CAIIB Free Mock Test, Online Practice Quiz & Flashcards

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the main focus of the provided text?

Benefits of CAIIB Online Mock Tests

CAIIB Telegram Group information

Unit wise Mock tests for CAIIB Paper-I

Definition of risk in Forex operations (correct)

Which section of the CAIIB exam deals with Retail Banking?

Paper 3 (correct)

Memory based mocks

Paper 1 - Advanced Bank Management

Paper 2 - Bank Financial Management

How many questions are included in a Full length Mock for CAIIB Paper-II - Bank Financial Management?

100 questions

350 questions

500 questions (correct)

300 questions

What is the purpose of the provided text snippet?

To advertise online mock tests for CAIIB exams Signup and view all the answers

Which paper combo includes Paper 1 ABM and Paper 2 BFM for the CAIIB exam?

CAIIB Combo (Paper 1 ABM+ Paper 2 BFM) Signup and view all the answers

What is the total number of questions provided across all the mock tests mentioned in the text?

~2700 questions Signup and view all the answers

What is the primary purpose of a Letter of Credit (LC) transaction?

To facilitate international trade between buyers and sellers in different countries Signup and view all the answers

Which of the following parties is responsible for opening and issuing the Letter of Credit?

The applicant/opener Signup and view all the answers

What is the role of the advising bank in the Letter of Credit transaction?

To authenticate the signatures and SWIFT messages related to the LC Signup and view all the answers

What is the purpose of the confirming bank in the Letter of Credit transaction?

To add its confirmation to the LC at the request of the beneficiary and the opening bank Signup and view all the answers

What is the maximum amount that a bank can expose itself to a particular counter party called?

Counter party limit Signup and view all the answers

What is the role of the beneficiary in the Letter of Credit transaction?

To ship the goods to the buyer Signup and view all the answers

What is the relationship between two banks that have mutual accounts with each other known as?

Correspondent banking relationship Signup and view all the answers

Which party is responsible for negotiating the documents and receiving payment in the Letter of Credit transaction?

The advising bank Signup and view all the answers

Which of the following limits restricts the operational risk on large deals?

Deal size limit Signup and view all the answers

What is a derivative based on?

Underlying financial asset Signup and view all the answers

Which limit specifies the maximum amount of exposure up to the spot date and future date?

Settlement risk limit Signup and view all the answers

What does a deal size limit determine?

Highest amount for which a deal can be entered Signup and view all the answers

Who is responsible for providing reimbursement authorization instructions to the reimbursing bank?

Issuing bank Signup and view all the answers

Which bank pays and presents a reimbursement claim to the reimbursing bank?

Claiming bank Signup and view all the answers

What is the role of the reimbursing bank in a letter of credit transaction?

Providing reimbursement authorization instructions Signup and view all the answers

Who provides reimbursement in a letter of credit transaction?

Reimbursing bank Signup and view all the answers

When is the reimbursing bank bound by provisions in the Letter of Credit?

Never Signup and view all the answers

What is the responsibility of the issuing bank regarding compliance certificates?

Not to request such certificates from the claiming bank Signup and view all the answers

What is the primary purpose of pre-shipment finance or Packing Credit Loan (PCL)?

To provide working capital for procuring, processing, and manufacturing goods meant for export Signup and view all the answers

Which of the following is a pre-sanction requirement for availing pre-shipment finance?

The borrower's name should not appear on the RBI's caution list Signup and view all the answers

What should the bank do to prevent the borrower from availing multiple pre-shipment finance facilities against the same order or Letter of Credit?

Note the fact of its credit facility on the reverse side of the original LC or contract Signup and view all the answers

Which of the following is NOT a pre-sanction requirement for availing pre-shipment finance?

The borrower must have a minimum net worth specified by the bank Signup and view all the answers

What should the bank do to assess the creditworthiness of the foreign buyer?

Call for credit reports or status reports on the foreign buyer Signup and view all the answers

What is the purpose of the Export/Import Code number (IEC) for the borrower?

To identify the borrower's export and import transactions Signup and view all the answers

Study Notes

Risk Management

Counterparty limit: maximum amount a bank can expose to a particular counterparty
Country risk: maximum exposure on a single country
Dealer limits: maximum amount a dealer can keep exposure during operating hours
Stop loss limit: maximum movement of rates against the position held, triggering the limit
Settlement risk: maximum amount of exposure to any entity, up to spot date and future date
Deal size limit: highest amount for which a deal can be entered, fixed to restrict operational risk on large deals

Derivatives

A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset or set of assets
Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes, and stocks

Correspondent Banking

Correspondent banking refers to the relationship between two banks with mutual accounts or one having an account with the other
In a larger sense, it means a relationship and servicing of banking needs as agents, without having an account relationship

Letter of Credit

Definition: a written commitment to pay the beneficiary when the terms and conditions are fulfilled
Operating process:
- Buyer and seller enter into a sales contract and agree to cover the transaction under a Letter of Credit
- Buyer's bank issues the LC and sends it to the beneficiary through its branch or correspondent
- Advising bank in the seller's country advises the LC to the beneficiary after authenticating signatures/swift

Reimbursement

Definition: instructions/authorization issued by the issuing bank to a reimbursing bank to reimburse the claiming bank
Reimbursement authorization is a separate transaction from the credit
Issuing bank is responsible for providing information required to the reimbursing bank

Pre-shipment Finance

Definition: working capital advance for procuring/processing/manufacturing of goods meant for export
Eligibility criteria:
- Borrower is a bank's customer
- Export/Import Code number (IEC) allotted by Director General of Foreign Trade
- Not on the caution list of RBI or the Specific Approval list of ECGC
- Capacity to execute the order within the stipulated time with a genuine and valid export order or Letter of Credit

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Prepare for the CAIIB (Certified Associate of Indian Institute of Bankers) exam with this online mock test series. The mock tests cover Paper-I (Advanced Bank Management) and Paper-II (Bank Financial Management), with unit wise mocks, case study mocks, full length mocks, and memory based mocks available for practice.

CAIIB Online Mock Tests

Choose a study mode