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IIFCL Grade A study materials
IIFCL Grade A study resources

IIFCL Grade A practice questions

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Question 1General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

IIFCL was set up in 2006 as a government-backed institution to provide long-term finance primarily for which segment of the Indian economy?

  1. Retail home loans and personal vehicle loans
  2. Micro-enterprise working capital loans in urban slums
  3. Infrastructure projects such as roads, ports and power Correct answer.
  4. Short-term crop loans to small and marginal farmers

Explanation

IIFCL is a state-owned infrastructure finance company created to bridge the long-gestation funding gap for projects in sectors like transport, energy and urban infrastructure. It lends directly and through take-out finance and refinance to infrastructure developers. Retail, micro-credit and crop lending are the mandates of other institutions.

Question 2General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The Reserve Bank of India's repo rate is best described as the rate at which:

  1. the government borrows through treasury bills in the primary market
  2. RBI lends short-term funds to banks against government securities Correct answer.
  3. RBI absorbs surplus liquidity from banks by taking deposits
  4. banks lend overnight funds to each other without collateral

Explanation

The repo rate is the policy rate at which the RBI provides short-term liquidity to banks against the collateral of government and other approved securities. It is the principal signal of the monetary policy stance. The uncollateralised interbank rate is the call money rate, and the absorption rate is the reverse repo or SDF rate.

Question 3General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

In Indian public finance terminology, 'capital expenditure' of the Union government refers to spending that:

  1. creates assets or reduces liabilities, such as building roads or repaying debt Correct answer.
  2. is transferred to states as untied revenue deficit grants
  3. is incurred only on defence procurement and security services
  4. covers salaries, pensions and routine administrative running costs

Explanation

Capital expenditure creates physical or financial assets or reduces liabilities, for example spending on highways, metro rail, or repayment of loans. Revenue expenditure, by contrast, is consumption-type spending such as salaries, subsidies and interest payments. The classification follows the government accounting framework rather than the sector of spending.

Question 4General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which institution regulates banks in India and is responsible for issuing bank licences?

  1. Reserve Bank of India Correct answer.
  2. Insurance Regulatory and Development Authority of India
  3. Ministry of Corporate Affairs
  4. Securities and Exchange Board of India

Explanation

The Reserve Bank of India is the banking regulator under the Banking Regulation Act, 1949, and grants licences for new banks and branch expansion. SEBI regulates securities markets, IRDAI regulates insurers, and the MCA administers company law. Banking supervision is therefore squarely with the RBI.

Question 5General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A bank's Cash Reserve Ratio (CRR) requires it to:

  1. invest a fixed share of deposits in government securities
  2. hold a specified share of net demand and time liabilities as cash with the RBI Correct answer.
  3. keep a portion of deposits in rural branches as priority sector lending
  4. maintain a minimum capital to risk-weighted assets ratio

Explanation

CRR is the proportion of a bank's net demand and time liabilities that must be maintained as cash balances with the RBI. It is a monetary policy tool that directly affects lendable resources. Investment in government securities is the SLR requirement, and the capital ratio is the CRAR.

Question 6General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The National Infrastructure Pipeline (NIP) announced by the Government of India is best described as:

  1. a scheme that guarantees equity returns to private road developers
  2. a bond issuance programme restricted to municipal corporations
  3. a pipeline of identified infrastructure projects with indicative investments mapped to sectors and states Correct answer.
  4. a statutory fund that replaces all state infrastructure budgets

Explanation

The NIP is a repository of identified infrastructure projects across sectors such as energy, roads, railways and urban development, with indicative investment estimates. It is a planning and monitoring framework rather than a funding vehicle. It does not replace state budgets or guarantee private returns.

Question 7General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following is a component of India's foreign exchange reserves as published by the RBI?

  1. Only the gold held in the RBI's vaults
  2. Loans extended by Indian banks to overseas borrowers
  3. Corporate dollar bonds issued by Indian firms abroad
  4. Foreign currency assets, gold, SDRs and the reserve tranche position with the IMF Correct answer.

Explanation

India's foreign exchange reserves comprise foreign currency assets, gold holdings, special drawing rights and the reserve tranche position with the IMF. These are official reserve assets held by the monetary authority. Private corporate borrowings and bank overseas loans are not part of official reserves.

Question 8General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

In project finance, the 'debt service coverage ratio' (DSCR) is computed as:

  1. cash available for debt service divided by scheduled interest and principal repayments Correct answer.
  2. profit after tax divided by net worth
  3. current assets divided by current liabilities
  4. total debt divided by total shareholders' funds

Explanation

DSCR measures whether a project's cash flows can comfortably meet its scheduled interest and principal obligations in a given period. A ratio above one indicates a surplus after debt service, which lenders use as a cushion. Debt-equity, return on equity and the current ratio measure different things.

Question 9General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A company raises funds by issuing bonds directly to a small group of institutional investors without a public offer. This is an example of:

  1. a private placement of debt Correct answer.
  2. an initial public offering of equity
  3. a bonus issue of shares
  4. a rights issue to existing shareholders

Explanation

Private placement is the issuance of securities to a select set of investors, typically institutions or high-net-worth individuals, without a public subscription. IPOs, rights issues and bonus issues all involve equity shares and different regulatory routes. The distinguishing feature here is the direct, non-public placement of debt.

Question 10General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The term 'take-out financing' in Indian infrastructure lending refers to:

  1. a long-term lender refinancing or purchasing a loan originally extended by another lender Correct answer.
  2. a borrower prepaying a high-cost loan using short-term working capital
  3. a government grant that replaces the promoter's equity contribution
  4. a bank recovering its loan by selling the borrower's plant and machinery

Explanation

Take-out financing allows banks that funded the construction phase to exit once the project is operational, with a long-term institution refinancing the loan. IIFCL has used such schemes to ease asset-liability mismatches for commercial banks. It is a refinancing arrangement, not a recovery action or a grant.

Question 11General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A bank's gross non-performing assets (GNPA) ratio is calculated as:

  1. gross NPAs divided by gross advances Correct answer.
  2. net NPAs divided by total deposits
  3. restructured loans divided by net worth
  4. provisions divided by gross advances

Explanation

The GNPA ratio expresses gross non-performing assets as a percentage of gross advances, showing the proportion of the loan book that has turned bad before provisioning. Net NPA ratio, by contrast, uses net advances and net NPAs after provisions. Using deposits or net worth in the denominator would change the meaning of the metric.

Question 12General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following instruments allows an Indian infrastructure company to borrow in foreign currency from abroad subject to RBI's external commercial borrowing framework?

  1. Participatory note issuance
  2. External Commercial Borrowing Correct answer.
  3. Preference share allotment to residents
  4. Commercial paper sold to domestic mutual funds

Explanation

External Commercial Borrowing is the route under which Indian entities raise foreign currency loans from recognised overseas lenders within limits and end-use norms set by the RBI and the government. Participatory notes are offshore equity-linked instruments, preference shares are domestic equity instruments, and commercial paper is a domestic money market instrument.

Question 13General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The 'inflation targeting' framework adopted by India in 2016 sets the flexible inflation target for the RBI at:

  1. 4 per cent CPI inflation with a band of plus or minus 2 per cent Correct answer.
  2. 2 per cent CPI inflation with a band of plus or minus 1 per cent
  3. 6 per cent WPI inflation with no tolerance band
  4. 5 per cent CPI inflation with a band of plus or minus 1 per cent

Explanation

The monetary policy framework agreement notified in 2016 set the target at 4 per cent consumer price index inflation with a tolerance band of plus or minus 2 per cent, giving a range of 2 to 6 per cent. Failure is defined as average inflation outside this band for three consecutive quarters. The headline measure used is CPI, not WPI.

Question 14General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

In infrastructure concession agreements, a 'force majeure' clause typically excuses a party from performance when:

  1. the lender's credit rating is downgraded below investment grade
  2. the concessionaire's equity contribution falls short of the agreed amount
  3. the traffic volume on the project highway is lower than projected
  4. extraordinary events beyond reasonable control, such as natural disasters or war, prevent performance Correct answer.

Explanation

Force majeure covers exceptional events outside the parties' control, such as earthquakes, epidemics, war or government action, which make performance impossible. Such clauses usually provide for relief, extension of time or termination with compensation. Financial shortfalls or demand shortfalls are commercial risks handled by other clauses.

Question 15General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The 'priority sector lending' targets for scheduled commercial banks in India include which of the following categories?

  1. Loans to non-banking financial companies for on-lending to large industry
  2. Investment in equity shares of listed infrastructure companies
  3. Agriculture, micro enterprises, education, housing and weaker sections Correct answer.
  4. Lending to large corporate houses for overseas acquisitions

Explanation

Priority sector lending covers specified segments such as agriculture, micro, small and medium enterprises, export credit, education, housing, social infrastructure and weaker sections. The objective is to ensure credit flow to sectors that may not otherwise get adequate institutional finance. Large corporate and speculative market lending fall outside these categories.

Question 16General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A special purpose vehicle (SPV) is commonly used in infrastructure projects because it:

  1. guarantees the project a fixed rate of return
  2. eliminates the need for any lender due diligence
  3. isolates project risks and cash flows from the sponsors' other businesses Correct answer.
  4. transfers all project risk to the government automatically

Explanation

An SPV is a legally separate entity created to own and operate the project, ring-fencing its assets, liabilities and cash flows from the sponsors. Lenders rely on the SPV's project revenues as the primary source of repayment. It does not remove due diligence, guarantee returns, or automatically shift risk to the government.

Question 17General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

'Viability Gap Funding' in Indian infrastructure financing is designed to:

  1. fund only the operations and maintenance expenses after commissioning
  2. meet the full capital cost of every commercially unviable project
  3. provide a grant to cover part of the project cost so that otherwise unviable projects become bankable Correct answer.
  4. replace the concessionaire's obligation to raise debt

Explanation

Viability Gap Funding provides a capital grant, usually a defined share of project cost, to bridge the gap between what user charges can support and what the project needs to be financially viable. It is meant to improve bankability, not to fund the entire project. Debt mobilisation and operations remain the developer's responsibility.

Question 18General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following best describes a 'masala bond'?

  1. A dollar bond issued by an Indian state government
  2. A rupee-denominated bond issued in an overseas market by an Indian entity Correct answer.
  3. A bond issued by the RBI to absorb liquidity from banks
  4. A rupee-denominated bond issued in India by a foreign sovereign

Explanation

Masala bonds are rupee-denominated debt instruments issued in international markets, typically under the RBI's external commercial borrowing framework or in offshore financial centres. The issuer bears the currency risk only in the sense that settlement is in rupees, while the investor bears the currency risk. They are not sovereign dollar bonds or RBI liquidity instruments.

Question 19General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A toll-operate-transfer (TOT) model of asset monetisation in the highways sector involves:

  1. the government collecting tolls and paying the concessionaire an annuity
  2. the concessionaire paying an upfront consideration for the right to collect tolls on an operating road for a fixed concession period Correct answer.
  3. the concessionaire taking ownership of the land in perpetuity
  4. the government awarding a contract to build a new expressway on a cost-plus basis

Explanation

Under the TOT model, existing operational highway assets are bid out, and the concessionaire pays an upfront lump sum for the right to operate and collect user fees for a defined period. It monetises completed public assets and transfers demand and operations risk to the private party. The asset reverts to the public authority at the end of the concession.

Question 20General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The 'Marginal Cost of Funds-based Lending Rate' (MCLR) introduced by the RBI in 2016 was intended to:

  1. replace the base rate with a formula linked to marginal cost of funds, making loan pricing more responsive to policy rate changes Correct answer.
  2. apply only to agricultural loans below a threshold amount
  3. fix all floating rate loans permanently at the repo rate
  4. set a ceiling on deposit rates offered by banks

Explanation

MCLR replaced the base rate system and is computed from the marginal cost of funds, negative carry on reserves, operating costs and a tenor premium. It was designed to transmit monetary policy changes faster to lending rates. It does not fix loans at the repo rate, nor does it regulate deposit rates.

Question 21General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

If a bank's SLR is 18 per cent and its net demand and time liabilities are Rs 1,000 crore, what is the minimum amount it must hold in approved liquid assets such as government securities and cash?

  1. Rs 18 crore
  2. Rs 180 crore Correct answer.
  3. Rs 820 crore
  4. Rs 1,180 crore

Explanation

The SLR is applied to net demand and time liabilities, so 18 per cent of Rs 1,000 crore is Rs 180 crore. This amount must be held in approved assets such as cash, gold or specified government securities. The remaining Rs 820 crore is the lendable portion before other prudential requirements.

Question 22General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The Insolvency and Bankruptcy Code, 2016 provides for a time-bound corporate insolvency resolution process under the oversight of:

  1. the Securities Appellate Tribunal
  2. the Debt Recovery Tribunal, with appeals to the RBI
  3. the National Company Law Tribunal, with appeals to the NCLAT Correct answer.
  4. the Competition Commission of India

Explanation

Corporate insolvency resolution applications are filed before the National Company Law Tribunal, and appeals lie with the National Company Law Appellate Tribunal. The process is administered by resolution professionals registered with the Insolvency and Bankruptcy Board of India. Debt Recovery Tribunals handle recovery suits, and the CCI handles competition matters.

Question 23General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following is the most accurate description of a 'credit default swap'?

  1. A bank guarantee issued in favour of a project lender
  2. A derivative that exchanges fixed and floating interest payments on a notional principal
  3. A contract to buy or sell an underlying asset at a future date at a pre-agreed price
  4. An agreement in which one party transfers the credit risk of a reference entity to another for a periodic fee Correct answer.

Explanation

A credit default swap is a credit derivative in which the protection buyer pays a periodic premium and receives compensation if a specified credit event occurs on a reference entity. It transfers credit risk without transferring the underlying loan or bond. Interest rate swaps, forwards and bank guarantees serve different purposes.

Question 24General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A project has projected cash available for debt service of Rs 120 crore in a year and scheduled interest plus principal repayments of Rs 80 crore. Its DSCR is 1.5. If the repayment schedule rises to Rs 100 crore with cash unchanged, the ratio becomes 1.2. Which conclusion is the most defensible?

  1. The project remains above the minimum coverage of 1.0 but has less headroom to absorb cash flow shocks Correct answer.
  2. The project has defaulted in the first year because DSCR is above 1
  3. The project's interest cost has fallen in proportion to the DSCR decline
  4. The project's debt-equity ratio has improved because the DSCR fell

Explanation

A DSCR above 1.0 means cash available covers scheduled debt service, so the project is servicing debt but with a thinner cushion at 1.2 than at 1.5. Lenders typically set a minimum DSCR covenant, often above 1.0, and a lower ratio reduces tolerance for revenue shortfalls. DSCR movement says nothing directly about the debt-equity ratio or interest cost.

Question 25General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Under the Basel III framework, the Liquidity Coverage Ratio requires banks to hold:

  1. high-quality liquid assets sufficient to cover net cash outflows for a 30-day stress period Correct answer.
  2. a minimum of 8 per cent of risk-weighted assets as common equity
  3. stable funding to cover long-term assets over a one-year horizon
  4. a leverage ratio of at least 10 per cent of total exposures

Explanation

The LCR is a short-term liquidity standard requiring a stock of high-quality liquid assets that covers net cash outflows under a specified 30-day stress scenario. The 8 per cent common equity requirement is the capital conservation buffer framework's minimum capital measure, and the one-year funding ratio is the Net Stable Funding Ratio. The leverage ratio is a separate, non-risk-based backstop.

Question 26General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The Reserve Bank of India's 'operation twist' involves which combination of open market operations?

  1. Simultaneous purchase of long-dated government securities and sale of short-dated government securities Correct answer.
  2. Simultaneous purchase of short-dated government securities and sale of long-dated government securities
  3. Simultaneous purchase of government securities and sale of corporate bonds of equal maturity
  4. Simultaneous purchase of dollars in the spot market and sale of dollars in the forward market

Explanation

Operation twist is a yield-management tool in which the central bank buys longer-maturity government bonds while selling shorter-maturity ones, pushing down long-term yields without changing the overall size of its balance sheet. For infrastructure financiers, lower long-end yields directly lower the cost of long-tenor project debt.

Question 27General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which institution was set up in India specifically to provide long-term finance for industrial and infrastructure projects and is classified as a development finance institution?

  1. India Infrastructure Finance Company Limited Correct answer.
  2. National Housing Bank
  3. Small Industries Development Bank of India
  4. National Bank for Agriculture and Rural Development

Explanation

IIFCL was incorporated in 2006 as a wholly government-owned company to provide long-tenor debt for infrastructure projects, and it was later notified as a non-banking financial company. It channels funds through direct lending, take-out finance and refinance of bank loans to infrastructure.

Question 28General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A state government guarantees repayment of a special purpose vehicle's project debt. In the RBI's prudential framework, how is such a loan treated for capital adequacy purposes?

  1. As a claim on the central government attracting a zero risk weight
  2. As a claim on the state government attracting a risk weight specified for state government exposures Correct answer.
  3. As an unsecured exposure because guarantees by state governments do not attract the sovereign treatment
  4. As fully covered by the state guarantee with zero risk weight

Explanation

Under RBI risk-weight rules, claims on state governments carry a prescribed risk weight rather than zero, and a guarantee from a state government shifts the exposure to that state. Only a central government guarantee attracts a zero risk weight under the standardised approach.

Question 29General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following best describes a 'credit enhancement' in the context of infrastructure bond issuance?

  1. An arrangement under which the borrower repays the loan before the scheduled maturity
  2. A mechanism that improves the credit rating of an issue by providing support such as a guarantee, letter of credit or structured subordination Correct answer.
  3. A clause that allows lenders to convert unpaid interest into equity shares of the project company
  4. A penalty levied on a borrower when project completion is delayed beyond the scheduled commercial operation date

Explanation

Credit enhancement is any arrangement that lifts the effective credit quality of a debt instrument above that of the issuer, for example a partial guarantee, a standby letter of credit, a cash reserve or tranching with subordination. It lowers the coupon investors demand and widens the pool of eligible buyers.

Question 30General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Under the RBI's framework for stressed assets, a loan account is classified as a non-performing asset when interest or instalment remains overdue for more than how many days?

  1. 60 days
  2. 90 days Correct answer.
  3. 30 days
  4. 180 days

Explanation

An asset becomes a non-performing asset when interest or principal has remained overdue for more than 90 days, a norm aligned with international practice. Classification triggers provisioning requirements and, for larger exposures, mandatory resolution under the prudential framework.

Question 31General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A bank lends Rs 500 crore to a road project at a floating rate linked to the repo rate. If the repo rate rises by 50 basis points, what is the approximate annual increase in interest cost on this facility, assuming full drawdown and no other changes?

  1. Rs 0.25 crore
  2. Rs 25 crore
  3. Rs 2.5 crore Correct answer.
  4. Rs 250 crore

Explanation

A 50 basis point rise equals 0.50 per cent. Applying 0.005 to Rs 500 crore gives Rs 2.5 crore of additional annual interest, a direct illustration of how policy-rate movements feed into project debt servicing.

Question 32General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which body approves the external commercial borrowing proposal of an Indian infrastructure company where the borrowing falls within the automatic route?

  1. The Reserve Bank of India, which issues the loan registration number under the automatic route Correct answer.
  2. The Securities and Exchange Board of India
  3. The Department of Economic Affairs through the Cabinet Committee on Economic Affairs
  4. The Ministry of Finance through the Foreign Investment Promotion Board

Explanation

For ECB under the automatic route, the borrower reports the loan and obtains a loan registration number from the RBI, which administers the framework. Approval by the government route applies only where the borrowing exceeds automatic-route limits or is in a restricted category.

Question 33General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

In the Union Budget's capital expenditure classification, which of the following would be recorded as capital expenditure?

  1. Payment of salaries to government school teachers
  2. Interest paid on outstanding government securities
  3. Subsidy transferred to farmers under a direct benefit scheme
  4. Construction of a new expressway by a central public works agency Correct answer.

Explanation

Capital expenditure creates or acquires assets or reduces liabilities, so building an expressway qualifies. Recurring items such as salaries, interest payments and subsidies are revenue expenditure in the budget classification.

Question 34General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

The Unified Payments Interface (UPI) is best described as which of the following?

  1. A wholesale settlement system used only by banks for interbank government securities transactions
  2. A card network operated by the RBI that settles merchant transactions in real time
  3. A real-time payment system built on the Immediate Payment Service that allows instant interbank transfers through a single mobile identifier Correct answer.
  4. A closed-loop wallet issued by individual banks that cannot be used across banks

Explanation

UPI, operated by NPCI, rides on the IMPS infrastructure and enables instant account-to-account transfers using a virtual payment address across participating banks. It is interoperable, unlike a closed wallet, and is designed for retail rather than wholesale settlement.

Question 35General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A project company must repay a bullet amount of Rs 400 crore at the end of year five. It sets aside equal annual amounts in a sinking fund earning 8 per cent compounded annually. Which concept does this arrangement illustrate?

  1. A share buyback funded from project cash flows
  2. Refinancing risk mitigation through a sinking fund reserve built from periodic contributions Correct answer.
  3. A foreign currency swap used to hedge principal repayment
  4. A leveraged buyout of the project sponsor

Explanation

A sinking fund accumulates periodic contributions so that a lump-sum obligation can be met at maturity, reducing refinancing and default risk on bullet structures. The annual contributions are computed using the future value of an annuity at the stated rate.

Question 36General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following is the primary role of the National Bank for Financing Infrastructure and Development (NaBFID)?

  1. Conducting monetary policy operations on behalf of the RBI
  2. Managing the government's foreign exchange reserves
  3. Acting as a development financial institution to provide long-term financing and credit enhancement for infrastructure projects Correct answer.
  4. Regulating the insurance sector and protecting policyholders

Explanation

NaBFID was established by an Act of 2021 as a statutory development financial institution to address the gap in long-tenor infrastructure finance, including lending and credit enhancement. It does not perform regulatory, reserve-management or monetary policy functions.

Question 37General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A bond carries a coupon of 9 per cent and is trading at a price above its face value. Which statement about that bond is necessarily true?

  1. Its yield to maturity is below 9 per cent Correct answer.
  2. Its yield to maturity equals 9 per cent
  3. Its credit rating must be below investment grade
  4. Its yield to maturity is above 9 per cent

Explanation

When a bond trades at a premium, the buyer pays more than face value and receives the same coupon, so the total return to maturity is lower than the coupon rate. Yield and price therefore move inversely, which is central to valuing infrastructure bonds in a falling-rate market.

Question 38General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Which of the following correctly describes the 'repo rate'?

  1. The rate at which the RBI absorbs surplus liquidity from the banking system
  2. The rate paid on savings bank deposits
  3. The rate at which the RBI lends short-term funds to banks against government securities Correct answer.
  4. The rate at which banks lend to their most creditworthy customers

Explanation

The repo rate is the policy rate at which the RBI provides short-term liquidity to banks against collateral of government securities. It anchors the interest rate structure and thereby influences the cost of project debt.

Question 39General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

A highway concessionaire collects tolls for 20 years and then transfers the asset to the state. Which risk does the concessionaire primarily bear that a contractor paid only for construction would not?

  1. Design risk during preparation of drawings
  2. Traffic demand risk over the operating period Correct answer.
  3. Construction cost overrun risk
  4. Labour availability risk at the site

Explanation

In a toll-based concession, the concessionaire earns revenue from user charges, so variation in actual traffic directly affects returns; this demand risk distinguishes it from an annuity or engineering-procurement-construction contract. Construction-related risks are shared with or borne by the contractor in an EPC structure.

Question 40General Awareness (with emphasis on Indian economy, banking, and infrastructure finance)

Under India's goods and services tax, which of the following is true of the treatment of works contracts for infrastructure construction?

  1. Works contracts are exempt from GST because they relate to public infrastructure
  2. Works contracts are taxed only by the state where the contractor is registered
  3. Works contracts are taxed as a composite supply of services at the applicable rate for construction services Correct answer.
  4. Works contracts are always treated as supply of goods and taxed at the goods rate

Explanation

A works contract is a composite supply in which the service element predominates, so it is taxed as a supply of construction services at the applicable rate, with input tax credit available for eligible inputs. This replaced the earlier dual levy of VAT and service tax on such contracts.

Question 41Reasoning and Quantitative Aptitude

A IIFCL credit analyst notes that the ratio of loans sanctioned to loans disbursed in a quarter is 5 : 3. If disbursements were ₹42 crore, what was the amount sanctioned?

  1. ₹84 crore
  2. ₹70 crore Correct answer.
  3. ₹63 crore
  4. ₹56 crore

Explanation

The ratio 5 : 3 means sanctioned amount corresponds to 5 parts while disbursed corresponds to 3 parts. One part equals 42 ÷ 3 = 14 crore, so sanctioned amount is 5 × 14 = 70 crore.

Question 42Reasoning and Quantitative Aptitude

In a portfolio review, 40% of the accounts are infrastructure, 25% are power, and the remaining 210 accounts belong to other sectors. What is the total number of accounts in the review?

  1. 525
  2. 600 Correct answer.
  3. 560
  4. ₹600

Explanation

Infrastructure and power together account for 65% of the accounts, so other sectors form 35%. Since 35% equals 210 accounts, the total is 210 ÷ 0.35 = 600.

Question 43Reasoning and Quantitative Aptitude

A IIFCL bond pays simple interest at 8% per annum. What amount of interest accrues on a principal of ₹25,000 over 18 months?

  1. ₹3,600
  2. ₹2,000
  3. ₹2,400
  4. ₹3,000 Correct answer.

Explanation

Simple interest equals principal × rate × time, with time in years. Here 18 months is 1.5 years, so interest is 25,000 × 0.08 × 1.5 = ₹3,000.

Question 44Reasoning and Quantitative Aptitude

A loan officer observes the series 3, 7, 15, 31, 63. Which rule generates each term from the previous one?

  1. Multiply by 2 and add 1 Correct answer.
  2. Add the previous two terms
  3. Add consecutive even numbers
  4. Multiply by 3 and subtract 2

Explanation

Each term equals twice the preceding term plus one: 3×2+1=7, 7×2+1=15, and so on through 63. Checking the rule against every step confirms it fits all terms.

Question 45Reasoning and Quantitative Aptitude

A IIFCL project team of 8 engineers can complete a feasibility study in 15 days. How many days will 12 engineers take, working at the same rate?

  1. 9
  2. 12
  3. 10 Correct answer.
  4. 11

Explanation

Total work equals 8 × 15 = 120 engineer-days. Dividing by 12 engineers gives 120 ÷ 12 = 10 days, since work and number of workers are inversely proportional.

Question 46Reasoning and Quantitative Aptitude

A sum invested at compound interest doubles in 5 years. In how many years will it become four times the original amount, at the same rate compounded annually?

  1. 10 Correct answer.
  2. 20
  3. 15
  4. 25

Explanation

Doubling once takes 5 years. Becoming four times means doubling twice, and compound growth multiplies the doubling periods, so 2 × 5 = 10 years.

Question 47Reasoning and Quantitative Aptitude

In a credit-appraisal test, the average score of 20 officers is 65. When one officer's score is corrected from 45 to 75, what is the revised average?

  1. 68
  2. 66
  3. 67
  4. 66.5 Correct answer.

Explanation

The original total is 20 × 65 = 1300. The correction adds 30, giving 1330, and 1330 ÷ 20 = 66.5.

Question 48Reasoning and Quantitative Aptitude

A IIFCL circular uses the word 'sanction' in the sense of formally approving a loan. Which option best captures that meaning in a single word?

  1. Audit
  2. Reject
  3. Postpone
  4. Authorise Correct answer.

Explanation

To sanction a loan is to give formal approval or authorisation for it. The other choices describe refusing, delaying, or examining, none of which conveys approval.

Question 49Reasoning and Quantitative Aptitude

A sum of ₹8,000 grows to ₹9,261 in 3 years at compound interest compounded annually. What is the annual rate?

  1. 7%
  2. 8%
  3. 6%
  4. 5% Correct answer.

Explanation

The ratio 9261/8000 equals (1+r)³. Since 9261 = 21³ and 8000 = 20³, the ratio is (21/20)³, so 1+r = 1.05 and r = 5%.

Question 50Reasoning and Quantitative Aptitude

A train 180 m long crosses a platform 270 m long in 30 seconds. What is the speed of the train in km/h?

  1. 48
  2. 60
  3. 54 Correct answer.
  4. 45

Explanation

The train must cover its own length plus the platform, a total of 450 m, in 30 seconds. Speed is 450 ÷ 30 = 15 m/s, and multiplying by 3.6 gives 54 km/h.