CAIIB ABM, Check Top 50 Most Repetitive CAIIB ABM MCQs

Top 50 Most Repetitive CAIIB ABM MCQs

Top 50 Most Repetitive CAIIB ABM MCQs: The CAIIB Advanced Bank Management (ABM) exam is a key step for banking professionals looking to advance their careers. This exam evaluates knowledge in important areas such as financial management, risk management, and banking operations. To help you prepare effectively, we have gathered the 50 most frequently asked MCQs that often appear in the CAIIB ABM exam. These questions will provide valuable insights into important topics and allow you to practice efficiently.

Why CAIIB ABM is Important for Your Career

For banking professionals, passing the CAIIB ABM exam is vital for career progression. The exam focuses on advanced banking concepts, such as financial management, risk management, and compliance with regulations. By reviewing these CAIIB ABM Important MCQs, you can strengthen your understanding and increase your chances of success in the exam.

Key Topics in CAIIB Advanced Bank Management

Before we dive into the MCQs, let’s explore the main areas that are often covered in the CAIIB ABM exam:

• Financial Management: Includes understanding financial statements, liquidity management, and capital planning.
• Risk Management: Covers types of risks like credit risk, market risk, and operational risk.
• Banking Operations: Focuses on the day-to-day running of banks, such as asset-liability management (ALM) and customer relations.
• Regulations and Compliance: Deals with laws and regulations that govern the banking industry, such as Basel guidelines and RBI rules.

Most Repetitive 50 MCQs for CAIIB ABM

Here is top 50 important MCQs that have appeared in previous CAIIB ABM exams:

1. Which of the following is not a part of the bank’s core activities?

• a) Lending
• b) Investment Banking
• c) Savings
• d) Payments

Answer: b) Investment Banking

2. What does the term “Capital Adequacy Ratio” refer to in banking?

• a) The ratio of a bank’s capital to its total assets
• b) The ratio of a bank’s capital to its risk-weighted assets
• c) The ratio of a bank’s loans to deposits
• d) The ratio of a bank’s total liabilities to total assets

Answer: b) The ratio of a bank’s capital to its risk-weighted assets

3. The main purpose of the Asset Liability Management (ALM) is to:

• a) Minimize risk
• b) Ensure liquidity and profitability
• c) Minimize operational costs
• d) Ensure compliance with regulations

Answer: b) Ensure liquidity and profitability

4. Which of the following is the major regulatory body for commercial banks in India?

• a) RBI
• b) SEBI
• c) IRDA
• d) NABARD

Answer: a) RBI

5. What is the maximum percentage of a bank’s loan portfolio that can be lent to the priority sector as per RBI guidelines?

• a) 30%
• b) 40%
• c) 50%
• d) 60%

Answer: b) 40%

6. The term “SWIFT” stands for:

• a) Society for Worldwide International Financial Telecommunications
• b) Society for Worldwide Interbank Financial Transfer
• c) Society for Worldwide Internet Financial Transactions
• d) Society for Worldwide Interbank Financial Telecommunications

Answer: d) Society for Worldwide Interbank Financial Telecommunications

7. What is the primary objective of Central Bank’s monetary policy?

• a) Managing government expenditures
• b) Controlling inflation and managing economic growth
• c) Regulating financial markets
• d) Managing taxation policies

Answer: b) Controlling inflation and managing economic growth

8. In which year was the Banking Regulation Act passed?

• a) 1945
• b) 1949
• c) 1955
• d) 1961

Answer: b) 1949

9. Which of the following is not a component of a bank’s financial statement?

• a) Balance Sheet
• b) Profit and Loss Account
• c) Cash Flow Statement
• d) Borrowing Report

Answer: d) Borrowing Report

10. A “Non-Performing Asset” (NPA) is an asset:

• a) That is performing well
• b) With interest payments overdue for more than 90 days
• c) That generates income for the bank
• d) Which is secured against collateral

Answer: b) With interest payments overdue for more than 90 days

11. What is the minimum capital required for setting up a new bank in India?

• a) Rs. 100 crore
• b) Rs. 200 crore
• c) Rs. 500 crore
• d) Rs. 1,000 crore

Answer: b) Rs. 200 crore

12. What is the full form of the term “IFRS” used in financial reporting?

• a) International Finance and Reporting Standards
• b) International Financial Reporting Standards
• c) Internal Finance and Reporting Standards
• d) International Federation of Reporting Standards

Answer: b) International Financial Reporting Standards

13. The process of “Securitization” involves:

• a) Converting assets into marketable securities
• b) Selling non-performing loans to investors
• c) Selling a bank’s physical assets
• d) Issuing new loans to customers

Answer: a) Converting assets into marketable securities

14. The main function of the RBI’s monetary policy is to:

• a) Control the liquidity in the economy
• b) Ensure loan growth in the economy
• c) Regulate interest rates on savings accounts
• d) Control the stock market

Answer: a) Control the liquidity in the economy

15. What does “Liquidity” in banking refer to?

• a) The amount of deposits a bank holds
• b) The ease with which a bank can access cash to meet its obligations
• c) The total capital invested in the bank
• d) The amount of loans granted by a bank

Answer: b) The ease with which a bank can access cash to meet its obligations

16. What is the term used for a customer account that has not been operated for a period of more than one year?

• a) Dormant Account
• b) Inactive Account
• c) Overdue Account
• d) Overdraft Account

Answer: a) Dormant Account

17. What does the term “Money Laundering” refer to?

• a) Providing loans to non-eligible individuals
• b) Moving illicit money into the legal financial system
• c) Disposing of old currency notes
• d) Reducing the money supply in the market

Answer: b) Moving illicit money into the legal financial system

18. What is the base rate in banking terminology?

• a) The rate charged by the central bank
• b) The minimum interest rate set by the RBI
• c) The rate charged by a bank to its customers for loans
• d) The rate of return on government securities

Answer: b) The minimum interest rate set by the RBI

19. The term “MCLR” in banking stands for:

• a) Maximum Credit Lending Rate
• b) Minimum Cost Lending Rate
• c) Marginal Cost of Funds Based Lending Rate
• d) Marginal Credit Lending Rate

Answer: c) Marginal Cost of Funds Based Lending Rate

20. Which of the following is an example of a fixed financial instrument?

• a) Mutual Funds
• b) Bank Deposits
• c) Stocks
• d) Equity Shares

Answer: b) Bank Deposits

21. What does “Risk-Based Capital” mean for banks?

• a) A measure of the risk taken by the bank in lending
• b) The bank’s capital determined by the risk of its assets
• c) The total capital required for market risk management
• d) The bank’s risk exposure to the government sector

Answer: b) The bank’s capital determined by the risk of its assets

22. A “Cash Reserve Ratio” (CRR) is maintained by banks with:

• a) RBI
• b) SEBI
• c) Banks’ own reserves
• d) The central government

Answer: a) RBI

23. What is the main objective of the Bank’s Corporate Social Responsibility (CSR) initiatives?

• a) Maximizing profits
• b) Fulfilling social and environmental obligations
• c) Reducing operational costs
• d) Increasing stock market performance

Answer: b) Fulfilling social and environmental obligations

24. What is the maximum period a bank can accept deposits from customers?

• a) 1 year
• b) 3 years
• c) 5 years
• d) No limit

Answer: d) No limit

25. What is the key difference between a term deposit and a demand deposit?

• a) Term deposits are non-repayable
• b) Term deposits have a fixed tenure, while demand deposits can be withdrawn anytime
• c) Term deposits are offered only by commercial banks
• d) Demand deposits have higher interest rates

Answer: b) Term deposits have a fixed tenure, while demand deposits can be withdrawn anytime

26. What is the minimum CRR that every commercial bank must maintain?

• a) 2%
• b) 3%
• c) 4%
• d) 5%

Answer: a) 2%

27. In terms of “Risk Management,” what is “Hedging”?

• a) Taking a position to limit potential losses
• b) Increasing market exposure
• c) Selling financial instruments
• d) Avoiding market risk

Answer: a) Taking a position to limit potential losses

28. What is the main objective of the bank’s Credit Risk Management framework?

• a) Preventing credit from being provided to high-risk customers
• b) Maximizing profitability from lending
• c) Ensuring compliance with banking regulations
• d) Reducing operational costs

Answer: a) Preventing credit from being provided to high-risk customers

29. Which of the following is an example of a contingent liability for a bank?

• a) Loan repayment
• b) Guarantees given by the bank
• c) Current account deposits
• d) Term deposits

Answer: b) Guarantees given by the bank

30. What does “AML” in banking stand for?

• a) Automated Loan Management
• b) Anti-Money Laundering
• c) Advanced Market Loans
• d) Advanced Money Lending

Answer: b) Anti-Money Laundering

31. What is the main focus of Basel III norms?

• a) Reducing government intervention in banking
• b) Strengthening capital requirements and improving risk management
• c) Increasing liquidity in the market
• d) Expanding credit to the retail sector

Answer: b) Strengthening capital requirements and improving risk management

32. Which of the following is not a type of financial derivative?

• a) Futures contracts
• b) Options
• c) Treasury Bills
• d) Swaps

Answer: c) Treasury Bills

33. The term “Interest Rate Risk” in banking refers to:

• a) The risk of a bank’s liquidity position changing
• b) The risk that changes in interest rates will negatively affect a bank’s financial condition
• c) The risk of loan default
• d) The risk of inflation affecting purchasing power

Answer: b) The risk that changes in interest rates will negatively affect a bank’s financial condition

34. Which of the following is not typically a function of the Risk Management Committee in a bank?

• a) Identifying risks across operations
• b) Developing new financial products
• c) Evaluating and mitigating risks
• d) Ensuring compliance with regulations

Answer: b) Developing new financial products

35. What does the term “Repo Rate” mean?

• a) The rate at which the RBI lends to commercial banks
• b) The rate at which commercial banks lend to each other
• c) The rate at which commercial banks lend to customers
• d) The rate of return on government securities

Answer: a) The rate at which the RBI lends to commercial banks

36. What does the term “LTV Ratio” stand for?

• a) Loan to Value Ratio
• b) Loan to Total Value Ratio
• c) Loan to Transaction Value Ratio
• d) Liability to Value Ratio

Answer: a) Loan to Value Ratio

37. The main objective of the bank’s “Compliance” function is to:

• a) Ensure profitability
• b) Ensure adherence to laws and regulations
• c) Develop new financial products
• d) Increase capital reserves

Answer: b) Ensure adherence to laws and regulations

38. What is “Risk-Based Supervision” (RBS)?

• a) Supervision based on the volume of transactions
• b) Supervision based on risk exposure and capital adequacy
• c) Supervision based on profitability
• d) Supervision based on market share

Answer: b) Supervision based on risk exposure and capital adequacy

39. What does the term “Digital Banking” refer to?

• a) Traditional banking services offered via physical branches
• b) Using digital technology to provide banking services online
• c) Banking operations restricted to mobile banking apps
• d) Offering loans exclusively through digital channels

Answer: b) Using digital technology to provide banking services online

40. What is the role of the Credit Rating Agency in banking?

• a) Evaluate the bank’s financial position
• b) Assess the risk and assign ratings to loans, borrowers, and investments
• c) Set the interest rate for loans
• d) Determine the capital requirements for banks

Answer: b) Assess the risk and assign ratings to loans, borrowers, and investments

41. What is the “Liquidity Coverage Ratio” (LCR)?

• a) A measure of a bank’s liquidity based on risk-weighted assets
• b) A ratio of short-term liquid assets to short-term liabilities
• c) A measure of a bank’s profitability
• d) A ratio of equity capital to assets

Answer: b) A ratio of short-term liquid assets to short-term liabilities

42. The term “KYC” stands for:

• a) Know Your Customer
• b) Know Your Credit
• c) Know Your Client
• d) Know Your Currency

Answer: a) Know Your Customer

43. Which of the following is an example of a long-term financial instrument?

• a) Savings Account
• b) Treasury Bills
• c) Bonds
• d) Demand Draft

Answer: c) Bonds

44. In banking, what does “Cross-Selling” refer to?

• a) Selling products across the counter
• b) Selling complementary or additional products to existing customers
• c) Selling loans to new customers
• d) Selling financial instruments in international markets

Answer: b) Selling complementary or additional products to existing customers

45. What is the purpose of the “Financial Action Task Force” (FATF)?

• a) Setting global interest rates
• b) Combating money laundering and terrorism financing
• c) Regulating financial institutions
• d) Providing credit ratings for countries

Answer: b) Combating money laundering and terrorism financing

46. Which of the following is a non-banking financial institution (NBFC)?

• a) State Bank of India
• b) HDFC Bank
• c) LIC Housing Finance
• d) Reserve Bank of India

Answer: c) LIC Housing Finance

47. What does the term “Basel III” primarily focus on?

• a) Interest rate regulation
• b) Capital and liquidity requirements for banks
• c) Reducing taxation for banks
• d) Regulating loans to the retail sector

Answer: b) Capital and liquidity requirements for banks

48. Which financial statement includes a bank’s assets, liabilities, and equity?

• a) Income Statement
• b) Balance Sheet
• c) Cash Flow Statement
• d) Profit and Loss Statement

Answer: b) Balance Sheet

49. What is the role of the “Audit Committee” in banking?

• a) Approving new financial products
• b) Monitoring financial transactions and ensuring compliance
• c) Setting interest rates for loans
• d) Determining profit margins

Answer: b) Monitoring financial transactions and ensuring compliance

50. The term “Digital Lending” refers to:

• a) Providing loans through physical branches
• b) Providing loans through automated machines
• c) Providing loans via digital platforms or online channels
• d) Providing loans to government employees

Answer: c) Providing loans via digital platforms or online channels

Importance of CAIIB ABM MCQs

Practicing CAIIB ABM MCQs is important for successful preparation.

1. Enhances Concept Understanding: MCQs help reinforce the core concepts of Advanced Bank Management, ensuring a clear understanding of the subject.
2. Improves Speed & Accuracy: Regular practice helps you manage your time effectively, allowing you to answer questions quickly and accurately during the exam.
3. Boosts Retention: Repetition of MCQs helps improve memory, making it easier to recall important topics on the day of the exam.
4. Familiarizes with Exam Pattern: MCQs are similar to the actual exam format, helping you get used to the types of questions and boosting your confidence.
5. Identifies Weak Areas: By practicing MCQs, you can pinpoint areas where you need more focus, allowing you to study effectively.
6. Promotes Conceptual Clarity: It helps you apply theoretical knowledge to real-world banking scenarios, enhancing your understanding of key concepts.
7. Comprehensive Review: MCQs cover a broad range of topics, ensuring you revise and understand all the important areas for the exam.

Advantages of CAIIB ABM MCQs

1. Better Exam Preparation: CAIIB ABM MCQs help you focus on key topics from the syllabus, ensuring you cover everything needed for the exam.
2. Improved Time Management: By practicing MCQs, you can improve your speed in answering questions, which is crucial during the actual exam.
3. Better Problem-Solving Skills: Solving MCQs helps you apply what you’ve learned to practical situations, strengthening your problem-solving abilities.
4. Increased Confidence: The more you practice MCQs, the more confident you will feel when taking the exam. You’ll be familiar with the exam pattern and types of questions.
5. Instant Feedback: MCQs provide immediate feedback, helping you identify weak areas. This lets you focus on those topics before the exam.
6. Comprehensive Coverage: MCQs cover a wide range of topics, ensuring that you understand all aspects of the CAIIB ABM syllabus.
7. Effective Revision: MCQs are an excellent tool for quick revision, allowing you to go over key concepts and test your knowledge as the exam date approaches.
8. Better Understanding of Concepts: The structure of MCQs forces you to think deeply about each topic, improving your understanding.
9. More Accuracy: Regular practice helps reduce mistakes and increase accuracy when answering questions during the exam.
10. Improved Retention: The repetition of concepts in MCQs helps you retain information for a longer period, which is essential for the exam.

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Conclusion

The CAIIB ABM Important MCQs listed above are valuable resources to enhance your preparation. Regular practice of these questions will not only boost your knowledge but also help you build confidence for the exam. By focusing on core topics like financial management, risk assessment, and regulatory compliance, you will be well-prepared to tackle the challenges of the CAIIB ABM exam. Best of luck with your preparation.

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