The CBI Foreign Exchange Officer exam demands a deep understanding of FEMA and recent RBI circulars. In this guide, we cover the 100 most important questions. This Vital mock test is specifically designed for the Central Bank of India Foreign Exchange Officer recruitment to help you master the concepts quickly.
Why This CBI Foreign Exchange Officer Test Matters?
📚 Interactive Question Bank
Select a question to view the expert explanation and answer.
✅ General Practice
Q51Which category of Authorized Dealer is primarily comprised of Select Financial Institutions (such as EXIM Bank and SIDBI) and Factoring Companies, authorized to undertake foreign exchange transactions incidental to their specific business activities?Q52Identify the statement that INCORRECTLY describes the regulatory requirements for Authorized Persons.Q53Consider the following statements:Q54Scenario: "Global Travels Ltd." is an entity licensed as an FFMC (Full Fledged Money Changer). A customer approaches them with an invoice for importing machinery from Germany and requests a foreign currency demand draft (DD) to pay the supplier. Based on FEMA regulations, what is the correct course of action?Q55According to the extant RBI Master Direction on Money Changing Activities, what is the minimum Net Owned Funds (NOF) required for an entity to apply for a Single Branch Full Fledged Money Changer (FFMC) license?Q56An existing Full Fledged Money Changer (FFMC) or a Non-Banking Financial Company (NBFC) wishing to upgrade to an Authorized Dealer (AD) Category-II license must generally maintain a minimum Net Owned Funds (NOF) of:Q57[Updated May 2024] Consider the following statements regarding the RBI's May 2024 instructions on foreign currency note transactions by FFMCs and non-bank AD Category-II entities:Q58A Full Fledged Money Changer (FFMC) is permitted to Purchase foreign exchange from all of the following sources EXCEPT:Q59Which of the following transactions are permitted to be undertaken by an AD Category-II entity?Q60Consider the following statements:Q61Scenario: Mr. Sharma, a resident Indian, approaches "Fast Forex Ltd." (an AD Category-II licensee) to buy a Forex Prepaid Card of USD 2,000 for his upcoming holiday in Singapore. He also wants to pay for the card in cash (INR). What is the regulatory position?Q62While FFMCs can purchase foreign currency from residents without limit, what is the maximum limit of foreign currency notes (Cash) that an FFMC can sell to a resident traveler for a private visit to a country (other than Iraq/Libya/Iran/Russia)?Q63[Updated Jan 2026] With effect from January 1, 2026, how are Authorized Dealer (AD) Category-II entities and Full Fledged Money Changers (FFMCs) required to report "LRS Daily Returns"?Q64Under the Prevention of Money Laundering Act (PMLA), 2002, and RBI’s Master Direction on KYC, what is the mandatory preservation period for records of transactions and identity (KYC) documents maintained by an Authorized Person?Q65Which of the following is NOT a correct procedure when an Authorized Person (AP) detects a Counterfeit Note tendered by a customer?Q66Consider the following statements regarding the "Concurrent Audit" requirements for Authorized Persons:Q67To renew an existing FFMC or AD Category-II license, the application for renewal must be submitted to the Reserve Bank of India at least:Q68Consider the following statements regarding Suspicious Transaction Reporting (STR):Q69Which of the following registers are mandatory for an FFMC to maintain at its branches?Q70Scenario: An AD Category-II entity's internal audit reveals that they sold USD 10,000 to a resident for a "Gift" remittance without obtaining the resident's PAN. What is the regulatory implication?Q71Which of the following accurately describes the primary functional difference between an Authorized Dealer (AD) Category-II and an Indian Agent under the Money Transfer Service Scheme (MTSS)?Q72Consider the following statements regarding the "Franchisee" model in the foreign exchange business:Q73A person resident in India who has returned from a trip abroad must surrender unspent foreign currency notes to an Authorized Person within what time frame?Q74Consider the following statements:Q75Under Section 13 of the FEMA, 1999, if an Authorized Person contravenes any provision of the Act (e.g., selling forex for a prohibited purpose), they are liable to a penalty of up to:Q76Scenario: A foreign tourist is leaving India and approaches an FFMC at the airport to re-convert his unspent Indian Rupees (INR) back into US Dollars. He produces an "Encashment Certificate" issued by a hotel 3 months ago. What is the validity period of an Encashment Certificate for the purpose of re-conversion?Q77Identify the INCORRECT statement regarding the issuance of Foreign Currency (Forex) Prepaid Cards by Authorized Dealers:Q78Scenario: An entity is authorized by the RBI to deal in foreign exchange for "specified purposes" but it is neither a Bank nor a full-fledged financial institution. It is primarily a company running a money changing business that has been upgraded. This entity is most likely classified as:Q79According to Section 2(e) of FEMA 1999, which of the following creates a "Capital Account Transaction"?Q80Following the amendments by the Finance Act, 2015 (effective October 2019), who holds the power to frame rules regarding "Non-Debt Instruments" (e.g., Equity, FDI)?Q81Under Section 6(3) of FEMA 1999 (as amended), the Reserve Bank of India may prohibit, restrict, or regulate all of the following transactions EXCEPT:Q82Which section of FEMA 1999 specifically empowers the Reserve Bank of India to authorize persons (Authorized Dealers, Money Changers) to deal in foreign exchange?Q83Consider the following duties of an Authorized Person (AP) under Section 10 of FEMA. Which statement is CORRECT?Q84Regarding Section 11 (RBI’s Power to Issue Directions), which of the following statements is legally valid?Q85Scenario: "TechIndia Ltd," an Indian startup, wants to issue Compulsorily Convertible Debentures (CCDs) to a US-based investor. Simultaneously, "InfraCo," another Indian firm, plans to raise a Foreign Currency Loan (ECB) from a German bank.Q86Under Section 13 of FEMA 1999, what is the maximum quantitative penalty that can be imposed if the amount involved in the contravention is quantifiable?Q87Which authority is primarily responsible for investigating contraventions under FEMA (Section 37) and conducting adjudication proceedings?Q88The Foreign Exchange (Compounding Proceedings) Rules, 2024 (notified in Sept 2024) introduced significant changes to the compounding process. Which of the following statements is CORRECT under the new rules?Q89Under the Compounding of Contraventions Rules, the RBI can compound all of the following types of contraventions EXCEPT:Q90If a person fails to pay the penalty imposed by the Adjudicating Authority within 90 days, they are liable for "Civil Imprisonment." Who issues the warrant for this arrest under Section 14?Q91Regarding the Appeal Mechanism under FEMA (Section 17 & 19), which statement is TRUE?Q92Scenario: "Alpha Corp" delayed filing its FC-GPR form by 2 years. They applied for compounding to RBI on Jan 1, 2025. The compounding order was passed on Feb 1, 2025. Alpha Corp pays the sum on Feb 10, 2025.Q93Under the Liberalized Remittance Scheme (LRS), what is the maximum amount a resident individual can remit outside India per financial year for permissible current or capital account transactions?Q94According to the Foreign Exchange Management (Overseas Investment) Rules, 2022, the total "Financial Commitment" made by an Indian Entity in all foreign entities shall not exceed:Q95Under Schedule I of the FEMA (Current Account Transactions) Rules, 2000, remittance for which of the following purposes is STRICTLY PROHIBITED (even under LRS)?Q96For the specific purpose of the Foreign Exchange Management Act (FEMA), how is a unit set up in an International Financial Services Centre (IFSC) (e.g., GIFT City) treated?
← Prev 50
Page 2 of 2 (96 Total Questions)
Frequently Asked Questions
Why is the distinction between Capital and Current Account critical for the Central Bank of India Foreign Exchange Officer exam?
It is the foundation of FEMA compliance. Current Account transactions (Trade/Interest) are generally free unless prohibited (Schedule I). Capital Account transactions (Loans/Investments) are prohibited unless explicitly permitted by RBI/Govt. Confusing the two leads to compliance failures.
Can a Resident Individual open a Foreign Currency Account in India?
Generally, no. However, specific exceptions exist: EEFC accounts for exporters and RFC (Resident Foreign Currency) accounts for returning NRIs. IFSC units are legally treated as ‘non-resident’ zones.
What is the role of EDPMS in export monitoring?
EDPMS (Export Data Processing and Monitoring System) is the IT backbone that links Customs (Shipping Bills), Banks (Inward Remittance), and RBI. It tracks un-realized exports and generates the ‘Caution List’ for defaulters.
How has the Compounding process changed in 2024?
The 2024 Rules doubled the application fee to ₹10,000 (+GST), allowed digital payments (NEFT), and removed the restriction that barred compounding if an appeal was pending. It also increased delegation powers to regional officers (e.g., AGM limit raised to ₹60 Lakhs).
What is the ‘75% Rule’ for FFMCs?
To prevent hoarding, FFMCs must sell at least 75% of the foreign currency notes they purchase from other banks/FFMCs to the public (travelers) every quarter. They cannot just trade inter-bank.
Can an Authorized Dealer Category-II handle export payments?
No. AD Category-II entities are restricted to “Specified Non-Trade Current Account Transactions” like private remittances, medical, and education fees. Trade transactions (Export/Import) require an AD Category-I license.
What happens if an exporter fails to realize proceeds within 15 months?
They must apply for an extension (ETX) through their AD Bank. If the delay is unjustified, they risk being flagged on the EDPMS Caution List, which blocks future exports.
Is PAN mandatory for LRS transactions?
Yes, PAN is mandatory for all LRS remittances, regardless of the amount (even below $25,000), to track the aggregate $250,000 limit and apply TCS correctly.
What is the difference between FDI and FPI?
FDI (Foreign Direct Investment) is long-term investment in unlisted equity or >10% of listed equity. FPI (Foreign Portfolio Investment) is generally <10% in listed equity and is considered more volatile (‘Hot Money’).
Does the Central Bank of India Foreign Exchange Officer exam cover the latest 2025 amendments?
Yes, recent exams focus heavily on updates like the extended export realization period (15 months), new TCS rates, and the split of powers between Govt (NDI) and RBI (Debt).