FINE008

**Prompt:**

The bank levies a __________ on the unutilized portion of the cash credit limit.

**Options:**

* A. fixed charge
* B. convenience charge
* C. commitment charge
* D. floating charge

**Correct Answer:** C. commitment charge

**Explanation:**

A commitment charge is a fee charged by a bank to a borrower for the unused portion of a
credit facility, such as a cash credit limit. This charge is typically levied as a percentage of
the unused credit limit.**Prompt:**

NABARD was established to have a control over

**Options:**

* A. Reserve Bank of India

* B. Regional Rural Banks
* C. Cooperative bank
* D. None of these

**Correct Answer:** B. Regional Rural Banks

**Explanation:**

NABARD was established as an apex body to oversee and regulate Regional Rural Banks
(RRBs). It provides financial assistance to these banks and supervises their operations to
ensure that they are meeting the needs of rural areas. While NABARD also works with other
financial institutions, its primary focus is on RRBs.**Prompt:**

__________ is calculated as the difference between current and projected credit and deposit
flows.

**Options:**

* A. funding gap
* B. matching gap
* C. duration gap
* D. liquidity gap
**Correct Answer:** A. funding gap

**Explanation:**

A funding gap is the difference between a bank's current and projected credit and deposit
flows. It measures the bank's ability to meet its funding needs in the future. A positive
funding gap indicates that the bank has more credit commitments than available funds, while
a negative funding gap indicates that the bank has more funds than it needs for its credit
commitments.

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Citations: [[1]]([invalid URL removed])Prompt:

In ________ funds are transacted on an overnight basis.

Options:

* A. call money market

* B. notice money market
* C. money market
* D. primary market

Correct Answer: A. call money market

Explanation:

The call money market is a segment of the money market where funds are lent and
borrowed on an overnight basis. This means that the loans are typically for one day only,
and the interest rate is determined at the beginning of each day. Call money markets are
used by banks, financial institutions, and corporations to meet their short-term liquidity
needs.

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Citations: [[1]]([invalid URL removed])Prompt:

Prepayments charges collected by branches should be credited to which account?

Options:

* A. Interest A/c
* B. Commission A/c
* C. Exchange A/c
* D. Current A/c

Correct Answer: B. Commission A/c

Explanation:

Prepayment charges are fees collected from customers who pay off their loans early. These
charges are typically treated as income and credited to the Commission A/c. This account is
used to record the income earned by the bank from various fees and charges, including
prepayment charges.

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Citations: [[1]]([invalid URL removed])Prompt:

Risk may be listed as (a) credit risk, (b) liquidity risk, (c) premature closure risk.

Options:

* A. Only a
* B. Only b
* C. a and c
* D. a, b, and c
Correct Answer: D. a, b, and c

Explanation:

Credit risk, liquidity risk, and premature closure risk are all types of risks that banks face.
Credit risk is the risk that a borrower will default on a loan. Liquidity risk is the risk that a
bank will not be able to meet its funding needs. Premature closure risk is the risk that a
depositor will withdraw their funds from a bank before the maturity date of their deposit.

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Citations: [[1]]([invalid URL removed])Prompt:

Preference Share Capital Instruments is part of __________ capital.

Options:

* A. Tier I
* B. Tier II
* C. Tier III
* D. Any of these

Correct Answer: B. Tier II

Explanation:

Preference Share Capital Instruments are a type of equity capital that ranks above common
equity but below debt in terms of priority for payment of dividends and claims in liquidation.
They are classified as Tier II capital under the Basel III capital adequacy framework. Tier II
capital is used to absorb losses and provide a cushion against unexpected risks.

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Citations: [[1]]([invalid URL removed])Prompt:

If a bank is not able to respond to a situation in time in internet banking, this is called

Options:

* A. Internet banking risk

* B. Strategic risk
* C. Reputation risk
* D. Operational risk

Correct Answer: D. Operational risk

Explanation:

Operational risk refers to the risk of loss arising from inadequate or failed internal processes,
people, and systems, or from external events. If a bank is unable to respond to a situation in
time in internet banking, it is an example of operational risk. This could lead to financial
losses, reputational damage, and customer dissatisfaction.

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Citations: [[1]]([invalid URL removed])Prompt:

A cash credit or a overdue account will be treated as NPA if an account remains out of order
for a period of more than __________ days.

Options:

* A. 90
* B. 180
* C. 360
* D. 30

Correct Answer: B. 180

Explanation:

Non-Performing Assets (NPAs) are loans or advances that have not been repaid in full or in
part on the due date and have remained overdue for a specified period of time. In India, a
cash credit or an overdue account is treated as an NPA if it remains out of order for a period
of more than 180 days.

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Citations: [[1]]([invalid URL removed])**Prompt:**

Which of the following is an example of an affirmative covenant?

**Options:**

* A. Limiting further capital expenditure

* B. Ensuring that the funds are applied for the purpose for which they were intended
* C. Restrictions on mergers or share repurchase
* D. All of these

**Correct Answer:** B. Ensuring that the funds are applied for the purpose for which they
were intended

**Explanation:**

An affirmative covenant is a promise made by a borrower to a lender to do something, such

as maintain a certain financial ratio or use the loan proceeds for a specific purpose. Ensuring
that the funds are applied for the purpose for which they were intended is an example of an
affirmative covenant. This ensures that the lender's money is being used as agreed upon
and reduces the risk of default.

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Paid up Equity capital of the bank and Share premium resulting from the issue of equity
shares is part of __________ capital.

Options:

* A. Tier I
* B. Tier II
* C. Tier III
* D. Any of these

Correct Answer: A. Tier I

Explanation:

Paid-up equity capital and share premium are both considered part of Tier I capital under the
Basel III capital adequacy framework. Tier I capital is the highest quality capital that a bank
can hold and is used to absorb losses and provide a cushion against unexpected risks.

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A bill of exchange accompanied by documents of title to goods is a

Options:

* A. Clean Bill
* B. Documentary Bill
* C. Supply Bill
* D. LC backed bill

Correct Answer: B. Documentary Bill

Explanation:

A documentary bill of exchange is a type of bill of exchange that is accompanied by

documents of title to goods. These documents can include invoices, bills of lading, and
insurance certificates. Documentary bills of exchange are used in international trade to
ensure that the seller will only receive payment once the buyer has received the goods.

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Any asset which has remained in the substandard category for a period of 12 months can be
termed as

Options:

* A. standard assets
* B. sub-standard assets
* C. doubtful assets
* D. loss assets

Correct Answer: C. doubtful assets

Explanation:

A doubtful asset is an asset that is considered to be at risk of default. If an asset remains in

the substandard category for a period of 12 months, it is considered to be doubtful. This
means that the bank is concerned that the borrower may not be able to repay the
loan.Prompt:

Which of the following are not related to Internet Banking Services?

Options:

* A. Payment Gateway services

* B. Corporate Internet Banking
* C. Letter of Credit
* D. Supply Chain Management

Correct Answer: C. Letter of Credit

Explanation:
A letter of credit is a document issued by a bank that guarantees payment to a seller if the
buyer fails to meet their obligations. It is a traditional financial instrument that is not typically
associated with internet banking services. While some banks may offer online applications
for letters of credit, the process of issuing and managing letters of credit is often still done
offline.

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Citations:Prompt:

__________ is normally for a period of or less than 2 years and hence provides funds for
short duration only.

Options:

* A. Pooling and transfer

* B. Factoring
* C. Securitization
* D. Takeout financing

Correct Answer: B. Factoring

Explanation:

Factoring is a financial arrangement where a business sells its invoices to a third party,
known as a factor, at a discount. The factor then collects the receivables from the customers
and pays the business the agreed-upon amount, minus a factoring fee. Factoring is typically
used for short-term financing needs, as the invoices are usually due within 30 to 60
days.Prompt:

What are the advantages of retail banking?

Options:

* A. Risk is less as client base is large

* B. Income is relatively more as spreads are more
* C. Stable model with less volatility
* D. a and b
Correct Answer: D. a and b

Explanation:

Retail banking offers several advantages, including:

* **Reduced risk:** A large client base diversifies the bank's risk, making it less susceptible
to losses from individual defaults.
* **Higher income:** Retail banking typically involves smaller transactions with higher
interest rates, leading to relatively higher income compared to corporate banking.
* **Stable model:** Retail banking is generally considered a stable business model with less
volatility compared to other areas of banking.

Therefore, both options A and B are correct.

Citations: [[1]](https://studylib.net/doc/25251397/retail-banking-questions)Prompt:

Rate of interest income to total assets is

Options:

* A. (Interest earned/total assets)x100

* B. (Interest earned/Total Liabilities) x 100
* C. (Interest paid/ Total assets) x 100
* D. (Interest paid/total liabilities) x 100

Correct Answer: A. (Interest earned/total assets)x100

Explanation:

The rate of interest income to total assets is a measure of a bank's profitability. It is

calculated by dividing the interest earned by the bank by its total assets. This ratio shows
how much interest income the bank is generating for every rupee of assets it has.Prompt:

NPA stands for

Options:

* A. Non performing assets

* B. Non perfect assets
* C. Non performing advances
* D. None of these

Correct Answer: A. Non performing assets

Explanation:
NPA stands for Non-Performing Assets. These are loans or advances that have not been
repaid in full or in part on the due date and have remained overdue for a specified period of
time.Prompt:

Which of the following is not a Retail Deposit Product?

Options:

* A. Recurring Deposit Account

* B. Term Deposit Account
* C. CC/OD account facility to a corporate office
* D. Current Deposit Account

Correct Answer: C. CC/OD account facility to a corporate office

Explanation:

A CC/OD account facility is typically offered to corporate customers, not individuals.

Therefore, it is not considered a retail deposit product. Retail deposit products are designed
for individual customers and include savings accounts, current accounts, fixed deposits, and
recurring deposits.Prompt:

Increase in reserve requirements will lead to

Options:

* A. No Change
* B. Increase
* C. Decrease
* D. Constant Increase

Correct Answer: C. Decrease

Explanation:

Reserve requirements are the amount of money that banks must hold in reserve at the
central bank. If the reserve requirements are increased, banks will have less money to lend
out. This will decrease the money supply in the economy, leading to higher interest rates and
reduced economic activity.Prompt:

Indian commercial banks are categorized into

Options:

* A. Public sector banks

* B. Private sector banks
* C. Foreign banks
* D. All of these
Correct Answer: D. All of these

Explanation:

Indian commercial banks are categorized into three main types:

* **Public sector banks:** These banks are owned and controlled by the government.
* **Private sector banks:** These banks are owned and controlled by private individuals or
companies.
* **Foreign banks:** These banks are branches or subsidiaries of foreign banks operating in
India.

Therefore, the correct answer is "All of these."Prompt:

OTR is the bailment of goods as security for payment of a debt or performance of a promise.

Options:

* A. Mortgage
* B. Hypothecation
* C. Pledge
* D. Assignment

Correct Answer: B. Hypothecation

Explanation:

Hypothecation is the bailment of goods as security for payment of a debt or performance of a

promise. It is a type of pledge where the goods remain in the possession of the pledger (the
borrower) until the debt is repaid. Mortgage, pledge, and assignment are other types of
security interests, but they have different characteristics.Prompt:

What is the next step after the advance sanctioned by the competent authority?

Options:

* A. Appraisal
* B. Check drawing power
* C. Disbursement
* D. None of these

Correct Answer: B. Check drawing power

Explanation:

After the advance is sanctioned by the competent authority, the next step is to check the
drawing power. Drawing power is the maximum amount that can be withdrawn from the
sanctioned advance. Once the drawing power is checked, the funds can be disbursed to the
borrower.Prompt:

Cash to deposit ratio is

Options:

* A. (Total loans/total deposits) x 100

* B. (Cash in hand + balance with RBI/Deposits) x 100
* C. (Cash in hand/Deposits) x 100
* D. (Balance with RBI/Deposits) x 100

Correct Answer: B. (Cash in hand + balance with RBI/Deposits) x 100

Explanation:

The cash to deposit ratio is a measure of a bank's liquidity. It is calculated by dividing the
sum of the bank's cash in hand and balance with the Reserve Bank of India (RBI) by its total
deposits. A high cash to deposit ratio indicates that the bank has sufficient liquidity to meet
its depositors' demands for withdrawals.Prompt:

Pillar III of Basel II is meant for

Options:

* A. Improving credit discipline

* B. Promoting competition
* C. Improving market discipline
* D. Promoting customer loyalty

Correct Answer: C. Improving market discipline

Explanation:

Pillar III of Basel II is focused on market discipline. It requires banks to disclose information
about their capital adequacy, risk exposure, and risk management practices. This
transparency is intended to improve market discipline by allowing investors and other market
participants to assess the bank's financial health and make informed decisions.Prompt:

A denotes a loss of income or profit that could arise when funds are sourced at a higher cost
than the return on investment of these funds.

Options:

* A. Long Margin
* B. Positive Carry
* C. Negative Carry
* D. Short Margin
Correct Answer: C. Negative Carry

Explanation:

Negative carry refers to a situation where the cost of financing an investment is higher than
the return generated by the investment. This can occur when interest rates on borrowed
funds are higher than the yield on the invested assets. In such a scenario, the investor incurs
a loss, which is referred to as negative carry.

Citations:
[[1]](https://www.studocu.com/in/document/institute-of-management-technology-ghaziabad/p
ost-graduate-program-in-management/fine008-banking-services/65174269)Prompt:

CTR signifies fraudulent capture and recording of customers' security details, to be used
later for committing fraud. It originates from the analogy that internet fraudsters are using
email lures to 'fish' for passwords and financial data from myriads of internet users.

Options:

* A. Identity theft
* B. Skimming
* C. Phishing
* D. Carding

Correct Answer: C. Phishing

Explanation:

Phishing is a type of cybercrime where fraudsters attempt to trick individuals into revealing
their personal information, such as passwords and credit card numbers, by pretending to be
from a legitimate organization. The term "phishing" is derived from the analogy of using
email lures to "fish" for personal information from unsuspecting victims.Prompt:

CTR risk arises from a bank's inability to meet its obligations when they come due, and
refers to situations in which a party is willing but unable to find a counterparty to trade an
asset.

Options:

* A. Interest Rate Risk

* B. Credit Risk
* C. Liquidity Risk
* D. Operational Risk

Correct Answer: C. Liquidity Risk

Explanation:
Liquidity risk refers to the risk that a bank will not be able to meet its obligations when they
come due. This can occur if the bank is unable to sell its assets or borrow funds to meet its
cash flow needs. In the given scenario, the inability to find a counterparty to trade an asset
indicates a liquidity risk.

Citations:
[[1]](https://www.studocu.com/in/document/institute-of-management-technology-ghaziabad/p
ost-graduate-program-in-management/fine008-banking-services/65174269)Prompt:

For uncollectible loans with such little value that their continuance as bankable assets is not
warranted, all identified losses have to be charged off. Such losses are generally charged off
in the same period in which they are written off.

Options:

* A. Special mentioned loans

* B. Loss Assets
* C. Sub-standard assets
* D. Doubtful assets

Correct Answer: B. Loss Assets

Explanation:

Loss assets are loans that have been deemed uncollectible and are written off as a loss.
These are loans with such little value that it is not worthwhile for the bank to continue holding
them on its books. When a loan is classified as a loss asset, the bank must recognize the
loss in the same period in which the loan is written off.Prompt:

Income from NPAs is not to be recognized on a

Options:

* A. compounding
* B. advance
* C. actual
* D. accrual

Correct Answer: D. accrual

Explanation:

Income from NPAs is not to be recognized on an accrual basis. Accrual accounting

recognizes income when it is earned, regardless of when it is received. However, income
from NPAs is not considered earned until the cash is actually received. This is because there
is no certainty that the bank will ever receive payment on the loan. Therefore, income from
NPAs is recognized on a cash basis, which means that it is only recognized when the cash is
received.Prompt:

Regional rural banks have been set up with the basic objective of

Options:

* A. Providing credit to semi-urban and urban population

* B. Providing deposit facility to farmers
* C. Providing deposit facilities to rural area
* D. Providing credit, deposit and other banking facility to people in rural areas

Correct Answer: D. Providing credit, deposit and other banking facility to people in rural
areas

Explanation:

Regional rural banks (RRBs) were set up in India with the primary objective of providing
financial services to rural areas. They offer a range of banking services, including credit,
deposits, and other financial products, to people in rural areas. This helps to promote rural
development and reduce the financial exclusion of rural populations.Prompt:

Minimum Capital Adequacy Ratio to be maintained by a Bank as per Basel Accord II is

Options:

* A. 0.05
* B. 0.07
* C. 0.08
* D. 0.1

Correct Answer: B. 0.07

Explanation:

Under Basel II, the minimum capital adequacy ratio (CAR) that banks must maintain is 8%.
This means that banks must have a capital base of at least 8% of their total risk-weighted
assets.Prompt:

NPA stands for

Options:

* A. Non performing assets

* B. Non perfect assets
* C. Non performing advances
* D. None of these
Correct Answer: A. Non performing assets

Explanation:

NPA stands for Non-Performing Assets. These are loans or advances that have not been
repaid in full or in part on the due date and have remained overdue for a specified period of
time.Prompt:

Tier I capital mainly includes

Options:

* A. Share capital and disclosed reserve

* B. Reserve and debt
* C. Share capital and debt
* D. Share capital, reserve and debt

Correct Answer: A. Share capital and disclosed reserve

Explanation:

Tier I capital is considered the core capital of a bank and is the most stable component of its
capital base. It consists of:

* **Share capital:** This is the capital raised by the bank through the sale of shares to
investors.
* **Disclosed reserves:** These are reserves that are clearly disclosed in the bank's financial
statements, such as retained earnings and other reserves.

Tier I capital is considered the most stable component of a bank's capital base because it is
not subject to any restrictions on its use or distribution.Prompt:

The securities brought by the bank with an idea to hold them up to maturity are categorized
as

Options:

* A. Held to Maturity
* B. Available for sale
* C. Held for Trading
* D. Held for Investment

Correct Answer: A. Held to Maturity

Explanation:

Securities held to maturity are debt securities that the bank intends to hold until their maturity
date. These securities are typically purchased with the intention of earning interest income
until maturity. The bank does not intend to sell these securities before maturity, unless there
is a compelling reason to do so.Prompt:

Full Form of SHG is

Options:

* A. Small Housing Group

* B. Self Housing Group
* C. Self Help Group
* D. Small Help Group

Correct Answer: C. Self Help Group

Explanation:

SHG stands for Self Help Group. These are voluntary associations of people, usually
women, who come together to save money and provide microcredit to each other. SHGs are
an important tool for poverty alleviation and women's empowerment in many developing
countries.Prompt:

When the risk of loss resulted by an unfavorable change in price of a security mainly due to
factors related to the issuer, it is termed

Options:

* A. Specific risk
* B. General market risk
* C. Interest rate risk
* D. Default risk

Correct Answer: A. Specific risk

Explanation:

Specific risk, also known as unsystematic risk or idiosyncratic risk, is the risk of loss in an
investment due to factors specific to the issuer of the security. This type of risk cannot be
diversified away by investing in a portfolio of securities. Some examples of specific risk
include the risk of a company going bankrupt, the risk of a product becoming obsolete, or the
risk of a company's management team being ineffective.Prompt:

ATM stands for

Options:

* A. Anytime money
* B. Automated teller money
* C. All time money
* D. Automated teller machine

Correct Answer: D. Automated teller machine

Explanation:

ATM stands for Automated Teller Machine. It is an electronic banking device that allows
customers to perform various banking transactions, such as withdrawing cash, depositing
money, transferring funds, and checking account balances.Prompt:

Certificate of Deposit (CD) is a negotiable market instrument and issued in dematerialised

form or as a Usance Promissory Note

Options:

* A. Capital market
* B. Primary market
* C. Secondary market
* D. Money market

Correct Answer: B. Primary market

Explanation:

A Certificate of Deposit (CD) is a negotiable market instrument issued by banks and other
financial institutions. It is a debt security that pays a fixed rate of interest over a specified
period of time. CDs are typically issued in the primary market, which is the market where
new securities are initially sold to investors. After the initial issuance, CDs can be traded in
the secondary market.Prompt:

Revaluation reserve is included in

Options:

* A. Tier I capital
* B. Tier II capital
* C. Tier III
* D. Tier I and Tier II capital

Correct Answer: B. Tier II capital

Explanation:

Revaluation reserve is a reserve created when the value of a bank's fixed assets is
increased through revaluation. It is included in Tier II capital, which is a supplementary
capital buffer that provides additional protection to depositors and other creditors. Tier II
capital is not as stable as Tier I capital, but it still plays an important role in ensuring the
financial soundness of a bank.Prompt:
Cash to deposit ratio is

Options:

* A. (Total loans/total deposits) x 100

* B. (Cash in hand + balance with RBI/Deposits) x 100
* C. (Cash in hand/Deposits) x 100
* D. (Balance with RBI/Deposits) x 100

Correct Answer: B. (Cash in hand + balance with RBI/Deposits) x 100

Explanation:

The cash to deposit ratio is a measure of a bank's liquidity. It is calculated by dividing the
sum of the bank's cash in hand and balance with the Reserve Bank of India (RBI) by its total
deposits. A high cash to deposit ratio indicates that the bank has sufficient liquidity to meet
its depositors' demands for withdrawals.Prompt:

Yield Curve Risk is known as

Options:

* A. Risk owing to altering of yields across maturities and its impact on NII
* B. Risk owing to wrong drawing of yield curve by Bank staff
* C. Risk of lower current yield
* D. None of these

Correct Answer: A. Risk owing to altering of yields across maturities and its impact on NII

Explanation:

Yield curve risk is the risk of loss arising from changes in the shape of the yield curve, which
is the relationship between interest rates and time to maturity. When the yield curve shifts, it
can have an impact on a bank's net interest income (NII), which is the difference between
the interest income it earns on its assets and the interest expense it pays on its liabilities. For
example, if the yield curve steepens, the bank may earn higher interest income on its
long-term assets, but it may also have to pay higher interest rates on its long-term liabilities.
This can lead to a decline in the bank's NII.

Citations: [[1]](https://www.iibf.org.in/uploads/caiib_riskmgt_modab.ppt)Prompt:

If a bank is not able to respond to a situation in time in internet banking, this is called

Options:

* A. Internet banking risk

* B. Strategic risk
* C. Reputation risk
* D. Operational risk

Correct Answer: D. Operational risk

Explanation:

Operational risk refers to the risk of loss arising from a bank's internal processes, systems,
or people. It includes the risk of fraud, errors, system failures, and other operational failures.
In the given scenario, the bank's inability to respond to a situation in time in internet banking
is an example of an operational risk.Prompt:

What are the advantages of retail banking?

Options:

* A. Risk is less as client base is large

* B. Income is relatively more as spreads are more
* C. Stable model with less volatility
* D. a and b

Correct Answer: D. a and b

Explanation:

Retail banking offers several advantages, including:

* **Lower risk:** A large customer base diversifies risk, reducing exposure to individual
defaults.
* **Higher income:** Retail banking often generates higher income due to wider spreads
between lending and deposit rates.
* **Stable model:** Retail banking is generally a stable business with less volatility compared
to other banking segments.

Therefore, both options A and B are correct.

Citations: [[1]](https://studylib.net/doc/25251397/retail-banking-questions)Prompt:

SEBI is the apex monetary institution of India

Options:

* A. SEBI
* B. NABARD
* C. RBI
* D. SIDBI

Correct Answer: C. RBI

Explanation:

The Reserve Bank of India (RBI) is the apex monetary institution of India. It is responsible for
formulating and implementing monetary policy, regulating the banking system, and issuing
currency. The other options listed are also financial institutions in India, but they do not have
the same level of authority or responsibility as the RBI.Prompt:

VaR is

Options:

* A. Potential worst case loss over indefinite period of time

* B. Potential worst case loss over definite period of time
* C. Potential gain delivered over a selected period
* D. Potential worst case loss at a specific confidence level over a certain period of time

Correct Answer: D. Potential worst case loss at a specific confidence level over a certain
period of time

Explanation:

Value at Risk (VaR) is a statistical measure used to quantify the potential loss in the value of
an investment portfolio over a specified period of time at a given confidence level. It is a risk
management tool that helps investors assess the potential downside risk of their
investments.Prompt:

NABARD was established to have a control over

Options:

* A. Reserve Bank of India

* B. Regional Rural Banks
* C. Cooperative Bank
* D. None of these

Correct Answer: B. Regional Rural Banks

Explanation:

The National Bank for Agriculture and Rural Development (NABARD) was established in
1982 to promote agricultural and rural development in India. It was given the responsibility of
overseeing and financing Regional Rural Banks (RRBs), which were set up to provide
financial services to rural areas.

Citations:
[[1]](https://www.civilsdaily.com/news/step-up-agri-spending-boost-farm-incomes/)Prompt:
Term deposits typically take the form of

Options:

* A. Fixed Deposits (FD)

* B. Recurring Deposits (RD)
* C. Certificates of Deposits (CD)
* D. All of these

Correct Answer: D. All of these

Explanation:

Term deposits are deposits that are made for a fixed period of time and earn a fixed rate of
interest. They can take several forms, including:

* **Fixed Deposits (FD):** These are deposits made for a fixed period of time, typically
ranging from a few months to several years.
* **Recurring Deposits (RD):** These are deposits made in regular installments over a fixed
period of time.
* **Certificates of Deposits (CD):** These are negotiable instruments issued by banks that
promise to pay a fixed rate of interest over a specified period of time.

Therefore, all of the options listed are valid forms of term deposits.Prompt:

Pillar III of Basel II is meant for

Options:

* A. Improving credit discipline

* B. Promoting competition
* C. Improving market discipline
* D. Promoting customer loyalty

Correct Answer: C. Improving market discipline

Explanation:

Pillar III of Basel II is focused on market discipline, which means encouraging banks to
disclose information about their risk exposures and capital adequacy to the market. This
transparency helps investors and other stakeholders to assess the bank's financial health
and make informed decisions.Prompt:

A cash credit or a overdue account will be treated as NPA if an account remains out of order
for a period of more than

Options:
* A. 30
* B. 90
* C. 180
* D. 360

Correct Answer: B. 90

Explanation:

In India, a cash credit or overdue account is classified as a Non-Performing Asset (NPA) if it

remains out of order for a period of more than 90 days. This means that the borrower has
not made any payments on the account for more than 90 days.Prompt:

EMI stands for

Options:

* A. Equally monthly installment

* B. Even monthly installment
* C. Equated monthly installment
* D. Equity monthly installment

Correct Answer: C. Equated monthly installment

Explanation:

EMI stands for Equated Monthly Installment. It is a fixed amount that a borrower pays to a
lender each month to repay a loan. The EMI includes both the principal amount of the loan
and the interest charged on it. The EMI remains the same throughout the loan tenure,
making it easier for borrowers to manage their finances.Prompt:

Capital adequacy ratio indicates

Options:

* A. Capital as a percentage of risk-weighted assets

* B. Capital as a percentage of deposits
* C. Capital as a percentage of investment
* D. None of these

Correct Answer: A. Capital as a percentage of risk-weighted assets

Explanation:

The Capital Adequacy Ratio (CAR) is a measure of a bank's financial strength. It is

calculated by dividing the bank's capital (both Tier I and Tier II capital) by its risk-weighted
assets. A higher CAR indicates that a bank has a stronger capital base to absorb losses and
protect depositors.Prompt:
The form which serves as a data base for cross-selling of different products in banks

Options:

* A. Account opening form

* B. KYC form
* C. Credit card form
* D. None of these

Correct Answer: B. KYC form

Explanation:

The Know Your Customer (KYC) form is a mandatory form that banks require customers to
fill out when opening an account. This form collects personal and financial information about
the customer, which can be used for cross-selling purposes. Banks can use the information
in the KYC form to identify products that the customer may be interested in and offer them
those products.Prompt:

Prepayments charges collected by branches should be credited to which account?

Options:

* A. Interest A/c
* B. Commission A/c
* C. Exchange A/c
* D. Current A/c

Correct Answer: B. Commission A/c

Explanation:

Prepayments charges are fees collected by banks from borrowers who pay off their loans
early. These charges are typically considered commission income for the bank and should
be credited to the Commission A/c.

Citations: [[1]]([invalid URL removed])Prompt:

How many schedules are there in Profit and loss account of a bank

Options:

* A. 2
* B. 3
* C. 4
* D. 5
Correct Answer: B. 3

Explanation:

There are three schedules in the Profit and Loss account of a bank:

1. **Income**
2. **Expenses**
3. **Profit/Loss**

The Income schedule lists all the bank's income items, such as interest income, fees and
commissions, and investment income. The Expenses schedule lists all the bank's expense
items, such as interest expense, salaries and wages, and operating expenses. The
Profit/Loss schedule shows the net profit or loss of the bank for the period.Prompt:

CTR signify fraudulent capture and recording of customers security details, to be used later
for committing fraud. It originates from the analogy that internet fraudsters are using email
lures to 'fish' for passwords and financial data from myriads of internet users

Options:

* A. Identity theft
* B. Skimming
* C. Phishing
* D. Carding

Correct Answer: C. Phishing

Explanation:

CTR stands for Card Testing and Reporting. It is a type of phishing attack in which fraudsters
use stolen credit card details to make small transactions to see if the card is still active. If the
transaction is successful, the fraudsters can use the card to make larger purchases.

Phishing is a type of social engineering attack in which fraudsters attempt to trick people into
revealing their personal information, such as passwords and credit card numbers. Phishing
attacks often take the form of emails that appear to be from legitimate businesses or
organizations.

The other options listed are also types of fraud, but they do not involve the fraudulent
capture and recording of customers' security details.

Identity theft is a type of fraud in which someone uses another person's personal information
to steal their identity. Skimming is a type of fraud in which criminals use a device to capture
the data from a credit or debit card. Carding is the use of stolen credit card information to
make purchases.Prompt:
CTR are individuals recruited over the internet with the sole purpose of being intermediaries
for illegally acquired funds. These funds could have been acquired through methods such as
phishing and other types of scams.

Options:

* A. Man in the browser

* B. Malware
* C. Phishers
* D. Mules

Correct Answer: D. Mules

Explanation:

Mules are individuals who are recruited to launder illegally acquired funds. They may be
unaware that the money they are handling is the proceeds of crime. Mules are often paid a
small fee for their services, and they may be unaware of the risks involved.

Citations:
[[1]](https://www.studocu.com/in/document/institute-of-management-technology-ghaziabad/p
ost-graduate-program-in-management/fine008-banking-services/65174269)Prompt:

The likelihood that default will take place over a specified time horizon is known as

Options:

* A. Probability of default
* B. Exposure at default
* C. Expected Loss
* D. Loss given default

Correct Answer: A. Probability of default

Explanation:

Probability of default (PD) is the likelihood that a borrower will default on a loan within a
specified period of time. It is one of the three key inputs used in calculating the expected loss
of a loan. The other two inputs are exposure at default (EAD) and loss given default (LGD).

PD is typically estimated using statistical models based on the borrower's credit history,
financial condition, and other relevant factors.Prompt:

CTR denotes a loss of income or profit that could arise when funds are sourced at a higher
cost than the return on investment of these funds

Options:
* A. Long Margin
* B. Positive Carry
* C. Negative Carry
* D. Short Margin

Correct Answer: C. Negative Carry

Explanation:

CTR stands for Carry Trade Risk. It is the risk of a loss in income or profit that can arise
when funds are borrowed at a lower interest rate than the return on investment of those
funds. This is known as a negative carry. If the interest rates on the borrowed funds increase
or the return on investment of the funds decreases, the trader will experience a loss.

Citations:
[[1]](https://www.studocu.com/in/document/institute-of-management-technology-ghaziabad/p
ost-graduate-program-in-management/fine008-banking-services/65174269)Prompt:

The fraction of the exposure and net of any recoveries, which will be lost following a default
event is known as

Options:

* A. Probability of default
* B. Exposure at default
* C. Expected Loss
* D. Loss given default

Correct Answer: D. Loss given default

Explanation:

Loss given default (LGD) is the fraction of the exposure that will be lost following a default
event, net of any recoveries. It is one of the three key inputs used in calculating the expected
loss of a loan. The other two inputs are probability of default (PD) and exposure at default
(EAD).

LGD is typically estimated using historical data on the recovery rate for defaulted loans.