CAIIB · Advanced Business & Financial Management · Module A — The Management Process
CAIIB ABFM Unit 2 — Planning: 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 2 — Planning (Module A — The Management Process). The CAIIB Mock Centre holds 170 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 A170 MCQs in the Mock Centre5 free belowIn the free demoPaper on 13 December
Key facts examiners test from this unit
Fundamentals and steps of planning — planning fixes objectives and the ways to reach them, in eight steps from opportunity analysis to follow-up.
Importance, advantages and disadvantages of planning — planning gives goals, direction and the basis for control, but done badly it becomes "death by plan".
Management by Objectives — in MBO, managers and staff jointly set, record and monitor goals that add up to the organisation's goal.
Changed since the textbook
RBI holds the repo rate at 5.25% and revises its 2026-27 forecasts (5 June 2026). The Monetary Policy Committee unanimously kept the policy repo rate at 5.25% with a neutral stance. RBI cut its projection of real GDP growth for 2026-27 to 6.6% (from 6.9%) and raised its CPI inflation projection to 5.1% (from 4.6%); press summaries link the revision to higher crude oil prices and the risk of a sub-normal monsoon. Source: All India Radio News
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. 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 170 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
Planning involves an objective analysis of future requirements mainly to:
Why (c): The textbook says the analysis of future requirements helps modify ongoing activities in the light of the objective. (a) is wrong: Discipline is not what the analysis serves. (b) is wrong: Salary fixing is not the purpose of planning's analysis. (d) is wrong: Statutory accounts record the past.
Question 2 of 5
During its annual planning exercise, a bank invites staff to propose new products, and one proposal becomes an instant-loan app that reaches the market ahead of rivals. Which benefit of planning does this illustrate?
Why (a): Planning makes managers think ahead about how to compete, which draws out new ideas, here a product that beat rivals to market; the textbook calls this 'promotes innovative ideas'. Avoiding duplicated work, giving direction and preparing for risks are other benefits, but none is about generating the new product. (b) is wrong: That point is about avoiding duplication and waste. (c) is wrong: Direction channels effort; it is not about new ideas. (d) is wrong: That point is about anticipating risks.
Question 3 of 5
In its most basic form, MBO is a procedure in which:
Why (a): MBO means managers and employees agreeing goals together, recording them and reviewing progress over the period, so that personal goals line up with the organisation's. Key result areas, budgetary control and trait rating are related tools, but none of them rests on jointly set goals. (b) is wrong: Key result areas are a tool, not jointly set goals. (c) is wrong: That is budgetary control. (d) is wrong: That is trait rating, not MBO.
Question 4 of 5
A bank planning a rural digital-lending product notes four factors. Which of them is a technological factor in a PESTLE analysis?
Why (c): PESTLE sorts the external environment into political, economic, social, technological, legal and environmental factors; wider smartphone and UPI use is technological. Interest rates are economic, a data-protection law is legal and population movement is social. (a) is wrong: Interest rates are an economic factor. (b) is wrong: A data-protection law is a legal factor. (d) is wrong: Population movement is a social factor.
Question 5 of 5
A bank's branch-expansion plan assumed steady demand. A new government scheme then doubles loan demand, and the bank cannot staff its branches fast enough. What lesson does this hold for contingency planning?
Why (c): Contingency planning begins by identifying events, beneficial as well as unfavourable, that could derail a strategy, and preparing responses in advance; a sudden surge in demand can strain a plan as badly as a slump. Planning only for adverse events, relying on the base forecast or waiting until the strategy fails all defeat its purpose. (a) is wrong: Favourable events can derail a strategy too. (b) is wrong: A careful forecast can still be wrong. (d) is wrong: Contingency plans are made in advance.
0 of 5 answered.
Traps in this unit
Premises are assumptions, not goals.
Planning is continuous: follow-up and review.
Planning is the foundation of control, not the reverse.
Practise all 170 questions on Unit 2. 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.