Transcript Document

INDIAN INSTITUTE OF
BANKING & FINANCE
LEGAL ASPECTS OF BANKING
OPERATIONS
JAIIB
MODULE A & B
• 01. The Shareholders of an acquired bank have a
right to get compensation under Sec 36AG of the
Banking Regulation Act. The amount thereof will
be determined as provided in the Fifth Schedule
to the Act after consultation with the RBI.
• A. True
B. False
• C. Not Banking Regulation Act
• D. Companies Act
• 02.Every banking company has to prepare its
balance sheet and profit and loss account as
stipulated in Sec.29 of the Reserve Bank of India
Act.
• A. It is not RBI Act 2.Companies Act
• C. Banking Regulation Act D. Both RBI and
Banking Regulation Act (only Section nos differ)
• 03.The banking Ombudsman passes an
order after affording the parties reasonable
opportunity to present their case. The order
is known as
• A. Preliminary Order B. Interim Order
• C. Final Order
D. None of these
• 04.Which statement is not appropriate
(Banking Ombudsman)
• A. Failure to honour LC commitment
• B. Ordinate delay in the payment or
collection of cheques
• C. Non-issue of drafts to non customers
• D. Not to entertain genuine complaints of
NRI customers
• 05.As per the Banking Regulation Act
Nomination facility is not applicable in
respect of
• A. Deposits
B. Safe Custody Articles
• C. Safe Deposit Locker D. None of these
• 06.Return on Unclaimed Deposits to cover
all deposits not operated for
• A. 10 years B. 12 years
• C. 18 years D. 20 years
• 07. For unclaimed deposit in respect of
Reinvestment plan term deposit, the same will
figure in the return
• A. When the said deposit has not completed 10
years
• B. When the said deposit has completed 10 years
• C. Provided the period of 10 years starts from the
expiry period of the deposit
• D. 10 years counted from the date of the deposit
• 08.The paid up capital of a banking
company represents
• A. Nominal Capital B. Amount subscribed
• C. Amount collected D. Contribution of the
sponsor bank
• 09..The additional director may be
appointed by the RBI
• A. in the interest of banking policy
• B. in the public interest
• C. in the interest of the depositors of the
banking company
• D. All the above
• 10.The directors of a banking company shall not
hold office for more than 8 years continuously.
However, it is not applicable to the Chairman.
• A. Not more than 5 years B. Not only Chairman
but also a whole-time director.
• C. In addition to the both even Executive Director
• D. In addition to b & c even for RBI nominated
Director
. 11.Identify the incorrect statement (regarding payment of
•
•
•
•
dividend to shareholders by banking companies)
A. No dividend is payable until all capitalised expenses are
completely written off
B. Dividend may be paid without writing of depreciation
C. Preliminary expenses, share selling commission and
organization expenses will come under item A.
D. The above are as per Section 15 of the Reserve Bank of
India Act.
• 12.The holding of shares by a banking company in any
company as pledgee, mortgagee or absolute owner shall
not exceed 25% of the paid up share capital and reserves
of that company or the paid up capital of the banking
company.
• A. The above is not incorrect B. The above is incorrect
• C. It is not 25% but 30%
• D. In addition to C, it is the paid up capital of that
company or the paid up capital and reserves of the banking
company.
• 13.Which statement is not correct with regard to
Foreign Banks.
• A. Have to deposit with RBI Rs.20 lacs when they
have place of business in Kolkata
• B. 20% of the profit in India to be deposited with
RBI
• C. 15% of the profit to be deposited with RBI and
not 20%
• D. The securities deposited can be replaced
• 14.Branch Licensing (identify the odd one)
• A. Changing the location of an existing place of business
within the same city, town or village would not need prior
permission.
• B. Opening of a temporary place of business upto one
month for extending banking business for any exhibition,
mela or conference requires prior permission.
• C. For RRBs permission is given by RBI
• D. For Co-operative banks RBI permission is a must
• 15. These are banking companies operating
only in a limited geographical area.
• A. Command Area Banks
• B. Regional Rural Banks
• C. Satellite Banks
• D. None of these
• 16.RBI provides temporary advances to meet
immediate needs when there is interval between
expenditures and flow of revenue. Such facilities
are provided to both Central and State
Governments.
• A. Temporary Overdrawing
• B. Tide Over Credit Facility
• C. Ways and Means Advances
• D. Line of Credit
• 17.Which one is not the permitted banking
business
• A. Buying or selling or bartering of good
directly or indirectly
• B. Acquire, construct and maintain any
building for its own purpose
• C. Negotiating of loans and advances
• D. Undertake and execute trusts
• 18. Acceptance of deposits by non- banking
financial companies is regulated by
• A. RBI
. B. Central Government
• C. Both A & B
• D. Registrar of Companies
• 19.As per Sec 12(1) of the BR Act, the subscribed
capital of a banking company shall not be less
than half of its authorised capital and the paid up
capital shall not be less than half of its subscribed
capital.
• A. The above is not incorrect
• B. The above is not as per BR Act
• C. RBI Act has discussed the above
• D. The above is incorrect
• 20.The director of a banking company is
exempted under Sec 10 of the BR Act, from the
requirement of holding qualification shares.
• A. The correct one is not director but the
Managing Director
• B. The Whole –time Chairman
• C. The Whole- time Chairman and the Managing
Director
• D. The Whole- time Chairman or the Managing
Director
• 21.In the absence of the Whole- time Chairman or
the Managing Director due to death, resignation or
illness, temporary arrangement can be made for a
period not exceeding six months without RBI’s
approval.
• A. True
B. False
• C. Not 6 months but 4 months
• D. In addition to © RBI approval is a must
• 22. Apart from giving various directions,
RBI may also
• A . Caution
• B. Give Advises
• C. Both a & b
• D. Instruct the banks to carry out certain
directions
• 23.While general credit controls operate on
the cost and total volume of credit, this aim
at regulating the distribution of bank
resources to particular sector of the
economy.
• A. Bank Rate
B. Selective Credit
Control
C. PLR
• D. Credit Policy
• 24.Every year, a sum equivalent to not above than
20 percent of profits of a banking company has to
be transferred to the reserve fund. Such transfer of
profits to reserve fund has to be made before any
dividend is declared.
• A. True
B. False
• C. Not 20 % but 15 %
• D. Not 20 % but 10 %
• 25.Every banking company to maintain in India certain
amount of assets as per Sec 25 of the BR Act. Accordingly,
at the close of business on the last Friday of every quarter,
such assets shall not be less than 25% of the demand and
time liabilities of the banking company in India.
• A. It is not 25% but 50%
• B. 75% is correct
• C. No such stipulation
• D. At the discretion of the respective banks
• 26. Loans charging exorbitant rates of
interest.
• A. Substantial Interest
• B. Usufructuary Loans
• C. Anomalous Loans
• D.Usurious Loans
• 27.These banks 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 the first Monday
in August of any year in which it carries on
business.
• A. Nationalized Banks B. State Bank of India also
C. Co-operative Banks D. None of these
• 28. RBI previous approval not required in
respect of a Banking Company
• A. Appointment of auditor
• B. Reappointment of auditor
• C. Removal of auditor
• D. None of the above
• 29. Apart from making regular inspection,
Reserve Bank is also empowered to conduct
• A. Further inspection
• B. Surprise verification
• C. Scrutiny
• D. Checking
• 30.If the compensation offered by the government or the
transferee bank is not acceptable to any person to whom
such compensation is payable, he may request the RBI to
refer the matter to the Tribunal.
• A. The above is correct
• B. The above is incorrect
• C. It is not RBI but Central Government
• D. It is not RBI but the transferee bank to refer to Tribunal
• 31.The RBI is empowered to order amalgamation of two
banking companies under sec 396 of the Companies Act.
But such power has to be exercised only after consultation
with the Central Government.
• A. True
B. It is other way round
• C. Central Government can direct and no need for any
consultation with RBI.
• D. RBI has been empowered to go ahead with
amalgamation
• 32.The liquidator has to make a preliminary report to the
High Court within three months of the winding up order on
the availability of assets for making preferential payments
under Sec 530 of the Companies act and for discharging
liabilities to depositors and other creditors.
• A. Correct
• B. Not 3 months
• C. within Two months
• D. Incorrect
• 33.Identify which statement is incorrect
(Preferential Payment)
• A. Depositors in Savings Bank accounts up to
Rs.250/= and then other depositors upto Rs.250/=
get priority over other creditors.
• B. After making these payments, the balance will
be for general creditors
• C. Then for payment of further amounts due to the
depositors.
• D. Then the depositors covered by the DICG Act
• 34. Authorisation under the law for a debtor
to postpone payment of dues for a specified
time is known as
• A. Postponement B. Deferred
• C. Deferment
D. None of these
• 35. A committee established under the regulations
framed by Reserve Bank of India under Sec 58 of
the Reserve Bank of India Act to exercise powers
of supervision and regulation under that Act and
the BR Act.
• A. Committee for Financial Supervision
• B . Board for Financial Regulation
• C. Committee for Financial Regulation
• D. Board for Financial Supervision
• 36.Find out the correct one (State Bank of India &
Subsidiary banks)
• A. The appointment of auditors is done by RBI in
consultation with the Central Government
• B. The State Bank of Saurashtra was constituted under the
State Bank of India( Subsidiary Banks )Act,1959
• C. The Chairman and Managing Director of SBI are
appointed for a period not exceeding seven years and are
not eligible for reappointment
• D. The Central Government may direct any Subsidiary
bank in consultation with RBI to acquire the business of
any bank.
• 37.Identify the correct order (RRBs)
35%:50%:15% issued capital
•
•
•
•
A. Nationalised Bank :RBI : SBI
B. Sponsor Bank : State Govt : Central Govt
C. Apex Bank : Central Govt : State Govt
D. Sponsor Bank: Central Govt : State Govt
• 38.RRB (which one is not correct)
• A. A person qualified to act as an auditor of companies
under Sec 226 of the Companies Act is qualified to be an
auditor of a RRB.
• B. The board consists of a Chairman appointed by the RBI
• C. RRBs were first set up in 1975 under the Regional
Rural Banks Ordinance, 1975. The Ordinance was later
replaced by the Regional Rural Banks Act, 1976.
• D. The Central Government is empowered to give
directions to RRBs on matters of policy involving public
interest
• 39.A nationalised bank has to hold an
annual general meeting of shareholders
within 4 weeks of the date of forwarding the
balance sheet and related statements /
returns to the Central Government.
• A. It is RBI & not Central Government
• B. Not 4 weeks C. Within 6 weeks
• D. Both Central Government & RBI
• 40. Provisions of Banking Regulation Act
applicable to
• A. State Co-operative Bank
• B. Central Co-operative Bank
• C. Primary Co-operative Bank
• D. All of these
•
•
•
•
41.A drawee bank will get protection in respect of
A. When the Account holder’s signature is forged.
B. When the payee’s signature is forged
C. When one of the joint account holders signature
is forged
• D. When the Cheque is signed by a person other
than the drawer (who is not authorised by the
account holder)
• 42.Identify the correct Relationship
between the Customer - Banker
• A. Deposit = Creditor – Debtor
• B. Deposit = Donor – Trustee
• C. Deposit = Agent - Principal
• D. Deposit = Debtor - Creditor
• 43.A paying banker has to return an
instrument (Cheque) for the reason the Cash
Credit limit is fully utilised. Choose the
appropriate reason
• A. Insufficient Funds B. Not Arranged for
• C. Limit Full
D. None of these
• 44. A bank has paid a forged cheque. They
filed a suit against the collecting banker as
well as the payee who received the money.
Whether Drawee bank would succeed?
• A. Yes B. No C. If the collecting banker
has acted in good faith and without
negligence they would loose the case D.
The paying bank need not suffer.
• 45.Which is not part of Sect131 of NIAct,1881
protection to Collecting Banker.
• A. The banker to act in good faith & without
negligence
• B. Should collect for any one including a customer
• C. the cheque so collected must have been crossed
generally or specially before receipt by the
collecting banker
• D. None of these
• 46.On an order cheque, the word order has been altered as
bearer. The cheque has been received at the front office for
payment. The counter clerk refused payment on the ground
the alteration needs the full signature of the drawer (who is
not present)
• A. The counter clerk is correct
• B. He is wrong.
• C. He is wrong because it is not a material alteration
• D. He is not incorrect since it is a material alteration
• 47.Protection is available under the provisions of
NIAct,1881, to a banker when
• A. there is a material alteration on the cheque
• B. Which is not visible to have been altered
• C. Signature of the drawer is genuine and matching with
the mandate
D. All of these
• 48.A collecting banker will not get
protection on
• A. a Crossed Cheque
• B. a Specially Crossed Cheque
• C. an uncrossed cheque
• D. None of the above
•
•
•
•
•
49.Collection of third party cheque is
A. Prohibited
B. Not prohibited
C. Avoided
D. Not protected
.50.A collecting banker will not get protection
when he collects a crossed cheque
• A. For his customer
• B. with out making proper enquiries
• C. with out negligence
• D. which is otherwise in order
• 51.If a duplicate term deposit receipt is issued on
the strength of an indemnity
• A. The depositor has to give an assurance that not
to use the duplicate, if he comes across the
original one
• B. Will use the duplicate and not the original
which will be surrendered to the bank
• C. will surrender both to the bank for them to take
appropriate decision.
• D. Will keep both with him till the due date
• 52.The number of Contracts under
indemnity
• A. One
• B. Two
• C. More than One
• D. None
• 53. Find out the correct one.
• A. Contract of indemnity is applicable when there
is a default
• B. Contract of Guarantee is applicable when there
is a loss
• C. Contract of Indemnity is not applicable for
default
• D. Contract of Indemnity is applicable when there
is a loss.
• 54.The bank has issued a guarantee on behalf of its
customer in favour of the beneficiary in which the bank
has undertaken to make payments on deferred basis.
• Identify the guarantee
•
•
•
•
A. Advance payment
B. Special Purpose
C. Performance
D. None of these
• 55. Bank D, has issued a performance guarantee on behalf of their
client M/s.Jasmine & co, a partnership firm, in favour of IOC.
Anticipating that the beneficiary is likely to invoke the guarantee, the
partners approached the bank not to honour the claim under the said
guarantee.
•
•
•
•
A. The banker to oblige
B. The banker to ignore their request
C. Banker to advise the partners to approach the competent court
D. Advise the partners to discuss with the beneficiary only
• 56.A bank has issued the guarantee with a protective clause
which indicated that the bank’s liability is restricted to Rs.2
lacs and the guarantee will be valid till 31st Dec of a
particular year. The beneficiary has invoked the guarantee
on 31st Dec of that year but received by the bank only on
3rd of January next year.
• A. The bank need not pay the amount
• B. The bank has to make the payment
• C. The beneficiary should have ensured that the bank got
the invocation request before 31st of Dec that year
• D. If the claim is done within the guarantee period and
received within a reasonable time, the bank cannot refuse
payment
• 57. 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
• 58. A bank has issued a performance guarantee
(fully secured by way of Fixed Deposit). The bank
• 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 them
• D. None of the above
• 59.The bank had given the guarantee for their
customer 7 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. The banker need not honour the claim
• B. The banker is not obliged to honour
• C. The banker cannot refuse payment
• D. The banker can postpone payment
• 60.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 banker
D. None of these
• 61.A person who for consideration became
the possessor of a bill
• A. Holder
• B. Payee
• C. Drawee in case of need
• D. None of these
• 62.A co-operative bank functioning in more
than one State is known as
• A. Urban Co-operative Bank
• B. State Co-operative Bank
• C. Multi- Force Co-operative Bank
• D. None of the above
• 63.Without stamp duty which instrument is
considered valid?
• A. Bill of Exchange
• B. Cheque
• C. Promissory Note
• D. Acknowledgement of Debt
• 64. Indemnity, Letter of Credit & Bank
Guarantee
• A. One and the same
• B. Both LC and Guarantee are same
• C. Indemnity is different from LC
• D. All are not similar
• 65. This bank is also known as Nominated
bank or Paying bank.
• A. Negotiating Bank
• B. LC opening Bank
• C. Exporter’s Bank
• D. Third party bank
• 66. This bank is deemed to undertake on its
part the liabilities of the credit vis-à-vis the
beneficiary or the Negotiating Bank.
• A. Importer’s bank
• B. Exporter’s bank
• C. Confirming bank
• D. Advising bank
• 67.Reimbursing bank is appointed by the
Importer to make reimbursement to the
Negotiating, Paying or Confirming bank.
• A. True
B. False
• C. Not Importer but exporter
• D. None of these
•
•
•
•
•
68. A revocable credit is
A. Less Common
B. Acceptance Credit
C. Time Credit
D. Nominated Credit
• 69.With Recourse Credit means that the right (recourse )
against the drawer under the bill is not available.
•
•
•
•
A. Correct
B. Incorrect
C. Partly available
D. None of these
• 70.For registering the charge created under Sec125 of the
Companies Act,1956, the fees is decided based on
•
•
•
•
A. The Value of the charge
B. The Paid up Capital of the Company
C. The Nominal Capital of the Company
D. The decision of the Registrar
• 71. Identify which is incorrect (Documents to be filed with
the Registrar of Companies)
• A. The Articles of Association duly signed, stamped and
witnessed
• B. A copy of the letter received from the ROC intimating
the non availability of the proposed name
• C. Any agreement which the company proposes to enter
into with any individual for appointment as its managing or
whole time director or manager
• D. None of the above
• 72.A partnership firm is deemed to be registered
• A. When the necessary papers are submitted to the
Registrar with adequate fees
• B. After 3 months from the date of submission of
necessary documents
• C. When the certificate of registration is granted
• D. When the bank account is opened
• 73.The ownership and possession of the
security with the customer.
• A. Mortgage & Pledge
• B. Pledge & Third party pledge
• C. Hypothecation & Mortgage
• D. Pledge & Hypothecation
• 74. 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
• 75.An obligation imposed on a person to
deal with property entrusted to him for the
benefit of persons including himself, the
obligation being enforceable.
A. Executor ship B. Administration
C. Trust
D. All of these
• 76.This is not part of Articles of
Association. Identify.
• A. Number of Directors of the Company.
• B. Names of the Directors of the Company
• C. Procedure for transfer and transmission
of shares
• D. Borrowing powers of the company
• 77.In Bengal and other parts of erstwhile Bengal
province, a Hindu Undivided Family is governed
by Mitakshara Law. In other parts of India, it is
governed by Dayabhag Law.
• A. True
B. False
• C. In other parts of the country it is Mitakshara
Law & in Bengal it is Dayabhag Law
• D. Through out India only one law i.e., Mitakshara
• 78.The three partners of ABC & Co
decided to induct A’s son as a partner who is
a minor.
• A. They cannot do it B. A minor can
become a partner C. With the consent of all
the existing partners a Minor can also be
admitted as a partner D. The law is silent
regarding this aspect
•
•
•
•
•
79. An hypothecation can be converted into
A. Pledge
B. Mortgage
C. Both A & B
D. None of the above
• 80. This type of mortgage 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 Mortgage
• C. Equitable Mortgage
• D. None of the above
• 81.This type of finance there is no bill
available even though the name suggests.
• A. Documentary Bill
• B. Supply Bill
• C. Bill of Exchange Discounting
• D. Cheque Purchasing
•
•
•
•
•
•
ALL THE BEST
THANKS
T.M.C.VASUDEVAN
(M) 9819500380
(T) 022-27606208
[email protected]