MCQ Bank

The issuing bank opens the letter of credit on behalf of the applicant, which is typically the importer or buyer, and is therefore located in the buyer's home country.

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Q81

The documents presented to bank are examined as per terms and conditions mention in the _________________.

A) None of the given options
B) Bill of exchange
C) Bill of lading
D) Letter of credit

AI Explanation

Banks examine the documents presented by the beneficiary strictly against the terms and conditions explicitly outlined in the letter of credit agreement.

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Q82

In an international sale transaction between importer and exporter, the buyer shifts the risk to ______________.

A) Seller
B) All of the given options
C) Exporter
D) Bank

AI Explanation

By using a letter of credit in an international transaction, the buyer utilizes the bank's creditworthiness and payment undertaking, effectively shifting the payment risk from the buyer to the bank.

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Q83

According to URR525, which of the following is a request for reimbursement from the Claiming Bank to the Reimbursing Bank?

A) Reimbursement claim
B) Reimbursement amendment
C) Reimbursement authorizations
D) Reimbursement undertaking

AI Explanation

Under URR 525, a reimbursement claim is the formal request or demand for payment sent by the claiming bank to the designated reimbursing bank.

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Q84

Problems loans are handled by ___________________________.

A) General bankers
B) Specialist bankers
C) None of the given options
D) Central bankers

AI Explanation

Problem loans, non-performing assets, or distressed debts require specialized workout, restructuring, and recovery skills typically handled by dedicated specialist bankers rather than general banking staff.

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Q85

A document describing about the merchandise, price, FOB origin, and name and address of the buyer is called _________________________.

A) Warrenty of title
B) Commercial Invoice
C) Bill of lading
D) Letter of indemnity

AI Explanation

A commercial invoice is an accounting document issued by the seller that provides essential details about the merchandise, price, delivery terms (such as FOB origin), and the names and addresses of both the buyer and seller.

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Q86

Which one of following is true for warranty of title?

A) A standard document evidencing the receipt of goods for shipment and issued by a freight carrier engaged in the business of forwarding or transporting goods
B) None of the given options
C) A standard document which states that the title being conveyed is good and that the transfer is rightful
D) A standard document used for billing for the goods and services

AI Explanation

A warranty of title is a legal assurance provided in a transaction stating that the seller has good title to the goods, has the right to transfer them, and that they are free from any unstated security interests or encumbrances.

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Q87

On which of the following dates, Uniform Customs and Practice for Documentary Credits (UCP 600) became effective?

A) 1st July 2005
B) 1st July 2008
C) 1st July 2007
D) 1st July 2006

AI Explanation

The Uniform Customs and Practice for Documentary Credits, commonly known as UCP 600, officially came into effect on July 1, 2007, replacing the older UCP 500 rules.

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Q88

In letter of credit, which of the following is a standard document which states that the title being conveyed is good and that the transfer is rightful?

A) Bill of lading
B) Commercial Invoice
C) Warranty of title
D) Letter of indemnity

AI Explanation

A warranty of title specifically guarantees that the title being conveyed to the buyer is valid, clean, and that the property transfer is completely rightful.

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Q89

Following are the significant factors in a credit evaluation process Except:

A) Borrower’s credential
B) Rate of Interest
C) Amount of credit
D) Borrower’s own Equity

AI Explanation

Significant core factors evaluated during the initial credit and borrower assessment process include the borrower's credentials, credit amount, and owner's equity or capital stake. While interest rates affect loan pricing, they are determined based on market conditions and overall risk profile rather than being a core borrower-specific credit evaluation metric.

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Q90

Which one of the following is NOT the salient feature of bank’s credit culture?

A) Ethics-Driven
B) Value Driven
C) Current-Profit Driven
D) Market-Share Driven

AI Explanation

A healthy bank credit culture focuses on long-term stability, ethical standards, value creation, and prudent risk management rather than chasing short-term current profits at the expense of asset quality.

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Q91

Head quarters of international chamber of commerce (ICC) are located at:

A) Rome
B) New York
C) London
D) Paris

AI Explanation

The headquarters of the International Chamber of Commerce (ICC), which promulgates rules such as the UCP for letters of credit, is located in Paris, France.

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Q92

______________________involves the borrower’s legal standings and management expertise in maintaining operations of the business, so that he can repay its debt obligations

A) Capacity
B) Character
C) Capital
D) Communications

AI Explanation

Capacity in credit analysis refers to the borrower's legal standing, operational competence, and ability to generate sufficient cash flows and manage operations effectively to repay debts.

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Q93

Which of the following is one in which the exporter has the right to request the paying, or negotiating bank to make either part, or all, of the credit value available to one or more third parties?

A) Irrevocable confirmed letter of credit
B) Red clause credit
C) Revolving credit
D) Transferable letter of credit

AI Explanation

A transferable letter of credit permits the primary beneficiary (the exporter) to make the credit available, in whole or in part, to one or more secondary beneficiaries (such as suppliers or sub-contractors).

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Q94

Negotiable Instrument Act recognizes the following types of promissory notes Except_____________________.

A) A promise to pay the bearer
B) A promise to pay
C) A promise to pay a certain sum of money to a person
D) A promise to pay a certain sum of money to the order of a certain person

AI Explanation

Under the Negotiable Instruments Act, a promissory note cannot be made payable to bearer on demand; legally, promissory notes must be payable to a specific person or to the order of a specified person.

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Q95

Which of the following banking facility is not available to an illiterate person?

A) Deposit money
B) Cash withdrawal by cheque
C) ATM card
D) All of the given options

AI Explanation

An illiterate person can typically deposit money and withdraw cash using standard bank withdrawal slips with thumb impressions, but issuing and using an ATM card requires technical literacy, PIN entry, and reading capabilities that make it restricted or unavailable.

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Q96

Equitable mortgage is created through deposit of _____________________ with the banks.

A) Title deed
B) Mortgage deed
C) None of the given options
D) Transfer deed

AI Explanation

An equitable mortgage is created by the deposit of title deeds of immovable property by the borrower to the bank as security for a loan, without requiring a formal registered mortgage deed.

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Q97

Which of the following agents work along with the principal?

A) Co-agents
B) Public Agents
C) General Agents
D) Private Agents

AI Explanation

Co-agents are secondary agents appointed by an original agent to assist in performing tasks along with the principal or the original agent.

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Q98

Agency can be created in the following ways Except:

A) By operation of Law
B) By ratification
C) By concent
D) By coercion

AI Explanation

An agency relationship can be legally created by consent, ratification, or operation of law, but coercion involves illegal force or duress and cannot form a valid legal agency.

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Q99

A minor can open his bank account with his/her ________________________.

A) Father
B) Guardian
C) Mother
D) All of the given options

AI Explanation

A minor is legally incompetent to contract, so a minor's bank account must be opened and operated under the supervision of a court-appointed or legally recognized guardian.