LEGAL & REGULATORY ASPECTS OF BANKING

A & Bjaiib

01..Day to day banking involves a number of aspects. Utilizing the various provisions of various Acts assumes greater significance in the Banking field. Knowledge about the same is very important.

02..To function as a Bank and to obtain a license from the Reserve Bank of India. Such license is issued as per the provisions of

a.. Reserve Bank of India Act

b.. Banking Regulation Act

c.. Constitution

d.. Both a & b

03..Under the provisions of the Banking Regulation Act, no organization other than a bank is authorized to accept deposits with drawable by cheque. The Savings Bank Scheme run by the government, a Primary credit society and any other person or firm notified by the government are exempted from this prohibition.

04..Which one is the permitted business of banks

a.. Opening and maintaining CASA

b.. Issuing of Postal stamps

c.. Selling of coins

d.. Selling Railway tickets

05..Which statement is incorrect. (Banking business)

a.. Carry on and transact guarantee and indemnity business

b.. Acquire, construct and maintain any building for its own purpose.

c.. Collecting and transmitting of money and securities

d.. None

06..Identify the Public Sector Banks

a.. Union Bank of India

b.. State Bank of Mysore

c.. Central Bank of India

d.. All the above

07.. CFD is an urban co-operative bank. E customer of that bank wish to nominate for his locker & Deposit facilities.

a.. Possibleb.. Not possiblec.. Nomination facility is only applicable for

Public sector banksd.. Bank to suggest to E to have joint facility

instead of nomination

08.. Ways and Means Advances are provided by

a.. Nationalized Banks

b.. Public Sector Banks

c.. Regional Rural Banks

d.. Reserve Bank of India

09.. Identify the power not pertaining to Reserve Bank of India

a.. Power to license

b.. Power regarding audit of banks

c.. Power to impose penalties

d.. None of these

10.. There is a co-operative bank facing winding up. The said co-operative bank is registered under the Deposit Insurance and Credit Guarantee Corporation Act. Then who has the power to order its winding up.

a.. Reserve Bank of India

b.. State Government

c.. Registrar of Co-operatives

d.. None of them

11. The Reserve Bank of India is the primary regulator of banks. But the Central Government has also been conferred extensive powers under the RBI Act and BR Act either directly or indirectly over the banks.

12.. Co-operative Banks come under the control of RBI by virtue of certain provisions of

a.. Reserve Bank of India Act

b.. Banking Laws (Application to Co-operative Societies) Act,1965

c.. Banking Regulation Act

d.. All the above

13.. In respect of the terms and conditions of service of its workmen, opening and closing of its branch premises, a bank is answerable to

a.. Its Corporate Office

b.. Reserve Bank of India

c.. Labor Authorities

d.. Its Head Office

14..RKL A Co-operative Bank has secured permission to have branches in other states as well.

a.. Multi purpose Co-operative Bank

b.. Multi State Co-operative Bank

c.. Multi Dimensional Co-operative Bank

d.. Multi Co-operative Bank

15.. Identify the odd one

a.. State Bank of Mysore

b.. Yes Bank

c.. Reserve Bank of India

d.. Postal Bank

16..Which one is not appropriatea.. A Commercial bank can sell mutual fund

productsb.. An urban co-operative bank cannot sell

general insurance productsc.. A Private Sector bank can provide Safe

deposit locker servicesd.. A Nationalized bank is not prohibited to

accept articles under safe custody

17..Accepting deposit receipt of another bank under safe custody article is the secondary business of a commercial bank.

a.. True

b.. Customer service

c.. False

d.. In fact it is the Primary business

18.. Identify which one is not the liability of a commercial bank

a.. Fixed deposit

b.. Home Loan which is under NPA

c.. Both a & b

d.. None of these

19.. These are banking companies operating only in a limited geographical area.

a.. State Co-operative Bank

b.. District Co-operative Bank

c.. Foreign Bank

d.. None

20.. A banking company, whose license is cancelled can appeal to Banking Ombudsman within a period of 30 days from the date of the order rejecting the license.

a.. True b.. Not Banking Ombudsman, but RBI Governorc.. Falsed.. Neither Banking Ombudsman nor RBI

Governor but RBI Main Office

21.. Banks should submit their request for new branches, administrative offices, ATMs for consideration of RBI

a.. As and when needed

b.. Once in a year

c.. Once in every six months

d.. Once in a quarter

22.. Who cannot approach directly RBI for branch licensing

a.. Regional Rural Banks

b.. Urban Co-operative Banks

c.. Nationalized Banks

d.. Private Sector Banks

23..A Foreign Bank which has a branch in Calcutta has to

a.. Deposit and keep deposited with RBI a sum of Rs.20 lacs

b.. Deposit an amount of 20% of the profit each year as disclosed in the profit and loss account with RBI

c.. Both a & bd.. Deposit a token amount as stipulated by RBI

from time to time

24.. The Central Government can exempt any foreign bank from the requirements on the recommendations of RBI for a specific period if the amounts deposited already by it are considered adequate. On the cessation of business by any foreign bank for any reason, these deposits shall from part of the assets of the company on which the creditors in India shall have the first charge.

25..A commercial bank (existing) has a place of business in both Kolkata & Mumbai minimum paid up capital and reserves

a.. Rs. 5 lacs

b.. Rs.10 lacs

c.. Rs.15 lacs

d.. Rs.100 lacs

26..Identify the Act which stipulates that the subscribed capital of a banking company shall not be less than half of its authorized capital and the paid up capital shall not be less than half of its subscribed capital.

a.. Companies Actb.. Reserve Bank of India Actc.. Banking Regulation Actd.. All these Acts

27..A bank when it receives more than the specified % of their shares for transfer to one party, the bank’s board has to refer the matter to RBI. The Bank shall not transfer the shares

a.. Without intimating RBIb.. Without receiving RBI’s acknowledgmentc.. Without intimating Finance Ministryd.. Without intimating Company Law Board

28.Banks can raise their capital even in the form of

a.. Innovative debt instruments

b.. Perpetual instruments

c.. Perpetual non cumulative preference shares

d.. Any one of the above

29..Declaration of dividend by banks require a minimum 9% of CAR and Net NPAs not exceeding 7%. The quantum of dividend that can be declared is based on the levels of net NPAs and in a graded level (Maximum 40%pay out ratio) and can be paid only from current year’s profits

30.. Suresh, a director of a banking company wish to hold office continuously for more than 8 years.

a.. He can

b.. He cannot

c.. He can hold only up to 7 years

d.. None

31..RBI may appoint an additional director/s in the interest of

a.. Public

b.. Banking policy

c.. Depositors of the company

d.. All of these

32.. On the Reserve Bank of India passing a removal order, the concerned person ceases to hold office which he/she was holding till then. Further he/she is prohibited, from directly or indirectly taking part in the management of any banking company for a period not exceeding 5 years as may be specified in the order. Contraventions of the order is punishable with a find of Rs.250 for each day during which the contravention continues.

33..When the board of a banking company is ordered to be reconstituted as per the provisions of the Banking Regulation Act, directors will not be removed for the purpose of reconstitution by

a.. Lotsb.. Majority decisionc.. Both a and bd.. None

34.. The shareholders of a banking company are entitled to dividends only before all the capitalized expenses are written off.

a.. Trueb.. Falsec.. It is after not befored.. There is no connection with the

capitalized expenses and declaring of dividends

35.. Other than the Governor, Deputy Governors of RBI, the other directors are

a.. Appointed

b.. Nominated

c.. Selected

d.. Elected

36.. RBI issues directions from time to time regulating the lending operations of banking companies

* The tools employed for exercising Selective Credit Control are

• Minimum margins for lending against selected commodities

• ceilings on the levels of credit and * charging of minimum rate of interest on

advances against specified commodities

37.. RBI is authorized to regulate interest rates on loans and advances as well as deposits.

• The Usurious Loans Act. 1918 prohibits lending at exorbitant rates. The law has been made to protect the weaker borrowers from the powerful moneylenders

• RBI has issued guidelines in respect of internet banking. These cover a.. Technology and Security issues b.. Legal issue and c . Regulatory and supervisory issues

38..The first major study by Cadbury Committee in 1992 led to the introduction of

a.. Corporate Culture

b.. Corporate Governance

c.. Corporate Social Responsibility

d.. Corporate Sector

39..Reserve Bank of India constituted a Consultative Group in November 2001 with a view to strengthening the internal supervisory role of the boards of banks under the Chairmanship of

a.. Dr.R.H.Patilb.. Dr.A.S.Gangulyc.. Dr. Rangarajand.. Dr.Chakraborthy

40.. Identify the Committee which issued guidance for promoting the adoption of sound practices of corporate governance by banking institutions.

a.. The Basel Committee on Banking Supervision

b.. The Advisory Group on Banking Supervision headed by Shri M.S.Verma

c.. The Advisory Group on Corporate Governance headed by Dr.R.H.Patil

d.. Narasimham Committee on Banking Reforms

41..Based on various recommendations of different committees and the cross-country experience, the Reserve Bank of India has initiated several measures to strengthen the corporate governance in Indian Banking sector including the concept of this for directors of the banks.

a.. Disclosure clauseb.. Fit and Proper criteriac.. Non disclosure claused.. Due diligence measures

42..The way in which boards oversee the running of a company by its managers, and how board members are in turn accountable to shareholders and the company and its implications for company behavior towards employees, shareholders, customers, banks and other stakeholders

a.. Corporate Cultureb.. Corporate Value & Responsibilityc.. Corporate Integrityd.. None

43..The guidance (Basel committee) entitled Enhancing Corporate Governance for Banking Organizations highlights the importance of the roles of boards of directors (with a focus on the role of independent directors) and senior management.

. effective management of conflicts of interest

. the roles of internal and external auditors, as well as internal control functions . governing in a transparent manner, especially where a bank operates in jurisdictions, or through structures, that may impede transparency and the role of supervisors in promoting and assessing sound corporate governance practices

44..In India the Corporate Governance involves

a.. Reserve Bank of India

b.. Securities and Exchange Board of India

c.. Department of Company Affairs

d.. a, b & c

45..Not a term deposit.

a.. Reinvestment plan

b.. Overdue Term deposit

c.. Flexi Recurring Deposit

d.. Daily collection account

46.. Identify which is the most appropriate one.a.. Presently RBI decides the bank deposits rates

of interestb.. Presently RBI decides the rate of interest on

Savings Bank depositsc.. Presently RBI decides the rate of interest on all

types of lending by banksd.. Presently RBI decides the rate of interest on

both deposits as well as lending without any freedom for the banks

47..Banks have to file a return on their unclaimed deposit within 30 days of the end of each calendar year.

.. All deposits not operated in 10 years

.. For term deposits, the period of 10 years starts from the expiry of the period of the deposit

48.. Rajiv has not nominated for his Recurring deposit

a.. Still he can nominate

b.. Since at the time of opening/ investing he has not done, now not possible

c.. He should have nominated then and there only

d.. Nomination facility, if not utilized by the customer, then bank should be held responsible

49..For a joint account of W & Y the account holders appointed J as nominee. The settlement condition on this term deposit being Either or Survivor. If W dies before the maturity of the subject deposit, then

a.. Bank will delete the name of W after completing formalities and allow Y to continue as the depositor

b.. Bank will take the consent of J before doing so as mentioned in (a)

c.. Bank will settle the claim by closing the deposit before maturity in favor of the claimants

d.. Since J is the nominee and the condition is not Jointly, the bank would make the payment to J

50.. Chandru is the depositor of a bank. He has an individual Savings Bank account (nominee is wife), a Safe Deposit locker in his name along with his wife ( no nomination but operation condition is Several) and a Term deposit (reinvestment plan) with his son (Either or Survivor) (nomination in favor of his wife). On the death of Chandru, Bank would

a.. Pay the amount on Savings Bank & Term deposit to Chandru’s wife

b.. Insist the wife of Chandru to close the safe deposit locker facility and take the contents

c.. Both a as well as bd.. None

51.. Which one is correct

a.. Both Safe deposit locker facility and Safe Custody Article facility are one and the same.

b.. The role of banker is different for both Locker and Article facilities

c.. In locker facility banker is the lessor whereas in the article facility banker is the bailee

d.. Both b & c

52..Mr.Krishnan one of the depositors has died. He had nominated his second son as the nominee. The First son, first and second daughters objected that the bank should not settle the claim in favor of the nominee. Mrs. Priya Krishnan the wife of the depositor had already died. However, the depositor’s mother Mrs. Manorama is

still alive.a.. Bank will have to settle the claim in favor of the two sons and two

daughters.b.. Under these circumstances the nomination is only a formality.c.. Bank will get valid discharge by making the payment to the nomineed.. Bank should not ignore Mrs. Manorama while settling the claim

53..Selective Credit Control seeks to influence the demand for credit by

* making borrowing more costly for certain purposes which are considered relatively inessential or

* by imposing stringent conditions on lending for such purposes. Or

* by giving concessions for certain desired types of activities

54..The tools employed for exercising SCC are

* .. minimum margins for lending against selected commodities

* .. ceilings on the levels of credit

* .. charging of minimum rate of interest on advances against specified commodities.

55..A bank wish to advance against shares of

a.. Private Limited Company

b.. Public Limited Company

c.. Their own Bank

d.. Both a & c not allowed

56..RBI still decides the rate of interest on

a.. Housing loan to an individual

b.. DRI

c.. Car finance

d.. Bills Discounted

57..The Reserve Bank of India (Amendment) Act,2006(Section 45W) empowers the Bank, in public interest or to regulate the financial system of the country to its advantage, to determine the policy relating to interest rates or interest rate products and give directions in that behalf to all agencies or any of them, dealing in securities, money market instruments, foreign exchange , derivatives, or other instruments of like nature as the Bank may specify from time to time.

58..Banking Ombudsman is an authority established under the Banking Ombudsman Scheme, 1995 by the RBI. The purpose is to resolve and settle the complaints of banking public against the commercial banks and the scheduled primary cooperative banks without resorting to courts.

59..Banking Ombudsman scheme applicable to all commercial banks, RRBs and schedules primary co-operative banks.

.. Disputes between two banks can also be taken up with the Banking Ombudsman

..A banking ombudsman may act as an arbitrator

60..Find out the odd one (Banking ombudsman)

a.. Observance of Reserve Bank directives on interest rates

b. Non-acceptance of application for loans without assigning valid reasons to the applicant

c. Non-issuance of Demand Drafts to customers

d. Non-adherence to prescribed working hours by branches

61..Identify the correct statement( Banking Ombudsman)

a.. The Credit card related issues are beyond the purview of Banking Ombudsman.

b.. The Credit card related issues are within the purview of Banking Ombudsman

c.. Forced closure of account without sufficient reason will not come under the purview of Banking Ombudsman.

d.. Excepting b other two are correct

62.. Shyam , a borrower of bank D has approached the Banking Ombudsman, since he is fed up with bank D who has been insisting him to repay the loan taken by him from the bank.

a.. Shyam will succeedb.. The borrower will not succeedc.. Such matters are not within the purview of the

Banking Ombudsmand.. The borrower can avoid repaying taking shelter

under Banking Ombudsman scheme

63..A bank has refused to open the account without any valid reasons. When the matter was referred to the Bank’s Zonal Office, no response received even after two months.

a.. The person can refer the matter to Banking Ombudsman.

b.. Even though he is yet to become the customer of the bank, he can refer the matter to Banking Ombudsman.

c.. Since he is the non customer he looses the right to refer the matter to Banking Ombudsman

d.. The person can refer the matter to the Head Office / Corporate Office of the Bank and then only can approach Banking Ombudsman

64..When the balance maintained by any scheduled bank falls below the stipulated minimum, such a bank shall be liable to pay a penal interest to RBI.

During the first fortnight , when such shortage occurs, the penal interest shall be 3% above the Bank rate and if the shortage continues in the next fortnight, the penal interest shall be 5% above the bank rate.

65..

.. Every scheduled bank has to submit a return to RBI showing the demand and time liabilities and borrowings from banks in India

65..RBI has issued guidelines in respect of internet banking. These guidelines cover

.. Technology and security issues

.. Legal issues

.. Regulatory and supervisory issues

These guidelines apply, in addition to internet banking, to other forms of electronic banking to the extent relevant.

66..Identify the odd one

a.. Regional Rural Bank

b.. State Bank of India

c.. Central Bank of India

d.. None of these

67..In the case of banking companies which are not scheduled banks, as per the provisions of BR act, the cash reserve need not be maintained with RBI. It may be with the bank itself, or in a current account with RBI or byway of net balance in current accounts or in one or more of these ways

68..A bank has to submit a Friday statement to RBI . The said Friday(22nd of a particular month) has not been declared as holiday under the Negotiable Instruments Act, but the previous working day and subsequent day were declared . Then the statement to be prepared as on

a.. 20th of that month b.. 23rd of that monthc.. 22nd of that month d.. 24th of that month

69..Every banking company has to maintain in India certain amount of assets as per the provisions of BR act.

.. At the close of business on the last Friday of every quarter, such assets shall not be less than 75% of the demand and time liabilities of the banking company in India.

70..The rate of interest on loans and advances contracted between a bank and customer is not liable to be opened by a court of law.

71..Every banking company has to submit 3 copies of its balance sheet and profit and loss account to RBI within 3 months from the end of the period to which it relate. The period may be extended by the RBI by a further period not exceeding 3 months.

72..A banking company need to submit copies of balance sheet and auditor’s report to the Registrar of Companies.

a. Yes. b. Noc. The banking company need not submit to

Registrar of Companies.d. Since they are submitting to RBI there is no

need to submit to Registrar Companies separately

73..These banks shave to display in a conspicuous place in their principal office a copy of the last audited balance sheet and profit and loss account. This has to be done not later than the first Monday in August every year.

a.. Multi State Co-operative Banks

b.. Nationalized Banks

c.. Private sector banks

d.. None

74..RBI is empowered to order special audit of the accounts of any banking company.

The expenses relating to the special audit to be borne by the concerned banking company.

.. Every month, a banking company has to submit to the RBI a return showing its assets and liabilities in India as at the close of business on the last Friday of the previous month

75..It is not mandatory to give a copy of the report to the banking company.

a.. Inspection & Audit report

b.. Scrutiny report

c.. Search report

d.. All these reports

76..Venugopal, an account holder with Bank UB has requested for the return of a cheque which had been duly paid by UB (drawee). The banker refused to give the original but provided a photo copy and charged him Rs.50 for the same.

a.. The bank is in orderb.. The bank is not in orderc.. The bank should have handed over the original paid

cheque that too without any charges (keeping a photo copy for their records)

d.. The customer is not in order in getting the original cheque, since it is the property of the bank once paid by them. At the most the customer can get a certificate from his banker and not the paid insturment

77..To order amalgamation of two banking companies under the provisions of Companies Act rests with

a.. Central Government

b.. Reserve Bank of India

c.. Central Government with the consultation

of Reserve Bank of India

d.. Company Law Board

78.. Which one is not correct (Winding up)a.. Central Government can appoint an official

liquidator, attached to the respective High court for conducting the winding up proceedings relating to banking companies.

b.. Reserve Bank can be an Official Liquidatorc.. State Bank of India can not be an Official

Liquidatord.. Other than an individual a banking company

can also act as an official liquidator

79..Within 15 days of the winding up order, the liquidator has to give notice calling for claims for preferential payment and other claims form every secured and unsecured creditor. The depositors need not make claims. The claims of every depositor of a banking company is deemed to have filed for the amount as shown in the books of the banking company standing to his credit.

80.. LJH has been having a savings bank account with a balance of Rs.738/- and a Recurring deposit account with a balance of Rs.2750/-. The bank has gone into liquidation and the official liquidator has proceeded to settle the claims after completing the formalities. Then

a.. LJH would not get any amountb.. LJH would get Rs.250 in each account as priority over

all other creditorsc.. LJH would be paid at the discretion of the Official

Liquidatord.. LJH would get the amount on pro rata basis only.

81..State Bank of India was established under sec 3 of the State Bank of India Act,1955 to take over the undertaking of the then Imperial Bank and to carry on the business of banking and other business in accordance with that act.

.. The Central Government can give directions to SBI on matters of policy involving public interest in consultation with the Governor of RBI and the Chairman of the State Bank.

82. State Bank of India Chairman and Managing Director are appointed for a period of 7 years.

a.. For Chairman it is 7 years, but for MD it is 5 years

b.. For both it is not to exceed 5 yearsc.. For both it is not to exceed 6 yearsd.. For Managing Director it is 7 years but for

Chairman it is only 5 years

83..The State Bank will act as an agent of RBI at the places where it has a branch and where RBI has no branch.

.. To handle government and other business as required by RBI.

.. The terms and conditions shall be as agreed between them.

84.. The Central Government may after consultation with the SBI and RBI by order in writing authorize a subsidiary bank to undertake other form of business.

..The State Bank is empowered to inspect the subsidiary banks

..The auditors are appointed by State Bank of India in consultation with RBI

85.. The issued capital of the Regional Rural Bank is held as 15 %:50%:35% by

a.. Regional Rural Bank : State Government : Sponsor Bank

b.. State Government : Central Bank (RBI): Sponsor Bank

c.. State Government : Reserve Bank of India : State Bank of India

d.. None of these

86..The chairman of a RRB is appointed bya.. The Sponsor Bankb.. The Sponsor Bank in consultation with

NABARDc.. The Sponsor Bank in consultation with

NABARD or otherwise in consultation with the Central Government

d.. The Sponsor Bank only as it has full power to appoint

87.. Identify the one not appropriate (RRB)a.. The auditor’s report and report on the working

of the bank need not be placed before the Parliament.

b.. RRB may transact the business of banking such as accepting of deposits and lending money.

c.. RRB is not coming under the purview of Banking Ombudsman

d.. The auditor’s report and report on the working of the bank has to be laid before the Parliament

88.. In respect of Nationalized Banks, the shares other than those held by the Central Government are freely transferable. No shareholder other than the Central Government can exercise voting rights in excess of 1 % of the total voting rights of all the shareholders.

89..The directors of Nationalized banks are nominated by the Central Government or elected from shareholders.

.. Among others one Chartered Accountant with not less than 15 years of experience nominated in consultation with RBI.

.. Not more than 6 directors to be nominated by Central Government

90..The number of existing Nationalized banks are

a.. 06

b.. 14

c.. 19

d.. 20

91.. Identify the appropriate one (Nationalized Banks)a.. For the purpose of Income Tax Act, a Nationalized

Bank is treated as a separate entityb.. For the purpose of Income Tax Act, a Nationalized

Bank is treated as an Indian companyc.. For the purpose of Income Tax Act, a Nationalized

Bank is not as an Indian companyd.. For the purpose of Income Tax Act, a Nationalized

Bank is treated as a Government of India undertaking (Public sector undertaking)

92.. State Bank of India act was amended to divide capital into shares of Rs.10 each instead of Rs.100/-

• The Banking Companies (Acquisition and Transfer of Undertakings )Act amended to facilitate public holdings of shares.

• Authorized capital could be up to Rs.1500/- crore divided into shares of Rs.10/-each and also to increase or reduce the authorized capital between Rs.1500 crore and Rs.3000 crore

93.. All the Nationalized banks have two Executive Directors.

a.. Trueb.. Falsec.. The criteria is that a Nationalized bank

has to cross Rs.1 lac crore business to have more than one ED

d.. Yes. At the discretion of Reserve Bank of India

94..The minimum paid up capital and reserves to start banking business by a cooperative bank is not less than Rs.1.00 lac

.. A co-operative bank not to lend on its own shares/ unsecured loans or advances to its directors/ any company or associates wherein the director has interest

95.. Restrictions not applicable for unsecured loans/ advances made by a co-operative bank against bills for supplies or services made to government or bills of exchange arising out of bona fide, commercial or trade transactions.

.. A co-operative bank to get permission of RBI to open a branch in a new place.

96..If a co-operative bank fails, the depositors of such a bank is protected upto Rs.1. lac subject to the provision that

a.. The depositor is not having more than Rs.1 lac at the time of failure of the bank

b.. The bank has registered with the DICGCc.. The depositor is not having more than one

deposit account d.. The depositor has opted for insurance

coverage specifically

97..Banking Ombudsman is

a.. Discontinued and a new company has been set up.

b.. Not applicable to delays in receipt of export proceeds

c.. Applicable to adherence to prescribed working hours by branches.

d.. All the above are not True.

98.. An urban co-operative bank cannot undertake this business (identify)

a.. Accepting of daily collection deposits

b.. Special deposit schemes for Senior Citizens

c.. Making available Safe deposit lockers

d.. None of the above

99.. B is the depositor of an Urban co-operative bank. His deposit got matured on Sunday 4th of a particular month (the bank holiday). He approached the bank on the next day 5th of that month (Monday- working day). The bank made the payment of interest only up to Saturday 3rd of that month. B demanded interest for Sunday 4th of that month as well, at contractual rate.

a.. The bank is in order in paying interest up to 3rd of that month

b.. The customer is entitled for his claimc.. The customer’s demand is not justifiedd.. The bank need not make the payment of one day’s

interest

100.. Identify the possible a.. A private sector bank cannot take over another

private sector bankb.. A private sector bank cannot be taken over by a

Nationalized bankc.. A private sector bank has been taken over by

one more private sector bank which has been taken over subsequently by another private sector bank

d.. All are possible

101..Bank depositor D has died. The nominee L has approached the bank with the necessary claim application along with the death certificate. On verification it has been found that before his death D had cancelled the nomination and not nominated any other person.

a.. L will not get the amountb.. Since L is not aware about cancellation he is eligible to

get the amountc.. D should have consulted L before cancelling the

nomination in favor of Ld.. Bank has to ignore L’s claim and proceed to settle the

amount in favor of the legal heirs of D only

• 102..J is the customer of a Bank for last 7 years. He has not operated the account for last around 6 months. The bank will have to treat his account as

a.. Dormant

b.. In operative

c.. Still operative

d.. Unclaimed

103..MM has been introduced by EE and the account has since been opened by bank KK. The liability of EE in this respect would be that of

a.. Monetary

b.. Moral

c.. Pecuniary

d.. Voluntary

• 104..Q has issued a cheque in favor of D. The cheque is having Account payee crossing. D has endorsed the same in favor of one J. J’s bank I is the collecting banker. Drawee bank is U.

• A.. Paying banker need not pay• B.. Drawee has to honor the cheque if it is

otherwise in order and sufficient balance is there in the account of Q.

• C.. I is responsible• D.. None of these

105.. An Usance Bill of Exchange has not been accepted by the drawee on presentation. Noting and Protest

a.. Necessary for domestic bills

b.. Compulsory for domestic bills

c.. Compulsory for foreign bills

d.. Not compulsory for foreign bills

• 106.. Truncated cheque would remain with

• A.. Collecting Banker

• B.. Paying banker

• C.. Drawer

• D.. Payee

• 107.. When the customer’s signature on the cheque is forged there is no mandate to the bank to pay. As such a banker is not entitled to debit the customer’s account on such forged cheque.

.. The drawee of a cheque having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required to do so, and, in default of such payment, must compensate the drawer for any loss or damage caused by such default.

• 108..“Payment in due course” means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which does not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned.

• 109..A cheque has been received in clearing on 27th of this month bearing the date as 18th of three months ago. The cheque to be returned on the grounds

a. Stale Cheque

b.. Ante Dated Cheque

c.. Not to be returned

d.. Post Dated

• 110...A cheque has been received by the drawee bank in local clearing. At that time the account has clear balance to meet the cheque amount. However, it has been noted that the Words and Figures differ. The cheque contained Rs Twelve thousand one hundred and two in words but in figures read as Rs.12100/- Bank has to

a. Make the payment b. Dishonor the cheque c.. Make payment for only Rs.12100/- as per figures d.. Act as a prudent banker

111.. A cheque has been received for collection. The Collecting banker has given his necessary certificates on the reverse of the cheque, which had more than two endorsements. (not crossed as account payee)

a. It is the responsibility of the collecting banker to verify the regularity of endorsements

b. It is not the responsibility of the paying bank to verify the regularity of endorsements

c.. The Collecting bank as well as the paying bank are responsible to verify the regularity of endorsements

d.. None of the above

• 112.. M has issued a cheque favoring N which has been received by the drawer’s banker. On scrutiny, it has been observed that the word bearer was altered into order again re-altered into bearer. M has signed only the cheque and not authenticated the alteration.

a.. The drawee bank to make payment. b.. The paying banker will be in order to return the same with a reason Material alteration requires drawer’s authentication c.. The above is not a material alteration. d.. The responsibility lies with the payee’s banker and not

that of the drawer’s banker.

• 113.. Allonge is associated with

a.. Will

b.. Insurance

c.. Nomination

d.. None

• 114.. A collecting banker is not responsible

a.. If a cheque is returned for want of funds

b.. If endorsements are not regular

c.. If a cheque specially crossed is collected

d.. All the above

• 115..On an uncrossd cheque tendered by P to the credit of his account, the collecting banker Q affixed his crossing (using the rubber stamp crossing seal of the bank) on receipt and sent for collection. Drawee bank being C.

a.. Bank Q will not get protection

b.. Bank Q will get protection

c.. Bank C is in the picture

d.. Bank C is not in the picture

• 116..A paying banker should not act in a casual manner. To get appropriate protection under the provisions of NI Act,1881, he should act in good faith. He should not have any doubt that the payment is being made to the incorrect person. He should act without negligence.

• 117..A Collecting banker should act in good faith.

He should collect cheques only for his customer

Cheques should have been crossed (Generally or specially)

Without negligence he should act.

• 118..The banker to understand his customer properly and the collecting banker should not act in a haste or in a causal manner.

The proper identification and opening of account with due care assumes lot of importance.

A collecting banker cannot avoid his responsibility, even at a later date, when it is proved that the account opened was not properly opened.

• 119..A cheque has been collected by Bank Y. But the cheque bore the crossing in favour of Bank S. The cheque is issued by D having account with Bank X.

a.. The drawee can make the payment since it has been collected by a bank.

b.. X not to honorc.. Y is not in order in collecting such a crossed

chequed.. Both b & c

• 120..V has issued a cheque favouring M for Rs.879/- The cheque has been otherwise in order and the account has enough balance. M is having account with BS bank and V is the account holder of JJ bank.

a.. JJ bank not to refuse paymentB.. JJ bank will receive paymentC.. BS bank will not receive paymentD.. BS bank to refuse payment

• 121.. UT, the paying banker has paid the cheque over looking the endorsements. Later on it came to the knowledge that the endorsements were regular but third endorsement was forged.

a.. The drawee is not protected

b.. It is a payment in due course

c.. The paying banker will get protection

d.. Excepting (a) the other two are appropriate

• 122..Bank W has received the cheque signed by their customer E. The cheque was issued around 4 months ago. Around 25 days ago at the request of E a fresh signature was obtained by Bank W. The bank returned the cheque in question when received ( yesterday in local clearing) on the ground signature varies.

a.. Bank W will get the protectionb.. Bank W obviously not get the protectionc.. It appears Bank W overlooked the new signature lodged

recently and returned the cheque which is having the earlier signature

d.. Both b & c

• 123..An account holder has appointed his brother as a Letter of Authority Holder (LAH) to operate the account. A cheque issued by the LAH has been received for payment. But it has come to the knowledge of the bank that the LHA had recently died.

a.. The bank will be in order in making the payment since the account holder is alive

b.. The bank will be in order in making the payment since the LAH is not the account holder

c.. The bank will be in order in making the payment if the same is counter singed by the drawer

d.. The bank will have to take a decision based on the association with that of the customer and his support to the bank

• 124..Bank S opened an account 5 months ago. At the time of opening of the said account, the bank relied on the signature of

an existing customer of another branch of the same bank. A few weeks ago they have collected a demand draft (issued by Bank KJ) on behalf of the account holder and released the payment . Subsequently, it came to the knowledge of S that the said demand draft was so altered as to the place of payment as well as the amount.

a.. Bank S is not at faultb.. Bank KJ has to bear the lossc.. Bank KJ is not at faultd.. Bank S is responsible

• 125..Sisters K & C are having a joint SB account. Operation condition being Several. A cheque bearing the signature of both of them have come in clearing and honored by their banker H. It has been found later on that one of the signatures was forged. Then bank H

a.. Will get protectionb.. Will not get protectionc.. Will get protection since the operation condition is any

oned.. Will get protection since it has not been found out within

the reasonable time.

• 126..Varhese issued a crossed cheque in favour of Sunder for Rs.7345/=. Despite that the drawee bank has made the payment over the counter i.e., Cash Payment. Under the circumstances

a.. The Drawee Bank is not responsible b.. The Drawee Bank is responsible c.. The Drawer’s bank is responsible d.. Both b & c

• 127..A Collecting Banker will get protection under the provisions of the Negotiable Instruments Act,1881,if

a.. He has collected for a non customer b.. He has collected for an account holder whose

account has been opened in a very causal manner by not applying Know Your Customer requirements properly.

c.. He has collected for an account holder whose account should not have been opened at all (incompetent to contract)

d.. He has collected for an account holder whose account has been introduced by one of the retired employees of the bank.

128..Bank PR has acted in good faith but with negligence in collecting a cheque which has not been crossed. Cheque in question has been paid by Bank JG (drawee). In case of dispute

a.. Bank JG will be held responsible

b.. Bank PR will be held responsible

c.. Both JG as well as PR would be held responsible

d.. Neither JG nor PR would be held responsible

• 129.. As per the relevant provisions of of NI Act,1881 a bank can seek protection only, if there is a material alteration in the cheque and does not appear to have been altered.

a.. The above is correctb.. The above is in correctc.. The material alteration will not alter the

position.d.. The material alteration will, to some extent alter

the position.

130..A Court order has come and the bank has to make the payment of Rs.2200/- to the court. Next day a cheque issued by the drawer for Rs.2828/- has come and at that time the bank had only Rs.1587/- (in view of the payment made to the court the previous day). The bank has to return the cheque for Rs.2828/- to the collecting banker with the reason

a.. Funds insufficientb.. Refer to Drawerc.. Attachment by Courtd.. Garnishee Order received

• 131..Bank SI has paid the cheque for which the drawer has requested for a stop payment. The bank had duly acknowledged the letter seeking stop payment. However honored the cheque in question. The bank defended their action quoting the acknowledgement in which it has been clearly mentioned that on account of beyond control of the bank if anything happens the bank cannot be held responsible.

a.. The drawer would not get the protectionb.. The drawee would get the protectionc.. The customer would have to be compensated by the

bankd.. The bank’s stand would be supported

• 132..Bank QR has paid the cheque signed by the Letter of Authority holder, in good faith. However, they overlooked the fact that last week the Letter of Authority holder’s power has been cancelled by the drawer and duly intimated the bank in writing. The cheque bore the date of yesterday. Bank QR

a.. Will not get protectionb.. Not a payment in due coursec.. Both a & bd.. Bank QR to get protection since they have acted in

good faith.

• 133.. Bank D has collected the proceeds on a cheque from Bank O. A, the customer of D, has not with drawn the amount so collected. At that time a request comes from Bank O that they have made the payment by mistake and the cheque in question should not have been paid since not only the signature of the drawer does not belong to him but also the entire cheque has been altered. Hence, requested Bank D to return the amount in question wrongly paid by Bank O

a.. Bank D need not obligeb.. Bank D has to obligec.. Bank D is answerable to their customer A only, on whose behalf the

cheque has been collected and credited to his accountd.. Bank O can not get the payment, since it was not a payment in due

course

• 134..Paying banker X has returned a cheque wrongly due to pressure of work. By the time they could realize, necessary damage has already been done. X

a.. Acted with negligent

b.. Not a payment in due course

c.. Both a & b

d.. Bank cannot be held responsible since the happening had not happened with intention.

• 135..A cheque has been issued by drawer Arun in favour of payee Arvind. The said cheque has been collected by Krishna’s bank. In fact Arvind has endorsed the cheque in favor of Krishna. Then the payment will be received

a.. From Arvind’s bank

b.. From Arun’s bank

c.. By Krishna’s bank

d.. Both b & c

• 136..A cheque issued for Rs.22222/- had to be returned by the drawee since the balance in the account at the time of receipt of the said cheque has been only Rs.2222/- Then the paying banker has to use the reason

a.. Refer to drawer

b.. Insufficient Funds

c.. Either a or b

d.. Exceeds arrangement

• 137..GDK, a banker has been asked to collect a bill of exchange on behalf of its customer. Then the banker would not get protection as per NIAct,1881 provisions, as a collecting banker

a.. Trueb.. Incorrectc.. Falsed.. Not True

• 138..Identify the inappropriate one (Collecting banker)

a.. The collecting banker should act in good faith.

b.. The collecting banker should act with negligent

c.. The collecting banker should collect for his customer

d.. The collecting banker should collect only crossed cheques and not uncrossed cheques

• 139.. A cheque has been issued by E an agent of an account holder B who maintains the account with Bank G. The cheque is issued in favor of E singed by E on bank G. E has requested G to credit the amount to his (E’s) account also maintained with G only. G obliges.

a.. Amounts to conversionb.. Not amounts to conversionc.. If not specifically permitted by B , then amounts to

conversiond.. G has carried out the instructions appearing on the

cheque hence will get protection

• 140..Which instrument is always payable to the payee or to the order

a.. Cheque

b.. Bill of exchange

c.. Promissory Note

d.. None

• 141..After F, collected the amount on a demand draft, (which has been chemically altered and parted with the money), U, the paying banker demanded the payment from the collecting banker. F expressed their inability since the payee is not traceable. During discreet enquiries by U (affected banker), it has come to the notice ,that the collecting banker has not applied due diligence in opening the account of the payee. U is contemplating to proceed legally.

a.. U would succeedb.. F would get the order in their favorc.. U would not succeed but F would not be sparedd.. F since helpless, U would have to bear the loss

• 142.. A person approached the bank B for opening of an account giving the reference of a VIP of the town. At the request of the new person, the banker B contacted the VIP over phone based on the telephone number furnished by the new person. After the conversation, the account was opened. Subsequently, a cheque collected by B happens not to belong to the payee. Then bank B

a.. Would not get protectionb.. Would get protection, since the bank has taken the precaution to

talk to the VIP before opening of the accountc.. Would get protectiond.. Would get protection, since there is no negligent on the part of B

and further B has acted in good faith and collected for his customer only

• 143.. A partnership firm is enjoying CC limit of Rs. 30.00lacs. The liability is Rs. 29.28 lacs. A cheque received in clearing for Rs.1.10 lac is to be returned. Identity the appropriate reason.

• A.. Insufficient funds• B.. Not arranged for• C.. Refer to Drawer• D.. None

• 144..A banker

a.. Can be a Drawee

b.. Can only be a paying banker but not a Drawee

c.. Who is the drawee will also be the paying banker.

d.. Can neither be a paying banker nor a Drawee at the same time.

• 145.. While writing a cheque the drawer has altered the name of the payee. He is required to affix his full signature.

• A.. Since altering of the payee’s name amounts to material alteration

• B.. His full signature is required to complete the formality.

• C.. His full signature is required to establish his consent

• D.. Both a & c

• 146..A cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image for transmission, substituting the further physical movement of the cheque in writing

• A.. Digital cheque b.. Truncated cheque• C.. A cheque in the electronic form • D.. None

• 147..In case of payment through truncated cheque, the proof of payment is

• A.. Physical image • B.. Details of cheque on the statement• C.. A certificate issued on the end of the

printout of the electronic image of a truncated cheque by the banker who paid the instrument

• D.. No separate proof needed

• 148..A cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature ( with or without biometrics signature) and asymmetric crypto system/

• A.. Truncated cheque b.. A cheque in the electronic form c.. Digital cheque d.. Future Cheque form

• 149..Which statement is appropriate

• A.. A post dated cheque can be paid

• B.. A stale cheque can be paid

• C.. A post dated cheque should not be honored

• D.. None

• 150..One R issued a cheque for commercial transaction a cheque for Rs.7777/- in favor of W. W handed over the cheque to his banker D, who sent it in clearing. The cheque was returned by the drawee for the reason “ account closed”. W wish to proceed against R for the reason Insufficient funds.

• A.. W would not succeed• B.. W cannot proceed since the reason for the return of

cheuqe is not insufficient funds• C.. Still W can proceed for the reason insufficient funds• D.. W has to get confirmation from his banker D before

proceeding as above.

• 151..Since C could not succeed in getting the money on a cheque which has been returned for the reason insufficient funds, he wanted to present once again the cheque. But his banker advised him the same cannot be done.

• A.. His banker is right• B.. There is no bar . C can present the cheque

more than one time• C.. However the same has to be done within the

validity of the cheque in question• D.. Both b & c

152..As per the appropriate Section of the NI Act, a Magistrate in a case ( Dishonour of cheque for the reason insufficient funds) wish to issue summons to the accused through courier service.

a.. He is in order in doing sob.. Such courier service must have been approved by the

Judge of High courtc.. Such courier service must have been approved by a

Court of Sessiond.. The Magistrate himself has the powers to take a

decision about identifying the appropriate courier in the absence of speed post facility.

• 153..A collecting banker has sent the cheque for collection drawn on an upcountry place. Before the receipt of the said cheque by the paying banker, the drawer died and the cheque in question has been returned for that reason. Since payee has been deprived of the payment whom he should charge

• A.. Collecting banker• B.. Paying banker• C.. Both of them• D.. None of them

• 154.. A cheque has been materially altered. For want of authentication the cheque was returned. Once again it was presented after due authentication by the issuer. When it was received for the second time, the drawee returned the cheque with the reason insufficient funds. However at the first instance sufficient balance was there.

• A.. Drwaee is responsible• B.. Collecting Banker is responsible• C.. Paying banker is responsible• D.. Drawer is responsible

• 155.. A cheque has been issued in connection with a payment due. Thinking that the same has been paid, the drawer has withdrew some amount. When the cheque in question came, the banker has returned the same for insufficient funds. In fact the shortage was only Rs.55/- The customer became furious and charged the banker.

• A.. Paying banker will be protected under payment in due course

• B.. Drawer will not succeed• C.. Drawee has acted within the parameters• D.. All are appropriate

156.. Contract of Indemnity and Surety are discussed in the Act

a.. Negotiable Instruments

b.. Sale of Goods

c.. SARFAESI

d.. None

157..A contract of indemnity has two parties.

.. The indemnifier has to make good the loss as soon as it occurs.

.. There are only two parties to a contract of indemnity and hence only one contract.

.. An indemnity is for the reimbursement of loss

158.. In an indemnity the risk is contingent whereas in a guarantee the liability is subsisting.

a.. The above is correct

b.. The above is incorrect

c.. For indemnity the risk is subsisting and for

guarantee the liability is contingent.

d.. For both risk contingent and liability subsisting

159..Identify the role of indemnity.a.. Bank has given a loan to C on the surety

of F.b.. Bank has settled the death claim in favor

of minor legal heirsc.. Bank for issuing a demand draft to a

studentd.. Bank for issuing a credit card to one of

the valued customers

160..In banks generally the indemnity is part of

a.. Issuing a Duplicate or Triplicate demand draft

b.. To cover the possible future loss

c.. To break open the locker under special circumstances

d.. All the above

161..Contract of indemnity is discussed in

a.. Securitization Act

b.. Transfer of Property Act

c.. Contract Act

d.. Banking Regulation Act as well

162.. Which statement is appropriate

(indemnity)

a.. The other name for surety is indemnity

b.. There is no other name for indemnity

c.. The other name for guarantee is indemnity

d.. Indemnity is also known as counter guarantee

163..Issuing of Bank guarantees is one of the functions of a banker.

It is a Non fund based finance extended by a bank.

To secure the bank guarantee in addition to necessary securities, the bank will have to obtain a suitable Counter guarantee or Counter indemnity to safe guard their interest

164.. Bank B has issued a guarantee on behalf of their borrower E in favor of the Department L. Identify the Surety, Beneficiary and Principal debtor

a.. B, L & E

b.. B, E & L

c.. L, B & E

d.. E, L & B

165.. Bank has issued a guarantee with a protective clause in which it is mentioned that their liability will cease after the expiry date. Still the bank insist the beneficiary to return the guarantee (original) duly cancelled or to that effect a written communication that there are no claims from the beneficiary is obtained to

a.. Protect the interest of the bankerb.. Protect against any possible developmentc.. Fulfill one of the formalities attached to issuing of Bank

guaranteesd.. Complete the normal function of a banker who issues a

Bank guarantee.

166.. Bank guarantee is the commitment given by the issuing bank (Guarantor) to the beneficiary.

If the claim is made by the beneficiary within the guarantee period and as per the terms and conditions of the bank guarantee, then the bank should make the payment without fail and also without any delay.

167.. Courts will not interfere in the functions of a banker with regard to bank guarantees issued by them.

The Courts will not prevent the bank from making the claim amount on the bank guarantee.

The Courts will interfere only when there is a mala fide intention or fraud or forgery takes place.

168.. Banks generally issue Performance guarantees.

Advance payment , Deferred payment and Statutory guarantees are also being issued by banks

Before issuing a bank guarantee, the bank will go through the draft copy and after satisfying with the contents they agree to issue.

Besides the documents for various types of securities, appropriate counter guarantee also to be taken.

169..Amount of guarantee, period, protective clause, claim period , beneficiary are some of the important aspects which are to be clearly understood and put in place to avoid complications at a later date.

.. If claim has come from the beneficiary utmost importance to be given and due action to be taken.

170.. Beneficiary U has invoked the guarantee. Bank B has to make the payment. At that time B has a collateral security of Rs.4 lacs (Term deposit) and not enough balance in the current account of the party. The claim amount is Rs.7 lacs.

a.. Obviously B will have to foreclose the Term deposit and make payment

b.. For the balance amount B can approach U with a request for some more time

c.. Since the amount of the collateral security will not be sufficient to meet the claim amount, B can desist from settling the claim of U.

d.. None of these

171.. Having given the commitment under a Bank guarantee, Bank JK had to make the payment when revoked by the beneficiary DG. In the process JK advanced a sum of Rs.2 lacs to F and adjusted the collateral security of Rs.3 lacs (by closing before maturity the Fixed deposit )and settled the claim .

a.. F can take objection for the action of JK.b.. JK is in order in carrying out as statedc.. The counter guarantee given by F allows JK to act

accordinglyd.. Both b & c

172.. When the contingent liability on a bank guarantee becomes a regular liability?

a.. On invocation of the guarantee

b.. When payment is made by the bank

c.. When payment is refused by the bank

d.. None of these

173.. Bank JY has issued a performance guarantee (fully secured by way of Fixed Deposit). Then JY

a.. Need not obtain counter guarantee or counter indemnity

b.. Need to obtain counter guarantee or counter indemnity as applicable

c.. can waive both of themd.. Better to consult its Head Office before

proceeding further

• 174..In banks generally the guarantee is part of

a.. Issuing a Duplicate or Triplicate demand draft

b.. To cover the possible future lossc.. To break open the locker under special

circumstancesd.. In all these cases it is indemnity and not

guarantee.

• 175..Indemnity holder vvv has incurred certain genuine expenses.

a.. She is entitled to recover from the person who has given the indemnity.

b.. She is entitled to recover from the indemnifier

c.. Both a & bd.. She is entitled to recover from the

indemnified

• 176.. A bank locker has to be opened forcefully because of certain developments. The same was carried out in the presence of the legal heirs of the locker holder( who is no more now) In the process the bank overlooked to obtain appropriate indemnity.

• A.. The bank is in order• B.. The bank is not in order• C.. Since the same has been opened in the

presence of legal heirs bank is in order• D.. None

177..A Letter of Credit is a commitment by the LC opening bank to the beneficiary (Exporter or Seller) to make payment.

.. Banks under a LC deal in documents

.. LC terms and conditions should not be vague .

178.. As in the case of Bank guarantee, the payment under the LC – Bank’s obligation is primary.

.. Exceptional cases the Court would interfere with the machinery of irrevocable obligations assumed by the banks, such as, clear cases of fraud of which the banks have notice.

179..LC documents include Bill of exchange, Invoice, Transport documents (like Airway bill, Bill of Lading, LR,RR,) Post parcel receipts, Insurance documents, Packing list, Certificate of Origin, Quality certificate and so on

180.. A Negotiating banker (the bank in the beneficiary / Exporter’s country) negotiates the bills (makes payment on the bills drawn by the seller and accepts the documents). He is also known as Nominated or Paying banker.

.. A confirming banker has to undertake on its part the liabilities of the credit vis-à-vis the beneficiary or the Negotiating bank.

.. Reimbursing bank is appointed by the issuing bank to make reimbursement to the Negotiating, Paying or Confirming bank

181..Which one is a transport document

a.. Bill of Exchange

b.. Bill of Entry

c.. Bill of Lading

d.. None of these

182.. Among other requirements LC specifically required that the invoice to contain quantity in 10 kg basis. However,the invoice has been made for 100 kg instead of 10 kg basis.

a.. Will be treated as a discrepancy & not likely to get payment

b.. Not an insignificant one

c.. Not an alarming issue

d.. It is insignificant

183.. Uniform Custom and Practice for Documentary Credits – UCPDC 600 came into effect on

a.. 25th October 2006

b.. 25th October 2007

c.. 1st July 2007

d.. 1st July 2008

• 184..According to UCPDC 600 reasonable time for acceptance or refusal of document by a

a.. Definite period of 5 banking days

b.. Definite period of 5 working days

c.. Definite period of 3 banking days

d.. Definite period of 7 banking days

• 185..A Deferred payment guarantee is generally associated with

a.. Current goods purchase and sale

b.. Capital goods purchase and sale

c.. Both a & b

d.. None

186..Bills are classified into inland, foreign, demand, Usance, Clean, Documentary.

.. Demand bills are always purchased whereas time bills are discounted.

.. Bills can also be accepted by banks on collection basis

187..M, a customer has tendered an upcountry cheque to his banker J, who accepted on collection basis. After sending the cheque for collection, at the request of M, J has purchased the same. Then the relationship between the banker and customer would be

a.. Agent – Principal b.. Creditor – Debtorc.. Debtor – Creditor d.. Principal - Agent

188.. Noting and Protest applicable

a.. When a bill is dishonored on account of non acceptance

b.. When a bill is dishonored on account of non payment

c.. When a foreign bill meets with the situation mentioned in both a and b

d.. All of these

189.. A cheque purchased has been returned with the reason “Funds insufficient”. Then the bank which advanced finance has to

a.. Recover the finance from the drawer

b.. Recover the finance from the drawee

c.. Recover the finance from the payee

d.. Forego the advance lent

• 190.. A has sold the goods to B who has agreed to pay the amount after 77 days. Then who will be drawing a Bill of Exchange. If Promissory Note is to be there instead of Bill of Exchange who will make it.

• A.. Both cases Seller• B.. Seller and Purchaser• C.. Purchaser and Seller• D.. Both cases Purchaser

191..Depending upon the nature, value of securities accepted by the banks, necessary/ appropriate Loan documents are to be taken to secure the securities/ money lent and also to protect the interest of the bank.

.. If proper / adequate precautions are not taken bank not only loose the security but also the chances of recovery.

192..Various types of Bank securities include Land/ Real Estate, Stocks and Shares, Debentures, Goods, Documents of Title to goods, Trust receipts, Life Policies, Post office NScs,, Term deposits, Book debts, Gold ornaments and so on. Banks also consider Supply Bills finance as well.

193.. Without stamp duty which instrument is considered valid?

a.. Agreement

b.. Cheque

c.. Promissory Note

d.. Acknowledgement of liability

194..Bank has considered the Life policy of the borrower as security. Then the transaction will involve

a.. Pledge

b.. Hypothecation

c.. Assignment

d.. Both c & a

195....YVU (P) Ltd company has been sanctioned a Supply Bills limit of Rs.7 lacs.

a.. The Charge need not be registered with the Registrar of Companies since Supply Bills is treated as an unsecured financeb.. The Charge has to be registeredc.. The Charge has to be registered since Book debts are considered as Collateral securityd.. No connection with the Registrar of Companies since the bank only gives the finance

196.. Identify which one is an actionable claim

a.. Life Policy

b.. Cheque

c.. Promissory Note

d.. Bill of Exchange

197.. The Irrevocable Power of Attorney is also insisted as one of the documents in respect of

a.. Life Policy Loan

b.. Term deposit Loan

c.. Clean OD

d.. Supply Bills Finance

198.. Bank GD has advanced on the security of a life policy of the borrower. The same has been dully assigned and registered in favor of the assignee. When the repayments are regular, the borrower dies. Then claim amount will be made by the insurance company to

a.. Nomineeb.. Assigneec.. Assignord.. Legal Heirs of the borrower

199.. There are 6 types of Mortgages.

The Transfer of Property Act discusses about the Mortgages.

The basic requirements include

An intention to create mortgage by the owner of the property (mortgagor) in favor of the Mortgagee (Creditor) to secure a debt

200.. BBH, a Ltd company has availed finance by way of Simple Mortgage. Then there

a.. Will be two types of Registrationsb.. One with the Registrar of Companiesc.. Another with the Sub Registrar of

Assurances in whose jurisdiction the mortgaged property is situatedd.. All of these

201..As per the provisions of the Registration Act,1908, a registered document operates, not from the date of its registration , but from the time of its execution. Thus a Mortgage document executed earlier, though registered later than another, has priority over the documents executed later

202..On 22.09.09 an equitable mortgage has been created by W in favor of Bank VPV. On the same property W succeeded in getting a finance by way of Simple mortgage on 11.10.09 from Bank B. Bank B ensured that the said mortgage was registered in their favor on 11.10.09 itself.

a.. Bank B will get the priorityb.. Bank VPV will get the priorityc.. Bank B will get the priority since they have got the

registration of the mortgage within the permitted periodd.. Neither Bank B nor VPV would get the priority

203..Limitation period on a Term loan

a.. 3 years

b.. 12 years

c.. 3 years from the date of disbursement

d.. None of these

204.. Bank M has considered a simple mortgage on 25th of June. The same borrower managed to obtain another mortgage loan (Simple mortgage) on 27th July (same year) from another bank (Bank E) on the same property. Bank E got the simple mortgage deed registered on 27th of subsequent month. Bank M also got the mortgage deed registered in their favor on 24th three months from the date of mortgage. Which bank would get the priority

a.. Bank Mb.. Bank Ec.. Both will not get priorityd.. Priority will have to be decided by a competent court based on the merits

205..Pledge cannot be created in the case of

a.. Goods which are existing

b.. Future goods

c.. Both a as well as b

d.. None

206..The term Hypothecation is not discussed in

a.. Transfer of Property Act

b.. Contract Act

c.. Sale of goods Act

d.. All of these

207.. Which one is more appropriate when the goods in process has been considered as one of the securities by the lending banker.

a.. Hypothecation

b.. Assignment

c.. Pledge

d.. Lien

208.. BDG & Co is an existing partnership firm. There are 4 partners. One of the partners son who is yet to become a major has been taken as the 5th partner with the consent of the other existing partners.

a.. Possible

b.. Not possible

c.. He can be a partner only to receive benefits

d.. Still he cannot be a partner

209..When Rakesh has been admitted to the partnership on 13.08.09 he was a minor. He gave his consent to be a regular partner in the firm wef 13.10.09. He became major on 13.09.09. Identify from which date he would be held liable.

a.. 13. 08.09b.. 13. 09.09c.. 13. 10.09d.. None

210..Though the Karta is considered as an important person in the affairs of a Joint Hindu Family it is

a.. Advisable to obtain the signatures of the adult members as well as the karta while opening a bank account

b.. Same as mentioned in (a )is applicable while lending

c.. It is enough if only karta signs the documents d.. In addition to c it is advisable to intimate the

other adult co parceners about the happening.

211..Identify the Public documents

a.. Memorandum of Association & Certificate of Commencement of Business

b.. Certificate of Incorporation & Certificate of Commencement of Business

c.. Articles of Association & Resolution

d.. None

212..A customer of a bank has been enjoying an overdraft facility. Since his dealings have not been satisfactory, the bank terminated the overdraft limit after giving him reasonable opportunity including in writing. Subsequently the cheques issued by the customer not honored. The aggrieved customer

a.. Can charge the bank for their inactionb.. Can get protection since he has been put to

inconvenience by the bankerc.. Both a & b not possibled.. Both a & b possible

213..D has taken a vehicle loan from Bank V. Besides Demand Promissory Note, she has executed Hypothecation agreement. One of the clauses in that agreement clearly states that even if one installment or one interest is not paid automatically that over due will make the entire liability over due. Further the creditor bank has the right to ask the borrower to repay the entire liability. D has not paid 2 installments. Then

a.. V can recover the entire money outstanding b.. V can recover the entire money outstanding plus updated interest

and other charges (as agreed if any)c.. D is required to regularize the account by paying only the unpaid

installments and interestd.. D is not required to pay any amount now and she can pay once at a

time in lump sum after certain period.

214..A Company has approached the bank for finance. The documents have been executed. But the Common Seal has not been affixed on the loan documents while executing .

a.. Bank cannot recover the amount lentb.. Bank can recover the amount lentc.. Unless other wise specified in the Articles of Association, affixing of Common seal is only optionald.. If both the parties agree (lender / creditor bank and the

borrower/ company) then affixing of common seal can be waived.

215..A LTD company has been sanctioned certain credit limits . The date of application 12th February; Sanction letter by the bank 27thFebruary; Execution of loan documents 22nd March and Finance availed on 29th March (all in the same year). Then charge to be registered within 30 days wef

a.. 27th Februaryb.. 22nd Marchc.. 12th Februaryd.. 29th March

216.. Modification applicablea.. When enhancement in the amount of the

finance enjoyed by the company already registered

b.. Change in the margin for a stock security under hypothecation

c.. Additional security of the company’s land under Simple Mortgage

d.. All these cases

217..Government of India has introduced electronic filing of returns. Banks and other charge holders are required to file the particulars of the charges created in their favor by the companies under this method. This is to ensure reduction in delays and one point availability of information about any company

• 218..A partnership firm has not been registered. At the time of opening of the account they assured to get the same registered. After some time the partnership firm was given CC against stock and on the collateral security of receivables. When the bank filed a suit for recovering the money lent against the firm and their major debtors, the major debtors objected to the same.

• A.. The bank cannot recover from the major debtors• B.. Bank is not part of the sales and hence cannot

recover from the major debtors• C.. Bank has overlooked the fact that the firm is yet to be

registered and hence cannot sue the major debtors of the firm

• D.. Both a & c