Question 1

Which of the following statements about "Credit Cards" is FALSE?

Interest is charged on the total outstanding amount if the full payment is not made by the due date.The minimum amount due is usually 5% of the outstanding balance.Cash withdrawal from a credit card attracts no interest if paid within the interest-free period.It is a revolving credit facility.

View Explanation

This statement is false. Cash withdrawals on credit cards usually attract interest from day one. There is NO interest-free period for cash advances.

Question 2

In Retail Banking, "Auto Loans" are typically secured by:

Mortgage of property.Hypothecation of the vehicle.Pledge of gold.Personal guarantee only.

View Explanation

Hypothecation is the charge created on movable assets (like cars) where the possession remains with the borrower, but the bank has the right to seize it in case of default.

Question 3

Which of the following is an electronic remittance product available 24x7?

Cheque ClearingBanker's ChequeNEFT / RTGS / IMPSDemand Draft

View Explanation

RBI has made NEFT and RTGS available 24x7x365. IMPS was always 24x7.

Question 4

A "Clean Personal Loan" refers to:

A loan used for cleaning purposes.An unsecured loan given without any collateral security.A loan fully secured by FD.A loan given to a person with a clean criminal record.

View Explanation

Personal loans are typically unsecured (Clean). The bank relies on the borrower's income and credit score (CIBIL) rather than physical security.

Question 5

In the context of Credit Information Companies (CICs) in India, what does a "DPD" of "000" in a credit report indicate?

The borrower has made payments on time (0 Days Past Due).The borrower has defaulted for 3 months.The account is written off.The borrower has no credit history.

View Explanation

DPD stands for "Days Past Due". A value of "000" means the borrower has met their payment obligation on or before the due date for that month, indicating good credit behavior.

Question 6

What is the moratorium period (repayment holiday) typically applicable for Education Loans under the IBA scheme?

No moratorium.Course period + 1 year.Course period + 6 months.Course period only.

View Explanation

Repayment generally commences one year after the completion of the course or 6 months after getting a job, whichever is earlier. The standard moratorium is Course Period + 1 year.

Question 7

In a "Reverse Mortgage Loan", who is the borrower?

A student.A first-time home buyer.A Senior Citizen owning a house.A builder.

View Explanation

Reverse Mortgage allows senior citizens to pledge their self-owned property to a bank in exchange for a regular income stream (annuity), without selling the house during their lifetime.

Question 8

The term "Minimum Amount Due" (MAD) on a credit card statement typically refers to:

The annual fee.The full outstanding balance.5% of the total outstanding balance (or a specific formula) required to keep the account standard.The credit limit.

View Explanation

Paying the MAD ensures no late payment fee is charged and the card remains active. However, interest is still charged on the remaining unpaid balance.

Question 9

If a bank sanctions a Home Loan with an LTV (Loan to Value) ratio of 80%, what is the "Margin" that the borrower has to contribute?

10%80%20%0%

View Explanation

Margin is the borrower's own contribution. Margin = 100% - LTV%. So, 100 - 80 = 20%.

Question 10

A CIBIL Score of 750 and above is generally considered:

Risky.Good/High Creditworthiness.Poor.Average.

View Explanation

A score of 750+ (out of 900) indicates a responsible borrower with a good track record of repayment. Banks often offer lower interest rates to such customers.

Question 11

In an Equated Monthly Installment (EMI), the interest component is calculated on:

The EMI amount.The original loan amount.Fixed rate basis.The reducing balance of the loan.

View Explanation

Interest in EMI is calculated on the outstanding principal balance. As principal is repaid each month, the interest component decreases, and the principal component increases.

Question 12

A "Loan Against Property" (LAP) can be used for:

Any personal or business purpose (except speculative activities).Only purchasing a new house.Only for business purposes.Only for medical emergencies.

View Explanation

LAP allows borrowers to unlock the value of their property for various needs like business expansion, education, marriage, etc. Unlike a home loan, usage is flexible.

Question 13

Which factor has the highest weightage in the calculation of a CIBIL Credit Score?

Length of Credit History.New Credit Inquiries.Credit Mix.Repayment History.

View Explanation

Timely repayment of past dues is the most critical factor (approx. 35% weightage). Defaults or late payments significantly damage the score.

Question 14

For a new car loan, banks typically finance up to what percentage of the "Ex-Showroom Price" or "On-Road Price"?

50% of Ex-Showroom Price85-90% of On-Road Price (depending on bank policy)100% of On-Road Price100% of Ex-Showroom Price + Insurance

View Explanation

While policies vary, banks generally require a margin of 10-15%. Financing 100% is rare and risky. On-Road price includes registration and insurance, which is the true cost to the borrower.

JAIIB Quiz

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