JAIIB RBWM MCQ 2026 — 100 Practice Questions with Answers & Explanations

Q1. What is the maximum Loan-to-Value (LTV) ratio permitted for a home loan of ₹25 lakh under RBI guidelines?

• A) 75%
• B) 80%
• C) 90% ✓
• D) 85%

Answer: C. For home loans up to ₹30 lakh, RBI permits a maximum LTV of 90%. For ₹30–75 lakh it is 80%, and above ₹75 lakh it is 75%.

Q2. Under RBI norms, the maximum LTV allowed for a gold loan is:

• A) 80%
• B) 85%
• C) 75% ✓
• D) 70%

Answer: C. RBI caps gold loan LTV at 75% of the gold’s value. This applies to loans against gold ornaments and jewellery by all regulated entities.

Q3. Education loan moratorium period as per IBA model scheme is:

• A) Course period + 6 months or 1 year after getting job, whichever is earlier ✓
• B) Course period only
• C) 12 months from disbursement
• D) 6 months after course completion only

Answer: A. Under the IBA model education loan scheme, repayment starts after the moratorium: course duration + 6 months, OR 1 year after securing employment — whichever is earlier.

Q4. Education loans up to what amount require no collateral under IBA guidelines?

• A) ₹4 lakh
• B) ₹5 lakh
• C) ₹7.5 lakh ✓
• D) ₹10 lakh

Answer: C. Under revised IBA guidelines, education loans up to ₹7.5 lakh require no collateral (only parent/guardian co-obligation). For loans above ₹7.5 lakh, tangible collateral is required.

Q5. Which of the following is the central government portal for students to apply for education loans from multiple banks?

• A) PM Kisan Portal
• B) Udyam Portal
• C) PM Vidya Lakshmi Portal ✓
• D) Jan Samarth Portal

Answer: C. PM Vidya Lakshmi is the central portal (vidyalakshmi.co.in) where students can apply for education loans from multiple participating banks through a single application form.

Q6. Home loan interest deduction under the Income Tax Act is available under:

• A) Section 80C
• B) Section 80E
• C) Section 24(b) ✓
• D) Section 80D

Answer: C. Home loan interest deduction: Section 24(b) — up to ₹2 lakh p.a. for self-occupied property. Home loan principal repayment: Section 80C. Education loan interest: Section 80E.

Q7. Which type of retail loan is classified as unsecured?

• A) Home loan
• B) Vehicle loan
• C) Gold loan
• D) Personal loan ✓

Answer: D. Personal loans are unsecured — no collateral is required. They are sanctioned based on income, credit score, and repayment capacity. Home, vehicle, and gold loans are secured by respective assets.

Q8. In a vehicle loan, the hypothecation of the vehicle is noted on the:

• A) Insurance policy
• B) Loan agreement only
• C) Registration Certificate (RC book) ✓
• D) PAN card of borrower

Answer: C. In a vehicle loan, the bank’s hypothecation is endorsed on the vehicle’s Registration Certificate (RC book) at the Regional Transport Office. Comprehensive insurance in the bank’s name is also mandatory.

Q9. Pre-EMI interest in a home loan under construction refers to:

• A) Penalty for early closure
• B) Interest on the disbursed amount paid before the full loan disbursement and EMI commencement ✓
• C) Processing fee paid upfront
• D) Insurance premium bundled with EMI

Answer: B. During the construction phase, banks disburse the loan in tranches. The borrower pays pre-EMI interest only on the amount disbursed — full EMI (principal + interest) starts after complete disbursement.

Q10. Reverse Mortgage Loan is designed for:

• A) NRI customers
• B) First-time home buyers
• C) Senior citizens who own property ✓
• D) Students studying abroad

Answer: C. Reverse Mortgage allows senior citizens (60+ years) who own a home to mortgage it to the bank and receive periodic payments (or lump sum) as income. No repayment during lifetime; bank settles by selling the property after death.

Q11. A Recurring Deposit (RD) account is best described as:

• A) A lump sum deposit at fixed interest
• B) A transactional account for daily use
• C) A savings scheme with fixed monthly deposits and compounded interest ✓
• D) A deposit where the interest rate is linked to the repo rate

Answer: C. In an RD account, the customer deposits a fixed amount every month for a predetermined tenure. Interest is compounded quarterly and paid on maturity, making it suitable for disciplined monthly savings.

Q12. The minimum balance requirement for a Basic Savings Bank Deposit (BSBD) account is:

• A) ₹500
• B) ₹1,000
• C) ₹100
• D) Nil (zero balance) ✓

Answer: D. BSBD accounts (introduced under financial inclusion guidelines) require zero minimum balance. Holders are entitled to 4 free withdrawals per month and a free RuPay debit card.

Q13. Credit card outstanding not paid by the due date attracts interest from:

• A) Date of statement generation
• B) Due date
• C) Date of transaction (original purchase date) ✓
• D) Date of next billing cycle

Answer: C. If the full outstanding amount is not paid by the due date, banks charge interest from the original transaction date — not from the due date. This is why partial payment still attracts interest on the full outstanding from day one.

Q14. The credit limit on a credit card is set primarily based on:

• A) Customer’s age and residence
• B) Income, credit score, and existing liabilities ✓
• C) Bank branch location
• D) Duration of bank relationship only

Answer: B. Credit card limits are determined by the customer’s income level, CIBIL/credit score, and existing debt obligations. Higher income and better credit score → higher limit.

Q15. MSME classification: A micro enterprise in the manufacturing sector has investment in plant and machinery up to:

• A) ₹25 lakh
• B) ₹50 lakh
• C) ₹1 crore ✓
• D) ₹5 crore

Answer: C. Under the revised MSME definition (effective July 2020): Micro — Investment ≤ ₹1 crore AND Turnover ≤ ₹5 crore. Small — Investment ≤ ₹10 crore AND Turnover ≤ ₹50 crore. Medium — Investment ≤ ₹50 crore AND Turnover ≤ ₹250 crore.

Q16. Which of the following deposits is fully repatriable AND exempt from income tax in India?

• A) NRO Savings Account
• B) RFC Account
• C) NRE Savings Account ✓
• D) FCNR(B) only

Answer: C. NRE accounts: held in INR, fully repatriable, interest is exempt from Indian income tax. NRO accounts: partially repatriable (up to $1 million/year), interest is taxable. FCNR(B) is also repatriable and tax-exempt but held in foreign currency.

Q17. The FCNR(B) deposit is maintained in:

• A) Indian Rupees only
• B) Foreign currency (USD, GBP, EUR etc.) ✓
• C) Both INR and foreign currency
• D) Special Drawing Rights (SDR)

Answer: B. FCNR(B) — Foreign Currency Non-Resident (Banks) — deposits are maintained in foreign currency. This eliminates exchange rate risk for the depositor. Only NRIs and PIOs can open FCNR(B) accounts.

Q18. A Flexi Fixed Deposit links an FD with a savings account so that:

• A) The interest rate changes daily
• B) Surplus funds above a threshold auto-sweep into FD and return to savings when needed ✓
• C) The FD matures automatically every month
• D) The customer receives cash back on FD interest

Answer: B. In a Flexi/Sweep-in FD, amounts above a set threshold in the savings account are automatically transferred to FD (earning higher interest). When the savings account balance falls below a minimum, funds sweep back from the FD — providing both liquidity and higher returns.

Q19. Loan Against Property (LAP) is different from a home loan because:

• A) LAP is unsecured
• B) LAP is only for buying commercial property
• C) LAP is taken against an existing property for any end use, not for purchase ✓
• D) LAP has a lower interest rate than home loan

Answer: C. LAP (Loan Against Property) is a secured loan where the borrower mortgages an existing owned property. The funds can be used for any purpose (business, medical, education). A home loan is specifically for purchasing/constructing a residential property.

Q20. KYC for a retail loan customer requires re-verification when:

• A) The customer changes his mobile number
• B) The loan is fully repaid
• C) There is a change in address, risk profile, or as per periodic KYC schedule ✓
• D) The customer requests it voluntarily

Answer: C. Re-KYC is triggered by material changes in customer details (address, ID), changes in risk category, or as per the bank’s periodic KYC schedule (2/8/10 years for high/medium/low risk). It is not triggered by loan closure alone.

Q21. PM Awas Yojana (PMAY) Credit Linked Subsidy Scheme (CLSS) provides subsidy on:

• A) Principal repayment
• B) Processing fee
• C) Home loan interest for first-time home buyers in EWS/LIG/MIG categories ✓
• D) Property registration charges

Answer: C. PMAY-CLSS provides upfront interest subsidy credited to the loan account, reducing EMI for first-time home buyers in Economically Weaker Section (EWS), Low Income Group (LIG), and Middle Income Group (MIG) categories.

Q22. The Annual Percentage Rate (APR) on a loan represents:

• A) The flat interest rate charged per year
• B) The true cost of borrowing including interest plus all fees and charges ✓
• C) The repo rate applicable to the loan
• D) The insurance premium as a percentage of the loan

Answer: B. APR (or EAPR — Effective Annual Percentage Rate) reflects the total cost of credit — interest rate plus processing fees, insurance premiums, and other charges — expressed as an annual percentage. Mandated by RBI for transparent disclosure to borrowers.

Q23. For a home loan of ₹50 lakh on a property valued at ₹60 lakh, the minimum down payment the borrower must arrange is:

• A) ₹3 lakh
• B) ₹10 lakh ✓
• C) ₹6 lakh
• D) ₹12 lakh

Answer: B. For a ₹50 lakh loan on a ₹60 lakh property: LTV = 50/60 = 83.3%. For loans above ₹30 lakh, RBI permits max 80% LTV. So maximum loan = ₹48 lakh. However, the question states loan = ₹50 lakh — minimum down payment = ₹60L − ₹50L = ₹10 lakh (this checks out as LTV = 83.3%, above 80% — in practice bank would sanction max ₹48L; but for exam purposes minimum down payment on stated amount = ₹10 lakh).

Q24. Kisan Credit Card (KCC) is primarily used for:

• A) Urban retail purchases
• B) Gold purchases for farmers
• C) Short-term working capital for crop cultivation and allied activities ✓
• D) Term loans for farm equipment purchase

Answer: C. KCC provides farmers with revolving credit for crop cultivation expenses, post-harvest expenses, allied activities, and consumption needs. Interest subvention is available for loans up to ₹3 lakh at 7% p.a. (effective 4% with subvention).

Q25. Which of the following is NOT a feature of a Savings Bank account?

• A) Interest is paid on daily balance
• B) Free NEFT/RTGS above a certain limit
• C) Unlimited free withdrawals with no restrictions ✓
• D) Nomination facility available

Answer: C. Savings accounts do not have unlimited free withdrawals — non-home branch cash withdrawals are typically limited (3–5 free per month). Current accounts have unrestricted withdrawals. Savings accounts earn interest; current accounts generally do not.

Q26. The first step in the financial planning process is:

• A) Asset allocation
• B) Investment selection
• C) Establishing client goals and financial position ✓
• D) Risk assessment

Answer: C. Financial planning follows: (1) Establish client goals and current financial position → (2) Analyse data → (3) Develop plan → (4) Implement → (5) Monitor. Goal-setting is always the starting point.

Q27. Risk profiling of an investor determines:

• A) The bank’s internal credit rating
• B) The investor’s risk tolerance and capacity to absorb losses ✓
• C) The maximum loan the investor can take
• D) The tax bracket of the investor

Answer: B. Risk profiling assesses an investor’s risk appetite (willingness to take risk) and risk capacity (financial ability to absorb losses). It determines the appropriate asset allocation — conservative (more debt), moderate (balanced), or aggressive (more equity).

Q28. Asset allocation in a financial plan refers to:

• A) Listing all assets owned by the client
• B) Distributing investments across asset classes (equity, debt, real estate, gold) based on goals and risk profile ✓
• C) Allocating funds for tax savings only
• D) Determining the client’s net worth

Answer: B. Asset allocation is the strategic distribution of an investment portfolio across different asset classes to balance risk and return, aligned with the investor’s goals, time horizon, and risk profile.

Q29. A High Net Worth Individual (HNI) in Indian banking context typically refers to a customer with investable assets of at least:

• A) ₹5 lakh
• B) ₹10 lakh
• C) ₹2 crore (varies by bank; commonly ₹1–5 crore) ✓
• D) ₹50 lakh

Answer: C. HNI definitions vary across banks, but in Indian banking the threshold is typically investable assets of ₹2 crore or above (some banks use ₹1 crore). HNIs receive dedicated relationship managers and access to private banking services. Ultra HNIs: above ₹25 crore.

Q30. The life cycle approach to wealth management suggests that investment strategy should change based on:

• A) Annual income changes only
• B) The investor’s stage of life (young, middle-aged, retired) ✓
• C) Market conditions only
• D) Government policy changes

Answer: B. Life cycle theory: Young investors (long horizon) → higher equity allocation. Mid-career → balanced allocation, goal-specific investing. Near retirement → shift to capital preservation (debt, fixed income). Retired → income-generating assets, low risk.

Q31. Private banking differs from retail banking primarily because it:

• A) Charges higher transaction fees
• B) Only offers fixed deposits
• C) Provides personalised, relationship-based financial services to HNI and UHNI clients ✓
• D) Is regulated differently from commercial banking

Answer: C. Private banking is a personalised banking model for wealthy clients — dedicated relationship managers, bespoke investment solutions, concierge services, estate planning, and exclusive credit products. It is offered within the same banking regulatory framework.

Q32. Which of the following best describes a Portfolio Management Service (PMS)?

• A) A type of fixed deposit with guaranteed returns
• B) A SEBI-regulated discretionary or non-discretionary investment management service for wealthy investors ✓
• C) An insurance product with investment component
• D) A pension product regulated by PFRDA

Answer: B. PMS is regulated by SEBI. Minimum investment: ₹50 lakh. The portfolio manager invests in stocks, bonds, and other securities on behalf of the client. Discretionary PMS: manager decides independently. Non-discretionary: client approves each trade.

Q33. Goal-based investing links each investment to:

• A) Monthly income generation only
• B) A specific financial goal with a defined time horizon and required corpus ✓
• C) The highest-return instrument available
• D) A fixed annual return target

Answer: B. Goal-based investing matches each financial objective (child’s education in 10 years, retirement in 20 years, home purchase in 3 years) with an appropriate investment avenue, tenure, and target corpus — rather than investing in isolation.

Q34. Estate planning in wealth management involves:

• A) Buying real estate for investment
• B) Tax planning for businesses
• C) Arranging for the orderly transfer of assets to heirs through wills, trusts, and nominations ✓
• D) Portfolio rebalancing after market downturns

Answer: C. Estate planning ensures that an investor’s wealth is transferred to chosen beneficiaries in a tax-efficient and legally sound manner after death, using tools like wills, trusts, family settlements, and nomination facilities.

Q35. Which regulator oversees Alternative Investment Funds (AIFs) in India?

• A) RBI
• B) IRDAI
• C) SEBI ✓
• D) PFRDA

Answer: C. SEBI regulates AIFs in India under the SEBI (Alternative Investment Funds) Regulations 2012. AIFs include venture capital funds, private equity funds, hedge funds, and real estate funds. Minimum investment: ₹1 crore (₹25 lakh for employees/directors of the AIF).

Q36. Mutual funds in India are regulated by:

• A) RBI
• B) IRDAI
• C) SEBI ✓
• D) PFRDA

Answer: C. SEBI (Securities and Exchange Board of India) regulates mutual funds under the SEBI (Mutual Funds) Regulations 1996. AMFI (Association of Mutual Funds in India) is the self-regulatory organisation for the MF industry.

Q37. Net Asset Value (NAV) of a mutual fund is calculated as:

• A) Total Assets ÷ Number of Units
• B) (Total Assets − Liabilities) ÷ Number of Units outstanding ✓
• C) Total Liabilities ÷ Number of Units
• D) Market Price of Fund Portfolio ÷ Face Value of Units

Answer: B. NAV = (Total Assets − Liabilities) ÷ Number of Units Outstanding. For open-end funds, NAV is calculated daily at end of day (cut-off time for subscriptions/redemptions is typically 3:00 PM).

Q38. An equity mutual fund must invest a minimum of what percentage in equity and equity-related instruments?

• A) 51%
• B) 60%
• C) 65% ✓
• D) 75%

Answer: C. SEBI mandates that an equity fund must invest at least 65% of its assets in equity and equity-related instruments to be classified as equity for tax purposes. This also gives equity tax treatment (LTCG above ₹1 lakh taxed at 10% after 1 year).

Q39. ELSS (Equity Linked Savings Scheme) has a lock-in period of:

• A) 1 year
• B) 2 years
• C) 3 years ✓
• D) 5 years

Answer: C. ELSS has the shortest lock-in of 3 years among all Section 80C investment options (PPF = 15 years, NSC = 5 years, Tax-saving FD = 5 years). ELSS invests primarily in equity and offers tax deduction up to ₹1.5 lakh under 80C.

Q40. In a Systematic Investment Plan (SIP), the key benefit of rupee cost averaging means:

• A) You always buy at the lowest NAV
• B) A fixed amount buys more units when NAV is low and fewer when NAV is high, averaging the purchase cost ✓
• C) Returns are guaranteed regardless of market movement
• D) The fund manager adjusts the NAV monthly

Answer: B. Rupee Cost Averaging: with a fixed SIP amount, the investor automatically buys more units when prices are low and fewer when prices are high. Over time, the average cost per unit is lower than the average NAV — reducing the impact of market volatility.

Q41. A Systematic Withdrawal Plan (SWP) allows an investor to:

• A) Redeem a fixed amount from the mutual fund at regular intervals ✓
• B) Invest additional units every month automatically
• C) Switch between funds automatically
• D) Reinvest dividend income into the same fund

Answer: A. SWP is the opposite of SIP — the investor withdraws a fixed amount periodically (monthly, quarterly) from the mutual fund. Useful for creating regular income in retirement while keeping the remaining corpus invested.

Q42. A liquid mutual fund primarily invests in:

• A) Long-term government bonds
• B) Mid-cap and small-cap stocks
• C) Money market instruments with maturity up to 91 days ✓
• D) Real estate investment trusts (REITs)

Answer: C. Liquid funds invest in short-term money market instruments — treasury bills, commercial paper, certificates of deposit — with maturity of up to 91 days. They offer high liquidity, low risk, and better returns than savings accounts for parking short-term surplus cash.

Q43. The difference between a Direct plan and a Regular plan of a mutual fund is:

• A) Direct plans have higher risk
• B) Regular plans have higher returns
• C) Direct plans have no distributor commission, resulting in a lower expense ratio and higher returns ✓
• D) Direct plans are only for institutional investors

Answer: C. In a Direct plan, investors invest directly with the AMC without going through a distributor — no commission is embedded, so the expense ratio is lower. Over long periods, the 0.5–1% lower expense ratio compounds to significantly higher returns compared to Regular plans.

Q44. An open-end mutual fund differs from a closed-end fund in that:

• A) Open-end funds invest only in equity
• B) Open-end funds allow investors to buy and sell units at NAV at any time, while closed-end funds have fixed corpus and are listed on exchanges ✓
• C) Closed-end funds have higher returns
• D) Open-end funds are regulated by RBI

Answer: B. Open-end funds: unlimited units, priced at NAV, bought/sold directly with AMC anytime. Closed-end funds: fixed number of units issued during NFO, listed on a stock exchange after NFO, traded at market price which may differ from NAV.

Q45. A Hybrid fund (Balanced fund) invests in:

• A) Only equity instruments
• B) Only debt instruments
• C) A combination of equity and debt instruments ✓
• D) Only money market instruments

Answer: C. Hybrid funds invest in both equity and debt. Aggressive hybrid (65–80% equity), Conservative hybrid (10–25% equity, 75–90% debt), Balanced advantage funds (dynamic equity allocation). They aim to balance growth and stability.

Q46. Expense Ratio of a mutual fund is:

• A) The return earned by the fund in the last year
• B) The tax charged on fund returns
• C) The annual fee charged by the AMC as a percentage of the fund’s average AUM ✓
• D) The exit load charged on redemption

Answer: C. Expense Ratio = Annual Management Expenses ÷ Average AUM × 100. It covers fund management fees, administrative costs, and distributor commissions (in regular plans). SEBI has capped expense ratios. Lower expense ratio → higher net return to investor.

Q47. Exit load in a mutual fund is:

• A) A fee charged at the time of purchasing units
• B) A fee charged when an investor redeems units before a specified period ✓
• C) A tax on mutual fund gains
• D) Annual maintenance charge

Answer: B. Exit load is a charge (typically 1%) levied by the AMC when units are redeemed before a specified holding period (often 1 year for equity funds). It discourages early withdrawals. Liquid funds typically have no exit load after 7 days.

Q48. The Growth option and Dividend option (IDCW option) of a mutual fund differ in that:

• A) Growth option has higher risk
• B) In Growth option, returns are reinvested and the NAV grows; in IDCW, periodic payouts reduce the NAV ✓
• C) IDCW option gives guaranteed income
• D) Both options always have the same NAV

Answer: B. Growth option: profits stay in the fund, NAV increases over time — suits long-term wealth creation. IDCW (Income Distribution cum Capital Withdrawal) option: distributes accumulated gains periodically — NAV falls after each distribution. SEBI renamed “Dividend” option to IDCW to reflect it’s a return of capital, not income.

Q49. Long-term capital gains (LTCG) on equity mutual funds are taxable at what rate if gains exceed ₹1 lakh?

• A) 15%
• B) 20%
• C) 10% (without indexation) ✓
• D) As per slab rate

Answer: C. For equity funds held for more than 1 year: LTCG above ₹1 lakh per year is taxed at 10% without indexation benefit (post Budget 2018 reintroduction). Gains up to ₹1 lakh are exempt. Short-term (≤1 year): 15%.

Q50. An Index Fund’s investment objective is to:

• A) Beat the benchmark index through active stock picking
• B) Replicate the composition and performance of a specified index like NIFTY 50 ✓
• C) Invest in the top-performing 10 stocks each quarter
• D) Invest only in government securities

Answer: B. Index funds are passively managed — they replicate the exact composition of a benchmark (NIFTY 50, SENSEX, NIFTY Midcap 150). Very low expense ratio (0.05–0.2%); returns track the index minus expenses. Suitable for cost-conscious long-term investors.

Q51. AMFI stands for:

• A) Association of Mutual Fund Investors
• B) Asset Management Fund of India
• C) Association of Mutual Funds in India ✓
• D) Alternative Mutual Fund Index

Answer: C. AMFI (Association of Mutual Funds in India) is the industry body for mutual fund houses. AMFI certifies mutual fund distributors (AMFI Registration Number — ARN). All MF distributors must have a valid ARN to sell MF products.

Q52. A Fund of Funds (FoF) invests primarily in:

• A) Stocks of fund management companies
• B) Units of other mutual funds ✓
• C) Foreign stocks only
• D) Real estate assets

Answer: B. A Fund of Funds invests in units of other mutual funds rather than directly in stocks or bonds. It provides diversification across multiple fund managers and strategies but carries a double expense ratio (FoF’s own expense + the underlying funds’ expenses).

Q53. Debt mutual funds are most suitable for investors seeking:

• A) High returns with high risk
• B) Tax-free equity gains
• C) Stable returns with lower risk than equity, for short to medium-term goals ✓
• D) Real estate exposure

Answer: C. Debt funds invest in fixed income instruments (bonds, T-bills, corporate paper). They carry interest rate risk and credit risk but are generally lower-risk than equity funds. Suitable for 1–3 year investment horizons and capital preservation goals.

Q54. The KYC requirement for first-time mutual fund investors in India is handled through:

• A) RBI directly
• B) IRDAI portal
• C) KRA (KYC Registration Agency) registered with SEBI ✓
• D) Post Office

Answer: C. MF KYC is a one-time process done through SEBI-registered KRAs (CAMS KRA, Karvy KRA, NDML, CSDL Ventures). Once KYC is compliant with one KRA, it is valid across all mutual funds. Aadhaar-based eKYC is also permitted.

Q55. The New Fund Offer (NFO) period for a mutual fund typically lasts:

• A) 1 year from SEBI approval
• B) 90 days
• C) 15 days (maximum 30 days with prior approval) ✓
• D) 60 days

Answer: C. Under SEBI regulations, an NFO (New Fund Offer) must remain open for a minimum of 3 business days and maximum of 15 days. An extension of up to 30 days may be allowed with prior SEBI approval. NFO price is typically ₹10 per unit.

Q56. Insurance in India is regulated by:

• A) RBI
• B) SEBI
• C) IRDAI ✓
• D) PFRDA

Answer: C. IRDAI — Insurance Regulatory and Development Authority of India — established under the IRDA Act 1999, headquartered in Hyderabad. It regulates and supervises all life and non-life insurance companies in India.

Q57. A term insurance plan provides:

• A) Death benefit + maturity benefit
• B) Only maturity benefit
• C) Death benefit only — no maturity benefit ✓
• D) Guaranteed returns linked to equity market

Answer: C. Term insurance is pure risk cover — it pays the sum assured only if the insured dies during the policy term. If the insured survives, no maturity benefit is paid. It is the cheapest form of life cover and the most efficient for income replacement.

Q58. An endowment plan differs from a term plan in that it:

• A) Has lower premiums
• B) Provides both death cover and a maturity benefit (survival benefit) ✓
• C) Does not pay anything on death
• D) Is regulated by SEBI, not IRDAI

Answer: B. An endowment plan combines insurance and savings — it pays the sum assured on death OR on surviving the policy term (maturity benefit). Premiums are higher than term plans because a portion builds a savings corpus.

Q59. ULIP (Unit Linked Insurance Plan) is characterised by:

• A) Guaranteed fixed returns
• B) No insurance component
• C) Market-linked returns with a life insurance cover; 5-year lock-in ✓
• D) Regulated by SEBI

Answer: C. ULIP combines insurance with investment — part of the premium provides life cover, the rest is invested in fund options chosen by the policyholder (equity, debt, balanced). Returns are market-linked. Minimum lock-in: 5 years. Regulated by IRDAI.

Q60. Family floater health insurance is different from individual health insurance because:

• A) It costs less because it covers fewer people
• B) A single sum insured covers all family members; any member can claim up to the full limit ✓
• C) It excludes pre-existing diseases permanently
• D) It is regulated by RBI

Answer: B. In a family floater plan, the total sum insured is shared among all covered members. If one member makes a large claim, the remaining sum insured reduces for others during the policy year. Premiums are lower than taking separate individual policies for each member.

Q61. A bank acting as an insurance Corporate Agent can tie up with a maximum of how many insurance companies?

• A) 1 life + 1 non-life
• B) 2 life + 2 non-life
• C) 3 life + 3 non-life + 3 standalone health insurers ✓
• D) Unlimited

Answer: C. Under IRDAI guidelines on Bancassurance, a bank acting as a Corporate Agent can have tie-ups with maximum 3 life + 3 non-life + 3 standalone health insurance companies. This was changed from the earlier “one insurer per category” rule to encourage competition and customer choice.

Q62. Critical illness insurance pays the sum assured:

• A) Only on hospitalisation
• B) Monthly as long as the illness persists
• C) As a lump sum on diagnosis of specified critical illness ✓
• D) Only if the insured dies from the critical illness

Answer: C. Critical illness (CI) cover pays a lump sum on diagnosis of specified conditions (cancer, heart attack, stroke, kidney failure, etc.) — regardless of actual hospitalisation cost. The payment helps cover treatment, income replacement, and lifestyle changes.

Q63. PM Jeevan Jyoti Bima Yojana (PMJJBY) provides:

• A) Accident cover of ₹2 lakh at ₹20/year
• B) Life cover of ₹2 lakh at ₹436/year for age group 18–50 ✓
• C) Health cover of ₹5 lakh at ₹1,000/year
• D) Pension of ₹3,000/month

Answer: B. PMJJBY: Life insurance cover of ₹2 lakh, annual premium ₹436 (revised), available to bank account holders aged 18–50 years, renewed annually. Death claim covers all causes of death. Administered through LIC and other insurers via banks.

Q64. PM Suraksha Bima Yojana (PMSBY) provides:

• A) Accidental death and disability cover of ₹2 lakh at ₹20/year ✓
• B) Life cover of ₹2 lakh at ₹436/year
• C) Health hospitalisation cover
• D) Pension for unorganised workers

Answer: A. PMSBY: Accident insurance — ₹2 lakh for accidental death or total permanent disability; ₹1 lakh for partial permanent disability. Annual premium: ₹20. Age: 18–70 years. Renewable annually. Partial disability cover distinguishes PMSBY from PMJJBY.

Q65. Whole Life Insurance provides coverage:

• A) Until age 60
• B) For a fixed term of 20 years
• C) For the entire lifetime of the insured (typically up to age 99 or 100) ✓
• D) Only until retirement

Answer: C. Whole Life policies provide cover for the entire life. Premiums may be paid for a limited period (say 20 or 30 years) but coverage continues until death or maturity age (99/100 years). It builds a guaranteed surrender value over time.

Q66. The principle of “Utmost Good Faith” (Uberrimae Fidei) in insurance means:

• A) The insurer must pay all claims without question
• B) Both insurer and insured must disclose all material facts honestly at the time of contract ✓
• C) The insured must prove negligence by the insurer
• D) Insurance contracts are void after 1 year

Answer: B. Utmost Good Faith is a fundamental insurance principle — both parties must disclose all material facts fully. Non-disclosure or misrepresentation by the insured (e.g., hiding a pre-existing illness) can void the policy and lead to claim rejection.

Q67. The principle of Indemnity in non-life insurance means:

• A) The insurer pays more than the loss to compensate the insured
• B) The insured is compensated for actual loss — not more, not less ✓
• C) The insured must pay the first portion of every claim (deductible)
• D) The insurer can deny all claims over ₹10 lakh

Answer: B. Indemnity ensures the insured is restored to the same financial position as before the loss — no profit from insurance. Life insurance is NOT based on indemnity (as life is not measurable financially) — it is a benefit contract.

Q68. Motor third-party insurance in India is:

• A) Optional for private vehicles
• B) Required only for commercial vehicles
• C) Mandatory for all motor vehicles under the Motor Vehicles Act ✓
• D) Only available from nationalised insurance companies

Answer: C. Under the Motor Vehicles Act 1988, third-party liability insurance is compulsory for all motor vehicles. Driving without third-party insurance is a criminal offence. Comprehensive motor insurance (which includes own damage) is optional but recommended.

Q69. An insurance rider is:

• A) A separate insurance policy
• B) An add-on benefit attached to a base insurance policy for an additional premium ✓
• C) A claim settlement procedure
• D) A regulatory requirement from IRDAI

Answer: B. Riders are optional add-ons that enhance a base policy’s coverage — e.g., Accidental Death Benefit Rider, Critical Illness Rider, Waiver of Premium Rider, Disability Rider. They are available at a small additional premium and are cost-effective compared to standalone policies.

Q70. Free-look period in insurance allows the policyholder to:

• A) Not pay the first premium for 30 days
• B) Return the policy within 30 days of receipt if not satisfied and get a refund ✓
• C) Make a claim within 30 days of buying the policy
• D) Change the sum assured within 30 days

Answer: B. IRDAI mandates a free-look period of 30 days (15 days for offline policies; 30 days for online and distance marketing policies) — if the policyholder is not satisfied with the policy terms, they can return it and receive a refund after deducting stamp duty, medical costs, and proportionate risk premium.

Q71. Pradhan Mantri Fasal Bima Yojana (PMFBY) provides:

• A) Pension to farmers
• B) Subsidy on fertiliser purchases
• C) Crop insurance against natural calamities, pests, and diseases ✓
• D) Health insurance for agricultural workers

Answer: C. PMFBY provides comprehensive crop insurance covering pre-sowing, standing crop, and post-harvest losses due to natural calamities. Premium is subsidised — farmers pay 2% for Kharif, 1.5% for Rabi, and 5% for horticultural/commercial crops.

Q72. The claim settlement ratio (CSR) of an insurance company measures:

• A) The profit margin of the insurer
• B) The percentage of claims settled out of total claims received ✓
• C) The premium growth rate
• D) The number of policies sold per branch

Answer: B. CSR = Claims settled ÷ Total claims received × 100. A higher CSR indicates better claim settlement performance. IRDAI publishes annual CSR data for all insurers. It is one of the most important metrics for choosing a life or health insurer.

Q73. Atal Pension Yojana (APY) is targeted at:

• A) Government employees
• B) Corporate sector employees
• C) Workers in the unorganised sector aged 18–40 ✓
• D) Senior citizens above 60

Answer: C. APY provides a guaranteed minimum pension of ₹1,000–₹5,000 per month from age 60. Available to bank account holders in the unorganised sector aged 18–40 years. Regulated by PFRDA. Government co-contributes 50% of subscriber’s contribution or ₹1,000/year (for eligible subscribers).

Q74. Surrender value in a life insurance policy is:

• A) The death benefit payable to nominee
• B) The amount paid by the insurer if the policyholder terminates the policy before maturity ✓
• C) The loan available against the policy
• D) The accumulated bonus declared by the insurer

Answer: B. Surrender value is paid when a policyholder discontinues the policy prematurely. It becomes payable only after premiums are paid for at least 2–3 years. Guaranteed Surrender Value (GSV) = percentage of premiums paid. Term insurance has zero surrender value.

Q75. In health insurance, the “waiting period” for pre-existing diseases typically is:

• A) 6 months
• B) 1 year
• C) 2–4 years (commonly 3 years as per IRDAI norm) ✓
• D) No waiting period

Answer: C. Health insurance policies typically impose a 2–4 year waiting period for pre-existing diseases (conditions known before buying the policy). IRDAI has reduced the maximum waiting period for pre-existing conditions to 3 years under the updated health insurance product guidelines.

Q76. UPI (Unified Payments Interface) is operated by:

• A) RBI directly
• B) SEBI
• C) NPCI (National Payments Corporation of India) ✓
• D) SBI Payments

Answer: C. NPCI operates UPI under authorization from RBI. NPCI also operates IMPS, RuPay, NACH, NACH, and Aadhaar-enabled payment systems (AePS). UPI enables instant 24×7 fund transfer using a Virtual Payment Address (VPA).

Q77. The per-transaction limit on UPI payments for regular transactions is:

• A) ₹50,000
• B) ₹25,000
• C) ₹1 lakh (₹2 lakh for specific categories) ✓
• D) ₹5 lakh

Answer: C. Standard UPI per-transaction limit: ₹1 lakh. Enhanced limits: ₹2 lakh for specific use cases (capital markets, collections, insurance, medical, education). UPI 123Pay for feature phones: ₹5,000. Limits are set by banks within NPCI’s framework.

Q78. IMPS (Immediate Payment Service) is available:

• A) Only on working days during banking hours
• B) 24×7 × 365 days including holidays ✓
• C) Only between 8 AM and 8 PM
• D) Only for transactions below ₹10,000

Answer: B. IMPS is a 24×7, real-time interbank fund transfer service — available even on bank holidays and weekends. NEFT is available 24×7 but settles in half-hourly batches. RTGS is for high-value transactions (₹2 lakh+) — available 24×7 since December 2020.

Q79. Account Aggregator (AA) in India is regulated as:

• A) A bank
• B) A mutual fund distributor
• C) An NBFC licensed by RBI ✓
• D) A credit information company

Answer: C. Account Aggregators are registered as NBFC-AAs under RBI’s NBFC-AA master direction. They facilitate consent-based data sharing between Financial Information Providers (FIPs — banks, insurers, MFs) and Financial Information Users (FIUs — lenders, advisors). The AA cannot see or store the data.

Q80. Video Customer Identification Process (V-CIP) was introduced by RBI to:

• A) Enable video conferencing between bank branches
• B) Allow banks to complete KYC through a live video call instead of physical visit ✓
• C) Monitor customer transactions via CCTV
• D) Replace ATM PIN with face recognition

Answer: B. V-CIP (Video KYC) allows banks to complete customer identification remotely — the bank officer conducts a live video call, the customer displays their OVD (Aadhaar/PAN), and a screenshot is captured and stored. Reduces physical branch visits for onboarding.

Q81. Digital lending guidelines issued by RBI require that loan disbursals and repayments must go directly to:

• A) The Lending Service Provider’s (LSP’s) account
• B) The borrower’s bank account — not through any third-party ✓
• C) An escrow account held by the fintech company
• D) RBI’s nodal account

Answer: B. Under RBI’s Digital Lending Guidelines (2022), loan disbursals must flow directly to the borrower’s verified bank account — not through LSP accounts. This prevents misuse of funds and improves transparency in the digital lending ecosystem.

Q82. BBPS (Bharat Bill Payment System) is used for:

• A) Inter-bank fund transfers
• B) Paying recurring utility and other bills through a centralised platform ✓
• C) Government subsidy disbursements
• D) FX currency exchange

Answer: B. BBPS (operated by NPCI) is an interoperable bill payment platform for electricity, water, gas, DTH, insurance, EMIs, education fees, and other utility bills. Available 24×7 through bank apps, payment apps, and business correspondents.

Q83. Phishing attacks on retail banking customers typically work by:

• A) Hacking bank servers directly
• B) Tricking customers into revealing credentials through fake websites or emails mimicking the bank ✓
• C) Installing malware on bank ATMs
• D) Intercepting physical mail

Answer: B. Phishing: fraudulent emails/SMS/websites that appear to be from the bank, asking customers to “verify” their credentials. Vishing: fraudulent phone calls. Smishing: fraudulent SMS. Banks never ask for OTP, CVV, or password over email, phone, or SMS — this is the cardinal rule for customer awareness.

Q84. Banking as a Service (BaaS) refers to:

• A) Banks offering free current accounts to startups
• B) Banks exposing their core banking capabilities through APIs to third-party fintech companies ✓
• C) RBI’s digital banking oversight system
• D) Outsourcing bank operations to third parties

Answer: B. BaaS allows fintech companies and non-banks to embed banking products (accounts, payments, loans, cards) into their apps and platforms using the licensed bank’s infrastructure via APIs. The bank provides regulatory compliance and financial services; the fintech provides the customer interface.

Q85. The RBI’s framework on customer liability for unauthorised digital transactions states that if the bank is at fault:

• A) Customer bears full liability
• B) Customer bears zero liability regardless of transaction amount ✓
• C) Customer bears liability up to ₹10,000
• D) Liability is shared equally between bank and customer

Answer: B. Per RBI’s Circular on Customer Liability (2017): if the unauthorised transaction occurs due to negligence on the bank’s part (system breach, bank employee fraud), the customer bears zero liability. If customer is at fault (sharing credentials), liability depends on how quickly the customer reports the fraud.

Q86. DigiLocker is a government platform that allows customers to:

• A) Store funds digitally
• B) Store and access official documents (Aadhaar, PAN, DL) digitally and share them as eKYC ✓
• C) Make UPI payments
• D) Check CIBIL score

Answer: B. DigiLocker (MeitY initiative) is a secure cloud-based platform where citizens store government-issued documents. Banks and other regulated entities can accept DigiLocker documents as valid KYC — eliminating the need for physical document submission in many cases.

Q87. CBS (Core Banking Solution) allows a customer to transact from:

• A) Only their home branch
• B) Any branch of their own bank only
• C) Any branch of their bank as transactions are centralised on a core server ✓
• D) Any bank branch in India

Answer: C. CBS centralises all accounts on a single server — customers are customers of the bank, not a specific branch. They can transact (deposit, withdraw, transfer) from any branch of the same bank, as well as through internet/mobile banking.

Q88. RBI’s regulatory sandbox allows:

• A) Banks to conduct stress tests
• B) Fintech companies to test innovative products in a controlled environment under RBI oversight ✓
• C) Customers to test new banking apps before official launch
• D) Banks to hold additional CRR in a separate sandbox account

Answer: B. RBI’s Regulatory Sandbox allows fintech start-ups to test new financial products or services with real customers in a contained, controlled regulatory environment with relaxed regulations for a limited time. This encourages innovation while managing systemic risk.

Q89. AePS (Aadhaar Enabled Payment System) enables:

• A) Aadhaar-based loan approvals
• B) Banking transactions (withdrawal, deposit, transfer) using Aadhaar number and fingerprint at a Business Correspondent ✓
• C) Aadhaar-linked insurance premium payment
• D) KYC verification only

Answer: B. AePS enables financial inclusion at the last mile — customers can withdraw cash, make deposits, check balance, and transfer funds at a Business Correspondent (BC) using just their Aadhaar number and biometric fingerprint. No card or PIN needed.

Q90. The Open Banking framework is primarily built on:

• A) Physical branch expansion
• B) RBI’s direct lending to customers
• C) APIs (Application Programming Interfaces) that enable secure data sharing between banks and third parties with customer consent ✓
• D) Government subsidies for digital payments

Answer: C. Open Banking uses APIs to allow third-party financial service providers to access customer banking data (with consent) to offer better products — personalised loans, financial management tools, comparison services. The Account Aggregator framework is India’s implementation of Open Banking principles.

Q91. Under RBI’s Integrated Ombudsman Scheme, a customer must first:

• A) File a complaint directly with the Ombudsman
• B) Complain to the bank first; approach Ombudsman only if not resolved within 30 days or unsatisfied with response ✓
• C) File a case in Consumer Court
• D) Approach RBI headquarters directly

Answer: B. The Ombudsman scheme requires customers to first exhaust the bank’s internal grievance mechanism. The customer can approach the Banking Ombudsman only if: (1) the bank has not responded within 30 days, or (2) the response is unsatisfactory. No fee for filing an Ombudsman complaint.

Q92. The maximum compensation that a Banking Ombudsman can award is:

• A) ₹5 lakh
• B) ₹10 lakh
• C) ₹20 lakh ✓
• D) Unlimited

Answer: C. Under the RBI Integrated Ombudsman Scheme 2021, the Ombudsman can award compensation up to ₹20 lakh for direct loss and up to ₹1 lakh for mental agony and harassment. The bank pays the compensation; the service is free for customers.

Q93. Under the Consumer Protection Act 2019, the District Consumer Disputes Redressal Commission has jurisdiction for complaints involving goods/services valued at:

• A) Up to ₹10 lakh
• B) Up to ₹20 lakh
• C) Up to ₹1 crore ✓
• D) Up to ₹50 lakh

Answer: C. Under the Consumer Protection Act 2019 (enhanced jurisdictions): District Commission — up to ₹1 crore. State Commission — ₹1 crore to ₹10 crore. National Commission — above ₹10 crore. (Previous limits were ₹20 lakh, ₹1 crore, above ₹1 crore.)

Q94. CRM (Customer Relationship Management) in banking primarily aims to:

• A) Manage employee performance records
• B) Build and maintain long-term relationships with customers by understanding needs and personalising service ✓
• C) Regulate banking compliance
• D) Manage core banking software

Answer: B. CRM in banking uses data on customer transactions, preferences, and lifecycle stages to personalise interactions, identify cross-selling opportunities, improve retention, and resolve complaints proactively. CRM systems (Salesforce, FinnOne etc.) help relationship managers manage customer portfolios.

Q95. “Treating Customers Fairly” (TCF) principles in banking require banks to:

• A) Offer the same interest rate to all customers
• B) Ensure products are suitable, fees are transparent, and customers are not misled ✓
• C) Never decline a loan application
• D) Offer all products free of charge to senior citizens

Answer: B. TCF (from UK FCA principles, adopted by RBI in spirit) requires: (1) suitable products for customers’ needs, (2) no misleading marketing, (3) transparent pricing, (4) no post-sale barriers, (5) adequate after-sale service. Cross-selling unsuitable insurance or investments violates TCF.

Q96. Bancassurance mis-selling occurs when a bank employee:

• A) Sells too many insurance policies
• B) Refers customers to IRDAI-registered insurers
• C) Pressures customers to buy insurance as a condition for loan approval ✓
• D) Offers discounts on insurance premiums

Answer: C. Tying loan approval to insurance purchase is a form of mis-selling — prohibited by both IRDAI and RBI. Customers must be given a free and informed choice. Banks must not coerce customers to buy insurance from the bank’s tied insurance partner to avail of loan or other banking services.

Q97. Net Promoter Score (NPS) in CRM measures:

• A) National Pension System performance
• B) Customer loyalty — the likelihood that a customer would recommend the bank to others ✓
• C) Bank’s net interest income
• D) Net performing assets ratio

Answer: B. NPS (Net Promoter Score) is a customer experience metric: customers rate on a 0–10 scale how likely they are to recommend the bank. Promoters (9–10), Passives (7–8), Detractors (0–6). NPS = % Promoters − % Detractors. Higher NPS indicates stronger customer loyalty.

Q98. A Business Correspondent (BC) helps banks achieve:

• A) Large corporate credit appraisals
• B) Financial inclusion by providing banking services in unbanked / underbanked areas ✓
• C) Investment banking and IPO management
• D) International trade finance

Answer: B. BCs are bank agents — typically local shopkeepers, NGO members, or self-help group leaders — who deliver basic banking services (account opening, deposits, withdrawals, remittances, AePS transactions) in remote areas where bank branches are unviable. Regulated under RBI’s BC framework.

Q99. The customer onboarding process in a bank includes all EXCEPT:

• A) KYC verification
• B) Risk profiling for investment products
• C) Account opening formalities
• D) Credit approval for unsolicited loans ✓

Answer: D. Customer onboarding includes KYC completion, account opening, initial deposit, debit card issuance, internet/mobile banking setup, and risk profiling for investment products. Unsolicited credit offers are not part of onboarding — loans require a separate application, credit assessment, and approval process.

Q100. Service Recovery Paradox in banking means:

• A) Customers who never complain are the most loyal
• B) Customers who had a complaint resolved well can become more loyal than customers who never had a problem ✓
• C) Service complaints always reduce customer loyalty
• D) Banks should avoid acknowledging service failures

Answer: B. The Service Recovery Paradox: when a bank resolves a customer’s complaint promptly, fairly, and empathetically, the customer’s trust and loyalty can actually exceed that of customers who never experienced a service failure. This is why grievance redressal quality is as important as avoiding failures in the first place.