SOLVED CAIIB COMBINED PAPER 20:
1. Which of the following are internal factor affecting credit risk?
(i) Excessive lending to cyclical industries,
(ii) Protectionist policies of other countries,
(iii) Low quality of credit appraisal and monitoring
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
2. Which of the following are correct regarding term loans by the banks?
(i) Asset liability matching is an important consideration in term financing,
(ii) Current ratio is the most important ratio in appraisal of a term loan,
(iii) Installment of term loan, payable within one year is considered as current liability
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
3. Total assets is Rs 20 lac, current liabilities Rs 10 lac and capital and reserves Rs 4 lac. What is the debt-equity ratio?
a. 1:1
b. 1.25:1
c. 1.5:1
d. 1.75:1
Ans - c
Explanation:
As per Balance sheet rule,
Total assets = Total liabilities
Since total assets here is Rs 20 lac hence total liabilities must be 20 lac.
Now Long term debt = 20-(10+4) = 6 lac
and capital + reserve (TNW i.e tangible net worth) = 4 lac
Since DER = TL/TNW or debt/ equity or TL/equity
Hence 6/4 = 1.5
4. BPLR system of lending rates was replaced by base rate system with effect from ......
a. 01 Jun 2010
b. 01 Jul 2011
c. 01 Jun 2011
d. 01 Jul 2010
Ans - d
5. ...... % of small enterprises advances should go to micro enterprises in case of foreign banks.
a. 20
b. 40
c. 60
d. 80
Ans - c
6. The conduct of LC business is governed by......
a. RBI
b. IRDA
c. UCPDC 600
d. AMFA
Ans - c
7. The amount of term loan installment is Rs 15000/- per month, Monthly average interest on TL is Rs 10000/-. If the amount of depreciation is Rs 30000/- p.a and PAT is Rs 300000/-. What would be the DSCR?
a. 1
b. 1.5
c. 2
d. 2.5
Ans - c
Explanation:
Since DSCR = (interest + PAT + Depreciation) / ( interest + installment of TL )
= (10000×12 + 300000 + 30000)/(10000×12 + 15000×12)
= (120000 + 330000) / (120000 + 180000)
= 450000/300000
= 1.5
8. Which of the following are macro level action for mitigation of credit risk?
(i) Improving appraisal standards of credit proposals,
(ii) Periodically reviews of the exposure norms for single and group borrowers,
(iii) Frequent reviews of norms and fixing internal limits for aggregate commitments to specific sectors of the industry or business
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - c
9. Regulated Interest rates by RBI, are applicable for credit limit up to Rs ... lakh.
a. 1
b. 2
c. 3
d. 5
Ans - b
10. The total priority sector target for foreign banks, operating in India with less than 20 branches, is ...
a. 20 %
b. 32 %
c. 40 %
d. 18 %
Ans - b
11. Which of the following is ratio, indicative of the repaying capacity of a borrower?
a. Quick ratio
b. TOL/TNW
c. DSCR
d. DER
Ans - c
12. Bank guarantee should normally have a maturity of more than ......
a. 5 years
b. 10 years
c. 15 years
d. 20 years
Ans - b
(i) Excessive lending to cyclical industries,
(ii) Protectionist policies of other countries,
(iii) Low quality of credit appraisal and monitoring
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
2. Which of the following are correct regarding term loans by the banks?
(i) Asset liability matching is an important consideration in term financing,
(ii) Current ratio is the most important ratio in appraisal of a term loan,
(iii) Installment of term loan, payable within one year is considered as current liability
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - b
3. Total assets is Rs 20 lac, current liabilities Rs 10 lac and capital and reserves Rs 4 lac. What is the debt-equity ratio?
a. 1:1
b. 1.25:1
c. 1.5:1
d. 1.75:1
Ans - c
Explanation:
As per Balance sheet rule,
Total assets = Total liabilities
Since total assets here is Rs 20 lac hence total liabilities must be 20 lac.
Now Long term debt = 20-(10+4) = 6 lac
and capital + reserve (TNW i.e tangible net worth) = 4 lac
Since DER = TL/TNW or debt/ equity or TL/equity
Hence 6/4 = 1.5
4. BPLR system of lending rates was replaced by base rate system with effect from ......
a. 01 Jun 2010
b. 01 Jul 2011
c. 01 Jun 2011
d. 01 Jul 2010
Ans - d
5. ...... % of small enterprises advances should go to micro enterprises in case of foreign banks.
a. 20
b. 40
c. 60
d. 80
Ans - c
6. The conduct of LC business is governed by......
a. RBI
b. IRDA
c. UCPDC 600
d. AMFA
Ans - c
7. The amount of term loan installment is Rs 15000/- per month, Monthly average interest on TL is Rs 10000/-. If the amount of depreciation is Rs 30000/- p.a and PAT is Rs 300000/-. What would be the DSCR?
a. 1
b. 1.5
c. 2
d. 2.5
Ans - c
Explanation:
Since DSCR = (interest + PAT + Depreciation) / ( interest + installment of TL )
= (10000×12 + 300000 + 30000)/(10000×12 + 15000×12)
= (120000 + 330000) / (120000 + 180000)
= 450000/300000
= 1.5
8. Which of the following are macro level action for mitigation of credit risk?
(i) Improving appraisal standards of credit proposals,
(ii) Periodically reviews of the exposure norms for single and group borrowers,
(iii) Frequent reviews of norms and fixing internal limits for aggregate commitments to specific sectors of the industry or business
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - c
9. Regulated Interest rates by RBI, are applicable for credit limit up to Rs ... lakh.
a. 1
b. 2
c. 3
d. 5
Ans - b
10. The total priority sector target for foreign banks, operating in India with less than 20 branches, is ...
a. 20 %
b. 32 %
c. 40 %
d. 18 %
Ans - b
11. Which of the following is ratio, indicative of the repaying capacity of a borrower?
a. Quick ratio
b. TOL/TNW
c. DSCR
d. DER
Ans - c
12. Bank guarantee should normally have a maturity of more than ......
a. 5 years
b. 10 years
c. 15 years
d. 20 years
Ans - b