The CAIIB (Certified Associate of Indian Institute of Bankers) exam is a prestigious certification highly valued by banking professionals in India. It strengthens a banker’s expertise in key areas such as financial management, risk management, and banking regulations. One of the most effective ways to prepare for the CAIIB 2026 exam is by solving practice questions, which help reinforce concepts, improve accuracy, and boost confidence. In this blog, we have provided a PDF containing paper-wise CAIIB questions, along with practice questions for each of the four compulsory papers.
Download the CAIIB Practice Questions Ebook
The CAIIB Practice Questions eBook 2026 contains important questions from all 4 compulsory papers. Below, we have provided a direct link to download the free eBook for all candidates.
CAIIB Paper Wise Practice Questions
Below we have provided some practice questions covering topics from all 4 compulsory papers.
Questions Based on ABM Paper
Q1. Statement 1: Inflation decreases the real value of money.
Statement 2: Deflation always encourages borrowing.
Statement 3: RBI uses repo rate as a tool to control inflation.
Question: Which of the statements given above is/are correct?
a) Only 1 and 2
b) Only 1 and 3
c) Only 2 and 3
d) All 1, 2, 3
Answer: b) Only 1 and 3
Q2. Statement 1: Asset diversification reduces overall portfolio risk.
Statement 2: Diversification eliminates all types of risk.
Statement 3: Portfolio management includes risk-return analysis.
Question: Which of the statements given above is/are correct?
a) Only 1
b) Only 1 and 3
c) Only 2 and 3
d) All 1, 2, 3
Answer: b) Only 1 and 3
Q3. Statement 1: ERP systems integrate various functions such as HR, finance, and operations.
Statement 2: ERP is only relevant for IT companies.
Statement 3: ERP improves information flow and decision-making.
Question: Which of the statements given above is/are correct?
a) Only 1 and 3
b) Only 2
c) Only 1 and 2
d) All 1, 2, 3
Answer: a) Only 1 and 3
Q4. Statement 1: Branch network expansion is a strategic decision.
Statement 2: Location analysis ignores customer demographics.
Statement 3: Technology adoption can complement branch network growth.
Question: Which of the statements given above is/are correct?
a) Only 1
b) Only 1 and 3
c) Only 2 and 3
d) All 1, 2, 3
Answer: b) Only 1 and 3
Q5. Statement 1: ERP helps banks in regulatory reporting and compliance.
Statement 2: ERP eliminates the need for internal audits.
Statement 3: ERP can generate consolidated financial reports in real time.
Question: Which of the statements given above is/are correct?
a) Only 1 and 3
b) Only 2
c) Only 1 and 2
d) All 1, 2, 3
Answer: a) Only 1 and 3
Q6. Statement 1: MIS (Management Information System) provides timely and accurate information for decision-making.
Statement 2: MIS focuses only on financial data, ignoring operations.
Statement 3: MIS reports support strategic and operational decisions.
Question: Which of the statements given above is/are correct?
a) Only 1 and 3
b) Only 2
c) Only 1 and 2
d) All 1, 2, 3
Answer: a) Only 1 and 3
Q7. Statement 1: Benchmarking helps banks compare performance against peers.
Statement 2: Benchmarking guarantees superior performance.
Statement 3: Benchmarking identifies areas for process improvement.
Question: Which of the statements given above is/are correct?
a) Only 1 and 3
b) Only 2
c) Only 1 and 2
d) All 1, 2, 3
Answer: a) Only 1 and 3
Q8. Statement 1: Interest rate swaps allow banks to manage interest rate risk.
Statement 2: Currency swaps expose banks to foreign exchange risk.
Statement 3: Derivatives eliminate all financial risk.
Question: Which of the statements given above is/are correct?
a) Only 1 and 2
b) Only 2 and 3
c) Only 1 and 3
d) All 1, 2, 3
Answer: a) Only 1 and 2
Q9. Statement 1: Business continuity planning ensures operations continue during disruptions.
Statement 2: Disaster recovery plan focuses on IT systems only.
Statement 3: Both BCP and DRP are part of risk management framework.
Question: Which of the statements given above is/are correct?
a) Only 1 and 2
b) Only 1 and 3
c) Only 2 and 3
d) All 1, 2, 3
Answer: b) Only 1 and 3
Q10. Statement 1: Strategic risk arises from inappropriate business decisions or poor implementation.
Statement 2: Reputational risk is unrelated to customer trust.
Statement 3: Strategic planning helps mitigate strategic risk.
Question: Which of the statements given above is/are correct?
a) Only 1 and 2
b) Only 1 and 3
c) Only 2 and 3
d) All 1, 2, 3
Answer: b) Only 1 and 3
Questions Based on BFM Paper
- Escrow reduces fraud risk because:
A) RBI insures it
B) Direct transfers without intermediaries
C) Funds held by neutral third party, released after obligations
D) Seller gets full payment in advance
Answer: C - Mr. Sharma deposits ₹1.8 lakh, friend deposits ₹50,000 same day. Violation under Section 269ST?
A) No violation
B) Violation only for Mr. Sharma
C) Violation because combined deposit > ₹2 lakh
D) No violation, but annual scrutiny possible
Answer: C - Business owner accepts ₹25,000 cash loan from relative, deposits ₹9 lakh. Section violation?
A) Violates Section 269SS
B) Violates 269ST
C) Both 269SS & 269ST
D) No violation due to relative
Answer: A - Bank securitises loans ₹100 crore, original maturity 18 months. Minimum retention requirement (MRR)?
A) ₹2 crore
B) ₹5 crore
C) ₹10 crore
D) ₹15 crore
Answer: B - Housing finance company securitises ₹500 crore bullet loans. MRR stake?
A) ₹25 crore
B) ₹50 crore
C) ₹75 crore
D) ₹100 crore
Answer: B - Non-retail loans, borrower-wise MRR. Overdue status determined?
A) Consolidated repayment
B) Each individual account
C) Average overdue
D) Largest account only
Answer: B - Retail loan pool, MRR maintained consolidated. NPAs classified based on:
A) Each borrower
B) Consolidated MRR account
C) Servicing agent report
D) Not applicable
Answer: B - Diamond exporter turnover ₹2.5 crore, wants DDA. Eligibility?
A) Eligible > 2 years track record
B) All exporters eligible
C) Not eligible, turnover insufficient
D) Only with joint application
Answer: C - Exporter holds 5 DDAs, wants 6th with another bank. Regulation?
A) Allowed
B) Not allowed, max 5 accounts
C) Allowed only with RBI approval
D) Allowed if one account closed
Answer: B - NRI remittance credited to Nostro account, bank applies rate to credit INR:
A) TT Selling
B) TT Buying
C) Bill Selling
D) Cash Buying
Answer: B
Questions Based on ABFM Paper
- Arrange the following steps of decision-making in the correct order:
I. Identifying the problem
II. Evaluating alternatives
III. Implementing the decision
IV. Defining objectives
V. Monitoring outcomes
A. IV, I, II, III, V
B. I, IV, II, III, V
C. IV, II, I, III, V
D. I, II, IV, III, V
Answer: A - Statement 1: SWOT analysis helps in identifying internal strengths and weaknesses of an organization.
Statement 2: PESTLE analysis focuses on external environmental factors affecting the organization.
Statement 3: Balanced Scorecard only evaluates financial performance.
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) All 1, 2, and 3
Answer: a) 1 and 2 only - Which of the following correctly differentiates between a leader and a manager?
A. Leaders maintain systems; managers inspire vision
B. Leaders inspire vision; managers ensure implementation of processes
C. Leaders avoid risks; managers encourage risks
D. Leaders focus on tasks; managers focus on people
Answer: B - Which of the following is NOT an advantage of delegation?
a) Reduces management workload
b) Helps develop subordinates’ skills
c) Ensures absolute control over every task
d) Improves efficiency
Answer: c - Statement I: Informal groups often influence employee behavior even without formal authority.
Statement II: Informal groups are deliberately structured by management to achieve goals.
A. Both statements are true
B. Both statements are false
C. Only Statement I is true
D. Only Statement II is true
Answer: C - Statement 1: MBO requires setting measurable goals jointly by manager and employee.
Statement 2: BARS must be customized for each job to anchor behaviors accurately.
Statement 3: 360-degree feedback only gathers information from peers.
a) Only 1 and 2
b) Only 2 and 3
c) Only 1 and 3
d) All 1, 2, 3
Answer: a) Only 1 and 2 - Match the management function with its description:
(A) Planning
(B) Organizing
(C) Leading
(D) Controlling
(1) Assigning resources and responsibilities
(2) Setting objectives and deciding on actions
(3) Motivating and guiding employees
(4) Comparing performance with standards
A. 2, 1, 3, 4
B. 1, 2, 3, 4
C. 2, 3, 1, 4
D. 3, 2, 1, 4
Answer: A - A bank anticipates regulatory changes and prepares action plans for different scenarios. This is an example of:
a) Single-use planning
b) Policy planning
c) Contingency planning
d) Programmed decision making
Answer: c - Statement 1: Technology upgrades can improve operational efficiency.
Statement 2: Competition has no effect on a bank’s market share.
Statement 3: Fluctuating interest rates affect loan profitability.
a) Only 1 and 3
b) Only 2 and 3
c) Only 1 and 2
d) All 1, 2, 3
Answer: a) Only 1 and 3 - What is the likely outcome if cross-functional teams lack clear communication protocols?
a) Improved collaboration
b) Delayed execution
c) Faster decision-making
d) Enhanced innovation
Answer: b
Download CAIIB previous Year Papers PDF
Questions Based on BRBL Paper
1. Submission of returns by banks under Banking Regulation Act:
- Monthly return of assets and liabilities
- Annual accounts within 3 months
- Quarterly return of assets in India
- RBI may call for half-yearly investment info
A) 1 and 4
B) 2 and 3
C) 1, 2, and 3
D) 1, 2, 3, and 4
Correct Answer: D
2. Banks must maintain records for which transactions under KYC/AML/CFT norms?
A) Cash > ₹10 lakh
B) Series of cash ₹10 lakh
C) Non-profit receipts > ₹10 lakh
D) All of the above
Correct Answer: D
3. Pledge under Section 172 of Indian Contract Act is defined as:
A) Transfer of ownership of goods
B) Bailment as security for debt or performance
C) Sale under deferred payment
D) Assignment of contractual rights
Correct Answer: B
4. Regarding amalgamation and moratorium under Banking Regulation and Companies Act:
- Central Govt can order amalgamation after consulting RBI
- RBI can apply for moratorium
- Moratorium ≤ 12 months
- No payments to depositors unless directed
A) 1 and 3
B) 2 and 4
C) 1, 2, and 4
D) 1, 2, 3, and 4
Correct Answer: C
5. Parties who can legally pledge goods under Indian law:
A) Bailee
B) Finder of goods
C) Mercantile agent with consent
D) Agent without possession
Correct Answer: D
6. Penalties under RBI Act:
- False or omitted statement → imprisonment ≤ 3 years + fine
- Failure to produce documents → fine ≤ ₹1 lakh per offence
- Continuing offences → fine ₹5,000/day
- Court cognizance without complaint unnecessary
A) 1 and 2
B) 2 and 4
C) 1, 2, and 3
D) 1, 2, 3, and 4
Correct Answer: C
7. Shareholding pattern in RRBs as per RBI/NABARD:
A) Central 50%, State 15%, Sponsor 35%
B) Central 40%, State 20%, Sponsor 40%
C) Central 60%, State 20%, Sponsor 20%
D) Central 25%, State 25%, Sponsor 50%
Correct Answer: A
8. If an MSE fails to comply with MSEFC order, XYZ Plastics Pvt. Ltd. should:
A) File complaint with National Board for MSMEs
B) Approach district court to enforce order
C) Cancel contract
D) Seek government financial assistance
Correct Answer: B
9. Stakeholders in RRBs include:
- RBI
- Central Government
- State Government
- Sponsor Bank
A) 1 and 4
B) 2, 3, and 4
C) 1, 2, and 3
D) 1, 2, 3, and 4
Correct Answer: B
10. Under Section 35 of Banking Regulation Act, RBI may issue directions if:
A) Bank violates SEBI regulations
B) Directions necessary in interest of banking policy/public interest
C) Bank fails to maintain CRR
D) RBI intends to restructure board
Correct Answer: B
FAQs
Ans. CAIIB Practice Questions 2026 are a set of sample questions designed to help candidates prepare for the CAIIB exam.
Ans. Using CAIIB Practice Questions helps improve exam readiness, strengthens concept understanding, and boosts confidence.
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