IIBF Forex Operations Exam -CCFE (Sudhir Kochhar ---Member of IIBF)


1) Name the two schemes introduced under the new foreign trade policy?

a. Merchandise Export from India Scheme & Services Export from India Scheme
b. Services Export from India Scheme & Services Import from India Scheme
c. Services Import from India Scheme & Merchandise Export from India Scheme
d. Merchandise Import from India Scheme & Services Export fr
om India Scheme

ANSWER: Merchandise Export from India Scheme & Services Export from India Scheme


2) Consider the following statements about the Foreign Trade Policy 2015-20 unveiled on 1st Apr’15.
A. This policy focuses on boosting exports and create jobs while supporting the Centre’s Make In India' and Digital India' programs.
B. The new policy is to create architecture for the Indian economy so that it can gain global competitiveness and promote the diversification of Indian export.
C. The policy is to move towards paperless working in 24x7 environments.
D. The policy comes at a time when export growth contracted 15 per cent in February 2014-15, reporting a negative growth for the third consecutive month.

ANSWER: All of the above is correct

Make in India’ and “Digital India” programme.

3. Status Holders Merchant as well as Manufacturer Exporters, Service Providers, Export Oriented Units (EOUs) and Units located in Special Economic Zones (SEZs), Agri. Export Zones (AEZs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) are recognized as various status holders as follows: MOST IMPORTANT
Status Business in million US dollars
One Star Export House 3
Two Star Export House 25
Three Star Export House 100
Four Star Export House   500
Five Star Export House     2000

4. In relation to INCOTERMS, which of the following is incorrect:

(a) Under the "E"-term (EXW), the seller only makes the goods available to the buyer at the seller's own premises.

(b) Under the "F"-terms (FCA, FAS and FOB), the seller is called upon to deliver the goods to a carrier appointed by the buyer.

(c) Under the "C"-terms (CFR, CIF, CPT and CIP), the seller has to contract for carriage, but without assuming the risk of loss or damage to the goods or additional costs due to events occurring after shipment or dispatch.

(d) Under the "D"-terms (DAF, DES, DEQ, DDU and DDP), the seller has to bear all costs and risks in advance needed to bring the goods to the place of destination.

(e) All are correct

Answer: (e) All are Correct

5. INCOTERMS are devised and published by

 (a) International Chamber of Commerce (b) World Bank (c) World Trade Organization (d) United Nations

Answer: ICC

6. A price agreed on CIF basis

(a) does not include the freight charges

(b) includes freight charges up to the port of loading

(c) includes freight charges up to the port of unloading (importer’s port)

(d) includes freight charges up to the importer’s works

Ans: (c) includes freight charges up to the port of unloading (importer’s port)

Explanation: Cost, Insurance and Freight" means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary to bring the goods to the named port of destination BUT the risk of loss of or damage to the goods, as well as any additional costs due to events occurring after the time of delivery, are transferred from the seller to the buyer.

CIF the seller also has to procure marine insurance against the buyer's risk of loss of or damage to the goods during the carriage.

 

6. Which of the following is not a party to a letter of credit:

(a) Advising Bank (b) Confirming Bank (c) Governing Bank (d) Issuing Bank (e) Reimbursing Bank

Ans:  Governing Bank

 

7. As a seller I will consider the lowest risk methods of payments?

A.Open Account

B.Documentary Collections

C.Letters of Credit

D.Cash in Advance

Ans: D.Cash in Advance

 

 8. The ISBP publications amend UCP 600 

A.Yes

B.NO

Ans: NO

 

9. Complying presentation means a presentation that is: Article 2  UCP 600

A.Within LC validity only

B.Presenting of all shipping documents

C.In accordance with LC terms & conditions

 

Ans: C.In accordance with LC terms & conditions

 

 10. If the beneficiary is not happy with the terms & conditions of LC, he can ask applicant for:

A.Fresh letter of credit (replacement)

B.An amendment

C.Applicant confirmation

 Ans: B. An amendment

 

11.Top of Form

issuing bank is bound by a Letter of Credit  Article 7 issuing Bank Undertaking

The 

A.  From the time of issue LC

B.  From the time the LC is advising by the Advising bank

C.  From the time LC is received by the beneficiary

Ans: From the time of issue LC

 

 12.Banking day means a day on which a bank is …………….at the place at which an act subject to these rules is to be performed.

Article 2 UCP 600 Defination Complying Presentation means

A.Regularly open for an act

B.Start from Monday to Friday

C.Normal days including Eid holiday

 Ans: A. Regularly open for an act


13. Nominated bank means the bank: 

A.that advise Letter of Credit

B. The Issuing Bank
C.LC available with

Ans: .LC available with

  

14)

A credit can neither be amended nor cancelled without the agreement of the following Parties:


 

A.

The issuing bank & The confirming bank

 

B.

The confirming bank & The beneficiary

 

C.

The issuing, confirming bank & the beneficiary (Correct Answer)

 

15)

Advising bank means the bank that advises the credit at the request of the………………

 

A.

The issuing bank (Correct Answer)

 

B.

The confirming bank

 

C.

The beneficiary

 

D.

The applicant

 

16)

The expression “on or about” or similar will be interpreted:


 

ARTICLE 3 HINT

 

A.

Five calendar days before until five calendar days after the specified date (both start and end dates included) (Correct Answer)

 

B.

Five calendar days before until five calendar days after the specified date (both start and end dates excluded)

 

C.

10 calendar days after the specified date (both start and end dates included)

 

17)

Branches of a bank in different countries are considered to be ……………… 

 

A.

Separate banks. (Correct Answer)

 

B.

Same Banks

 

 

18)

Terms such as “first class”, “well known”, “qualified”, “independent”, “official”, “competent” or “local” used to describe the issuer of a document allow…………………..
 

 

ARTICLE 3

 

A.

Any issuer including the beneficiary to issue that document.

 

B.

Any issuer except the beneficiary to issue that document. (Correct Answer)

 

C.

Any issuer to issue that document.

 

19)

Words such as “prompt”, “immediately” will be: 
 

 

ARTICLE 3 HINT

 

A.

One day

 

B.

One week

 

C.

Disregarded (Correct Answer)

 

20)

The words “from” and “after” when used to determine a maturity date:

 

ARTICLE 3

 

A.

Exclude the date mentioned. (Correct Answer)

 

B.

Include the date mentioned


21. In a consignment sale,
   A the exporter retains title to the merchandise that is shipped.
B the importer only pays the exporter after he has sold the merchandise. 
C if the importer cannot sell the merchandise he returns it to the exporter.
D All of the above.

ANS: ALL OF THE ABOVE
22. The euro is the name for

a currency deposited outside its country of origin.
a bond sold internationally outside of the country in whose currency 
   the bond is denominated.

a common European currency.
a type of sandwich
Ans: common European Currency

23. Suppose that the Japanese yen is selling at a forward discount in the forward-exchange market. This implies that most likely

this currency has low exchange-rate risk.
this currency is gaining strength in relation to the dollar.
interest rates are higher in Japan than in the United States.
interest rates are declining in Japan.
Ans 
interest rates are higher in Japan than in the United States.

24.For a trade to be classified as Merchanting Trade following conditions should be satisfied:

a. Goods acquired should not enter the Domestic Tariff Area, and

b. The state of the goods should not undergo any transformation.

C. Only a

d. a & b both

Ans: d. a & b both

25: A transferable credit can do which of the following?                                                                                                                                                            A Protect the applicant from the risks of loss and error.                                                                                                                                                                 B Allow the second beneficiary to obtain payment for complying documents.                                                                                                                              C Restrict the right of the second beneficiary to claim payment directly from the nominated bank.                                                                                               D Permit the supplier to provide the intermediary trader with the security of a documentary credit.  
Ans: B Allow the second beneficiary to obtain payment for complying documents.    
26. In accordance with UCP 600, which of the following terms may NOT be altered on a transferred documentary credit?                                                                                                                              The:                                                                                                                                                                A amount.                                                                                                                                                                                                                                      B required documents.                                                                                                                                                                                         
C period for presentation.                                                                                                                                                                                                                 D amount of insurance cover
Ans: B  required documents. 
27.A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with bank (AD) in India subject to certain conditions.
A True
B false
Ans: True

28. In case of realization and repartition of Export Proceeds, It is obligatory on the part of the exporter to realize and repatriate full value of goods or software to India within 12 months. state True or False

Ans: False

Explanation:

Category of Exporter

Time Frame

all exporters including Units in Special Economic Zones (SEZs), Status Holder Exporters, Export Oriented Units (EOUs), Units in Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs) until further notice.

period of realization and repatriation of export proceeds shall be 9 months from the date of export

For goods exported to a warehouse established outside India

the proceeds shall be realized within 15 months from the date of shipment of goods.



29. Export of goods on lease, hire, etc requires RBI permisssion
A) True
B) False
Ans: True
Explanation: Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through an AD Category – I banks, to the Regional Office concerned of the Reserve Bank, giving full particulars of the goods to be exported.
30. exporter shall be under an obligation to ensure that the shipment of goods is made within one year from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed
A) Libor + 200 basis point
B) Libor + 100 basis point
C) Libor + 300 basis point
D) Libor + 250 basis point
Ans: B) Libor + 100 basis point


31.What is FEMA ?

  • First Exchange Management Act
  • Foreign Exchequer Management Act
  • Foreign Exchange Management Act
  • Foreign Evaluation Management Act

32.  Exports and Imports come under the purview of :

 

a.  Ministry of Finance

b.  Ministry of Commerce

c.  Ministry of External Affairs

d.  Ministry of Home  Affairs

e.  Ministry of SSI

Ans: b. Ministry of Commerce

33.  State Bank of India is maintaining account in Japanese Yen with American Express Bank, Tokyo. It is known as:

 

a.  Vostro account

b.  Nostro account

c.  Loro account

d.  Escrow account

e.  Current account

Ans: Nostro account
Explanation: 

Nostro and vostro are simply two different names, or terms, used to describe the same bank account. The terms are used when one bank has another bank's money on deposit, typically in relation to international trading or other financial transactions.

Both banks must record the amount of money being stored by one bank on behalf of other bank. The terms nostro and vostro are used to differentiate between the two sets of accounting records kept by each bank. A nostro account is the term used by bank "A" to refer to "our" account held by another bank, bank "B." Nostro means "our," and it is a shorthand way of talking about "our money that is on deposit at your bank." Vostro account is the term used by bank "B," where bank "A's" money is on deposit. Vostro means "your," and refers to "your money that is on deposit at our bank."

vostro account is like any other account held by a bank. The account is a record of money owed to or maintained by a third party, typically another bank, but it can be either a company or an individual. Banks in the United Kingdom or the United States often hold a vostro account on behalf of a foreign bank. The vostro account is held in the currency of the country where the money is on deposit.

The nostro account is the record of the bank whose money is on deposit at another bank. These accounts are often used to simplify settlements of trade and foreign exchange transactions. For both nostro and vostro accounts, the domestic bank, the bank that is holding the account, acts as caretaker for the account and is sometimes referred to as the "facilitator" bank. Nostro accounts with debit balances are considered cash assets. Contrarily, vostro accounts with a credit balance are considered liabilities. Computerized accounting allows for easily reconciling nostro and vostro accounts just by using opposite "+" or "-" signs in the banks' respective accounting systems. Courtesy: http://www.investopedia.com/

nostro-account

34.  Which one of the following is not a Current account transaction?

 

a.  Imports payables

b.  Exports receivables

c.  Insurance

d.  Dividend

e.  External  Commercial Borrowings

Ans: e. External  Commercial Borrowings

Explanation: The current account records exports and imports of goods and services as well as unilateral transfers whereas the capital account records transactions of purchase and sale of foreign assets and liabilities during a particular year. The current account considers goods and services currently being produced. 


35.  Under a “TOM Value” transaction, the rate is agreed today but the settlement is to be done on:

 

a.  Next working day

b.  Same day

c.  3 Working days after the date of deal

d.  4 working days after the date of  deal

e.  2 working days after the date of deal


Ans: a. Next working day

Explanation: Cash date or Trade date: The date of the transaction, say “today” If today is 25-Jan-17, then Cash date is 25-Jan-17 
Tom date: Tom is short for “tomorrow” and is the next working day from the Cash date  27 Jan 2017

Read more at: http://www.moneycontrol.com

36. What is FCNR (B) A/c ?
Ans: It means ‘Foreign Currency NonResident (Bank)’ Account.

37.Who can open a FCNR (B) a/c ?
Ans: The account can be opened in the name of NRI individuals (single/ joint) or with resident Indians on 'former or survivor' basis.

38. Who is a Nonresident Indian (NRI)/ Persons of Indian origin (PIO) ?
Ans: NRI are those Indian residents who are in employment, studying and staying permanently abroad. PIO are foreign nationals (except of Pakistan and Bangladesh), with their origin in India. Students proceeding abroad for higher studies are treated as Nonresidents.

39. Which type of accounts can be opened under FCNR (B) ?
Ans: Only Term Deposit with maturity of minimum 1 year & maximum 5 years.

40. In which currencies can these a/cs be opened in our Bank ?
Ans: Pound Sterling, US Dollar, Euro, Canadian Dollar and Australian Dollar.

41.Can these accounts be opened jointly with Indian residents ?
Ans: Yes, but with their resident close relative (Relative as defined in Section 6 of the Companies Act, 1956) on 'former or survivor' basis.

42. Which of the following is not true regarding an AWB?
 
a.  It is prima facie evidence of receipt of cargo.
b.  It is a document of title to goods.
c.  The date of dispatch indicated on the AWB will be deemed to be the date of shipment
d.  AWB serves as an instruction sheet giving all the instruction needed for moving the goods.
e.  AWB is made out in three originals

Ans: b. It is a document of title to goods.

 Explanation: Transport document issued by a carrier for air transportation. If issued by the actual carrier, it is a master air waybill. If issued by an air freight consolidator or forwarder it is a house air waybill. The document is issued in three originals and is not negotiable so it cannot be issued to the order; it is always nominative and non-endorsable. Since it is not negotiable, and it does not evidence title to the goods, in order to maintain some control of goods not paid for by cash in advance, sellers often consign air shipments to their sales agents, or freight forwarders’ agents in the buyer’s country. The standard form was designed to enhance the application of computerized systems to air freight processing for both the carrier and the shipperModel of Air Waybill.


43. BEF  is the statement which banks submit to RBI relating to ::

 

a.  Transactions in US Dollars
b.  Importers who have not submitted documentary evidence for import within stipulated time period
c.  Over due export bills
d.  Non performing assets
e.  Excess overnight limit position of the bank

Ans: b. Importers who have not submitted documentary evidence for import within stipulated time period


44. In relation to FEDAI, which of the following is correct:

a. Providing training-task-related acquisition of skills to bank officers by conducting workshops, seminars in the field of of forex operations

b. Formulating uniform rules and guidelines for Authorised Dealers

c. Granting accreddiation to intermediaries in the interbank forex market

d. To contribute to the development of the foreign exchange market

e. All of the above

Ans:All of the above

Explanation: Due to continuing integration of the global financial markets and increased pace of de-regulation, the role of self-regulatory organizations like FEDAI has also transformed. In such an environment, FEDAI plays a catalytic role for smooth functioning of the markets through closer co-ordination with the RBI, other organizations like FIMMDA, the Forex Association of India and various market participants. FEDAI also maximizes the benefits derived from synergies of member banks through innovation in areas like new customized products, bench marking against international standards on accounting, market practices, risk management systems, etc.


45. What is known Holiday as per FEDAI rules:

a. one is known atleast 3 working days before the date
b.one is known atleast 2 working days before the date
c. one is known atleast 4 working days before the date
d. None of these

Ans:one is known atleast 3 working days before the date

46. As per FEDAI The exchange trading hours for Inter-bank forex market in India would be from
a. 9 am to 5.30 pm
b. 9.00 a.m. to 5.00 p.m
9.00 a.m. to 4.30 p.m
Ans: b. 9.00 a.m. to 5.00 p.m
Explanations:  No customer transaction should be undertaken by the Authorised Dealers after 4.30 p.m. on all working days. 1.2 Cut-off time limit of 05.00 p.m. is not applicable for cross currency transactions. In terms of paragraph 7.1 of Internal Control Guidelines over Foreign Exchange Business of Reserve Bank of India (February 2011), Authorised Dealers are permitted to undertake cross currency transactions during extended hours, provided the Managements lay down the extended dealing hours.

47. As per FEDAI in case of dishonour of a Export bill before crystallisation, the bank shall recover.
a.  Rupee equivalent amount of the bill and foreign currency charges at TT selling rate.
b.  Rupee equivalent amount of the bill and foreign currency charges at Bill selling rate.
c   at agreed rate
Ans:Rupee equivalent amount of the bill and foreign currency charges at TT selling rate.

48. What will be the normal transit period for Export Bills in Foreign Currencies
a. 5 days
b. 25 days
c   120 days
Ans:a. 5 days
Explanations: Normal transit period comprises of the average period normally involved from the date of negotiation/purchase/discount till the receipt of bill proceeds. It is not to be confused with the time taken for the arrival of the goods at the destination. In the case of export usance bills, where due dates are fixed or are reckoned from date of shipment or date of bill of exchange etc, the actual due date is known. Therefore in such cases, normal transit period is not applicable.

49. On receipt of credit advice/statement of nostro account and compliances of guidelines, requirements of the Bank and FEMA, the Bank shall transfer funds for the credit of exporter’s account within
a. 2 working days
b. 5 working days
c  25 working days
Ans:. 2 working days

50. The two basic types of exchange rates are the:

a. spot exchange rate and the forward exchange rate.

b. spot exchange rate and the future exchange rate.

c. present exchange rate and the forward exchange rate.

d. present exchange rate and the future exchange rate.

Answer: a


51. __________ is the act of trading different currencies.

a. Foreign exchange

b. Arbitrage

c. Foreign Trade

d. Exportation

Answer: a

 

52. A(n) __________ is the price of one currency in terms of another currency.

a. export price

b. import price

c. exchange rate

d. arbitrage price

Answer: c


53. Who heads Foreign Investment Promotion Board (FIPB)?
 [A]Prime Minister 
[B]Finance Minister 
[C]Finance Secretary
 [D]Home Minister 
Ans: Finance Secretary 
The finance secretary {Ashok Lavasa is current Finance Secretary (2016)} is the chairman of the Foreign Investment Promotion Board (FIPB). FIPB is a single window clearance system proposals on foreign direct investments.

54. The spot exchange rate and the forward exchange rate differ by the:

a. location of the trade.

b. type of trader.

c. type of currency exchanged.

d. timing of the actual currency exchange.

Answer: D

 

55. The __________ exchange rate is the price for “immediate” currency exchange.

a. forward

b. spot

c. future

d. current

Answer: B


 56. The __________ exchange rate is the price now for a currency exchange that will take place sometime in the future.

a. forward

b. spot

c. future

d. current

Answer: A

 

57. If the U.S. dollar is worth 129.68 Japanese yen, then the Japanese yen is worth __________ US dollars.

a. 0.007711

b. 129.68

c. 0.002289

d. 354.25

Answer: A

 

58. If the Canadian dollar is worth 0.6378 U.S. dollars, then the U.S. dollar is worth __________ Canadian dollars.

a. 1.5679

b. 0.6378

c. 2.2058

d. 3.7826

Answer: a. 1.5679

 

59. The U.S. dollar price per British pound is the __________ the British pound price per U.S. dollar.

a. reciprocal of

b. complement of

c. same as

d. sum of

Answer: A

 

60. The foreign exchange market is:

a. a single gathering place where traders shout buy and sell orders at each other.

b. a grouping, by electronic means, of banks and traders who work at banks that conduct foreign exchange trades.

c. located in New York.

d. located in London.

Answer: B


 

61. __________ foreign exchange trading involves currency exchanges done between individuals.

a. interbank

b. retail

c. special

d. government

Answer: B

 

62. __________ foreign exchange trading is foreign exchange trading done between the banks active in the market.

a. interbank

b. retail

c. customer

d. government

Answer: A

 

63. Two types of foreign exchange trading are __________ trading and __________ trading.

a. customer; interbank

b. customer; government

c. retail; interbank

d. retail; government

Answer: C

 

64. The foreign exchange market is a __________ market.

a. 24-hour

b. 12-hour

c. 8-hour

d. 4-hour

Answer: A

 

65. Nearly half of all foreign exchange trading involves banks in __________ and __________.

a. New York; Frankfurt

b. New York; London

c. London; Frankfurt

d. Tokyo; New York

Answer: B

 

66. The U.S. dollar is called a __________ because it is often used as an intermediary to accomplish trading between two other currencies.

a. common currency

b. main currency

c. trade currency

d. vehicle currency

Answer: D

 

67. The foreign exchange spot market provides __________ that permit payments to flow between individuals, businesses, and other organizations that prefer to use different currencies.

a. trade services

b. government authority

c. clearing services

d. technological services

Answer: C

 

68. Which of the following is NOT a function of the interbank operations of the foreign exchange market?

a. Provides a bank with a continuous stream of information on conditions in the foreign exchange market.

b. Provides a bank the means to readjust its own position quickly and at low cost.

c. Permits a bank to take on a position in a foreign currency quickly.

d. Provides a bank with technological resources for use in foreign exchange trading.Answer: D

 

69. A speculative position on exchange rate movements in the near future is usually held:

a. for a long time, typically lasting more than a year.

b. for a long time, typically lasting more than five years.

c. for a short time, typically being closed out by the end of the day.

d. for a long or short time, it does not matter.

Answer: C

 

70. The main benefit of using a foreign exchange broker is that the broker provides ___________ to the trades until an exchange rate is agreed on for a trade.

a. technological resources

b. low-cost information

c. anonymity

d. low-cost trading services

Answer: C

 

71. Interbank trading is conducted directly between __________ or through the use of __________ that provide anonymity until the trade is complete.

a. traders; the government

b. traders; brokers

c. individual consumers; the government

d. individual consumers; brokers

Answer: B


72. The price at which one can enter into a contract today to buy or sell a currency 30 days from now is called a 
a. Reciprocal exchange rate. 
b. Effective exchange rate. 
c. Exchange rate option. 
d. Forward exchange rate. 
e. Multilateral exchange rate. 
Ans: d 

73. Forward exchange rates are useful for those who wish to 
a. Protect themselves from the risk that the exchange rate will change before a transaction is completed. 
b. Gamble that a currency will rise in value. 
c. Gamble that a currency will fall in value. 
d. Exchange currencies at a point in time in the future. 
e. All of the above.
 Ans: e

74. Mirror accounts
Further, the account maintained by a bank(ABC) with another bank(XYZ) is known as a Nostro account like I already discussed, and the statement which it receives from the bank with which it maintains accounts in foreign currency is known as a Nostro account statement. The replica of this account is maintained by the bank in its own books for operational purposes in local currency and is known as a Nostro mirror account. It is maintained by by the local bank(XYZ) for accounting of inflows and outflows of forex taking place from a Nostro account of the bank. Lets say the Nostro account deals in USD(the foreign currency). So if the Nostro account in USD shows the actual funds position and actual credits and debits leading to the funds position and is maintained in the books of the bank ABC, the Mirror(of Nostro) account is maintained in the books of the local(XYZ) bank in the local currency, say INR.

75. FDI is prohibited in the following sectors
  • Lottery Business including Government/private lottery, online lotteries, etc.
  • Gambling and Betting including casinos etc.
  • Chit funds
  • Nidhi company
  • Trading in Transferable Development Rights (TDRs)
  • Real Estate Business or Construction of Farm Houses (Real estate business does not include development of townships, construction of residential /commercial premises, roads or bridges )
  • Manufacturing of cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
  • Activities/sectors not open to private sector investment e.g. Atomic Energy and Railway operations (other than permitted activities)

76.    FDI is also allowed through two different routes namely, Automatic and through the Foreign Investment Promotion Board (FIPB). In the automatic route, foreign entities do not need the prior approval of the government to invest. However, they have to inform the RBI about the amount of investment within a stipulated time period. In specific sectors, FDI is through the FIPB or the Government route where the FIPB has to approve each foreign investment.

77. What is the net worth required for setting up Branch office and Liason office in India by Foreign Companies?
AnsThe non-resident entity applying for a BO/LO in India should have a financially sound track record viz:
  1. For Branch Office — a profit making track record during the immediately preceding five financial years in the home country and net worth of not less than USD 100,000 or its equivalent.

  2. For Liaison Office — a profit making track record during the immediately preceding three financial years in the home country and net worth of not less than USD 50,000 or its equivalent.

78. Branch Offices: Permissible Activities

a). Companies incorporated outside India and engaged in manufacturing or trading activities are allowed to set up Branch Offices in India with specific approval of the Reserve Bank. Such Branch Offices are permitted to represent the parent / group companies and undertake the following activities in India:

  1. Export / Import of goods.

  2. Rendering professional or consultancy services.

  3. Carrying out research work, in areas in which the parent company is engaged.

  4. Promoting technical or financial collaborations between Indian companies and parent or overseas group company.

  5. Representing the parent company in India and acting as buying / selling agent in India.

  6. Rendering services in information technology and development of software in India.

  7. Rendering technical support to the products supplied by parent/group companies.

  8. Foreign airline / shipping company.

Normally, the Branch Office should be engaged in the activity in which the parent company is engaged.

b) Retail trading activities of any nature is not allowed for a Branch Office in India.

c) A Branch Office is not allowed to carry out manufacturing or processing activities in India, directly or indirectly.

d) Profits earned by the Branch Offices are freely remittable from India, subject to payment of applicable taxes.


79. BUYERS/SUPPLIERS CREDIT
Trade Credits refer to the credits extended by the overseas supplier, bank and financial institution for maturity up to five years for imports into India. Depending on the source of finance, such trade credits include suppliers’ credit or buyers’ credit. Suppliers’ credit relates to the credit for imports into India extended by the overseas supplier, while buyers’ credit refers to loans for payment of imports into India arranged by the importer from overseas bank or financial institution. Imports should be as permissible under the extant Foreign Trade Policy of the Director General of Foreign Trade (DGFT).
A. Routes and Amount of Trade Credit
Automatic Route: ADs are permitted to approve trade credit for import of non- capital and capital goods up to USD 20 million or equivalent per import transaction.
Approval Route: The proposals involving trade credit for import of non-capital and capital goods beyond USD 20 million or equivalent per import transaction are considered by the RBI.
B. Maturity
  • Maximum Maturity in case of import of non capital goods (Raw Material, Consumables, Accessories, Spares, Components, Parts etc): upto 1 year from the date of shipment or operating Cycle whichever is less.
  • Maximum Maturity in case of import of capital goods : upto 5 years from the date of shipment (Beyond 3 years banks are not allowed to provide Letter of Undertaking / comfort)
  • Incase of Capital Goods, the ab-initio (from beginning) contract period should be 6 (six) months for all trade credits.
C. All-in-cost Ceilings: 6 Month Libor (respective currency of credit) + 350 bps
80. General Prohibition on making of Overseas Direct Investment (ODI):

As per the FEMA Regulations, any Indian entity can only with the prior approval of the Reserve Bank, make investment in the foreign entities engaged in the below mentioned sectors:

  • Real Estate;
  • Banking Businesses.
  • Any Investment in the Country of Pakistan.

81. Investment Limit under Overseas Direct Investment (ODI)

:Any Investment to be made by the eligible investors shall not exceed the limit of 400 % of the net worth of the Investor. 

However the cap of 400% shall not be applicable in case investment is made out of the funds:

  • Held in the Exchange Earner's Foreign Currency (EFFC) Account; or
  • Raised through the issue of ADRs/GDRs provided that ADRs/GDRs are issued in accordance with the Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and other guidelines issued by the government.

Further the cap limit of 400 percent shall also not be applicable in case the investment is to be made in the unincorporated entities in the oil sector by Navratna PSUs, ONGC, Videsh Limited and Oil India Limited (OIL) provided that such investment is subject to the approval of the competent authority.


82.AIRWAY BILL: The air waybill is a contract of carriage between the shipper and air carrier. It is issued by the air carrier and serves as a receipt for the shipper. When the shipper gives the cargo to a freight consolidator or forwarder for transportation, the air waybill is obtained from the consolidator or forwarder.

83. What is Multimodal Transport Bills of Lading and through Bill of Lading? 

Ans: Multimodal transport bill of lading and combined bill of lading are transport documents covering transport by more than one mode of transport.
Through Bill of Lading :  Through Bill of lading is virtually identical to the Multimodal Transport Bill of lading but with one major difference. The Multimodal Transport Bill of Lading is issued by the Multimodal Transport Operator (MTO) (generally the sea carrier) who takes responsibility of the goods (e.g. shortages, losses, damages) during the entire period of transport, thus not only for the sea passage but also for the other transport modes as well. The Through Bill of Lading is issued by the sea carrier but the carrier states on the contract of carriage that he is only responsible of the goods for that part of the carriage he takes care of, such as the sea passage only.

TYPES OF BILL OF LADING

There are various types of bill of lading depending on the requirements of the shipment:

STRAIGHT BILL OF LADING

This is used when the goods are already paid for and are directly shipped to the customer.

TO ORDER BILL OF LADING

This is used when the goods are sold on trade credit and the shipment can be either to a distributor or the customer.

CLEAN BILL OF LADING

This is used to state that the goods were in proper condition when loaded. This is a sign off from the carrier.

SOILED BILL OF LADING

This is used when the goods are marred in any way or are damaged.

INLAND BILL OF LADING

This is used to ship goods domestically through railways or roads, but not through seas.

OCEAN BILL OF LADING

This is used to ship goods through seas, both nationally and internationally.

THROUGH BILL OF LADING

This is used in complex transactions where the shipment passes through different ways of transportation and also various centers of distribution. This bill of lading requires an ocean and inland bill of lading.

MULTIMODAL/ COMBINED TRANSPORT BILL OF LADING

A type of through bill of lading where a shipment involves at least two ways of transport.

84. As per foreign Trade policy for making advance import payment for import of Aircraft and Choppers whose permission is required:

a. RBI

b. DGCA

c. Ministry of Finance

Ans:b. DGCA 

Explanation: As a sector specific measure, entities which have been permitted under the extant Foreign Trade Policy to import aircrafts and helicopters (including used / second hand aircraft and helicopters) or any other person who has been granted permission by the Directorate General of Civil Aviation (DGCA) to operate Scheduled or Non-Scheduled Air Transport Service (including Air Taxi Services), can make advance remittance without bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million. 

85. The entire Merchanting Trade Transactions should be completed within an overall period of ______ months and there should not be any outlay of foreign exchange beyond______  months.

a. 9 and 4

b. 9 and 9

c. 9 and 6

d.12 and 9

Ans: a. 9 and 4

86.  FATF stands for-
1)  
2) 
3)  
4)  
Ans: Financial Action Task Force

87. which is not compulsory for disbursement of PCFC to client
a. IEC
b. Underlying contract in the form of PI, PO or LC
c. ECGC policy taken by customer.
d. ECGC policy taken by bank
Ans: ECGC policy taken by customer.

88. Branch office in India Of foreign companies are allowed open FCY accounts for normal operations in India

A Yes

B No

C Its AD’s discretion

D None of above

Ans B


89. Prior approval from RBI is required for

a Remittance of USD 25000 from Proprietor’s Current account from its individual LRS eligibility

b For soliciting deposits for their foreign/overseas branches

c to open, maintain and hold foreign currency account with a bank outside India for making remittances under the LRS

d None of these

Ans B


90.The time-frame for a traveller who has returned to India to surrender foreign exchange?

A 180 days

B 365 days

C 7 days

D None of these

Ans A

91.  Resident Foreign Currency (RFC) Account with an AD will be of type

  1. Current account
  2. Savings
  3. Term deposit
  4. Any of these

Ans B


92. Regulatory limits # 2–Part Drawings/ Undrawn Balances—Limit of 10%

(i) In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc., to be ascertained after arrival and inspection, weighment or analysis of the goods. In such cases, AD Category – I banks may negotiate the bills, provided:

a) The amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of 10 per cent of the full export value.

b) An undertaking is obtained from the exporter on the duplicate of EDF forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realization.

(ii) In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category – I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realized at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from the date of shipment.

As per guidelines existing on 26th Nov 2016


93.Under LRS, Individuals are permitted to open and maintain foreign currency accounts

  1. With Banks in India
  2. With Foreign Banks in India
  3. With banks abroad
  4. With Offshore Banking Units ( OBU) in India

Ans c 


94.International Debit Cards can be used

a.For any current account transaction

b.For any permissible current account transaction

c.For any capital account transaction

d.For payment of call back charges

Ans b 


95. Where the amount of advance exceeds USD X or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. The value of X is

  1. USD 500000
  2. USD 5000000
  3. USD 200000
  4. None of these.

Ans a. As per extant guidelines on 22.11.2016


96. Recipients of foreign inward remittances are allowed to retain up to what extent in the EEFC Account

a 100%  b 50 %  c 10 %  d 25 %

Ans a


97. Citizens of Pakistan, Bangladesh, Sri Lanka, Afghanistan, China, Iran, Nepal, Bhutan, Macau or Hong Kong, (10 countries) irrespective of their residential status, cannot, without prior permission of the Reserve Bank, acquire or transfer immovable property in India, other than on lease, not exceeding

  1. 5 years
  2. 3 years
  3. 7 years
  4. None of these.
Ans: 5 years

98. PAN card need not be insisted upon for remittance made towards permissible current account transactions up to USD _______ per financial year.
a. 25000
b. 5000
c. 10000
d. none of these
Ans: 25000

99.  ECB -2 has to be filed with the RBI within _______ working days from the close of month
a. 5
b. 7
c. 6
d. none of these

100. Bank XYZ of India send collection documents to bank of tokyo in Japan for collecting payment from japanese importer for USD 20000, Indian bank receives payment in Jp morgan chase USA Nostro, As per URC 522 - Article 3 who is the remitting bank?
a. Bank in India
b. Bank in USA
C bank in tokyo

Ans: Bank In India

Explanations: ARTICLE 3 PARTIES TO A COLLECTION a For the purposes of these Articles the "parties thereto" are: 1 the "principal" who is the party entrusting the handling of a collection to a bank; 2 the "remitting bank" which is the bank to which the principal has entrusted the handling of a collection; 3 the "collecting bank" which is any bank, other than the remitting bank, involved in processing the collection; 4 the "presenting bank" which is the collecting bank making presentation to the drawee. b The "drawee" is the one to whom presentation is to be made in accordance with the collection instruction.


101. URC 522 - Article 18 PAYMENT IN FOREIGN CURRENCY

In the case of documents payable in a currency other than that of the country of payment (foreign currency), the presenting bank must, unless otherwise instructed in the collection instruction, release the documents to the drawee against payment in the designated foreign currency only if such foreign currency can immediately be remitted in accordance with the instructions given in the collection instruction.


102. Which one is true about the UCP?

    1. A set of general guidelines that each party to a letter of credit may comply with if they choose.

    2. A set of rules that a bank may include in a letter of credit the bank issues if the bank wishes to, but which all parties must adhere to if so included.

    3. A law that governs all letters of credit.

    4. The bar code that appears on the packaging of most consumer products

  1. Ans: A set of rules that a bank may include in a letter of credit the bank issues if the bank wishes to, but which all parties must adhere to if so included.

103.  What happens if a confirming bank fails to examine documents before the end of the fifth day following presentation?

a.  The confirmation ceases to exist and the bank must forward the documents to the issuing bank for payment.

b.  If the documents have no discrepancies, the confirming bank may owe past due interest for “wrongful dishonor,” but, if the documents do have discrepancies, nothing much happens as their obligation is only to honor compliant documents.

c.  The confirming bank must send a notice of refusal stating the reasons the bank was unable to examine the documents within the five-day time frame.

d.  The confirming bank becomes obligated to pay even if the documents contain discrepancies.

Ans: The confirming bank becomes obligated to pay even if the documents contain discrepancies.

104. If a UCP600 letter of credit calls for presentation of a multimodal transport document, which of the following is true?

  1. The multimodal transport document must be marked “clean on board.”
  2. The letter of credit must specify a place of dispatch, a port of loading, a port of discharge, and a final destination.
  3. The letter of credit must specify a place of dispatch and a final destination, but must not specify a port of loading or a port of discharge.
  4. None of the above. Ans:

105. Which of the following is true?
  1. Under UCP600, banks no longer have to worry about documents being consistent with each other.
  2. Bills of lading with language that calls into question the delivery of goods against surrender of an original bill of lading were acceptable under UCP500, but not under UCP600.
  3. When talking about letters of credit, the expression “banks examine documents on their face” means that banks examine the front of documents but not the back.
  4. Under UCP600, an issuing bank is permitted to refuse documents but then change their minds and rescind their refusal.
Ans:Under UCP600, an issuing bank is permitted to refuse documents but then change their minds and rescind their refusal.

106. A letter of credit is issued calling for shipment from Long Beach, CA, partial shipments allowed. An amendment is made, changing the port of loading to Los Angeles, CA, but curtailing the latest shipping date by a month. Which of the following is true?
  1. The beneficiary must now ship from Los Angeles.
  2. The beneficiary may continue to ship from Long Beach, but, if the beneficiary does so, it will be deemed to constitute rejection of the amendment.
  3. The beneficiary may now ship from Los Angeles, but, if the beneficiary does so, it will be deemed that the beneficiary has accepted the amendment, including the earlier deadline for shipments. Ans
  4. The beneficiary may accept the change in ports and reject the change in the latest shipping date, as long as the beneficiary does so expressly, either before or upon presentation of documents.

107.Under UCP600, if a bank is closed for unplanned reasons (force majeure), what happens to letters of credit that expire before the bank reopens?
  1. The bank will pay for compliant documents that were presented before the day the bank closed, even though they were not examined until after the bank reopened. Ans:
  2. The bank will accept presentation of documents within 30 calendar days after they reopen, as long as they are all dated prior to the expiration dates of the respective letters of credit.
  3. If the beneficiary presented documents X days before the day the bank closed, they will be allowed 5-X days after the bank reopens to correct discrepancies.
  4. All of the above.

108. When an issuing bank decides to refuse documents due to discrepancies under a letter of credit they made subject to UCP600, which of the following are the bank required to do?
  1. Contact the applicant and see whether the applicant will grant a waiver of the discrepancies.
  2. Notify the presenter of the documents of every discrepancy on which the refusal is based. Ans
  3. Notify the presenter either that they are holding the documents at the disposal of the presenter or that they are returning them.
  4. Send notice of refusal “immediately” upon deciding to refuse the documents.

 109. If packing credit is availed in foreign currency the interrest is linked to:
a. Libor
b. Mibor
C. BPLR-2%
Ans: a. LIBOR

110. One month outright forward rate for GBP/INR is 80.81/80.83 and the relevant swap points are 10/9, then the outright spot rate for GBP/INR is:

 

a.  80.71/80.74


b.  80.90/80.93


c.  80.91/80.93


d.  80.72/80.73


e.  80.91/80.92

Ans: a. 80.71/80.74


  1. 111. For recurring expenses, remittances up to X per cent of the average annual sales/income or turnover during the last two financial years, are permissible. The value of x is

a 15%  b 25%  c 10 %  d None of these


Ans C


      112. What are the type of rates that are not quoted for foreign exchange purchase transactions.

a.TT selling

b.Bill Buying

c.Currency Buying

d.TT buying

Ans a

113. What are the type of rates that are not quoted for foreign exchange sale transactions.

a.TT selling

b.Bill Selling

c.Currency Selling

d.None of these

Ans d

114 what is maxim applied for direct quotes

a Buy High Sell Low

b. Buy Low Sell High

c.Either of above

d None of above

Ans b


    115.Which person resident outside India can not purchase shares or convertible debentures issued by Indian company under automatic route without FIPB approval ?
  1. A citizen of Pakistan
  2. A citizen of Bangladesh
  3. A citizen of Nepal
  4. A citizen of Sri Lanka

Ans 1


116. Exporters Caution list is informed to Ads by

a COX series Circular

b DIR series circular

c Automated and to be downloaded on daily basis through EPDMS

d None of these

Ans b


117.

  1. NRI is a person who is

a citizen of India

b person resident outside India

c person of Indian Origin

d all of above

Ans d


118. FIRC are issued in form known as

a BCI b ETX c FIR d LEG

Ans a BCI


119. Under FERA 1973

a. A person was presumed guilty unless he proved himself innocent

b.ADs were free to carry out any transaction

c.A person was free to do any current account transaction.

d.A person was presumed innocent unless he is proven guilty

Ans a.


120.As per FEMA, who from directorate of enforcement can

    1.  take up investigative work in the case of any contravention under the Act?

a.Officers not below the rank of Assistant Director

b Officers not below the rank of Deputy Director

c.Officers not below the rank of Director

d Officers not below the rank of Joint Director

Ans a


121.Authorised Dealers obtain simplified application cum declaration form A2 up to

a.USD 5000 or equivalent

b.USD 25000 or equivalent

c.USD 10000 or equivalent

d.INR 25000 or equivalent

Ans b


122 What is limit of permissible foreign exchange that can be released to a traveller going to Nepal ?

a.USD 5000 or equivalent

b.USD 10000 or equivalent

c .No foreign exchange can be released

d.None of these

Ans c


    123.What is maximum monetary penalty payable in FEMA?

a Five times the amount involved

b Double the amount involved

c Three Times the amount involved

d No relation with amount involved

Ans c


  1. 124.the offence in FERA was treated as

a Civil Offence

b Trivial Offence

c Criminal Offence

d None of these.

Ans c


  • 125. when a forward contract cancelled with one AD be rebooked with another AD?

    a with permission of AD

    b with permission of RBI

    c when the second AD agrees

    d The switch is warranted by competitive rates on offer.

    Ans d


      126. what is currency in which FCNR accounts can be opened?

    a.any freely convertible foreign currency

    b.USD, JPY,EUR, GBP, CAD & AUD

    c GBP , USD only

    d.USD, JPY,EUR, GBP, CAD & NLG.

    Ans a


    127.NRO accounts can be

    a savings

    b savings, current

    c savings, current, term deposits

    d.  savings, current, term deposits, recurring

    Ans d


    128. What happened to forwards booked to hedge balances in EEFC account?

    a.to be delivered

    b. to be cancelled

    c.to be crystallized

    d. to be transferred

    Ans a


    129 FEMA 1999 came into force from which date

    a Dec 31,1999

    b.Jan 01 2000

    c.June 30 2000

    d. June 1 2000

    Ans d

     

    130 What is the period within which an individual should surrender unspent foreign exchange to ADs?

    a 180 days

    b 90 days

    c 1 year

    d  Immediately on return

    Ans a



      131. Prohibited Current Account transactions (V.Imp!!!!) – you can’t draw foreign exchange for:-
    1. Forex can’t be drawn for making payment to any person in Nepal or Bhutan! Use Rupees!
    2. Remitting lottery winnings outside India.
    Remitting any income from winning in any races/ horse races/ hobbies etc.
    3. You can’t remit any money outside India for the purchase of lottery tickets, or banned magazines, sweepstakes, betting etc.
    4. You can’t draw forex for making payments on any ‘Call Back Services’ on telephone calls – call back is when you call and then immediately get a call back being routed through the telephone services of a company where charges are lower.

    132. The limit under Liberalised Remittance Scheme, has be increase to USD 2,50,000 per financial year for permissible current or capital account transaction or a combination of both, whereby all resident individuals, including minors, are allowed to freely remit to that extent – the increase came in 2015.

    133. The Authorized Dealers under FEMA are classified into
    a) 2 Categories
    b) 3 Categories
    c) 4 Categories
    d) Only 1 category

    134. Indian rupee is fully convertible on
    a) Current account transactions
    b) Capital account transactions
    c) Both current and capital account transactions
    d) Neither under current account nor under capital account.


    135. Non resident Bank accounts refer to
    a) NOSTRO accounts
    b) VOSTRO accounts
    c) Accounts opened in offshore centres
    d) None of the above

    136. The number of NOSTRO accounts that can be maintained by a Bank in a particular currency is
    a) Not exceeding ten
    b) Minimum two
    c) Dependent on the number of Overseas branches of the Bank
    d) No such limit.

    137. Remittances through the Exchange Houses under the Rupee Drawing Arrangements for financing of trade
    transactions are permitted up to

    a) Rs. 2,00,000 per transaction
    b) Rs. 5,00,000 per transaction
    c) Rs. 50,000 per transaction
    d) No such limit.
    Ans: b) Rs. 5,00,000 per transaction

    138. Authorised Dealers – Category I in India are
    a) All scheduled commercial banks in India
    b) All public sector banks in India
    c) All banks authorised by RBI to deal in foreign exchange
    d) All of the above.
    Ans: c) All banks authorised by RBI to deal in foreign exchange

    139. International Finance Corporation finances exclusively
    a) Private sector enterprises.
    b) Public sector enterprises
    c) Both private and public sector enterprises.
    d) Private, Public and Government enterprises.

    140. Importer-Exporter Code is allotted by
    a) Directorate General of Foreign Trade
    b) Customs Authorities
    c) Respective banks where the customers maintain their accounts
    d) Department of Exports & Imports.

    141. The application to be submitted to customs for clearance of export cargo is
    a) Shipping document
    b) Shipping Bill
    c) Export General Manifesto
    d) None of the above.

    142. Beneficiary under the letter of credit is
    a) The bank opening the letter of credit
    b) The customer of the LC Opening Bank
    c) The confirming bank
    d) The exporter

    143. Banks are advised to achieve target of ___ % of their total Net Bank Credit under export finance
    a. 15
    b. 20
    c. 12
    d. 10

    144. Specific Approval List (SAL) pertains to
    a. OFAC
    b. ECGC
    c. DGFT
    d. None of the above
    13. Renewal of export credit facilities should be considered within ___ days from the date of application
    a. 30
    b. 20
    c. 10
    d. 7

    145. Kimberly Process Certification Scheme (KPCS) relates more to
    a. Diamonds
    b. Gold
    c. Conflict diamonds
    d. Silver

    146. Banks may release packing credit
    a. In one lumpsum
    b. In stages as per requirement
    c. Either a or b
    d. None of the above

    147. Packing credit can be liquidated, subject to certain ceiling, also from
    a. EEFC
    b. Rupee resources
    c. Either or both a and b
    d. None of the above

    148. When a letter of credit does not indicate whether it is revocable or irrevocable, it is treated as
    a) Revocable
    b) Irrevocable
    c) Ambiguous
    d) None of the above and an amendment is sought for clarification.

    149. A confirmed letter of credit is one
    a) Confirmed to be authentic
    b) Confirmed by the Importer to be correct
    c) Confirmed by the Exporter that he agrees to the conditions
    d) Confirmed by the Bank (other than the LC opening bank).

    150. Under the confirmed letter of credit, the undertaking of the confirming bank is
    a) In addition to that of the opening bank.
    b) In substitution of the undertaking of the opening bank
    c) Subject to government policies of the exporter country
    d) None of the above.


    151. A transferable letter of credit can be transferred
    a) Once
    b) Twice
    c) Thrice
    d) Any number of times


    152. A letter of credit which provides for granting of pre-shipment finance as well as storage of goods in the name
    of the Bank is
    a) Red clause Letter of Credit
    b) Standby Letter of Credit
    c) Green clause Letter of Credit
    d) Secured Letter of Credit

    153. A letter of credit carries an undertaking of the opening bank to pay up to a specified amount in case of nonperformance
    of certain obligation by the applicant. This letter of credit is
    a) Invalid
    b) Anticipatory letter of credit
    c) Standby letter of credit
    d) Performance letter of credit


    154. The description of goods in the following document should agree exactly with the description in the letter of
    credit
    a) Bill of Lading
    b) Commercial Invoice
    c) Certificate of Origin
    d) All of the above


    155. As per UCP, the minimum amount for which marine insurance should be effected is
    a) FOB value
    b) CIF value
    c) FOB value plus 10 %
    d) CIF value plus 10 %

    156. Expiry date of a letter of credit refers to
    a) The last date for shipment
    b) The last date for negotiation
    c) The last date for presentation of documents to issuing Bank
    d) Last date of the month in which shipment can be made.

    157. Under URR, the reimbursement authorisation is issued by
    a) LC Issuing Bank
    b) LC Negotiating Bank
    c) LC Advising Bank
    d) LC Confirming Bank


    158. Certificate of Origin indicates
    a) The country of shipment of goods
    b) The place of manufacture of goods
    c) The country of manufacture of goods
    d) The country of origin of the supplier

    159. The following document does not evidence sale
    a) Consular invoice
    b) Certified invoice
    c) Visaed invoice
    d) Proforma invoice

    160. Llyods clause signifies
    a) Certification of the beneficiary’s details on the Bill of Lading
    b) Certification of the sea worthiness of the vessel carrying the goods
    c) Certification of goods on board the vessel
    d) Certification that the goods placed on board the ship are free from any defects.

    161. Freight to pay BL is acceptable if
    a) Contract terms are CIF
    b) Contract terms are C&F
    c) Contract terms are FOB
    d) Contract terms are Freight prepaid

    162. INCO terms cover
    a) Trade in tangibles
    b) Ownership and transfer rights
    c) Contracts of carriage
    d) Rights and obligations of parties to contract of sales.

    163. The INCO term providing the least responsibility to the seller is
    a) DDP
    b) FOB
    c) CIF
    d) Ex-works

    164. The INCO term providing the least responsibility to the buyer is
    a) DDP
    b) FOB
    c) CIF
    d) Ex-works

    165. Adoption of INCO terms is
    a) Compulsory for all international contracts
    b) Compulsory for all letter of credit transactions
    c) Optional for the parties to the contract
    d) Mandatory for transactions with OFAC countries.

    166. The amount of packing credit should not normally exceed
    a) The local cost of manufacture for the exporter
    b) FOB value of the export contract
    c) CIF value of the export contract
    d) Cost of manufacture or the FOB value of the export contract whichever is lower.

    167. Pre-shipment credit can be made available by Bank for a maximum period of
    a) 90 days
    b) 180 days
    c) 270 days
    d) 360 days

    168. Under Pre-shipment credit, RBI would provide re-finance only for a period not exceeding
    a) 90 days
    b) 180 days
    c) 270 days
    d) 360 days

    169. Application for Extension of time for realization of export bills should be made in form
    a) EBW
    b) GR
    c) ETX
    d) XOS

    170. Collection of export bills are subject to ICC regulations under :
    a) UCP
    b) URR
    c) URC
    d) URDG

    171. Pick the odd country out:
    a) Sudan
    b) Iran
    c) Iraq
    d) Cuba


    172. Import licences are required for import of goods coming under
    a) Prohibited List
    b) OFAC List
    c) Negative List
    d) Restricted cover countries

    173. Buyer’s credit (Import of raw materials) can be extended for a maximum period of:
    a) 360 days from date of shipment linked to operating cycle and trade transaction.
    b) 360 days from date of receipt of goods linked to the trade transaction.
    c) 360 days from the date of filing BOE linked to operating cycle and trade transaction.
    d) Depending on the tenor of the import linked to the trade transaction.

    174. A bill of lading issued by the carrier for goods delivered in apparent good order and condition is called:
    a) Bearer Bill of Lading
    b) Clause Bill of Lading
    c) Clean Bill of Lading
    d) Carrier Bill of Lading

    175. The financial risk that a borrower, customer or obligor will not pay on due date because of the political,
    economic or social instability in his country is called
    a) Settlement risk
    b) Credit risk
    c) Country risk
    d) Reputational risk

    176. The current EXIM Policy of our country is valid for a period of
    a) 10 years
    b) 5 years
    c) 3 years
    d) 1 year

    177. SWIFT refers to
    a) Society for Worldwide International Financial Transaction
    b) Society for Worldwide Inter-Bank Financial Transaction
    c) Society for Worldwide Inter-Bank Financial Telecommunication
    d) Society for Worldwide International Financial Telecommunication

    178. SFMS refers to
    a) Society for financial messaging services
    b) Structured Financial Messaging System
    c) Structured Financial Messaging Services
    d) Structured Financial Messaging Scheme

    179. ISBP refers to
    a) International Standby Practices
    b) International Standard Banking Policies
    c) International Standard Banking practices
    d) International Structured Banking practices

    180. SDF refers to
    a) Standard Documentary Facts
    b) Structured Documentary Financials
    c) Statutory Declaration Form
    d) Shipping Declaration Forms

    181. INCO terms refer to
    a) International Commercial Terms
    b) International Communication Terms
    c) International Conference Terms
    d) International Commodity Terms.

    182. SGS signifies
    a) Certification on the weights of the commodities
    b) Certification on Inspection of the commodities
    c) Certification on the authenticity of the documents under LC
    d) Certification on the packing condition of the commodities.

    183.Form 83 refers to
    a) Application filed with RBI for allotment of Loan Registration No for ECB-Automatic route.
    b) Application filed with RBI for opening a Branch abroad
    c) Application filed with RBI for opening a Project office
    d) Application for draw down of the ECB.

    184.. Form ECB refers to
    a) Application filed with RBI for allotment of Loan Key No for EC-Approval route.
    b) Application for draw down of ECB under the automatic route
    c) Application filed with RBI for allotment of Loan Registration No. For ECB–Automatic route
    d) Application for closure of ECB under the approval route

    185. AD Banks are now permitted to approve buyer’s credits for imports into India up to a maximum of
    a) USD 20 Mn per import transaction
    b) USD 10 Mn per import transaction
    c) USD 50 Mn per import transaction
    d) No such limit.

    186. Drafts drawn by the Exchange Houses should have a validity of ..... months from the date of issue thereof:
    a) 3 months
    b) 6 months
    c) 9 months
    d) 12 months
    Ans:a) 3 months

    187. In India, documents under LC will not be negotiated on Saturdays as Forex Markets are closed on Saturdays
    – True/FALSE.
    Ans: False

    188. A credit is irrevocable even if there is no indication to that effect – TRUE/False
    Ans: True

    189. A commercial invoice need not be signed – TRUE/False
    Ans: True

    190. The description of the goods in a commercial invoice must correspond with that appearing in the credit –
    TRUE/False

    191. Under Documentary Credit, the bank is under obligation to accept a presentation even outside its banking
    hours -True/FALSE
    192. Reasonable period under UCP 600 refers to 5 calendar days following the day of presentation – True/FALSE
    193. Globalization results in development of new financial instruments – TRUE/False
    194. Settlement risk refers to the risk on the counter-party in settling the transaction – TRUE/False
    195. ECBs are permitted for working capital requirements under exceptional circumstances – True/FALSE
    196. SWIFT is a co-operative Society. TRUE/False
    197. Under pre-shipment credit, running account facility can be considered to sub-suppliers: True/False
    198. Normal Transit Period (NTP) is the time taken for the arrival of the goods at the destination. – True/False
    199. Under ECNOS concessional rate of interest is not offered – True/False
    200. An exporter can avail of PCFC in US Dollars against an export order invoiced in EURO – True/False