1. INDIAN INSTITUTE OF BANKING & FINANCE LEGAL ASPECTS OF BANKING OPERATIONS JAIIB MODULE A & B

2. 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

3. 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)

4. 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

5. 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

6. 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

7. 06.Return on Unclaimed Deposits to cover all deposits not operated for A. 10 years B. 12 years C. 18 years D. 20 years

8. 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

9. 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

10. 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

11. 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

12. . 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.

13. 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.

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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 %

26. 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

27. 26. Loans charging exorbitant rates of interest. A. Substantial Interest B. Usufructuary Loans C. Anomalous Loans D.Usurious Loans

28. 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

29. 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

30. 29. Apart from making regular inspection, Reserve Bank is also empowered to conduct A. Further inspection B. Surprise verification C. Scrutiny D. Checking

31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

37. 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.

38. 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

39. 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

40. 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

41. 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

42. 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)

43. 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

44. 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

45. 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.

46. 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

47. 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

48. 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

49. 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

50. 49.Collection of third party cheque is A. Prohibited B. Not prohibited C. Avoided D. Not protected

51. .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

52. 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

53. 52.The number of Contracts under indemnity A. One B. Two C. More than One D. None

54. 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.

55. 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

56. 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

57. 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 31 st Dec of a particular year. The beneficiary has invoked the guarantee on 31 st Dec of that year but received by the bank only on 3 rd 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 31 st 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

58. 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

59. 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

60. 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

61. 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

62. 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

63. 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

64. 63.Without stamp duty which instrument is considered valid? A. Bill of Exchange B. Cheque C. Promissory Note D. Acknowledgement of Debt

65. 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

66. 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

67. 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

68. 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

69. 68. A revocable credit is A. Less Common B. Acceptance Credit C. Time Credit D. Nominated Credit

70. 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

71. 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

72. 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

73. 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

74. 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

75. 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

76. 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

77. 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

78. 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

79. 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

80. 79. An hypothecation can be converted into A. Pledge B. Mortgage C. Both A & B D. None of the above

81. 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

82. 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

83. ALL THE BEST THANKS T.M.C.VASUDEVAN (M) 9819500380 (T) 022-27606208 vasu1611@yahoo.co.in