CAIIB Crash Course June 2025 ABM Quiz-1

26/05/2025

Table of Contents

CAIIB Crash Course June 2025 ABM Quiz-1

JAIIB CAIIB Course Quiz – June 2025: The CAIIB exam for June 2025, conducted by IIBF, is fast approaching. To support your preparation, we are providing regular MCQ-based quizzes specifically designed for the JAIIB CAIIB syllabus. These quizzes are structured module-wise and unit-wise to help you cover the entire syllabus systematically. Practicing these quizzes consistently will strengthen your concepts, improve accuracy, and increase your chances of clearing the exam on your first attempt.

1. Under the RBI guidelines, which of the following is a responsibility of the Chief Vigilance Officer (CVO) in private sector and foreign banks?
(a) Monitoring employee performance
(b) Developing marketing strategies
(c) Conducting internal audits
(d) Implementing anti-fraud measures

2. According to the _______ Act, companies are required to disclose their financial statements to the public.
(a) Companies Act, 2013
(b) Banking Regulation Act, 1949
(c) Income Tax Act, 1961
(d) Securities and Exchange Board of India (SEBI) Act, 1992

3. As per the _______ guidelines, banks are required to disclose information about their non-performing assets (NPAs) and provisioning policies.
(a) Basel III
(b) Reserve Bank of India (RBI)
(c) Indian Banks’ Association (IBA)
(d) National Stock Exchange (NSE)

4. What is the purpose of a Compliance Policy in an organization?
(a) To facilitate tax evasion and unethical practices.
(b) To restrict business operations and hinder growth.
(c) To ensure adherence to laws, regulations, and internal policies.
(d) To bypass regulatory authorities and gain unfair advantages.

5. Which of the following activities is within the scope of the compliance function?
(a) Developing marketing campaigns and strategies.
(b) Conducting background checks on potential employees.
(c) Setting sales targets and monitoring sales performance.
(d) Ensuring data privacy and protection.

6. ABC Bank has recently implemented a new compliance policy to ensure adherence to anti-money laundering (AML) regulations. The policy requires the bank’s employees to conduct enhanced due diligence (EDD) for high-risk customers. However, one of the relationship managers, Mr. Sharma, is not fully aware of the new policy and continues to onboard high-risk customers without performing EDD. What action should the bank take to address this situation?
(a) Issue a verbal warning to Mr. Sharma and provide him with training on the new compliance policy.
(b) Temporarily suspend Mr. Sharma’s responsibilities and assign him to a different role within the bank.
(c) Terminate Mr. Sharma’s employment due to non-compliance with the bank’s policy.
(d) Ignore the issue since Mr. Sharma is a seasoned employee and has a good track record.

7. Which of the following is an essential component of the Compliance Structure at the Corporate Office?
(a) Compliance Committee
(b) Compliance Officer
(c) Compliance Manual
(d) Compliance Training Program

8. A bank has recently experienced a significant increase in fraudulent transactions conducted through its online banking platform. On further investigation, it was discovered that the bank’s internal control system did not have appropriate authentication measures in place, allowing unauthorized individuals to gain access to customer accounts. This situation highlights the importance of:
(a) Risk assessment
(b) Information security policies
(c) Internal control monitoring
(d) Training and awareness programs

9. Statement I: The Operations Department is responsible for overseeing the production and delivery of goods or services.
Statement II: The Research and Development Department is responsible for conducting market research and developing new products or technologies.
Statement III: The Legal Department is responsible for ensuring compliance with laws and regulations.
(a) Only statement I is correct.
(b) Only statements II and III are correct.
(c) Only statements I and III are correct.
(d) All statements are correct.

10. Which of the following strategies is effective in reducing control risk?
(a) Increasing the complexity of control procedures to minimize errors.
(b) Implementing segregation of duties to ensure checks and balances.
(c) Reducing the frequency of internal audits to save costs.
(d) Relying solely on automated controls for transaction processing.

11. Which of the following is a key benefit of implementing a robust loan review mechanism or credit audit?
(a) Increase in loan delinquency rates
(b) Decrease in non-performing assets (NPAs)
(c) Reduction in loan origination process time
(d) Higher profitability through aggressive lending practices

12. Compliance risk arises due to ____________ of regulatory and legal requirements and ____________ by the organization.
(a) non-compliance, misinterpretation
(b) compliance, violations
(c) violations, misinterpretation
(d) non-compliance, adherence

13. Statement I: Credit audit involves a detailed examination of the credit approval process, credit monitoring, and recovery mechanisms of a financial institution.
Statement II: The objective of credit audit is to ensure compliance with regulatory guidelines and internal credit policies.
Statement III: Credit audit primarily focuses on evaluating the profitability and financial performance of the borrowers.
(a) Only statements I and II are correct.
(b) Only statements I and III are correct.
(c) Only statements II and III are correct.
(d) All statements I, II, and III are correct.

14. PQR Bank has implemented stringent measures to prevent money laundering and comply with anti-money laundering regulations. As an AML officer, you have identified a suspicious transaction in which a customer is involved. What should be your immediate action?
(a) Freeze the customer’s account and initiate an internal investigation.
(b) Inform the customer about the suspicious transaction and request an explanation.
(c) Report the suspicious transaction to the relevant regulatory authorities.
(d) Monitor the customer’s account for further suspicious activities without taking immediate action.

15. In the GRC framework, risk __________ is the process of identifying, assessing, and prioritizing risks, while risk evaluation involves developing strategies to manage and mitigate those risks.
(a) monitoring
(b) assessment
(c) identification
(d) evaluation

16. ABC Corporation, a manufacturing company, is considering implementing an integrated GRC approach. They are evaluating the potential benefits to justify the investment. Which of the following benefits is a strategic advantage of an integrated GRC approach?
(a) Improved stakeholder confidence and reputation
(b) Cost savings through reduced insurance premiums
(c) Streamlined internal communication and collaboration
(d) Enhanced decision-making through data analytics

17. LMN Corporation wants to establish a robust whistle-blower policy that encourages reporting of unethical practices and provides protection to whistle-blowers. Which of the following components should be included in the policy?
(a) Establishing a dedicated whistle-blower committee to investigate reported cases.
(b) Penalizing whistle-blowers for reporting false allegations.
(c) Promising full confidentiality without any exceptions.
(d) Offering protection against retaliation for the whistle-blowers.

18. ABC Non-Banking Financial Company (NBFC) has recently achieved significant growth and now falls under the purview of scale-based regulation. As per the transition path, which regulatory framework will ABC NBFC be subjected to?
(a) Current regulatory framework
(b) Revised regulatory framework
(c) Scale-based regulatory framework
(d) No regulatory framework

19. for the compliance function in NBFC-UL/ML, the compliance function should be independent and __________ from the operational and business __________.
(a) distinct, functions
(b) isolated, areas
(c) separated, units
(d) differentiated, divisions

20. Statement I: Non-Banking Financial Companies in the Upper Layer (NBFC-UL) and Middle Layer (NBFC-ML) are required to establish a compliance function.
Statement II: The compliance function in NBFC-UL and NBFC-ML should be independent and separate from other functions within the organization.
Statement III: The Chief Compliance Officer (CCO) is responsible for ensuring compliance with applicable laws, regulations, and internal policies in both NBFC-UL and NBFC-ML.
(a) Only statement I is true.
(b) Only statements I and II are true.
(c) Only statements II and III are true.
(d) All statements are true.

Answer:

Q1: C
Q2: A
Q3: C
Q4: C
Q5: D
Q6: D
Q7: C
Q8: A
Q9: C
Q10: C
Q11: A
Q12: A
Q13: B
Q14: D
Q15: B
Q16: C
Q17: B
Q18: A
Q19: B
Q20: C