Free 2026 CAIIB Mock Exam
CAIIB Elective: Commercial Credit & Risk Management
Full 2026 IIBF pattern mock exam environment. Answer questions, flag items for review, and receive an instant diagnostic scorecard with topic breakdowns free.
Exam Attempt Completed
IIBF Passing Threshold is 50%. Your final scorecard breakdown is below.
Topic Performance & Weakness Diagnostics
| Topic Tested | Score | Accuracy (%) | Strength Status |
|---|---|---|---|
| Forensic Accounting & Related Party Siphoning | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Liquidity Coverage Ratio (LCR) | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Sub-Standard & Doubtful NPA Norms | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Standard and Sub-Standard Asset Provisioning | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Bond Yield to Maturity (YTM) | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Forward Rate Calculation & Interest Rate Parity | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Risk Weighted Assets (RWA) & Capital Requirement | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Altman Z-Score Model | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Tandon Committee Method II (MPBF) | 0 / 1 | 0% | WEAK - REVISION NEEDED |
| Value at Risk (VaR) Calculation | 0 / 1 | 0% | WEAK - REVISION NEEDED |
Detailed Solved Question Key & Explanations
During a credit audit of an NPA borrower, the auditor notices substantial unsecured loans given to group associate companies with zero interest rates while the company pays 12% interest on bank borrowings. This pattern is a primary indicator of:
Diverting low/zero-interest funds to related entities while servicing high-cost bank debt is a primary RBI Red Flag Indicator (EWS #4 for Funds Diversion & Siphoning).
Diverted Funds = Non-Operating Advances to Related PartiesA commercial bank holds Stock of High Quality Liquid Assets (HQLA) of Rs. 150 Crores. Total Net Cash Outflows over the next 30 calendar days under severe stress are estimated to be Rs. 120 Crores. What is the bank's Liquidity Coverage Ratio (LCR)?
LCR = Stock of HQLA / Total Net Cash Outflows over 30 days = 150 / 120 = 1.25 or 125%. Basel III and RBI norms mandate a minimum LCR of 100% to survive a 30-day liquidity stress scenario.
LCR = Stock of HQLA / Net Cash Outflows over 30 DaysA Term Loan account has remained an NPA for 18 months as of March 31, 2026 (D1 Category). Tangible collateral security value is Rs. 40 Lakhs against an outstanding balance of Rs. 100 Lakhs. What is the total RBI provision required?
Outstanding = 100 L. Tangible Security = 40 L. Unsecured portion = 100 - 40 = Rs. 60 Lakhs. In Doubtful D1 stage (NPA between 12 to 24 months): Provision = 100% on Unsecured shortfall (60 L) + 25% on Secured portion (25% of 40 = 10 L) = Total Provision of Rs. 70 Lakhs.
Provision = (100% * Unsecured Shortfall) + (25% D1 Rate * Secured Value)For a standard commercial real estate (residential housing sector) advance, what is the standard asset provisioning rate mandated by the RBI?
RBI standard asset provisioning rates are: (a) Agricultural & MSME standard accounts = 0.25%; (b) Commercial Real Estate (CRE) - Residential Housing = 0.75%; (c) CRE - General/Others = 1.00%; (d) Other Standard advances = 0.40%.
A 10-year bank bond with face value of Rs. 1,000 pays an annual coupon of 8% (Rs. 80). If the current market price of the bond is Rs. 950, what is the approximate YTM of the bond?
Approximate YTM = [ Coupon + (Face Value - Price)/n ] / [ (Face Value + Price)/2 ] = [ 80 + (1000 - 950)/10 ] / [ (1000 + 950)/2 ] = [ 80 + 5 ] / 975 = 85 / 975 = 8.718% ≈ 8.72%. When market price is below face value, YTM > Coupon Rate.
YTM ≈ [ C + (F - P)/n ] / [ (F + P)/2 ]The Spot USD/INR rate is 83.00. The 6-month risk-free interest rate in India is 7.0% p.a. and in USA is 5.0% p.a. According to Interest Rate Parity (IRP), what is the expected 6-month USD/INR forward rate?
Forward Rate = Spot Rate * [ (1 + r_INR * t) / (1 + r_USD * t) ] = 83.00 * [ (1 + 0.07*0.5) / (1 + 0.05*0.5) ] = 83.00 * (1.035 / 1.025) = Rs. 83.81.
F = S * [ (1 + r_INR * t) / (1 + r_USD * t) ]A bank advances a commercial loan of Rs. 200 Crores to a corporate borrower with a Risk Weight of 75% under Basel III Standardised Approach. If minimum RBI CRAR requirement is 11.5%, how much total capital must the bank hold for this loan?
RWA = Exposure * Risk Weight = 200 Crores * 75% = Rs. 150 Crores. Capital Required = RWA * 11.5% = 150 * 0.115 = Rs. 17.25 Crores.
Capital Required = (Exposure * Risk Weight %) * RBI CRAR %In Altman's Z-Score model for predicting corporate bankruptcy, if a manufacturing company has a computed Z-Score of 1.50, which zone of financial health does this place the borrower in?
In the Altman Z-Score model for public manufacturers: Z-Score < 1.81 is the 'Distress Zone' (insolvency likely); 1.81 <= Z-Score <= 2.99 is the 'Grey Zone' (moderate risk); Z-Score > 2.99 is the 'Safe Zone'. A score of 1.50 signals distress.
Under Tandon Committee Method II, a borrower has Total Current Assets of Rs. 230 Lakhs and Current Liabilities (other than bank borrowings) of Rs. 100 Lakhs. What is the Maximum Permissible Bank Finance (MPBF)?
Under Method II of Tandon Committee norms, MPBF = 0.75 * (Current Assets - Non-Bank Current Liabilities) = 0.75 * (230 - 100) = 0.75 * 130 = Rs. 98 Lakhs.
MPBF = 0.75 * (Total CA - Non-Bank CL)A bank holds a trading portfolio of Rs. 100 Crores with a daily standard deviation of 1.5%. Assuming a 99% confidence level (z-score = 2.33), what is the 1-day Value at Risk (VaR)?
1-day VaR = Portfolio Value * Daily Volatility (σ) * Z-score = 100 Crores * 1.5% * 2.33 = 100 * 0.015 * 2.33 = Rs. 3.495 Crores.
1-Day VaR = Portfolio Value * σ * Z(99%)Welcome Back
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