Join CAIIB WITH ASHOK on YouTube & App
BFM MODULE – A
Chapter 9: INTERNATIONAL FINANCIAL SERVICE
CENTRE (IFSC), GIFT CITY (MCQs)
What we will study?
MCQs based on Macmillan Book?
Join CAIIB WITH ASHOK on YouTube & App
Q1. Banks interested in setting up IFSC Banking Units (IBUs) will be
required to obtain prior permission from ______?
a) Ministry of Finance.
b) Reserve Bank of India.
c) Securities and Exchange Board of India.
d) Insurance Regulatory and Development Authority.
Answer: B
Refer Page: 245, Topic: 9.2.
Explanation: The Reserve Bank of India (RBI) regulates banking
operations in India, including IFSC Banking Units (IBUs), and banks
must obtain its prior approval before setting up IBUs.
Q2. According to the SEZ Act, 2005, we need ------- to set up an IFSC
in an SEZ?
a) Approval from the Central Government.
b) Approval from the Reserve Bank of India.
c) Recommendation from the State Government.
d) Clearance from the Foreign Investment Promotion Board.
Join CAIIB WITH ASHOK on YouTube & App
Answer: A
Refer Page: 243, Topic: 9.2.
Explanation: The SEZ Act 2005 (Special Economic Zones Act, 2005)
allows setting up an IFSC in an SEZ or as an SEZ after obtaining
approval from the Central Government.
Q3. On which date did the Gujarat International Financial
Technology Tec-City (GIFT City) begin operations?
a) January 1, 2020. b) August 15, 2019.
c) January 26, 2020. d) December 5, 2019.
Answer: D
Refer Page: 243, Topic: 9.2.
Explanation: Gujarat International Financial Technology Tec-City
(GIFT City) was established at Gandhinagar, Gujarat and started
functioning from 5th Dec 2019 with 225 companies including 3
PSBs, 9 Private. Sector Banks & 3 MNC Banks.
Join CAIIB WITH ASHOK on YouTube & App
Q4. Which city is home to the Gujarat International Financial
Technology Tec-City (GIFT City)?
a) Mumbai, Maharashtra. b) Bengaluru, Karnataka.
c) Gandhinagar, Gujarat. d) Hyderabad, Telangana.
Answer: C
Refer Page: 243, Topic: 9.2.
Explanation: Gujarat International Financial Technology Tec-City
(GIFT City) was established at Gandhinagar, Gujarat and started
functioning from 5th Dec 2019 with 225 companies including 3
PSBs, 9 Private Sector Banks & 3 MNC Banks.
Q5. What is the minimum capital requirement for an IFSC Banking
Units (IBUs), as provided by the parent bank?
a) USD 10 Mn or equivalent in INR.
b) USD 50 Mn or equivalent in foreign currency.
c) USD 100 Mn or equivalent in any currency.
d) USD 20 Mn or equivalent in any foreign currency.
Join CAIIB WITH ASHOK on YouTube & App
Answer: D
Refer Page: 244, Topic: 9.4.
Explanation: Capital - The parent bank will be required to provide
a minimum capital of USD 20 Mn or equivalent in any foreign
currency to its IBU which should be maintained at all times.
Q6. What is true about reserve requirements for IFSC Banking
Units (IBUs)?
a) IBUs are subject to CRR but exempt from SLR requirements of
RBI.
b) IBUs are exempt from both CRR and SLR requirements of RBI.
c) IBUs must maintain 25% SLR at all times.
d) IBUs are subject to SLR only if lending in INR.
Answer: B
Refer Page: 244, Topic: 9.4.
Explanation: Reserve requirements - The liabilities of the IBU are
exempt from, both, CRR and SLR requirements of RBI.
Join CAIIB WITH ASHOK on YouTube & App
Q7. What is the full form of IFSCA?
a) Indian International Financial Standards and Compliance
Authority.
b) International Investment and Foreign Services Control
Authority.
c) International Financial Services Centres Authority.
d) Institute for International Finance and Services Compliance
Authority.
Answer: C
Refer Page: 245, Topic: 9.5.
Explanation: International Financial Services Centres Authority
(IFSCA)
Q8. Which of the following statement is true?
i) IFSC Banking Units (IBUs) are not allowed to open Saving Bank
accounts.
ii) IFSC Banking Units (IBUs) are allowed to open Saving Bank
accounts.
a) Statement (i) is correct.
Join CAIIB WITH ASHOK on YouTube & App
b) Statement (ii) is correct.
c) Both Statements (i) & (ii) are correct.
d) None of the above is correct.
Answer: A
Refer Page: 246, Topic: 9.7.
Explanation: PERMISSIBLE ACTIVITIES AT IBUS:
IBUS are not allowed to open SB accounts.
Q9. What retail deposit reserve ratio IFSC Banking Units (IBUs)
must maintain daily on deposits raised from individuals?
a) 5% of the average monthly balance.
b) 2% of total deposits.
c) 5% of the deposits raised from individuals outstanding as at the
end of the current working day.
d) 3% of the deposits raised from individuals outstanding as at the
end of the previous working day.
Answer: D
Refer Page: 246, Topic: 9.6.
Join CAIIB WITH ASHOK on YouTube & App
Explanation: (g) IBUs are required to maintain a retail deposit
reserve ratio on daily basis at 3% of the deposits raised from
individuals outstanding as at the end of the previous working day.
Q10. What is the exposure ceiling for IFSC Banking Units (IBUs) in
the case of a single borrower?
a) 10% of the parent bank’s Tier I capital.
b) 5% of the parent bank’s Tier I capital.
c) 15% of the total assets of IBU.
d) 5% of the group’s total capital.
Answer: B
Refer Page: 246, Topic: 9.7.
Explanation: PERMISSIBLE ACTIVITIES AT IBUS:
Exposure ceiling for IBUs shall be 5 % of the parent's Bank Tier I
Capital in case of Single borrower and 10% of the parent Bank's
Tier I Capital in the case of a borrower group.
Join CAIIB WITH ASHOK on YouTube & App
Q11. What is the duration of Exchange Operations at GIFT City, as
permitted for Foreign Portfolio Investors (FPIs)?
a) 12 hours a day. b) 24 hours a day.
c) 22 hours a day. d) 18 hours a day.
Answer: C
Refer Page: 247, Topic: 9.8.
Explanation: RELAXATIONS FOR THE FPI (FOREIGN PORTFOLIO
INVESTORS) ENTITIES AT GIFT CITY:
All exchanges operate 22 hours a day and FPIs permitted to
operate without any additional documentation.
Q12. Which of the following statement is true?
i) Companies do not pay securities transaction tax or commodity
transaction costs, which are covered under Foreign Portfolio Investors (PFI)
entities at GIFT CITY.
ii) Companies pay securities transaction tax or commodity transaction
costs, which are covered under Foreign Portfolio Investors (PFI) entities at
GIFT CITY.
a) Statement is i is true. b) Statement is ii is true.
c) Statement i & ii both are true. d) None of the above are true.
Join CAIIB WITH ASHOK on YouTube & App
Answer: A
Refer Page: 247, Topic: 9.8.
Explanation: Companies do not pay securities transaction tax or
commodity transaction costs.
Q13. International Financial Services Centers Authority (IFSCA) is?
a) An association of all the IFSCs across the globe.
b) A Statutory Authority established by the Govt. of India.
c) A Self-Regulatory body to oversee the functioning of the IBUs.
d) A regulatory authority in the UK overseeing the functioning of
all the Banks in UK.
Answer: B
Refer Page: 249, Topic: Terminal question.
Explanation: The International Financial Services Centres Authority
(IFSCA) is a statutory body established by the Indian government
in 2019 to regulate and promote financial activities in IFSCs like
GIFT City.
