Q.1 Which of the following is an example of a credit card fraud?
Skimming
Phishing
Cheque kiting
Loan default
Explanation - Skimming is the illegal copying of credit/debit card information to commit fraud.
Correct answer is: Skimming
Q.2 What is 'Phishing' in banking fraud?
Using fake websites or emails to steal credentials
Stealing ATM cards
Overdrawing an account
Forgery of cheques
Explanation - Phishing involves tricking customers into revealing sensitive banking information through fake emails or websites.
Correct answer is: Using fake websites or emails to steal credentials
Q.3 Cheque kiting is:
Writing a cheque from a non-funded account to exploit float time
Depositing counterfeit currency
Unauthorized ATM withdrawal
Credit card misuse
Explanation - Cheque kiting is a fraudulent practice of drawing cheques from accounts without sufficient funds to exploit the bank's clearing time.
Correct answer is: Writing a cheque from a non-funded account to exploit float time
Q.4 Which fraud occurs when a customer uses a fake identity to open a bank account?
Identity fraud
Account takeover
Skimming
Insider trading
Explanation - Identity fraud occurs when someone opens or uses a bank account under a false identity to commit illegal activities.
Correct answer is: Identity fraud
Q.5 The RBI has mandated banks to follow which framework to detect and prevent financial frauds?
KYC & AML
FIFO
GAAP
ISO 9001
Explanation - Know Your Customer (KYC) and Anti-Money Laundering (AML) frameworks help banks detect and prevent fraud.
Correct answer is: KYC & AML
Q.6 Which type of fraud involves misuse of a bank’s computer system?
Cyber fraud
Cheque fraud
Loan fraud
Insurance fraud
Explanation - Cyber fraud is the manipulation or misuse of banking systems or networks to steal money or data.
Correct answer is: Cyber fraud
Q.7 Loan fraud is primarily associated with:
Providing false information to obtain a loan
Overdrawing accounts
Phishing emails
ATM card theft
Explanation - Loan fraud occurs when borrowers provide fake documents or misleading information to get bank loans.
Correct answer is: Providing false information to obtain a loan
Q.8 A bank employee issuing loans in exchange for personal gain is an example of:
Insider fraud
Cyber fraud
Identity fraud
Cheque kiting
Explanation - Insider fraud occurs when bank employees misuse their position to commit fraudulent activities.
Correct answer is: Insider fraud
Q.9 Which of the following is a common method used in ATM fraud?
Card skimming
Cheque kiting
Phishing
Ponzi schemes
Explanation - Card skimming involves installing a device on ATMs to capture card data for fraudulent use.
Correct answer is: Card skimming
Q.10 RBI circular on fraud classification helps banks to:
Categorize and report frauds
Open new branches
Increase interest rates
Issue new currency notes
Explanation - The RBI provides guidelines for banks to classify, report, and monitor fraud incidents systematically.
Correct answer is: Categorize and report frauds
Q.11 Which is the main cause of cheque fraud?
Forgery or alteration of cheque
ATM hacking
Phishing emails
Misuse of loan documents
Explanation - Cheque fraud typically involves forging or altering cheques to illegally withdraw funds.
Correct answer is: Forgery or alteration of cheque
Q.12 Unauthorized online transfer from a customer account without their consent is called:
Online banking fraud
ATM fraud
Loan fraud
Identity theft
Explanation - Online banking fraud happens when fraudsters gain access to accounts and transfer money illegally.
Correct answer is: Online banking fraud
Q.13 A Ponzi scheme in banking involves:
Paying returns to old investors from the new investors’ money
Overdrawing account funds
Forgery of cheques
Phishing emails
Explanation - Ponzi schemes are fraudulent investment scams where returns are paid using funds from new investors rather than profits.
Correct answer is: Paying returns to old investors from the new investors’ money
Q.14 Which technology helps banks detect unusual transactions and potential frauds?
Fraud monitoring systems
Blockchain mining
ATM PIN generation
Cheque clearing software
Explanation - Fraud monitoring systems track transactions in real-time to detect suspicious patterns and prevent fraud.
Correct answer is: Fraud monitoring systems
Q.15 In banking, 'account takeover' fraud occurs when:
A fraudster gains unauthorized control of a customer account
A cheque is altered
ATM card is cloned
Loan documents are forged
Explanation - Account takeover fraud is when criminals illegally access and control someone’s bank account to steal funds.
Correct answer is: A fraudster gains unauthorized control of a customer account
Q.16 Which of the following is NOT a preventive measure against banking frauds?
Regular transaction monitoring
Strong KYC practices
Sharing OTP with strangers
Fraud awareness training
Explanation - Sharing OTPs or passwords with unknown individuals increases vulnerability to fraud and is not a preventive measure.
Correct answer is: Sharing OTP with strangers
Q.17 RBI has defined a 'fraud' in banking as:
Any act of deception causing financial loss to the bank
Only cybercrimes
Only ATM card theft
Only loan defaults
Explanation - The RBI defines fraud broadly as any intentional act of deception causing financial or reputational loss to the bank.
Correct answer is: Any act of deception causing financial loss to the bank
Q.18 Which fraud occurs when a customer uses multiple identities to obtain multiple loans?
Multiple loan fraud
ATM fraud
Cheque fraud
Insider trading
Explanation - Multiple loan fraud involves taking loans from different banks using fake or multiple identities without intending to repay.
Correct answer is: Multiple loan fraud
Q.19 Misuse of banking instruments such as demand drafts for illegal activities is an example of:
Instrument fraud
ATM fraud
Phishing
Loan fraud
Explanation - Instrument fraud occurs when banking instruments like cheques, demand drafts, or pay orders are misused for fraudulent purposes.
Correct answer is: Instrument fraud
Q.20 Which of the following is an emerging risk for banks due to digitalization?
Cyber fraud
Cheque fraud
Loan default
Overdraft misuse
Explanation - As banking becomes digital, cyber fraud is increasingly common due to hacking, phishing, and malware attacks.
Correct answer is: Cyber fraud
Q.21 Forgery of signatures on cheques is classified under:
Cheque fraud
ATM fraud
Loan fraud
Cyber fraud
Explanation - Forgery of signatures or alteration of cheque details is a common type of cheque fraud.
Correct answer is: Cheque fraud
Q.22 Which measure is recommended to prevent ATM card skimming?
Covering the keypad while entering PIN
Using only old ATMs
Sharing card details online
Disclosing PIN to family
Explanation - Covering the keypad prevents hidden cameras or devices from capturing the PIN during ATM transactions.
Correct answer is: Covering the keypad while entering PIN
Q.23 An internal audit in banks helps to:
Detect and prevent internal frauds
Increase loan interest
Open new accounts
Issue new currency
Explanation - Internal audits review bank processes and transactions to identify weaknesses and prevent fraud by employees or management.
Correct answer is: Detect and prevent internal frauds
Q.24 Money laundering in banking refers to:
Making illegally-gained money appear legal
Overdrawing account funds
Forgery of cheques
ATM card theft
Explanation - Money laundering is the process of concealing the origins of illegally-obtained funds to make them appear legitimate.
Correct answer is: Making illegally-gained money appear legal