BFM A - Unit 5 set 1 - Motivational Banker

1. What is factoring?

A legal arrangement between two sellers

A financial arrangement between a factor company and a seller of goods

A contract between a buyer and a seller

A purchase agreement between a factor company and a buyer

Question 1 of 34

2. What percentage of the invoice value can be immediately financed through factoring?

50-60%

60-70%

75-80%

80-90%

Question 2 of 34

3. What is one advantage of factoring for the importer?

Not Requires the use of LC, reducing costs

Provides credit protection on all approved debtor limits

Maintains sales ledger

Provides advisory services for new areas

Question 3 of 34

4. What does factoring provide regarding the buyers?

Credit check on sellers

Credit protection on all approved debtor limits

Advisory services for new areas, countries

Sales ledger maintenance

Question 4 of 34

5. What is forfaiting?

A mechanism for importing goods without recourse

A mechanism for discounting export receivables on a with recourse basis

A mechanism for discounting export receivables on a without recourse basis

A mechanism for providing finance for domestic trade

Question 5 of 34

6. What type of risks does forfaiting take away?

Political and commercial risks

Financial and operational risks

Market and exchange rate risks

Legal and regulatory risks

Question 6 of 34

7. What percentage of finance is made available against the invoice drawn through forfaiting?

50%

75%

90%

100%

Question 7 of 34

8. What is one advantage of forfaiting regarding credit administration?

Requires extensive credit administration

Freedom from credit administration and follow-up

Increases paperwork related to credit administration

Requires additional credit monitoring

Question 8 of 34

9. What is the aim of EDPMS and IDPMS?

To facilitate efficient processing of import transactions only.

To bridge information gaps between Customs and Banks.

To streamline export data processing and monitoring.

To monitor domestic transactions.

Question 9 of 34

10. Which of the following functions can be performed using EDPMS?

Accessing information on import transactions.

Submitting import-related reports to RBI.

Accessing caution-listed exporters' information.

Requesting extension of time limits for import transactions.

Question 10 of 34

11. Who is responsible for updating the IDPMS database in real-time?

Customs officials.

Exporters.

Authorized Dealers (AD) banks.

Importers.

Question 11 of 34

12. What is the main impact of IDPMS implementation?

Increased paperwork for import transactions.

Discontinuation of submission of BEF statements by banks.

Enhanced manual processing of import data.

Reduced efficiency in import monitoring.

Question 12 of 34

13. Which regulatory body oversees exports from India and imports into the country?

Reserve Bank of India (RBI)

Ministry of Finance

Director General of Foreign Trade (DGFT)

Securities and Exchange Board of India (SEBI)

Question 13 of 34

14. What is the purpose of the Importer-Exporter Code (IEC) number?

To regulate foreign currency transactions.

To issue directions regarding export/import financing.

To serve as the registered number for firms engaged in international trade.

To monitor import/export policies and procedures.

Question 14 of 34

15. Which financial transactions require realization in convertible foreign currency (FC)?

All export proceeds

Import financing

Export bills drawn in Indian Rupees (INR)

Export proceeds realized through a VOSTRO account in India

Question 15 of 34

16. In which financial year do all forex transactions take place?

January to December

April to March

July to June

October to September

Question 16 of 34

17. Which form is applicable for all exports except for software exports?

SOFTEX Form

EDF Form

FEMA Form

Trade Samples Form

Question 17 of 34

18. What is the purpose of the SOFTEX Form?

To declare exports of goods other than software

To declare exports of software in non-physical form

To declare exports of trade samples and personal effects

To declare imports of ship stores and aircraft spare parts

Question 18 of 34

19. Which category of exports is exempt from the submission of Export Declaration forms?

All types of exports require submission of Export Declaration forms

Goods imported free of cost for re-export

Software exports

Ship stores and aircraft spare parts

Question 19 of 34

20. Under what conditions can Authorized Dealers (ADs) waive the requirement of submitting EDF?

For all exporters without any conditions

Only for status holders without any annual limit

For status holders subject to an annual limit based on previous years' performance

For pharmaceutical exports only

Question 20 of 34

21. How many copies of the Export Declaration Form (EDF) are submitted to Customs at the time of shipment?

Single copy

Duplicate copies

Triplicate copies

Quadruplicate copies

Question 21 of 34

22. What does Customs do with the original copy of the Export Declaration Form (EDF) after certification?

Forward it to the exporter

Retain it and forward it to RBI

Hand it over to the Authorized Dealer (AD)

Destroy it

Question 22 of 34

23. How long do exporters have to submit the duplicate copy of the EDF to the Authorized Dealer (AD)?

14 days

21 days

30 days

45 days

Question 23 of 34

24. What action does the AD take if the duplicate copy of the EDF is misplaced?

Reject the shipment

Request a new declaration from Customs

Accept a Custom-certified copy in its place

Report the incident to RBI

Question 24 of 34

25. What is the purpose of getting the Export Declaration Form (EDF) countersigned by the Authorized Dealer (AD) when exporting goods through postal services?

To verify the authenticity of the parcel

To ensure compliance with export regulations

To expedite customs clearance

To obtain insurance coverage for the shipment

Question 25 of 34

26. In the process of exporting goods through postal services, what happens to the original and duplicate copies of the Export Declaration Form (EDF)?

Both copies are submitted to the postal authority

The original copy is submitted to the postal authority, and the duplicate copy is retained by the exporter

The original copy is retained by the exporter, and the duplicate copy is submitted to the postal authority

Both copies are retained by the Authorized Dealer (AD)

Question 26 of 34

27. What condition allows the parcel to be addressed directly to the consignee when exporting goods through postal services?

If the parcel is small and lightweight

If the dispatch is made against full payment

If the parcel contains perishable items

If the consignee is a government entity

Question 27 of 34

28. Which entity provides the required information to the reimbursing bank according to the Uniform Rules for Bank-to-Bank Reimbursement (URR 725)?

Claiming bank

Issuing bank

Reimbursing bank

Tele-transmission service provider

Question 28 of 34

29. What is the requirement for cancellation of an irrevocable Reimbursement Authority (RA) according to URR 725?

Notice to the claiming bank

Consent from the reimbursing bank

Approval from the Tele-transmission service provider

Confirmation from the claiming bank

Question 29 of 34

30. How long does the reimbursing bank have to process claims submitted via Tele-transmission?

1 banking day

2 banking days

3 banking days

5 banking days

Question 30 of 34

31. When can claims be submitted according to URR 725?

Within 24 hours of the due date

5 days after the due date

10 days before the due date

On the due date

Question 31 of 34

32. What does ISP 1998 stand for in the context of Standby LC?

International Standard Procedure 1998

Independent Standby Provisions 1998

International Standby Practices 1998

Irrevocable Standby Protocol 1998

Question 32 of 34

33. What are the risk factors associated with Standby LC?

Lack of shipment and insurance evidence

High issuance fees

Limited bank involvement

Long processing times

Question 33 of 34

34. In which situations are Standby LCs typically issued?

When bank guarantees are readily available

When trade is conducted solely on a cash basis

When there is uncertainty about the buyer's ability to pay

When import evidence is not required

Question 34 of 34

BFM A – Unit 5 set 1

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