Attempt CAIIB BFM Practice Quiz and Download Free PDF

1. The following rates are quoted by a bank: Spot USD/INR: 83.50 / 83.60. Exchange margin for TT Buying: 0.10%. A customer receives an inward remittance of USD 10,000 and wants the rupee proceeds credited to the account. What TT Buying Rate will the bank apply?

2. Spot USD/INR = 83.00. 6-month forward rate = 84.50. What is the annualized forward premium on USD against INR, and what does it indicate?

3. Consider the following statements about the Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS) under the current regime: Statement 1: A resident individual may remit up to USD 250,000 per financial year under LRS for permitted current and capital account transactions. Statement 2: From 1 April 2025, the TCS threshold for LRS remittances is Rs.10 lakh in a financial year. Statement 3: LRS remittances for education financed through a qualifying education loan from a financial institution are not subject to TCS.

4. Which combination of features applies ONLY to FCNR(B) accounts? Feature 1: Repatriation of principal and interest is freely allowed Feature 2: Account is denominated in Indian Rupees Feature 3: Completely protects the depositor from INR depreciation risk Feature 4: Interest income is taxable in India

5. Under UCP 600, which of the following statements about document examination is CORRECT?

6. Statement 1: A Nostro account is a foreign currency account maintained by an Indian bank with its correspondent bank overseas. Statement 2: A Vostro account is the account of a foreign bank held with an Indian bank in Indian Rupees. Statement 3: Reconciliation of Nostro accounts is critical to prevent forex exposure and fraud in international banking.

7. Which of the following money market instruments are conventionally issued at a discount to face value and redeemed at face value, without periodic coupon payments?

8. Assertion (A): Call money transactions are overnight borrowings and lendings in the interbank market, predominantly used by banks to manage daily reserve requirements. Reasoning (R): Call money rates (MIBOR) are highly volatile as they fluctuate based on the daily demand and supply of funds in the banking system.

9. A 10-year Government Security with face value Rs.100 and coupon rate 7.00% (semi-annual) is trading in the market. The current market yield (YTM) is 6.50%. The bond will trade:

10. A bond portfolio has a market value of Rs.500 crore and a Modified Duration of 5.5 years. What is the Basis Point Value (BPV) of the portfolio?

11. Statement 1: A normal (upward sloping) yield curve indicates that long- term interest rates are higher than short-term rates, reflecting expectations of economic growth and inflation. Statement 2: An inverted yield curve (short-term rates > longterm rates) is often considered a leading indicator of economic recession. Statement 3: A flat yield curve means there is no difference between short and long-term rates and always indicates stable, risk-free economic conditions.

12. Which of the following items are included in Common Equity Tier 1 (CET1) capital? i) Paid-up equity share capital ii) Statutory reserves and free reserves iii) Perpetual Non-Cumulative Preference Shares (PNCPS) iv) Revaluation reserves (at a discount of 55%) v) Deferred Tax Assets (DTA) – fully deducted

13. Under the Standardised Approach to credit risk, which statement best describes the treatment of an individual housing loan secured by residential property?

14. Assertion (A): The Internal Capital Adequacy Assessment Process (ICAAP) is a bank’s own internal process to ensure it holds adequate capital for all material risks, including risks not fully covered under Pillar 1. Reasoning (R): ICAAP is a Pillar 2 requirement under Basel III and covers risks such as concentration risk, IRRBB, strategic risk, and reputational risk.

15. Statement 1: Under Basel III Pillar 3, banks are required to make public disclosures about their capital structure, risk exposures, and capital adequacy to promote market discipline. Statement 2: Pillar 3 disclosures are mandatory and must be published at least annually. Statement 3: Pillar 3 applies only to internationally active banks and not to domestic Indian banks.

16. A bank has: Rate Sensitive Assets (RSA) = Rs.12,000 crore Rate Sensitive Liabilities (RSL) = Rs.15,000 crore Interest rates are expected to FALL by 75 basis points. What is the expected change in Net Interest Income (NII)?

17. A bank has: Duration of Assets = 4.5 years Duration of Liabilities = 3.0 years Total Assets = Rs.10,000 crore Total Liabilities = Rs.9,000 crore Calculate the Duration Gap.

18. A bank has NDTL of Rs.2,00,000 crore. SLR is 18% and CRR is 4.5%. Calculate: (i) Minimum SLR Investment required, (ii) CRR balance with RBI, and (iii) total preempted funds.

19. A bank has a Doubtful Asset (D2 – more than 1 year but up to 3 years in Doubtful category). Outstanding balance = Rs.100 lakh. Security (realizable value) = Rs.40 lakh. What is the total provisioning required as per RBI norms?

20. A Cash Credit (CC) account has been continuously irregular for the last 95 days – the drawings exceed the Drawing Power (DP) consistently. The borrower’s business is otherwise healthy. How should this account be classified?