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Test: Retail Banking & Wealth Management - 3 - Bank Exams MCQ


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100 Questions MCQ Test Mock Test Series for JAIIB Exam 2025 - Test: Retail Banking & Wealth Management - 3

Test: Retail Banking & Wealth Management - 3 for Bank Exams 2024 is part of Mock Test Series for JAIIB Exam 2025 preparation. The Test: Retail Banking & Wealth Management - 3 questions and answers have been prepared according to the Bank Exams exam syllabus.The Test: Retail Banking & Wealth Management - 3 MCQs are made for Bank Exams 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Retail Banking & Wealth Management - 3 below.
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Test: Retail Banking & Wealth Management - 3 - Question 1

Purchasing and using banking and other financial products requires interactions with the bank through a delivery channel. Customer satisfaction happens through different delivery channels and experiencing an optimum channel mix increases customer satisfaction. Technology has touched every aspect of our lives in recent years and banking has been no exception. Information technology has allowed banks to provide much better levels of service to their customers at low costs. The deployment of technology has also changed the channels via which customers interact with their banks. Bank branches form the traditional channel for the delivery of banking services. Almost every bank in the world has branches although banks have reduced their reliance on these branches and are attempting to replace branches with technologies like ATMs, PoS, Mobile banking, etc.

Q. What is a Point of Sale (PoS) terminal?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 1

Point of Sale (PoS) terminals is used for facilitating payments made by customers in merchant establishments using credit or debit cards.

Test: Retail Banking & Wealth Management - 3 - Question 2

Purchasing and using banking and other financial products requires interactions with the bank through a delivery channel. Customer satisfaction happens through different delivery channels and experiencing an optimum channel mix increases customer satisfaction. Technology has touched every aspect of our lives in recent years and banking has been no exception. Information technology has allowed banks to provide much better levels of service to their customers at low costs. The deployment of technology has also changed the channels via which customers interact with their banks. Bank branches form the traditional channel for the delivery of banking services. Almost every bank in the world has branches although banks have reduced their reliance on these branches and are attempting to replace branches with technologies like ATMs, PoS, Mobile banking, etc.

Q. What is an Internet Payment Gateway?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 2

An Internet Payment Gateway provides an easy and secure mechanism to merchants for processing online payments by shielding them from the underlying complexity of payment transactions and integration with electronic fund transfer switches. It is an interface that allows merchants to accept payments securely from customers using various payment methods such as credit/debit cards or internet banking.

Test: Retail Banking & Wealth Management - 3 - Question 3

Purchasing and using banking and other financial products requires interactions with the bank through a delivery channel. Customer satisfaction happens through different delivery channels and experiencing an optimum channel mix increases customer satisfaction. Technology has touched every aspect of our lives in recent years and banking has been no exception. Information technology has allowed banks to provide much better levels of service to their customers at low costs. The deployment of technology has also changed the channels via which customers interact with their banks. Bank branches form the traditional channel for the delivery of banking services. Almost every bank in the world has branches although banks have reduced their reliance on these branches and are attempting to replace branches with technologies like ATMs, PoS, Mobile banking, etc.

Q. Which of the following is not a component of the branch layout?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 3

The marketing strategy of the branch is not a component of the branch layout.

Test: Retail Banking & Wealth Management - 3 - Question 4

What was the impact of the IT revolution on retail banking in India?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 4

With the advantage of technology, private sector banks had posed a threat to the retail segment of foreign banks. PSBs also redefined business models with technology initiatives and aggressively entered the market space, creating a retail war and capturing their share of the pie in the liberalized economic environment. 

Test: Retail Banking & Wealth Management - 3 - Question 5

Which among the following describes the correct difference between Portfolio management services and Mutual funds?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 5

Portfolio management involves a higher degree of customization, tailored specifically to the goals of investors, and demands a share of profits from the investor. On the other hand, mutual funds charge a fixed entry and exit fee from the investor.

Test: Retail Banking & Wealth Management - 3 - Question 6

Which of the following bonds is tax exempted from the interest rate earned?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 6

Sovereign Gold Bonds are those under which the entities invest in digitized firms of gold, rather than avail the physical presence of gold, and interest generated via these bonds is tax-free.

Test: Retail Banking & Wealth Management - 3 - Question 7

What does "Transfer of Accounts" signify in banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 7

IBA has given the facility of account number portability where the customer maintains the same account number with a bank when he shifts his account to another Branch of the same bank, inside or outside the city.

Test: Retail Banking & Wealth Management - 3 - Question 8

What is the risk associated with the DSA model?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 8

The risk associated with the DSA model is reputation risk as field personnel deployed by the DSAs for sourcing business may make false promises and engage in mis-selling, which can affect the reputation of the bank.

Test: Retail Banking & Wealth Management - 3 - Question 9

What is the purpose of the Minimum Retention Requirement (MRR)?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 9

The MRR is designed to ensure that the originating banks have a continuing stake in the performance of securitized assets to ensure that they carry out proper due diligence of loans to be securitized.

Test: Retail Banking & Wealth Management - 3 - Question 10

Which of the following is true about Horizontally organized business process models?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 10

A horizontally organized model is a structure that uses different process models for different products, offering end-to-end solutions product-wise.

Test: Retail Banking & Wealth Management - 3 - Question 11

Which of the following approach of business models aims at dividing the business units into autonomous divisions independent enough to take their own decisions?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 11

SBU’s approach aims at dividing the business into lines of Strategic Business Units approach which are autonomous divisions, flexible enough to exercise control over most of the factors affecting its performance.

Test: Retail Banking & Wealth Management - 3 - Question 12

What is the starting point for the implementation of CRM in banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 12

The implementation of CRM in banks starts with the identification of customers based on the products they availed and the focus of the bank.

Test: Retail Banking & Wealth Management - 3 - Question 13

What is the purpose of decision models in marketing management?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 13

The purpose of decision models in marketing management is to assist the marketing manager in decision making.

Test: Retail Banking & Wealth Management - 3 - Question 14

The customers of any organization drive its revenues, therefore, it is important to build up a large and targeted customer base depending on the products and/or services the organization offers. To make the customers aware of an organization's (here, banks) business and its products and services (here banking products and services), marketing is required which helps the customer in making correct buying decisions. In the context of Retail banking, marketing means- Identifying the most profitable markets now and in the future. It involves assessing the customer's present and future needs which are continuously evolving and dynamic in nature. In marketing, the banks set business development goals and make plans to meet them by going through the four stages of the Marketing process. The elements of the marketing mix for retail banking are- Product, Price, Place, Promotion, Process, People, and Physical evidence.

Q. Which of the following statements best describes a bank product?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 14

A bank product can be defined as “Anything that can provide the satisfaction, use, and return desired by the customer”.

Test: Retail Banking & Wealth Management - 3 - Question 15

The customers of any organization drive its revenues, therefore, it is important to build up a large and targeted customer base depending on the products and/or services the organization offers. To make the customers aware of an organization's (here, banks) business and its products and services (here banking products and services), marketing is required which helps the customer in making correct buying decisions. In the context of Retail banking, marketing means- Identifying the most profitable markets now and in the future. It involves assessing the customer's present and future needs which are continuously evolving and dynamic in nature. In marketing, the banks set business development goals and make plans to meet them by going through the four stages of the Marketing process. The elements of the marketing mix for retail banking are- Product, Price, Place, Promotion, Process, People, and Physical evidence.

Q. What is the key to augmented marketing of retail products?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 15

The key to augmented marketing of retail products is transparency, continuous contact, and respecting the views and feelings of customers.

Test: Retail Banking & Wealth Management - 3 - Question 16

The banks, in addition to the core banking products like Current Accounts, Savings Deposits, etc. offer certain para-banking activities either departmentally or by setting up subsidiaries. Some such activities are insurance, Mutual funds, credit/debit cards, social security schemes, etc. But such services cannot be offered from the bank's products due to certain restrictions, rather they offer them through the relevant service providers by acting as their corporate agents. These services increase the reach and customer base of banks as it makes the banks a one-stop financial hub for all the financial demands of different customers. Also, it improves the fee-based income of the banks. For example - To avail mutual funds products through banks, the concept of Mutual banking has emerged.
Read the following statements about the Para banking activities of banks-
I. Solution-oriented funds are a type of mutual fund that has a pre-specified lock-in period. An example of such a type of fund is the Index Fund scheme
II. Pradhan Mantri Jeevan Bima Yojana (PMJJBY) is a life insurance cover for the death of the holder due to any reason and it is administered through the Life Insurance Companies. An individual is eligible to join the scheme through one bank account only in the case of multiple banks.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 16

Both statements are correct and include the scope of both the para-banking products mentioned.

Test: Retail Banking & Wealth Management - 3 - Question 17

The banks, in addition to the core banking products like Current Accounts, Savings Deposits, etc. offer certain para-banking activities either departmentally or by setting up subsidiaries. Some such activities are insurance, Mutual funds, credit/debit cards, social security schemes, etc. But such services cannot be offered from the bank's products due to certain restrictions, rather they offer them through the relevant service providers by acting as their corporate agents. These services increase the reach and customer base of banks as it makes the banks a one-stop financial hub for all the financial demands of different customers. Also, it improves the fee-based income of the banks. For example - To avail mutual funds products through banks, the concept of Mutual banking has emerged.

Q. Which among the following securities can be dematerialized with the depository?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 17

Dematerialization is a process of converting physical certificates into electronic forms. All types of equity/debt instruments, whether listed/unlisted/privately placed, can be dematerialized with the depository.

Test: Retail Banking & Wealth Management - 3 - Question 18

The banks, in addition to the core banking products like Current Accounts, Savings Deposits, etc. offer certain para-banking activities either departmentally or by setting up subsidiaries. Some such activities are insurance, Mutual funds, credit/debit cards, social security schemes, etc. But such services cannot be offered from the bank's products due to certain restrictions, rather they offer them through the relevant service providers by acting as their corporate agents. These services increase the reach and customer base of banks as it makes the banks a one-stop financial hub for all the financial demands of different customers. Also, it improves the fee-based income of the banks. For example - To avail mutual funds products through banks, the concept of Mutual banking has emerged.

Q. Which of these is an eligibility criterion for banks to undertake insurance business with risk participation through a subsidiary/joint venture?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 18

The eligibility criteria for banks to undertake the insurance business with risk participation requires the net worth of a bank to be not less than Rs 1000 crore and a minimum net worth of Rs. 500 crores with NPAs not more than 3%, shall make a profit in the preceding 3 financial years.

Test: Retail Banking & Wealth Management - 3 - Question 19

Although every organization, including banks, must be vigilant in spending money. But today certain circumstances like changes in customer preferences, technological innovations, etc. are putting pressure on banks to improve their operating efficiency. The banks can achieve efficiency in their operations by limiting their expenditure in some areas and making necessary investments in technology, marketing, automation, etc., and also optimizing their legacy investments in branches and traditional systems. The opportunity for improving the operating efficiency varies across different banks and even different branches of the same bank. According to a survey, two out of three bankers acknowledged that they just rely on retaining the current customers for business development. However, the banks need to implement a proactive approach.

Q. Which of the following is the best strategy to increase a bank branch's profitability?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 19

The best way to increase branch profitability is to have specific goals set for different branches as they have different locations, customer cases, and other circumstances. So, each branch should be allowed to set its own goals and objectives within the corporate guidelines followed at the headquarter office of the bank. 

Test: Retail Banking & Wealth Management - 3 - Question 20

Although every organization, including banks, must be vigilant in spending money. But today certain circumstances like changes in customer preferences, technological innovations, etc. are putting pressure on banks to improve their operating efficiency. The banks can achieve efficiency in their operations by limiting their expenditure in some areas and making necessary investments in technology, marketing, automation, etc., and also optimizing their legacy investments in branches and traditional systems. The opportunity for improving the operating efficiency varies across different banks and even different branches of the same bank. According to a survey, two out of three bankers acknowledged that they just rely on retaining the current customers for business development. However, the banks need to implement a proactive approach.

Q. What is the formula for the long-term success of banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 20

For a bank to be successful, it needs a balanced approach that not only enables a bank to improve its operating efficiency but also enables it to upgrade its capabilities to better respond to market needs.

Test: Retail Banking & Wealth Management - 3 - Question 21

Although every organization, including banks, must be vigilant in spending money. But today certain circumstances like changes in customer preferences, technological innovations, etc. are putting pressure on banks to improve their operating efficiency. The banks can achieve efficiency in their operations by limiting their expenditure in some areas and making necessary investments in technology, marketing, automation, etc., and also optimizing their legacy investments in branches and traditional systems. The opportunity for improving the operating efficiency varies across different banks and even different branches of the same bank. According to a survey, two out of three bankers acknowledged that they just rely on retaining the current customers for business development. However, the banks need to implement a proactive approach.

Q. Why is efficiency important for banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 21

Banks must be vigilant about spending wisely, changes in the industry are putting pressure on banks' operating budgets, and banks need to upgrade their capabilities to respond to market needs and prepare for the future.

Test: Retail Banking & Wealth Management - 3 - Question 22

Which among the following code(s) would not apply to the member banks of BCSBI following the Bank's Commitment Codes?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 22

All the above-mentioned voluntary codes of IBA would not apply to the member banks of BCSBI following the Bank's Commitment Codes.

Test: Retail Banking & Wealth Management - 3 - Question 23

What is the difference between Closed System PPIs and Semiclosed System PPIs?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 23

Closed System PPIs are issued by an entity for facilitating the purchase of goods and services from that entity only and do not permit cash withdrawal. Semi-closed System PPIs are used for the purchase of goods and services, at a group of clearly identified merchant locations/establishments which have a specific contract with the issuer to accept the PPIs as payment instruments. 

Test: Retail Banking & Wealth Management - 3 - Question 24

What financial product witnessed the first notable technology development in the financial industry and who introduced it?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 24

The first notable technological development in the financial industry was the advent of the Credit card introduced by the Dinner's Club in 1950.

Test: Retail Banking & Wealth Management - 3 - Question 25

Why is the evaluation of current business processes essential for CRM implementation in banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 25

The evaluation of current business processes is important to understand the products and services the bank wants to offer and how it wants to develop its customer portfolio.

Test: Retail Banking & Wealth Management - 3 - Question 26

Why did businesses begin to establish MKIS's?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 26

As competition became increasingly intense, the gathering and management of marketing information became important. More and more businesses began to establish MKIS's to learn about the needs of the marketplace for new or improved products and services.

Test: Retail Banking & Wealth Management - 3 - Question 27

Which of the following best describes Private Banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 27

Private Banking, also called Class Retail banking involves providing personalized banking, and other financial services to high-net-worth individuals.

Test: Retail Banking & Wealth Management - 3 - Question 28

Which of the following is not an advantage of Portfolio management services (PMS)?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 28

In PMS, the service provider shares only a part of the profits but not the losses.

Test: Retail Banking & Wealth Management - 3 - Question 29

Which section of the Income Tax Act, of 1961 gives the inclusive definition of "Person" for the assessment of tax liability?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 29

Section 2(31) of the Income Tax Act, 1961, a "person" can be an individual, a HUF, a company, a firm, an AOP/BOI, a local authority, or every artificial or judicial person who is not included in any of the above-mentioned categories.

Test: Retail Banking & Wealth Management - 3 - Question 30

What is/are true regarding the Savings Bank Account of a minor?
I. The minors are permitted to open a Savings Bank Account in their sole name only after attaining 14 years of age
II. No Overdraft facility is available on a minor's Savings Bank Account held either singly or jointly with guardians
III. Cheque book facility cannot be provided on the Savings account of a minor under any circumstances

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 30

The minors can open a Savings Bank Account in their name after attaining 10 years of age but no Overdraft facility is available, and also a cheque-book can be issued, subject to certain conditions.

Test: Retail Banking & Wealth Management - 3 - Question 31

What are the three historical data files used by CICs to build credit scores?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 31

CICs typically build scores using three historical data files: Defaults on previous credit transactions, payment behavior/payment history, and previous searches/inquiries.

Test: Retail Banking & Wealth Management - 3 - Question 32

Why did RBI introduce new payment products in the mid-eighties and early nineties?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 32

The initiatives taken by RBI in the mid-eighties and early nineties focused on technology-based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new payment products by taking advantage of the technological advancements in banks. The overall thrust was to reduce the use of paper for transactions.

Test: Retail Banking & Wealth Management - 3 - Question 33

What is a TAN Number?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 33

TAN refers to Tax Deduction Number which is a 10-digit alphanumeric number that is allocated to those who are liable to deduct TDS i.e., Tax Deductors.

Test: Retail Banking & Wealth Management - 3 - Question 34

Which of these gifts is not chargeable to tax under the Income tax act, of 1961?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 34

If the aggregate value of gifts received during the financial year exceeds Rs. 50 thousand, the full amount shall be chargeable to tax.

Test: Retail Banking & Wealth Management - 3 - Question 35

Which of the following statements best describes Customer delight in respect of the services provided by banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 35

If the products and/or services provided by banks are more compelling than what a customer has expected, it results in Customer Delight.

Test: Retail Banking & Wealth Management - 3 - Question 36

What are the two core strengths that define a bank's retail business model?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 36

The two core strengths that define a bank's retail business model are clear customer centricity and a strong value chain focus.

Test: Retail Banking & Wealth Management - 3 - Question 37

What is the focus of information systems analysis in CRM implementation in banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 37

The focus of the analysis of the existing information infrastructure of the bank is to reinforce and customize the CRM infrastructure accordingly, rather than replace it.

Test: Retail Banking & Wealth Management - 3 - Question 38

How have private banks traditionally viewed themselves about CRM?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 38

Private banks have traditionally viewed themselves as exceedingly Customer Centricity offering what they believe to be highly personalized services to High-Net-Worth Customers.

Test: Retail Banking & Wealth Management - 3 - Question 39

What is a Credit Information Company (CIC)?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 39

A Credit Information Company (CIC) is an independent third-party institution that collects financial data regarding loans, credit cards, and more.

Test: Retail Banking & Wealth Management - 3 - Question 40

A bank lends loans to its various customers at different rates and conditions. These loans are the asset products of the banks and are shown on the asset side of a Bank's Balance sheet. However, in the process of lending banks to their customers, a bank assumes various risks. The repayment of such loans and advances is one criterion for judging the success of any bank. In other words, the higher the efficiency of the collection department, the better would be the ability of financial institutions to launch any asset product with confidence. The banks use various methods and undertake various processes to make the customers repay the extended loans. The banks use various recovery processes to recover the retail assets when default takes place such as visiting Debt Recovery Tribunal the purpose. Despite many efforts of the banks, sometimes the customers default on their loans due to various reasons.

Q. What is the re-scheduling of retail loans?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 40

"It is a phenomenon of extending the number of installments if the borrower cannot afford to repay the loan in time."
Rescheduling retail loans involves modifying the repayment schedule by extending the number of installments. This adjustment is made when the borrower is facing financial difficulties and is unable to meet the original repayment terms. By extending the repayment period, the borrower is provided with more manageable installment amounts to accommodate their financial situation.

Test: Retail Banking & Wealth Management - 3 - Question 41

A bank lends loans to its various customers at different rates and conditions. These loans are the asset products of the banks and are shown on the asset side of a Bank's Balance sheet. However, in the process of lending banks to their customers, a bank assumes various risks. The repayment of such loans and advances is one criterion for judging the success of any bank. In other words, the higher the efficiency of the collection department, the better would be the ability of financial institutions to launch any asset product with confidence. The banks use various methods and undertake various processes to make the customers repay the extended loans. The banks use various recovery processes to recover the retail assets when default takes place such as visiting Debt Recovery Tribunal the purpose. Despite many efforts of the banks, sometimes the customers default on their loans due to various reasons.

Q. What is the 'Siphoning' of borrowed funds?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 41

Siphoning of funds means using the funds borrowed for purposes unrelated to the operations of the borrower, to the detriment of the financial health of the lender.

Test: Retail Banking & Wealth Management - 3 - Question 42

A bank lends loans to its various customers at different rates and conditions. These loans are the asset products of the banks and are shown on the asset side of a Bank's Balance sheet. However, in the process of lending banks to their customers, a bank assumes various risks. The repayment of such loans and advances is one criterion for judging the success of any bank. In other words, the higher the efficiency of the collection department, the better would be the ability of financial institutions to launch any asset product with confidence. The banks use various methods and undertake various processes to make the customers repay the extended loans. The banks use various recovery processes to recover the retail assets when default takes place such as visiting Debt Recovery Tribunal the purpose. Despite many efforts of the banks, sometimes the customers default on their loans due to various reasons.

Q. What is Moratorium period?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 42

A holiday period/moratorium period is the time allowed for borrowers when they are not required to make any loan re-payment i.e., the period before the EMIs begin.

Test: Retail Banking & Wealth Management - 3 - Question 43

How does customization of offerings affect customer satisfaction in CRM?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 43

By customizing their offerings, CRM applications help banks enhance the perceived quality of products and services from a customer’s viewpoint, which indirectly affects customer satisfaction.

Test: Retail Banking & Wealth Management - 3 - Question 44

Which of the following statements is most closely associated with the customer expectations for banks to be "Reliable"?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 44

Reliability means the ability to perform the promised service to the customers accurately.

Test: Retail Banking & Wealth Management - 3 - Question 45

To be successful, the banks understand their different customers, differentiate them on certain characteristics, and offer different types of banking and other financial products which best suit a particular segment. But certain core products are offered to all the segments. Here, the competition among banks lies in offering the products in the best possible manner. But there are some new products offered by banks called augmented products. So, the overall products of the banks are classified into three types, one of which is Deposit products. These products are offered to deposit the funds in different ways and since the customers' deposits form the bank's liability, these are also called Liability products. Some such products are Savings Deposits, Current Deposits, Term Deposits, etc. Savings and Current Deposits are demand Deposits whereas Term Deposits involve RDs, FDs, and Combination Term Deposits.

Mr. A, 16 years old is a student. He has Rs. 60,000 which he saved as the pocket money that his father gives him every month. Siddharth came across a topic in his studies that talks about various savings schemes a bank provides, and so he decided to invest his saved money in Fixed Deposits. But he does not have any source of income nor does he have any of the following documents like a Driving license, PAN, etc. Is he eligible to invest in a Fixed Deposit?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 45

As per the rules, opening a time deposit account of more than Rs. 50,000 requires a PAN, but if the above transaction is carried on by a minor who does not have a PAN and does not have any income chargeable to tax, he shall quote the PAN of his father or mother or guardian.

Test: Retail Banking & Wealth Management - 3 - Question 46

To be successful, the banks understand their different customers, differentiate them on certain characteristics, and offer different types of banking and other financial products which best suit a particular segment. But certain core products are offered to all the segments. Here, the competition among banks lies in offering the products in the best possible manner. But there are some new products offered by banks called augmented products. So, the overall products of the banks are classified into three types, one of which is Deposit products. These products are offered to deposit the funds in different ways and since the customers' deposits form the bank's liability, these are also called Liability products. Some such products are Savings Deposits, Current Deposits, Term Deposits, etc. Savings and Current Deposits are demand Deposits whereas Term Deposits involve RDs, FDs, and Combination Term Deposits.

Q. For which among the following types of customers, do the banks open a small account?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 46

If any low-risk individual does not have any of the OVDs then the bank may open a small bank for such customers, subject to certain conditions.

Test: Retail Banking & Wealth Management - 3 - Question 47

Which of these is an example of a short-term capital asset?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 47

Gold jewelry is a movable capital asset and the period of holding is not more than 36 months, therefore it is an example of a short-term capital asset.

Test: Retail Banking & Wealth Management - 3 - Question 48

What is the main purpose of designing an MIS for a bank?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 48

The MIS should help the bank meet the service as well as financial goals to improve customer satisfaction.

Test: Retail Banking & Wealth Management - 3 - Question 49

Read the following statements-
I. Under the Integrated approach of Business models, the various socio-economic aspects related to a business are combined to form one complete business unit.
II. Integrated approach is said to be a Management by Objectives process where the focus is on achieving the focused objective of a business unit.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 49

An integrated approach is a cohesive approach generally followed by small businesses. In this approach, the various socio-economic aspects related to a business are combined to form one complete business unit, and there is no division. It is not a Management by Objectives approach.

Test: Retail Banking & Wealth Management - 3 - Question 50

What are the two core strengths that define a bank's retail business model?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 50

The two core strengths that define a bank's retail business model are clear customer centricity and a strong value chain focus.

Test: Retail Banking & Wealth Management - 3 - Question 51

Among the below given, which of the following doesn't come under the category of Direct taxes?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 51

DIRECT TAX
Income Tax Act

  • Expenditure Tax Act
  • Securities Transaction Tax
  • Interest Tax Act
  • Perquisite Tax
  • Gift Tax Act

INDIRECT TAX

  • Value Added Tax
  • Service Tax
  • Goods and Services Tax (GST)
  • Excise Duty
  • Custom Duty and Octroi

Hence, option (d) is the correct choice.

Test: Retail Banking & Wealth Management - 3 - Question 52

Among the given, which of the following is not a correct statement in context to 7P of marketing?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 52
  • The seven Ps are both independent as well as interdependent in the marketing effectiveness. The 7 Ps individually contribute-their part in the effectiveness. But these P's are interlinked in such a way that one P will be a deciding P for the effectiveness of the other R For example, though product is an important element of the marketing mix, the effectiveness of the product and the strategy depends on the price. Similarly, price is an important element in the marketing mix, but the product and price will not matter much if the promotion or the place aspects are not given due consideration. If the 'process' element is not taken care of, the other Ps will not be effective.
  • Hence, option (a) is the correct choice.
Test: Retail Banking & Wealth Management - 3 - Question 53

Mr. D and Mr. E run a partnership firm and want to open a current account with a bank. What operational instructions are typically associated with such accounts?
Statement 1: The account can be operated by any partner.
Statement 2: The account can be operated jointly by any two partners.
Statement 3: The account can be operated only by the partners who have been authorized to do so by the partnership deed.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 53

Current accounts for partnership firms typically require the partners to be authorized to operate the account by the partnership deed. The account can be operated jointly by any two authorized partners, but not necessarily any partner.

Test: Retail Banking & Wealth Management - 3 - Question 54

Which of the following is a disadvantage of a current deposit account?
Statement 1: It has a low minimum balance requirement lower than that of savings account
Statement 2: It charges high fees for transactions.
Statement 3: It offers high interest rates.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 54

One of the disadvantages of a current deposit account is that it often charges high fees for transactions, such as for cash deposits or withdrawals. This can add up to significant costs for businesses that make frequent transactions. While current deposit accounts may have a minimum balance requirement, it is typically higher than that of a savings account. Additionally, as mentioned earlier, current deposit accounts typically do not offer interest or offer very low interest rates.

Test: Retail Banking & Wealth Management - 3 - Question 55

Banking Regulation Act 1949 came into force from _______.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 55
  • Banking System in India is governed under the Banking Regulation Act, 1949 by Reserve Bank of India which provide the regulatory framework for the supervision of banks in the country.
  • The Banking Regulation Act, 1949 was passed as the Banking Companies Act 1949 and it came into force from 16 March 1949 and changed to Banking Regulation Act 1949 from 1 March 1966.
Test: Retail Banking & Wealth Management - 3 - Question 56

Among the given, which of the following is/are not the type of the PPIs issued in our country?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 56

Prepaid Payment Instrument (PPIs) that can be issued in the country are classified under three types:

  • Closed System PPIs: These PPIs are issued by an entity for facilitating the purchase of goods and services from entity only and do not permit cash withdrawal.
  • Semi- Closed System PPIs: These PPIs are used for purchase of goods and services, including financial services, remittance facilities etc.
  • Open system PPIs: These PPIs are issued only by banks and are used at any merchant for purchase of goods and services, including financial services, remittance facilities etc.

Hence, among the given, there is nothing called as Semi open system PPIs.
Hence, option (d) is the correct choice.

Test: Retail Banking & Wealth Management - 3 - Question 57

Which of the following feature of CRM software can create geographic marketing campaigns based on customers' physical locations?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 57
  • Common features of CRM software include:
    • Marketing Automation
    • Sales force Automation
    • Contact center Automation
    • Geolocation technology or location based
  • Geolocation technology or location-based services: Some CRM systems include technology that can create geographic marketing campaigns based on customers' physical locations, sometimes integrating with popular location-based GPS apps. Geolocation technology can also be used as a networking or contact management tool in order to find sales prospects based on location.
Test: Retail Banking & Wealth Management - 3 - Question 58

Mr. Z had a fixed deposit account with a bank. He died without appointing a nominee or a legal heir. What should the bank do?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 58

In case of the death of a depositor without appointing a nominee or a legal heir, the bank should freeze the account and wait for legal heirship to be established by a court of law. The bank should not transfer the deposit to the state government or any other government fund without a court order.

Test: Retail Banking & Wealth Management - 3 - Question 59

Assertion: The ratio of gross earnings to overall revenue, or net margin, is a useful indicator for assessing profitability.

Reason: ratio of gross earnings to overall revenue, or net margin is insufficient to evaluate the company's financial well-being using a basic dollar amount of profit, it is essential to take the net margin ratio into account.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 59
  • Profitability-based evaluation, which can be a more full and inclusive way of measuring performance, can capture the amount of operational efficiency as well as the intricacies of the bank's diversification profits through non-interest revenue businesses and control of their costs. The ratio of gross earnings to overall revenue, or net margin, is a useful indicator for assessing profitability. Because it is insufficient to evaluate the company's financial well-being using a basic dollar amount of profit, it is essential to take the net margin ratio into account.
  • Hence, option (a) is correct choice.
Test: Retail Banking & Wealth Management - 3 - Question 60

Among the given which of the following shows the need for the bank to implementation of a CRM program?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 60
  • Customer relationship management (CRM) is a technology for managing all your company's relationships and interactions with customers and potential customers.
  • The need for CRM lies in the fact that business is still using manual processes, like spreadsheets and paper approvals, which results in the business being highly inefficient.
  • It wastes a considerable amount of time for employees doing repetitive tasks, which leads to a decline in productivity.
  • Needs for banks to implementation of a CRM program:
    • Need to increase operational efficiencies
    • Need to derive more value from employees.
    • Increasing Competition in retail banking.
    • Rising NPAs.
    • Increasing Importance of Fee-Based Income.
    • Delivery Channel EfficacyApplication of Technology
Test: Retail Banking & Wealth Management - 3 - Question 61

Payment of a crossed cheque is facilitated under which section of NI Act?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 61

A paying banker is protected under NI Act in the following cases:
Forged endorsement in an
i. order cheque under section 85 (1)
ii. bearer cheque under section 85 (2)
iii. draft under section 85 (A)
Material alteration in a cheque under section 89
Payment of a crossed cheque under section 128.
Hence, option (d) is correct choice.

Test: Retail Banking & Wealth Management - 3 - Question 62

Which of the following approaches categorize businesses based on their product or service offering?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 62

Segmented business approach categorizes businesses based on their product or service offering. This approach helps banks to understand the needs and requirements of different customer segments and to tailor their services accordingly. Segments can be based on factors such as age, income, occupation, and lifestyle.

Test: Retail Banking & Wealth Management - 3 - Question 63

Among the below given, which of the following is/are the components of wealth management?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 63
  • Wealth management can be thought of as a comprehensive service focused on taking a holistic look at a client's financial picture, including services such as investment management, financial planning, tax planning and estate planning.
  • Components of Wealth Management
  • A consultative process
  • Customized choices and solutions
  • Delivery in close consultation with your clients
  • Hence, option (d) is the correct choice.
Test: Retail Banking & Wealth Management - 3 - Question 64

Which of the following statements/(s) is/are correct regarding the reasons behind the development of BCSBI Codes?
A. To promote good and fair banking practices by setting minimum standards while dealing with you.
B. To increase transparency so that you can have a better understanding of what you can reasonably expect of the services.
C. To encourage market forces, through competition, to achieve higher operating standards.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 64
  • The Banking Codes and Standards Board of India (BCSBI) is an independent banking industry watchdog that protects consumers of banking services in India.
  • The Code has been developed to:
    • promote good and fair banking practices by setting minimum standards while dealing with you.
    • increase transparency so that you can have a better understanding of what you can reasonably expect of the services.
    • encourage market forces, through competition, to achieve higher operating standards.
    • promote a fair and cordial relationship between you and your bank.
    • foster confidence in the banking system.
Test: Retail Banking & Wealth Management - 3 - Question 65

Among the given, under which scenario the small account can be open under Rule 2 clause (fb)?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 65

In terms of Rule 2 clause (fb) of the Notification 'small account' means a savings account in a banking company where-

  • The aggregate of all credits in a financial year does not exceed rupees one lakh;
  • The aggregate of all withdrawals and transfers in a month does not exceed rupees ten thousand;
  • The balance at any point of time does not exceed rupees fifty thousand.
Test: Retail Banking & Wealth Management - 3 - Question 66

What conditions need to be met by an individual to be considered as a Resident Ordinarily Resident (ROR)?
I. Has been a resident of India in at least 2 out of 10 years in the immediate previous years.
II. Total income (other than foreign sources) exceeds ₹10 Lakh.
III. Has stayed in India for at least 721 days in 7 immediately preceding years.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 66

In case an individual is eligible as a resident, it needs to be determined whether the individual is Resident Ordinarily Resident (ROR) or Resident Not Ordinarily Resident (RNOR). The individual will eligible to be ROR if the following two conditions are met:

  • Has been a resident of India in at least 2 out of 10 years in immediately previous years
  • Has stayed in India for at least 730 days in 7 immediately preceding years.

As per guidelines effective from FY 2020-21, a citizen of India or a person of Indian origin who leaves India for employment outside India during the year will be eligible to be considered as ROR if he stays in India for an aggregate period of 182 days or more. However, this condition will apply only if his total income (other than foreign sources) exceeds ₹15 Lakh. Also, a citizen of India who is deemed to be a resident in India (w.e.f .FY 2020-21) will be a resident and ordinarily resident in India.

Thus, the correct option is (a).

Test: Retail Banking & Wealth Management - 3 - Question 67

Mr. Sahoo is a businessman. Out of his savings, he invested in Life Insurance policy Endowment products and Mutual Fund products respectively. According to Maslow's theory of Hierarchy, he is satisfying the _______ and ______needs respectively while investing in Life Insurance Policy Endowment products and Mutual Funds?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 67
  • Investment in Life Insurance policy Endowment products is Safety/Security Need and
  • investment in Mutual fund products is Social Need.
Test: Retail Banking & Wealth Management - 3 - Question 68

Statement 1: Bonds are generally considered a safer investment option than stocks.
Statement 2: Bondholders are partial owners of the issuing company.
Statement 3: Bonds typically offer higher potential returns than stocks.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 68

Bonds are a form of debt issued by companies or governments that pay a fixed rate of interest over a specified period of time, making them generally considered a safer investment option than stocks, which are subject to greater price fluctuations and volatility. However, bondholders are not partial owners of the issuing company and do not have voting rights, unlike stockholders. Bonds typically offer lower potential returns than stocks due to their lower risk profile.

Test: Retail Banking & Wealth Management - 3 - Question 69

In case of Affluent households (Income between Rs.5 lac to Rs 10 lac), what percent of penetration is provided?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 69

The following are the correctly matched:

  • Type of Household - Credit card penetration
  • Urban Mass household (income between 25,000 to Rs 2 lac p.a. - 4%
  • Mass affluent households (Income between Rs.2 lac to Rs 5 lac p.a. - 22 %
  • Affluent households (Income between Rs.5 lac to Rs 10 lac) - 34%

Hence, option (c) is the correct choice.

Test: Retail Banking & Wealth Management - 3 - Question 70

Depository Participant (DP) are registered under which of the following organizations?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 70
  • Depository Participant (DP) is an agent of the depository who is authorized to offer depository services to investors and is registered as a DP with SEBI. Financial institutions, banks, custodians, stockbrokers and other types of intermediaries specified under SEBI (Depositories and Participants) Regulations, 1996, complying with the requirements prescribed by SEBI/ Depositories can be registered as DP. An investor will always interact with a DP for the services and cannot directly approach the depository for any services except for Redressal of Grievances.
  • Thus, the correct option is (c).
Test: Retail Banking & Wealth Management - 3 - Question 71

As per the provisions contained in Rule 114B, Income-tax Rules, opening an account other than the time- deposit account of not exceeding ₹50,000 and a basic savings bank deposit Account with a bank requires which of the following?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 71

As per the provisions contained in Rule 114B, Income-tax Rules, opening an account other than a time- deposit account of not exceeding ₹50,000 and a Basic Savings Bank Deposit Account with a bank, required to quote Permanent Account Number (PAN). Cash deposit with a bank exceeding ₹50,000 also requires PAN, if the account is not seeded with PAN. Where a person, entering into any transaction referred to in this rule, is a minor and who does not have any income chargeable to income-tax, he shall quote the permanent account number of his father or mother or guardian, as the case may be, in the document pertaining to the said transaction. If any person who does not have a permanent account number and who enters into any transaction specified in this rule, shall make a declaration in Form No.60 giving therein the particulars of such transaction.

Thus, the correct option is (c).

Test: Retail Banking & Wealth Management - 3 - Question 72

Assertion: Digitisation of retail banking products increases the risk of cyber attacks.
Reason: Digital banking services require banks to maintain secure digital systems to protect customer data.

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 72

While digitisation of retail banking products brings numerous benefits, it also poses new risks such as cyber attacks. Banks need to invest in cybersecurity measures to protect customer data and prevent financial fraud. The need for secure digital systems increases the risk of cyber attacks.

Test: Retail Banking & Wealth Management - 3 - Question 73

Which of the following features does not match with the Systematic Withdrawal Plan (SWP)?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 73
  • A Systematic Withdrawal Plan(SWP) is a facility which allows an investor to withdraw a fixed amount at predetermined intervals. One can choose the amount and frequency of withdrawal also.At the set date, units from the portfolio are sold and the funds are transferred to your account.
  • Systematic Investment Plan, most popularly known as SIP is a disciplined way of investing offered by mutual funds, where one invests a fixed amount at a regular frequency (say, every month). It allows an investor to invest a fixed sum of money in a selected scheme of mutual fund at predefined intervals like monthly, quarterly, etc.
  • Thus, the correct option is (b).
Test: Retail Banking & Wealth Management - 3 - Question 74

DEF bank has a portfolio of commercial real estate loans worth $2 billion. They decide to securitize these loans in order to reduce their risk exposure. They create a special purpose vehicle (SPV), which purchases the loans from the bank and issues securities backed by the cash flows from the loans. What type of securities have they created?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 74

In this scenario, DEF bank has securitized their portfolio of commercial real estate loans, which means they have pooled together these loans and sold them to an SPV. The SPV then issues securities backed by the cash flows from the loans. Since these loans are specifically commercial real estate loans, the securities created are asset-backed securities. These securities are typically rated by credit rating agencies and sold to investors, who receive cash flows from the underlying loans.

Test: Retail Banking & Wealth Management - 3 - Question 75

How are investment managers compensated?

Detailed Solution for Test: Retail Banking & Wealth Management - 3 - Question 75
  • Investment managers are usually compensated via a management fee, usually a percentage of the value of the portfolio held for a client. Management fees may range from 0.35% to 2% annually. Also, fees are typically on a sliding scale - the more assets a client has, the lower the fee they can negotiate. The average management fee is around 1%.
  • Thus, the correct option is (d).
Test: Retail Banking & Wealth Management - 3 - Question 76

Among the below given statements which of the following is correct in context to marketing channels?