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JAIIB /Diploma in Banking & Finance
LEGAL & REGULATORY ASPECTS OF BANKING
MODULES A & B
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..A Bank to operate has 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 withdrawable 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 not the permitted business of banks
a.. Accepting of term deposits
b.. Issuing of travellers’ cheques
c.. Selling of coins
d.. Making available Safe deposit lockers
05..Which statement is incorrect. (Banking business)
a.. Carry on and transact guarantee and indemnity business
b.. Buying or selling or bartering of goodsc.. Acquire, construct and maintain any
building for its own purpose.d.. Collecting and transmitting of money and
securities
06..Identify the Public Sector Banks
a.. Central Bank of India
b.. State Bank of Mysore
c.. United Bank of India
d.. All the above
07..A Private Bank governed by
a.. Companies Act
b.. Banking Regulation Act
c.. Reserve Bank of India
d.. a, b & c
08.. BDF is an urban co-operative bank. A customer of that bank wish to nominate for his locker facility.
a.. Possibleb.. Not possiblec.. Nomination facility is only applicable for
Public sector banksd.. Customer to have joint facility instead of
nomination
09..Which one is not applicable to Banking Regulation Act.
a. Regulation business of banking companies
b. Control over management of banking companies
c. Acceptance of deposits by non banking financial institutions
d. Suspension and winding up of banking business
10.. Ways and Means Advances are provided by
a.. Nationalized Banks
b.. Public Sector Banks
c.. Regional Rural Banks
d.. None of these
11.. 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
12.. 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
13. 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.
14..Reserve Bank of India can issue Rs.1000 denomination currency notes as per the provisions of
a.. Reserve Bank of India Act
b.. Banking Regulation Act
c.. Both a & b
d.. Constitution
15.. 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
16.. 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
17..A Co-operative Bank is having branches in more than one State.
a.. Multi purpose Co-operative Bank
b.. Multi State Co-operative Bank
c.. Multi Dimensional Co-operative Bank
d.. Multi Co-operative Bank
18..State Bank of Saurashtra was constituted under
a.. Saurashtra State Banks (Amalgamation) Act,1956
b.. State Bank of India Act,1955
c.. State Bank of India (Subsidiary Banks)Act,1959.
d.. Saurashtra State Bank Act,1957
19.. Identify the odd one
a.. State Bank of India
b.. Axis Bank
c.. Reserve Bank of India
d.. Postal Bank
20..Which one is not appropriatea.. A Commercial bank is prohibited in
selling insurance productsb.. An urban co-operative bank can sell
mutual fund productsc.. A Private Sector bank can issue a Credit
cardd.. A Nationalized bank is permitted to
accept articles under safe custody
21..Accepting deposit receipt under safe custody article is the secondary business of a commercial bank.
a.. True
b.. In correct
c.. False
d.. In fact it is the Primary business
22.. Identify the main liability of a commercial bank
a.. Term Deposit
b.. Term Loan
c.. Both a & b
d.. None of these
23.. 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
24.. ABC and company approached RBI for a license to start a commercial bank. After examining, RBI has rejected the company’s application. Then ABC company
a.. Is ineligible to start a banking business
b.. Can carry on with the banking business after a period of six months
c.. Is not ineligible to start a banking business
d. None of these
25.. 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 Board
26.. 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
27.. Who cannot approach directly RBI for branch licensing
a.. Regional Rural Banks
b.. Urban Co-operative Banks
c.. Nationalized Banks
d.. Private Sector Banks
28..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
29.. 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.
30..A commercial bank (existing) has a place of business in both Mumbai and Kolkata minimum paid up capital and reserves
a.. Rs. 5 lacs
b.. Rs.10 lacs
c.. Any amount
d.. Rs.10 crores
31..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.. Banking Regulation Actb.. Companies Actc.. Reserve Bank of India Actd.. All the above
32..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
33.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
34..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
35..Holding of beneficial interest by any individual or his spouse or his minor child, whether singly or taken together in the shares of a company exceeding Rs.5 lacs or 10% of the paid up capital of the company amounts to
a.. Substantial interest
b.. Beneficial interest
c.. Vested interest
d.. Associated interest
36.. A director of a banking company shall not hold office continuously for more than
10 years.
a.. True
b.. False
c.. Not 10 years but 8 years
d.. Neither 10 years nor 8 years but 7years
37..In the absence of a chairman, the management of the whole of the affairs of the banking company shall be entrusted to
a.. A Managing Director
b.. A committee of Top Management representatives
c.. An Executive Director
d.. None of these
38..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
39.. 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.
40..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
41.. 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
42..If the bank’s board is not properly constituted then the Central Government will have to reconstitute the Board.
a.. Appropriate
b.. In fact RBI is empowered
c.. Not Appropriate
d.. Neither Central Government Nor RBI but Banking Ombudsman
43.. Any office, sub-office, pay-office, sub-pay office and any place at which deposits are received, cheques enchased or moneys lent is known as
a.. Place of Banking
b.. Place of Business
c.. Branch of a Bank
d.. Place of a Bank
44..It is known as part of another company, if the composition of its Board of Directors is controlled by the other company or more than half of equity shares is held by the other company or it is the subsidiary of any company which is the other’s subsidiary as provided in the Companies Act.
a.. Holding companyb.. Substituted companyc.. Subsidiary companyd.. None
45.. Other than the Governor, Deputy Governors of RBI, the other directors are
a.. Appointed
b.. Nominated
c.. Selected
d.. Elected
46.. As per the provisions of the Reserve Bank of India Act, the Whole time Chairman or the Managing Director of a banking company to hold qualification shares of minimum 50.
a. It is not 50 but 100b. They need not hold any qualification sharesc. They need to have minimum qualification
shares of 10 as per the provisions of Banking Regulation act and not RBI act
d. None of these
47.. 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
48.. 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
49..The Regional Rural Banks are constituted under the
a.. Regional Rural Banks Act,1976
b.. Reserve Bank of India Act
c.. Banking Regulation Act
d.. Regional Rural Banks Act,1975
50..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
51..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.. Shri M.S.Vermad.. None of them
52.. 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.. None of these
53..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
54..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 Valuec.. Corporate Integrityd.. None
55..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
56..In India the Corporate Governance involves agency
a.. Reserve Bank of India
b.. Securities and Exchange Board of India
c.. Department of Company Affairs
d.. a, b & c
57.. Identify the incorrect statement (Corporate Governance)a.. Large industrial houses will not be allowed to acquire, by way of
strategic investment shares not exceeding 10% of the paid up capital of the bank.
b.. RBI guidelines on acknowledgement for acquisition or transfer of shares will be applicable for any acquisition of shares of 5% and above of the paid up capital of the private sector bank.
c.. Where ownership is that of a corporate entity, the objective will be to ensure that no single individual / entity has ownership and control in excess of 10% of that entity.
d.. Concept of ‘fit and proper’ criteria not applicable to employees but to the directors of the bank including CEO
58..Reserve Bank of India may caution or give advise to banking companies as per the provisions of
a.. Reserve Bank of India Act
b.. Banking Regulation Act
c.. Both a & b
d.. Only b
59.. Identify which one is not a demand deposit.
a.. Savings Bank
b.. Overdue Term deposit
c.. Flexi Recurring Deposit
d.. Current Account
60.. 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
61..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
62.. Rajender has nominated his brother Pawar as the nominee for his Savings Bank account. Nominee will not be entitled to get the money on this account from the bank
a.. As long as Rajender is alive
b.. If Rajender is closing the said account.
c.. If Rajender has changed the nomination in some one’s favour
d.. In all the above cases
63..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
64.. Chavan 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 Chavan, Bank would
a.. Pay the amount on Savings Bank & Term deposit to Chavan’s wife
b.. Insist the wife of Chavan to close the safe deposit locker facility and take the contents
c.. Both a as well as bd.. None
65.. 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
66..Mr.Murthy, 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. The wife of the depositor had already died. However, the depositor’s mother is 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 nominee
d.. Bank will have to convince the nominee so that they can make the payment to all the legal heirs.
67..Selective Credit Control seeks to influence the demand for credit by
(i). making borrowing more costly for certain purposes which are considered relatively inessential or
(ii). by imposing stringent conditions on lending for such purposes. Or
(iii). by giving concessions for certain desired types of activities
68..The tools employed for exercising SCC are
(i) .. minimum margins for lending against selected commodities
(ii) .. ceilings on the levels of credit
(iii).. charging of minimum rate of interest on advances against specified commodities.
69..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
70..RBI still decides the rate of interest on
a.. Housing loan to an individual
b.. DRI
c.. Temporary Over drawing
d.. Bills Purchased
71..Board for Regulation and Supervision of Payment and Settlement Systems (BPSS) has a chairman. Identify its chairman.
a.. Under Secretary in the Finance Department
b.. Senior Most Deputy Governor of RBIc.. Retired Chairman of a Nationalized Bank
as appointed by the Central Governmentd.. None of them
72..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.
73..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.
74..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
75..Find out the odd one (Banking ombudsman)a.. Observance of Reserve Bank directives on
interest ratesb. Non-acceptance of application for loans
without assigning valid reasons to the applicant
c. Non-issuance of Demand Drafts to non-customers
d. Non-adherence to prescribed working hours by branches
76..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
77.. An aggrieved client of a bank can
a.. Take up the matter directly with Banking Ombudsman for redressal
b.. Not take up the matter directly with Banking Ombudsman for redressal
c.. Take up the matter with Banking Ombudsman only after referring the matter to the bank concerned in writing
d.. Take up the matter simultaneously with both
78.. Identify the appropriate one (Banking Ombudsman)
a.. The Ombudsman is free to follow the procedure considered appropriate.
b.. The time limit is 2 years from the date of complaint
c.. Refusal to close account is not within the purview of Banking Ombudsman
d.. Appellate Authority under the Scheme is Banking Ombudsman himself
79.. A borrower of the bank has approached the Banking Ombudsman since the bank has been asking him to repay the loan taken by him from the bank.
a.. The borrower 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
80..A bank has refused to open the account without any valid reasons. When the matter was referred to the Bank’s Regional 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
81..Every year a sum equivalent to not less than 15% of profits to be transferred to the reserve fund by a bank. Such transfer to be made not before any dividend is declared.
a.. Yes b.. No
c.. Partly true d.. Fully in correct
82..Appropriation of any amount from the reserve fund or the share premium account has to be reported to RBI within 21 days of such appropriation.
.. Every scheduled bank has to submit a return to RBI showing the demand and time liabilities and borrowings from banks in India
83..Creating a Reserve Fund do not apply to these banks.
a.. Foreign banks operating in India
b.. Nationalized Banks
c.. State Bank of India
d.. State Bank of Hyderabad
84..Identify the odd one
a.. Regional Rural Bank
b.. State Bank of India
c.. Central Bank of India
d.. None of these
85..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
86..A bank has to submit a Friday statement to RBI . The said Friday(16th of a particular month) has not been declared as holiday under the Negotiable Instruments Act, but the previous working day was declared . Then the statement to be prepared as on
a.. 14th of that month b.. 15th of that month
c.. 16th of that month d.. 17th of that month
87..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.
88..As per the provisions of the BR Act, a return regarding the assets maintained in India to be submitted to RBI, within 14 days from the end of every quarter.
a.. Not 14 days b.. It is 20 days
c.. It is 15 days not 20 days
d.. One month
89..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.
90..Banks whose shares are listed in the capital market are required to publish their
a.. Un audited quarterly results as per pro forma prescribed by SEBI.
b.. Audited quarterly results as per pro forma prescribed by RBI.
c.. Un audited quarterly results as per pro forma prescribed by RBI.
d.. Un audited quarterly results as per pro forma prescribed by SEBI as well as RBI.
91..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
92..Foreign banks (banking companies incorporated outside India) operating in India have 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
a.. The First of July of the year in which it carries on business
b.. The First Monday in Augustc.. The First Friday in Novemberd.. The Last Friday in December
93..The accounts and balance sheet have to be kept displayed (Foreign Banks)
a.. Till 31st of October each year.
b.. Till 31st of December each year
c.. Till 31st of January subsequent year
d.. None of these
94..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
95..It is not mandatory to give a copy of the report to the banking company.
a.. Inspection report
b.. Scrutiny report
c.. Search report
d.. All these reports
96..An account holder of a bank (drawer) has requested for the return of a cheque which had been duly paid by his banker (drawee). The banker refused to give the original but provided a photo copy and charged him 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
97..The Reserve Bank of India is empowered to conduct an inspection of any banking company
a.. Once in a year
b.. At regular intervals
c.. At any time
d.. At the mutual consent
98.. Board for Financial Supervision has jurisdiction over
a.. The banking companies
b.. Nationalized banks
c.. State Bank and its subsidiaries
d.. All of these
99..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
100..The scheme of amalgamation of banks shall come into force from the date of
a.. Reserve Bank of India’s Notification
b.. Central Government’s Notification
c.. Central Government’s Sanction
d.. Reserve Bank of India’s Approval
101.. 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
102..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.
103.. H has been having a savings bank account with a balance of Rs.775/- and a Recurring deposit account with a balance of Rs.2550/-. The bank has gone into liquidation and the official liquidator has proceeded to settle the claims after completing the formalities. Then
a.. H would not get any amountb.. H would get Rs.250 in each account as priority over all
other creditorsc.. H would be paid at the discretion of the Official
Liquidatord.. H would get the amount on pro rata basis only.
104..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.
105.. 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
106..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.
107.. 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
108..With regard to the subsidiary banks of the State Bank of India
a.. The Central Government is empowered to make rules
b.. The State Bank of India is also empowered to make regulations
c.. Both a & b
d.. Incorrect it should have been vice versa
109.. Regional Rural Banks have the holding pattern such as Central Government 50% , Sponsor Bank 35% and State Government 15%
• Two or more RRBs may be amalgamated by the Central Government by notification in the Official Gazette.
110.. 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
111..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
112.. 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
113.. 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.
114..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
115..The number of existing Nationalized banks are
a.. 06
b.. 14
c.. 20
d.. None
116.. 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)
117.. 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
118.. 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
119..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
120.. 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.
121..A co-operative bank has to maintain liquid assets not less than 25% or such other % not exceeding 40% as the RBI may stipulate by notification. The amount has to be maintained as at the close of business on
a.. The last day of the quarter.
b.. The last Friday of each calendar quarter
c.. Any day
d.. The last day of the month
122..Three copies of balance sheet and other connected documents along with the auditor’s report to be submitted to Reserve Bank of India by a Co-operative bank within
a.. 12 weeks b.. 3 monthsc.. 9 months d.. None
123..A State Co-operative Bank and a Central Co-operative Bank have to submit Annual balance sheet to
a.. Reserve Bank
b.. National Bank
c.. Both a & b
d.. Only a
124..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 has is not having more than one
deposit account d.. The depositor has opted for insurance
coverage specifically
125..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.
126.. Bank G and Bank N are engaged in the process of merging with another and to form into a new company.
a.. Amalgamation
b.. Merger
c.. Take Over
d.. Consolidation
127..If an act or omission on the part of an accused constituting an offence continues from day to day a fresh offence is committed on every day on which the act or omission continues.
a.. Continuing offenceb.. Continues offencec.. Perpetual successiond.. None of the above
128.. A cooperative society, other than primary agricultural credit society, the primary object of which is to transact banking business and having a paid up capital of Rs.3 lacs and the bye laws do not permit admission of other cooperative societies as member.
a.. Co-operative Bankb.. Urban Bankc.. Non Scheduled Bankd.. None
129.. 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
130.. 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
131.. The primary objective of this is to finance its members and includes a co-operative land development bank.
a.. Co-operative Credit Society
b.. State Co-operative Bank
c.. Urban Co-operative Bank
d.. Co-operative Bank
132.. 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
133.. An officer appointed to conduct court proceedings for winding up of companies and includes Reserve Bank of India or other persons appointed to conduct winding up of banking companies under the appropriate provisions of the Banking Regulation Act.
a.. Inspectorb.. Notary Publicc.. Pleaderd.. None of these
134.. For public sector banks, the principles of corporate governance have been statutorily recognized as per
a.. Banking Companies (Acquisition and Transfer of Undertakings) Financial Institutions Laws (Amendment) Act,2006.
b.. Banking Companies (Acquisition and Transfer of Undertakings) Act1970.
c.. Banking Companies (Acquisition and Transfer of Undertakings) Act,1980
d.. Nationalized Banks (Management and Miscellaneous Provisions) Scheme, 1970 & 1980.
135.. Which is within the purview of Corporate Governance
a.. Banking Ombudsman
b.. Fit and Proper criteria
c.. Know Your Customer
d.. None of these
136..Co-operative Banks are required to prepare their balance sheet and profit and loss account in the forms set out as per the provisions of
a.. Reserve Bank of India Act
b.. Banking Regulation Act
c.. Multi State Co-operative Societies Act
d.. Companies Act
137.. Banking Regulation Act was made applicable to co-operative banks by
a.. Banking Laws (Application to C0-operative Societies Act,1965.
b.. Reserve Bank of India Act
c.. Banking Regulation Act with suitable amendments wef 1985
d.. Since inception of the Act
138..Identify the appropriate statement.a.. A co-operative bank has to obtain license to do
business from the Registrar of Co-operatives.b.. Loans charging exorbitant rate of interest is
called Usufructuary loansc.. A banking company can hold shares in any
other companyd.. Foreign banks which have 5 years of existence
in India can be allowed to transfer their entire profit to their parent country.
139.. Find out the odd one
a.. A scheduled Bank cannot accept Recurring deposits
b.. A Nationalized Bank can give loans against the hypothecation of shares
c.. A Private Sector bank is generally prohibited from offering Home loans
d.. State Bank of India can conduct the Clearing House in the absence of RBI office.
140..D is the customer of a Bank for last 7 years. He has not operated the account for last around 5 months. The bank will have to treat his account as
a.. Dormant
b.. In operative
c.. Still operative
d.. Unclaimed
141.. Bank J’s depositor 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 J 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.. J 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 J only
142.. A stranger would like to have a Bank locker. He says since he has other bank accounts he will not open an account with the bank but still wants to have a locker.
a.. Bank has to oblige himb.. Bank need not oblige himc.. Bank will have to explain the position and
convince him to have the account after completing the formalities
d.. Bank need not worry about anything and simply refuse since already they are over burdened
143.. A person is having both savings bank account and a current account. The savings bank account is showing a balance of Rs.2345/- (cr) whereas the Current account is showing a balance of Rs.458/-(dr). Then the
a.. Banker owes the money in respect of current account.
b.. Banker has to get the money for savings bank account
c.. In both cases the relationship remains the samed.. In both cases the relationship not same
144.. 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.
145..“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.
146.. A cheque has been received in clearing on 27th of this month bearing the date as 24th 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
147.. 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 Eleven thousand one hundred and one in words but in figures read as Rs.11100/- Bank has to
a. Make the payment b. Dishonor the cheque c.. Make payment for only Rs.11100/- as per figures d.. Act as a prudent banker
148.. 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
149.. 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.
150.. Allonge is associated with
a.. Will
b.. Insurance
c.. Nomination
d.. None
151..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
152.. 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
153..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.
154..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.
155.. 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.
156.. 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
157..T has issued a cheque favouring M for Rs.789/- The cheque has been otherwise in order and the account has enough balance. M is having account with BS bank and T is the account holder of JJ bank.
a.. JJ bank not to refuse payment
B.. JJ bank will receive payment
C.. BS bank will not receive payment
D.. BS bank to refuse payment
158..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
159.. Bank W has received the cheque signed by their customer E. The cheque was issued around 4 months ago. Around two weeks 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
160..A collecting banker fails to obtain payment within a reasonable period from an up country branch.
a.. He has to compensate the payee for whom he has undertaken the collection
b.. He has to approach the paying banker for payment or in lieu of that the cheque sent in clearing with proper reason for return.
c.. He can keep quite till the payment is received or otherwise.
d.. His responsibility is only to send the instrument for collection and payment or non payment is not in his hands
161.. 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
162..Bank R opened an account 9 months ago. At the time of opening of the said account, they 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 J) on behalf of the account holder and released the payment . Subsequently, it came to the knowledge of R that the said demand draft was so altered as to the place of payment as well as the amount.
a.. Bank R is not at faultb.. Bank J has to bear the lossc.. Bank J is not at faultd.. Bank R is responsible
163.. A cheque has come in clearing. It was torn. The collecting banker has not certified. The paying banker has
a.. To honour the cheque ignoring the above fact that the cheque is torn
b.. To dishonor the cheque to the collecting banker seeking his confirmation for mutilation
c.. To pay the cheque,if it is otherwise in order and there is sufficient balance in the said account to meet the cheque
d.. To honour the cheque since mutilation is not amounting to material alteration
164.. 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.
165.. Rajagopalan issued a crossed cheque in favour of Laxman for Rs.27,345/=. 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
166..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.
167..UB, collecting bank has collected a specially crossed cheque. The crossing has been in favor of another banker JI. UB is not the agent for JI. The cheque is issued by an account holder of bank DE.
a.. DE can make the payment since it has been collected by a bank.
b.. The drawee bank not to payc.. UB is not in order in collecting such a crossed
chequed.. Both b & c
168..Bank U has paid the cheque issued by his customer T for a sufficient sum in favor of S whose banker M has collected the cheque. The cheque was issued on 3rd of March and collected by the collecting bank on 5th of July the same year.
a.. A payment in due courseb.. Since not collected within a reasonable period U will not
be protectedc.. Both M and U have not done their respective jobs
properlyd.. Not a payment in due course
169.. 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.
170.. 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.. None of these
171..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
172..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.
173.. 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
174..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.
175..A cheque is drawn on a bank holiday. Then it is payable on
a.. The same day
b.. Succeeding working day of the bank
c.. Preceding working day of the bank
d.. None of the above
176.. 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
177.. 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
178..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.
a.. True
b.. Incorrect
c.. False
d.. Not True
179..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
180.. A collecting banker has collected a cheque having a crossing ‘not negotiable”.
a.. Nothing prevents the collecting banker in collecting such an instrument
b.. The collecting banker will not get protection because he has collected such a cheque
c.. The collecting banker will get protection provided he has taken an assurance from the drawer.
c.. It is for the drawee bank to satisfy about the importance of this type of crossing
181.. 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
182..After F, collecting 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
183.. B is the collecting banker. The cheque is crossed in favor of two banks (of which one is in favor of B). Then the bank
a.. Will be in order in collecting the chequeb.. Will not be in order in collecting the chequec.. Will be in order provided B is collecting as
agent of another bank whose name is also appearing in the crossing
d.. Will be in order and it is the responsibility of the paying banker to make payment or not
184..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
185.. A banker
a.. Cannot be a paying as well as collecting banker
b.. Can only be a paying banker
c.. Can be a paying as well as collecting banker
d.. Can only be a collecting banker
186..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
187.. While sending the cheque on collection to an outstation cheque the collecting bank has not noticed the tearing on the cheque.
a.. The paying banker returned the cheque on technical ground
b.. The paying banker is in order
c.. Both a & b
d.. The collecting banker can sue the paying banker for non payment.
188.. M,V & N are the partners of a firm. The operation condition being any two partners to sign. One has to be V. A cheque received in clearing bearing the signatures of N & M
a.. To be honored
b.. After paying confirmation to be got from V
c.. Not to be honored
d.. Bank need not strictly adhere
189..A new person has approached the bank for opening of an account. He has the address proof, identify proof and appears to be a genuine person. He has been asked to bring an introduction of the customer of the bank. Accordingly a person has been brought. The said person closed the account two days ago on personal reasons. The banker
a.. Need not open the accountb.. Has to act as a prudent bankerc.. Need to request for another existing customer’s introduction onlyd.. Need not show interest in opening such account and
avoid
190..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
191.. 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
192..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
193..TA has executed an indemnity agreement in favor of KA. Identify the indemnified.
a.. TA
b.. KA
c.. Both TA as well as KA
d.. None
194..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
195.. Indemnity holder SV 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
196..Contract of indemnity is discussed in
a.. Securitization Act
b.. Transfer of Property Act
c.. Contract Act
d.. Banking Regulation Act as well
197.. Which one is appropriate.a.. For a contract of indemnity there are two
partiesb.. For a contract of indemnity there are
three partiesc.. For a contract of indemnity there are
more than three partiesd.. For a contract of indemnity not more
than one party
198. 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
199..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
200.. Bank V has issued a guarantee on behalf of their borrower D in favor of the Department E. Identify the Surety, Beneficiary and Principal debtor
a.. V, D & E
b.. E, D & V
c.. D, E & V
d.. V, E & D
201.. 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.
202.. 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.
203.. 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.
204.. A bank guarantee has been issued by Bank Y on behalf of its customer H in favor of P. The guarantee amount being Rs.3.75 lacs. When the claim received by Y from P, the bank has a balance of Rs.3.77 lacs in the current account of H. Then the bank Y
a.. Can debit H’s current account with the claim amount and make a demand draft in favor of P and send.
b. Before doing so Y to consult H and seek his permission.
c. Bank Y to consult and discuss with Pd. Y need not consult P since he is the person to receive
money from Bank Y.
205.. 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.
206..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.
207.. 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 (Fixed 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 Fixed 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
208.. 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
209.. Bank CP has issued a guarantee on behalf of NV for Rs.37 lacs. Beneficiary DJ has invoked the guarantee on the last date of the guarantee and received by CP on 5th day after the expiry date of the bank guarantee.
a.. DJ not eligible to get the paymentb.. CP not obliged to settle the claimc.. DJ will get and CP to settled.. Claim should have come before the expiry and
not after that date.
210..Bank EF has issued a guarantee in favor of Telephone department for an allotment of STD booth on behalf of ZA. As a security EF taken 100% margin by way of a fixed deposit. The same has been got discharged in favor of the bank and necessary Pledge documents obtained. The counter guarantee has been issued on an unstamped paper.
a.. Bank will not be able to contest in the court of law in case of developments
b.. Since the guarantee has been fully secured there is no requirement of any counter guarantee
c.. Still a counter guarantee should have been obtained having a proper stamp duty only
d.. Bank EF is correct in obtaining an unstamped counter guarantee.
211.. 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
212.. 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
213.. Bank OL had given the guarantee for their customer 5 months ago. Recently they came to know that the customer has closed down the business and left the place. The beneficiary has invoked the guarantee.
a.. OL need not honor the claim
b.. OL is not obliged to settle the claim
c.. OL cannot refuse payment
d.. OL can postpone payment
214..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 .
215.. 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.
216..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
217.. 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
218..Types of LC include
• Revocable / Irrevocable credit
• Confirmed credit
• With / without recourse credit
• Back – to – back credit
• Revolving credit
• Anticipatory credit
219.. The bank in the Beneficiary / Exporters country through which the LC is advised to the beneficiary is called Advising bank. The other name for advising bank is
a.. Notifying bank
b.. Nominated bank
c.. Paying bank
d.. Notified bank
220..Which one is a transport document
a.. Bill of Exchange
b.. Bill of Entry
c.. Bill of Lading
d.. None of these
221.. 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
222..Generally this document is issued in sets of 2, 3 or 4 and all are termed as originals.
a.. Bill of Exchange
b.. Bill of Entry
c.. Certificate of Origin
d.. None
223.. This is also known as Laws of Letter of Credit.
a.. INCOTERMS
b.. UCPDC
c.. Both a & b
d.. None
224.. 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
225.. 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
226..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
227..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
228..A has drawn a bill on D, on 13th of last month. D has accepted the said bill on 25th of last month. The period of the bill being 70 days. Then such a bill is called
a.. At sight bill
b.. On demand bill
c.. After sight bill
d.. Not a time bill
229..When a bill is transferred for consideration to any person so as to entitle him to claim the amount represented by bill, then such transfer is called
a.. Endorsementb.. Assignmentc.. Negotiationd.. Passing on the title
230..N, a customer has tendered an upcountry cheque to his banker G, who accepted on collection basis. After sending the cheque for collection, at the request of N, G 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
231.. Seller has drawn a bill from Mumbai and accepted by a purchaser in Chennai.
a.. An inland bill
b.. A documentary bill
c.. A sight bill
d.. A demand bill
232.. A bill of exchange has been drawn in Australia and the drawee has agreed to pay the same in America.
a.. Not a foreign bill
b.. A foreign bill
c…A domestic bill
d.. An inland bill
233..A banker becomes a holder for value, when he
a.. Collects a cheque on behalf of his customer
b.. Discounts a cheque on behalf of his customer
c.. Collects on behalf of another bankerd.. Purchases a cheque on behalf of his
customer
234.. 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
235.. 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
236..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.
237..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.
238.. Without stamp duty which instrument is considered valid?
a.. Agreement
b.. Cheque
c.. Promissory Note
d.. Acknowledgement of liability
239..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
240.. The ownership and possession of the security with the borrower.
a.. Pledge & Mortgage
b.. Pledge & Third party pledge
c.. Hypothecation & Mortgage
d.. Pledge & Hypothecation
241.. Bank XX has considered a loan on their Fixed deposit. The deposit holder is V and the loan has to be given to N. Then N would give /execute
a.. Letter of Pledge
b.. Third Party Letter of Pledge
c.. Demand Promissory Note
d.. Duly discharged Fixed deposit receipt
242....YAR (P) Ltd company has been sanctioned a Supply Bills limit of Rs.5 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
243.. Identify which one is an actionable claim
a.. Fixed Deposit
b.. Cheque
c.. Promissory Note
d.. Bill of Exchange
244.. A depositor wish to transfer his fixed deposit to his brother’s name.
a.. Not possible since it is already printed on the deposit receipt as Not transferable
b.. Possible by way of proper endorsementc.. Possible by closing the deposit before
maturity and with that open a new account in the name of the depositor’s brother
d.. None of the above
245.. 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
246.. Identify the inappropriate one (Securities)
a.. It should be durable
b.. Its storing should not create problems
c.. It should be subject to wider price fluctuations
d.. It should be easily and freely transferable
247.. To protect the bank’s security, insurance to be taken
a.. For the full value of the property
b.. For the full value of the security
c.. For the average value of the property
d.. For the average value of the security
248.. 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
249.. 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
250.. (1) The sale is ostensible and not real. (2) The mortgagee has the right to receive rent on the property mortgaged (3) Mortgage is put through in a Notified area (4) Private Sale possible- Identify the mortgages
a.. Simple Mortgage/ English Mortgage/ Equitable Mortgage/ Anomalous Mortgage
b.. Mortgage by way of Conditional Sale/ Usufructuary Mortgage / Equitable Mortgage / English Mortgage
c.. Registered Mortgage / English Mortgage / Mortgage by way of Deposit of Title Deeds / Simple Mortgage
d.. Mortgage by way of Conditional Sale / Equitable Mortgage / Usufructuary Mortgage / Anomalous Mortgage
251..Find out the correct mode of charge in respect of(1) Vehicle loan,(2) Cash Credit (stock with the borrower)(3)Gold ornaments loan & (4) Flat purchase.
a.. Pledge / Hypothecation / Hypothecation/ Mortgageb.. Hypothecation / Assignment / Pledge / Mortgagec.. Hypothecation / Hypothecation / Pledge / Mortgaged.. Pledge / Mortgage / Hypothecation / Hypothecation
252.. BGH, a Ltd company has availed finance by way of Simple Mortgage. Then there
a.. Will be two types of Registrations
b.. One with the Registrar of Companies
c.. Another with the Sub Registrar of
Assurances in whose jurisdiction the
mortgaged property is situated
d.. All of these
253..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
254..The limitation period for filing a suit for sale of mortgaged property is 12 years from the date the mortgage debt becomes due.
.. The limitation period for filing suit for foreclosure is 30 years form the date the money secured by mortgage becomes due..
.. Foreclosure means the loss of the right possessed by the mortgagor to redeem the mortgaged property.
.. Under the Mortgage by way of conditional sale, the mortgagee can sue for foreclosure, but not sale of the property.
255.. A property mortgaged (Equitable mortgage) is in a village X which is not a Notified Area. The bank branch which gave the loan is in a Notified area J. If the bank wish to file a suit, then
a.. Suit has to be filed in the district headquarters of the bank branch
b.. Suit to be filed with the Mortgage courtc.. Such loan not possible (Property in a different
area and the lending bank in another area)d.. None of these
256.. Under a Mortgage suit there are two decrees possible
a.. Yes
b.. First is called the initial decree
c.. Second is called final decree
d.. First is known as preliminary decree which is followed by final decree
257..A limitation period on a Term loan
a.. 3 years
b.. 12 years
c.. 3 years from the date of disbursement
d.. None of these
258.. Bank M has considered an equitable mortgage on 23rd of July. 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 executed on 27th of subsequent month. 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
259..Identify the type of mortgage which provides a personal covenant to pay on a specified date notwithstanding the absolute transfer of the property to the mortgagee.
a.. English Mortgage b.. Simple Mortgagec.. Equitable Mortgaged.. All the above
260..Identify the correct one (Mortgage)a.. There is no absolute transfer of the property in favor of
the mortgagee- English Mortgageb.. There is no time limit specified and the mortgagee
remains in possession of the mortgaged property until the debt is repaid
- Usufructuary Mortgagec.. The sale is real but not ostensible – Mortgage by way of
Conditional Saled.. The mortgagee has the powers to sell the mortgaged
property without the intervention of the Court.-Simple Mortgage
261.. (1) Borrower C has offered his gold ornaments as security to Bank F. (2) Bank K has obtained the landed property from the Debtor J. Identify the pledgee and the mortgagor in these cases.
a.. Pledgee – K & Mortgagor – Cb.. Pledgee – C & Mortgagor – Kc.. Pledgee – F & Mortgagor – Jd.. Pledgee – F & Mortgagor – K
262..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
263.. Goods are pledged to a bank. The banker need not insure the same.
a.. True
b.. Since it is in possession of the bank, no insurance cover is required
c.. It is prudent to have proper insurance cover
d.. False
264.. Which one assumes significance in the case of pledge
a.. Possession of the goods pledged with the pledgor
b.. Pledgee is having only the equitable right and not the actual possession
c.. Giving a reasonable notice to the pledgord.. Ownership automatically gets transferred
to the creditor under a pledge
265..(1) There is no transfer of interest but only an obligation to repay the debt (2) There is transfer of interest in the asset to the creditor.
a.. Mortgage & Hypothecation
b.. Hypothecation & Mortgage
c.. Mortgage & Pledge
d.. Third party pledge & Hypothecation
266.. The term Hypothecation is not discussed in
a.. Transfer of Property Act
b.. Contract Act
c.. Sale of goods Act
d.. All of these
267.. 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
268..XZB a partnership firm is having Cash credit facility on the security of hypothecated stock. Then the creditor banker has to conduct
a.. Inspection of stocks b.. At irregular intervals by different officialsc.. At regular intervals by the In charge of
the branchd.. Excepting c other two are appropriate
269..A partnership firm is enjoying the credit facilities by way of pledge, hypothecation and Mortgage of the firm’s assets. Then charge registration has to be done within 30 days from the date of creation of charge for all these charges.
a.. Trueb.. Falsec.. Not applicable to Pledged.. Applicable to Hypothecation only and not to
Mortgage and Pledge
270.. 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
271.. While a bank advances to a partnership firm they generally
a.. Do not obtain the personal guarantee of the individual partners
b.. Do obtain the personal guarantee of the individual partners
c.. Do obtain signatures of all the partners on the loan documents
d.. Both b & c
272..When L has been admitted to the partnership on 13.03.08 he was a minor. He gave his consent to be a regular partner in the firm wef 13.07.08. He became major on 13.06.08. Identify from which date he would be held liable.
a.. 13.03.08
b.. 13.06.08
c.. 13.07.08
d.. 13.09.08
273..Mitakshara Law is applicable
a.. In Bengal
b.. In erstwhile Bengal province
c.. Other than a & b
d.. In all parts of India
274.. The Hindu Undivided Family is a creature of Customary Law among Hindus and is governed by personal laws.
a.. Dayabhag Law
b.. Mitakshara Law
c.. Both a and b
d.. None of these
275..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.
276..Which one is appropriatea.. Firm has to have maximum 20 members if they
are involved in a banking businessb.. A Private Limited company can have minimum
2 membersc.. A Private Limited company can have more than
150 members as a special cased.. A Partnership firm can have more than 20
members but not to exceed 50. Otherwise, it would be treated as a Private Limited company and not a firm
277..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
278..In a Public Limited Company, Public associated with
a.. Equity Shares
b.. Debenture
c.. Public Deposit
d.. All
279.. Which one is not appropriate (Private Limited Company)
a.. Restrictions on the right to transfer its shares
b.. Maximum members only 50
c.. Limitation on number of members to 50(excluding the people, who are employees and ex-employees of the company)
d.. Prohibition as to participation by general public in its capital requirements
280..Precautions to be taken while lending to Clubs, Societies, Associations, schools and other non trading associations.
Same is the case with that of trusts and lending to trustees.
Appropriate understanding of the respective provisions of bye laws, resolutions, laws a must to avoid complications at a later stage.
In all these cases, mostly public money is handled more care and attention throughout assumes significant
281..Identify which one is not classified as Non fund based finance.
a.. Bank Guarantee
b.. Co-accepted Bills finance
c.. Letters of Credit
d.. None of these
282..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
283..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.
284..The person in charge of the credit department has overlooked the contents of the Memorandum of Association (objects clause) and made an advance to a Private Limited Company. Later on the company chose not to repay.
a.. The banker can recover the amount lentb.. The banker cannot recover the amount lentc.. The loan documents will safe guard the interest of the
bankd.. The loan documents and the fact that the company has
taken the money would come to the rescue of the bank
285.. A Public Limited company has an Authorized Capital of Rs.16 lacs. The issued and subscribed capital Rs.12 lacs and the paid up capital is Rs.10 lacs and free Reserves Rs.2 lacs. The Company wish to obtain finance to the extent of Rs16 lacs. Then
a.. Bank can lend on the usual resolution which includes the borrowing powers
b.. Bank cannot lend on the usual resolution which included the borrowing powers
c.. Bank need to obtain separate resolution only when the borrowing is exceeding the capital. Since the same is not exceeding in the instant case, there is no need for special resolution
d.. None of the above
286..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.
287..There are 9 charges as specified in the Companies Act requires compulsory registration with the Registrar of Companies.
a.. True
b.. False
c.. Not 9
d.. Less than 9
288..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
289..Identify which one is within the purview of Registration of charge.
a.. Personal guarantee of the Managing Director
b.. Vehicle belonging to one of the directors offered as a collateral security to the company’s borrowing
c.. Receivables taken as collateral security
d.. Fixed deposit of the company as collateral security
290.. 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
291..Which form used for Modification
a.. Form 8
b.. Form 14
c.. Form 8 & 13
d.. Form 13 & 17
292..Identify the odd one (Registration of charge)
a.. Charge registration to be done by the borrowing company
b.. Even the lending banker can effect registration of charge
c.. Charge by way of hypothecation as well as pledge attracts compulsory registration
d.. Besides manual even charge registration possible through electronic mode as well
293.. Bank K has advanced to a Limited Company. Initially the company was doing well. For one reason or other the company went into liquidation and the Official liquidator has taken over the assets of the company to settle the liabilities on pro rata basis. He will have an access to the assets secured by the banker as well.
a.. Trueb.. Falsec.. Provided the banker has not got the registration done within the
stipulated time and the manner in which required as per the provisions of the Companies Act
d.. Once the documents are taken and the bank has the right on the assets secured, non registration or registration will not alter the position. The banker only will have the exclusive right
294..For satisfaction of charge it is enough the bank informs the same to the Registrar of Companies once the liability is cleared in full by the company.
a.. Trueb.. Not True. Bank has to inform by filing
form 13 & 17c.. There is no need to satisfy the charged.. False
295..Bank DD has advanced to HIJ (P) Ltd company. The bank has the security of stock (hypothecation) Fixed deposit( Pledge) Vehicle (hypothecation) and Building (Mortgage). All belongs to the company. Charge registration in favor of the bank where ever applicable, already done. The company goes into liquidation and the Official liquidator demands the Fixed deposit (since not registered) from the bank while taking charge of the company’s assets for pro rata distribution.
a.. Bank to close the term deposit and issue a demand draft in favor of the Official Liquidator.
b.. Bank need not adhere to the request of the Official Liquidatorc.. Bank can adjust the liability of the company by adjusting the Fixed
deposit receiptd.. Still the banker will be considered only as a secured creditor and the
request of the official liquidator will not be tenable, in addition to ©
All the best
Vasudevan
09819500380
02227606208
vasu1611@yahoo.co.in