CAIIB · Advanced Bank Management · Module C — Credit Management
CAIIB ABM Unit 21 — Credit Delivery and Straight Through Processing: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper I of the December 2026 cycle (Sunday 6 December 2026)
This is the free practice page for CAIIB ABM Unit 21 — Credit Delivery and Straight Through Processing (Module C — Credit Management). The CAIIB Mock Centre holds 121 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.
ABM · Module C121 MCQs in the Mock Centre5 free belowPaper on 6 December
Key facts examiners test from this unit
Documentation and third-party guarantees — before money leaves the bank, the right people sign the right, stamped, completed documents, charges are registered in time, and guarantees close the gaps.
Charge over securities and possession — match the charge to the asset, let only the owner create it, and decide at appraisal who holds the goods.
Disbursal of working capital and term loans — working capital flows through drawing power and, for large borrowers, a fixed loan component; term loans go to the seller or follow progress, with equity first.
Changed since the textbook
RBI's instructions consolidated into 238 Master Directions (28 November 2025). RBI streamlined more than 9,000 circulars and directions issued up to 9 October 2025 into 238 Master Directions for its regulated entities, effective 28 November 2025. Instructions the textbook quotes from circulars, such as the loan system for delivery of bank credit and the information-sharing requirements for consortium and multiple banking, now sit in these consolidated directions. Source: New commercial bank regulations
RBI (Digital Lending) Directions, 2025 (8 May 2025). RBI consolidated its digital lending rules for commercial and co-operative banks, NBFCs (including HFCs) and all-India financial institutions, effective May 2025 (later compliance dates 15 June and 1 November 2025). Source: RBI notifies the Reserve Bank of India (Digital Lending) Directions, 2025 (IndiaLaw LLP)
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 121 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
With which authority, besides others, must a charge over an aircraft be registered?
Why (d): Charges over aircraft must also be registered with the DGCA. (a) is wrong: It has no such role. (b) is wrong: That is for ships. (c) is wrong: The airport operator does not register charges.
Question 2 of 5
A rice miller with a weak track record seeks a cash credit limit against paddy. Which arrangement gives the bank the most control over the stock?
Why (b): Under lock-and-key the goods sit under the bank's lock and are released only against deposits or a trust receipt, so the bank keeps the most control, at the cost of delay and inconvenience, which is why it is now rare. Hypothecation leaves possession with the borrower. (a) is wrong: Hypothecation leaves the paddy with the miller; the bank depends on his statements. (c) is wrong: Constructive possession leaves the paddy with the miller as agent. (d) is wrong: A clean limit gives no charge, so no control.
Question 3 of 5
Under the loan system for delivery of bank credit (fund-based working capital limits of ₹150 crore and above), how may the working capital loan component be repaid?
Why (d): The loan system requires 60% of the limit to be drawn as a loan with a minimum tenor of seven days; banks may stipulate repayment in instalments or as a bullet and may roll the loan over on the borrower's request, subject to IRAC norms. (a) is wrong: Repayment on demand describes the cash credit component, not the loan. (b) is wrong: There is no fixed three-year EMI rule. (c) is wrong: Conversion into a term loan is not required.
Question 4 of 5
At the time of granting fresh facilities to a multiple-banking borrower, what should a bank obtain?
Why (c): Banks should obtain declarations from borrowers about credit facilities already enjoyed from other banks, in the prescribed format. (a) is wrong: RBI does not approve sanctions. (b) is wrong: Other banks do not guarantee. (d) is wrong: It is not the prescribed step.
Question 5 of 5
A bank is automating its retail loan processing end to end. What must come first?
Why (d): Straight-through processing works only if the system knows exactly what the lender's policy requires, so the first step is to capture the policy's parameters (eligibility, financial ratios, pricing and limits) as rules for the developer: the 'synchronisation between the maker and the user'. (a) is wrong: Migration comes after the system is built to the policy. (b) is wrong: Training comes once the system exists. (c) is wrong: Data links are built into a system designed around the policy's rules.
0 of 5 answered.
Traps in this unit
Back-dated or blank documents.
Hypothecated goods are with the borrower: monitor them.
Book debts are assigned, not pledged.
Practise all 121 questions on Unit 21. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the ABM Online Mock Centre unlocks all 4,600+ ABM questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
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