ABM C - Unit 23 - set 2 - Motivational Banker

1. Which of the following is NOT an accredited Credit Rating Agency (CRA) recognized by RBI?

CRISIL Limited

Brickwork Ratings India Pvt. Ltd.

Dun & Bradstreet Corporation

Moody's

Question 1 of 25

2. What is the significance of assigning different risk weights to assets based on their external ratings?

It helps in identifying potential frauds

It determines the interest rates charged on loans

It assists in calculating capital adequacy requirements

It simplifies the loan application process

Question 2 of 25

3. Which type of rating approach is used by banks until they have sufficient data for an Advanced Internal Rating Based approach?

Domestic rating approach

External rating approach

Historical rating approach

Personal rating approach

Question 3 of 25

4. What is the significance of having both internal and external credit ratings in the banking sector?

It provides redundancy in the rating process

It allows for cross-validation of creditworthiness assessments

It increases regulatory compliance burdens

It hinders efficient decision-making by bank management

Question 4 of 25

5. Which of the following is NOT an international Credit Rating Agency (CRA) recognized by RBI?

Fitch

Moody's

Acuite Ratings and Research Limited

Standard & Poor's

Question 5 of 25

6. What is the primary purpose of using credit derivatives in risk management?

To transfer credit assets to other institutions

To hedge against the risks associated with credit assets

To speculate on changes in credit markets

To eliminate credit risk entirely

Question 6 of 25

7. Which of the following is NOT a type of credit derivative mentioned in the passage?

Collateralised debt obligations (CDO)

Credit Default Swaps (CDS)

Credit Default Insurance (CDI)

Credit Linked Notes (CLN)

Question 7 of 25

8. What is the main feature of a Credit Default Swap (CDS)?

It covers both principal and interest payments in case of default

It can only be offered on conventional bank loans

It involves the payment of a premium by the risk buyer to the risk seller

It is standardised by the International Monetary Fund (IMF)

Question 8 of 25

9. What is the role of the Protection Buyer in a Credit Default Swap (CDS) transaction?

To underwrite the default risk

To seek protection against credit default or specified credit events

To purchase high-quality securities on behalf of the risk seller

To define credit events as per ISDA guidelines

Question 9 of 25

10. How is a Credit Linked Note (CLN) structured?

It directly transfers credit risk to investors

It pays a premium to the risk seller for protection against credit default

It issues notes linked to underlying credit, with risk protection provided by a SPV

It covers both principal and interest payments in case of default

Question 10 of 25

11. What does RBI advise lenders regarding credit appraisal reports prepared by outside consultants?

Lenders should rely solely on credit appraisal reports prepared by outside consultants.

Lenders should conduct their independent and objective credit appraisal in all cases and must not depend on credit appraisal reports prepared by outside consultants.

Lenders should outsource credit appraisal entirely to outside consultants.

Lenders should only consider credit appraisal reports from in-house consultants of the borrowing entity.

Question 11 of 25

12. What should lenders ascertain regarding equity capital brought in by promoters/shareholders?

The number of shareholders involved in the project.

The nationality of the shareholders.

The source and quality of equity capital brought in by the promoters/shareholders.

The annual revenue of the shareholders' companies.

Question 12 of 25

13. According to RBI guidelines, what is the purpose of including the Director Identification Number (DIN) in the data submitted by banks to RBI/Credit Information Companies?

To track the personal expenses of directors.

To monitor the end-use of funds by companies.

To identify directors who have similar names.

To facilitate communication between directors.

Question 13 of 25

14. What does RBI advise banks to do in case of doubt arising from identical names of directors?

Seek a declaration from the borrowing company.

Use independent sources for confirmation of the identity of directors.

Consult other banks for verification.

Ignore the doubt and proceed with the credit appraisal.

Question 14 of 25

15. What does RBI recommend regarding the engagement of auditors for certification of diversion/siphoning of funds?

Banks should not engage auditors for such certification.

Banks should rely solely on certification given by borrower's auditors.

Banks could consider engaging their own auditors for specific certification purposes without relying on certification given by borrower's auditors.

Banks should not include any certification clause in loan agreements.

Question 15 of 25

16. How many Credit Information Companies (CICs) are currently operational in India?

Question 16 of 25

17. What is the primary purpose of the Credit Information Companies (Regulation) Act, 2005?

To regulate the banking sector in India

To strengthen the legal mechanism for credit information sharing

To promote financial inclusion

To regulate the stock market

Question 17 of 25

18. According to Section 15 of the Credit Information Companies (Regulation) Act, 2005, what is required of every Credit Institution?

To submit data to all CICs

To become a member of at least one CIC

To maintain credit information databases

To obtain credit information from all CICs

Question 18 of 25

19. What is the maximum one-time membership fee that CICs can charge Credit Institutions (CIs)?

Rs. 5,000 each

Rs. 10,000 each

Rs. 15,000 each

Rs. 20,000 each

Question 19 of 25

20. How frequently should Banks/FIs submit the list of suit-filed accounts and non-suit filed accounts of wilful defaulters of Rs. 25 lakh and above to all CICs?

Quarterly

Annually

Monthly or more frequent basis

Bi-annually

Question 20 of 25

21. What is the primary purpose of the Central Repository of Information on Large Credits (CRILC) established by the RBI?

To regulate the banking sector in India

To collect, store, and disseminate credit data to lenders

To promote financial inclusion

To monitor stock market transactions

Question 21 of 25

22. What is the threshold for reporting credit information to CRILC in terms of aggregate fund-based and non-fund based exposure?

Rs. 1 crore

Rs. 5 lakhs

Rs. 5 crores

Rs. 10 crores

Question 22 of 25

23. Which type of loans are exempted from reporting to CRILC?

Housing loans

Crop loans

Personal loans

Educational loans

Question 23 of 25

24. What is the threshold for reporting outstanding current account balance to CRILC?

Rs. 5 lakhs

Rs. 1 crore

Rs. 10 crores

Rs. 50 lakhs

Question 24 of 25

25. What is the purpose of the rating system introduced in banking?

To provide information about borrowers' credit history

To mitigate market risks and operational risks

To quantify the risks involved in a credit proposal

To facilitate information sharing among Credit Information Companies

Question 25 of 25

ABM C – Unit 23 – set 2

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