🟦 SECTION 1: Overview of Credit Management (10 MCQs)

1. What is the primary objective of credit management?
➡️ Answer: Risk Mitigation

2. The historical credit structure in India was mainly influenced by:
➡️ Answer: Cooperative Movement

3. Which body issues guidelines crucial for bank credit policy?
➡️ Answer: RBI

4. “Principle of Safety” in lending primarily refers to:
➡️ Answer: Repayment Capacity

5. A borrower who takes loans frequently for day-to-day operations is classified as:
➡️ Answer: Working Capital Borrower

6. Term loans fall under which category of credit?
➡️ Answer: Non-Current Credit

7. The component that ensures timely recovery of dues is:
➡️ Answer: Credit Monitoring

8. KYC & due diligence are part of:
➡️ Answer: Pre-sanction Process

9. Large corporate borrowers mainly avail:
➡️ Answer: Project Finance

10. The principle that ensures proper utilization of funds is:
➡️ Answer: Purpose

🟩 SECTION 2: Analysis of Financial Statements (20 MCQs)

11. Financial statements include Balance Sheet and:
➡️ Answer: Profit & Loss Account

12. Cash Flow Statements are mandated under which AS?
➡️ Answer: AS-3

13. Who is the primary user for financial statements in lending?
➡️ Answer: Bankers

14. Depreciation follows which accounting concept?
➡️ Answer: Matching Concept

15. Creative accounting is also known as:
➡️ Answer: Window Dressing

16. Related Party Transactions come under:
➡️ Answer: Disclosure Requirements

17. A balance sheet is prepared using which equation?
➡️ Answer: Assets = Liabilities + Equity

18. Profit after tax appears in:
➡️ Answer: P&L Account

19. A projected financial statement is required for:
➡️ Answer: Credit Appraisal

20. The technique involving ratio computation is called:
➡️ Answer: Ratio Analysis

21. Horizontal analysis compares:
➡️ Answer: Year-wise Trends

22. Funds Flow Statement shows:
➡️ Answer: Movement of Working Capital

23. Creative accounting is done mainly to:
➡️ Answer: Manipulate Results

24. Cash from operations is part of:
➡️ Answer: Operating Activities

25. Banking relies more on:
➡️ Answer: Cash Flow Analysis

26. Rearranging financial statements for analysis is known as:
➡️ Answer: Financial Reconstruction

27. EBITDA stands for earnings before:
➡️ Answer: Interest, Tax, Depreciation, Amortization

28. Current ratio is calculated as:
➡️ Answer: Current Assets / Current Liabilities

29. A company’s solvency is checked using:
➡️ Answer: Debt-Equity Ratio

30. Note to accounts are part of:
➡️ Answer: Annual Report

🟧 SECTION 3: Working Capital Finance (20 MCQs)

31. Working capital refers to:
➡️ Answer: Current Assets − Current Liabilities

32. Working capital cycle represents:
➡️ Answer: Time to convert raw material to cash

33. IT industry WC assessment is based on:
➡️ Answer: Cash Budget Method

34. MPBF under Tandon Committee (Method II) allows:
➡️ Answer: 75% of Working Capital Gap

35. Bills purchased/discounted are part of:
➡️ Answer: Fund-based Credit

36. TReDS is used for:
➡️ Answer: MSME Receivable Discounting

37. Non-fund based limits include:
➡️ Answer: Bank Guarantees

38. Drawing power is calculated based on:
➡️ Answer: Stock & Debtors Statement

39. Liquidity ratio commonly used in WC assessment:
➡️ Answer: Current Ratio

40. Maximum tenor for a bill under RBI guidelines:
➡️ Answer: 90 Days

41. WC finance is mainly meant for:
➡️ Answer: Short-term Needs

42. The most liquid asset is:
➡️ Answer: Cash

43. Cash budget method is used in industries with:
➡️ Answer: Seasonal Cash Flows

44. Trade credit is a:
➡️ Answer: Spontaneous Finance Source

45. Bills rediscounting is allowed under:
➡️ Answer: RBI Guidelines

46. “Margin money” refers to:
➡️ Answer: Borrower’s Contribution

47. CC limit is reviewed:
➡️ Answer: Annually

48. Factoring is a method of:
➡️ Answer: Receivables Financing

49. Sole authority regulating TReDS:
➡️ Answer: RBI

50. Cash credit is a type of:
➡️ Answer: Fund-based Facility

🟨 SECTION 4: Term Loans (10 MCQs)

51. Term loans finance:
➡️ Answer: Fixed Assets

52. DPG stands for:
➡️ Answer: Deferred Payment Guarantee

53. Project appraisal evaluates:
➡️ Answer: Feasibility

54. Infrastructure projects need:
➡️ Answer: Long Gestation Period

55. Term loans repayment schedule is called:
➡️ Answer: Amortization

56. DSCR indicates:
➡️ Answer: Repayment Capacity

57. Project cost includes:
➡️ Answer: Capital Expenditure

58. Break-even analysis determines:
➡️ Answer: No-Profit-No-Loss Point

59. Appraisal assesses:
➡️ Answer: Technical & Financial Viability

60. Project IRR is used for:
➡️ Answer: Investment Decision

🟪 SECTION 5: Credit Delivery & STP (10 MCQs)

61. Loan documentation ensures:
➡️ Answer: Legal Validity

62. Charge over movable property is created through:
➡️ Answer: Hypothecation

63. Possession of security under mortgage is:
➡️ Answer: Not Required

64. Consortium lending involves:
➡️ Answer: Multiple Banks

65. Loan syndication is common in:
➡️ Answer: Large Projects

66. STP in credit refers to:
➡️ Answer: Straight Through Processing

67. Pari-passu charge means:
➡️ Answer: Equal Charge Priority

68. Multiple banking means:
➡️ Answer: Separate Banking Arrangements

69. Power of attorney is part of:
➡️ Answer: Documentation

70. Security perfection means:
➡️ Answer: Proper Charge Registration

🟥 SECTION 6: Credit Control & Monitoring (10 MCQs)

71. Main purpose of monitoring:
➡️ Answer: Early Warning Signals

72. LRM stands for:
➡️ Answer: Loan Review Mechanism

73. Stock statements are collected:
➡️ Answer: Monthly

74. Monitoring identifies:
➡️ Answer: Diversion of Funds

75. Credit audit is part of:
➡️ Answer: Post-sanction Process

76. Operating cycle study helps in:
➡️ Answer: WC Review

77. Covenants are included in:
➡️ Answer: Sanction Terms

78. SMA classification is based on:
➡️ Answer: Days Past Due

79. Early warning signals include:
➡️ Answer: Delayed Stock Statements

80. Escrow account is used for:
➡️ Answer: Cash Flow Monitoring

🟦 SECTION 7: Risk Management & Credit Rating (10 MCQs)

81. Credit risk means:
➡️ Answer: Default Risk

82. External rating agency in India:
➡️ Answer: CRISIL

83. Internal rating models are built by:
➡️ Answer: Banks

84. Credit derivatives mitigate:
➡️ Answer: Credit Exposure

85. PD in credit risk stands for:
➡️ Answer: Probability of Default

86. Rating upgrade means:
➡️ Answer: Reduced Risk

87. Basel norms deal with:
➡️ Answer: Capital Adequacy

88. Rating is important for:
➡️ Answer: Pricing of Loans

89. LGD stands for:
➡️ Answer: Loss Given Default

90. Credit information is stored by:
➡️ Answer: CICs

🟫 SECTION 8: Restructuring, Rehabilitation & Recovery (10 MCQs)

91. NPA stands for:
➡️ Answer: Non-Performing Asset

92. Wilful defaulter is one who:
➡️ Answer: Intentionally Defaults

93. ARC purchases:
➡️ Answer: Stressed Assets

94. CDR refers to:
➡️ Answer: Corporate Debt Restructuring

95. SARFAESI allows:
➡️ Answer: Enforcement of Security Interest

96. OTS stands for:
➡️ Answer: One-Time Settlement

97. IBC 2016 deals with:
➡️ Answer: Insolvency Resolution

98. Haircut in recovery means:
➡️ Answer: Reduction in Claim

99. SMA-2 indicates delay of:
➡️ Answer: 61–90 Days

100. Recovery suit is filed in:
➡️ Answer: DRT

Here is a 🎯 Last 5-Year CAIIB – ABM Credit Management (Module C) Exam Pattern Question Set — fully based on the style, structure, and difficulty level asked in real exams (memory-based).

🎯 **CAIIB – ABM (Credit Management)

Last 5-Year Actual Exam Pattern MCQs (50 Questions)**

🟦 PART A — Conceptual (Core Theory) MCQs (15 Questions)

1. The most important objective of Credit Management in banks is:
➡️ Answer: Minimizing NPAs

2. Which principle of lending ensures the proper end-use of funds?
➡️ Answer: Purpose

3. As per RBI, credit risk arises from:
➡️ Answer: Inability of borrower to meet obligations

4. “Multiple Banking Arrangement” means:
➡️ Answer: Each bank deals with borrower independently

5. Working capital is finance meant for:
➡️ Answer: Short-term operational needs

6. A borrower who frequently changes business address without intimation is considered:
➡️ Answer: Non-cooperative borrower

7. The most reliable statement for credit analysis by banks is:
➡️ Answer: Cash Flow Statement

8. Deferred Payment Guarantee (DPG) is issued in case of:
➡️ Answer: Supply of Machinery on Credit

9. In consortium lending, security charge is created:
➡️ Answer: Pari-passu

10. The ratio that measures long-term solvency:
➡️ Answer: Debt–Equity Ratio

11. A bill under TReDS can be financed for a maximum tenor of:
➡️ Answer: 180 days (as per actual platform norms)

12. LRM (Loan Review Mechanism) is part of:
➡️ Answer: Post-sanction monitoring

13. The key risk in credit portfolios is:
➡️ Answer: Default Risk

14. CIBIL is classified as:
➡️ Answer: Credit Information Company (CIC)

15. The minimum DPD for NPA classification in India is:
➡️ Answer: 90 Days

🟩 PART B — Financial Statement Analysis + Numericals (15 Questions)

16. Current Ratio of a company is 1.5:1.
Current Assets = ₹300 lakh.
Find Current Liabilities.
➡️ Answer: ₹200 lakh

17. If Net Profit = ₹10 lakh and Sales = ₹100 lakh, Net Profit Margin =
➡️ Answer: 10%

18. A company’s operating cycle is 120 days. This means:
➡️ Answer: Time to convert raw material to cash

19. In Cash Flow Statement, payment to creditors appears under:
➡️ Answer: Operating Activities

20. Inventory = ₹40 lakh, Debtors = ₹30 lakh, Creditors = ₹20 lakh.
Working Capital =
➡️ Answer: ₹50 lakh

21. If DSCR = 1, it indicates:
➡️ Answer: Borderline repayment capacity

22. EBITDA = ₹60 lakh, Depreciation = ₹10 lakh, Interest = ₹5 lakh, Tax = ₹5 lakh.
Net Profit =
➡️ Answer: ₹40 lakh

23. A firm has sales of ₹200 lakh and a receivable period of 60 days.
Debtors value =
➡️ Answer: ₹33 lakh (approx.)

24. A projected P&L is prepared for:
➡️ Answer: Loan Appraisal

25. “Window dressing” refers to:
➡️ Answer: Creative Accounting

26. Equity = ₹50 lakh, Debt = ₹150 lakh.
Debt-Equity Ratio =
➡️ Answer: 3:1

27. Cash Budget method is most used in:
➡️ Answer: Seasonal industries

28. Funds Flow Statement studies:
➡️ Answer: Movement of Working Capital

29. Interest Coverage Ratio = EBIT / Interest.
If EBIT = ₹40 lakh, Interest = ₹10 lakh → ICR =
➡️ Answer: 4

30. A company with negative cash flow from operations indicates:
➡️ Answer: Liquidity Stress

🟧 PART C — Working Capital Finance (WC) — (10 Questions)

31. MPBF under Tandon Method II equals:
➡️ Answer: 75% of Working Capital Gap

32. Maximum review period for CC limits is:
➡️ Answer: 12 months

33. Stock statements for DP calculation are typically submitted:
➡️ Answer: Monthly

34. Bills purchased/discounted by banks are considered:
➡️ Answer: Fund-based facility

35. Bank Guarantee is a:
➡️ Answer: Non-fund based limit

36. TReDS platform resolves:
➡️ Answer: MSME receivable delays

37. In IT/software industry WC, banks use:
➡️ Answer: Cash Budget Method

38. Drawing Power is calculated using:
➡️ Answer: Value of stock + book-debts – margin

39. Factoring provides:
➡️ Answer: Receivable Finance

40. A higher operating cycle means:
➡️ Answer: Higher working capital requirement

🟨 PART D — Term Loans, Project Finance, Delivery (5 Questions)

41. Term loans finance:
➡️ Answer: Fixed Assets

42. Appraisal of infrastructure projects requires:
➡️ Answer: Specialised Due Diligence

43. Repayment schedule of term loan is called:
➡️ Answer: Amortization

44. Security for term loans is primarily:
➡️ Answer: Fixed Asset Charge

45. Project IRR higher than cost of capital means:
➡️ Answer: Accept Project

🟥 PART E — Risk Management, Restructuring & Recovery (5 Questions)

46. SMA-1 overdue range:
➡️ Answer: 31–60 days

47. A wilful defaulter must fulfil condition of:
➡️ Answer: Intentional diversion/non-repayment

48. ARC acquires NPAs using:
➡️ Answer: SRs (Security Receipts)

49. IBC resolution must be completed within:
➡️ Answer: 330 days (including extensions)

50. Legal recovery of secured assets is handled under:
➡️ Answer: SARFAESI Act

Here you go — Memory-Based & Tentative MCQs on:

🌟 Resolution of Stressed Assets under Insolvency & Bankruptcy Code, 2016 (IBC)

(Covers Insolvency, Bankruptcy, CIRP, Liquidation, PPIRP for MSMEs, Legal Framework, Applicability)

A high-quality 40 MCQ set, in exam pattern, each with correct answer.

🟦 IBC 2016 — Memory-Based + Tentative MCQs (40 Questions)

🔹 Section A: Basics of Insolvency & Bankruptcy (8 MCQs)

1. Insolvency refers to:
➡️ Answer: Inability to pay debts when due

2. Bankruptcy under IBC applies primarily to:
➡️ Answer: Individuals & Partnership Firms

3. The key objective of IBC 2016 is:
➡️ Answer: Time-bound resolution of stressed assets

4. The maximum timeline for completing Corporate Insolvency Resolution Process (CIRP) is:
➡️ Answer: 330 days

5. Insolvency and Bankruptcy Board of India (IBBI) functions as:
➡️ Answer: Regulator under IBC

6. Which entity cannot file insolvency under IBC?
➡️ Answer: Financial service providers

7. Bankruptcy is declared by:
➡️ Answer: Adjudicating Authority

8. Which process aims at “resolution over liquidation”?
➡️ Answer: CIRP

🔹 Section B: Applicability of the Code (6 MCQs)

9. IBC applies primarily to:
➡️ Answer: Companies, LLPs, Individuals, Partnership Firms

10. IBC does NOT apply to:
➡️ Answer: NBFCs and Banks (financial service providers)

11. Minimum default amount for filing CIRP is:
➡️ Answer: ₹1 Crore

12. Which body is the Adjudicating Authority for corporate insolvency?
➡️ Answer: NCLT

13. Insolvency of individuals falls under the authority of:
➡️ Answer: DRT

14. Corporate persons under the Code include:
➡️ Answer: Companies & LLPs

🔹 Section C: Legal Elements of IBC (8 MCQs)

15. The moratorium under Section 14 is imposed upon:
➡️ Answer: Admission of CIRP application

16. During moratorium, which action is prohibited?
➡️ Answer: Recovery action by creditors

17. The entity responsible for running the company during CIRP is:
➡️ Answer: Interim Resolution Professional / Resolution Professional

18. Committee of Creditors (CoC) consists of:
➡️ Answer: Financial Creditors

19. Minimum voting share for CoC approval of a resolution plan:
➡️ Answer: 66%

20. Information Memorandum is prepared by:
➡️ Answer: Resolution Professional

21. Liquidation is initiated when:
➡️ Answer: No resolution plan within timeline

22. Section 29A of IBC deals with:
➡️ Answer: Ineligible persons for submitting a resolution plan

🔹 Section D: Corporate Insolvency Resolution Process (CIRP) (8 MCQs)

23. CIRP begins with:
➡️ Answer: Filing of application by creditor or debtor

24. Upon admission, the management of corporate debtor is taken over by:
➡️ Answer: IRP

25. Public announcement of CIRP is done within:
➡️ Answer: 3 days of appointment of IRP

26. Claims verification is done by:
➡️ Answer: IRP/RP

27. CIRP must be completed within:
➡️ Answer: 180 days + 90 days extension + 60 days litigation = Max 330 days

28. Essential function of CoC is to:
➡️ Answer: Approve/reject resolution plans

29. If CoC rejects all plans:
➡️ Answer: Liquidation

30. Insolvency commencement date refers to:
➡️ Answer: Date of admission by NCLT

🔹 Section E: Liquidation Process (6 MCQs)

31. Liquidator is generally nominated from:
➡️ Answer: Resolution Professionals

32. The priority of distribution in liquidation follows:
➡️ Answer: Waterfall mechanism (Section 53)

33. Secured creditors in liquidation may:
➡️ Answer: Realize security outside liquidation

34. Liquidation order is passed by:
➡️ Answer: NCLT

35. The liquidator must complete liquidation within:
➡️ Answer: 1 year (may extend)

36. Assets during liquidation are sold:
➡️ Answer: As a going concern or piecemeal

🔹 Section F: Pre-Packaged Insolvency for MSMEs (PPIRP) (4 MCQs)

37. PPIRP applies only to:
➡️ Answer: MSMEs

38. PPIRP is initiated by:
➡️ Answer: Corporate Debtor (with 66% FC consent)

39. Maximum timeline for PPIRP:
➡️ Answer: 120 days

40. Key benefit of PPIRP over CIRP:
➡️ Answer: Debtor remains in control (Debtor-in-Possession model)

✅ Done!

Here is 🟧 ONE-PAGE IBC (Insolvency & Bankruptcy Code, 2016) REVISION NOTES

🟧 IBC 2016 — One-Page Revision Notes (CAIIB Exam Ready)

🔹 1. What is Insolvency & Bankruptcy?

• Insolvency → Inability to pay debts when due.

• Bankruptcy → Legal declaration of inability to repay debts (for individuals/partnerships).

• For corporates, the term used is corporate insolvency, not bankruptcy.

🔹 2. Applicability of IBC

✔ IBC applies to:

• Companies

• LLPs

• Individuals

• Partnership firms

❌ IBC does NOT apply to:

• Banks

• NBFCs

• Insurance companies
  (i.e., financial service providers)

🔹 3. Objective of IBC 2016

• Time-bound resolution of stressed assets

• Maximizing value of assets

• Promoting entrepreneurship

• Balancing interests of all stakeholders

• Shift from “Debtor-in-Control” to “Creditor-in-Control”

🔹 4. Adjudicating Authorities

• NCLT → Corporate Insolvency

• NCLAT → Appeals from NCLT

• DRT → Individuals & Partnerships

• IBBI → Regulator under IBC

🔹 5. Corporate Insolvency Resolution Process (CIRP)

📌 Who can trigger it?

• Financial Creditor

• Operational Creditor

• Corporate Debtor itself

📌 Minimum Default:

• ₹1 Crore (for corporate insolvency)

📌 Key Steps in CIRP

1. Filing of application (FC/OC/CD)

2. Admission by NCLT → Moratorium imposed (Section 14)

3. Appointment of IRP

4. Public announcement → Claims invited

5. Formation of CoC (Financial Creditors)

6. CoC confirms IRP → becomes RP

7. Preparation of Information Memorandum

8. Resolution plan submission & evaluation

9. CoC approval (≥ 66% voting)

10. Final approval by NCLT

⏳ Timelines

• Normal period: 180 days

• Extension: 90 days

• Litigation period: 60 days
  👉 Total max: 330 days

🔹 6. Moratorium (Section 14)

During moratorium, the following are prohibited:

• Recovery proceedings

• Legal suits

• Foreclosure / enforcement of security

• Transfer or disposal of assets

Objective: Calm period for resolution

🔹 7. Liquidation

If CIRP fails:

• No resolution plan

• CoC rejects plans

• Time expires

📌 Liquidator:

Usually the existing RP

📌 Distribution Priority (Section 53 – Waterfall)

1. IRP/RP & liquidation costs

2. Secured creditors (who relinquish charge) & workmen dues

3. Employees’ dues

4. Unsecured creditors

5. Government dues + remaining secured creditors

6. Preference shareholders

7. Equity shareholders

🔹 8. Section 29A – Ineligible Persons

Not eligible to submit resolution plans:

• Undischarged insolvents

• Wilful defaulters

• Persons connected to NPAs

• Persons convicted for >2 years

• Related parties of above

Purpose: Prevent defaulting promoters from buying back assets cheaply.