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JAIIB IE&IFS Unit 37 — Factoring, Forfaiting and TReDS: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 1 of the November 2026 cycle (1 November 2026)

This page is a free slice of our JAIIB IE&IFS question bank for Unit 37 — Factoring, Forfaiting and TReDS (Module D — Financial Products and Services). The Mock Centre holds 56 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

IE&IFS · Module D56 MCQs in the Mock Centre5 free belowPaper on 1 November 2026

Key facts examiners test from this unit

  1. Factoring = finance + sales-ledger + collection bundle (ALL of the above); Factoring Regulation Act 2011, Sec 2(j); ~4,000 years old (Hammurabi); first widespread use = 18th-century American colonies.
  2. Recourse split: recourse — factor recovers from seller; non-recourse — factor bears bad debts; per the textbook, WITHOUT-recourse factoring is not practised in India.
  3. Numbers: ~85% invoice payment (80% domestic advance, 20% margin); credit period max 150 days incl. 60-day grace; service fee 0.1–0.3%; finance charge computed monthly.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
Factoring is a facility for:
Why (d): Factoring is a one-stop receivables package: the factor finances your invoices, maintains your sales ledger, and collects the debts from your buyers.
Question 2 of 5
The agency buying the receivables is the:
Why (b): The agency that BUYS the receivables from the seller is the factor — it steps into the seller's shoes as legal owner of the debt and then collects from the buyer.
Question 3 of 5
Forfaiting discounts export receivables on a ____ basis:
Why (b): Forfaiting discounts export receivables strictly WITHOUT recourse — the forfaiter buys the avalised paper outright and absorbs credit, country and currency risk, leaving the exporter completely free.
Question 4 of 5
Forfaiting is commonly used for ____ transactions only:
Why (b): Forfaiting is used for INTERNATIONAL transactions only — it exists to de-risk medium-term exports, and there is no such thing as domestic forfaiting.
Question 5 of 5
TReDS finances trade receivables of:
Why (b): TReDS exists to finance the trade receivables of MSMEs — small suppliers stuck waiting on big buyers get paid quickly by auctioning their invoices on the platform.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
FactorForfaiterReceivables buyer vs export-bill discounter
RecourseNon-recourseSeller's risk vs factor's risk
Practise all 56 questions on Unit 37. The free demo opens a slice of every subject with the same explanations; the IE&IFS Online-only pass unlocks all 3,032 IE&IFS questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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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. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.