Credit Management Training Program

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Questions 25 Time 20 minutes

1. A credit appraiser/ banks look into…….. while granting Credit.

1 point

Capital

Capacity

Credit worthiness

Confidence

All of these

Clear selection

2. Mark the incorrect

1 point

Overdraft is drawing over & above balance in the account

Bank Guarantee is a fund-based Loan.

Cash Credit is a facility given to a Trader

Housing Loan is a retail loan

All

Clear selection

3. Choose the Correct Sentence

1 point

Document can be executed at different dates by different partners.

On DP note the maximum Stamp duty is Rs 100/-

For Equitable Mortgage the last executed Sale Deed is sufficient for creation of EM

The documents are valid for 5 years from the date of execution.

On LIC policy the Charge created is Lien.

Clear selection

4. Mark the Correct Answer

1 point

While preparing Worth/ Financial Report/Status Report Asset & Liabilities are taken at Book value.

Interview of the borrower is not a part of Due Diligence.

Managerial Appraisal does not form the core of the business.

It is common practice to obtain Confidential Report, CIBIL Score, Scan defaulter’s list

All are Correct

Clear selection

5. While reviewing operations in a CC account, which one of the following will you compare with the credit summation for the period 1st April to 31st March?

1 point

a. Interest paid in the CC limit.

b. Debit summation in the same account.

c. Annual interest expenditure shown in the P&L Account.

d. Annual purchases of the borrowing unit.

e. Annual sales of the borrower unit.

Clear selection

6. In the monthly stocks & receivables statement, which of the following items are not to be deducted from the total value of stocks & receivables for arriving at the Drawing Power?

1 point

a. Value of obsolete stocks identified during inspection.

b. Value of stocks held on consignment basis.

c. Value of stocks received under LCs, for which the bills have been duly paid.

d. Value of stocks received under LCs, for which the bills remain outstanding.

e. Book Debts which remain outstanding for more than 9 months.

Clear selection

7. Which one of the following is important information that you will find in the “ Stock/ Monthly Select Operational Data (MSOD)” statement obtained from large borrowers?

1 point

a. Cash & bank balance

b. Trade Creditors

c. Sales

d. Outside borrowings by the unit

e. Book Debts outstanding for more than 6 months

Clear selection

8. The main reason why the liabilities against expired Bank Guarantees are required to be reversed in system without undue delay, is that:

1 point

a. Banks will have to honour claims under the BG unless & until the corresponding entry in the bank’s books is marked off.

b. Guarantee fee will have to be charged for such expired BGs also till they are marked off.

c. Capital charge against such expired BGs can be released to support further credit growth.

d. The serial number given to the expired BG for security purposes can be given to another fresh BG.

e. None of the above

Clear selection

9. Mark the Correct group of Current Assets

1 point

Raw material [RM], Debtors, Plant.

b. Work in Process, Advance to Workers, Furniture & Fixture

c. RM, Debtors, Advance paid for Consumables

d. None of these

e) All of these

Clear selection

10. If Sales Projection of Rs.160 lakhs is accepted; mark correct answer in respect of Turnover method; Gross Working capital will be?

1 point

a. Rs.80 lakhs 50%

b. Rs. 40 lakh 25%

Rs.8 lakh 5%

Rs.40 Lakhs Less Rs.04 lakhs

None of these

Clear selection

12. Tangible Net Worth is

1 point

Current Asset Less Current Liabilities

Capital plus Reserves Less Current Liabilities

Net Wort Less Intangible Assets

Term Liability Plus Current Assets

None of these

Clear selection

13, Current Ratio is Showing following Trends: 1.25/1; 1.10/1 ; 0.9/ 1 Mark the Correct Statement

1 point

a) Liquidity is Increasing

b) Liquidity is Stable

c) Solvency is Going Up

d) Liquidity is decreasing.

e) None is Correct

Clear selection

14. Net Working Capital is

1 point

It is CA minus Term Liabilities

Current Liability plus Term Liabilities

Net Worth Less Intangible assets

Current Assets / Current Liabilities

None of these

Clear selection

15. If TOL/ TNW Ratio for 3 years is 1.8; 1.4; 1.2 Mark the Wrong Statement

1 point

Indicates that Solvency is Going Down.

Solvency is Going Up

Loan Repayments are Regular

Unit is increasing Capital &/ or Reserves

None of these

Clear selection

16. Calculate Debtors Velocity or Debtors Period in days [Year is 360 days]. If Debtors are Rs.250; Creditors are 320; Gross Sales is 1600; Gross Purchases are 1800

1 point

a) 250x360/ 1600= 56 days

b) 250x360/ 1800 = 50 days

c) 320 x360 /1600 = 72 days

d) 320X360/ 1800 = 64 Days

e) None of these

Clear selection

17. While Appraising Term Loans Mark the Incorrect Answer

1 point

Cost of Project & Means of Finance is worked out

DSCR is Calculated by dividing NP + Deprecation / Total EMIs for a Year

Fixed Asset Coverage Ratio is Net Fixed Assets/ Term Loan

Moratorium period can be judged with the help of DSCR

If in a project IRR (Internal Rate of Return) is 12.5% whereas Rate of Interest on TL is 10.5% it is a viable project.

Clear selection

18. Mark Correct Answer

1 point

a. Document can be executed at different dates by different partners

b. Document cannot be executed at different dates by different partners.

c. Documents should be signed first & then filled in & stamped.

d. All are correct.

e. None of the above

Clear selection

19. Mark the CORRECT statement

1 point

a. On DP Note the maximum Stamp duty applicable under Indian Stamp Act is Re.1. . .

b. For Equitable Mortgage the Deposit of Title deeds can be at any branch.

c. Most documents are valid for 3 years from the date of execution.

d. On LIC policy the Charge created is Lien

e. Limitation period stands extended even if an amount of Rs.50/- is deposited by BM or Staff

Clear selection

20. Choose the appropriate answer in respect of CIBIL

1 point

a. It is the financial snapshot of businesses & depicts financial health to the business world.

b. Credit rating helps to determine the probability of default.

c. Credit bureaus capture credit history into a single number known as a credit rating or credit score.

d. Understanding the credit habits of potential borrowers enables better lending decisions

e. All the above

Clear selection

21. Banks are required to achieve ____________% of their Adjusted Net Bank Credit under Agriculture advances

1 point

a. 18%

b. 24%

c. 12%

d. 20%

Clear selection

22. What is the maximum amount of housing loan for a dwelling unit in a Metropolitan area (with population of ten lacs or above) which is eligible for classification in the Priority Sector?

1 point

a. 35 lakhs

b. 25 lakhs

c. 30 lakhs

d. 50 lakhs

Clear selection

23. The maximum Guarantee cover available under CGTMSE to Trading unit is up-to:

1 point

a. 100 lakhs

b. 50 lakhs

c. 150 lakhs

d. 127.50 lakhs

Clear selection

24. Once the Guarantee is invoked, the CGTMSE will make available ________% of the claim within _______ days of lodging the claim. Mark Appropriate Group

1 point

a. (25%; 7)

b. (50%; 15)

c. (75%; 30)

d. (60%; 20)

Clear selection

25. As per revised classification criteria, a Micro Enterprise is one in Investment in Plant & Machinery is up-to ________cr and Annual Turnover is upto _______ cr. Mark Appropriate Group

1 point

a. (1; 5)

b. (5; 50)

c. (50; 250)

d. (100; 500)

Clear selection

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