CAIIB · Bank Financial Management · Module C — Treasury Management
CAIIB BFM Unit 19 — Introduction to Treasury Management: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper II of the December 2026 cycle (Saturday 12 December 2026)
This is the free practice page for CAIIB BFM Unit 19 — Introduction to Treasury Management (Module C — Treasury Management). The CAIIB Mock Centre holds 184 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.
BFM · Module C184 MCQs in the Mock Centre5 free belowPaper on 12 December
Key facts examiners test from this unit
The treasury and its integration — the treasury grew from funds management and CRR/SLR compliance (a service and compliance centre) into an integrated profit centre across money, securities and foreign exchange markets.
Market risk, functions, roles and books — currency risk plus interest rate risk is market risk; merchant business is deals with customers; remember 3 markets, 5 forces, 7 functions, 3 roles, 3 books.
Globalisation and the treasury — globalisation integrates domestic and global markets through free capital flows; India freed the current account but not the capital account fully.
Changed since the textbook
Financial Stability Report, June 2026 (30 Jun 2026). RBI released its Financial Stability Report on 30 June 2026. Banks' profits from securities trading fell through 2025-26 and turned into losses for all bank groups in January–March 2026 (public sector banks −₹158 crore, private banks −₹280 crore, foreign banks −₹9,597 crore). Source: ABC Live
Credit Derivatives Directions, 2026 (25 Jun 2026). RBI issued final Credit Derivatives Directions on 25 June 2026, effective at once: resident non-retail users may use credit default swaps and total return swaps without purpose restrictions, and exchanges may offer single-name and credit-index CDS. Source: ANI
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 184 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
Which of these is NOT one of the driving forces behind integrated treasury management?
Why (b): The five forces behind integrated treasuries are integrated cash flow management, interest arbitrage, access to global resources, corporate demand for high-end services and risk management. The size of the government's borrowing programme affects the bond market but did not drive integration. (a) is wrong: Integrated cash flow management is a driving force. (c) is wrong: Corporate demand for high-end services is a driving force. (d) is wrong: Interest arbitrage is a driving force.
Question 2 of 5
What is sometimes cumulatively called the "transfer of savings"?
Why (c): The textbook says these foreign currency payments and receipts are cumulatively referred to as the transfer of savings. (a) is wrong: Branch transfers are internal. (b) is wrong: The CRR is a reserve requirement. (d) is wrong: It is not about a customer's accounts.
Question 3 of 5
What did RBI's renaming of its Exchange Control Department as the Foreign Exchange Department in 2004 reflect?
Why (b): FEMA, in force from June 2000, replaced FERA's control approach with the management of foreign exchange; the renaming of the department from 31 January 2004 reflected that shift. India still does not have full capital account convertibility. (a) is wrong: RBI still regulates foreign exchange under FEMA. (c) is wrong: Full capital account convertibility has not been allowed. (d) is wrong: RBI's department still administers FEMA.
Question 4 of 5
A bank buys USD from exporters at ₹83.40 and sells USD to importers at ₹83.70. What does it earn on buying USD 50,000 by TT and selling the same amount?
Why (d): In merchant business the bank's profit is the spread between its selling and buying rates: (83.70 − 83.40) × 50,000 = ₹15,000. (a) is wrong: It doubles the spread. (b) is wrong: It halves the spread. (c) is wrong: It misplaces the decimal.
Question 5 of 5
Who subscribes to primary issues of corporate debt (non-SLR securities)?
Why (c): The textbook says primary issues are subscribed by the Investment Department. (a) is wrong: Dealers work in the secondary market. (b) is wrong: The back office settles deals. (d) is wrong: The mid office monitors risk.
0 of 5 answered.
Traps in this unit
Capital account is largely, not fully, convertible.
Banks' overseas limits are linked to net worth.
Credit appraisal and retail lending are not treasury roles.
Practise all 184 questions on Unit 19. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the BFM Online Mock Centre unlocks all 7,600+ BFM questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
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.