Commercial Banking questions

What is not true about bank guarantees?

• A document issued by a bank stating its commitment to pay someone a specific amount of money on behalf of a buyer as long as the seller meets certain terms and conditions

• Is a bank promising to take the obligations for a third party (its customer), if this party cannot fulfill his obligations written in the underlying contract

• Relieve the counterparty from having to assess the ability of the customer to meet the term of the underlying contract

• Is a type of credit

What is a commercial bank?

• Commercial banks are state-owned enterprises operating under the Enterprise Law.

• Commercial banks are credit institutions whose main business is to issue money.

• Commercial banks are an enterprise doing business in the financial sector

• Commercial banks are an extremely important intermediary financial institution in the market economy, a type of business operating in the monetary-banking field.

The major difference between borrowing $1,000 from a bank and borrowing the same amount from a lending store, such as F88, is _____.

• the difference in managing currency

• the difference in interest charges

• the difference in retail lending

• the difference in protecting depositors

Which sentence is correct?

• Banking activities are only activated by providing payment service via account

• CDs are long-term securities and are not re-saleable in the market.

• Lending is not the most profitable process for banking

• The deposit insurance assured by the FDIC is underwritten by the federal government.

What is a special category of loans in which an arranger, or group of arrangers, forms a group of creditors based on a mandate to finance the company (or government) borrower ?

• Overdraft

• Syndicated lending

• Asset-based finance

• Short-term loans

What are BASEL Norms/Accords?

• Series of three sequential banking regulation agreements

• Generating funds to finance the deficit

• Sale and purchase of bonds and securities by commercial banks to the customers 

• Sale and purchase of bonds and securities by the RBI to the government

As a credit officer, what principles must you ensure when making loans to corporate customers?

• The customer uses the loan for the right purpose as committed and repays the loan principal and interest on time as stated in the contract.

• Customers use the loan for the right purpose as committed and repay the loan with both principal and interest when there are conditions for repayment.

• Customers can use the loan at their discretion as long as they can repay both principal and interest on time to the Bank.

• Customers use the loan according to the instructions of the Bank and repay the loan both principal and interest on time to the Bank.

Which of the following are the limitations in the creation of credit for commercial banks?

A. The amount of cash that commercial banks possess 

B. Supply of collateral security 

C. Monetary policy of the central bank 

D. Allied deposits scheme 

E. Deposits linked with special benefits 

• A, D and E only

• D and E only

• A, C and E only

• C and D only

Indirect finance is a method of financing where funds are transferred indirectly from the savers to the borrowers through_______ ?

• Financial market

• Banks

• Financial intermediaries

• Commerical Banks

What is the most literal example of short-term loan? (Multiple answers)

• A loan with a term of 12 months, in special cases it can be extended up to 15 months.

• A loan of fewer than 12 months to provide capital to customers for production, business, and life services.

• A loan with a term of up to 12 months to provide capital to customers for production, business, and life services

• All of the above