Unit 5: Relationship between bank and customer - Practice Quiz

1 The Banking Ombudsman Scheme in India was introduced and is administered by which authority?

2 What is the primary purpose of the Banking Ombudsman Scheme?

3 The Prevention of Money Laundering Act (PMLA) was enacted in which year?

4 Which banking practice is mainly used to comply with the PMLA, 2002?

5 What does the abbreviation 'UPI' stand for?

6 Which organization developed and operates the UPI system in India?

7 What does 'ATM' stand for in banking?

8 Which of the following is a common service offered through a bank ATM?

9 Internet banking allows customers to perform banking transactions primarily through which medium?

10 Which of the following is a key advantage of internet banking for customers?

11 Mobile banking apps are primarily designed to be used on which device?

12 What is the main role of a chatbot in banking services?

13 Chatbots and virtual assistants in banks mainly rely on which technology?

14 What is the main purpose of a credit scoring model in banking?

15 Which of the following is a well-known credit score used by lenders in India?

16 What does a robo-advisor primarily provide to customers?

17 In banking, Customer Relationship Management (CRM) mainly focuses on which objective?

18 What is the primary function of a complaint management system in a bank?

19 Which of the following is a common strategy used by banks to expand their customer base?

20 Why do banks offer different products to different customer groups such as students, businesses, and senior citizens?

21 A bank wants to increase its retail customer base in semi-urban areas with limited branch presence. Which strategy would be most effective and cost-efficient?

22 A bank offers zero-balance salary accounts, cash management services, and trade finance. These products are primarily targeted at which customer segments respectively?

23 Two banks compete for the same pool of home-loan customers. Bank A lowers its interest rate while Bank B keeps rates the same but offers faster, paperless approval. This illustrates competition based on:

24 A bank uses its CRM system to identify a customer holding only a savings account and offers them a credit card and a mutual fund SIP. This CRM activity is best described as:

25 A customer files a complaint with a bank and does not receive a reply within 30 days. Under the Integrated Ombudsman Scheme, 2021, the customer can:

26 A bank notices a customer making several cash deposits of ₹49,000 each on the same day across different branches to avoid a reporting threshold. Under PMLA, 2002, this behaviour should be reported as a:

27 A bank deploys an AI chatbot on its mobile app. Which task is the chatbot best suited to handle without human intervention?

28 In a typical credit scoring model, which factor generally carries the highest weight when predicting a borrower's likelihood of default?

29 A young investor with limited funds wants automated, low-cost portfolio recommendations based on an online risk questionnaire. Which service best meets this need?

30 A good complaint management system assigns each grievance a unique tracking number and defines turnaround times for resolution. The primary benefit of this design is:

31 A customer logs into internet banking and is asked for a password followed by a one-time password (OTP) sent to their phone. This security mechanism is called:

32 A bank's mobile app allows customers to deposit cheques by photographing them. This feature is commonly known as:

33 A bank installs cash-recycler ATMs that accept deposits and dispense the same notes to other customers. The main advantage of recyclers over conventional ATMs is:

34 A customer pays a shopkeeper by scanning a QR code and entering a UPI PIN. In this transaction, the UPI PIN primarily serves to:

35 A bank launches a 'refer-a-friend' program rewarding existing customers who bring in new account holders. This strategy mainly leverages:

36 A CRM analytics report flags that a long-standing customer has reduced transaction frequency and recently closed a recurring deposit. The bank should interpret this as a signal of:

37 Under PMLA, 2002, banks are required to maintain records of all transactions for a minimum period of:

38 A borrower has a CIBIL score of 820 out of 900. Compared with a borrower scoring 620, the bank is likely to:

39 Which type of grievance would typically fall outside the scope of the RBI's Integrated Ombudsman Scheme?

40 A key limitation of robo-advisory services compared with a human financial advisor is that robo-advisors:

41 A bank identifies a customer who, over three weeks, deposits cash of structured as 11 separate deposits of just under each across multiple branches. Under PMLA, 2002 and related RBI/FIU-IND reporting norms, which report is MOST specifically triggered by this structuring behaviour?

42 Under the Reserve Bank - Integrated Ombudsman Scheme, 2021, a customer files a complaint directly with the Ombudsman without first approaching the bank. Which outcome is MOST accurate?

43 A lender uses a logistic regression credit scoring model. Applicant A has estimated probability of default and applicant B has . Expressed in log-odds (logit), how much higher is A's logit than B's? (Use .)

44 In the UPI architecture, a customer of Bank X pays a merchant whose account is with Bank Y using a third-party app (TPAP) backed by sponsor Bank Z. Which entity acts as the issuer bank (remitter PSP's underlying bank) in this transaction?

45 A bank computes Customer Lifetime Value (CLV) for a segment with average annual margin of , annual retention rate of , and discount rate of . Using the simplified CLV formula , what is the approximate CLV?

46 A robo-advisory platform rebalances portfolios automatically to a fixed target allocation. In a strongly trending bull market, which structural weakness of this rules-based rebalancing is MOST likely to reduce returns compared to a buy-and-hold investor?

47 Two banks compete on savings deposit rates. Bank A's deposit base is highly rate-sensitive (high interest elasticity), Bank B's is relationship-driven (low elasticity). If both face a market rate cut, which outcome is MOST consistent with microeconomic reasoning?

48 A banking chatbot uses intent classification with a confidence threshold. Lowering the confidence threshold for auto-responses will MOST directly:

49 An internet banking system implements two-factor authentication but reuses the same session token across both the login and transaction-authorization steps. Which attack does this design MOST directly fail to mitigate?

50 A bank's new customer acquisition cost (CAC) is and the average new customer's CLV is . Management proposes a referral campaign cutting CAC by 30% but reducing average CLV by 20% (due to lower-quality referrals). What happens to the CLV-to-CAC ratio?

51 A mobile banking app stores an authentication token in local device storage without encryption and relies on certificate pinning for network security. Which residual risk remains MOST significant?

52 A bank's complaint system shows a rising First Contact Resolution (FCR) rate but simultaneously rising repeat-complaint volumes within 30 days. Which interpretation is MOST likely correct?

53 A bank's ATM network experiences cash-out failures. Average daily withdrawal demand per ATM is with standard deviation , and replenishment occurs every 2 days. To maintain roughly 97.5% service level (z ) over the 2-day cycle, approximately how much cash should be loaded? (Assume independent daily demand.)

54 A bank designs products for three segments: mass retail, HNI/wealth, and MSME. Applying a cost-to-serve vs. revenue-contribution matrix, which segment-strategy pairing represents the MOST appropriate response for a high-cost-to-serve, high-revenue segment?

55 Under PMLA, 2002, a reporting entity must retain records of transactions and client identity. For how long must these records be maintained after the business relationship ends or the transaction is completed, as amended?

56 A credit scoring model shows an AUC-ROC of on training data but on an out-of-time validation sample. The Kolmogorov-Smirnov (KS) statistic has also dropped sharply. The MOST appropriate diagnosis is:

57 Under the RB-IOS, 2021, if a complainant is dissatisfied with the Ombudsman's award (or the bank is aggrieved), to whom does the appeal lie, and within what period?

58 NPCI imposes a volume cap on the market share any single third-party app provider (TPAP) can hold in UPI transactions. From a systemic risk perspective, the PRIMARY rationale for this cap is to:

59 A regulator reviews a robo-advisor's suitability process. The algorithm maps every client to one of only three model portfolios based solely on a 5-question risk quiz, ignoring investment horizon and liquidity needs. The MOST serious compliance concern is:

60 A bank's CRM uses an RFM (Recency, Frequency, Monetary) model. Customer P: last transaction 2 days ago, 40 transactions/year, total value. Customer Q: last transaction 90 days ago, 3 transactions/year, total value. Which CRM action pairing is MOST defensible?