BANK MCQ Quiz Hub

1. The advance remittance against imports is subject to the conditions
the amount should not exceed USD 25000.
it should earn interest at LIBOR
the import should be capital goods.
None of the above

2. . Import license are required
for all imports.
for all capital imports.
import of goods covered by negative list
. For all the above.

3. A bank opening a letter credit gets charge over the imported goods till payment is made by the importer under the provisions of
application for the credit
the letter of credit.
. the sale contract
the import licence.

4. The maximum period of credit fixed by RBI depends on
Anticipated life of export goods
. Extent of foreign competition
Nature of the foreign market
All the above

5. For deferred payment import remission should be sought from the Reserve Bank when
the period of credit beyond one user.
the imports in a year exceeds USD 20 million.
the imports per transaction exceeds USD 20 million.
all in the cost borrowing exceeds LIBOR.

6. Standby letters of credit can be used by authorized dealers in India for
exporters liability on account of exports from India.
selective importers
both A and B above.
None

7. An exporter cannot obtain details about prospective buyers from
yellow pages.
web sites.
Indian embassy abroad
None of the above

8. Under advance remittance as a method of payment the credit risk is borne by
the importer.
the exporter.
importer’s bank
none.

9. Open account was used as a method of payment indicates
the transactions are legal.
the buyer has no money to pay immediately
. the seller wants to sell desperately.
None of the above

10. Open account method of payment is beneficial to
the buyer
the seller.
the buying agent
both the buyer and seller

11. Cash on delivery method is normally used for
bulk cargo with immediate market
slow-moving terms
small but valuable items sent by post.
exports to countries with balance of payments problem

12. Documents against payment term indicates
the documents are sent by post.
the export is risky
. the collecting bank will hand the documents to the buyer against payment
the exporter delivers the documents to the bank against advance.

13. The best form of method of payment for an importer would be
open account
letter of credit.
documents against payment
Advance remittance.

14. When goods are sent to an agent of an exporter in the importing country, the method of payment adopted is
open account.
letter of credit
consignment sale.
document against acceptance.

15. The method of payment where the exporter relies on the undertaking of a bank to pay is.
bank guaranteebove.
letter of credit
letter of comfort.
None of the above

16. Letter of credit transactions are generally governed by the provisions of
Uniform customs and Procedures for Documentary Credits.
United Conference on Practices for Documentary Credits.
Uniform Customs and Practice for Documentary Credits
Uniform Code and Procedure for Documentary Credits.

17. The beneficiary under a letter of credit is
the bank opening the credit.
the customer of the opening bank.
the confirming bank.
the exporter.

18. A letter of credit is opened on behalf of
exporter customers.
importer customers
any party wishing to make payment abroad
None of the above

19. A letter of credit is addressed to
the beneficiary.
. the negotiating bank
the reimbursing bank
none

20. A letter of credit that provides for granting of pre-shipment finance as well as storage of goods in the name of the bank is
a red clause letter of credit
a standby letter of credit.
a green clause letter of credit.
a secured letter of credit.

21. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as
. revocable
irrevocable
. revocable or irrevocable at the option of the beneficiary.
revocable or irrevocable at the option of the negotiating bank.

22. Payment for bills drawn under letter of credit should be made by the negotiating bank
after the documents are approved by the issuing bank.
immediately or on a future date depending upon the terms of credit. C.
only in foreign currency.
immediately in all cases.

23. Under an acceptance letter of credit, the responsibility of the issuing bank is
only to accept the bill
to pay against the bill
to accept the immediately and also to pay the amount of the bill on its due date
to get the acceptance of the importer on the bill.

24. Which of the following organisation does not specialize in training activity?
Indian Institute of foreign trade
Indian Institute of packing
Indian trade promotion organisation
None of the above

25. Under the confirmed letter of credit the undertaking the confirming bank is
in addition to that of the opening bank.
in substitution of the undertaking of the opening bank
subject to government policies to the exporter country
None of the above

26. A credit which provides for reinstatement of the amount as and when bills are drawn under it is called
reinstatement credit
reimbursement credit
revolving credit.
back-to-back credit.

27. Working Group for approval of project exports does not include
Reserve Bank of India.
Financing bank
Exim bank
DGFT.

28. For project exports fulfilling norms for period of credit, in principle sanction can be given by
the financing bank.
Exim bank
The financing bank for contracts worth up to Rs 25 crores and Exim bank for contracts worth up to RS 100 crores
the financing bank for contracts worth up to Rs 100 crores and Exin bank for contracts worth up to Rs 25 crores.

29. The following statement with respect to moratorium on repayment of principal on project export is not correct
For capital goods exports the maximum period of moratorium is 1 year.
For turnkey project exports the maximum period moratorium is 2 years.
For consumer goods export the maximum period moratorium is 3 years.
None of the above

30. Export of services on deferred payment terms requires clearance of the Working Group for
contracts beyond Rs 5 crores.
contracts beyond 10 crores
contracts beyond 20 crores
all contracts.

31. In case of failure of the exporter, the liability of the bank which has issued the performance guarantee is to
compel the exporter to fulfil his obligation.
find alternative contractor who can execute the contract
financially compensate the beneficiary up to the value of the contract
financially compensate the beneficiary up to the guaranteed amount.

32. Advance payment guarantee assures
Advance payment guarantee assures
the exporter that the importer will make advance payments.
the importer to refund the money he has advanced to the exporter, if the latter fails
the exporter that the bank will extend credit for the contract.

33. Indian parties are prohibited from making investment in a foreign entity engaged in the business of
real estate.
real estate or banking
real estate or banking or agriculture.
None of the above

34. Direct investment in a joint venture abroad can be made by an Indian party with ceiling on limit under automatic route if the investment is made from
balances in EEFC account
funds raised through ADR/GDR.
balances in EEFC account or funds raised through ADR/GDR
no such provision.

35. Which of the following is not an approved method of funding direct investment in a foreign joint venture?
Capitalisation of reserves
Issuing shares in the foreign market.
Swap of shares
Utilisation of ECB proceeds.

36. An Indian entity which has made direct investment abroad is not required to
repatriate to India the dues receivable from foreign entity.
submit an annual performance report to Reserve Bank
ensure return on investment is not less than the prime rate in the country of investment.
None of the above

37. . Export Credit Guarantee Corporation(ECGC) policies do not cover risk against A. buyer’s protracted default to pay for the goods. B. war in buyer’s country. C. buyer’s failure to obtain necessary import licence or exchange authorization from authorities in his country. D. cancellation of export licence.
buyer’s protracted default to pay for the goods.
war in buyer’s country.
buyer’s failure to obtain necessary import licence or exchange authorization from authorities in his country
cancellation of export licence.

38. The standard policy of ECGC protects loss to the extent of
90% for political risk and 60% for commercial risk.
90% for both political and commercial risks.
60% for political risk and 90% for commercial risk
60% for both political and commercial risks.

39. The maximum amount of claim against an individual buyer that ECGC will accept under its standard policy issued to an exporter is known as
maximum liability.
credit limit.
individual limit.
there is no such ceiling.

40. The standard policy of ECGC is issued
on a whole turnover basis for 24 months.
on whole turnover for 12 months.
against each consignment separately.
on monthly basis.

41. Unless prohibited by letter of credit, a bank can accept
claused bill of lading
received for shipment bill of lading
bill of lading indicating that the carrying vessel is propelled by sail only
None of the above

42. A red clause letter of credit is also known as
standby credit.
anticipatory credit.
automatic credit.
back to back credit.

43. Guarantee credit is another name for
back to back credit
anticipatory credit
standby credit
none of the above.

44. Amendment to a letter of credit should be advised through the
negotiating bank
advising bank.
issuing bank
None of the above

45. 19 A guarantee issued by a bank in lieu of bid money to be deposited by the exporter to participate in the tender is a
bid bond guarantee
performance guarantee.
advance payment guarantee
retention money guarantee.

46. A guarantee issued in favour of an importer so that he releases entire contract amount instead of retaining a portion is
performance guarantee
retention money guarantee
bid bond guarantee.
advance payment guarantee.

47. A guarantee issued in favour of an importer so that he releases entire contract amount instead of retaining a portion is
performance guarantee
retention money guarantee
bid bond guarantee.
advance payment guarantee.

48. For export guarantees issued a bank may obtain cover from ECGC under its
A. export performance guarantee.
retention money guarantee
bid bond guarantee
advance payment guarantee.

49. The statutory basis for regulation of foreign trade in India is
Foreign Trade( Development and Regulation) Act.
Foreign Exchange Management Act.
Customs Act.
Director General of Foreign Trade.

50. Two parties agreeing to buy and sell from each other without involving payment is known as
Domestic trade.
foreign trade
Countertrade
non-paying trade.

51. . Banks can permit a reduction in the value of export bills up to
1%.
2%
5%
10%.

52. . Banks can permit a reduction in the value of export bills up to
1%.
2%
5%
10%.

53. The undrawn balance on export bills are permitted up to
10%
15%
5%
2%

54. For imports from Pakistan, payment should be made in
US dollars.
Indian Rupee
Pakistan currency
any currency.

55. The time limit for export realization
is 2 months from the date of shipment.
is 3 months from the date of shipment C. .
is 4 months from the date of shipment
is 6 months from the date of shipment.

56. Comprehensive risk policy covers
only commercial risk.
only political risk
both commercial and political risk
None of the these

57. 21 Export turnover policy is for
large exporters who pay not less than Rs 10 lakhs per annum towards premium
large exporters who pay not less than 25 lakhs per annum towards premium
small exports who pay less than 10 lakhs per annum.
small exporters who pay more than 10 lakhs premium per annum.

58. Which one of the following statements relating to Consultancy and Technology Services Finance Programme of Exim Bank is Wrong?
The exporter is expected to get an advance payment of 25%.
The export should be covered by ECGC policy.
Minimum period of loan is seven years.
They should be secured by a government guarantee or letter of credit.

59. For Export Oriented Units, Exim Bank finances
term loans only.
both working capital and term loans
term loans, working capital as long term working capital.
only investment overseas.

60. Which one of the following is not a common feature of direct lending by Exim Bank?
They are for medium or long-term.
The size of the loan is high.
Security is not insisted upon
Interest rates are relatively low.

61. For availing discounting of bills with forfeiter, the exporter should produce
realised bills of exchange or promissory notes accepted by importer’s bank
realised bills of exchange or promissory notes accepted by exporter’s bank.
Reserve Bank permit.
no objection certificate from Exim bank.

62. Which of the following is not a basic objective of documentation in foreign trade?
to assure that the exporter will receive the payment.
to assure that the importer will receive the goods.
to reduce foreign exchange risk
none of the above.

63. Which of the following is not an important document in foreign trade?
check for the value of goods.
a draft.
bill of lading.
a letter of credit.

64. _ risk is the potential exchange loss from outstanding obligations as a result of exchange-rate fluctuations.
Trade.
Exchange
Finance
Transaction

65. Foreign exchange risk can be reduced by using _____.
forward contracts
futures contracts
currency options.
All the above

66. Which of the following is not a condition for drafts to be negotiable?
must be in writing, signed by the drawer.
must contain a promise to pay a certain sum if goods are receive
must contain an order to pay
must be payable on sight or at a specified date.

67. If a draft is made to bearer, payment should be made to _____.
a bank.
drawer
acceptor
anyone who presents the draft.

68. If a draft is accepted by a bank, it becomes a _____.
valid draft.
demand draft
usance draft
bankers acceptance.

69. If a draft is accepted by a bank, it becomes a _____.
valid draft.
demand draft
usance draft
bankers acceptance.

70. If a draft is accepted by a bank, it becomes a _____.
valid draft.
demand draft
usance draft
bankers acceptance.

71. Forms of countertrade include the following except ___.
simple barter.
clearing arrangement
mutual agreement
counter purchase