CAIIB · Banking Regulations & Business Laws · Module B — Important Acts/Laws & Legal Aspects of Banking Operations, Part A
CAIIB BRBL Unit 10 — Foreign Exchange Management Act, 1999: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper IV of the December 2026 cycle (Sunday 20 December 2026)
This is the free practice page for CAIIB BRBL Unit 10 — Foreign Exchange Management Act, 1999 (Module B — Important Acts/Laws & Legal Aspects of Banking Operations, Part A). The CAIIB Mock Centre holds 179 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.
BRBL · Module B179 MCQs in the Mock Centre5 free belowPaper on 20 December
Key facts examiners test from this unit
FEMA: purpose, reach and money terms — FEMA, in force from 1 June 2000, replaced the criminal FERA with a civil law to facilitate trade and payments; it reaches residents' offices abroad, and its money terms decide what it regulates.
Residence and the two kinds of transactions — an individual is resident after more than 182 days in India in the preceding year, unless he leaves or comes for reasons that show otherwise; capital account transactions change cross-border assets or liabilities, and everything else is current account.
Regulating foreign exchange: Sections 3, 4, 7 and 8 — payments to and from non-residents must pass through authorised persons, residents hold foreign assets only as permitted, and exporters must declare the full value and realise and repatriate it within the RBI's period.
Changed since the textbook
Realisation back to 9 months (5 Jun 2026). An amendment to the 2015 export regulations restored nine months to realise export proceeds, from 5 June 2026. Source: CorpLaw Updates
Authorised Persons Regulations, 2026 (30 Apr 2026). AD Categories I, II and III, money changers and forex correspondents; no fresh FFMC licences; franchisees to end within two years. Source: Outlook Money
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 179 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
Is the New York office of a US company, with no Indian owner, covered by FEMA?
Why (c): FEMA covers offices outside India only if they are owned or controlled by a person resident in India, which this office is not. (a) is wrong: Foreign-owned offices abroad are not covered. (b) is wrong: Dealing with Indian residents does not bring a foreign office within Section 1. (d) is wrong: An employee's nationality does not decide coverage.
Question 2 of 5
Why does a customer's residence under FEMA matter to a bank?
Why (a): Residence decides which rules apply: for example, Section 4 limits residents' foreign assets, and different accounts and remittance rules apply to residents and non-residents. (b) is wrong: KYC follows its own rules; FEMA residence decides the accounts and permissions. (c) is wrong: Deposit insurance does not turn on FEMA residence. (d) is wrong: Tax rates come from tax law, not FEMA.
Question 3 of 5
How does Section 2(y) treat using realised export proceeds to repay a foreign currency loan?
Why (a): Section 2(y) includes use of the realised amount for discharge of a debt or liability denominated in foreign exchange. (b) is wrong: The definition expressly allows this use. (c) is wrong: No separate approval is needed for this to count as repatriation. (d) is wrong: Schedule I does not cover it.
Question 4 of 5
Under Section 13(1), what is the maximum penalty where the sum involved is quantifiable?
Why (d): Section 13(1) allows a penalty of up to thrice the sum involved where it is quantifiable. (a) is wrong: ₹2 lakh applies only where the sum is not quantifiable. (b) is wrong: The multiple is three, not two. (c) is wrong: The cap is three times the sum.
Question 5 of 5
The Directorate of Enforcement enforces several laws. Which of these is NOT one of them?
Why (d): The Directorate of Enforcement enforces FEMA, the PMLA and the Fugitive Economic Offenders Act, 2018, and handles residual FERA cases. The Customs Act is administered by the customs authorities under the CBIC, with the DRI investigating smuggling. (a) is wrong: The ED enforces FEMA. (b) is wrong: The ED enforces the PMLA. (c) is wrong: The ED enforces the Fugitive Economic Offenders Act.
0 of 5 answered.
Traps in this unit
Foreign exchange is wider than foreign currency.
More than 182 days, not 182 or more.
Interest and dividends are current account.
Practise all 179 questions on Unit 10. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the BRBL Online Mock Centre unlocks all 5,800+ BRBL 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.