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100 Questions MCQ Test - Test: Retail Banking & Wealth Management - 1

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Test: Retail Banking & Wealth Management - 1 - Question 1

What services are typically offered by retail banks?

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

The retail banking sector is often described as typical mass-market banking, offering services such as savings and operative accounts, and personal loans, including auto loans and student loans.

Test: Retail Banking & Wealth Management - 1 - Question 2

Delivery channels in retail banking refer to the various ways through which customers can access and use banking products and services. These channels can be physical, such as bank branches, ATMs, and cash deposit machines, or digital, such as mobile banking, internet banking, and digital wallets. The availability and convenience of these channels are important factors in customer satisfaction and retention. Banks are constantly innovating and expanding their delivery channels to provide more choices and convenience to customers. The use of digital channels has seen significant growth in recent years due to their ease of use and accessibility.

Q. What kind of notes are ATMs loaded with?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 2

The efforts are made to ensure that ATMs are loaded with either newly minted or ATM fit notes which are sorted and processed on hi-tech note.

Test: Retail Banking & Wealth Management - 1 - Question 3

Delivery channels in retail banking refer to the various ways through which customers can access and use banking products and services. These channels can be physical, such as bank branches, ATMs, and cash deposit machines, or digital, such as mobile banking, internet banking, and digital wallets. The availability and convenience of these channels are important factors in customer satisfaction and retention. Banks are constantly innovating and expanding their delivery channels to provide more choices and convenience to customers. The use of digital channels has seen significant growth in recent years due to their ease of use and accessibility.

What steps are taken to address discrepancies in cash dispensation?
(i) Online monitoring of ATMs having a high number of dispenser problems
(ii) Follow up with manufacturers for periodical preventive maintenance
(iii) Training of custodians to ensure proper cash loading

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

Online monitoring of ATMs having high numbers of dispenser problems, follow-up with manufacturers for periodical preventive maintenance, and training of custodians to ensure proper cash loading are some of the steps taken to address discrepancies in cash dispensation.

Test: Retail Banking & Wealth Management - 1 - Question 4

Which of the following services related to banking are covered under the Code of Bank's Commitment to MSEs?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 4

The Code applies to all the products and services listed, including banking services related to Government transactions.

Test: Retail Banking & Wealth Management - 1 - Question 5

What is the primary driver of profitability and strength of retail banking models?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 5

The more the number of customers, the more will be the profitability and strength of the retail banking models.

Test: Retail Banking & Wealth Management - 1 - Question 6

What does the term 'Price' refer to in the marketing mix?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 6

In the context of deposit products, 'Price' refers to the interest rate offered by the bank to the customer. In asset products, 'Price' refers to the interest rate charged by the bank to the borrower. In other services, 'Price' refers to the fees/charges the bank levies on the customer.

Test: Retail Banking & Wealth Management - 1 - Question 7

According to the Indian Contract Act, of 1872, which of the following statements is true regarding a minor entering into a contract?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 7

According to the Indian Contract Act, of 1872, a minor is not capable of entering into a valid contract, and a contract entered into by a minor is void. A contract for the supply of necessities of life to a minor is, however, a valid contract.

Test: Retail Banking & Wealth Management - 1 - Question 8

What is the importance of a balanced approach to improving bank operations?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 8

A balanced approach that enables a bank to improve operating efficiency and upgrade its capabilities to respond to market needs and prepare for the future is imperative to the success of a bank’s operations and profitability.

Test: Retail Banking & Wealth Management - 1 - Question 9

Which type of life insurance policy is designed to pay a lump sum after a specific term or on death?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 9

An endowment policy is designed to pay a lump sum after a specific term or on death.

Test: Retail Banking & Wealth Management - 1 - Question 10

Which of the following is NOT a requirement of customers from their bank/s for maintaining their accounts/relationship?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 10

Non-transparent dealings and service charges is not a requirement of customers from their bank/s for maintaining their accounts/relationship. Customers expect transparent dealings and service charges from their bank/s. 

Test: Retail Banking & Wealth Management - 1 - Question 11

Which of the following statements is true regarding cross-selling programs?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 11

The scope for cross-selling can be determined by the percentage of total asset accounts to the total deposit accounts.

Test: Retail Banking & Wealth Management - 1 - Question 12

What are the different approaches adopted by banks for their retail banking activities?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 12

The different approaches adopted by banks for their retail banking activities are the Strategic Business Unit (SBU) approach, Departmental approach, and Integrated approach (part of the overall business plan).

Test: Retail Banking & Wealth Management - 1 - Question 13

Which term is used to describe asset management in finance parlance?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 13

Asset management in finance parlance is also known as buy-side, while investment banking is termed as sell-side.

Test: Retail Banking & Wealth Management - 1 - Question 14

What are the benefits of Blockchain according to Forbes?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 14

According to Forbes, Blockchain brings the following benefits: it records and validates every transaction, it does not require third-party authorization, and it is decentralized.

Test: Retail Banking & Wealth Management - 1 - Question 15

Which of the following statements is correct about Open Ended Funds?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 15

Open-ended funds allow you to invest money and redeem it anytime as per your needs and your strategies, regardless of any time circumstances.

Test: Retail Banking & Wealth Management - 1 - Question 16

The use of artificial intelligence (AI) and technology in retail banking has revolutionized the way banks interact with their customers. AI-powered chatbots are now used to provide customers with 24/7 support, reducing wait times and improving customer satisfaction. Personalized recommendations and offers are made to customers based on their transaction history and behaviour, resulting in higher sales and improved customer loyalty. Banks also use AI to detect and prevent fraud in real-time, enhancing the security of customer transactions.

Q. What is the role of AI in fraud detection?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 16

AI uses additional behavioural indicators to detect suspicious activity and offers suggestions for mitigating risk.

Test: Retail Banking & Wealth Management - 1 - Question 17

The use of artificial intelligence (AI) and technology in retail banking has revolutionized the way banks interact with their customers. AI-powered chatbots are now used to provide customers with 24/7 support, reducing wait times and improving customer satisfaction. Personalized recommendations and offers are made to customers based on their transaction history and behaviour, resulting in higher sales and improved customer loyalty. Banks also use AI to detect and prevent fraud in real-time, enhancing the security of customer transactions.

Q. Which industry sector witnessed the fastest adoption of Artificial Intelligence among Indian start-ups in 2018?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 17

E-commerce witnessed the fastest adoption of Artificial Intelligence among Indian start-ups in 2018.

Test: Retail Banking & Wealth Management - 1 - Question 18

The use of artificial intelligence (AI) and technology in retail banking has revolutionized the way banks interact with their customers. AI-powered chatbots are now used to provide customers with 24/7 support, reducing wait times and improving customer satisfaction. Personalized recommendations and offers are made to customers based on their transaction history and behaviour, resulting in higher sales and improved customer loyalty. Banks also use AI to detect and prevent fraud in real-time, enhancing the security of customer transactions.

Q. What are Passbook updation kiosks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 18

Passbook updation kiosks are automatic kiosks that enable customers to print their passbooks. SBI has installed Swayam (passbook printing kiosk) which uses barcode technology and allows customers to update their passbooks hassle-free.

Test: Retail Banking & Wealth Management - 1 - Question 19

What led to the emergence of specialized and sophisticated products in banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 19

The inability of the legacy architecture of banks to serve diverse needs. The emergence of specialized and sophisticated products in banks can be attributed to the limitations of traditional legacy systems and architectures. Legacy systems were designed to cater to more traditional banking functions and were not equipped to handle the evolving needs and demands of customers. As customer expectations changed and technology advanced, banks faced challenges in meeting these demands with their existing infrastructure.

Test: Retail Banking & Wealth Management - 1 - Question 20

What is the consequence of not providing mobile numbers to the bank?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 20

According to the guidelines, banks may not offer the facility of electronic transactions, other than ATM cash withdrawals, to customers who do not provide mobile numbers to the bank.

Test: Retail Banking & Wealth Management - 1 - Question 21

What should a proactive marketer watch to develop new products?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 21

A proactive marketer should particularly watch the product life cycle of the product and the present stage of the product. This will enable the organization to survive and achieve its business objectives by developing new products and proactively seizing emerging, changing customer needs.

Test: Retail Banking & Wealth Management - 1 - Question 22

The Co-Lending Model (CLM) allows banks to co-lend with all RBI-registered NBFCs including Housing Finance Companies (HFC) based on a _____.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 22

The Co-Lending Model (CLM) allows banks to co-lend with all RBI-registered NBFCs including Housing Finance Companies (HFC) based on a prior agreement.

Test: Retail Banking & Wealth Management - 1 - Question 23

What is the purpose of income tax slabs?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 23

Income tax slabs are designed to ensure that the tax system is fair and progressive, meaning that those who earn more pay a higher percentage of their income in taxes. This helps to reduce income inequality and ensure that those with higher incomes contribute more to the government's revenue.

Test: Retail Banking & Wealth Management - 1 - Question 24

Why is diversification important in portfolio management?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 24

Diversification reduces the risk of investing in individual securities by spreading the risk and reward of those securities across a range of assets, sectors, and geographic regions.

Test: Retail Banking & Wealth Management - 1 - Question 25

What is the advantage that new-generation private sector banks had in terms of technology implementation?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 25

New-generation private sector banks had a great advantage as they were late entrants and hence could start with the technology advantage and source the same from external vendors. By developing their proprietary models and software, these banks could have greater control over their technology implementation and adapt it to their unique business strategies and customer needs.

Test: Retail Banking & Wealth Management - 1 - Question 26

Why is the implementation of a CRM program a compulsion for banks in retail banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 26

CRM is not just an option for banks, but a compulsion to achieve business synergies and optimization of resources.

Test: Retail Banking & Wealth Management - 1 - Question 27

What is the purpose of marketing control in retail banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 27

Marketing control in retail banking involves regulating the goals by auditing, measuring, evaluating, and acting upon the defined parameters of control. This stage can be done in two ways - reactive methodology and proactive methodology, and corrective action is taken at the operational level or the strategic level depending upon the relevance of the control aspect of the parameters.

Test: Retail Banking & Wealth Management - 1 - Question 28

Which of the following allowances for employment or transfer are allowed under the new tax regime?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 28

Any allowance for traveling for employment or on transfer is allowed under the new tax regime.

Test: Retail Banking & Wealth Management - 1 - Question 29

What has given rise to increased demand in the financial markets, especially in banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 29

The Indian economy has been witnessing an upswing due to the liberalization policy adopted by the planners. This has led to increased income and saving levels, resulting in increased demand on the financial markets and more particularly on banks.

Test: Retail Banking & Wealth Management - 1 - Question 30

What is the benefit of listing retail bonds?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 30

Retail bonds are typically listed and can thus be bought and sold during regular market hours, allowing investors more flexibility.

Test: Retail Banking & Wealth Management - 1 - Question 31

What is the significance of the PSD2 guidelines?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 31

They provide open banking tools for tech companies is the significance of the PSD2 guidelines.

Test: Retail Banking & Wealth Management - 1 - Question 32

What penalty may be imposed if the number of withdrawals from an SB account exceeds the specified limit?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 32

If the number of withdrawals exceeds the specified limit, a penalty may be imposed in the form of non-payment of interest for the relevant month.

Test: Retail Banking & Wealth Management - 1 - Question 33

Which of the following best defines Customer Relationship Management (CRM) in retail banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 33

CRM in retail banking is about managing customers by offering the right products and services matching their needs, addressing their total need spectrum, and ensuring customer satisfaction.

Test: Retail Banking & Wealth Management - 1 - Question 34

Marketing Information Systems (MIS) are vital for the banking industry to gather, analyze and interpret data about customers, products and services, and market trends. MIS helps banks to understand the changing needs of customers and to design products and services that meet those needs. MIS also helps banks to track their competitors' activities and to adapt to changes in the market. With the help of MIS, banks can identify the most effective marketing channels and promotional strategies to reach their target audience. It also enables banks to make informed decisions, reduce costs, and improve profitability. Therefore, MIS is a crucial tool for banks to stay competitive and meet the demands of their customers.

What was the initial purpose of an MKIS in the 1960s?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 34

In the 1960s, an MKIS was an outgrowth of marketing research and its purpose was to gather and manage marketing information.

Test: Retail Banking & Wealth Management - 1 - Question 35

Group insurance products are offered by life insurers for which purpose?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 35

The group insurance products are offered by life insurers for providing life cover at a competitive premium as compared to regular policies.

Test: Retail Banking & Wealth Management - 1 - Question 36

Remittance products in banking refer to services that allow people to send money to others who are located in different geographical locations. These products are designed to facilitate the easy and secure transfer of funds between individuals, businesses, or institutions. Remittance products can be in the form of wire transfers, online transfers, mobile payments, or other electronic means. Banks offer different types of remittance products that cater to the specific needs of their customers. Some of these products come with fees while others are free. Overall, remittance products have made it easier and faster for people to transfer money across borders.

Q. What is the settlement process for NEFT transactions between originating and receiving banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 36

The settlement of funds between originating and receiving banks in NEFT takes place centrally in Mumbai, whereas the branches participating in NEFT can be located anywhere across the country.

Test: Retail Banking & Wealth Management - 1 - Question 37

Remittance products in banking refer to services that allow people to send money to others who are located in different geographical locations. These products are designed to facilitate the easy and secure transfer of funds between individuals, businesses, or institutions. Remittance products can be in the form of wire transfers, online transfers, mobile payments, or other electronic means. Banks offer different types of remittance products that cater to the specific needs of their customers. Some of these products come with fees while others are free. Overall, remittance products have made it easier and faster for people to transfer money across borders.

Q. Which of the following statements is true regarding the process flow of remittances and fund transfers through RTGS?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 37

The remittances and fund transfers through RTGS are settled on a gross basis from the liquidity maintained by the sender bank with the settlement bank. The remittances are credited on a dynamic basis and settlement is also made on a dynamic basis. That is, the message communication, remittance, credit, and settlement for the credit are done immediately subject to the systems and procedures prescribed for remittances through RTGS.

Test: Retail Banking & Wealth Management - 1 - Question 38

What are the latest security standards mandated by Visa/Master Card/RuPay Card for payments made through e-Gateway?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 38

The latest security standard mandated by Visa/Master Card/RuPay Card for payments made through e-Gateway is 3D Secure Authentication.

Test: Retail Banking & Wealth Management - 1 - Question 39

What is the name of the regulatory act that governs the banking system in India?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 39

The Banking Regulation Act, of 1949 is the regulatory act that governs the banking system in India. It provides the regulatory framework for the supervision of banks in the country.

Test: Retail Banking & Wealth Management - 1 - Question 40

Which of the following is not an example of other products and services offered by banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 40

Deposits are not considered as part of other products and services as they are basic products offered by banks.

Test: Retail Banking & Wealth Management - 1 - Question 41

What are the two traditional measures of profitability for a business?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 41

The two traditional measures of profitability for a business are Return on Assets (ROA) and Return on Equity (ROE).

Test: Retail Banking & Wealth Management - 1 - Question 42

Retail banking concepts, which primarily deal with providing banking services to individual customers, are applicable in any country where there is a significant population of individual customers. Retail banking differs from corporate or wholesale banking, which focuses on providing services to businesses, institutions, and large corporations. While retail banking involves services such as savings accounts, loans, credit cards, and mortgages, corporate banking includes services such as cash management, financing, and investment banking. The distinction between the two types of banking is important, as it helps banks to determine which types of services they should prioritize and which customer segments they should focus on.

Q. What is the purpose of sweep-in and sweep-out facilities in savings accounts?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 42

Sweep-in and sweep-out facilities in savings accounts allow idle funds kept in accounts to earn additional interest by automatically transferring funds above a certain specified level to a fixed deposit account.

Test: Retail Banking & Wealth Management - 1 - Question 43

Retail banking concepts, which primarily deal with providing banking services to individual customers, are applicable in any country where there is a significant population of individual customers. Retail banking differs from corporate or wholesale banking, which focuses on providing services to businesses, institutions, and large corporations. While retail banking involves services such as savings accounts, loans, credit cards, and mortgages, corporate banking includes services such as cash management, financing, and investment banking. The distinction between the two types of banking is important, as it helps banks to determine which types of services they should prioritize and which customer segments they should focus on.

Q. What are the three basic characteristics of today's retail banking sector?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 43

The retail banking sector is characterized by three basic characteristics - multiple products, multiple channels of distribution, and multiple customer groups.

Test: Retail Banking & Wealth Management - 1 - Question 44

Retail banking concepts, which primarily deal with providing banking services to individual customers, are applicable in any country where there is a significant population of individual customers. Retail banking differs from corporate or wholesale banking, which focuses on providing services to businesses, institutions, and large corporations. While retail banking involves services such as savings accounts, loans, credit cards, and mortgages, corporate banking includes services such as cash management, financing, and investment banking. The distinction between the two types of banking is important, as it helps banks to determine which types of services they should prioritize and which customer segments they should focus on.

Q. What type of value proposition is not typically offered for term deposit accounts?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 44

Accidental life cover may be offered for term deposit accounts, but group life and health insurance policies are not typically offered for term deposits due to operational reasons. Instead, they are structured as part of demand deposit accounts.

Test: Retail Banking & Wealth Management - 1 - Question 45

What is the major role of a bond market?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 45

The major role of a bond market is to help the government and large private entities access long-term capital.

Test: Retail Banking & Wealth Management - 1 - Question 46

What is the most common reason for default on home loans?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 46

The most common reason for default on home loans is the increase in interest rates, which can lead to an increase in EMIs and make it difficult for the borrower to service the loan.

Test: Retail Banking & Wealth Management - 1 - Question 47

Tax planning in banking involves developing strategies to minimize tax liabilities while maximizing returns on investments. It involves analyzing different investment options and selecting the ones that offer the most tax benefits. For instance, investing in tax-saving fixed deposits, mutual funds, or insurance policies can help reduce tax liabilities. Banks also offer tax-saving investment products such as National Savings Certificates (NSC), Public Provident Funds (PPF), and Equity-Linked Savings Schemes (ELSS) that provide tax deductions under various sections of the Income Tax Act. Additionally, banks may offer tax planning advice to their customers to help them optimize their tax savings while ensuring compliance with tax laws.

Q. Which of the following is true about Section 80CCC?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 47

Section 80CCC allows a deduction for payment towards annuity pension plans of LIC or any other insurance company. The pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt. 

Test: Retail Banking & Wealth Management - 1 - Question 48

What is the purpose of the Branch Level Customer Service Committee meetings?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 48

The member banks will display in their branches the date of the monthly Branch Level Customer Service Committee meeting, which customers may attend if so desired.

Test: Retail Banking & Wealth Management - 1 - Question 49

Which type of approach is characterized by combining all socio-economic aspects and adopting a cohesive approach to tackle problems of the business?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 49

The Integrated Approach is characterized by combining all socioeconomic aspects and adopting a cohesive approach to tackle the problems of the business.

Test: Retail Banking & Wealth Management - 1 - Question 50

Which of the following is a necessary transformation for banks and financial institutions to serve digitally empowered consumers?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 50

Banks and financial institutions must transform their current operating model of delivery in four ways to add significant value for their customers and add significant value for their brands. This includes building a strong digital banking model.

Test: Retail Banking & Wealth Management - 1 - Question 51

Which organization initiated the establishment of the RuPay card payment scheme in India, and what is the primary purpose of this initiative?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 51

The National Payments Corporation of India (NPCI) is the organization that initiated the establishment of the RuPay card payment scheme in India. RuPay is a new card payment scheme launched by NPCI to fulfill the Reserve Bank of India's (RBI) vision of offering a domestic, open-loop, multilateral system. The primary purpose of RuPay is to create a payment system that allows all Indian banks and financial institutions to participate in electronic payments, thereby reducing dependence on international payment systems and promoting financial inclusion within the country.
Hence, the correct answer is option (c).

Test: Retail Banking & Wealth Management - 1 - Question 52

Among the given, which of the following is/are not among the fundamental ingredients of an effective marketing mix in retail banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 52

Marketing mix in retail banking refers to the different ingredients to make customer happy and satisfied. The fundamental ingredients of an effective marketing mix in retail banking are as follows: (i) Product (ii) Price (iii) Promotion (iv) Place (v) People (vi) Process (vii) Physical evidence.
Hence, option (b) is the correct choice.

Test: Retail Banking & Wealth Management - 1 - Question 53

If return and risk of three portfolios are as follows: Portfolio X (1%, 1%), Portfolio Y (1%, 2%), Portfolio Z (2%, 1%). Which is the superior portfolio?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 53

To calculate the expected return of a portfolio, the investor needs to know the expected return of each of the securities in their portfolio as well as the overall weight of each security in the portfolio. In Z Option the Return is more than the Risk i.e., 2% (Return) > 1% (Risk).

Test: Retail Banking & Wealth Management - 1 - Question 54

________ is a demand deposit.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 54

Overdue Deposits mean term deposits which are not withdrawn on maturity dates and notice money which is not withdrawn on the expiry of the notice given. Overdue deposit is a demand deposit.
Thus, the correct option is (b)

Test: Retail Banking & Wealth Management - 1 - Question 55

Among the given, which of the following concepts is involved in product policy?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 55

Product policy would include the products to be offered to different segments, the product line based on the homogenous needs of the heterogeneous customer base, designing product tailored to specific customer base if the segment is an important segment. The product policy involves the following concepts -
(i) Appraisal of the product line and individual products;
(ii) Decisions on product differentiation;
(iii) Product positioning;
(iv) Brand decisions;
(v) Decisions on packaging;
(vi) New Product Development.

Test: Retail Banking & Wealth Management - 1 - Question 56

Consider the following statements regarding the Profitability and choose the correct answer.
I. The concept of profitability is absolute.
II. Profitability is the metric used to determine the scope of a company's profit in relation to the size of the business.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 56
  • Profit is an absolute number determined by the amount of income or revenue above and beyond the costs or expenses an entity incurs. It is calculated as total revenue minus total expenses and appears on an entity's income statement.
  • Profitability is closely related to profit - but with one key difference. While profit is an absolute amount, profitability is a relative one. It is the metric used to determine the scope of a company's profit in relation to the size of the business. Profitability is a measurement of efficiency - and ultimately its success or failure.
Test: Retail Banking & Wealth Management - 1 - Question 57

In case of Open PPI's the amount shall not exceed ____ Lakh at any point of time.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 57
  • In case of Open PPI's, they are issued only by Banks and are used at any merchant and such PPI's shall also facilitate cash withdrawal at ATM. However, the amount shall not exceed Rs 1 Lakh at any point of time.
  • Open system: PPIs under this system can only be issued by banking institutions that have been approved by the RBI. These instruments can be used to facilitate purchases, remittances, cash withdrawals, etc. examples of PPIs issued under this system are debit cards and credit cards.
Test: Retail Banking & Wealth Management - 1 - Question 58

Statement 1: Home loans are long-term loans used to purchase a property or land.
Statement 2: Home loans have lower interest rates compared to other loans, as they are secured by the property being purchased.
Statement 3: Home loans have a longer repayment period than other loans, typically ranging from 15 to 30 years.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 58

Home loans are long-term loans used to purchase a property or land. They are secured by the property being purchased, which allows lenders to offer lower interest rates compared to other loans. Home loans also have a longer repayment period than other loans, typically ranging from 15 to 30 years. All three statements are true.

Test: Retail Banking & Wealth Management - 1 - Question 59

What are the major advantages of non-fund based businesses?
I. They help in recovering NPA.
II. They offer a customer base.
III. They offer tremendous scope for income and profit.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 59
  • Some of the non-fund based products are: i. Bank Guarantee ii. Letter of Credit iii. Co-acceptance of bills
  • These types of non-fund based businesses offer tremendous scope for income and profit because banks collect commission for offering these services without outlay of funds. Banks' outlay of funds is involved if there is failure of the obligation by the party. Non-fund based businesses do not fall exactly on the retail side but certain elements of the above embrace the retail banking segment also. Non-fund based business offers a wonderful scope for the banker to augment their income without outlay of funds. Banks offer these products normally to their well-established customers.
  • Thus, the correct option is (a)
Test: Retail Banking & Wealth Management - 1 - Question 60

Statement 1: Retail banking is the provision of financial services to individual customers.
Statement 2: Retail banking plays an important role within the overall operations of a bank.
Statement 3: Retail banking services include deposit accounts, loans, credit cards, and mortgages.

Which of the following options is correct?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 60

Statement 1 is true since retail banking services are designed to cater to the needs of individual customers, providing services such as deposit accounts, loans, credit cards, and mortgages. Statement 2 is true since retail banking plays a crucial role within the overall operations of a bank, contributing significantly to its profitability and sustainability. Retail banking is typically the largest revenue-generating business segment of a bank and serves as a key interface between the bank and its customers. Statement 3 is true since deposit accounts, loans, credit cards, and mortgages are all examples of retail banking services that are provided to individual customers. Therefore, option (d) is the correct answer.

Test: Retail Banking & Wealth Management - 1 - Question 61

For how many mutual funds Banks can act as a corporate agent.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 61

There is no limit for Banks as a corporate agent to distribute mutual funds

Test: Retail Banking & Wealth Management - 1 - Question 62

Which of the following services should be provided to meet the customer expectations with regard to savings accounts?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 62

The study suggested further measures to improve the service quality to meet the customer expectations with regard to savings accounts:

  • Need to improve transaction time at the branch.
  • Branch offerings need to be relooked at, in terms of range of services offered, in light of people-related drivers being seen as driving overall customer satisfaction.
  • Lack of adequate channels is felt by the customer, in addressing his needs. Need to relook at current channels and their ease of access/usage for the customer.

Thus, the correct option is (d)

Test: Retail Banking & Wealth Management - 1 - Question 63

Which of the following statements is NOT a constraint in retail banking?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 63
  • Rapid evolution of products can lead to IT complications: As products evolve rapidly, IT systems might face complications in adapting to these changes.
  • The costs of maintaining branch networks tend to be relatively high: Maintaining physical branch networks and handling low-value transactions incur relatively high costs.
  • Higher delinquencies especially in unsecured retail loans and credit card receivables: Retail banking can experience higher delinquencies, especially in unsecured loans and credit card receivables.
  • Client loyalty is strong with a good scope for cross-selling and customers tend not to change banks very often: This is not a constraint but an advantage of retail banking. Customers' loyalty and cross-selling opportunities are positive aspects of retail banking.
  • Hence, the correct answer is option (d).
Test: Retail Banking & Wealth Management - 1 - Question 64

Consider the following statements and choose the correct answer.
I. Wealth management service is usually appropriate for wealthy individuals with a broad array of diverse needs.
II. Wealth management is an investment advisory service but cannot combine other financial services.
III.A wealth management advisor is a high-level professional who manages an affluent client's wealth holistically, typically for one set fee.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 64

Wealth Management Services can be summarized in three stages:-

  • Wealth management is an investment advisory service that combines other financial services to address the needs of affluent clients.
  • A wealth management advisor is a high-level professional who manages an affluent client's wealth holistically, typically for one set fee.
  • This service is usually appropriate for wealthy individuals with a broad array of diverse needs.
  • Thus, the correct option is (b).
Test: Retail Banking & Wealth Management - 1 - Question 65

Among the given, which of the following parameters doesn't helps in improving credit score?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 65

Factors lending to favourable credit score

  • On time loan EMI payments.
  • Regular payment of credit card bills.
  • Paying credit card bills in full rather than paying minimum due amount every time.
  • Avoiding over-leveraging
  • Maintaining strong financial records.

Factors leading to negative credit score

  • Too many credit report enquiries by banks and other institutions.
  • Cheque bounces/dishonours.
  • Irregular loan repayment.
  • Defaulting on credit card bills/making late payments or consistent part payments.
  • Too much unsecured credit such as multiple personal loans.
Test: Retail Banking & Wealth Management - 1 - Question 66

Which of the following features of bond is correct?
I. They are variable income instruments
II. They are tradeable
III. They do not yield interest

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 66

To determine which features of bonds are correct, let's evaluate each statement:

I. They are variable income instruments

  • This statement is generally incorrect. Bonds are typically fixed income instruments, meaning they provide regular, fixed interest payments to the bondholder until maturity.

II. They are tradeable

  • This statement is correct. Bonds are financial instruments that can be bought and sold in the secondary market.

III. They do not yield interest

  • This statement is incorrect. Bonds typically yield interest, which is paid periodically to the bondholder as a return on the investment.

Therefore, the correct answer is:

3. Only II

Test: Retail Banking & Wealth Management - 1 - Question 67

___________ is a risk management technique that allocates business resources to create multiple lines of business that offer a variety of products and / or services in different industries.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 67

Diversification:

  • Diversification is a risk management technique that allocates business resources to create multiple lines of business that offer a variety of products and / or services in different industries. With diversification, a significant revenue loss from one line of business will not cause irreparable harm to the company's bottom line. Risk management is a key component in any sound company strategy. It is necessary to ensure long term organization sustainability and profitability.

Hence, option (d) is the correct choice.

Test: Retail Banking & Wealth Management - 1 - Question 68

In which of the following ways, the price structuring for products and services is attempted by Banks?
I. Standalone pricing for different products and services.
II. Special quotes for high-value deposits.
III. Bundled pricing / holistic pricing based on total relationship.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 68

Banks are following different strategies to grab the Retail Banking Business from Customers. They are using Standalone Pricing, Special Quotes, Bundled Pricing, etc. The standalone selling price is the price at which an entity would sell a promised good or service separately to a customer. Product bundling is a technique in which several products are grouped together and sold as a single unit for one price.

Test: Retail Banking & Wealth Management - 1 - Question 69

XYZ Bank is a prominent financial institution that has been operating for decades. They are currently considering their approach to retail banking. After careful analysis, they decide to divide their retail banking operations based on autonomous divisions, each with its own product offerings and market segments. These divisions are aimed at achieving clear business objectives with a focus on profitability.

Q. Which approach to retail banking is XYZ Bank adopting?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 69

The provided case study indicates that XYZ Bank is dividing its retail banking operations into autonomous divisions, each with specific product offerings and market segments, and focusing on achieving clear business objectives and profitability. This description aligns with the Strategic Business Unit (SBU) Approach.

  • Departmental Approach: This approach involves segregating functions into departments based on their specialized roles, which is not the case in the scenario described.
  • Integrated Approach: This approach involves adopting a cohesive approach to tackle problems but doesn't involve dividing operations into autonomous divisions.

Therefore, the correct answer is option (a).

Test: Retail Banking & Wealth Management - 1 - Question 70

Who is responsible for performing the functions of the Central KYC Records Registry (CKYCR)?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 70
  • Customer Due Diligence (CDD) Procedure and sharing KYC information with Central KYC Records Registry (CKYCR) Government of India has authorized the Central Registry of SecuritizationAsset Reconstruction and Security Interest of India (CERSAI), to act as, and to perform the functions of the CKYCR. Banksshall capture the KYC information for sharing with the CKYCR in the manner mentioned in the Rules, as required by the revised KYC templates prepared for 'Individuals' and 'Legal Entities' as the case may be. REs shall take the following steps: Scheduled Commercial Banks(SCBs)shall invariably upload the KYC data pertaining to all new individual accounts opened on or after January 1, 2017 with CERSAI in terms of the provisions of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
  • Thus, the correct option is (c)
Test: Retail Banking & Wealth Management - 1 - Question 71

Statement 1: In disclosed factoring, the buyer is aware of the factoring agreement.
Statement 2: Undisclosed factoring is more common than disclosed factoring.
Statement 3: Disclosed factoring is typically used when the seller has a strong relationship with its buyers.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 71

In disclosed factoring, the buyer is aware of the factoring agreement and is instructed to make payments to the financial institution rather than the seller. Disclosed factoring is typically used when the seller has a strong relationship with its buyers and wants to maintain that relationship. Undisclosed factoring is less common than disclosed factoring and is used when the seller does not want its buyers to know that it is using a factoring company.

Test: Retail Banking & Wealth Management - 1 - Question 72

The compensation for the DSAs will basically depend on the__________.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 72
  • By appointing DSAs, the cost of delivery of service would be considerably reduced as DSAs are not in their payrolls. The compensation for the DSAs will basically depend on the volumes of business sourced.
  • However, there is Reputation Risk in the DSA model as the field personnel deployed by the DSAs for sourcing business try to make some false promises in the Turnaround Time (TAT) in retail asset processing and issue of credit cards.
  • DSAs focus on pure selling by pushing the products than effective marketing after verifying the needs of the customers and their actual requirements.
  • Hence, option (d) is the correct choice.
Test: Retail Banking & Wealth Management - 1 - Question 73

What role does a bank branch play in enhancing customer satisfaction and the bank's image?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 73
  • A bank branch serves as a channel for both sales and services, emphasizing personal relationships with customers. It mentions that bank employees can play a vital role in ensuring customer satisfaction by interacting with customers in a friendly manner. The branch's role goes beyond transactions, as it contributes to enhancing customer relationship management and boosting the bank's overall image.
  • Customers still choose brick and mortar locations despite the abundance of remote channels available to improve the client experience of retail banking services. Principal causes of the same are:
  • Branch provides tangibility to banking services' abstract character. Customers feel more confident that they are not only physically involved in the transactions but also feel the branch's level of customer care thanks to the transactions that take place there.
  • Employees in the branch communicate with customers regarding their transactions.
  • Direct communication between bank employees and customers allows for a better knowledge of what each party expects from the other in terms of service.
  • Thus, option (c) accurately captures the role of a bank branch in fostering customer relationships and improving the bank's image.
Test: Retail Banking & Wealth Management - 1 - Question 74

Which of the following statements are correct?
Statement 1: The Goal of Wealth Management is to sustain and grow wealth in long term.
Statement 2: HNWI stands for High Network Individuals

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 74
  • Wealth Management includes investment management, financial planning, insurance sales, tax advice, and estate planning. The goal of a wealth manager is to help clients grow and preserve their wealth over the long term.
  • Net Wealth of High-Net-Worth Individuals (HNWIs) As noted above, people who fall into this category have more than $1 million in liquid assets, including cash and cash equivalents. These assets do not include things like personal assets and property such as primary residences, collectibles, and consumer durables.
  • Hence statement 2 is not correct and only statement 1 is correct.
Test: Retail Banking & Wealth Management - 1 - Question 75

____is the first step to intermediation, which is the primary function of banks.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 75
  • Intermediation is the primary function of banks and mobilisation of deposit is the first step to intermediation. They accept deposits from the public and lend it to the enterprise class engaged in productive activities. On loans and advances banks charge some additional interest rate. Banks don't have their own money and so they lend from the deposited money. Banks normally pay interest on the money deposited by the public which lies with the banks. Therefore, the deposited money is the bank's liability as interest is paid on that sum to the depositor. On the other hand, the money given out as a loan becomes an asset for the bank and earns interest.
  • Thus, the correct option is (c)
Test: Retail Banking & Wealth Management - 1 - Question 76

Which of the following is an advantage of an MKIS?
I. Improved decision making
II. Increased costs
III. Decreased efficiency

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 76

Improved decision making is a key advantage of an MKIS, as it allows businesses to make more informed and data-driven decisions. Increased costs and decreased efficiency are not advantages of an MKIS, but are actually potential disadvantages if the system is not properly implemented and managed.

Test: Retail Banking & Wealth Management - 1 - Question 77

Using the ______provided by the bureau, bankers can be able to avoid disasters like nonpayment of dues.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 77
  • A Credit bureau tracks the indebtedness and repayment history of individual borrowers on loans they have taken from banks, non-banking financial service companies and financial institutions. It also contains certain personal information of each borrower, like name, age and verified permanent address. The information is collected in a credit information report, which is made available to loan-issuing members. Using the credit information report (CIR) provided by the bureau, bankers should be able to avoid disasters like nonpayment of dues.
  • Thus, the correct option is (d).
Test: Retail Banking & Wealth Management - 1 - Question 78

A good credit score will indicate the character of the borrower in his financial matters. Which of the following are some of the indicators of good score?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 78

A good credit score will indicate the character of the borrower in his financial matters. The following are some of the indicators of good score:

  • Evidence of financial discipline.
  • If the borrower has defaulted once or twice due to reasons beyond their control, those would show up as clear aberrations in an overall consistent payment history.
  • The longer the credit history, the better. The lender's assessment presumably improves as he gets bigger spans of repayment. One should be judicious about closing old accounts and opening new ones.

Thus, the correct option is (d)

Test: Retail Banking & Wealth Management - 1 - Question 79

What does a seamless multi-channel experience mean for banks?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 79
  • Banks should seek to attract and retain customers with a compelling multi-channel experience across all touch points (branches, online, mortgage and investment advisors, etc.). Technology continues to rapidly change the way consumers behave and interact. Virtual channels are becoming more relevant, with the increasing penetration of high-speed Internet connectivity and Web-enabled mobile devices allowing consumers to spend more time online. Bank customers will not only continue to use a mix of channels, but will use non-branch channels for increasingly complex banking transactions.
  • While retail branches remain a core banking channel, research shows that customer traffic is in some cases flat or declining, as customers come to rely more heavily on digital/phone channels. In fact, online banking and call centres account for 55 percent of transactions today. This shift can be a positive development for banks, but they must be ready to provide customers with a rich set of capabilities and a seamless experience across all channels. Successful execution of such a strategy has tangible economic rewards, but requires the right set of investments and development of new capabilities.
  • Hence, the correct answer is option (c).
Test: Retail Banking & Wealth Management - 1 - Question 80

Which of the following is/are correct regarding the need for AI in the banking industry in India?
I. Thrust for a process-driven operation.
II. To minimize the chances of fraud and scam.
III. To support focus on productivity and efficiency.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 80

Following points explain the need for AI in the banking sector:

  • Enormous challenges in the banking sector.
  • Thrust for a process-driven operation.
  • Initiate self-service in the branches.
  • Customer desire to deliver different personalized solutions.
  • Build functional efficiencies.
  • Escalating the productivity of employees.
  • To support focus on productivity and efficiency
  • Manage an immense volume of data at record speed and gain valuable insights.
  • To carry out effective decision-making.
Test: Retail Banking & Wealth Management - 1 - Question 81

Which of the following is not one of the core products in banking scenario?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 81
  • Core products are essentially those products which define what kind of business we are in. In the banking scenario, some of the core products are Savings Bank, Current Account, Term Deposit, Recurring Deposit, Cash Credit, Overdraft, Retail Loans, Term Loan, Drafts etc. These core products are essential products and need not have a strong marketing content. These products will have a stable life in the growth stage of the product life cycle, because they are indispensable for the different segments of customers.
  • Thus, the correct option is (b)
Test: Retail Banking & Wealth Management - 1 - Question 82

In the context of loan securitization, what is the Minimum Retention Requirement (MRR) prescribed by the guidelines for loans with an original maturity of more than 24 months?

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 82
  • The Minimum Retention Requirement (MRR) is a regulatory provision in loan securitization that mandates the originating banks to retain a certain percentage of the book value of the loans being securitized. This is done to ensure that the originating banks have a vested interest in the performance of the securitized assets, and to encourage them to conduct proper due diligence before securitizing the loans.
  • For loans with an original maturity of more than 24 months, the guidelines stipulate an MRR of 10% of the book value of the loans being securitized. This means that the originating bank must retain 10% of the total value of the loans even after they are securitized and sold to investors. This requirement aims to mitigate risk and align the interests of the bank with the performance of the assets.
  • In contrast, loans with an original maturity of 24 months or less have a lower MRR of 5% of the book value, as stated in the passage.
  • Hence, the correct answer is option (b).
Test: Retail Banking & Wealth Management - 1 - Question 83

Housing loan should be sanctioned and disbursed to applicant from the present ceiling of 14 days, for ideal customer requirements of _______.

Detailed Solution for Test: Retail Banking & Wealth Management - 1 - Question 83
  • Housing loan should be sanctioned and disbursed to applicant from the present ceiling of 14 days, for ideal customer requirements of 7 working days.
  • Hence, option (b) is the correct choice.
Test: Retail Banking & Wealth Management - 1 - Question 84