CAIIB · Advanced Business & Financial Management · Module D — Emerging Business Solutions
CAIIB ABFM Unit 24 — Green and Sustainable Financing: 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 24 — Green and Sustainable Financing (Module D — Emerging Business Solutions). The CAIIB Mock Centre holds 180 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 D180 MCQs in the Mock Centre5 free belowPaper on 13 December
Key facts examiners test from this unit
Green finance: meaning, scale and ISO standards — climate finance sits inside green finance, which sits inside sustainable finance; ISO standards add structure and credibility.
Building green finance: instruments and green bonds — green projects are funded by grants, risk mitigation, equity and debt; green bonds earmark proceeds for green uses.
Benefits of green bonds and international best practices — green bonds widen funding and ease maturity mismatch; countries promote green finance by disclosure, directed lending, prudential rules and green institutions.
Changed since the textbook
India's NDC for 2031–2035 approved (25 March 2026). The Union Cabinet approved India's third NDC: cut the emissions intensity of GDP by 47% by 2035 from the 2005 level; reach 60% non-fossil installed power capacity by 2035; and add a carbon sink of 3.5–4.0 billion tonnes of CO2e. It reports a 36% fall in emissions intensity (2005–2020) and a 52.57% non-fossil share (February 2026); 50% was reached in June 2025, five years early. Source: PM India
RBI consolidates green deposit rules into Climate Finance Directions (28 November 2025). RBI issued RE-wise Climate Finance and Management of Climate Change Risks Directions, 2025 (commercial banks, small finance banks, NBFCs), replacing the April 2023 framework. Green deposits stay optional, rupee-only and at normal rates; proceeds go to nine green categories (fossil fuels, nuclear, landfills, hydro above 25 MW and others are excluded); unallocated money sits only in Level 1 HQLA for up to a year; annual third-party verification and impact assessment. Source: TaxGuru
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 180 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
Under the Green Bond Principles, what does the 'project evaluation and selection' component ask the issuer to set out?
Why (a): The textbook says this component sets out the issuer's environmental objectives and the projects' risks and how they are mitigated. (b) is wrong: That is management of proceeds. (c) is wrong: That is reporting. (d) is wrong: That is use of proceeds.
Question 2 of 5
Which of these is one of the four components of the Green Bond Principles?
Why (d): The four components are use of proceeds, project evaluation and selection, management of proceeds, and reporting. (a) is wrong: The principles are voluntary and need no government approval. (b) is wrong: Ratings are not a GBP component. (c) is wrong: Listing is not a GBP component.
Question 3 of 5
The UK set up the Green Investment Bank in 2012, a government-owned company with £3 billion of capital. Which kind of green finance policy does this illustrate?
Why (a): The textbook's fourth kind of policy is green financial institutions, such as the UK Green Investment Bank plc (2012). (b) is wrong: The bank is a new institution; directed lending steers existing banks' credit. (c) is wrong: No reporting requirement is involved. (d) is wrong: No prudential rule is involved.
Question 4 of 5
Which of these is true of green deposits under the RBI's rules?
Why (d): Green deposits, now governed by the RBI's directions of November 2025 (which replaced the April 2023 framework), are optional rupee deposits whose proceeds may be used only for eligible green activities, excluding fossil fuels, nuclear power and large hydro, with annual third-party verification and impact assessment. They carry the bank's normal rates, and the RBI sets no quota. This goes beyond the textbook. (a) is wrong: Green deposits are rupee deposits. (b) is wrong: They carry the bank's normal rates; the RBI fixes no special rate. (c) is wrong: They are optional; the RBI sets no quota.
Question 5 of 5
Which entities must file the BRSR?
Why (c): Under the BRSR, the top 1,000 listed entities report their material ESG risks and opportunities, approach and financial implications. (a) is wrong: 100 was the BRR's coverage in 2012. (b) is wrong: The BRSR applies to listed entities by market capitalisation. (d) is wrong: It covers listed companies generally.
0 of 5 answered.
Traps in this unit
ISO 14008 values impacts; ISO 14007 uses the values in cost-benefit analysis.
A hybrid bond gives recourse to the asset and the issuer's other assets.
Green masala bonds put currency risk on investors.
Practise all 180 questions on Unit 24. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the ABFM Online Mock Centre unlocks all 4,000+ ABFM questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
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