Retail Lending Certification Quiz 1

What is the primary role of BFIs in the financial sector?

• To provide investment advice

• To only collect deposits

• To channel financial resources efficiently

• To lend money without assessing risk

Which of the following is NOT a step in credit risk identification?

• Assessing the borrower's income

• Calculating the interest rate

• Verifying the loan purpose

• Checking the value of collateral

What is the purpose of conducting Customer Due Diligence (CDD)?

• To identify customers and verify their identity

• To approve loans without documentation

• To increase loan interest rates

• To reduce the number of customers

Which document is NOT typically required for Customer Due Diligence?

• Credit history report

• Business registration

• Passport

• National identity card

In the context of credit products, what is an Overdraft primarily used for?

• Real estate purchases

• Flexibility in working capital

• Long-term investments

• Fixed asset acquisition

What type of loan is suitable for Kimseng, who needs to finance a steel galvanization plant?

• Term Loan

• Revolving Loan

• Home Improvement Loan

• Overdraft

What principle does Tomaco Bank adhere to when ensuring loans are used for the right purposes?

• Credit monitoring

• Customer verification

• Risk assessment

• Loan structuring

Kosal, a pig farm owner, wants to apply for a loan to finance the construction of his additional pig farm. The business sources water from the stream right behind the plant. However, there were frequent complaints from the local communities that the business flow the sewage to stream which leads to water pollution for consumption and irrigation.

What is the main concern regarding Kosal's pig farm loan application?

• Insufficient collateral

• Lack of business plan

• Environmental impact

• High interest rates

What is the primary focus of the credit risk management process?

• To reduce operational costs

• To ensure customer satisfaction

• To assess and mitigate credit risk

• To maximize profits

Champa own a 100-hector rice farm, and she plans to expand her planting size by adding two more tractors. The useful life of each tractor is expected to be five years, after which the tractor will be sold out. Champa wants a loan tenor of 84 months because she does not want to stress her cash flow too much.

What is the expected useful life of the tractors Champa plans to purchase?

• Seven years

• Three years

• Ten years

• Five years