Previous Year Memory Based Paper

Previous Year paper
(Memory based)
PNB Credit Manager –

2022
(Professional Knowledge)
Memory based paper – PNB Credit Manager – 2022 (Professional)
Exam Pattern (2022)
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Memory Based Professional Knowledge Questions (2022)
1. Calculate the Current ratio based on the following information:

Liabilities Amount Assets Amount
Equity Share Capital 2,00,000 Plant & Machinery 1,00,000
13% Preference Share Capital 1,00,000 Land 1,20,000
General Reserve 20,000 Stock 41,000
15% Debentures 1,00,000 Debtors 2,50,000
Trade Creditors 80,000 Cash in Hand 14,000
Bank Overdraft 25,000
5,25,000 5,25,000
a. 2.90
b. 2.51
c. 3.04
d. 1.48
e. 3.81
Answer: a
Current Ratio = Current Assets/Current Liabilities

3,05,000 / 1,05,000 = 2.90
Current Assets: Stock + Debtors + Cash in hand i.e., 41,000 + 2,50,000 + 14,000 = 3,05,000
Current Liabilities: Trade Creditors + Bank Overdraft i.e., 80,000 + 25,000 = 1,05,000
2. Calculate the Quick ratio based on the following information:

5,25,000 5,25,000
a. 3.04
b. 2.51
c. 1.48
d. 2.90
e. 3.30
Answer: b 2.51
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Quick ratio = Quick Assets/Current Liabilities

2,64,000 / 1,05,000 = 2.51
Quick Assets: Debtors + Cash in hand i.e., 2,50,000 + 14,000 = 2,64,000
Current Liabilities: Trade Creditors + Bank Overdraft i.e., 80,000 + 25,000 = 1,05,000
3. Calculate the Proprietary Ratio of the company based on the following information:
5,25,000 5,25,000
a. 0.61
b. 0.59
c. 0.57
d. 0.40
e. 0.41
Answer: a
Shareholders fund/Total assets = 3,20,000/5,25,000 = 0.609 i.e., 0.61
Shareholders fund: Equity + Preference + General Reserve

2,00,000 + 1,00,000 + 20,000 = 3,20,000
Total assets: Plant & Machinery + Land + Stock +Debtors + Cash

1,00,000 + 1,20,000 + 41,000 + 2,50,000 + 14,000 = 5,25,000
4. Calculate the Debt Equity ratio of the company based on the following information:
5,25,000 5,25,000
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a. 0.31
b. 0.33
c. 0.49
d. 0.45
e. 0.91
Answer: A
D/E ratio= Debt/Shareholders Fund

D/E ratio = 100000/320000= 0.3125
Debt= 1,00,000 (Debentures)
Shareholders Fund= Equity Share + Preference Share + General Reserve

2,00,000 + 1,00,000 + 20,000 = 3,20,000
Refer to the following information to answer the next 4 questions
Opening Stock: 20,000 Capital Employed: 15,00,000

Closing Stock: 1,00,000 Trade Receivables: 1,00,000
Net Purchases: 6,30,000 Trade Payables: 40,000
Direct Expenses: 50,000 Bank Overdraft: 20,000
Net Sales: 12,00,000 Cash in hand: 10,000
Indirect Expenses: 3,50,000 Net Fixed Assets: 24,00,000
5. Calculate the Inventory Turnover Ratio

a. 5 Times
b. 9.17 Times
c. 10 Times
d. 5.25 Times
e. 6 Times
Answer: c (10 Times)
Inventory Turnover Ratio: COGS/Average Inventory

= 6,00,000/60,000
= 10 Times
COGS = Opening Stock + Purchase + Direct Expenses – Closing Stock

= 20,000 + 6,30,000 + 50,000 – 1,00,000
= 6,00,000
Average Inventory = (Opening Stock + Closing Stock) / 2

= (20,000 + 1,00,000) / 2
5
= 60,000
6. Calculate the Working Capital Turnover Ratio:

a. 8 Times
b. 10 Times
c. 5 Times
d. 12 Times
e. 6 Times
Answer: a (8 Times)
Working Capital Turnover Ratio = Net Sales / Working Capital

=12,00,000/ 1,50,000
Working Capital = Current Assets – Current Liabilities

= 2,10,000 – 60,000
= 1,50,000
Current Assets: Closing Stock + Trade Receivables + Cash
= 1,00,000 + 1,00,000 +10,000
= 2,10,000
Current Liabilities = Trade payables + Bank Overdraft
= 40,000 + 20,000
= 60,000
7. Calculate the Fixed Assets Turnover Ratio.
a. 2 Times
b. 0.5 Times
c. 5 Times
d. 2.5 Times
e. 3 Times
Answer: b (0.5 times)

Fixed Assets Turnover Ratio = Net Sales/ Net Fixed Assets
12,00,000/ 24,00,000 = 0.5
8. Calculate its average collection period.
a. 30.4 days
b. 34.3 days
c. 12 days
d. 24 days
e. 60.5 days
Answer: A
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Average accounts receivables = ₹1,00,000

Net sales = ₹12,00,000
To calculate the average collection period, we need to determine the average accounts
receivables turnover. The formula for accounts receivables turnover is:
Accounts Receivables Turnover = Sales / Average Accounts Receivables
Accounts Receivables Turnover = ₹12,00,000 / ₹1,00,000

Accounts Receivables Turnover = 12
The average collection period is 365/accounts turnover

Average Collection Period = 365/12 = 30.42 days

Revenue from operations 1,70,000
COGS 60,000
Selling expense 40,000
Administration expense 20,000
9. Calculate gross profit ratio:
a) 52.9%
b) 29.14%
c) 30%
d) 64.71%
e) 53%
Answer: d. 64.71%
Gross profit ratio= Gross profit/Net revenue
1,10,000/1,70,000 * 100
=64.71%
Calculation of gross profit: Revenue – COGS

=170,000 – 60,000
=1,10,000
10. Calculate operating profit ratio:
a. 29.14%
b. 52.9%
c. 64.71%
d. 53%
e. 30%
Answer: a. 29.14%
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Operating profit ratio= Operating profit/Net revenue

50,000/1,70,000 * 100
=29.14 %
Calculation of Operating profit: Revenue – COGS – Operating expenses

=170,000 – 60,000-40,000-20,000
=50,000

Particulars Amount
Equity and Liabilities
1. Shareholders’ funds
a) Share capital 1200000
b) Reserves and surplus 300000
c) Money received against share warrants 100000
2. Non-current Liabilities
a) Long-term borrowings 500000
b) Other long-term liabilities 40000
3. Current Liabilities
a) Short-term borrowings 200000
b) Trade payables 100000
c) Other current liabilities 50000
d) Short-term provisions 150000
Assets
1. Non-Current Assets
a) Fixed assets 1600000
b) Non-current investments 200000
c) Long-term loans and advances 100000
2. Current Assets
a) Current investments 160000
b) Inventories 150000
c) Trade receivables 100000
d) Cash and cash equivalents 250000
e) Short-term loans and advances 80000
11. Calculate the Debt Equity Ratio of the company.

a) 0.29: 1
b) 0.34: 1
c) 0.33:1
d) 0.5:1
e) None of the above
Ans. b
Debt-Equity Ratio =Debts/Equity
Debt = Long-term borrowings + Other long-term liabilities = Rs. 5,00,000 + Rs. 40,000
= Rs. 5,40,000
Equity = Share capital + Reserves and surplus + Money received against share
warrants
= Rs. 12,00,000 + Rs. 3,00,000 + Rs. 1,00,000
= Rs. 16,00,000
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Debt/Equity Ratio = 540000/1600000 = 0.34
12. Calculate the Equity multiplier of the company.

a) 0.61
b) 1.65
c) 0.57
d) 1.76
Ans. B
Equity Multiplier = Total Assets / Equity
Total assets = 26,40,000

Equity = 16,00,000
Equity multiplier = 26,40,000/16,00,000

= 1.65
13. Who decides what will be the cropping season for the purpose of loan?
a. RBI
b. Lending bank
c. State Level Bankers' Committee
d. Sponsor Bank of RRB in a region
e. State Government
Ans. C
As per the prudential norms for agriculture loans, the crop season for each crop, which
means the period up to harvesting of the crops raised, would be as determined by the
State Level Bankers' Committee (SLBC) in each State.
14. What is the time line given by RBI to borrowers having exposure of above Rs.25
crore to obtain by Legal Entity Identifier (LEI) code?
a. 31 December 2022
b. 31 March 2023
c. 30 April, 2023
d. 1 July, 2023
e. 1 October, 2023
Answer: c.
Legal Entity Identifier (LEI) Code is a unique 20-digit code used to identify legal entities that
engage in financial transactions worldwide in order to improve the quality and accuracy of
financial data systems for better risk management post the global financial crisis by
establishing a global reference system.
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All non-individual borrowers availing an aggregate exposure of Rs. 5 crore and above from
banks and financial institutions were mandated to obtain LEI Code over the prescribed
timeline. The requirement was initially introduced by RBI vide notification dated November
02, 2017 for large corporate borrowers i.e., having total exposure of Rs. 50 crores. Further,
the roadmap for borrowers with exposure from Rs. 5 crore to Rs. 50 crore was to be issued
in due course as follows:
Timeline for obtaining LEI by borrowers
Total Exposure LEI to be obtained on or before
Above ₹25 crore April 30, 2023
Above ₹10 crore, up to ₹25 crore April 30, 2024
₹5 crore and above, up to ₹10
April 30, 2025
crore
15. If CIBIL score is -1 then what does that mean?

a. Good credit history
b. Poor credit history
c. No Credit history
d. No bank account
e. Multiple bank accounts
Answer: c
A CIBIL score is a three-digit numerical representation of an individual's creditworthiness
and credit history. It ranges from 300 to 900, with a higher score indicating a better credit
profile.
If a CIBIL score in India is -1, it signifies that the individual does not have a credit history or
credit record with the Credit Information Bureau (India) Limited (CIBIL). When a person does
not have any credit history or has not taken any loans or credit facilities in the past, CIBIL
assigns a score of -1. This means that the person's creditworthiness and credit behaviour
cannot be evaluated because there is no data available on their borrowing and repayment
activities.
This score is also known as “NH” or “no history”
16. The reporting requirement for banks to provide credit information to Central
Repository of Information on Large Credits (CRILC) about their borrowers is
applicable for exposure of _________
a. Rs. 5 crore and above
b. Rs.10 crore and above
c. Rs.25 crore and above
d. Rs. 50 crore and above
e. Rs.100 crore and above
Ans. A
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RBI has constituted a Central Repository of Information on Large Credits (CRILC) to collect,
store, and publish data on all borrowers’ credit exposures. Banks/Financial Institutions are
expected to report findings to CRILC.
Banks will have to provide credit information to CRILC about their borrowers with an
aggregate fund-based and non-fund based exposure of and over Rs.5 Crores
17. What is the maximum loan amount available to street vendors under the PM Street
Vendor's AtmaNirbhar Nidhi (PM Svanidhi) scheme in India?
a. Rs.5,000
b. Rs.7,500
c. Rs.10,000
d. Rs.15,000
e. Rs.20,000
Answer: c)
Under the PM Svanidhi scheme, street vendors can avail of working capital loans. The
maximum loan amount available to street vendors is Rs.10,000. This loan amount is
designed to support street vendors in re-establishing their businesses impacted by the
COVID-19 pandemic.
18. In an Inter Creditor Agreement (ICA), what is the minimum agreement requirement for
lenders to make a decision?
a. 50% lenders by value and 50% lenders by number

b. 60% lenders by value and 75% lenders by number
c. 75% lenders by value and 60% lenders by number
d. 80% lenders by value and 40% lenders by number
e. 90% lenders by value and 50% lenders by number
Answer: c)
In an Inter Creditor Agreement (ICA), for any decision to be made, a minimum agreement is
required among the lenders. The correct requirement is that at least 75% of lenders by value
and 60% of lenders by number should agree. These thresholds ensure that a significant
majority of lenders support the proposed decision before it can be implemented.
19. What is the loan amount range available for Proof of Concept (POC) or Prototype
development under the Stand-Up India Scheme in India?
a. 1 lakh to 10 lakhs
b. 5 lakhs to 50 lakhs
c. 50 lakhs to 5 crores
d. 10 lakhs to 1 crore
e. 1 crore to 10 crores
Answer: d.
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Under the Stand-Up India Scheme, the loan amount range available for Proof of Concept
(POC) or Prototype development is 10 lakhs to 1 crore. This range is specifically designed to
support entrepreneurs, especially women and individuals from Scheduled Castes (SC) or
Scheduled Tribes (ST) categories, in developing and testing their business ideas through
POC or prototype development.
20. Which among the following is not the benchmark rate for calculating lending rate by
banks?
a. Repo rate
b. Reverse Repo rate
c. MCLR
d. BPLR
e. T-bill 6 months
Answer: B
The lending rate is determined by banks based on internal benchmarks or external

benchmark rates.
 The internal benchmark rates include prime lending rate (PLR), BPLR (benchmark
PLR), base rate or MCLR
But, in the context of the banking system’s failure to correctly transmit the interest
rate directions of the RBI, the central bank has decided to instruct banks to follow
some external benchmarks for setting their interest rate.
 The RBI in the circular identified the following external benchmarks for banks to
follow:
o Reserve Bank of India policy repo rate.
o Government of India 3-Months Treasury Bill yield published by the Financial
Benchmarks India Private Ltd. (FBIL).
o Government of India 6-Months Treasury Bill yield published by the FBIL.
o Any other benchmark market interest rate published by the FBIL.
21. What will be the risk weight for an individual housing loan of upto Rs.30 lakh and having
LTV ratio of up to 80%?
a) 20%
b) 25%
c) 30%
d) 35%
e) 50%
Ans. D
While deciding the quantum of loan to be granted as housing finance, banks should abide
by the following Loan to Value (LTV) and Risk Weights (RWs):
Category of Loan LTV Ratio (%) Risk Weight (%)
(a) Individual Housing Loans
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< 80 35
Upto ₹ 30 lakh
> 80 and < 90 50
Above ₹ 30 lakh & upto ₹ 75 lakh < 80 35
Above ₹ 75 lakh < 75 50
(b) CRE – RH NA 75
22. For the purpose of calculating LTV for a housing loan, the stamp duty can be added
in the cost of the housing property of up to what value?
a. Rs.25 lakh
b. Rs.20 Lakh
c. Rs.10 lakh
d. Rs.30 lakh
e. Rs.35 lakh
Ans. C
As per RBI, in cases where the cost of the house/dwelling units does not exceed Rs.10 lakh,
bank may add stamp duty, registration and other documentation charges to the cost of the
house/dwelling unit for the purpose of calculating LTV ratio.
23. For what purpose did RBI set up a working group led by Sunil Mehta, to accelerate
and widen the reach of digital banking services?
a) Introducing Tokenisation
b) Guidelines for Digital lending
c) Feature phone based UPI
d) Setting up of Digital Banking Units
e) Finalising account aggregator system
Ans. D
A working group (WG) under the chairmanship of Sunil Mehta, Chief Executive, IBA and
select banks recommended guidelines for setting up of Digital Banking Units (DBUs) by
commercial banks.
A DBU is a specialised fixed point business unit / hub housing certain minimum digital
infrastructure for delivering digital banking products & services as well as servicing existing
financial products & services digitally, in both self-service and assisted mode, to enable
customers to have cost effective/ convenient access and enhanced digital experience to/ of
such products and services in an efficient, paperless, secured and connected environment
with most services being available in self-service mode at any time, all year round.
24. As per the IRAC norms (Income Recognition, Asset classification and Provisioning
Pertaining to Advance) a regular/ ad hoc credit limits that has not been reviewed/
renewed within _____ days, will be treated as NPA.
a) 90 days
b) 120 days
c) 180 days
d) 270 days
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e) 360 days
Ans. C
Regular and ad hoc credit limits need to be reviewed/ regularised not later than three months
from the due date/date of ad hoc sanction. Hence, an account where the regular/ ad hoc
credit limits have not been reviewed/ renewed within 180 days from the due date/ date of ad
hoc sanction will be treated as NPA.
25. What is the maximum period for which an asset can be considered a substandard
asset?
a) Less than or equal to 6 months
b) Less than or equal to 12 months
c) Less than or equal to 18 months
d) Less than or equal to 24 months
Ans. B
A substandard asset is one which has remained NPA for a period less than or equal to 12
months.
26. In which of the following situations an NPA account can be upgraded to standard
account?
a) The last one month arrears and current month interest and principal is cleared
b) The last financial year arrears of interest and principal are cleared.
c) All arrears of interest is paid
d) All arrears of principal is paid
e) All arrears of interest and principal is paid
Ans. E
As per RBI guidelines, a loan account can be upgraded to ‘standard from NPA only if all the
arrears of interest and principal are paid by the borrower.
27. What is the minimum holding period before a bank can transfer loan with tenor of up
to 2 years?
a) 2 months
b) 3 months
c) 4 months
d) 5 months
e) 6 months
Ans. B
The transferor can transfer loans only after a minimum holding period (MHP), as prescribed
below, which is counted from the date of registration of the underlying security interest with
Central Registry of Securitisation Asset Reconstruction and Security Interest of India
(CERSAI):
 Three months in case of loans with tenor of up to 2 years;
 Six months in case of loans with tenor of more than 2 years.
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28. As per the IRAC norms, the exposure would include:

a) Only fund based exposure
b) Only non-fund based exposure
c) Both fund based and non-fund based exposure
d) Fund based and investment exposure
e) Fund based, non-fund based and investment exposure
Ans. E
Aggregate exposure under the guidelines would include all fund based and non-fund based
exposure, including investment exposure with the lenders.
29. Which of the following banks are not covered under opening and operation of current
accounts and CC/OD accounts?
a) Scheduled Commercial Banks
b) Payment Banks
c) RRBs
d) NBFCs
e) All are included
Ans. D
The provisions of the instructions related to Opening of Current Accounts and CC/OD
Accounts by Banks apply to current accounts and CC/OD accounts opened or maintained
with the following Regulated Entities (REs):
 All Scheduled Commercial Banks
 All Payments Banks
Note – RRBs are also scheduled banks
30. What is the revised limit of the personal loans that can be given to any director of
other Bank without Board's Approval?
a) Rs.25 lakh
b) Rs. 50 lakh
c) Rs. 1 crore
d) Rs.2 crore
e) Rs.5 crore
Ans. E
In July 2021, Reserve Bank of India (RBI) overhauled rules for extending loans to directors
of other banks and relatives of directors. As per the amendments, the central bank has
allowed banks to extend personal loans up to Rs.5 crore (revised from Rs.25 lakh) to
directors of other banks and directors' relatives other than spouses without board approval.
31. Within how many days of creation of charge on assets, is it needed to be registered
with the RoC?
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a) 15 days
b) 21 days
c) 30 days
d) 35 days
e) 60 days
Ans. C
Section 77 states that Companies are required to register ALL TYPES OF CHARGES, with
ROC within 30 days of its creation.
32. Under the ECLGS scheme for Hospitality sector, what is the period of moratorium
allowed?
a) 1 year
b) 2 years
c) 3 years
d) 4 years
e) No moratorium
Ans. B
ECLGS 3.0 refers to the scheme for providing 100% guarantee to member lending
institutions in respect of eligible credit facility extended by them to its borrowers in the
Hospitality and related Sectors. Here, moratorium period of 2 years on the principal amount
shall be provided to borrowers of GECL facility under ECLGS 3.0, during which period
interest shall be payable.
33. The Emergency credit line Guarantee Scheme provided guarantee for what
percentage of the eligible loan extended by the member lending institution?
a) 50%
b) 75%
c) 80%
d) 90%
e) 100%
Ans. E
ECLGS scheme provided 100% Guarantee to member lending institutions in respect of
eligible credit facility extended by them to the eligible borrowers
34. For which of the following maturity, banks are not required to publish MCLR?
a. Overnight
b. Fortnight
c. One month
d. Six months
e. One Year
Answer: B
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MCLR is the benchmark rate set by banks in India for lending purposes. It is based on
factors such as the bank's Marginal cost of funds, Negative carry on account of CRR,
Operating costs and Tenor premium.
Banks shall publish the internal benchmark for the following maturities:
 overnight MCLR,
 one-month MCLR,
 three-month MCLR,
 six month MCLR,
 One year MCLR.
Banks have the option of publishing MCLR of any other longer maturity.
35. According to the guidelines in India, how often should banks review and revise their
Marginal Cost of Funds based Lending Rate (MCLR)?
a. Once a week
b. Once a month
c. Once a year
d. Once every six months
e. Once every quarter
Answer: B
Review of MCLR
 Banks shall review and publish their Marginal Cost of Funds based Lending Rate
(MCLR) of different maturities every month on a pre-announced date with the
approval of the Board or any other committee to which powers have been delegated.
 Banks which do not have adequate systems to carry out the review of MCLR on a
monthly basis, shall review their rates once a quarter on a pre-announced date for
the first one year i.e. upto March 31, 2017 and adopt the monthly review thereafter.
36. As per RBI’s IRAC norms, under doubtful assets, stock audit at annual intervals by
external agencies is mandatory in cases of NPAs with balance of ______
a) Rs.5 crore and above
b) Rs.10 crore and above
c) Rs.15 crore and above
d) Rs.25 crore and above
e) Rs.50 crore and above
Ans. A
With a view to bringing down divergence arising out of difference in assessment of the value
of security, in cases of NPAs with balance of Rs.5 crore and above stock audit at annual
intervals by external agencies appointed as per the guidelines approved by the Board would
be mandatory in order to enhance the reliability on stock valuation. Collaterals such as
immovable properties charged in favour of the bank should be got valued once in three
years by valuers appointed as per the guidelines approved by the Board of Directors
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37. Which of the following will not be a party to foreign Letter of credit?
a. Applicant
b. Beneficiary
c. Issuing Bank
d. Confirming Bank
e. Custom Authorities
Answer: e. Custom Authorities.
Among the options given, the party that is not typically involved in a foreign letter of credit
transaction is Customs Authorities
The parties involved in a foreign letter of credit transaction are as follows:
a. Applicant: The applicant is the buyer or importer who requests the letter of credit to be
issued in favor of the beneficiary.
b. Beneficiary: The beneficiary is the seller or exporter who will receive payment under the
letter of credit upon meeting the specified terms and conditions.
c. Issuing Bank: The issuing bank is the bank that issues the letter of credit on behalf of the
buyer/applicant. It is responsible for making the payment to the beneficiary upon
presentation of compliant documents.
d. Confirming Bank: The confirming bank is an additional bank that adds its confirmation to
the letter of credit, guaranteeing payment to the beneficiary. This bank is involved when the
issuing bank and the beneficiary are in different countries or when there is a need for an
additional level of assurance.
Customs authorities, on the other hand, are not directly involved in the letter of credit
transaction itself. Their role primarily comes into play during the physical movement of goods
across borders, where they enforce customs regulations, conduct inspections, and collect
duties or taxes. However, they are not a party to the letter of credit transaction itself.
38. Under the MUDRA Shishu scheme, what percentage of interest subvention is provided to
eligible borrowers?
a. 1%
b. 2%
c. 3%
d. 4%
e. 5%
Answer: b.
The MUDRA Shishu scheme, which is a part of the Micro Units Development and Refinance
Agency (MUDRA) initiative in India, provides an interest subvention or interest subsidy to
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small borrowers. Under the MUDRA Shishu scheme, borrowers can avail loans up to Rs.
50,000 (for small business and entrepreneurial activities).
Previously, the Government of India had implemented an interest subvention scheme for
MUDRA Shishu loans. Under this scheme, eligible borrowers were entitled to an interest
subsidy of 2% per annum on their loans.
39. A prospectus which enables an issuer to make a series of issues within a period of 1
year without the need of filing a fresh prospectus every time is known as _________
a. Red Herring Prospectus

b. Abridged Prospectus
c. Shelf Prospectus
d. Draft Prospectus
e. Recurring Prospectus
Answer: c)
A "Shelf Prospectus" is a legal document filed with regulatory authorities for a public
offering of securities. It allows a company to register securities for future offerings without
the need to prepare a new prospectus each time. It has a validity of 1 year as per
Companies Act, 2013. It provides flexibility and efficiency in the issuance of securities,
enabling the company to respond quickly to market conditions and raise capital when
needed.
40. Which of the following correctly defines a "small company" as per the Companies Act
2013?
a. A company with a paid up capital of up to Rs.50 lakh and turnover of less than Rs. 2
crore.
b. A company with a paid up capital of up to Rs.20 lakh and turnover of less than Rs.
50 lakh.
c. A company with a paid up capital of up to Rs.20 lakh and turnover of less than Rs. 2
crore
d. A company with a paid up capital of up to Rs.50 lakh and turnover of less than Rs.
20 crore
e. A company with a paid up capital of up to Rs.50 lakh and turnover of less than Rs.
10 crore
Answer: a)
As per the Companies Act 2013 of India, a "small company" is defined based on the
following criteria:
small company” means a company, other than a public company,—
i. paid-up share capital of which does not exceed fifty lakh rupees or such higher
amount as may be prescribed which shall not be more than ten crore rupees
and
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ii. turnover of which as per profit and loss account for the immediately preceding
financial year does not exceed two crore rupees or such higher amount as may be
prescribed which shall not be more than one hundred crore rupees
Provided that nothing in this clause shall apply to—

(A) a holding company or a subsidiary company;
(B) a company registered under section 8; or
(C) a company or body corporate governed by any special Act;
41. If a Unique Document Identification Number (UDIN) is not generated at the time of
filling an audit report in India, how many days are provided for generating the UDIN
compulsorily?
a. 15 days
b. 30 days
c. 45 days
d. 60 days
e. 90 days
Answer: d. 60 days
Unique Document Identification Number (UDIN) is a unique number generated by the
Institute of Chartered Accountants of India (ICAI) for each document certified or
attested by a practicing-chartered accountant (CA). UDIN helps in maintaining the
authenticity and traceability of certified documents.
It is mandatory to generate UDIN while signing the Audit Reports / Certificates /
Document. However, if any member is unable to generate UDIN as desired above, it
has to generated within 60 days of signing the same.
42. Which loan does not require the borrower to pay back during their lifetime?
a. Personal loan
b. Mortgage loan
c. Auto loan
d. Reverse mortgage
e. Education loan
Answer: d. Reverse mortgage

In a reverse mortgage loan, the borrower is not required to pay back the loan during
their lifetime. Reverse mortgage is a type of loan available to elderly homeowners
where they can convert a portion of the equity in their home into loan funds. The loan
is typically repaid when the borrower permanently moves out of the home, passes
away, or sells the property. Until then, the borrower does not make any monthly
mortgage payments. Instead, the loan balance increases over time as interest and
fees accumulate. The loan is usually repaid from the proceeds of the sale of the
home.
21
43. When a borrower opts for an insurance policy in connection with a loan, it is a case of
_______
a. Assignment
b. Pledge
c. Mortgage
d. Hypothecation
e. Guaranty
Answer: a. Assignment
When a borrower opts for an insurance policy in connection with a loan, it is common
for the lender to require the borrower to assign the insurance policy to the lender.
This means that the borrower transfers the rights and benefits of the insurance policy
to the lender as security for the loan. This assignment serves as additional collateral
for the loan, providing the lender with a claim on the insurance proceeds in the event
of a claimable event. Therefore, the loan opted insurance policy is associated with
the case of assignment.
44. Under the Stand-Up India scheme in India, projects approved for women
entrepreneurs are primarily focused on which category?
a. Greenfield
b. Brownfield
c. Orangefield
d. Bluefield
e. Yellowfield
Answer: a. Greenfield
The Stand-Up India scheme aims to promote entrepreneurship among women and
marginalized communities. It specifically focuses on providing financial assistance to
set up new enterprises or expand existing ones. In the context of the scheme,
"Greenfield" refers to the establishment of new business ventures. Therefore,
projects approved for women entrepreneurs under the Stand-Up India scheme can
be in the greenfield category.
It's important to note that the terms "brownfield" and "orangefield" are not typically
used in the context of the Stand-Up India scheme.
45. Among the following options, which one can lead to an immediate outflow of funds
from the bank?
a. Letter of Credit
b. Bank Guarantee
c. Bill Discounting
d. Overdraft facility
e. All of the above
22
Answer: c.
Bill discounting is a type of short-term borrowing facility provided by banks to
businesses. In bill discounting, the bank purchases the bills or invoices of a business
at a discounted value before their maturity. The bank pays the discounted amount to
the business, and the business receives immediate funds. However, this transaction
also leads to an immediate outflow from the bank as they provide funds to the
business based on the discounted value of the bills.
46. Which of the following is the utility of Equity Multiplier for the investor?
a. To know the portion of interest on debt that can be covered from earnings available
to equity shareholders
b. To know the number of times preference share interest can be paid from earnings
available to equity shareholders
c. To know the portion of return on equity generated as a result of debt
d. To know the number of times equity is multiplied to get the value of debt
e. None of the above
Answer: c.
The equity multiplier is a financial ratio that allows investors to understand the extent to
which a company's return on equity (ROE) is influenced by debt. It measures the proportion
of a company's assets that are funded by debt relative to equity. The formula for the equity
multiplier is:
Equity Multiplier = Total Assets / Total Equity
By calculating the equity multiplier, investors can determine how much of the return on
equity is attributable to debt financing. A higher equity multiplier indicates a larger portion of
the company's ROE is a result of debt, while a lower equity multiplier suggests that equity
financing plays a more significant role in generating the company's return.
47. What is the limit on loan given to Start-Ups under MSME that can be classified as PSL?
a) Rs. 25 lakh
b) Rs.50 lakh
c) Rs.25 crore
d) Rs.50 crore
Ans. D
Loans up to Rs.50 crore to Start-ups, as per definition of Ministry of Commerce and
Industry, Govt. of India that conform to the definition of MSME are considered under Priority
sector lending.
48. Under the Companies Act 2013, if a company borrows more than a specific limit, the
Board needs to seek consent of the company by a _____________
a) Ordinary resolution
23
b) Special resolution
c) Extraordinary resolution
d) Board resolution
Ans. B
The Board of Directors of a company shall exercise the following powers only with the
consent of the company by a special resolution, namely:—
 to sell, lease or otherwise dispose of the whole or substantially the whole of the
undertaking of the company or where the company owns more than one undertaking,
of the whole or substantially the whole of any of such undertakings.
 to invest otherwise in trust securities the amount of compensation received by it as a
result of any merger or amalgamation;
 to borrow money, where the money to be borrowed, together with the money already
borrowed by the company will exceed aggregate of its paid-up share capital, free
reserves and securities premium , apart from temporary loans obtained from the
company’s bankers in the ordinary course of business:
 to remit, or give time for the repayment of, any debt due from a director.
49. What is the maturity period of External Commercial Borrowings?

a) 1 year
b) 2 years
c) 3 years
d) 5 years
e) No specific maturity period
Ans. C
Minimum Average Maturity Period (MAMP) is 3 years for all ECBs, irrespective of the
amount of borrowing except for:
 ECB raised from foreign equity holder and utilised for specific purposes, the MAMP
would be 5 years.
 ECB up to USD 50 million per financial year raised by manufacturing sector, which
has been given a special dispensation, the MAMP would be 1 year.
50. A creditor would be happy if there is a decrease in a ratio of ___________

a) Debt to total assets ratio
b) Return on equity
c) Return on assets
d) Interest coverage
e) Debtor turnover
Ans. A
Debt to assets ratio is a type of solvency ratio which shows what part of the assets are
funded through debt. A lower ratio indicates lower debt burden on the company and is
therefore preferred by lenders/creditors.
24
RoE and RoA are profitability ratios and an increase means the company is better
performing.
Interest coverage ratio tells the earnings available with he company to service the interest
cost and is therefore better if higher.
25

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PNB Credit Manager –

Exam Pattern (2022)

Memory Based Professional Knowledge Questions (2022)

1. Calculate the Current ratio based on the following information:

Current Ratio = Current Assets/Current Liabilities

2. Calculate the Quick ratio based on the following information:

Quick ratio = Quick Assets/Current Liabilities

Quick Assets: Debtors + Cash in hand i.e., 2,50,000 + 14,000 = 2,64,000

Shareholders fund/Total assets = 3,20,000/5,25,000 = 0.609 i.e., 0.61

Shareholders fund: Equity + Preference + General Reserve

Total assets: Plant & Machinery + Land + Stock +Debtors + Cash

D/E ratio= Debt/Shareholders Fund

Debt= 1,00,000 (Debentures)

Shareholders Fund= Equity Share + Preference Share + General Reserve

Refer to the following information to answer the next 4 questions

Opening Stock: 20,000 Capital Employed: 15,00,000

5. Calculate the Inventory Turnover Ratio

Answer: c (10 Times)

Inventory Turnover Ratio: COGS/Average Inventory

COGS = Opening Stock + Purchase + Direct Expenses – Closing Stock

Average Inventory = (Opening Stock + Closing Stock) / 2

6. Calculate the Working Capital Turnover Ratio:

Working Capital Turnover Ratio = Net Sales / Working Capital

Working Capital = Current Assets – Current Liabilities

7. Calculate the Fixed Assets Turnover Ratio.

Answer: b (0.5 times)

8. Calculate its average collection period.

Average accounts receivables = ₹1,00,000

Accounts Receivables Turnover = Sales / Average Accounts Receivables

Accounts Receivables Turnover = ₹12,00,000 / ₹1,00,000

The average collection period is 365/accounts turnover

Refer to the following information to answer the next 2 questions

9. Calculate gross profit ratio:

Calculation of gross profit: Revenue – COGS

10. Calculate operating profit ratio:

Operating profit ratio= Operating profit/Net revenue

Calculation of Operating profit: Revenue – COGS – Operating expenses

Refer to the following information to answer the next 2 questions

11. Calculate the Debt Equity Ratio of the company.

Debt/Equity Ratio = 540000/1600000 = 0.34

12. Calculate the Equity multiplier of the company.

Equity Multiplier = Total Assets / Equity

Total assets = 26,40,000

Equity multiplier = 26,40,000/16,00,000

15. If CIBIL score is -1 then what does that mean?

This score is also known as “NH” or “no history”

a. 50% lenders by value and 50% lenders by number

The lending rate is determined by banks based on internal benchmarks or external

28. As per the IRAC norms, the exposure would include:

Note – RRBs are also scheduled banks

Answer: e. Custom Authorities.

a. Red Herring Prospectus

small company” means a company, other than a public company,—

Provided that nothing in this clause shall apply to—

Answer: d. Reverse mortgage

Equity Multiplier = Total Assets / Total Equity

49. What is the maturity period of External Commercial Borrowings?