18 UBM 412 -BANKING THEORY, LAW AND PRACTICES

UNIT I

CHOOSE THE RIGHT ANSWER:

1. The relationship between a banker and a customer is

A. That of a debtor and creditor

B. That of a creditor and a debtor

C. Primarily that of a debtor and a creditor

D. (A) & (B) together

2.The banker has a lieu on

A. Bonds given for collection

B. Bonds given for safe custody

C. Bonds left by mistake

D. (A) & (B) together

3.In executing the standing instruction,there exists a relationship of

A. Debtor and creditor

B. Trustee and beneficiary

C. Bailee and bailor

D. Agent and Principal

4.To constitute a person as a customer

A. There must be a frequency of transactions

B. There must be dealing of a banking nature

C. There must be some sort of an account

D. There must be asingle transaction of any nature

5.The banker has a statutory obligation to

A. Honour customer’s cheques

B. Exercise lieu

C. Maintain secrecy of his customer accounts

D. Honour customer’s bills

6.A banker is a _________ debtor

A. General

B. Special

C. Privileged

D. common

7.The world ‘customer’ signifies a relationship in which ________ is of no

essence

A. Time

B. Duration

C. Tensure

D. Period

8. Commercial banks plays a _________ note in the economic development of a

nation

A. Static

B. Dynamic

C. Active

D. Ability

9.The commercial banks are _________ for generation of savings of the

community

A. Agency

B. Bailor

C. Chit funds

D. Trade

10.Banks are not merely creators but also regulators of ___________

A. Bank rate

B. Credit

C. Inflation

D. Deflation

11.Bank provide ________credit to government by investing there funds in

securities and short term finance by purchasing treasury bills

A. Short term

B. Long term

C. Medium term

D. None

12.In India the ________ major banks were nationalized

To speed up the tempo of economic development

A. 10

B. 20

C. 19

D. 18

13.Which scheme concentrates on compact areas in financing agricultural

activities

A. Lead bank scheme

B. Village adoption scheme

C. Service area approach

D. None

14.Under DIR scheme,assistant is provided at the rate of

A. 7%

B. 3%

C. 4%

D. 1%

15.MFAL assist _________

A. Marginal farmers

B. Artisans

C. Small scale industry

D. None

16. RBI is the ___________ to the government

A. Banker

B. Trader

C. Linker

D. None

17. The present bank rate is ___________

A. 6.5%

B. 9%

C. 7%

D. 1%

18.The RBI is the banker to the government when it ___________

A. Control the credit

B. Advise the government

C. Issue loan

D. All the above

19.A bill market is a market for ________ bills

A. Short term

B. Long term

C. Medium term

D. None

20. ___________ act as sole agent for RBI

A. ICICI

B. IDBI

C. SBI

D. PNB

UNIT II

21. Contract by lunatics in India are _________

A. Always void

B. Always valid

C. Always voidable

D. At time voidable

22.The best procedure for opening an account in name of a minor x and the

guardian y would be under the style

A. ‘X’ A/c

B. ‘X A/c’- minor

C. ‘Y’ in trust for X

D. ‘Y’ A/c

23.The most undesirable customer is __________

A. A Minor

B. A married women

C. An unregistered firm

D. An undischarged bankrupt

24.A customer letter of instruction,without any stamp,in connection with the

operation of his account is known as __________

A. Power of attorney

B. Authority letter

C. Probate

D. Mandate

25.The greatest risk in opening a trust account is _________

A. Invalid

B. Breach of trust

C. Valid

D. Void

26.Before opening a current are savings account ________Must be obtained

A. A letter of intimation

B. A letter of comment

C. A letter of introduction

D. A letter of knowledge

27.A drunkard is __________ from entering into a contract, when he is

incapable of understanding the implication of contract due to the

Effect of liquor

A. Qualified

B. Qualified partially

C. Disqualified

D. Punished

28.A minor is a person who has not attained the age of _________

A. 19

B. 17

C. 18

D. 20

29.A ________ can recover even a 3rd

party’s Security pleged without repaying

the debt

A. None

B. Minor

C. Major

D. Senior citizen

30.A minor can never be appointed as a __________

A. Bailee

B. Trustee

C. Lesser

D. None

31.A minor can enjoy the benefits of a partnership firm but,his is

_____________

A. Liable

B. Partially liable

C. Not liable

D. None

32.The following one does not constitute a settlement of a account

As far as apass book is concerned _________

A. A wrong entry favorable to a customer

B. A wrong entry favorable to a banker

C. A fictious entry

D. (A) & (B) together

33.A wrong entry in a pass book favorable to a customer constitutes a

settlement of account provides ________

A. The customer act upon it immediately

B. A customer acts upon it in good faith

C. The customer has attend his position by relying Upon it

D. (B) & (C) together but not (A)

34.The duplicate pass book can be issued against the payment of _________

A. 2

B. 3

C. 4

D. 6

35. ___________ entry doesn’t constitute a settlement of account

A. Fictious

B. Lethargic

C. Mistake

D. None

36.The booklet which contains the copy of acustomer’s account in the banker’s

ledger is _________

A. Pass book

B. Journal

C. Ledger

D. All

37.A pass book belongs to _________

A. Banker

B. Customer

C. Third party

D. All

38.The entries in a pass book may be of _________ types

A. 2

B. 3

C. 4

D. 6

39.A dispute doesn’t arise in repect of _________ entry

A. Wrong entry

B. Correct entry

C. Mistake entry

D. Misrepresentation

40.The interest of a banker would bejeopardized, if he has dealing with an

___________ firm

A. Register

B. Agreed

C. Unregistered firm

D. All the above

UNIT III

41.A banker will open an account for a partnership firm only when an

application in writing is submitted by any ___________ partners

A. Two

B. Three

C. One or more

D. Three are more

42.The following one is a negotiable instrument, negotiable by usage or custom

__________

A. Bills of exchange

B. Accommodation bill

C. Promissory note

D. Share warrant

43,The document drawn by a debtor on the creditor agreement to pay a certain

sum is called ________

A. Cheque

B. Promissory note

C. Bills of exchange

D. Draft

44.The most important feature of negotiable instrument is ___________

A. Free transfer

B. Transfer free from defects

C. Right to sue

D. (A) & (B)

45.In case of a negotiable instrument, the following person generally get a good

title __________

A. Finder of the lost instrument

B. Holder of a stolen instrument

C. Holder in due course

D. Holder of a forget instrument

46.Gross firing refers to _________

A. Cheque

B. Draft

C. Accommodation bill

D. None

47.The negotiable instrument act was passed in the year of _________

A. 1880

B. 1881

C. 1911

D. 1950

48. Negotiable instrument states _________ kinds of instrument

A. 2

B. 3

C. 4

D. 1

49.A promissory note contain a promise by _______ to the creditor to pay

acertain sum of money after a certain date

A. Creditor

B. Debtor

C. Banker

D. All

50. The bill is always drawn by the __________

A. Creditor

B. Debtor

C. Banker

D. All

51.The person who draws the thecheque is called _________

A. Drawee

B. Drawer

C. Payee

D. Banker

52. The person on whom the cheque is drawn is called

A. Payee

B. Drawee

C. Banker

D. All

53. The drawee is otherwise called as _______

A. Acceptor

B. Drawer

C. Payee

D. None

54. The person to whom the amount is payable is called the ________

A. Drawee

B. Payee

C. None

D. Drawer

55. A bill are promissory note must be in ______ only

A. Oral

B. Writing

C. Text form

D. None

56. __________are payable on demand only

A. Cheque

B. Drafts

C. Bills

D. None

57. when negotiable instrument is complete in all it’spaticulars,it is called as

_________ instrument

A. Incomplete

B. Complete

C. Mistake

D. Misrepresented

58. A bill delivered conditionally are for a special purposes called

_________.

A. Escrow

B. Trade

C. Clean

D. Complete

59. There is a provision in the act for a stranger, to take up liabilities by

accepting a ________.

A. Cheque

B. Bills

C. Draft

D. All the above

60.In case the original bill is dishonored,

A new bill can be drawn for the son of liquidated damage. This new bill is

called _________

A. Draft

B. Cheque

C. Redraft

D. None

UNIT IV

61. The most common part is to negotiable instruments are of _________ types.

A. 3

B. 4

C. 1

D. 2

62. The cheque was originally spelt as ___________.

A. Cheque

B. Chequ

C. Check

D. None

63. The origin of the word cheque has been delivered from the French word

_________.

A. Echecs

B. Echoes

C. Echees

D. All the above

64. The commercial bank today enjoy the privilege of printing money is the

form of _________.

A. Currency

B. Cheques

C. Drafts

D. Bills

65. ____________ is a dead cheque.

A. Stale

B. Stake

C. Stack

D. None

66. ____________ cheque is always mean for a local payment only

A. Customer

B. Banker

C. Drawer

D. None

67. A bearer cheque can be transferred by __________.

A. Order

B. Mere delivery

C. Delivery by payment

D. All the above

68. The reasonable period allowed in India for the presentation of a chequeis

__________.

A. 1 Year

B. 3 Months

C. 9 Months

D. Depending upon custom

69. The document which can be used only for making local payment is

_________.

A. Cheque

B. Bills of exchange

C. Banker’s cheque

D. Draft

70. Dishonour of a cheque due to want of funds is an offence under Sec

_______ of the NI act.

A. Sec-137

B. Sec-131

C. Sec-138

D. Sec-111

71. A draft may be payable either to bearer or ___________.

A. Order

B. Cheque

C. Bill

D. None

72. ____________ is an essential part of cheque

A. A/c number

B. Bank name

C. Payee name

D. Signature

73. Abanker should always compare the signature on the _________ with the

specimen signature.

A. Draft

B. Cheque

C. Bill

D. Over draft

74. The term __________ denotes the person to whom the amount of the cheque

is payable.

A. Drawee

B. Drawer

C. Payee

D. None

75. Cheque can be drawn by person who ________account in a bank.

A. Current

B. Saving

C. Recurring

D. (A) & (B)

76. The draft can also br crossed like a _________.

A. Document

B. cheque

C. Bill

D. Promissory note

77. A post-dated cheque can __________.

A. Dishonored

B. Honored

C. Partially honored

D. None

78. A cheque is the most economical and safe method of _________

transaction.

A. Money

B. Document

C. Bill

D. None

79. Cheques are drawn against the funds in the hands of _________.

A. Banker

B. Customer

C. Special customer

D. All the above

80. A paid cheque itself acts as a ________.

A. Boucher

B. Voucher

C. Both (A) & (B)

D. (A) only

UNIT V

81. businessman prefers _________.

A. Loan

B. Over draft

C. Cash credit

D. None

82. The most important principle of a sound lending is _________.

A. Safety

B. Profitability

C. Security

D. All the above

83. capacity of the borrower is determined by __________.

A. Willingness to repay

B. Viability of the project

C. Managerial ability

D. Purchasing power

84. Discounting of bills of exchange is __________.

A. Clean advance

B. Secured advance

C. Neither

D. Both

85. ___________ gives a person only a right to retain the possession of the

goods and not power to sell them.

A. Pledge

B. Lieu

C. Mortgage

D. All

86. __________ may be in respect of goods starts shares document of title to

goods and any other movable property.

A. Lieu

B. Mortgage

C. Hypothecation

D. Pledge

87. ___________ is essential to complete a pledge .

A. Delivery of goods

B. Possession

C. Title

D. All the above

88. _________ is a method of creating change on immorable properties like

land and building.

A. Pledge

B. Mortgage

C. Lieu

D. Hypothecation

89. There are _________ kinds of mortgage.

A. 7

B. 5

C. 4

D. 6

90. __________ means transfer of any exiting or future right property or debt

By one person to another.

A. Lieu

B. Pledge

C. Assignment

D. None

91. The mortgage movable property for securing loan is called ________.

A. Pledge

B. Lieu

C. Hypothecation

D. None

92. Hypothecation facility is also called _________.

A. Close loan facility

B. Open loan facility

C. (A) Only

D. Both (A) & (B)

93. Neither possession nor ownership transferred in __________.

A. Pledge

B. Mortgage

C. Hypothecation

D. None

94. A banker’s lieu is __________.

A. General lieu

B. Particular lieu

C. Negative lieu

D. Positive lieu

95. A pledge can be made in respect of __________.

A. Shares

B. Building

C. Book debts

D. Land

96. ___________ is a promise by a third party to the lender for the present or

future debt of the borrower.

A. Warranty

B. Guarantee

C. (A) only

D. None of the above

97. in case of guarantee, there are __________.

A. 3 contracts

B. 2 contracts

C. 4 contracts

D. 1 contract

98. A banker should prefer to discount _________.

A. Trade bill

B. Accommodation bill

C. Both

D. None

99. The liability of the principal debtor is __________.

A. Primary

B. Secondary

C. Tertiary

D. None

100. Section _______ of the Indian contract act defines a contract of guarantee.

A. 128

B. 129

C. 126

D. 122

18UBM412-BANKING THEORY LAW AND PRACTICE

K2 QUESTIONS

UNIT-1

1. Define Banking.

2. What is commercial banking?

3. Define central bank.

4. Write ant two difference between RBI and commercial bank.

5. Write ant two industrial development banks.

6. Expand IDBI.

7. Expand ICICI.

8. Write any two recent trends in commercial banks in India.

9. Write any two functions of IDBI.

10. List out two functions of ICICI.

UNIT-II

11. Define the terms ‘banker’

12. Define the term and ‘customer’

13. Explain relationship between banker and customer.

14. Write any two procedures for opening of account.

15. Write any two steps for closing of account.

16. Define passbook.

17. What is special type of customers?

18. Write short note on minors.

19. Write short note on lunatic.

20. Explain drunkard special type of customers.

UNIT-III

21. Define negotiable instrument.

22. Discuss the features of negotiable instrument.

23. What are the types of negotiable instruments?

24. What is promissory note?

25. Define bill of exchange.

26. Define cheque.

27. What are the classifications of negotiable instruments?

28. Write any two differences between promissory note and bill of exchange.

29. Write any two differences betweenbill of exchange and cheque.

30. List out any two advantages of negotiable instrument.

UNIT-IV

31. Write any two advantages of cheque.

32. List the salient features of cheque.

33. Give any one disadvantage of cheque.

34. Explain drawing of a cheque.

35. Write any two precautions before honoring a cheque.

36. Explain dishonoring of a cheque.

37. What is meant by crossing?

38. List the essentials of crossing.

39. Mention the significance of crossing

40. Compare the general crossing and special crossing.

UNIT-V

41. Explain the meaning of hypothecation.

42. Write any two principles of sound lending.

43. What is unsecured advances?

44. What is meant by secured advances?

45. What are the forms of advances?

46. Define lien.

47. Define pledge.

48. What do you mean by guarantee?

49. What do you mean by indemnity?

50. Write any two difference between guarantee and in indemnity.

51. Mention a difference between Savings Bank account and Fixed Deposit account

52. Give expansion form of SMS.

53. State any two point of importance of bank.

54. What is NEFT ?

18 UBM 412 – BANKING THEORY LAW AND PRACTICE

SECTION –B

K3 Questions

UNIT-1

1. List out the functions of commercial banks.

2. Analyse and write brief note about features of commercial banks.

3. Examine brief notes on Industrial Development Bank of India.

4. List out the functions of IDBI.

5. Analyse and write brief notes on CTS.

6. Analyze and describe brief notes on Industrial Credit and Investment Corporation

of India.

7. Discover the origin of ICICI and its importance.

8. Discover the origin of RBI and explain its functions.

9. Examine and state the RBI functions.

10. Compare the primary relationship between banker and customer.

UNIT-2

11. Compare the secondary relationship between banker and customer.

12. Analyse and write short note on traditional banking

13. Analyse and write short note on e-banking.

14. Distinguish between traditional banking and e-banking.

15. Analyse and conclude General precautions for opening accounts.

16. List the KYC norms.

17. List out the procedure for opening an account in banks.

18. List out the Current deposit account account privileges.

19. List out the saving deposit account account honors.

20. List out the saving deposit account account rights.

UNIT-3

21. Examine the features of Negotiable instruments.

22. Inspect and briefly discuss about e-banking.

23. Inspect and briefly discuss about promissory note.

24. Discover and draw the specimen of a promissory note.

25. List out the featuresof promissory note.

26. Examine and draw the specimen of a bill of exchange.

27. List out the features of bill of exchange.

28. What are the classifications of negotiable instruments?

29. Examine the relationship of special parties to a negotiable instrument.

30. Infer negotiation Vs assignment.

UNIT-4

31. List out the features of a cheque.

32. Discover and draw the specimen of a cheque.

33. Classify the different types of cheque in details.

34. Examine the relationship between cheque and draft.

35. Analyze in detail the provisions given under Sec.138 of the NI Act.

36. Who may cross the cheque? List out the significance of crossing.

37. Examine the drawing of a cheque.

38. Distinguish between a stale and postdated cheque.

39. “All cheques are bills but all bills are not cheques” Discuss.

40. Analyze and write brief note on e.cheque.

UNIT-5

41. Inspect and write short notes on recent development in banking industry.

42. Inspect and write short notes on recent development in banking industry.

43. Analyze and explain the characteristics of a mortgage.

44. Examine the precautions a banker should take in granting loans and advances

against

45. Inspect and write the advantage of accepting guarantee as security for a loan.

46. List out the advantages of mobile banking.

47. Analyze and write brief note on Guarantee.

48. Analyze and write short note on Indemnity.

49. Inspect and write the advantages of Secured advances.

50. Inspect and write the features of unsecured advances.

18UBM 412 – BANKING THEORY LAW AND PRACTICE

SECTION –C

K4 & K5 Questions

UNIT-1

1. Distinguish between RBI and Commercial bank. .

2. Explain the role of central bank.

3. Elaborate NEFT.

4.Explain RTGS and its importance.

5.Discuss in detail note about the recent trends of commercial banks in India.

UNIT-2

6. Explain the procedure for entries in pass book.

7.Discuss in brief the practice governing the opening of a joint account.

8.Define the term “Banker” and “Customer “and explain the relationship that exists between

them.

9.laborate the special type of customers.

10.List out the negotiable instrument types and explain it’s with example.

UNIT-3

11.Define bill of exchange and state its essentials. Assess how does it differ from a

promissory note?

12.Discuss the rights of parties to negotiable instruments in the case of ( i) Lost instrument

(ii) Stolen instrument (iii) Instrument obtained by fraud.

13. Compare and differentiate between cheque and bill of exchange.

14.Discuss in detail notec on types of cheque. .

15. Propose the difference between a cheque and a draft and bring

Out clearly the risks of honouring a postdated cheque..

UNIT-4

16.Discuss the position of a paying banker with regard to the following:

a) A cheque crossed generally

b) A cheque crossed specially.

c) A cheque crossed ‘Not Negotiable’.

17. Elaborate the precautions before honouring a cheque and dishonoring of a cheque

18.Explain the different types of Crossing of cheques.

19. Assess which form of crossing is the safest and why?

20.Discuss in detail note on principles of sound lending.

UNIT-5

21.Explain the difference between Guarantee and Indemnity.

22. Compare and compose main difference between secured and unsecured advances.

23.Explain the principles that guide a banker in granting loans and advances.

24.Elaborate the role of banking in development of Micro Small and Medium enterprises.

25.Discuss in detail e-banking merits and demerits. And state its constraints.