Chapter 9: Important Retail Asset Products (JAIIB – Paper 4)
1. What is the maximum tenure generally allowed for a home loan in India?
A. 10 years
B. 15 years
C. 30 years
D. 40 years
Banks typically provide home loans for a maximum tenure of 30 years to allow affordable EMIs while considering the borrower's repayment capacity.
2. Under the Pradhan Mantri Awas Yojana (PMAY), what is the key benefit for eligible home loan borrowers?
A. Subsidy on property registration charges
B. Interest subsidy on home loan principal
C. Tax-free home loan repayment
D. Free insurance for home
PMAY provides interest subsidy on the principal amount of home loans for eligible beneficiaries under CLSS (Credit Linked Subsidy Scheme), making loans more affordable.
3. A home improvement loan is generally sanctioned for which of the following purposes?
A. Renovation, repairs, or extension of an existing house
B. Buying a new house
C. Investing in a commercial property
D. Paying off credit card debts
Home improvement loans are meant for renovation, repairs, or expansion of existing residential property, not for purchasing new properties.
4. A customer has taken a home loan of ₹25 lakh at 8% per annum for 20 years. Which of the following methods is commonly used by banks to calculate EMI?
A. Simple interest method
B. Reducing balance method for interest only
C. Daily interest accrual method
D. Equated Monthly Installment (EMI) formula
Banks use the EMI formula to calculate fixed monthly installments, which include both principal and interest over the loan tenure.
5. Which of the following is mandatory for a borrower to avail PMAY subsidy on a home loan?
A. Meeting income criteria and owning no pucca house
B. Having an existing home loan with another bank
C. Investing in commercial real estate
D. Being a senior citizen above 60 years
PMAY eligibility requires that the beneficiary should meet income criteria and should not already own a pucca (permanent) house anywhere in India.
6. Home decor loans are primarily provided for which purpose?
A. Buying a new house
B. Interior decoration, furniture, and furnishings
C. Paying off previous home loan
D. Real estate investment
Home decor loans are designed to finance interior decoration, furniture, furnishings, and other beautification needs of an existing home.
7. Which of the following is generally true about auto/vehicle loans?
A. They can be availed only for commercial vehicles
B. They are granted without checking the borrower's credit history
C. The vehicle itself is kept as collateral until loan repayment
D. They are not subject to any interest rate
Auto/vehicle loans are typically secured loans where the financed vehicle serves as collateral until the loan is fully repaid.
8. A personal loan is generally considered:
A. A secured loan requiring collateral
B. A home loan variant
C. A vehicle-specific loan
D. An unsecured loan for individual needs
Personal loans are generally unsecured loans granted to individuals for various personal needs like medical expenses, travel, or education.
9. What is the typical repayment tenure for personal loans in India?
A. 12 months to 60 months
B. 10 to 20 years
C. 6 months to 12 months
D. More than 20 years
Personal loans are short to medium-term loans with tenures usually ranging from 1 year (12 months) to 5 years (60 months), depending on bank policies.
10. When a customer applies for an auto loan, which document is typically mandatory?
A. Passport and visa
B. Property ownership proof
C. KYC documents and income proof
D. PAN card only
Banks require KYC documents (ID and address proof) and income proof to assess eligibility and repayment capacity before sanctioning an auto loan.
11. What is the primary purpose of an educational loan?
A. Financing higher education expenses such as tuition and living costs
B. Buying books and stationery only
C. Paying for a home loan EMI
D. Investing in stocks
Educational loans are provided to cover tuition fees, hostel charges, examination fees, and other educational expenses for higher studies in India or abroad.
12. Which of the following is a key feature of most educational loans in India?
A. Mandatory collateral for all loans
B. Fixed interest rates with no subsidy
C. Immediate repayment from the first month of the loan
D. Moratorium period during study and initial repayment holiday
Educational loans typically offer a moratorium period covering the study duration plus a few months after completion before repayment starts.
13. Other retail loans generally include which of the following?
A. Only home loans and vehicle loans
B. Loans for consumer durables, credit cards, and lifestyle needs
C. Loans for corporate businesses
D. Loans for international trade
Other retail loans cover smaller, consumer-oriented loans like personal loans, consumer durable loans, and credit card cash advances.
14. What is the first step in the retail loan processing workflow?
A. Disbursing the loan
B. Creating the EMI schedule
C. Receiving the loan application and verifying eligibility
D. Posting the loan in CBS
Loan processing begins with receiving the application and verifying borrower eligibility, income, and KYC documents before sanctioning.
15. In retail loan processing, which of the following is usually done before sanctioning the loan?
A. Loan disbursement
B. Credit appraisal and risk assessment
C. EMI recovery
D. Asset insurance only
Banks conduct credit appraisal and risk assessment, including evaluating the borrower's creditworthiness and repayment capacity, before sanctioning a retail loan.
