Pre Promotion Training for Officers - 2017

FOREIGN EXCHANGE-PPT0-2017
Q 1. What is the definition of current account transaction as FEMA
1. It is import of capital goods into India .
2. It is exports of goods and services.
3. All transactions undertaken by a resident that do not alter his / her assets or liabilities,
including contingent liabilities, outside India are current account transactions.
4. Alters the forex position of the country with regard to its balance of payment.
5. All the above.

Q 2. All Letters of Credit issued by banks in terms of UCPDC 600 are

1. Revocable
2. Irrevocable
3. Confirmed irrevocable
4. Irrevocable unless stated otherwise
5. Confirmed revocable.

Q 3. Foreign Trade Policy is issued by

1. Reserve Bank of India.
2. Indian Banks Association.
3. Customs Authority.
4. Ministry of Commerce, GOI.
5. Directorate General of Foreign Trade.

Q 4. What is Liberalised Remittance Scheme (LRS) of US$ 250000-

1. All resident individuals, including minors, are allowed to freely remit up to USD 2,50,000
per financial year.
2. Permitted for any permissible current or capital account transaction or a combination of
both.
3. Resident individuals can avail of foreign exchange facility for the purposes mentioned in
Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within
the limit of USD 2,50,000 only.
4. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.
5. All the above.

Q 5. UCPDC relating to Letter of Credit transactions is compiled under the aegis of

1. Foreign Exchange Dealers Association of India.
2. Confederation of Indian Industry.
3. Reserve Bank of India.
4. Foreign Exchange Management Act.
5. International Chamber of Commerce.

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Q 6. Indian Rupee is
1. Fully Convertible on current account only.
2. Partially convertible on capital account.
3. Fully convertible on current account and partially convertible on capital account.
4. Convertible subject to favourable BOP.
5. Not convertible.

Q 7. Authorised Dealer may allow remittance out of balance held in NRO account to the extent of
1. US$ 100000 only.
2. Any amount can be remitted.
3. No repatriation is permitted.
4. US$ One Million in a financial year.
5. None of the above.

Q 8. Foreign Currency fluctuation risk is borne by the customer, in which of the following
1. Non Resident External Account.
2. Exchange Earners Foreign Currency Account.
3. Foreign Currency Non Resident Account.
4. Resident Foreign Currency Account.
5. Resident Foreign Currency Domestic Account.

Q 9. Which of the following is not a document of title of goods

1. Airway Bill.
2. Bill of Lading.
3. Railway Receipt.
4. Lorry Receipt.
5. Warehouse receipt.

Q 10. Irrevocable Letter of Credit constitute

1. A definite undertaking of issuing Bank.
2. To make payment for the documents on presentation.
3. Documents should be drawn strictly as per the terms of the Letter of Credit.
4. All the above together.
5. None of the above.

Q 11. If a letter of credit does not specify the expiry date

1. 7 days.
2. 10 days.
3. 21 days.
4. 30 days.
5. 35 days.

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Q 12. Currency Declaration Form (CDF) has to be insisted upon while enchasing foreign currency
notes above
1. US$ 1000. 2. US$ 2000. 3. US$ 5000. 4. US$ 10000 5. Need not be insisted.

Q 13. R Return is used by the Reserve Bank of India to monitor the

1. Balance of payment position.
2. Performance of banks authorized to deal in forex.
3. Assets and Liabilities in FC of banks.
4. To assess volatility in forex markets.
5. None of the above.

Q 14. SWIFT has its headquarters in

1. Helsinki in Finland.
2. New York in USA.
3. London in UK.
4. Brussels in Belgium.
5. Amsterdam in Netherlands.

Q 15. Quantum of PCL is determined by

1. Including freight and insurance charges.
2. Excluding freight and insurance charges.
3. Excluding insurance charges.
4. Excluding freight charges.
5. Including profit margin.

Q 16. While collecting high value FX cheques it would be advisable to use the following facility
provided by our
correspondents
1. Final credit-on collection basis.
2. Priority credit.
3. Immediate credit basis.
4. Preferred Collection basis.
5. Auto credit

Q 17. Remittance towards import bills

1. May be made in cash if less than Rs. 5000.
2. Must be made by debit to account of the customer.
3. May be made in cash if less than US$ 1000.
4. Must be debited to account of customer if amount is more than U$ 100000.
5. Must be debited to account of customer if amount is more than Rs. 100000.

Q 18. What is the role of advising bank in case of a letter of credit

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1. To forward to the seller and negotiate the documents.

2. To verify the genuineness of the LC and forward it to the beneficiary.
3. To give confirmation that payment would be made by it in case the issuing bank fails to
make payment.
4. To allow pre-shiment credit if asked for by the beneficiary.
5. All the above.

Q 19. The recommendations regarding Capital Account Convertibility was given by

1. Rangarajan Committee.
2. Jalan Committee.
3. Tarapore Committee.
4.Ahluwalia Committee.
5.Narasimhan Committee.

Q 20. . Loans can be granted against the security of funds held in NRE/FCNR accounts either to the
depositor or third parties up to a maximum limit of
1. Rs. 20 lakhs.
2. Rs. 100 lakhs
3. No upper limit.
4. Cannot be granted.
5. None of the above.

Q 21 What is the entitlement of currency component in foreign exchange released to a traveler

proceeding to countries such as Libya and Iraq
1. US$ 2000.
2. US$ 5000.
3. US$ 10000.
4. US$ 500.
5. No limit.

Q 22. . Which among the following is correct relating to irrevocable letter of credit
1. Amendments to the LC is carried out at the discretion of the opening bank only.
2. Amendments are done at the request of the beneficiary only.
3. Amendments can be made only by the consent of the beneficiary, applicant, and opening
bank.
4. Once opened a LC cannot be amended.
5. None of the above.

23. Which of the following is a preferred document as far as financing bank and exporter/importer is
concerned
1. Claused bill of lading.
2. Through bill of lading.
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3. Straight bill of lading.

4. Charter party bill of lading.
5. On board full set clean bill of lading.

24 BEF statement is
1. A statement of non submission overdue bill of entry.
2. A statement of non submission of proof of export.
3. A statement of overdue export bills.
4. A statement of forward contracts.
5. None of the above.

25. A bill of lading indicates the defective condition of packaging and goods packaged. Such a bill of
lading is called
1. Straight bill of lading.
2. Ocean bill of lading.
3. Short bill of lading.
4. Claused bill of lading.
5. Clean bill of lading.

26. It is obligatory on the part of the exporter to realize and repatriate the full value of goods /
software / services to India within a stipulated period from the date of export. The stipulated
period is

1. Nine months from date of exports.

2 Six months from date of exports.
3 One year from date of exports.
4 No time limit stipulated.
5 None of the above.

27. A person resident in India may open a foreign currency account known as Exchange Earners
Foreign Currency account. The following is not one of the features of the account
1. Resident individuals are permitted to include resident close relative as joint holders, on former
or survivor basis.
2. No credit facilities shall be permitted against security of balances in the account.
3. All categories of foreign exchange earners are allowed to credit 100% of their foreign exchange
earnings.
4. The sum total of the accruals in the account during a calendar month should be converted into
Rupees on or before the last day of the succeeding calendar month.
5. The balances in EEFC account need not be converted into Rupees.

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28. Any person resident in India may take outside India (other than to Nepal and Bhutan) currency
notes of Government of India and Reserve Bank of India up to an amount not exceeding
1. Rs. 100000
2. Rs. 50000
3. Export currency is not permitted.
4. Rs. 25000
5. None of the above.

29. Where an exporter receives advance payment (with or without interest), from a buyer outside
India, the exporter shall be under an obligation to ensure that the shipment of goods is made
within ------- from the date of receipt of advance payment
1. One year.
2. Six months.
3. Nine months.
4. Fifteen months
5. No time limit fixed for shipment.

30. Exporters are expected to submit shipping documents to the Authorised Dealers within -----
days of shipment of goods for exports
1. No time limit fixed.
2. 30 days.
3. 7 days.
4. 15 days.
5. 21 days

31. AD Category I banks should normally dispatch shipping documents to their overseas
branches/correspondents expeditiously. However, they may dispatch shipping documents direct to
the consignees or their agents resident in the country of final destination of goods in cases where
1. Advance payment or an irrevocable letter of credit has been received for the full value of the
export shipment.
2. The AD Category I banks may also accede to the request of the exporter provided the
exporter is a regular customer and the AD Category I bank is satisfied, on the basis of
standing and track record of the exporter and arrangements have been made for realization of
export proceeds
3. AD Category I banks may also permit 'Status Holder Exporters and units in Special Economic
Zones (SEZ) to dispatch the export documents to the consignees outside India subject to
certain conditions.
4. The duplicate copy of the EDF is submitted to the AD banks for monitoring purposes, by the
exporters within 21 days from the date of shipment of export.
5. All the above are correct.

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32. The Reserve Bank of India has permitted the AD Category I banks to extend the period of
realization of export proceeds beyond stipulated period of realization from the date of export, up
to a period of ------------ months, at a time
1. 12. 2. 3. 3. 6. 4.15. 5.No authority to extend period.

33. In terms of the extant regulations, remittances against imports should be completed not later
than six months from the date of shipment, except in cases where amounts are withheld towards
guarantee of performance, etc.. However the time limit in respect of import of books is

1. 9 months. 2.Allowed without restriction as to time limit. 3.One year.

4.7 months. 5. 15 months.

34. A person may send into India, without limit, foreign exchange in any form other than currency
notes, bank notes and travellers cheques. Import of foreign exchange in excess of US 10000 in the
form of foreign currency notes and travelers cheques or US 5000 exclusively in currency notes is
permitted subject to

1. A declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF).
2. Certificate from a foreign bank that the funds have been withdrawn from the account.
3. Convincing the Customs Authorities, as to source of funds.
4. Permitted in case of ship crew members whose salary is paid in cash.
5. Not permitted to bring travelers cheques and foreign currency notes.

35. AD Category I bank may allow advance remittance for import of goods

1. Without any ceiling subject to certain conditions:

2. If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional,
irrevocable standby Letter of Credit or a guarantee from an international bank of repute
situated outside India is required.
3. bank is satisfied about the track record and bonafides of the importer, the requirement of the
bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up
to USD 5,000,000 (US Dollar five million).
4. A PSU which is not in a position to obtain a guarantee from an international bank of repute
against an advance payment, is required to obtain a specific waiver for the bank guarantee
from the Ministry of Finance, Government of India before making advance remittance
exceeding USD 100,000.
5. All the above are correct.

36. In case of all imports, irrespective of the value of foreign exchange remitted / paid for import into
India, it is obligatory on the part of the AD Category I bank through which the relative remittance
was made, to ensure that the importer submits :-

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1. The Exchange Control Copy of the Bill of Entry for Home Consumption.
2. No document required, if import is less than US$ 100000
3. Certificate from Chartered Accountant.
4. Insisted if import is above US$ 200000
5. No evidence of imported need be insisted.

37. Loans and overdrafts against NRE/FCNR accounts may be

1. Granted for any purpose.

2. Granted for purposes other than re-lending/agriculture/plantation activities/investments in
real estate business.
3. Granted only for personal purposes.
4. Granted but not to third parties.
5. Granted up to a maximum limit of Rs 100 lakhs.

38. Interest on NRO deposits attracts TDS

1. No, it is exempt.
2. Yes @ 10% if amount exceeds Rs 10000 in a FY.
3. Yes @ 20%.
4. Yes @ 30% without any exemption.
5. As per terms of the Double Taxation Avoidance Agreement (DTAA) signed between the country
of residence of the NRI and India.

39. Form A1 and A2 are not required if the amount of remittance does not exceed

1. US$ 500/A1 and US$ 5000/A2.

2. US$ 500
3. US$ 5000
4. US$ 100000
5. Dispensed with.

40. The Foreign Trade Policy 2015-20 envisages increase in Indias export from US$465.9 Billion in
2013-14 to----------in 2019-20

1. US$ 900 Billion

2. US$ 600 Billion
3. US$ 1000 Billion
4. US$ 800 Billion
5. US$ 1200 Billion

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41. What is amount available for remittance for private visit; gift/donation; going abroad on
employment; emigration; maintenance of close relatives abroad; business trip; medical treatment
abroad; studies abroad for resident Indians

1. US$ 500
2. US$ 10000
3. US$ 25000
4. US$ 250000 under LRS includes/subsumes for all the above purposes in financial year.
5. US$ 125000

42. How much foreign currency can be carried for travel abroad

1. US$ 3000 per trip.

2. US 5000 for travel to Iraq and Libya.
3. Travellers proceeding to the Islamic Republic of Iran, Russian Federation and other Republics of
Commonwealth of Independent States who can draw entire foreign exchange (up-to USD
250,000) in the form of foreign currency notes or coins.
4. For travellers proceeding for Haj/ Umrah pilgrimage, full amount of entitlement (USD 250,000)
in cash or up to the cash limit as specified by the Haj Committee of India, may be released by
the ADs and FFMCs.
5. All the above are correct.

43. How many days in advance can one buy foreign exchange for travel purpose

1. Permissible foreign exchange can be drawn 180 days in advance by an individual, resident in
India.
2. 7 days in advance.
3. 3 months in advance.
4. On year in advance
5. Previous day of travel.

44. On return from a foreign trip, how much unspent foreign exchange can be retained by resident
Indian

1. To be surrendered within 7 days to Authorised Dealer.

2. Only foreign coins can be retained.
3. US$ 2000 can be retained and excess amount to be surrendered within 180 days of return.
4. US$ 5000 can be retained.
5. All unspent amount to be surrendered within 6 months.

45. The following persons are not Non Resident Indians Placement

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1. Going abroad to participate in an auto exhibition.

2. Visiting relatives and friends in USA.
3. Going for Medical treatment abroad.
4. Going abroad on business trip.
5. All the above.

46. FCNR (B) deposits are accounted in the books of the bank at

1. Notional rate.
2. Weekly Average Rate.
3. LIBOR rate.
4. Spot Rate.
5. Forward Rate.

47. FCRA means

1. Foreign Currency Regulation Act

2. Foreign Contribution Regulation Act
3. Foreign Cheques Regulation Act
4. Foreign Commodities Regulation Act
5. None of these.

48. As per UCPDC 600 which document need not signed

1. Commercial invoice. 2.Transport Document. 3.Certificate of Origin.

4.Insurance document. 5.All the above.

49. When a letter of credit is confirmed by a confirming bank, the request for such confirmation
should come from which of the following

1. Negotiating bank. 2.Exporter. 3. Importer. 4.Opening bank. 5.Reimbursing bank.

50. Housing loan of NRIs can be repaid out of

1. Funds in NRO account. 2.Funds in NRE account. 3.Funds in FCNR account.

4.Funds from relatives. 5.All the above.

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