CAIIB-BFM MEMORY RECALLED MCQ+CASE STUDY HELD ON 26.12.

2020
Q. NO 1. Foreign Currency Translation Reserve ( FCTR) arising due to translation of financial statements of a
banks foreign operations to the reporting currency are shown in :
a) Reserve & surplus in the balance sheet of the bank
b) Loss & surplus reserve in the balance sheet of the bank
c) Assets side in the balance sheet of the bank
d) Liabilities side in the balance sheet of the bank.

Q. NO 02. In a Banking Company fails to maintain the required amount of SLR, it shall be liable to pay to RBI
in respect of that default, the penal interest for next succeeding working day at the rate of...
a) Two percent per annum above the bank rate of the shortfall.
b) Three percent per annum above the bank rate of the shortfall.
c) Five percent per annum above the bank rate of the shortfall.
d) None of the above.

[Link] 03. Liquidity Risk included which type of Risk:

a) Funding Risk, Time Risk & Call Risk
b) Funding Risk, Interest Risk & Call Risk
c).Funding Risk, Market Risk & Call Risk
d) Funding Risk, Time Risk only.

[Link] 04. Stop loss, exposure limit and monitor is the part of which office:
a).Front Office
b). Mid Office
c). Back Office
d). Head Office level

[Link] [Link] facility for NRI :

a). 50,000/- 2 Week
b). 50,000/- 3 Week
c) 1,00,000/- 2 Week
d). 50,000/- 1 Month

[Link] 06 (T.S.A) The Standardized Approach of Operation Risk which of the not included:
A) It has 8 Bita factor
B) Retail has Lower Bita factor as compare to commercial Banking
C) Bita factor varies from 12% to 18 %
D) It cover previous five year loss data.

[Link] 07. Crystallization done by bank on:

A) 30 days
B) 15 days
C) 60 days
D) Bank discretion.

[Link] 08. Under supplier credit scheme, the EXIM bank offers:
a. credit to Indian exporters for manufacturing
b. credit to Indian exporter for offering deferred credit to overseas buyers
c. credit to overseas importers to import from Indian exporters
d. credit to Indian importers to import from other countries.

[Link] 09 Temporary Asset to Volatile Liabilities Ratio<1 indicates

Select the correct option
A) Possibility of a liquidity problem.
B) Possibility of currency problem.
C) Possibility of asset problem
D) Possibility of liability problem

[Link] 10. Which of the following are among the basic contractual or relationship obligations that bank must meet:
A) New loan Demand.
B) Innovation of Bank Guarantee.
C) Deposit withdrawals
D) Accepted deposit of all maturities.
Select the correct option
a) a,b and c
b) b,c and d
c) a,b and d
d) a,c and d

[Link] 11. ECGC published country risk classification:

a. Quarterly
b. Monthly
c. Half-Yearly
d. Yearly

[Link] 12. M1 includes: currency with circulations+........+RBI Deposit.

a).Post office deposit.
b)Term Deposit.
c)Demand deposits in banks
d).Term deposit in bank

[Link] 13. Liquidity coverage ratio period for:

a).Total net cash outflows over the next 30 calendar days
b).Total net cash outflows over the next 15 calendar days
c).Total net cash outflows over the next 60 calendar days
d). Total net cash outflows over the next 90 calendar days

[Link] 14. Advance Tax Pay is:

a) Investment
b). Borrowing
c). Contingent Liabilities and Provisions.
d). Loan and Advances

[Link] 15. Altman Z-score choose correct:

a). Higher Z score, Lower Default Possibility
b). Higher Z score, Higher Default Possibility
c). Lower Z score, Higher Default Possibility
d). Lower Z score, Lower Default Possibility
Match it a) 1&2 b) 1&2 c) 1&4 d) 3&4

[Link] 16. Central Repository of Information on Large Credits (CRILC) :

a). Central Repository of Information on Large Credits, collect data
b). Central Repository of Information on Large Credits, store data
c). Central Repository of Information on Large Credits, send data to secondary Market
d). Central Repository of Information on Large Credits, discriminate credit data to lender.

[Link] 17. In TIER-I, Revaluation Reserve is at the discount of:

a). 55 % Discount
b). 45 % Discount
c). 50 % Discount
d). 100% % Discount

[Link] 18. Which is not Hybrid Debt Instrument:

a). PCPS
b). RNPCS
c). RSPCS
d). Ordinary Shares

[Link] 19. What is correct regarding TIER-II

a). It is called “Going concern Capital
b). Revelation Reserve included in it.
c). It is the core capital of the Bank.
d). Hybrid Hybrid Debt Instrument & Sub-ordinate debit included in it.

[Link] 20. Which one of the part of TIER-I

a).CET-1
b). PDS
c). Capital Reserve
d). All

[Link] 21. 'Held to Maturity (HTM) is a part of:

a). Trading Book
b). Banking Book
c). Capital Book
d). Contingent liability of the bank.

[Link] 22. Which Bucket matching with risk portfolio percentage: 5%, 10%, 15%
a) Today
b). 2-7 days
c). 8-14 days
d). 15-28 days

[Link] 23. Which is not money market instrument:

a). Term Money
b). CD
c). CP
d). Convertible Bond

[Link] 24. Demand and supply of money rates decided by:

a).Fixed Exchange Rate.
b)Floating Exchange Rate.
c).Fixed and Floating Exchange Rate.
d). Market decided it own rates.

[Link] 25. NPA provisioning Norms decided by:

a). Bank own Policy
b). RBI
c). Globally
d) BASEL

[Link] 26. SUPERVISORY REVIEW PROCESS : Principle No 3 what says:-

a) 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.
b)Supervisors should expect banks to operate above the minimum regulatory capital ratios and should have the ability to
require banks to hold capital in excess of the minimum.
c) Supervisors should review and evaluate banks' internal capital adequacy assessment and strategies, and ability to monitor/
ensure their compliance with regulatory capital ratios.
d) 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 the bank. It should require remedial action if capital is not
maintained or restored.

[Link] 27. A consignment has beet shipped by the exporter on Jan 09, 2019. The insurance policy is dated Jan
12, 2019 but it provides that the insurance cover is effective from January 09, 2019

Select the correct option:

a) documents can be accepted for negotiation.
b) documents can not be accepted as insurance policy is dated subsequent to date of shipment.
c) documents can be accepted under reserve.
d) UCPDC does not make any provision on this aspect. It is discretion of the negating bank.

[Link] 28. In a Banking Company fails to maintain the required amount of SLR, it shall be liable to pay to RBI
in respect of that default, the penal interest for that day at the rate of...
a) One percent per annum above the bank rate of the shortfall.
b) Two and half percent per annum above the bank rate of the shortfall.
b) Three percent per annum above the bank rate of the shortfall.
c) Five percent per annum above the bank rate of the shortfall.

[Link] 29. Level 1 assets can be included in the stock of HQLA without limit and Level 2 asstes can only
comprise 40% of the stock of HQLA. Of this, level 2B asstes can only comprise of ----------of stock of HQLA.
a) 15 %
b) 30 %
c) 45 %
d) 50 %

Q. NO 30. Calculate Leverage Ratio: formula

a) Leverage Ratio: RSA/(Tier-I+Tier-II)
b) Leverage Ratio: RSA/RSA/Equity
c) both
d) None of the above.

Q. NO 31. An NRI holding an International Credit Card issued by an Authorised Dealer can settle the
transaction through card out of balances held in his -------------

a) FCNR
b) NRE
c) NRO
d) EEFC
select the correct option from the above following:
a) a, b, c
b) b, c, d
c) a, b, d
d) a, c, d

Q. NO 32. Cooke Ratio components

a. It included on-balance sheet items
b. It included off-balance sheet items
c. It included both on-balance sheet items and off-balance sheet items
d. None of the above.

Q. NO 33. Which are not Money Market Instrument?

a) REPO
b) CP
c) LAF
d) CMB (Cash Management Bill)

Q. NO 34. Principle of propositioning comes under?

a) Accounting Standard
b) ICAAP
c) Capital adequacy Norms
d) None of These

Q. NO 35. Select the correct option of In the Maturity of Call Option?

a) Strike Price is less than Market Price
b) Strike Price is More than Market Price
c) Strike Price is Equal than Market Price
d) Call option can never be part of Risk

Q. NO 36. A 10 Year bond has modified duration of 4.62. What is the Price Value.
a) 0.462
b) 0.0462
c) 0.44462
d) 46.2

Q. NO 37. Secondary Market Settlement of T-Bills Takes Place through?

a) CRICL
b) CCIL
c) ICRA
d) CARE

Q. NO 38. Beta Factor of Commercial Banking?

a) 18 %
b) 12%
c) 15%
d)- 11%

Q. NO 39. Which capital is called supplementary Capital.

a) Tier-I
b) Tier-II
c) Tier-III
d) None.

[Link] 40. Delivery versus payment (DVP) is a securities industry settlement method that :
a).P1
b). P2
c) P3
d).T+1

[Link] 41. All settlement globally will be settled on:

a)TOM
b).TOD
c).FORWARD
d).None of the above

[Link] 42. As per BASEL-III framework prescribed the following two minimum standards:
a).Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)
b). Liquidity Coverage Ratio (LCR) and CCB
c). Net Stable Funding Ratio (NSFR) and CCCB
d). Net Stable Funding Ratio (NSFR) and CCB

[Link] 43. Minimum amount of certificate of deposit:

a) Rs.1 lac
b). Rs.2 lac
c). Rs.3 lac
d). Rs 5 lac

[Link] 44. ECGC, as per standard policy do not cover:

a)Commercial dispute raised by Bank.
b). Default and insurance for any party
c). Government in buyers country dispute
d). Failure in the expenditure fulfillment T&C.

[Link] 45. What is Settlement Risk:

a) In a financial market transaction one party pays money and receives the instruments.
b) The counter party receives the money and parts with the instrument.
c) If any of the above transacting parties defaults it is known settlement risk.
d) All the above.

[Link] 46. Risk is:

a) Certainties.
b) Uncertainties.
c). Planned
d). Unplanned

CASE STUDIES 1: Money market

Money market is the market where the banks raise and deploy (i.e. borrow & lend) short term funds ranging from one.
day to one year These may be in the form of : (a) Inter-bank money market such as Call money, Notice money and
Term money, where investment are as per the ceiling imposed by RBI:
1. Main player in call money Market:
a. Banks
b. RBI
c. FRIL
d. CCIL

2. Period of one day to 14 days Money Market :

a. Call Money
b. Notice Money
c. Term Money
d. Term Borrowing

3. Commercial bank lending in Notice Money Market is:

a. Not exceeding 100% of capital fund
b. Not exceeding 120% of capital fund
c. Not exceeding 125% of capital fund
d. Not exceeding 25% of capital fund

[Link] lending in call/Notice money market

a) Up to 25% of their NOF
b. Below 25% of their NOF
c. Up to 25% of
d. Up to 225% of their NOF.
 CASE STUDIES 2. Credit Rating:
RATING IN DIFFERENT YEARS
COMPANY YEAR 1 YEAR 2 YEAR 3 YEAR 4
1 AAA AAA AAA AAA
2 A AA A AAA
3 BBB BB A AA
4 B BBB B B
5 C C C C
6 B A D A
7 D D D D
8 BB C c B
9 BBB C B D
10 A B B C

1. Continuously four years how many companies not change their rating:
a. Company 1
b. Company 2
c. Company 5
d. Company 9
a) 1 &2 b) 2 & 3 c). 4 &1 d) 2 & 4

2. How many companies improve their rating in the beginning of two years:

[Link] the 3rd year which rating got maximum no of company? Ans B

4. % same in last year company same rating

CASE STUDIES 3. Letter of credit

Q1. Red clause LC
Q2. Confirmed LC
Q3. Amount 10% + or -
Q4. Beneficiary name asked, which answer is none of these.

CASE STUDIES 4
As per RBI guidelines on ALM, capital and reserves are to be placed in over 5 years bucket, Savings Bank and
Current Deposits may be classified into volatile and core portions.
Savings Bank(10%) and
Current (15%)
Deposits are generally withdraw-able on demand. This portion may be treated as volatile. While volatile portion can
be placed in the time bucket 14days, the core portion may be placed in over 1-3years bucket. The term deposits are to
be placed respective maturity buckets.
Capital—Rs.1180cr,
Reserves—Rs.12000cr,
Current-account—Rs.1000cr,
Saving Bank—Rs.4000cr,
Term deposits 1 month maturity bucket—Rs.400cr, 1to less than 3months maturity bucket Rs.800cr,
3months to less than 6 months maturity bucket—Rs.1200cr,6months to less than12 maturity bucket Rs.2000cr,1year
to less than 3 years maturity bucket—Rs.1200cr, 3yearstolessthan 5yearsmaturitybucket—Rs.600crandabove
5yearsmaturitybucket—Rs.800 cr. Borrowing from RBI—Rs.400cr. Based on the given in formation, answer the
following questions:
01What is the amount of current account deposit thatcanbeplacedin14 days bucket:
a) Rs. 100 cr b) Rs. 150 cr c) Rs. 200 cr d) Nil

02What is the amount of savingbankdepositthatcanbeplacedin14days bucket:

a) Rs. 100 cr b) Rs. 200 cr c) Rs. 300 cr d) Rs. 400 cr

03What is the amount of currentaccountdepositthatcanbeplacedin1-3 years bucket:

a) Rs. 100 cr b) Rs. 400 cr c) Rs. 800 cr d) Rs. 900 cr

04What is the amount of savingbankdepositthatcanbeplacedin1-3 years bucket:

a) Rs. 4000 cr b) Rs. 3600 cr c) Rs. 3200 cr d) Rs. 3000 cr

05What is the total of amount of term deposit that will be placed in various maturity buckets up to less than 12
months;
a) Rs. 2400 cr b) Rs. 2800 cr c) Rs. 3200 cr d) Rs. 4400 cr

Answers: 1-b 2-d 3-d 4-b 5-d

CASE STUDIES 5
Time of buckets Assets Liability
Gap Cumulative gap
1-28 days 800 1000 -200 -200
29daysto 3months 650 550 100 -100
3-6 months 2700 3150 -450 -550
6-12months 450 600 -150 -700
1-3years 150 300 -150 -850
3-5years 450 200 250 -600
Over 5years— 1000 200 800 200
Non-sensitive 300 500 -200 0 Total 6500 6500 0

Using the details given above,answer the following questions

Using the details given above,answer the following questions.

01 if interest rate falls by 25 bps, in the first time bucket, the likely impact on the NII for the bank shall be :
a) +15.50 cr b) +0.50 cr c) Over all impact will be nil d) +0.05or

02 In terms of extant RBI guidelines on ALM, the maximum non-sensitive assets, a bank can have in
percentage to total assets is.
a) 25% b) 10% c) no such restriction by RBI d) 20%—

03 The total rate sensitive assets for the banks is Rs.

a) 6500 b) 6200 c) 6300 d) 6000

04 In rising interest scenario, the bank will have a impact of interest rate changes on NU:
a) favorably b) adverse c) insufficient input d) neutral

Ans.1-b2-c3-b4-a