PRESTIGE INSTITUTE OF MANAGEMENT & RESEARCH

SUBMITTED TO – DHEERAJ AHUJA

SUBMITTED BY – Anjali Shukla
Janhavi Patil
Siddharth Golecha
Naveen Singh

SECTION – 3 Trade Finance

1. ------- is to produce or purchase the material and
labour necessary to fulfil the sales order.
a) Pre-shipment financing
b) Post & pre shipment
c) Post shipment
d) None of the above ans. A
2. Upto---- of world trade relies on trade finance
instruments.
a) 50%
b) 70%
c) 100%
d) 90% ans. D
3. ------ in order to generate immediate cash while
offering payments terms to buyers.
a) Pre-shipment financing
b) Post & pre shipment
 c) Post shipment
d) None of the above ans. C

4. Export refers to ---- of goods and services and ---- of

foreign exchange.
a) Inflow, outflow
b) Inflow, inflow
c) Outflow, inflow
d) Outflow, outflow ans.C
5. Export finance is ---- working capital finance allowed
to an exporter.
a) Mid-term
b) Short-term
c) Long-term
d) All of the above ans. B
6. Export finance do not covers natural risks such as
floods, cyclone etc.
a) True
b) False ans. B
7. -----is the capital that is used to bring goods into the
country.
a) Import finance
b) Export finance ans. A
8. Pre shipment finance is also known as working capital
finance.
a) Yes
b) No ans. A
9. Pre shipment finance is credit granted to the ---- by a
financial institution.
a) Importer
b) Exporter
c) Both a and b ans. B
10. Which one of the following is not the objective
of pre shipment finance?
a) Procure raw material
b) Carry out manufacturing processes
c) To pay for publicity and advertising in overseas
market
d) Ship the goods for buyers ans. C
11. The greater the risk associated with the
transaction ----the cost
a) Lesser
b) Equal
c) Greater
d) Cannot determined ans. C
12. The ---- stability and ----- stability of the buyers
are also taken into the consideration.
a) Financial, political
b) Political, economic
c) Social, political
 d) Financial, social ans. B
13. Is it necessary for pre shipment finance to know
whether the buyer is reliable with good credit
history?
a) Yes
b) No ans. A
14. Full form of PCFC is-
a) Packing credit foreign certificate
b) Packing credit formal certificate
c) Packing credit in foreign currency
d) None of the above ans. C
15. How many digits does IEC code contain?
a) 11
b) 8
c) 12
d) 10 ans. D
16. If the goods to be exported fall under restricted
or canalized category then the license/authorization
is issued by
a) Custom house agent
b) Export promotion council
c) DGFT
d) Captain of ship ans. C

17. Financial institution can also grant credit to a

third party manufacturer or supplier of goods who
 does not have export orders or L/C in their own
name.
a) yes
b) No ans. A
18. Where the export order is divided between more
than one exporter, pre-shipment credit is shared
between them.
a) No
b) Yes
c) Maybe ans. B
19. Which are the two main factor that bank
determine the percentage of margin.
1) The nature of the commodity
2) The mode of transportation
3) The nature of order
4) The mode of payment
a) 1 and 2
b) 4 and 3
c) 1 and 3
d) 2 and 4 ans. C
20. Post shipment finance is provided to meet
working capital requirements ---- the actual shipment
of good.
a) After
b) Before
c) In between ans. A
21. Post shipment credit is-
 a) Debit facility extended to an exporter from the
date of shipment of goods till the realization of
the export proceeds.
b) Credit facility extended to an exporter from the
date of shipment of goods till the realization of
the export proceeds.
c) Credit facility extended to an importer from the
date of shipment of goods till the realization of
the export proceeds.
Ans. B

22. Which one of the following is not the feature of

finance at post shipment stage?
a) To pay towards ECGC premium
b) To meet expenses in respect of after sales service
c) To pay for representatives abroad in connection
with their stay board
d) Provide a secure warehouse for goods and raw
material
ans. D
23. Freight and other shipping expenses comes
under-
a) Pre shipment finance
b) Post shipment finance
c) None of the above ans. B
24. Contracts ---- need the clearance from the
working group on export finance.
 a) Below Rs.10 lakh
b) Above Rs.100 crore
c) Above Rs.50crore
d) Below Rs.1 crore ans. C

25. Any loan upto Rs.10 crore for financing export of

capital goods on deferred payment terms is
sanctioned by
a) EXIM Bank
b) Commercial bank ans. B
26. An approval of an export credit proposal of an
exporter is known as—
a) Export finance
b) Import finance
c) Appraisal ans. C
27. All costs before shipment would be eligible for
being finance under
a) Pre shipment
b) Packing credit
c) Both a and b
d) None of the above ans. C
28. The bank extends the packing credit facilities
after ensuring
a) The export is regular customer, a bonafide exporter
b) Has a good standing in market
 c) The exporter has the necessary licenses and quota
d) All of the above ans. D
29. How many stages are there of pre shipment
finance?
a) 6
b) 4
c) 5
d) 7 ans. C
30. Follow up packing credit advance is the stage
comes after
a) Liquidation of packing credit advance
b) Disbursement of packing credit advance
c) Overdue packing credit
d) Appraisal and sanction of limits ans. B
31. The quantum of finance is fixed based on
a) FOB value of contract
b) Fob value of L/C
c) On domestic value
d) All of the above ans. D
32. The packing credit period should not exceeds
a) 90 days
b) 200 days
c) 45days
d) 180 days ans. D
33. ----- also physically inspect the stock at regular
intervals.
a) Agent
b) EXIM bank
c) The authorized dealers
d) RBI ans. C
34. At which stage does the pre shipment credit will
be converted into post shipment credit?
a) Follow up of packing credit advance
b) Disbursement of packing credit advance
c) Overdue packing credit
d) Liquidation of packing credit advanceans. D
35. The PCFC will be available for a maximum period
of-
a) 360 days
b) 180 days
c) 90 days
d) 250 days ans. A
36. Full form is LIBOR -
a) London interbank ordered rate
b) London international offered rate
c) London interbank offered rate ans. C
37. Forfaiting and factoring are ---- services
a) Similar services
b) Different services ans. A
38. Factoring is for ---- receivables
a) Short term (180 days)
 b) Short term (90 days)
c) Short term(under 90 days)
d) Short term under (180 days) ans. C
39. Forfaiting can be receivables against which
payments due for---
a) Long term, over 90 days upto 1 year
b) Long term, over 180 days upto 3 years
c) Long term, over 90 days upto 5 years
d) Long term, over 90 days upto 6 years ans. C
40. Bank Guarantee is a……
a) Positive action instrument
b) Non-performance instrument
c) Transferred action instrument
d) None of these
Ans. b

41. Payment under bank guarantee is released

when…..
a) Terms of underlying trade transaction are not met
b) Terms of underlying trade transaction are met
c) When debtors fails to perform
d) None of these
Ans. a
42. …….is necessary for issue of bank guarantee
 a) Line of credit
b) Adequate collateral
c) Letter of understanding
d) Either a or b
Ans. d

43. When a guarantee is issued directly in favour of

beneficiary, it is called……
a) Payment guarantee
b) Rental guarantee
c) Direct guarantee
d) None of these
Ans. c

44. In indirect guarantee……

a) Two beneficiaries are involved
b) Two debtors are involved
c) Two banks are involved
d) None of these
Ans. c
45. The second bank involved in indirect guarantee
is usually a……
a) Domestic bank of debtors domicile
b) Subsidiary of 1st bank
c) Foreign bank with head office in beneficiary
country
 d) Reserve bank of India
Ans. c
46. In indirect guarantee the responsibility of
payment is on…..
a) Initiating bank
b) Guaranteeing bank
c) Both banks
d) None of these
Ans. b

47. In indirect guarantee, the guarantee is issued

to beneficiary by….
a) Foreign bank
b) Initiating bank
c) Partially on both banks
d) None of these
Ans. a
48. In case of default in indirect guarantee the
whole loss is beared by
a) Guaranteeing bank
b) Initiating bank
c) Partially by both banks
d) None of these
Ans. b
49. Tender bond is also called
a) Performance bond
 b) Bid bond
c) Security bond
d) All of the above
Ans. b

50. Tender bond is issued for…..

a) Service projects
b) Foreign investments
c) Construction & bid-based selection projects
d) All of the above
Ans. c
51. Performance bond gives guarantee for
a) Outstanding contractual obligations
b) Payment obligations
c) Both a & b
d) Collateral obligations
Ans. a
52. In case of performance bond guarantee, the
guarantee considers….
a) Full contractual amount
b) Specific amount of contract
c) No amount
d) Full amount plus interest on loss
Ans. b
53. Credit guarantee acts as a……..for borrower
a) Payment assurance
b) Third party collateral
c) Credit line
d) All of the above
Ans. d
54. Credit guarantee is issued for….
a) Lending
b) Borrowing
c) Both a & b
d) None
Ans. b
55. Payment guarantee can be used in place of…
a) Letter of credit
b) Letter of indemnity
c) Letter of understanding
d) None of these
Ans. a

56. Payment guarantee provides security against……

 a) Default for goods to be delivered
b) Foreign direct investment
c) Foreign institutional investment
d) None of these
Ans. a
57. When client agrees to make payment in
advance, the……. Type of guarantee is used
a) Mobilization advance guarantee
b) Advance payment guarantee
c) Credit guarantee
d) Confirmed payment guarantee
Ans. b
58. When some amount is paid in advance to
contractor for procurement of material to initiate the
project, the…….type of guarantee is used
a) Mobilization advance guarantee
b) Advance payment guarantee
c) Credit guarantee
d) Confirmed payment guarantee
Ans. a
59. ……..is used in case in which goods arrive at the
port of destination before the original bill of lading
a) Letter of credit
b) Letter of indemnity
c) Letter of understanding
 d) None of these
Ans. b
60. …….document serves to protect the carries
financially against possible repercussions in
connection with release of goods without
presentation of original B/L
a) Shipping bill
b) Letter of indemnity
c) Letter of indent
d) None
Ans. b
61. Sometimes…….is required by companies to issue
high value value credit card
a) Rental guarantee
b) Credit card guarantee
c) Credit guarantee
d) Both b & c
Ans. c
62. Ideally a bank guarantee should not have tenure
more than
a) 7yrs
b) 25yrs
c) 10yrs
d) 20yrs
Ans. c
63. On issuance of guarantee beyond 10yrs the
bank need permission for such policy…..
a) RBI
b) Board of directors
c) Head office of bank
d) Both a & b
Ans. b
64. ……..is a set of contractual rules that apply to
demand guarantees & counter-guarantees
a) URDG
b) UCP
c) FEDAI
d) FERA
Ans. a

65. URDG was developed by……..

a) ICC
b) RBI
c) DGFT
d) IMF
Ans. a
66. URDG 458 was revised and formed as
a) URDG 768
b) URDG 758
c) URDG 778
d) URDG 788
 Ans. b
67. URDG 458 was revised by ICC on
a) 1st July, 2010
b) 1st July, 2010
c) 1st April, 2010
d) 1st March, 2010
Ans. b
68. Full form of URDG is
a) Union rules for demand guarantee
b) Uniform rules for demand guarantee
c) Urged regulations for demand guarantee
d) None of these
Ans. c
69. URDG is a law
a) True
b) False
c) Can’t say
Ans. b
70. URDG has……..articles
a) 27
b) 32
c) 35
d) 30
Ans. c
71. …….is similar to guarantee which assure
payment in case of default to third party
 a) Standby letter of credit
b) Letter of credit
c) Letter of indemnity
d) All of the above
Ans. a

72. Standby LC is used in……

a) Franchise
b) Turn key projects
c) Import-export business
d) All of the above
Ans. c
73. Standby letter of credit are subject to
regulations of…
a) UCPDC, 600
b) ISP, 98
c) URDG, 758
d) Either a & b
Ans. d
74. Co-acceptance of bills better than LC because
a) In latter, commission is payable from date of
opening while in former, commission is
applicable after shipment
 b) Co-acceptance is a means of non-recourse
finance for the exporter
c) Only a
d) Both a & b
Ans. d
75. Which of the following come under clean
payment
a) Open a/c transaction
b) Delivery against payment
c) Advance payment
d) Delivery against acceptance
e) Both a & c
Ans. e
76. Which of the following come under
documentary collection
a) Open a/c transaction
b) Delivery against payment
c) Advance payment
d) Delivery against acceptance
e) Both b & d
Ans. e
77. Channel financing is concerned with
a) Large corporation
b) Unit/enterprises to whom bank has financed
c) All small and big suppliers & dealers in channel
 d) All of the above
Ans. c
78. In conventional lending banks concentrate on…..
a) All small and big suppliers & dealers in channel
b) Only large corporate
c) Unit/enterprises to whom bank has financed
d) Both b & c
Ans. d
79. ……..reduces the firms dependency on bank
a) Channel financing
b) Conventional lending
c)Vendor financing
d) None
Ans. a
80. Which of the following is/are benefits of channel
financing?
a) Firms can concentrate more on their core
competence
b) Saves time & cost involved in arranging
creditors
c) Suppliers & dealers get payment promptly
d) All of the above
Ans. d
81. Vendor financing takes place between
a) Vendor & company
b) Vendor & consumer
 c)Vendor & bank
d) None of these
Ans. a
82. Rental guarantee protects against
a) Loss in purchase of property
b) Loss in rent of property
c)Both a & b
d) Only b
Ans. b
83. In India it is mandatory to issue guarantee in
terms of URDG
a) True
b) False
c)Can’t say
Ans. b
84. Guarantees issued under URDG 758 are subject
to which of the following conditions?
a) Should comply with provisions of FEMA
b) Must comply with provisions of Indian contract
act
c)Should include a suitable clause indicating that
the guarantee is issued under URDG 758
d) All the above
Ans. d
85. Full form of UCP 600 is
 a) Unitary credit & practices for documentary
credits
b) Uniform custom & practices for documentary
credits
c)Uniform credit & provision for documentary
credits
d) None of these
Ans. b
86. Full form of ISP 98 is
a) International standby practices
b) Indian standby practices
c)International standard practices
d) International standby procedure
Ans. a

87. Which of the following is not a basic objective of

documentation in foreign trade?
A. to assure that the exporter will receive the payment
B. to assure that the importer will receive the goods
C. to eliminate risk of noncompletion
D. to reduce foreign exchange risk
 E. none of the above
Ans. E
88.Which of the following is not an important document in
foreign trade?
A. a check for the value of goods
B. a draft
C. bill of lading
D. a letter of credit
E. none of the above
Ans. A
89. ______ risk is the potential exchange loss from
outstanding obligations as a result of exchange-rate
fluctuations.
A. Trade
B. Exchange
C. Finance
D. Noncompletion
E. Transaction
Ans. e
90. Foreign exchange risk can be reduced by using _____.
A. forward contracts
B. futures contracts
 C. currency options
D. currency denomination
E. all of the above
Ans. e
91. Which of the following is not a condition for drafts to
be negotiable?
A. must be in writing, signed by the drawer
B. must contain a promise to pay a certain sum if goods
are received
C. must contain an order to pay
D. must be payable on sight or at a specified date
E. must be made out to order or bearer
Ans. b
92. If a draft is made to bearer, payment should be made
to _____.
A. a bank
B. drawer
C. acceptor
D. anyone who presents the draft
E. all of the above
Ans. d
93. If a draft is accepted by a bank, it becomes a _____.
A. valid draft
 B. demand draft
C. usance draft
D. banker's acceptance
E. drawee's acceptance
Ans. d
94. Forms of countertrade include the following except
___.
A. simple barter
B. clearing arrangement
C. switch trade
D. counterpurchase
E. mutual agreement
Ans. e
95. Documentary drafts require various shipping
documents such as ____.
A. bills of lading
B. insurance certificates
C. commercial invoices
D. A and B
E. A, B, and C
Ans. e
96. When IBM ships products to its subsidiary in
Argentina, it will most likely use a ____ draft.
A. sight
B. clean
C. D/P
D. demand
E. all of the above
Ans. b
97. If a carrier is instructed to deliver goods to an
importer, a _____ bill of lading is used.
A. straight
B. order
C. documentary
D. on-board
E. clean
Ans. a
98. A(n) _____ bill of lading does not guarantee that the
goods have been loaded on the vessel.
A. on-board
B. foul
C. received-for-shipment
D. straight
 E. order
Ans. c
99. Which of the following is not true of a letter of credit?
A. it is a document
B. issued by a bank
C. at the request of the exporter
D. the bank agrees to honor a draft drawn on the
importer
E. payable in the designated currency
Ans. c
100. If a letter of credit can be neither cancelled nor
modified without the consent of all parties, it is known
as _____.
A. revolving
B. irrevocable
C. revocable
D. unconfirmed
E. unclean
Ans. b
101. If an exporter is doubtful about an issuing bank's
ability to pay, he will expect a domestic bank to join the
transaction in a _____ letter of credit.
A. revolving
 B. irrevocable
C. revocable
D. unconfirmed
E. confirmed
Ans. e
102. Which of the following may be required as
additional documents in a letter of credit?
A. commercial invoice
B. insurance document
C. consular invoice
D. certificate of origin
E. all of the above
Ans. e
103. Which of the following documents should
necessarily accompany a draft?
A. certificate of origin
B. weight list
C. packing list
D. inspection certificate
E. none of the above
Ans. e
104. A commercial invoice is issued by _____.
A. exporter
B. exporter's bank
C. importer
D. importer's bank
E. confirming bank
Ans. a
105. A document that contains a precise description of
the goods is known as a _____.
A. weight list
B. packing list
C. commercial invoice
D. certificate of origin
E. consular invoice
Ans. c
106. Which of the following is not true of a consular
invoice?
A. provides customs officials with all information
B. facilitates easy customs clearance
C. helps customs officials assess duties
D. issued by the consulate of the exporting country
 E. it is not a title to the goods
Ans. d
107. Which of the following is not a form of offset
agreements?
A. coproduction
B. licensed production
C. subcontractor production
D. cash in advance
E. technology transfer
Ans. d
108. Which of the following is not a form of
countertrade?
A. barter
B. consignment
C. switch trading
D. counterpurchase
E. compensation agreement
109. In a _____ countertrade the initial seller receives
compensation in products that arise out of the original
sale.
A. consignment
B. barter
 C. counterpurchase
D. buy-back agreement
E. switch trading
Ans. d
110. Buying a company's accounts receivable on a
nonrecourse basis is known as _____.
A. switch trading
B. financing
C. factoring
D. funding
E. free trade
Ans. c
111. Which of the following is not necessarily a party to a
forfaiting transaction?
A. exporter
B. importer
C. broker
D. bank
E. forfaiter
Ans. c
112. Below are five steps involved in a typical trade
transaction. Which step is out of order:
 A. exporter agrees to ship under a letter of credit
B. exporter ships the product to the importer
C. importer’s bank issues the letter of credit
D. exporter prepares a 60-day draft on importer in
accordance with the letter of credit.
E. the draft is accepted by the importer’s bank
becoming a bankers’ acceptance.
Ans. c
113. The “three C’s” of international commerce are:
A. customers
B. commitment
C. currency
D. cultural sensitivity
E. A, B, and D
Ans. e
114. When exporting some common pitfalls include:
A. failure to use an export management company
B. failure to print service, sales, and warranty messages
in local languages
C. chasing orders around the world instead of
establishing a basis for profitable operations and orderly
growth
 D. failure to consider licensing or joint venture
agreements
E. all of the above
Ans. e
115. In forfaiting commission is paid by
a) Importer
b) Exporter
c) Partially by both
Ans. A
116. Minimum value for forfaiting is
a) 5 lakh
b) 3 lakh
c) 1 lakh
d) None of these
Ans. C
117. In factoring the initial payment made by factor is
a) Whole contract value
b) Half contract value
c) 80%of contract value
Ans. C
118. A ____ is a document from a bank guaranteeing that a
seller will receive payment in full as long as certain delivery
conditions have been met:
a) Agreement
b) Letter of Credit
c) Bill Paper
d) None of The Above
ans. c
119. Letter of Credit is used only for international trading
payment operations:
a) Yes
b) No
c) None of The Above
ans. a

120. Most Letter of Credit often used in International Trade.

Letters of Credit are governed by rules promulgated by the:
a) International Chamber of Commerce
b) Uniform Customs and Practice for Documentary Credits
c) Both of The Above
d) None of The Above
ans.c
121. Letter of Credit is beneficial for which party:
a) Seller (Exporter)
b) Buyer (Importer)
c) Both of The Above
d) None of The Above
ans. a
122. Sellers must trust that the bank issuing the letter of
credit is valid, and that the bank will pay as agreed. If sellers
have any doubts, they can use a ______letter of credit,
which means that another (presumably more trustworthy)
bank will guarantee payment:
a) Confirmed
b) Irrevocable
c) Revocable
d) None of The Above
ans. b

123. Letter of Credit is essential. Which among the following

functions is suitable regarding the requirement of letter of
credit:
a) Importers and exporter regularly use letters of credit to
protect themselves.
b) Working with an overseas buyer can be risky because you
do not necessarily know who you're working with.
c) Buyer may be honest and have good intentions, but
business troubles or political unrest can delay payment of
seller.
d) Communication can be difficult across thousands of miles
and different time zones.
e) All of The Above
f) None of The Above
ans. e

124. Letter of Credit are usually issued by:

a) Banks
b) Financial Institutions
c) Both of Above
d) None of The Above
ans. c

125. Besides the Banks and Financial Institutions, Letter of

Credit can be issue by:
a) Insurance Companies
b) Mutual Funds
c) Both of Above
d) None of The Above
ans. d
126. Which among the following definitions are wrong:
a) Beneficiary - The company or individual who will receive
the payment from buyer.
b) Issuing Bank - The bank which issues letter of credit to
seller party
c) Advising Bank - (The bank where seller wants receipt of
payment)
d) All of The Above
e) None of The Above
and. d

127. The bank with which credit is available (to seller) called
______:
a) Delegated Bank
b) Nominated Bank
c) Any Bank
d) None of The Above
ans. b

128. If no bank is mentioned in the credit as nominated

bank, then:
a) penalty can occur
b) all banks are nominated
c) cancellation of letter of credit
d) None of The Above
ans. b
129. Which among the following is correct about term
'Revocable' in Letter of Credit:
a) If buyer and Issuing Bank that established the Letter of
Credit manipulate the Letter of Credit.
b) Any corrections made without informing or getting
permission from the seller.
c) All LCs are irrevocable (Type of LC is obsolete).
d) All of The Above
e) None of The Above
ans. a
130. Which is correct about Irrevocable letter of credit:
a) only allows change or cancellation of the letter of credit by
issuing bank with approval by the beneficiary.
b) All letters of credit governed by the current UCP are
irrevocable letter of Credit.
c) Both of The Above
d) None of The Above
ans. a
131. The first documented use of factoring occurred in
a) American colonies
b) Mesopotamia
c) British colonies
d) None of these
Ans. A
132. Factoring is
a) 90 days
b) 120 days
c) 180 days
Ans. A
133. Risk of non payment remains with exporter in
a) Non recourse factoring
b) Recourse factoring
c) Both a&b
Ans. B
134. Factoring is for
a) Medium-term receivables
b) Long-term receivables
c) Short-term receivables
Ans.c
135. Time period for Forfaiting is
a) 7 years
b) 3 years
c) 1 years
d) 5year
Ans. D
136. ………….. is for long term receivables
a) Factoring
b) Forfaiting
c) Both a&b
Ans. B
137. Benefits of forfaiting ………..
a) Improved cash flow
b) Reduced administration cost
c) rIsk reduction
d) all opf the above
ans. D
138. commission fee for forfeiting ranges
between
a) 0.5% to 2.5%
b) 0.5% to 1.5%
c) 1% to 2%
Ans. B
139. There are ………. Models of factoring
a) 2
b) 5
c) 7
Ans. A
140. In factoring commission is paid by
a) Exporter
b) Importer
c) Partially by both
Ans. A
141. Which of the following term cannot be used for
transportation of goods by Road or Air?
A. FAS.
B. DDR
C. EXW.
D. CIR
ANSWER: A
142. Packing credit is
A. an advance made for packing goods for export.
B. pre-shipment finance for export.
C. a priority sector advance.
D. advance for importer.
ANSWER: B
143. The amount of packing credit should not normally
exceed
A. the local cost of manufacture for the exporter.
B. FOB value of the export contract.
C. CIF value of the export contract.
D. the cost of manufacture or FOB value of the export
contract whichever is less.
ANSWER: D
144. Which of the following person is not eligible for
packing credit?
A. a .merchant exporter.
B. a person making deemed exports.
C. sub-suppliers to manufacture exporter.
D. supplier to sub-supplier to manufacture exporter.
ANSWER: D
145. The running account facility for packing credit is
available for
A. status holders only.
B. export for specified goods.
C. exporters with good track record
D. exporters with orders above Rs. 100 crores.
ANSWER: C
146. The advantage to the exporter of running account
facility of packing credit is
A. production of letter of credit or firm order is completely
waive
B. the period of facility need not be adhered to.
C. production of letter credit on firm order is waived
immediately they must be produced within
reasonable time.
D. the rate of interest is low.
ANSWER: C
147. The exemption from the condition credit should not
exceed domestic cost of production is not waived
for
A. commodity eligible for duty drawback.
B. commodity imported under advance licence
C. HPS groundnuts.
D. agro based productions like tobacco.
ANSWER: B
148. The substitution of commodity/fresh export of
adjustment of packing credit is not available for
A. advance against sensitive commodities.
B. transactions of sister/associate/group concerns.
C. exports availing running account facility.
D. exports with imports.
ANSWER: B
149. Normally the maximum period for which packing
credit advances are made is
A. 90 days.
B. 135 days.
C. 180 days.
D. 360 days.
ANSWER: C
150. A pre-shipment advance is not expected to be
adjusted by
A. proceeds of export bill
B. export incentives.
C. post-shipment finance.
D. local funds.
ANSWER: D

151. A packing credit was granted against an export order

but the export could not take place
A. It should be reported to the RBI
B. The exporter should be black list
C. Claim should be preferred with ECG
D. Interest at domestic rate should be charged on the
advance from the date of advance
ANSWER: D
152. For direct export the packing credit should normally
be granted only against
A. a letter of credit.
B. firm order.
C. export licence.
D. a letter of credit or firm order.
ANSWER: D
153. For packing credit in rupees the interest period up to
180 days is chargeable at
A. BPLR minus 2.5%.
B. BPLR minus 3%.
C. not exceeding BPLR minus 2.5%.
D. not less than BPLR minus 2.5%.
ANSWER: C
154. Pre-shipment credit in foreign currency is available for
a period of
A. maximum 180 days.
B. minimum 180 days.
C. maximum 270 days.
D. maximum 360 days.
ANSWER: A
155. Pre-shipment credit in foreign currency can be availed
in
A. US Dolor only.
B. the currency of export only.
C. the currency of import only.
D. any permitted currency.
ANSWER: D
156. Advising of letter ofcredit will be done by the bank
A. only to its customers
B. to any person provided the letter of the credit is issued
by its correspondent bank.
C. free of charge to its customers and for a cost to others.
D. to any beneficiary and from any issuing bank.
ANSWER: B
157. The following is not a post-shipment advance
A. negotiation of bill under letter of credit
B. purchase of foreign bill.
C. advance against foreign bill for collection
D. packing credit.
ANSWER: D
158. A bill drawn under a letter of credit contains
discrepancies
A. the bank should refuse to negotiate documents
B. take the bill on collection basis only.
C. must negotiate irrespective of discrepancies
D. may purchase it or take it for collection, but should not
refuse to handle the bill.
ANSWER: D
159. If an export bill which was purchased /negotiated is
not realized within reasonable time from the due
date the bank should
A. reserve the bill from the export bill purchase portfolio.
B. make a claim with ECGC
C. report to RBI.
D. take further bills from the exporter only on collection
basis.
ANSWER: A
160. The following is a must for an exporter
A. GR form.
B. EP form.
C. PP form.
D. GRX form.
ANSWER: C
161. Duty drawback is the refund of duty chargeable on
A. Exported material
B. Imported material
C. Damaged material
D. Exports to Indian owned warehouses in Europe.
ANSWER: B
162. Availing post-shipment credit in foreign currency is
compulsory for
A. exporters who have not availed packing credit.
B. all exporters who have availed packing credit.
C. exporters who have availed pre-shipment credit in
foreign currency.
D. exporters who have availed credit from banks.
ANSWER: C
163 Post-shipment credit in foreign currency can be
availed by
A. use of on-shore foreign currency funds
B. banks raising foreign currency funds abroad
C. exporters arranging funds abroad
D. any of the above methods.
ANSWER: D
164. Advance remittance from importer can be accepted
by an exporter in India provided
A. the advance does not carry interest payment.
B. shipment will be made only after one year from the date
of receipt of advance.
C. advance does not exceed 25% of export value.
D. rate of interest,if payable, does not exceed Libor plus
1%.
ANSWER: D
165. A bank may refuse to accept an export bill for
collection
A. when the customer has sufficient limits under bill
discounting facility.
B. when the documents have discrepancies when
compared to letter of credit requirements.
C. when the documents are received from a non customer
D. when the documents are received from a customer.
ANSWER: C
166 . If the importer refuses to accept the bill drawn on
him the exporter
A. should reimport the goods.
B. must find an alternate buyer.
C. may reimport or sell to an alternate buyer depending
upon commercial expediency
D. sue the importer.
ANSWER: C
167. If export cargo is lost in transit, the exporter should
A. claim under marine insurance.
B. claim with ECGC
C. seek write off of post-shipment credit.
D. seek refund of customs duty.
ANSWER: A
168. Pre-shipment rupee credit from Exim bank is available
for
A. period upto 180 days.
B. period beyond 180 days.
C. trunkey proects only.
D. foreign currency components only.
ANSWER: B
169. For export oriented units, Exim bank finances
A. term loans only.
B. both working capital and term loans.
C. term loans, working capital and long term working
capital.
D. for investment from overseas.
ANSWER: C
170. Which of the following is not a common feature of
direct lending by Exim bank?
A. They are for medium or long term.
B. The size of the loan is high.
C. Security is not insisted upon.
D. Interest rates are relatively low.
ANSWER: C
171. Bid Bond issued as part of
A. Turnkey project
B. Post award clearance
C. supply bidding process
D. Deferred Payment
ANSWER: C
172. Exim bank lending to foreign governments take the
form of
A. soft loans.
B. commercial loans.
C. lines of credit.
D. relending facility.
ANSWER: C
173. The facility that is available to commercial banks in
India from Exim bank is
A. refinancing of export credit.
B. export bill re-discounting.
C. syndication of export credit risks.
D. all the above.
ANSWER: D
174. Exim bank issues guarantees on behalf of
A. all exporters from India.
B. exporters of construction and turnkey projects
C. banks in India.
D. Govt, of India.
ANSWER: B
175. Exim bank issues guarantees to commercial for
A. all export advances
B. all export advances repayable beyond one year.
C. post-shipment suppliers credit from one year to three
years.
D. loans with refinance from Exim bank.
ANSWER: C
176. Export factoring is available for
A. short term exports.
B. medium term exports.
C. all exports.
D. export under consignment basis.
ANSWER: A
177. Which of the following service is not provided by an
export factor?
A. invoice discounting.
B. providing credit information.
C. maintenance of debtors account.
D. none of the above.
ANSWER: D
178. Export factoring encourages the following method of
payment
A. open account system.
B. letter of credit method
C. documentary bill.
D. advance payment.
ANSWER: A
179. Factoring refers to.
A. discounting of any export bill.
B. discounting of medium term export bill.
C. writing off unrealized export bill.
D. waiver of charges on export bills.
ANSWER: B
180. Under supplier's credit for deferred payment exports
scheme of Exim bank
A. pre-shipment finance is available for periods beyond
180 days
B. post-shipment finance is available in Indian rupees for
deferred payment exports.
C. post-shipment finance is available in foreign currency
for deferred payment exports.
D. post-shipment finance is available in Indian rupees or
foreign currency for deferred payment exports.
ANSWER: A
181. Which of the following statements relating to
consultancy and technology services finance programme
of Exim bank is wrong?
A. The exporter is expected to get an advance payment of
25%
B. The export should be covered by ECGC policy.
C. Minimum period of the loan is seven years.
D. They should be secured by a government guarantee or
letter of credit.
ANSWER: C
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