CAIIB 2020 Bank Financial Management Mock Tests Set 13

Banks are required to formulate policies to achieve which of the following objectives of asset Liability Management II)Loan Quality III)Generating fee income and service charges IV)Control of non-interest operating expenses


Options are :

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

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

At macro-level, Assets Liability Management involves which of the following features- I) Formulation of critical business policies, II) Efficiency allocation of capital III) Designing of products with appropriate pricing strategies. IV) Achieving profitability through price matching while ensuring liquidity by means of maturity matching.


Options are :

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

Answer :Only I,II,III

At micro-level the Assets Liability Management aims at achieving profitability through _____  matching while ensuring _______  by means of maturity matching.


Options are :

  • price, liquidity
  • liquidity, price
  • capital, liquidity
  • capital, price

Answer :price, liquidity

CAIIB 2020 Bank Financial Management Mock Tests Set 14

The main aspects to be addressed under the SRP(Supervisory Review Process), and therefore under the Internal Capital Adequacy Assessment Process (ICAAP), includes: I)The risks that are not fully captured by the minimum capital ratio prescribed under Pillar 1 II)The risks that are not at all taken into account by the Pillar 1 III)The factors external to the bank


Options are :

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

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

Which of the following statements is false?


Options are :

  • Investments in shares and advances to other firms, not connected with the business is included in current assets
  • Investments in shares and advances to other firms, not connected with the business is excluded from current assets
  • Advances to other firms connected with the business included in the loans and advances
  • Investments in shares of other firms is included in “investments” and shown in Balance Sheet at assets side

Answer :Investments in shares and advances to other firms, not connected with the business is included in current assets

If there is an assets of ? 120 in the doubtful-I cat and the realization value of security is ? 100 only, what will be the provision requirement?


Options are :

  • ? 40
  • ? 45
  • ? 50
  • ? 60

Answer :? 45

CAIIB 2020 Bank Financial Management Mock Tests Set 2

Deferred credits will appear on the balance sheet with the


Options are :

  • Assets
  • Liabilities
  • Owner's/Stockholders' Equity
  • None of the above

Answer :Liabilities

Insolvency and Bankruptcy Code 2016, permits banks to push for recovery of money from a company within a period of _______ , with a grace period of a further _______, if majority (i.e.75%) of the creditors agrees.


Options are :

  • 90 days, 15 days
  • 180 days, 90 days
  • 60 days, 15 days
  • 30 days, 15 days

Answer :180 days, 90 days

Which of the following statements is true?


Options are :

  • Taking term loan from bank is treated as revenue receipt and credited to profit and loss account
  • Installment of term loan payable is treated as revenue expenditure and is changed to profit and loss account
  • Installment of term loans payable within 12 months from the date of the balance sheet is classified under current liabilities
  • Installment of term loans payable within 12 months from the date of the balance sheet is classified under secured loans.

Answer :Installment of term loans payable within 12 months from the date of the balance sheet is classified under current liabilities

CAIIB 2020 Bank Financial Management Mock Tests Set 3

The Ratio which throws light on the operating efficiency or effective use of the facilities and resources, are calculated on the basis of:


Options are :

  • Financial data take from profit and loss account
  • Financial data take from profit and loss a/c and balance sheet
  • Financial data are taken from the balance sheet
  • None of these

Answer :Financial data take from profit and loss account

Which one of the following statements does not speak appropriately about networking capital?


Options are :

  • Excess of current assets over current liability is called net working capital (NWC)
  • The greater the amount of net working capital (NWC), the more would be the liquidity of the enterprise
  • The greater the amount of bank borrowing for financing current assets, the more would be the liquidity of the enterprise
  • Networking capital is financed through equity as well as debt sources.

Answer :The greater the amount of bank borrowing for financing current assets, the more would be the liquidity of the enterprise

A company enjoys cash credit account with a bank. It also has a term loan account with o/s balance of ? 15 Crores as on 31-03-2014. The bank has also subscribed to the bonds issued by the borrower company amounting to ? 3 Crores. As on 31-03-2014, the CC account with o/s balance of Rs 1.20 Crs is required to be classified as NPA. There is no default in payment of interest and installment in the term loan and bonds. What will be the amount that will become NPA on account of this company?


Options are :

  • ? 1.20 Crores
  • ? 4.20 Crores
  • ? 16.20 Crores
  • ? 19.20 Crores

Answer :? 19.20 Crores

CAIIB 2020 Bank Financial Management Mock Tests Set 4

The Basal Committee has also laid down which of the following principles in regard to the SRP((Supervisory Review Process) envisaged under Pillar 2: P1: Banks should have a process for assessing their overall capital adequacy in relation to their risk profile and a strategy for maintaining their capital levels. P2: Supervisors should review and evaluate the banks’ internal capital adequacy assessments and strategies, as well as their ability to monitor and ensure their compliance with the regulatory capital ratios. Supervisors should take appropriate supervisory action if they are not satisfied with the result of this process. P3: Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to require the banks to hold capital in excess of the minimum. P4: Supervisors should seek to intervene at an early stage to prevent capital from falling below the minimum levels required to support the risk characteristics of a particular bank and should require rapid remedial action if capital is not maintained or restored.


Options are :

  • Only P1
  • Only P2
  • Only P1,P2,P3
  • All of the above viz. P1,P2,P3,P4

Answer :All of the above viz. P1,P2,P3,P4

When the business is dependent heavily upon borrowed money and trade creditors the situation is called_____:


Options are :

  • Over capitalization
  • Under capitalization
  • High gearing
  • None of these

Answer :Under capitalization

Which of the following action results in a decrease in the total working capital of the firm? (i) Changing the method of packing the product. The new method results in a more attractive packet. The time required for packing one unit of finished goods and the inventory level of packing material remains the same. (ii) Changing the method of depreciation (iii) Decrease in wage rates


Options are :

  • Both i and ii
  • Both ii and iii
  • Both i and iii
  • None of these

Answer :Both i and iii

CAIIB 2020 Bank Financial Management Mock Tests Set 5

The ICAAP comprises a bank’s procedures and measures designed to ensure which of the following aims- (I)An appropriate identification and measurement of risks (II)An appropriate level of internal capital in relation to the bank’s risk profile (III)Application and further development of suitable risk management systems in the bank


Options are :

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

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

The Basel Committee on Banking Supervision has agreed upon which of the following guiding principles on Pillar 3 disclosures- P1: Disclosures should be clear. P2: Disclosures should be comprehensive. P3: Disclosures should be meaningful to users. P4: Disclosures should be vary over time.


Options are :

  • Only P1
  • Only P2
  • Only P1,P2,P3
  • All of the above viz. P1,P2,P3,P4

Answer :Only P1,P2,P3

Banks are required to make Pillar 3 disclosures at least on a half yearly basis, irrespective of whether financial statements are audited, with the exception of which of the following disclosures: I)Liquidity Coverage; II)Credit Risk: General Disclosures for All Banks; and III)Credit Risk: Disclosures for Portfolios Subject to the Standardised Approach.


Options are :

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

Answer :Only II,III

CAIIB 2020 Bank Financial Management Mock Tests Set 6

An account is treated as ‘out of order’ when -


Options are :

  • If the outstanding balance remains continuously in excess of the sanctioned limit/drawing power.
  • In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period.
  • Only b
  • both a and b

Answer :both a and b

Any amount due to the bank under any credit facility is ‘overdue’ if


Options are :

  • it is not paid on the due date fixed by the bank.
  • it is not paid on the due date fixed by court of law.
  • it is not paid on the due date fixed by the state government
  • it is not paid on demand by the bank on any particular day.

Answer :it is not paid on the due date fixed by the bank.

The quantum of working capital to be given to an industrial unit would depend on……


Options are :

  • Sales volume
  • Purchases to be made
  • Operating cycle
  • Current assets needed to execute the projected sales and production levels

Answer :Current assets needed to execute the projected sales and production levels

CAIIB 2020 Bank Financial Management Mock Tests Set 7

Credit spreads tend to widen as:


Options are :

  • the credit cycle improves.
  • economic conditions worsen.
  • broker-dealers become more willing to provide capital.

Answer :economic conditions worsen.

Which of the following statements is correct w.r.t. Loans with Moratorium for Payment of Interest?


Options are :

  • In the case of bank finance given for industrial projects or for agricultural plantations, etc.where moratorium period is available for payment of interest, payment of interest becomes ‘due’ only after the moratorium or generation period is over.
  • In the case of housing loan or similar advances granted to staff members where interest is payable, after recovery of principal, interest need not be considered as overdue from the first quarter onwards.
  • Only a
  • both a and b

Answer :both a and b

A loan granted for short duration crops will be treated as NPA, if the installment of principal or interest thereon remains overdue for _____ crop seasons.


Options are :

  • one
  • two
  • four
  • six

Answer :two

CAIIB 2020 Bank Financial Management Mock Tests Set 1

A loan granted for long duration crop will be treated as NPA, if the installment of principal or interest thereon remains overdue for _____ crop season.


Options are :

  • one
  • two
  • four
  • six

Answer :one

A low Current Ratio may imply………


Options are :

  • Shortage of Working Capital
  • Surplus of Working Capital
  • Sufficient Working Capital
  • Threshold Working Capital

Answer :Shortage of Working Capital

Interest Rate Parity (IRP) implies that:


Options are :

  • Interest rates should change by an equal amount but in the opposite direction to the difference in inflation rates between two countries
  • The difference in interest rates in different currencies for securities of similar risk and maturity should be consistent with the forward rate discount or premium for the foreign currency
  • The interest rates between two countries start in equilibrium, any change in the differential rate of inflation between the two countries tends to be offset over the long-term by an equal but opposite change in the spot exchange rate
  • in the long run real interest rate between two countries will be equal e) Nominal interest rates in each country are equal to the required real rate plus compensation for expected inflation

Answer :The difference in interest rates in different currencies for securities of similar risk and maturity should be consistent with the forward rate discount or premium for the foreign currency

CAIIB 2020 Bank Financial Management Mock Tests Set 10

Scheme for Sustainable Structuring of Stressed Assets is shortly knows as -


Options are :

  • S4A
  • SA4
  • 4SA
  • SSSA

Answer :S4A

Which is not one of the pillars on which the ALM process rests as per RBI Guidelines


Options are :

  • ALM risk management system
  • ALM information system
  • ALM organization
  • ALM process

Answer :ALM risk management system

Responsibility of ALCO of the bank does not include


Options are :

  • According clearance for large value credit proposals
  • Ensuring adherence to limits set by the board
  • Deciding business strategy of the bank on the assets & liabilities
  • Aligning the business with the decided risk management objectives

Answer :According clearance for large value credit proposals

CAIIB 2020 Bank Financial Management Mock Tests Set 11

Comment / Suggestion Section
Point our Mistakes and Post Your Suggestions