (LAMPS) for on-lending to agriculture
  • Loans sanctioned by banks to MFIs for on-lending to the agriculture sector.
  • Outstanding deposits under SEDF and other eligible funds with SIDBI on account of priority sector shortfall. (Correct)

Answer :Outstanding deposits under SEDF and other eligible funds with SIDBI on account of priority sector shortfall.

CAIIB 2020 Advanced Bank Management Mock Tests Set 5

Which of the following is not part of Micro, Small and Medium Enterprises under priority sector advance?


Options are :

  • Loans to entities involved in assisting the decentralized sector in the supply of inputs to and marketing of outputs of artisans, village and cottage industries.
  • Loans to co-operatives of producers in the decentralized sector viz. artisans, village and cottage industries.
  • Loans sanctioned by banks to MFIs for on-lending to MSME sector.
  • Outstanding deposits with SIDBI on account of priority sector shortfall.
  • None of these (Correct)

Answer :None of these

In term loans,Appraisal of Managerial Aspects includes answers to which of the following questions-


Options are :

  • the borrower is relying heavily on term loans
  • What is the financial stake of promoters in the project?
  • What is the form of business organisation?
  • all of the above viz. I,II,III,IV (Correct)

Answer :all of the above viz. I,II,III,IV

Which of the following is NOT a step of Project Appraisal?


Options are :

  • Appraisal of Managerial Aspects
  • Technical Appraisal
  • Economic Appraisal
  • Social Appraisal (Correct)

Answer :Social Appraisal

CAIIB 2020 Advanced Bank Management Mock Tests Set 5

Debtors Velocity Ratio indicates:


Options are :

  • proportion of credit sales to annual sales
  • the proportion of credit sales to fixed assets
  • average time-lag between sales and the collection of debts (Correct)
  • average time taken in effecting sales to customers
  • none of the above

Answer :average time-lag between sales and the collection of debts

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