MCQ on International Banking 1. Which of the following is characteristic feature of foreign exchange markets 1. Merchant Market 2. Inter bank market * 3. International Market 4. All the above 2. What is a permitted currency? 1. Only USD 2. Only GBP 3. USD, GBP,JYEN,DEM 4. Any currency, which is freely traded, active and convertible in the market * 3. What is called arbitrage? 1. Referring to a third party for selling an unsettled dispute 2. Difference between the spot rate and forward rate 3. Making profit due to disparities in price in different markets * 4. Quoting a rate for both buying and selling 4. ''REER'' denotes 1. Real effective exchange rate * 2. Reengineering on organization 3. Rendering effective & efficient related services 4. Relevant equal exchange rate 5. Rules for conduct of foreign exchange business in India are framed by 1. FEDAI* 2. FEDAI under the control of RBI 3. Exchange control department, RBI 4. IBA
6. Stand by letter of credit is 1. A substitute for performance guarantee 2. Issued in USA as their law prohibits issue of guarantee by bank 3. Covered by the provisions of UCPDC 500 4. All the above *
7. Confirmed letter of credit is referred to as a 1. Credit, the authority of which confirmed by a local bank 2. Credit under which a payment is confirmed to the beneficiary 3. Credit where the beneficiary enjoys a firm undertaking of another bank apart from that of the issuing bank * 4. None of the above 8. A transferable CREDIT refers to a credit which can be 1. Transferred any number of times, till its validity 2. Transferred from advising bank to another bank, for purposes of availing packing. Credit or for negotiation 3. credit which expressly states transferability in the LC itself * 4. None of the above 9. Multimodal Transport Documents (MTD) refers to 1. Shipment made in different lots 2. A transport document covering at least two different modes of transport * 3. Shipment across two or more countries 4. Shipment made through sea-going vessels 10. A 1. 2. 3. 4.
claused bill of lading is one which contains certain conditions Which speak something foul about the cargo /packaging * Which speak something foul about the vessel carrying cargo Both a &b above Which are contrary to the terms of the LC.
11. NRE accounts can be opened for 1. All foreign Nationals 2. All NRIs including persons of India origin and (Overseas corporate bodies) * 3. Only for overseas corporate bodies 4. NRI's and foreign Nationals 12. Forward contract in foreign exchange refers to 1. An agreement between bank and customer or between banks * 2. An agreement between buyer and agent 3. An agreement between two brokers
4. An agreement between importer and exporter 13. A 1. 2. 3. 4.
Vostro Account is A rupee account of a foreign bank in India * A dollar account of a foreign bank in India A dollar account of a multi national company in India None of the above
14. Who is fixing the rate of exchange for US dollars for purchase and sale to public 1. RBI 2. FEDAI 3. Banks on their own * 4. World Bank 15. Resident Indians are eligible under the scheme of BTQ to avail of foreign Exchange upto us $----- of the equivalent for under taking one or more private visit to any country abroad 1. 10,000 * 2. 3500 3. 4000 4. None of the above
16. Unspent foreign exchange brought back in the form of TCs by the traveller who has availed BTQ should be surrendered to the authorized dealer within 1. 7 days 2. 15 days 3. 180 days * 4. Can retain with him for ever 17. What are the types of rates that are quoted for foreign exchange sale transaction? 1. TT selling 2. Bill selling 3. Currency selling 4. All the above *
18. Whenever the exporter demands overdue interest on sight bill or the interest payable on usance bills, at what rate, the interest shall be payable by the importer? 1. LIBOR 2. Prime lending rate 3. Prime rate of the invoice currency * 4. No interest is payable 19. If agency commission is payable in Indian Rupees to a local agent, on any imports into India, at what rate the interest shall be payable? 1. There is no ceiling * 2. 2.5% of FOB value of import 3. 2.5% of CIF value of import 4. 2.5% of C &I value of import 20. In case of imports on sight terms, when the bills of entry should be submitted? 1. Within 6 months from the date of payment 2. Within 3 months from the date of payment * 3. Within 15 days from the date of payment 4. Within 1 years from the date of payment
21. What is called ''Merchanting Trade"? 1. The trade conducted by the Merchant Exporter 2. The trade conducted by the Merchant Importer 3. The trade in which the customer acts both as importer and exporter; where in he has matching imports and exports* 4. The trade conducted by a whole sale merchant 22. Which one of the following is not covered under the shipments {Comprehensive risks} policy issued by ECGC favouring an exporter 1. Insolvency of the overseas buyer 2. Overseas buyer's failure to accept the goods 3. Civil war in the buyer's country 4. Quality dispute relating to the goods between the exporter and the buyer.* 23. An importer who finds that the goods received are inferior and different from the ones described in the documents under LC 1. Can sue the beneficiary for non-compliance of the terms of LC 2. Can sue the seller for breach of sale contract terms *
3. Can instruct the credit-issuing bank to reject the claim of negotiation bank 4. 1 and 2 above 24. When the issuing bank finds that the documents are not as per LC terms it should advise the negotiating bank. 1. That the documents are not in order. 2. Listing out the discrepancies 3. Rejection of documents 4. Rejection of documents, listing out all the discrepancies, and stating that they are returning the documents /holding the document at negotiating bank's risk and responsibility.* 25. Like GR form for export of physical goods and services, Softex form is for export of computer software in non-physical form .To whom the same is to be submitted? 1. Ministry of Commerce, GOI 2. Ministry of Finance, GOI 3. Department of Electronics, GOI * 4. Reserve Bank of India. 26. When an exporter customer requires a Pre-shipment loan, what are the things a bank considers before giving the loan? 1. Whether the party is having an IEC number 2. Whether the party is having an irrevocable LC or confirmed order 3. Whether the party is having capacity to execute the contract 4. All the above* 27. When an exporter receives an order to manufacture of 10000 pieces of a commodity whereas he has got the capacity to manufacture only 5000 pieces. Can a bank entertain his request for a partial packing credit? 1. He can be considered a loan if the time for completion is enough to execute the order with his capacity or if the order doesn’t prohibit sub contracting.* 2. He will not be eligible any packing credit, because he is not able to execute the contract wholly 3. Granting of two PCs (total for 10000 pieces) for the order holder and the sub-supplier, requires RBI permission 4. None of the above 28. Normally PC should be granted, based on the FOB value of the contract, sometimes customer may ask the PC facility, beyond the FOB value; can it can be granted?
1. Yes, When the raw material input cost is more than the export value i.e. FOB* 2. When RBI has given permission to sanction such loan 3. When the party is enjoying sanctioned limits by Head Office. 4. No, we can never grant PC beyond FOB value 29. A PC has been granted for RS 100,000/- against an order received from Australia for supply of neem oil. But the order could not be executed, because the buyer cancelled the same. He gave another order for supply of fruits and vegetables to Dubai, to substitute the original order Can AD permit substitution of orders. 1. We cannot permit as substitution of orders is not allowed 2. We can permit, provided RBI sanction is obtained 3. We can freely permit substitution of orders, provided the exporter has got competency to execute the order* 4. None the above 30. When a packing credit has been availed in foreign currency, how the post-shipment credit has to be extended? 1. Post-shipment credit denominated in Indian Rupees (DBPF/ UBDF ) 2. Post shipment credit denominated in foreign currency (RDBF /RDBF) * 3. Either PSC (in Rupees) or RDBF /RUBF 4. None of the above 31. One of your exporter customers has received an export order for USD 100,000/- (Present conversion rate USD 1= RS 47/-). The contract is for CIF value. Freight is estimated at 10% and insurance premium will be approximately 5%. Your branch has prescribed a margin of 10%. What will be the eligible packing credit loan amount? 1. 32,13,000 2. 37,80,000 3. 42,00,000 4. 35,95,000* 32. You are required to negotiate an export bill for USD 150000.00at 60 days after sight drawn under a LC. Assuming the following rates in the inter bank market calculate the exchange rate to be quoted bearing in mind that the required exchange margin is 0.150% , NTP is 20 days and interest is to be collected at 11% p.a. at the time of negotiation and recoverable from the customer. SPOT USD1= Rs.48.2000/48.2500 and premia are
one month-0.0800/0100, 2 month 0.1500/0.1650 and 3 month 0.2300/0.2400 ANS: Since the NTP is 20 days and usance of the bill is 60 days the forward rate should be that as applicable to 80 days. Since this is a buying transaction the premium for 2 months is only considered because of the principle “give less”. The working of the rate is as under: Inter bank rate + premium= 48.200+ 0.1500 = 48.3500 Exchange margin @ 0.150% is reduced from the above = 48.35000.0545 = 48.2955 and when rounded off it is 48.2950 Amount payable to the customer = 150000* 48.3500 =Rs.7252500 Interest recoverable = {7252500* 80*11}/ 36500= Rs174854.79
