Chapter 3: Applicability of Retail Banking Concepts and Distinction between Retail and Corporate/Wholesale Banking (JAIIB – Paper 4)
1. Which of the following best describes the applicability of retail banking concepts?
A. Focus on international trade finance and forex management
B. Exclusive financing to large corporates only
C. Concentration on government borrowings
D. Providing banking products and services to individual customers
Retail banking primarily deals with individual customers, offering products like savings accounts, loans, and personal banking services.
2. In retail banking, which of the following products is NOT generally offered?
A. Credit cards
B. Housing loans
C. Working capital finance for large corporates
D. Personal loans
Working capital finance for large corporates is part of wholesale/corporate banking, not retail banking.
3. A retail banking model is highly applicable in which of the following environments?
A. Economies with growing middle-class population
B. Markets dominated by large industrial houses only
C. Sectors requiring project finance
D. Infrastructure development financing
Retail banking thrives in markets with a large and expanding middle-class base, where demand for personal financial products increases.
4. Which factor makes retail banking concepts more applicable in India in recent years?
A. Declining household incomes
B. Rising disposable income and urbanization
C. Reduction in banking penetration
D. Focus on bulk corporate lending
Growth in disposable income, urbanization, and financial literacy has made retail banking highly relevant in India.
5. Why do banks find retail banking concepts attractive?
A. Retail loans have higher chances of default compared to corporate loans
B. Retail banking requires fewer customers to achieve profitability
C. Diversified retail portfolios reduce risk concentration
D. Retail banking is less dependent on technology
Retail banking reduces risk through diversification across many small borrowers, unlike corporate banking where exposure is concentrated in a few large accounts.
6. Which of the following is a key distinction between retail banking and corporate banking?
A. Retail banking serves individuals, while corporate banking serves businesses
B. Retail banking provides project finance, while corporate banking provides savings accounts
C. Retail banking deals only with agriculture loans, while corporate banking deals with retail loans
D. Both serve the same type of customers
Retail banking focuses on individuals and households, while corporate/wholesale banking deals with institutions and large companies.
7. Which of the following products is typically associated with corporate banking rather than retail banking?
A. Personal loans
B. Credit cards
C. Home loans
D. Working capital finance
Working capital finance is a corporate/wholesale banking product, while retail banking focuses on individual financial needs like loans and deposits.
8. In terms of risk profile, which statement correctly differentiates retail and corporate banking?
A. Retail banking carries concentrated risk in few clients
B. Corporate banking carries concentrated risk, while retail banking has diversified risk
C. Both carry equal levels of risk concentration
D. Corporate banking has no risk compared to retail banking
Corporate banking deals with a few large accounts, leading to concentrated risk, while retail banking deals with many small accounts, spreading the risk.
9. Which of the following best describes the revenue difference between retail and corporate banking?
A. Retail banking earns mainly from trade finance
B. Corporate banking earns mainly from credit cards and savings deposits
C. Retail banking earns from mass products like savings accounts and loans, while corporate banking earns from large ticket financing and services
D. Both have the same sources of revenue
Retail banking revenues come from volume-based small ticket products, while corporate banking revenues come from fewer but high-value transactions and services.
10. Which of the following statements is true regarding relationship management in retail vs. corporate banking?
A. Corporate banking requires deeper relationship management with fewer clients, while retail banking focuses on mass customer service
B. Retail banking requires relationship managers for each client
C. Both require the same depth of personalized relationship
D. Corporate banking has no need for relationship management
Corporate/wholesale banking clients are fewer but high-value, requiring personalized relationship management, while retail banking deals with large numbers of customers in a standardized way.
11. A customer named Rajesh takes a home loan of ₹40 lakh for 20 years. This is an example of:
A. Corporate banking
B. Retail banking
C. Wholesale banking
D. Investment banking
Home loans to individuals fall under retail banking, as they are personal financial products offered to households.
12. XYZ Ltd., a steel manufacturing company, approaches the bank for a ₹500 crore project finance loan. This transaction will be classified under:
A. Retail banking
B. Priority sector lending
C. Consumer banking
D. Corporate/Wholesale banking
Large-ticket project finance loans to companies are part of corporate/wholesale banking, not retail banking.
13. A bank notices that in its retail loan portfolio, defaults are spread across many small accounts, whereas in its corporate portfolio, a single large borrower default caused significant stress. This highlights:
A. Retail banking carries concentrated risk
B. Corporate banking reduces risk through diversification
C. Retail banking spreads risk, while corporate banking involves concentration risk
D. Both portfolios have identical risk concentration
Retail banking distributes exposure across many small customers, reducing concentration risk, unlike corporate banking where a few big accounts dominate.
14. A bank launches a new mobile app offering instant personal loans, digital savings accounts, and credit card management. This initiative is mainly aligned with:
A. Retail banking strategy
B. Wholesale banking strategy
C. Treasury operations
D. Corporate investment banking
Digital products like personal loans, savings, and credit cards are part of retail banking, targeting mass individual customers.
15. A relationship manager handles only 10 large corporate clients, while another officer manages 5,000 savings accounts of individuals. This difference reflects:
A. Both are examples of retail banking
B. Both are examples of corporate banking
C. No difference between the two segments
D. Corporate banking requires deeper personalized management, while retail banking focuses on mass customer service
Corporate banking relies on intensive relationship management with fewer high-value clients, whereas retail banking deals with a large customer base in a standardized way.
