CAIIB · Advanced Business & Financial Management · Module A — The Management Process
CAIIB ABFM Unit 1 — Basics of Management: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper III of the December 2026 cycle (Sunday 13 December 2026)
This is the free practice page for CAIIB ABFM Unit 1 — Basics of Management (Module A — The Management Process). The CAIIB Mock Centre holds 154 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five practice questions with explanations, and the traps that cost marks.
ABFM · Module A154 MCQs in the Mock Centre5 free belowIn the free demoPaper on 13 December
Key facts examiners test from this unit
Management and its functions — management is a social, continuous process of planning, organising, staffing, directing and controlling; Fayol founded modern management and Taylor scientific management.
Schools of management thought — classical sees a machine, behavioural sees people and motivation, quantitative uses models, systems sees an open system, and contingency says there is no one best way.
Contemporary school: TQM and the learning organisation — TQM manages for quality through involvement, customer focus, standards and monitoring, guided by Deming's 14 principles; a learning organisation solves problems together through Senge's five disciplines.
Changed since the textbook
RBI Trend and Progress report 2024-25: bank-group shares (29 December 2025). RBI's Report on Trend and Progress of Banking in India 2024-25 shows that the share of public sector banks in the consolidated balance sheet of scheduled commercial banks fell to 54.9 per cent at end-March 2025 from 55.2 per cent a year earlier, and that of private sector banks moderated to 37.1 per cent from 37.5 per cent; foreign banks held about 6.6 per cent and small finance banks about 1.3 per cent. The CRAR of SCBs was 17.4 per cent and the GNPA ratio a multi-decadal low of 2.2 per cent at end-March 2025. Source: RBI
RBI directions on climate finance and climate change risks for commercial banks (28 November 2025). RBI issued the Reserve Bank of India (Commercial Banks – Climate Finance and Management of Climate Change Risks) Directions, 2025 (RBI/DOR/2025-26/172). They apply to commercial banks other than small finance banks, payments banks and local area banks, and cover rupee green deposits, a Board-approved financing framework for eligible green activities, integration of climate-related financial risk into governance and risk management, and disclosures with annual impact assessment and external assurance. Source: RBI (Commercial Banks – Climate Finance and Management of Climate Change Risks)…
5 free practice questions — tap an option
Five practice questions from this unit. Answers lock on the first tap, exactly as in the exam, and an explanation opens underneath. The Mock Centre has all 154 questions on this unit, from easy to tough, with caselets and key-in numericals, why every other option is wrong and the exam tip — and tracks your score and revision dates.
Question 1 of 5
After two branches merge, the regional manager redraws the reporting lines, groups the loan and deposit desks into separate sections and fixes how much authority each section head has. Which function of management is this?
Why (c): Organising covers dividing work into units, setting up who reports to whom and delegating authority with responsibility, which is what the regional manager is doing. Staffing would then fill those positions with suitable people, and directing guides and motivates them once the structure is in place. (a) is wrong: Planning decides goals and courses of action, before structure. (b) is wrong: Staffing fills the positions once the structure exists. (d) is wrong: Directing guides people within the structure.
Question 2 of 5
A branch manager finds that output rose after staff were consulted about changes in their work and given more attention, although pay and procedures stayed the same. Which school of management does this finding support?
Why (d): The neoclassical school focuses on motivation, people's differing needs and human relations, so attention and participation raising output fits its view. Scientific management would look for gains from standardised methods and incentive pay, neither of which changed here. (a) is wrong: Pay and methods did not change, so Taylor's levers explain nothing. (b) is wrong: No models or data analysis were involved. (c) is wrong: The finding is about human relations, not situational fit.
Question 3 of 5
Which statement describes the quantitative school or management science?
Why (c): The quantitative school emphasises mathematical and statistical models, studies management as a science and stresses operations and management information systems. (a) is wrong: That is the systems view. (b) is wrong: That is the behavioural view. (d) is wrong: That is the contingency view.
Question 4 of 5
Which discipline helps people understand how deeply ingrained assumptions and generalisations shape their decisions?
Why (d): A mental model helps us understand the impact of deeply ingrained assumptions and generalisations on our interactions and decisions; it requires reflection. (a) is wrong: Systems thinking is about interconnections. (b) is wrong: Personal mastery is about personal capacity and vision. (c) is wrong: Shared vision is about a joint picture of the future.
Question 5 of 5
How does the textbook describe the United Nations' Sustainable Development Goals?
Why (c): The textbook describes the UN's 17 Sustainable Development Goals as the blueprint for a better and more sustainable future, covering poverty, inequality, climate change, environmental degradation, peace and justice; management must balance sustainability expectations with business goals. (a) is wrong: The SDGs are not RBI reporting rules. (b) is wrong: They are goals, not a growth ranking. (d) is wrong: They are not trade rules.
0 of 5 answered.
Traps in this unit
Planning is the fundamental function; controlling needs it first.
Salary is a hygiene factor, not a motivator.
Deming opposed the lowest-bid system and annual merit ratings.
Practise all 154 questions on Unit 1. This unit is part of the free CAIIB demo: register with your e-mail and the whole unit opens, with full why-right / why-wrong explanations, a 60-question test in each paper and Smart Revision of your mistakes.
Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. CAIIB content follows rules and developments up to IIBF's cut-off of 30 June 2026 (where a rule changed later, the update box says so); verify from official sources before relying on them in practice.