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Legal 1000 Ques PDF
Legal 1000 Ques PDF
Legal 1000 Ques PDF
Page 1 of 146
8 Which of the following does not match in the context of formation of banks:
A. State Bank of India constituted under SBI Act 1955
B. Nationalised Banks constituted under Nationalisation Act 1970 and 1980
C. RRBs constituted under RRB Act 1976
D. State Bank associate banks constituted under State Bank (Subsidiary Bank) Act 1959
B Nationalized banks were constituted under Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 & 1980.
9 The cooperative Banks fall under the following type of organisation:
A. cooperative society
B. banking company
C. public sector bank
D. any of the above
A Cooperative Banks are cooperative societies registered under any Central Act or State Act.
10 Which of the following is not correct regarding the purpose for which RBI was created under Reserve Bank of India Act 1934:
A. to regulate the issue of bank notes
B. to directly undertake regulation of banking system
C. to keep reserves for securing monetary stability in India
D. to operate the currency and credit system of India
B RBI does not directly deal with regulation of banking system under Reserve Bank of India Act except u/s 42 that deals with CRR. RBI
regulates the banks under provisions of Banking Regulation Act.
11 Banking Regulation Act, in addition to commercial banks, is applicable to which of the following:
A. primary agricultural credit societies
B. cooperative land mortgage banks
C. cooperative banks
D. none of the above
C Banking Regulation Act is not applicable to primary agricultural credit societies and cooperative land mortgage banks. Cooperative
banks are covered by the Act as a result of an amendment in the year 1965.
12 Banking Regulation Act deals with (which one is not correct):
A. regulation of banking business of banking companies
B. control over the management of banking companies
C. suspension or winding up of banking business or levying of penalties for violation of provisions of the Act
D. appointment of board of directors by RBI
D The Board of Directors of banks are not appointed by RBI.
13 Which of the following is not a member of Central Board of directors of RBI?
A. Governor
B. 4 deputy governors appointed by Govt.
C. other directors nominated by RBI
D. Directors nominated by Govt.
C Directors are nominated by govt. and not by RBI.
14 RBI has the authority under Section 22 of Reserve Bank of India Act to issue bank notes with a denomination of:
A. minimum Re 1 and maximum Rs.1000
B. minimum Rs 2 and maximum Rs.1000
C. minimum Re 1 and maximum Rs.10000
D. minimum Rs. 2 and maximum Rs.10000
D RBI has powers to issue bank notes with a minimum Rs 2 and maximum Rs.10000, as the Central Govt. may decide on recommendations
of Central Board of RBI.
Page 2 of 146
15 RBI undertakes govt. business as per Reserve Bank of India Act. Which of the following is not correct regarding this:
A. u/s 20, it has obligation to undertake business of Central Govt.
B. in case of state governments, RBI undertakes banking business based on the agreement with State governments u/s 21 A
C. RBI provides temporary advances to Govt. which are called liquidity adjustment facility
D. none of the above
C RBI provides temporary advances to govt. called ways and means advances to meet the gap between expenditure and flow of revenue.
16 Which of the following is not power of RBI under Banking Regulation Act as a regulator and a supervisor of banks:
A. to issue licence for opening of a bank
B. to regulate cash reserves and statutory reserves
C. to undertake audit and inspection of banks
D. to give directions in public interest
B RBI has a no. of supervisory and regulatory functions as given in various options. But regulation of cash reserves (CRR) is through
Reserve Bank of India Act and not through Banking Regulation Act.
17 Govt. of India can give directions to RBI (which one is not correct):
A. u/s 7 (1) of Reserve Bank of India Act
B. u/s 22 of Banking Regulation Act
C. after consultation with Governor RBI
D. the direction should be in public interest
B Govt. can issue directions to RBI in public interest, under Reserve Bank of India Act after consulting the Governor.
18 Which of the following powers are not available with Central Govt. as per provisions of Banking Regulation Act 1949:
A. issue of licence for formation of banks u/s 22
B. approval to banks for formation of subsidiary for certain business u/s 19
C. power to acquire undertaking of banks
D. suspension of business and amalgamation of banks u/s 45
A The power to issue licence for formation of banks, is used by RBI not by Central Govt.
19 Who exercises powers on cooperative banks from registration till winding up:
A. RBI
B. Govt. of India
C. Registrar of cooperative societies
D. all the above
C The Registrar of cooperative societies exercise a wide range of powers for cooperative societies from their registration to winding up.
20 Which of the following statement is not correct:
A. public sector bank is established under a special statute
B. banking companies are registered under Banking Regulation Act
C. cooperative banks are registered under State Coop Societies Act
D. none of the above
B Banking companies are registered under Companies Act.
21 Associate banks of SBI are registered under:
A. Companies Act
B. Banking Companies Acquisition and Transfer of Undertaking Act
C. SBI Act 1955
D. none of the above
D Associate Banks of SBI have been created under provisions of State Bank (Subsidiary Banks) Act 1959.
Page 3 of 146
22 RRBs have been created:
A. as a company under Companies Act
B. as cooperative societies
C. as a body corporate under a special statute
D. none of the above
C RRBs are created under RRB Act 1976.
23 The Banking Regulation Act was passed for:
A. creating various banks in India
B. creating Reserve Bank
C. regulating the banking companies
D. regulating the acceptance of deposit from public
C Banking Regulation Act was enacted to regulate the banking companies.
24 Which of the following statement is not matched correctly:
A. Central Govt. can give direction to RBI - correct
B. Central govt. is primary regulator of banks - false
C. if license of a bank is cancelled, the appeal lies with Central govt. - true
D. State govt. have also control over cooperative banks - false
D RBI is primary regulator of banks and state govt. also have control over cooperative banks.
25 The cooperative banks that operate in more than one State, are registered under which of the following:
A. State coop societies Act
B. Reserve Bank of India Act
C. Multi-state coop societies Act
D. all the above
C The cooperative banks that operate in more than one State are registered under Multi-state cooperative societies act.
26 Central govt. can exempt the banks from provisions of Banking Regulation Act:
A. of its own, if satisfied
B. on request of the bank concerned
C. on recommendation of RBI
D. any of the above, depending upon the circumstances
C Central Govt. has the authority to exempt any bank from provisions of Banking Regulation Act on the recommendations of RBI.
27 The company related issues of the banking companies are regulated by which of the following:
A. authorities under Companies Act
B. Reserve Bank of India
C. Central Govt.
D. Securities and Exchange Board of India
A The company related matters that are not banking issues, are regulated by the authorities under the Companies Act
28 Banks are undertaking trading in shares and securities and this activity is regulated by:
A. authorities under Companies Act
B. Reserve Bank of India
C. Central Govt.
D. Securities and Exchange Board of India
D Trading in shares and securities are regulated by SEBI irrespective whether it is done by banks or companies or individuals.
Page 4 of 146
29 The term corresponding new banks is used in relation to which of the following:
A. State group banks
B. nationalized banks
C. foreign banks
D. new private banks
B Nationalized banks are the corresponding new banks under the provisions of Banking Companies (Acquisition and Transfer of
Undertaking) Act 1970 and 1980.
30 Central govt. can give direction to RBI only after consulting:
A. Governor RBI
B. Central Board of RBI
C. Finance Commission
D. President of India
A Central govt. can give direction to RBI in consultation with Governor RBI.
31 The Companies Act applies to the banking companies:
A. irrespective whether the provisions of the Banking Regulation Act
B. insofar as the provisions are consistent with the provisions of Banking Regulation Act
C. in relation to their registration and winding up
D. all the above
C The Companies Act is applicable with regard to formation and winding up of a company.
32 The Banking Regulation Act applies to cooperative banks:
A. as provided in the State cooperative Act
B. as provided in the Central cooperative Act
C. as provided in the modification of Section 56
D. as applicable to other commercial banks
C With the introduction of section 56 of Banking Regulation Act in the year 1965, the cooperative banks have come under regulator
purview of RBI.
33 In public sector banks, the shareholding of the Central govt. is :
A. not less than 50%
B. 51% or more
C. more than 50%
D. less than 50%
A To be a public sector bank, the Central Govt. share holding must not be less than 50% in the capital of a bank.
34 A banking company requires ____ from ____ to undertake banking business as per provision of Section ___ of Banking Regulation Act:
A. registration, RBI, 23
B. licence, RBI, 22
C. registration, Registrar of Companies, 24
D. certificate of commencement of business, Registrar of Companies, 24
B U/s 22 of Banking Regulation Act, banks are required to obtain licence from RBI to carry on banking business.
35 If a bank has to shift its branch in ____ (area), it requires RBI permission u/s 23 of Banking Regulation Act:
A. same district
B. same city
C. same town
D. same village
A Shifting of branch outside the same city, same town or same village does not require RBI permission.
Page 5 of 146
36 Under Section 11 of Banking Regulation Act, the foreign banks have to deposit ___ arising out of their business in India with, RBI:
A. 10% of their deposits
B. 20% of their deposits
C. 20% of their profit for each year
D. 20% of their net demand and time liabilities
C Foreign banks have to deposit 20% of their profit every year with RBI.
37 Bank companies can promote a subsidiary for the business activities mentioned :
A. in the Resolution passed by their Board of Directors
B. in their Articles of Association
C. Section 6 (1) of Banking Regulation Act
D. Section 22 of Banking Regulation Act when issued licence by RBI.
C Banks can promote a subsidiary for undertaking a business activity mentioned in section 6 (1) of Banking Regulation Act, provided that
activity is part of the Object as per Memorandum of Association, if a banking company.
38 The shareholder of a banking company can exercise maximum ___ % of the total voting rights of all shareholders:
A. 2%
B. 5%
C. 10%
D. no such limit.
C A shareholder of a banking company can exercise maximum 10% of the total voting rights of all shareholders;
39 Banking companies can pay dividend only after they have written off (which one is not correct):
A. all bad debts
B. all capitalized expenses
C. all preliminary expenses
D. all share selling expenses
A Banks can pay dividend only after writing off all the capitalized expenses which include preliminary and share selling expenses.
40 If the banking licence of a banking company is rejected:
A. it can carry the banking business with special permission of Central Govt.
B. it can carry the business as a money lender
C. it can carry the banking business in one State with permission of State govt.
D. it can carry the banking business for not more than 5 years there after.
B If the banking license is rejected, the bank cannot carry the banking business but it can carry business as money lender or any other
business.
41 If the banking licence of a company is cancelled, the appeal can be made to ___ within ___ from date of order rejecting the licence:
A. High Court, 30 days
B. Supreme Court, 30 days
C. Central Govt., 30 days
D. Central Govt., 60 days
C A banking company can appeal to Central govt. within 30 days from date of order of rejection.
42 What is the maximum brokerage that the banks can give:
A. 2.5% of the paid up value of the share
B. 1% of the face value of the share
C. 2% of the face value of the share
D. 0.5% of the authorised capital
A The maximum brokerage that can be given by a banking company is restricted to 2.5% of the paid up value of the shares.
Page 6 of 146
43 Which of the following does not match:
A. a person cannot hold the shares of a banking company, as per limit under Reserve Bank of India Act - false
B. a banking company can hold the shares of another banking company - true
C. banking companies can give brokerage as a percentage of paid-up capital - true
D. there is no appeal against RBI decision on cancellation of license - true
D The appeal is possible to Central govt. within 30 days.
44 Majority of the directors i.e. ___ % of the directors should have the qualifications prescribed u/s 10 A (2) of BR Act:
A. 24%
B. 49%
C. 51%
D. 74%
C U/s 10 A (2) of Banking Regulation Act, at least 51% of the directors should have the prescribed qualifications.
45 If board of a bank is to be reconstituted u/s 10A of Banking Regulation Act, for the purpose of reconstitution, the directors are removed:
A. by lots
B. by majority decision
C. by rotation
D. as per order fixed by RBI
A The directors are removed by lots and such decision is binding on all the directors.
46 If the Chairman of a bank is to be removed from office :
A. RBI has to give compensation to him
B. RBI has to give opportunity to him of being heard
C. RBI has to take the Board of the bank into confidence
D. RBI has to give him opportunity to continue as director
B Before removal of the Chairman, he has to be given an opportunity of being heard.
47 If RBI wants to remove Chairman of a bank and gives opportunity to the bank of being heard, RBI can pass the removal order if there
is no response from the bank for:
A. 15 days
B. 30 days
C. 2 months
D. 3 months
C Bank is given 2 months time by RBI of being heard for removal of Chairman. If there is no response from the bank, RBI can pass the
removal order.
48 U/s 36AB of Banking Regulation Act, RBI can appoint ___ in a bank:
A. workmen director
B. managing director
C. director
D. additional director
D RBI can appoint additional director when RBI is of the opinion that it is necessary to do so in public interest or in interest of banking
policy / depositors of the bank.
49 In relation to removal of managerial personnel, the provisions of Section 36AA of Banking Regulation Act have:
A. overriding effect over other laws
B. persuasive effect over other laws
C. indirect effect over other laws
D. no effect on other laws
A U/s 36AA, Banking Regulation Act, RBI has powers to remove Chairman, Director or Chief Executive of a bank and this section has
overriding effect over other laws.
Page 7 of 146
50 The fit and proper criteria relating to directors of a bank, is fixed by:
A. Central Govt.
B. Reserve Bank of India
C. Security and Exchange Board of India
D. Board of Directors of the concerned bank.
B Under corporate governance guidelines, RBI has the authority to prescribe the fit and proper criteria, in respect of directors of the bank.
51 Which of the following statement does not match :
A. an ordinary director can hold office maximum for 8 years on a continuous basis - False
B. A company intending to do commence banking business, require licence from SEBI - False
C. the post of Chairman of a bank can be part-time also - True
D. none of the above match
A An ordinary director can hold office maximum for 8 years on a continuous basis.
52 If a chairman of a bank is removed by RBI, he can appeal to ___ within ___:
A. Governor RBI, 30 days
B. SEBI, 30 day
C. Central Govt., 30 days
D. Central govt., 2 months
C The appeal can be made by the chairman of a bank, who is removed by RBI, to Central Govt. within a period of 30 days of date of order.
53 Under Section 36M, Banking Regulation Act, RBI can remove ___ of a bank:
A. Officer or other staff
B. Top Management Officers
C. Directors
D. Chairman
A RBI can remove an officer or other staff of a banking company u/s 36M of Banking Regulation Act.
54 In which of the following circumstances, RBI cannot cancel the licence of a banking company:
A. the banking company ceases to carry on its business
B. the banking company is unable to pay its depositors in full
C. the banking company has changed its registered office from one State to another State
D. all the above
C RBI can cancel the licence if the banking company ceases to carry on its business or the banking company is failing to pay its depositors in
full.
55 Which of the following statement is correct regarding dividend payment by banks:
A. there are no restrictions on banks to pay dividend
B. the dividend cannot be paid without permission of RBI
C. dividend can be paid only when the capitalized expenses are completely written off
D. dividend can be paid out of past profits or current profits
C There are restrictions on payment of dividend by banks which include that the dividend can be paid out of current year profits and only
when all the capitalized expenses are written off.
56 Corporate governance involves promotion of interest of:
A. shareholders only
B. shareholders and employees only
C. shareholders, employees and customers only
D. shareholders, employees, customers and stakeholders
D Corporate governance is to ensure to promote the interest of shareholders, employees, customers and all stakeholders.
Page 8 of 146
57 Corporate governance is based on the principle of:
A. corporate fairness
B. corporate transparency
C. corporate accountability
D. all the above
D Corporate governance is based on the principles of corporate fairness, transparency and accountability.
58 Corporate governance principals of 2004, are called:
A. CG principles of corporate governance
B. OECD principles of corporate governance
C. Corporate governance principles
D. ABC principles of corporate governance
B These are revised principles that have been approved by various governments all over the world.
59 In India, the corporate governance guidelines have been issued for banks by ___ based on the recommendations of ___ committee:
A. SEBI, Mitra Committee
B. SEBI, Ganguly Committee
C. RBI, Ganguly Committee
D. RBI, Mitra Committee
C RBI issued guidelines on fit and proper criteria for directors of banks on the basis of recommendations of Ganguly committee.
60 As per RBI guidelines for corporate governance, RBI permission is required for acquisition of shares of a private bank, if it is:
A. 5% or more
B. 10%
C. 10% or more
D. 15% or more
C As per February 2004 guidelines, this is the requirement of RBI in the interest of diversified ownership of banks, so that no single group
entity should have a controlling interest in a bank.
61 Large industrial houses are allowed to acquire by way of strategic investment, in shares of a private bank, not more than:
A. 2% of the capital of the bank
B. 5% of the capital of the bank
C. 10% of the capital of the bank
D. 20% of the capital of the bank
C The restriction is 10% so that the industrial groups should not have controlling interest.
62 U/s 21 of Banking Regulation Act, RBI issues directions to banks in respect of:
A. loans and advances
B. audit and inspection
C. capital structure of banks
D. corporate governance
A U/s 21 of Banking Regulation Act, RBI issues directions to banks in respect of loans and advances relating to margin, rate of interest and
other restrictions including selective credit control directives.
63 RBI can regulate acceptance of deposits including rate of interest on deposits by banks, under section ___ of ____:
A. 35, Banking Regulation Act
B. 35-A, Banking Regulation Act
C. 35, Reserve Bank of India Act
D. 45, Reserve Bank of India Act
B U/s 35A of Banking Regulation Act, RBI issues various directions in public interest, to banks. These guidelines include the guidelines on
deposits, customer service, KYC etc.
Page 9 of 146
64 Banking Ombudsman settles disputes:
A. between two customers
B. between a customer and a bank
C. between two banks and between a customer & the bank
D. between a customer and the govt.
B The institution of Ombudsman has been created to settle the dispute between the banks and their customers. The earlier provision of
arbitration between two banks has been withdrawn in the year 2006.
65 RBI can issue directions to banks on loans and advances :
A. in the interest of Govt.
B. in the interest of borrowers
C. in the interest of public
D. in the interest of borrowers, govt., public and banks
C RBI can issue directions on loans and advances in the interest of public.
66 The purpose of issue of selective credit control by RBI is to regulate the availability of credit according to:
A. priority of borrowers
B. priority of RBI
C. risk involved in the loan transaction
D. national priority
D The selective credit control directives are issued by RBI with a view to make credit available to essential sectors of economy according to
national priorities.
67 Which of the following prohibits, lending at very high (exorbitant) rates of interest and empowers reopening of such contract:
A. Usurious Loans Act
B. Reserve Bank of India Act
C. Banking Regulation Act
D. Companies Act
A As per provisions of Usurious Loans Act, the loans cannot be given at exorbitant rates of interest. If loans are found to be at high rates,
the courts can intervene.
68 Which of the following provides that a transaction between a banking company and its borrower cannot be reopened by courts on the
ground that the rate of interest is excessive:
A. Section 12, Usurious Loans Act
B. Section 46, Reserve Bank of India Act
C. Section 21A, Banking Regulation Act
D. Section 21, Banking Regulation Act
C Section 21A of Banking Regulation Act provides that a transaction between a banking company and its borrower cannot be reopened by
courts on the ground that the rate of interest is excessive.
69 Which of the following statement does not match to its answer:
A. banks can lend any amount of loans to their directors - false
B. RBI issues directions to banks on loans and advances u/s 35A of Banking Regulation Act - true
C. Banking Ombudsman have been created by RBI u/s 35 A of Banking Regulation Act - true
D. When credit flow is regulated by RBI to particular sectors of the economy it is known as priority sector credit - false
B RBI issues directions to banks on loans and advance u/s 21 of Banking Regulation Act. The regulation of credit flow to particulars sectors
is called selective credit control.
70 Directions u/s 35A of Banking Regulation Act can be issued by RBI to:
A. a particular bank only
B. all banks uniformly
C. a particular bank or uniformly to all banks
D. not to a particular bank but generally to all banks
C Directions can be issued by RBI to a particular bank or generally to banks u/s 35 of Banking Regulation Act.
Page 10 of 146
71 U/s 26 of Banking Regulation Act, the banks are required to file a return with RBI relating to:
A. unclaimed deposits
B. selective credit control advances
C. advances to sensitive sectors of the economy
D. position of high value bad loans
A U/s 26 of Banking Regulation Act, the banks are to send to RBI an annual return as on Dec 31 every year within 30 days relating to
unclaimed deposits.
72 Indian banks are required to transfer ___% of their annual profits to reserve fund under Banking Regulation Act:
A. 25%
B. 20%
C. 15%
D. 10%
B Banks incorporated in India are required to statutorily transfer 20% of their profits every year to a reserve fund.
73 Every banking company has to maintain in India, certain amount of assets u/s 25 of Banking Regulation Act as at:
A. close of each half year
B. as at the close of business on the last Friday of each year
C. as at the close of business on the last Friday of each half year
D. as at the close of business on the last Friday of each quarter
D Such assets are to be maintained on a quarterly basis i.e. last Friday of each quarter.
74 Every banking company has to maintain assets in India, equal to ___% of ___ u/s 25 of Banking Regulation Act as at last Friday of each
quarter :
A. 75% of demand and time liabilities
B. 75% of net demand and time liabilities
C. 50% of net demand and time liabilities
D. 25% of demand and time liabilities
A Such assets equal to 75% of demand and time liabilities are to be maintained on a quarterly basis i.e. last Friday of each year.
75 If a bank fails to maintain cash reserve u/s 42 of Reserve Bank of India Act, it has to pay penal interest to RBI for first day at:
A. bank rate
B. bank rate + 3%
C. BPLR of the bank concerned
D. bank rate + 5%
B The penal interest for the first day is bank rate + 3% and for 2nd and subsequent days it is bank rate + 5%.
76 Which category of banks maintain cash reserve ratio u/s 18 of Banking Regulation Act:
A. nationalized banks
B. banking companies that are not scheduled banks
C. scheduled banks
D. cooperative banks
B Banking companies that are not scheduled banks have to maintain cash reserve ratio prescribe by RBI u/s 18 of Banking Regulation Act.
Other banks maintain CRR as per Section 42 of Reserve Bank of India Act.
77 Liquid assets maintained by banks u/s 24 of Banking Regulation Act are ____ of the cash reserves maintained by banks u/s 42 of Reserve
Bank of India Act:
A. inclusive
B. exclusive
C. dependent
D. partly inclusive
B Liquid assets i.e. SLR is exclusive of the CRR.
Page 11 of 146
78 If a bank fails to pay penalty imposed by RBI for non-maintenance of liquid assets u/s 24 of Banking Regulation Act, it can be recovered:
A. by way of an appeal to Govt.
B. by filing suit in a civil court
C. by filing suit in a court not less than High Court
D. if it is a banking company, by filing appeal with Registrar of Company
B If a bank fails to pay penalty imposed by RBI and RBI has to recover through legal measure. RBI can file suit in a civil court.
79 Which of following type of banks have to maintain cash reserve (CRR) under provisions of Law:
A. scheduled commercial banks only
B. non-scheduled commercial banks only
C. all types of banks including primary cooperative credit societies
D. scheduled and non-scheduled commercial banks.
D Scheduled banks maintain CRR u/s 42 of Reserve Bank of India Act and non-scheduled banks u/s 18 of Banking Regulation Act.
80 Which of the following provision of Banking Regulation Act is not properly matched:
A. Section 26 - Unclaimed deposits
B. Section 21 - RBI authority to give directions to banks on loans and advances
C. Section 24 - maintenance of cash reserve
D. Section 17 - creation of reserve fund by bank from profits
C Section 24 of Banking Regulation Act deals with maintaining liquid assets i.e. SLR by banks and not cash reserve (CRR).
81 For the purpose of Section 42 of RBI, which of the following is not included in the demand and time liabilities:
A. saving bank and current deposits
B. capital and reserves
C. term deposits up to 1 year
D. borrowing
B Capital and reserves are part of the equity of the bank and are not taken as demand and time liabilities for CRR purposes i.e. Section 42
of Reserve Bank of India Act.
82 U/s 11 (2) of Banking Regulation Act, foreign banks are required to ______, 20% of their profits for each year in respect of all their
business conducted in India:
A. maintain as reserve fund
B. maintain as special deposit
C. maintain as deposit with RBI
D. maintain as additional cash reserve
C Foreign banks are required to deposit with RBI and maintain the deposit, which should be equal to 20% of the profit for each year.
83 The directions issued by RBI to banks, u/s 35A of Banking Regulation Act :
A. are binding on the banks only
B. are applicable to banks as well as public
C. are not binding on the bank but are only advisory in nature
D. are binding on the banks if they give acceptance to the same
A The directions of RBI to banks u/s 35A of Banking Regulation Act are binding on the banks. There are penalties for non-compliance of
such directives.
84 If there is a transaction of a bank with a borrower that violates the RBI guidelines:
A. the violation would invalidate the transaction
B. the bank will be liable for prosecution by RBI
C. the transaction will be automatically cancelled
D. all the above
B As per Supreme Court judgement in BoI Finance Ltd vs The Custodian, such transaction will not be invalidated but RBI can initiate
prosecution of the bank concerned.
Page 12 of 146
85 The liquid assets u/s 24 of Banking Regulation Act can be maintained by the bank in the form of:
A. cash in hand and bank balances only
B. cash in hand, bank balance and investment in gold or approved securities
C. cash in hand, bank balance and investment in gold only
D. cash in hand and investment in gold or approved securities only
B U/s 24 of Banking Regulation Act, the liquid assets i.e. SLR can be maintained as cash in hand, bank balance and investment in gold or
approved securities
86 Banking Regulation (Amendment) Act 2007 amended Section 24 (1) (2) of Banking Regulation Act. As a result :
A. the minimum SLR should be 25% of demand and time liabilities
B. the minimum SLR should be 25% of net demand and time liabilities
C. the minimum SLR should be 24% of net demand and time liabilities
D. the minimum SLR earlier fixed at 25% of net demand and time liabilities will be fixed by RBI
D Banking Regulation (Amendment) Act 2007 omitted Section 24 (1) (2) of Banking Regulation Act and thus provided that RBI can fix up
the SLR maximum up to 40% of net demand and time liabilities.
87 If penal interest is imposed by RBI for defaults in maintaining liquid assets (SLR):
A. RBI can waive the penal interest
B. RBI cannot waive the penal interest and has to recover
C. RBI can partly waive the penal interest
D. RBI has no option except to waive if the bank refuses to make the payment
A If RBI is satisfied, it can waive the penal interest imposed on a bank for non-compliance of maintaining SLR.
88 Which of the following does match:
A. there is no restriction on allowing loans and advances against its shares by a bank - false
B. a bank can lend to a firm in which its director is a partner - false
C. banks cannot grant loans to firms in which their directors are guarantors - true
D. none of the above
C Banks cannot grant loans on the security of their own shares. Further they also cannot lend to firms in which their directors are partners
or guarantors.
89 In the context of selective credit control, which of the following is correct:
A. RBI can specify the purpose for which advances may be or may not be granted.
B. RBI can give the direction to banks in general and not to a particular bank
C. RBI can give the direction in the interest of banking policy and for no other matter
D. none of the above
A RBI can specify the purpose of advance, it can give direction in general to all banks and to a particular bank also and direction can be
given in public interest or in the interest of banking policy.
90 In case of nomination for deposit accounts, the nominee can obtain payment of deposit:
A. before maturity in case of term deposit
B. during the life time of depositor,
C. even when there is direction from court to the contrary
D. give discharge on FDR for raising a loan after death of the account holder
A The nominee can obtain payment of FDR before maturity but cannot give discharge for obtaining loan. If there is a court order, payment
to be made as per court order only. Further, during the life time of account holder, he has no rights.
91 When articles lying in safe custody of the bank, are handed over to the nominee after death of the account holders:
A. the bank gets valid discharge
B. the bank gets valid discharge only if it is with consent of the legal heirs
C. the bank gets valid discharge when no dispute is raised by the legal heirs
D. the bank get valid discharge only if there is a court direction to that effect.
A The bank gets valid discharge only when the articles are handed over to nominee after death of the account holder.
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92 Which of the following provision does match in the context of nomination :
A. for deposit accounts - Section 45ZA of Banking Regulation Act
B. for safe custody of articles accounts - Section 45ZE of Banking Regulation Act
C. for safe deposit vault (locker) accounts - Section 45ZC of Banking Regulation Act
D. all the above match
A Section 45ZA relates to nomination in case of deposits, 45ZC to safe deposit of articles and 45ZE to safety lockers.
93 Which of the following tools are not used by RBI under selective credit control directives:
A. minimum margin for lending
B. ceiling on the level of credit
C. minimum rate of interest on advances to select commodities
D. none of the above
D All these tools are used by RBI to enforce selective credit control i.e. to effect the quantum and cost of credit.
94 Section 20 A of Banking Regulation Act provides that:
A. banks cannot grant loans on the security of their own shares
B. banks can write off the loans in the name of directors of banks with prior permission of RBI
C. banks cannot lend on the security of partly paid shares
D. banks cannot lend on the security of shares of private companies.
B As per section 20A of Banking Regulation Act, the banks cannot write off the loans given to directors of banks without permission of RBI.
95 Which of the following rates of interest on advances are fixed by banks themselves:
A. ceiling rate on loans to exporters
B. loans under DRI
C. bench mark prime lending rate
D. ceiling rate on loans up to Rs.2 lac in priority sector
C Ceiling rate on loans to exporter, loans under DRI and Ceiling rate on loans up to Rs.2 lac in priority sector are fixed by RBI. But BPLR
is fixed by the bank concerned.
96 U/s 25 (1) of Banking Regulation Act, banks submit to RBI a return relating to ___ within ___ from end of every quarter:
A. assets maintained in India, one month
B. assets and liabilities in India, two month
C. capital adequacy ratio, 15 days
D. position of NPA, one month
A Banks are required to maintain as assets in India being 75% of their demand and time liabilities and for that they have to submit a report
to RBI every quarter within one month.
97 If the last Friday is a holiday, the return u/s 25 (1) of Banking Regulation Act can be submitted to RBI relating to :
A. next day
B. previous day
C. next working day
D. preceding working day
D If last Friday for which the return is required to be submitted is a holiday, the return is to be submitted as on preceding working day.
98 RBI can carry inspection of banks by exercising powers u/s ___ of ____:
A. Section 21, Banking Regulation Act
B. Section 35, Banking Regulation Act
C. Section 21, Reserve Bank of India Act
D. Section 35, Reserve Bank of India Act
B RBI can conduct inspection of banks by exercising powers u/s 35 of Banking Regulation Act.
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99 If a bank makes appropriation from reserve fund created u/s 17 (1) of Banking Regulation Act, it has to report the matter to ____ within
____ of such appropriation:
A. RBI, 30 days
B. RBI, 21 days
C. SEBI, 21 days
D. RBI and Central Govt., 21 days
B If a bank makes appropriation from reserve fund created u/s 17 (1) of Banking Regulation Act, it has to report the matter to RBI within
21 days of such appropriation.
100 While taking a decision on the complaint filed by a customer, the Ombudsman :
A. follows the general guidelines issued by the govt., SEBI, RBI
B. takes into account the circumstances and frames its own rules
C. takes into account RBI directives
D. all the above
C As per Supreme Court judgement in Canara Bank vs PRN Upadhyaya, Ombudsman is to take into account the RBI directions.
101 The banking companies are required to prepare profit and loss account and balance sheet as at:
A. close of the calendar year
B. close of the financial year
C. close of the national year
D. last reporting Friday of March every year
B The banking companies are to prepare P&L account and balance sheet as on the last day of March every year, which is the last day of the
financial year.
102 Who has the powers to change the day for the purpose of preparation of profit and loss account and balance sheet:
A. Reserve Bank of India
B. Security & Exchange Board of India
C. Central Govt.
D. Institute of Chartered Accountants of India
C Central govt. through notification can change the day. It was changed from Dec 31 to Mar 31 in the year 1992.
103 The balance sheet and profit loss account of a banking company is required to be audited by:
A. chartered secretary
B. any person qualified under any law to be an auditor of the company
C. auditors of the banking company
D. certified financial analyst
B Bank balance sheet is required to be audited by any person qualified under any law to be an auditor of the company appointed as
statutory auditor by RBI.
104 A banking company is required to submit ___ copies of the balance sheet and profit and loss account to ___, in addition to RBI:
A. three, Registrar of Companies
B. two, Registrar of Companies
C. two, SEBI
D. three, Central govt.
A 3 copies are required to be submitted to Registrar of Companies.
105 When RBI conducts inspection of a bank, a copy of the inspection report:
A. should be given to the bank
B. is given to the bank on request of the bank
C. is given to the bank on direction of Central govt.
D. is not required to be given to the bank, being confidential matter
A A copy of the report is required to be given by RBI to the bank, without any request from the bank.
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106 The Board for Financial Supervision is constituted by:
A. Security & Exchange Board of India
B. Reserve Bank of India
C. Serious Frauds Office of India
D. Central Govt.
B The Board for Financial Supervision is constituted by RBI.
107 The Central govt. can prohibit a banking company to accept deposit from public u/s 35 (4) of Banking Regulation Act, if business of the
company is conducted:
A. by violation of RBI directives
B. at a loss
C. to the detriment of interest of depositors
D. not in compliance of the Act
C If a banking company conducts its business to the detriment of its depositors, the Central govt. can prohibit such company from accepting
deposit from public.
108 Which of the following statement, does not match:
A. banks have to prepare balance sheet and profit and loss account as on last Friday of March every year - False
B. 2 copies of such profit and loss account and balance sheet is required to be submitted to RBI - True
C. RBI can order special audit of a bank, with consent of the Central govt. - False
D. none of the above
C Balance sheet and profit and loss account is prepared as on last day of March every year and 3 copies are to be submitted to RBI. RBI
can order special audit as per its judgement and discretion without any permission of Central govt.
109 Which of the following statement is not a correct statement?
A. Central govt. can order RBI for inspection of a banking company
B. before publishing the inspection report of a bank, Central govt. has to give notice to the bank
C. Board for Financial Supervision is constituted by RBI
D. Foreign banks have to prepare profit and loss account and balance sheet in India, for the entire business they are transacting including the
business in India.
D Foreign banks are to prepare the balance sheet and profit and loss account for the business they are transacting in India only.
110 Where a banking company fails to comply with _____, Central Govt. may order to acquire such banking company:
A. directions of RBI u/s 21 and 35A of Banking Regulation Act
B. direction of Central Govt.
C. directions of SEBI
D. provisions of Companies Act
A Central govt. may order acquiring a banking company, if it is satisfied on the report of RBI that the banking company has failed to
comply RBI directions u/s 21 and 35A of Banking Regulation Act.
111 U/s 38 of Banking Regulation Act, who can apply to High Court for winding up of a banking company:
A. Central Govt.
B. Reserve Bank of India
C. Security & Exchange Board of India
D. Registrar of companies.
B RBI can make application to High court for winding up a banking company u/s 38 of Banking Regulation Act.
112 Which of the following can order winding up a banking company if satisfied that the banking company is unable to pay its debts:
A. High Court
B. RBI
C. Central Govt.
D. Registrar of companies
A High Court, on the basis of an application filed by RBI can order winding up of a banking company it is failing in paying its debts.
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113 If there is winding up proceeding against a banking company, the depositors of the banking company:
A. have to file the claims directly with the liquidator
B. have to file the claims through RBI
C. shall be deemed to have filed their claims
D. shall not be entitled to any claim
C If there is winding up proceeding against a banking company, the depositors of the banking company, shall be deemed to have filed their
claims.
114 Which of the following can order moratorium on a banking company:
A. Central Govt. on recommendations of RBI
B. RBI on recommendations of Central govt.
C. RBI on its own
D. Central govt. on its own
A RBI may apply to Central govt. for an order of moratorium in respect of a banking company.
115 If a banking company is acquired, this undertaking is vested in:
A. Reserve Bank of India or Central Govt.
B. Central Govt. only
C. Central govt., a company created by central govt. only
D. Central govt., a company created by central govt. or a corporation, as directed by central govt.
D The undertaking of an acquired bank is vested in the Central govt. or in any company or corporation as directed by the Central Govt.
116 In case of liquidation of a banking company, which of the following cannot be appointed a liquidator:
A. Reserve Bank
B. State Bank of India
C. any other person specified by RBI
D. none of the above
D The liquidator can be RBI, SBI or any other person specified by RBI.
117 If a false statement is made in a return or other document submitted by a bank under the provisions of Banking Regulation Act, it is
punishable with:
A. imprisonment only
B. fine only
C. fine and / or imprisonment
D. no punishment only a warning by RBI
C If a false statement is made in a return or other document submitted by a bank under the provisions of Banking Regulation Act, it is
punishable with imprisonment and/or fine.
118 A banking company has to prepare the balance sheet:
A. in the form prescribed by RBI
B. in the form prescribed by Central Govt.
C. in the form set out in the 3rd Schedule to the Banking Regulation Act
D. in the form prescribed by ICAI
C A banking company has to prepare its annual accounts in the form set out in 3rd Schedule to the Banking Regulation Act.
119 If under Section 30 (IB) of Banking Regulation Act, a special audit is conducted on the order of RBI, the expenses of such audit are
borne by:
A. Reserve Bank
B. Central Govt.
C. Bank concerned
D. sharing on a pro-rata basis
C If under Section 30 (IB) of Banking Regulation Act, a special audit is conducted on the order of RBI, the expenses of such audit are borne
by the bank concerned.
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120 The annual audit of a banking company, is to be carried by a person qualified to be auditor of a company, as per provisions of:
A. Section 29, Banking Regulation Act
B. Section 30, Banking Regulation Act
C. Section 29, Reserve Bank of India Act
D. Section 29, Companies Act
B The audit is to be carried u/s 30 of Banking Regulation Act
121 Which of the following is a correct statement:
A. RBI can publish the information collected from a banking company in public interest
B. RBI cannot publish the information collected from a banking company under provisions of Banking Regulation Act
C. RBI cannot publish the information obtained during inspection of a banking company
D. none of the above
A RBI can publish any information, it deems appropriate, in public interest, that it obtained from a banking company.
122 Which of the following statement is correct:
A. Board for Financial Supervision is constituted by SEBI for supervision of mutual funds & companies.
B. Board for Financial Supervision is constituted by RBI for supervision of banks and FIs.
C. Board for Financial Supervision is constituted by Central govt. for supervision of public sector undertakings.
D. none of the above
B The Board for Financial Supervision is constituted by RBI for supervision of banks and FIs.
123 What are the provisions of section 31 of Banking Regulation Act regarding balance sheet and profit and loss account of a banking
company:
A. these are required to audited
B. these are required to be prepared as on March 31 every year
C. these are required to be published in a news paper within 6 months
D. all the above
C As per Sec 31 of Banking Regulation Act, the banking company has to publish its balance sheet and profit and loss account within 6
months from the date to which it relate, in a newspaper in circulation at the place where the principal office is located.
124 The banks, whose shares are listed on stock exchange, are required to publish their un-audited results in news papers on a ____ basis, as
per ___ requirement:
A. half-yearly, RBI
B. quarterly, SEBI
C. half-yearly, SEBI
D. quarterly, RBI
B As per SEBI listing requirement, the banks having their shares listed on a stock exchange have to publish their un-audited quarterly
results in a news paper.
125 The banking company is required to submit to RBI 3 copies of its audited balance sheet within ___ and this period can be extended by
RBI for ____.
A. 3 months, 2 month
B. 2 months, 1 month
C. 2 months, 2 months
D. 3 months, 3 months
D The period is 3 months and can be extended by RBI for not exceeding 3 months.
126 Foreign Banks are required to display in their principal office, a copy of the last audited balance sheet not later than:
A. the first Monday in August
B. the last day of June
C. the last Friday of June
D. the last Friday of July
A Foreign banks have to display in their principal office, a copy of the last audited balance sheet not later than the first Monday in August
of any year in which it carries on business.
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127 The special audit ordered by RBI can be in respect of:
A. a transaction
B. a class of transactions
C. a period of transactions
D. any of the above
D The special audit ordered by RBI can be in respect of a transaction, class of transactions or a period of transactions, as deemed
appropriate by RBI.
128 U/s 27 of Banking Regulation Act, which of the following statement is required to be submitted by a banking company, to RBI:
A. monthly return on liquid assets i.e. SLR, as on close of the last Friday of previous month
B. monthly return on cash balances i.e. CRR, as on close of the last Friday of previous month
C. monthly return on assets and liabilities in India as on close of the last Friday of previous month
D. quarterly return on assets in India as on close of the last Friday of previous quarter
C U/s 27 of Banking Regulation Act, a banking company is required to be submitted to RBI monthly return on assets and liabilities in India
as on close of the last Friday of previous month.
129 The banking companies are required to preserve records of various transaction for a period prescribed by ___ u/s ___ of Banking
Regulation Act:
A. Central Govt., 45Y
B. Central Govt., 45Z
C. RBI, 45Y
D. RBI, 45Z
A Central govt. is empowered to prescribe the period for preservation of various types of records u/s 45Y.
130 A bank has the authority to _____, u/s 45Z of Banking Regulation Act:
A. return paid instruments after expiry of prescribed period of preservation
B. return paid instruments even before the expiry of prescribed period of preservation
C. allow nomination facilities to the customer for deposit accounts
D. allow nomination facilities to customer for locker and safe custody of articles accounts
B U/s 45Z of Banking Regulation Act, the banks are authorised to return paid instruments to their customers even before the end of the
specified period of preservation of record.
131 U/s 35 of Banking Regulation Act, the inspecting officer, can :
A. obtain statements or information relating to affairs of the banking company
B. examine a director of the banking company on oath
C. examine an officer of the banking company on oath
D. all the above
D The inspecting official for the purpose of inspection can obtain statements or information and may examine a director or an officer of the
banking company, on oath.
132 Which of the following is not correct regarding scrutiny of a bank, by RBI:
A. it can be conducted u/s 35 (1A) of Banking Regulation Act
B. the copy of the report can be given to the bank, if requested by the bank
C. RBI, otherwise, is under obligation to give copy of the report to the bank
D. scrutiny can be carried by one or more officers of RBI
C A copy of the scrutiny report can be given to the banking company, if requested by the banking company. Otherwise, RBI is not under
obligation to give copy of the report.
133 Which of the following is not correct regarding the Board for Financial Supervision:
A. the board is to meet at least once in a month
B. Governor RBI is Chairperson of the Board
C. Quorum for the meeting is three members
D. none of the above
D Board for Financial Supervision of RBI has Governor as the Chairperson. It has to meet at least once in a month. The quorum for the
meeting is 3 members.
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134 If a banking company is acquired by the Govt., the compensation to shareholders is determined:
A. as per amount approved by SEBI
B. as per decision of the Registrar of Companies
C. as per Schedule 5 of B R Act
D. as per decision taken by the Govt. being a fair amount of compensation.
C The compensation to shareholders is determined as per Schedule 5 of Banking Regulation Act
135 If ___ wants the amalgamation of two banking companies, it can pass an order to that affect, under___:
A. Govt., Section 39 Banking Regulation Act
B. RBI, Section 66 of Companies Act
C. Govt., Section 396 of Companies Act
D. Govt., Section 44 of Reserve Bank of India Act
C In consultation with RBI, Govt. can order amalgamation of two banking companies u/s 396 of Companies Act.
136 Section 36AE of Banking Regulation Act deals with which of the following aspects:
A. order by Govt. for amalgamation of two banks
B. acquiring of a banking undertaking by the Govt.
C. imposing moratorium on a bank
D. merger of one bank with another bank in the interest of depositors
B U/s 36AE the Central Govt. can acquire the undertaking of banking company in certain cases.
137 If a bank is acquired and a scheme is framed by the Central govt. in consultation with RBI, such scheme is binding on:
A. the Govt.
B. the acquired bank
C. the creditors and depositors
D. all the above
D If a scheme is prepared by the Central govt. u/s 36AF, in consultation with RBI it is binding on the Govt., the acquired bank, the
creditors, the depositors and all other persons having any rights or liabilities in respect of the acquired bank.
138 If on recommendations of RBI, a moratorium is imposed on a bank by the Govt., the total period of such moratorium can be extended by
govt. but not exceeding:
A. 12 months
B. 9 months
C. 6 months
D. 3 months
C If on recommendations of RBI, a moratorium is imposed on a bank by the Govt., the total period of such moratorium can be extended by
govt. but not exceeding 6 months.
139 The scheme of amalgamation or merger of a bank, during the moratorium period is prepared by:
A. the acquired bank
B. the transferee bank
C. RBI
D. Central Govt.
C The scheme of amalgamation or merger of a bank, during the moratorium period is prepared by RBI.
140 RBI can apply to High Court, the winding up of a banking company in which of the following circumstances:
A. if banks has failed to maintain minimum paid up capital and reserves
B. if bank is not entitled to carry on banking business in India u/s 22 of Banking Regulation Act
C. prohibition to accept fresh deposits u/s 35(4) of Banking Regulation Act
D. any of the above
D RBI can apply to High Court, the winding up of a banking company in all the above circumstances.
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141 In case of winding up proceedings against a banking company, the liquidator has to make preferential payments u/s 43A of Banking
Regulation Act. The order of such payment shall be (which one is correct):
A. saving bank depositors up to Rs.250 - 2nd preference
B. other depositors up to Rs.250 - 1st preference
C. creditors as per Section 530 of Companies Act - 3rd preference
D. none of the above
A The preference will be to creditors as per Section 530 of Companies Act, then the saving bank depositors up to Rs.250 and then other
depositors up to Rs.250.
142 Voluntary winding up is ordered by High Court only when ____ certifies that the bank will be able to pay in full all its debts as they
accrue:
A. High Court
B. Bank concerned
C. liquidator
D. RBI
D No voluntary winding up is permissible unless RBI certifies that the bank will be able to pay its debts as they accrue.
143 If a bank fails to produce any book or documents which is obligatory during the course of inspection u/s 35 of Banking Regulation Act,
by RBI, the punishment is:
A. fine up to Rs.5000 and imprisonment up to 1 month
B. fine up to Rs.2000 and no imprisonment
C. fine up to Rs.5000 and no imprisonment
D. fine up to Rs.2000 and imprisonment up to 1 month
B There is provision for fine only up to Rs.2000.
144 If a bank is prohibited to accept deposits by RBI u/s 35 (4) of Banking Regulation Act but it accepts deposits, there is provision for:
A. fine up to Rs.1000 per day
B. fine up to Rs.2000 per day
C. fine up to equal the amount of deposit accepted
D. fine up to twice the amount of deposit accepted
D There is provision for fine up to twice the amount of deposit accepted.
145 If there is a default or contravention by a bank (for example non-reporting of Frauds), RBI can impose penalty ___ of Banking
Regulation Act:
A. Section 47 A,
B. Section 46 A
C. Section 46-B
D. Section 39 AC
A Such penalty can be imposed by exercising powers u/s 47 A of Banking Regulation Act.
146 State Bank of India has been constituted as a :
A. body corporate under SBI Act
B. banking company under SBI Act
C. society under SBI Act
D. public sector bank
A SBI has been incorporated as a body corporate under SBI Act 1955.
147 Which of the following appoints Chairman of State Bank of India:
A. Reserve Bank
B. RBI Governor
C. Central Govt.
D. Central Board of SBI
C SBI Chairman is appointed by Central Govt. He is also Chairman of SBI Associate Banks.
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148 SBI conducts business for Central Govt. like collection of taxes, payment of pensions etc. and also other business entrusted by RBI:
A. as agent of Central Govt.
B. as agent of RBI
C. as a banker to Central govt.
D. in all the above capacities
B Right to conduct govt. business is vested with RBI. SBI and other banks conduct govt. business as agents of RBI.
149 As per section 51 of____ , the provisions of Banking Regulation Act are applicable to SBI:
A. Companies Act
B. Banking Regulation Act
C. Reserve Bank of India Act
D. Negotiable Instrument Act
B The provisions of Banking Regulation Act 1949 are applicable to SBI u/s 51 of Banking Regulation Act.
150 The major portion of shares of associate banks of SBI, is held by:
A. RBI
B. Central Govt.
C. SBI
D. public
C SBI holds the major portion of shares of associate banks.
151 The major portion of shares of Regional Rural Banks is held by:
A. Central Govt.
B. sponsor bank
C. state govt.
D. NABARD
A 50% of shareholding of RRBs is held by Central govt. The balance 35% is held by sponsor banks and 15% by the State govt.
152 The area of operation of RRBs is restricted to:
A. one state
B. one district
C. notified area
D. no restriction
C The area of operations of RRBs is restricted to the notified area.
153 The RRBs are managed by:
A. the Central Govt.
B. their Board of Directors
C. the Board of Directors of the sponsor banks
D. the State govt.
B RRBs have their own Board of Directors. But sponsor banks provide major support in management of affairs of RRBs.
154 Which of the following statement does not match:
A. RRBs are not required to maintain CRR - false
B. State Bank associate banks are not to maintain SLR - false
C. SBI can make regulations for carrying out the purposes of SBI Act in consultation with RBI and with prior approval of Central Govt. - True
D. Central govt. cannot give directions to SBI in the matter of policy relating to public interest - True
D Central govt. can give directions to SBI in the matter of policy relating to public interest.
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155 The management of nationalized banks is governed by:
A. Banking Regulation Act
B. Banking Companies (Acquisition and Transfer of undertakings) Act 1970 & 1980
C. Nationalized Banks (Management and Misc. provisions) Scheme 1970, 1980
D. Companies Act 1956
C The management of nationalized banks is governed by Nationalized Banks (Management and Misc. provisions) Scheme 1970, 1980
156 In the Banking Regulation Act, a reference to a banking company is considered a reference to a ____ also, unless the context otherwise
requires:
A. body corporate
B. banking company
C. cooperative bank
D. none of the above
C In the Banking Regulation Act, a reference to a banking company is considered, a reference to a cooperative bank also, unless the context
otherwise provides.
157 What is the amount of minimum paid up capital and reserves for commencement or carrying on business as a cooperative bank:
A. Rs.1 lac
B. Rs.5 lac
C. Rs.20 lac
D. Rs.100 lac
A The amount of minimum paid up capital and reserves is Rs.1 lac.
158 Section 19 of Banking Regulation Act provides for restrictions on the cooperative banks in ____ in other cooperative societies:
A. acquiring interest
B. placing deposit
C. holding of shares
D. all the above
C As per Section 19 of Banking Regulation Act, there are certain restrictions on cooperative banks in holding of shares of other cooperative
societies.
159 U/s 31 of Banking Regulation Act, the state cooperative banks and central cooperative banks are required to submit returns to:
A. NABARD only
B. RBI only
C. RBI and NABARD
D. RBI, NABARD and Central/State Govt.
C U/s 31 of Banking Regulation Act, the state cooperative banks and central cooperative banks are required to submit returns to RBI as
well as NABARD.
160 The cooperative banks have to prepare their balance sheet and profit and loss account, as per the format prescribed in:
A. 2nd schedule of Reserve Bank of India Act
B. 3rd Schedule of Banking Regulation Act
C. concerned Act, under which the cooperative bank has been incorporated.
D. RBI directions
B The cooperative banks also prepare their balance sheet and profit and loss account, as per the format prescribed in 3rd Schedule of
Banking Regulation Act.
161 Banking Regulation Act was made applicable to cooperative banks by enacting:
A. Banking Laws (Application to Cooperative Societies) Act 1965
B. Banking Regulation (Application to Cooperative Societies) Act 1965
C. Banking Laws (Application to Cooperative Banks) Act 1965
D. Banking Laws (Cooperative Societies) Act 1965
A Banking Regulation Act was made applicable to cooperative banks by enacting Banking Laws (Application to Cooperative Societies) Act
1965.
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162 Which of the following statement is correct:
A. primary cooperative banks do not require licence from RBI.
B. provisions of Banking Regulation Act are not applicable on cooperative banks
C. a cooperative bank can be a primary coop bank, a state coop bank or a central coop bank
D. none of the above
C Primary coop banks also require licence from RBI and provisions of Banking Regulation Act are also applicable to cooperative banks.
Besides, a cooperative bank can be a primary coop bank, a state coop bank or a central coop bank.
163 A scheduled cooperative bank has to maintain cash reserve (CRR):
A. as per Section 24 of Banking Regulation Act
B. as per requirement of Societies Registration Act
C. as per Section 42 of Reserve Bank of India Act
D. as per rules framed by State govt. concerned.
C The scheduled cooperative banks have also to maintain CRR as per Section 42 of Reserve Bank of India Act.
164 State Bank and nationalized banks act as agents of RBI for:
A. carrying out transactions in govt. business only
B. payment of pensions only
C. collection of taxes only
D. transacting govt. business and other business entrusted by RBI
D State Bank and nationalized banks act as agents of RBI for transacting govt. business and other business entrusted by RBI.
165 Which of the following is ex-officio Chairman of associate banks of SBI:
A. Chairman of SBI
B. Governor RBI
C. Managing Director of SBI
D. Chairman appointed by Board of Directors of the concerned associate bank
A Chairman of SBI is also ex-officio Chairman of associate banks of SBI
166 Who can be an auditor of a nationalized bank:
A. any person approved by RBI.
B. any person approved by ICAI
C. a person qualified to be an auditor of a company under Companies Act.
D. any of the above
C A person qualified to be an auditor of a company under Companies Act, can be an auditor of nationalized bank.
167 Public sector banks are represented by which of the following group:
A. SBI, nationalized banks, other domestic banks
B. Nationalized banks, SBI & associate banks, RRBs
C. Nationalized banks, SBI & associate banks, foreign banks
D. All domestic Banks, SBI & associate banks, RRBs
B Public sector banks include SBI and associate banks, nationalized banks and RRBs.
168 SBI was constituted by taking over the undertaking of:
A. Imperial Bank
B. Bengal Bank Limited only
C. Presidency banks
D. all the above
A SBI was constituted by taking over the undertaking of Imperial Bank.
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169 Other than Central Govt. no other shareholders can exercise more than __% of the voting rights in SBI:
A. 1%
B. 2%
C. 5%
D. 10%
D Other than Central Govt. no other shareholders can exercise more than 10% of the voting rights in SBI.
170 SBI can carry which of the following types of business:
A. as an agent of RBI
B. business of banking u/s 5 (b) of Banking Regulation Act
C. other business as specified u/s 6 (1) of Banking Regulation Act
D. all the above
D SBI can carry all the above types of business.
171 State Bank of India can sell the shares of associate banks but such sale should not result in reduction of SBI shareholding below __ % of
the issued capital:
A. 74%
B. 51%
C. 50%
D. 33%
C State Bank of India can sell the shares of associate banks but such sale should not result in reduction of SBI shareholding below 50 % of
the issued capital:
172 State Bank of India can remove the managing director of its associate banks after giving an opportunity to show cause with approval of:
A. SEBI
B. RBI
C. Central govt.
D. all the above
B State Bank of India can remove the managing director of its associate banks after given an opportunity to show cause with approval of
RBI.
173 Audit of SBI associate banks is to be carried by auditors qualified to be appointed as auditors of a company as per provisions of
Companies Act and appointed by:
A. SEBI
B. Registrar of Companies
C. RBI
D. SBI in consultation with RBI
D Audit of SBI associate banks is to be carried by auditors qualified to be appointed as auditors of a company as per provisions of
Companies Act and appointed by SBI in consultation with RBI.
174 The share capital of RRBs is held by : (which one does match)
A. Sponsor Banks - 50%
B. Central Govt. - 35%
C. State Govt. - 15%
D. none of the above
C Share capital is held by Central Govt., sponsor banks and State govt. in the ratio of 50:35:15.
175 RRBs can carry which of the following types of business:
A. as an agent of sponsor bank only
B. business of banking u/s 5 (b) of Banking Regulation Act only
C. other business as specified u/s 6 (1) of Banking Regulation Act only
D. b and c both
D RRBs can conduct business of banking u/s 5(b) and other business specified u/s 6 (1) of Banking Regulation Act.
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176 Who can audit the accounts of RRBs.
A. a person approved by ICAI
B. any persons approved by RBI
C. any persons approved by sponsor bank
D. a person qualified to be appointed as auditor of a company as per provisions of Companies Act.
D Audit of RRBs can be conducted by a person qualified to be appointed as auditor of a company as per provisions of Companies Act
177 Nationalized banks can raise capital in which of the following forms, as per provisions of Banking Companies (Acquisition and Transfer
of Undertaking) and FI Laws (Amendment) Act 2006:
A. by way of a public issue
B. by way of preferential allotment
C. by way of private placement
D. any of the above
D The capital can be raised by these banks by issuing equity or preference shares by way of a public issue or preferential allotment or
private placement.
178 In the capital of nationalized banks, the share of the Central govt. should not be less than:
A. 74%
B. 67%
C. 51%
D. 49%
C Central govt. should hold at least 51% of paid up capital of the nationalized banks.
179 In case of nationalized banks, a preference share holder can exercise, maximum ___ of the total voting rights:
A. 1%
B. 2%
C. 5%
D. 10%
A The maximum extent is 1% of total voting rights.
180 What is not correct regarding the directors of a nationalized bank:
A. whole time directors can be maximum - 4
B. central govt. official as director - 1
C. directors representing staff members including officers - 1
D. total no. of directors - 15
C There can be one director each, representing staff and officers.
181 A nationalized bank is required to hold annual general meeting within ____ of the date of forwarding the balance sheet etc. to the
central govt.
A. 3 weeks
B. 6 weeks
C. 2 months
D. 3 months
B A nationalized bank is required to hold annual general meeting within 6 weeks of the date of forwarding the balance sheet etc. to the
central govt.
182 The authorised share capital of a nationalized bank can be maximum:
A. Rs.2500 cr
B. Rs.2000 cr
C. Rs.1500 cr
D. Rs.500 cr
C As a result of Amendment Acts of 1994 and 1995, the authorised capital can be up to Rs.1500 cr divided into shares of Rs.10 each.
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183 Which of the following statement regarding, cooperative banks is not correct:
A. if a cooperative bank operates in one state, State laws are applicable
B. if a cooperative bank operates in more than one state, Central laws are applicable
C. the business of banking of cooperative banks is regulated by Banking Regulation Act
D. a primary agricultural credit society is also regulated by Banking Regulation Act
D A primary agricultural credit society is not regulated by Banking Regulation Act.
184 Which of the following types of cooperative societies are exempted from using the word bank, banker or banking, as part of their name:
A. a primary credit society
B. a coop society formed for the protection of the mutual interest of coop banks
C. a coop society other than a primary credit society formed by employees of the State Bank, associated banks, nationalized bank.
D. all the above
D All the above types of cooperative societies are not to use the words bank, banker or banking as part of their name.
185 Which of the following restrictions is not applicable to cooperative banks in respect of loans and advances:
A. cannot be granted on the security of their own shares
B. loans cannot be granted to any of its directors
C. loans cannot be granted to firms or private companies in which any of its directors are partners or guarantors or managing agents.
D. none of the above
D All the above restrictions are u/s 20 of Banking Regulation Act and cooperative banks have to follow these restrictions.
186 A coop society to function as a bank, obtains licence from:
A. NABARD
B. RBI
C. Concerned State Govt. if operation is in one State
D. Central govt. whether operation is in one state or more than one state
B A coop bank requires licence from RBI u/s 22 of B R Act, like other banks.
187 Opening of temporary branches by coop banks for the purpose of exhibitions, conferences, mela etc. up to a period of ___ does not
require RBI permission:
A. 15 days
B. one month
C. 3 months
D. 6 months
B Opening of temporary branches by coop banks for the purpose of exhibitions, conferences, mela etc. up to a period of one month does not
require RBI permission:
188 For opening branches by cooperative banks, the application to RBI is required to be routed through:
A. State govt.
B. Central Govt.
C. SLBC of the concerned State
D. NABARD
D For opening branches by cooperative banks, the application to RBI is required to be routed through NABARD.
189 Cooperative banks have to file return regarding cash balances and liquid assets with:
A. RBI only
B. NABARD only
C. RBI, NABARD and concerned State Govt.
D. RBI and NABARD
D Cooperative banks have to file returns relating to CRR and SLR to RBI under copy to NABARD.
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190 A state cooperative bank has to submit copy of audited balance sheet to:
A. RBI only
B. NABARD only
C. RBI, NABARD and concerned State Govt.
D. RBI and NABARD
D Given answer is correct. No explanation is required.
191 Which out of the following is not correct regarding submission of copy of audited balance sheet by a cooperative bank :
A. it is submitted to RBI and NABARD
B. it is to be submitted within 3 months
C. three copies are required to be submitted
D. none of the above
B The balance sheet and profit and loss account are required to submitted within 6 months and not 3 months.
192 Winding up of a coop bank may be sought by RBI in which of the following situations:
A. bank has not been fulfilling the requirement of minimum paid up capital and reserves
B. bank is not entitled to carry on banking business in India u/s 22 of Banking Regulation Act
C. bank has been prohibited by RBI u/s 35 (4) of B R Act, to accept further deposits.
D. in any of the above circumstances
D Under any of the given situations, RBI may seek winding up of a coop bank.
193 A coop banks is deemed to be unable to pay its debtors if it refused to meet any lawful demand made at any of its branches within ___
days, where RBI office is located:
A. same day
B. two working days
C. three working days
D. five working days
B A coop banks is deemed to be unable to pay its debtors if it refused to meet any lawful demand made at any of its branches within 2 days,
where RBI office is located and within 5 days, where RBI office is not located.
194 A coop banks is deemed to be unable to pay its debtors if it refused to meet any lawful demand made at any of its branches within ___
days, where RBI office is not located:
A. same day
B. two working days
C. three working days
D. five working days
D A coop banks is deemed to be unable to pay its debtors if it refused to meet any lawful demand made at any of its branches within 2 days,
where RBI office is located and within 5 days, where RBI office is not located.
195 If a cooperative bank wants insurance of its deposits with DICGC:
A. it has to get itself registered with DICGC
B. it has not be make any formal request to DICGC. Being a bank, insurance cover is automatically available
C. it has to get registration with DICGC with recommendations from RBI
D. it has to get registration with DICGC with recommendations from NABARD
A If a cooperative bank wants insuring of its deposits with DICGC, it has to get itself registered with DICGC.
196 The bank is under obligation to make payment of cheques issued by the customer under:
A. Section 10 of NI Act
B. Section 11 of Indian Contract Act
C. Section 31 of NI Act
D. Section 31 of Reserve Bank of India Act
C Duty to make payment of cheques issued by customers is as per Section 31 of NI Act. If bank fails to make the payment, despite fulfillment
of conditions by the customer, bank is liable for the loss to the customer.
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197 Bankers obligation to make payment of cheques, is on account of the fact that:
A. banker customer relationship is that of debtor and creditor
B. bank gives undertaking in writing to each customer that bank will make the payment of the cheques
C. customer obtains in writing from the bank that bank will make payment of the cheques
D. there is implied contract between the bank and the customer.
A Banker obligation to make payment of cheques, is on account of the fact that banker customer relationship is that of debtor and creditor.
198 Under which of the following, a protection is not available to the paying bank:
A. Section 10 of NI Act
B. Section 85 of NI Act
C. Section 89 of NI Act
D. Section 131 of NI Act
D U/s 131, the protection is available to the collecting bank against conversion and not to the paying bank. In other sections, the protection
is available to the paying bank.
199 Which of the following, relating to protection, does not match:
A. Section 10 NI Act - payment in due course
B. Section 85 (1) NI Act - payment of an endorsed cheque payable to order
C. Section 85A NI Act - payment of an endorsed demand draft payable to order
D. Section 89 NI Act - payment of bearer cheque
D U/s 89, NI Act, the protection is available to the paying bank in case of materially altered cheque.
200 If a bank makes payment of a crossed cheque it gets protection u/s ___, if the payment is otherwise in order:
A. Section 131 NI Act
B. Section 128 NI Act
C. Section 124 NI Act
D. Section 106 NI Act
B Section 131 deals with protection to collecting bank and section 124 or 106 do not deal with the protections. Section 128 provides
protection to the paying bank, if payment of a crossed cheque is made which otherwise in order.
201 Section 31 of NI Act i.e. banker obligation to make payment of cheque applies to:
A. customer only
B. bank only
C. bank and customer both,
D. neither bank nor customer.
B Section 31 of NI Act imposes duty on the bank to make payment of cheques issued by the customer, provided conditions such as sufficient
balance, funds properly available for payment of the cheque etc., are satisfied by the customers.
202 Bank is under obligation to pay cheque u/s 31 NI Act, if the funds are properly available. Which of the following circumstances are
treated as funds available to pay the cheque:
A. the banker has not exercised its right of set off for amount due from customer
B. there is no order from court or any other lawful authority restraining the bank from making payment
C. both the above
D. only (b) above
C The funds are treated to be available if both the conditions at (a) and (b) are satisfied.
203 U/s 31 of NI Act, the banker is under obligation to pay when duly required to do so, which means that:
A. cheque should be properly drawn, only
B. cheque should be signed by the drawer (customer) only
C. cheque can be signed by agent of drawer only
D. all / any of the above
D Both the above conditions should be satisfied i.e. cheque should be properly drawn and also the cheque should be signed by the customer
or his agent.
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204 If a bank refuses to make payment of a cheque wrongfully, the bank is liable to compensate the ___, in case he suffers any loss:
A. holder
B. payee
C. endorsee
D. drawer
D If the cheque is dishonoured wrongfully, the bank is liable to compensate the drawer (and no one else) for loss if any.
205 If bank makes payment of a cheque disregarding crossing by the drawer, the bank is liable to:
A. true owner only
B. payee only
C. endorsee only
D. drawer only
A Where the bank makes payment of a cheque disregarding crossing by the drawer, the bank is liable to the person who has suffered loss
i.e. the true owner (payee or endorsee) of the cheque and not the drawer.
206 If a bank is wound up, what type of right, the payee of a cheque, has?
A. payee has no claim against the bank
B. payee has a claim against the drawer only
C. payee has a claim as a creditor of the bank
D. payee can either recover the amount from the bank or from the drawer.
C The payee of a cheque is deemed to be creditor of the bank in case of failure of a bank before obtaining the payment and he has a claim on
the bank.
207 Section 10 of NI Act deals with which of the following aspects:
A. obligation of the bank to make payment of a cheque
B. payment in due course
C. protection to the paying bank for making payment of a bearer cheque
D. protection to the collecting bank for collecting a cheque for a customer
B Section 10 deals with the payment in due course.
208 To treat a payment as a payment in due course which of the following conditions need not be satisfied:
A. payment as per apparent tenor of the cheque
B. in good faith and without negligence
C. payment must be made to a customer
D. payment to the person in possession of the instrument
C There is no such condition that payment should be made to a customer. Compliance of other conditions is essential.
209 Protection is available to bank u/s ___ of NI Act, for making payment of a cheque, which is materially altered, if the alteration is not
apparent:
A. Section 10
B. Section 85
C. Section 89
D. Section 128
C It is Section 89 of NI Act which provides protection.
210 If a signature of a drawer are forged on a cheque and are similar to the signatures on record:
A. the bank cannot debit the account of the customer and if account is debited, bank is liable
B. the bank cannot debit the account but if the forgery is in the knowledge of the customer, bank is not liable
C. the bank is liable for forgery, even if the payment of the cheque has not been made
D. the bank is not liable if the forgery is done in connivance with the drawer
A A forged cheque is not a mandate of the customer. Hence bank cannot debit the account of the customer. If account is debited, the debited
amount has to be restored by the bank. (Supreme Court judgement in Canara Bank vs Canara Sales Corpn and others).
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211 In a joint account of X and Y, a cheque is presented in clearing and paid. Later on it is found that signatures of X are genuine but that of
Y are forged.
A. the bank cannot debit the account of the customer. Hence the bank is liable
B. the bank cannot debit the account but if the forgery is in the knowledge of the customer, bank is not liable
C. the bank is liable for forgery, even if the payment of the cheque has not been made
D. the bank is not liable if the forgery is done in connivance with the drawer
A A forged cheque is not a mandate of the customer. Hence bank cannot debit the account of the customer. If account is debited, the debited
amount has to be restored by the bank. (Supreme Court judgement in Bihta coop Development and Cane Marketing Union vs Bank of
Bihar).
212 The payment of a materially altered cheque was made by the bank and alteration was not visible despite reasonable care in passing the
cheque. Later on when customer raised a dispute and insisted for examination of the cheque through ultra-violet lamp, it was found that
the cheque was materially altered. Under the circumstances:
A. the bank is liable for the negligence
B. the bank is liable for making payment of a materially altered cheque
C. the bank is liable for not taking adequate precautions and having shown negligence in not using the ultra violet lamp
D. the bank took reasonable care and not liable.
D Using advance technology including ultra-violet lamp is not an obligation when reasonable care is otherwise exercised. Hence bank is not
liable as per Supreme Court judgement in Bank of Maharashtra vs Automotive Engg. Co.
213 A customer lost his cheque book, but he could not inform the bank about loss of cheque book:
A. customer is negligent and cannot claim damages from the bank, if there is loss to the customer due to negligence of the bank
B. If cheque leave is misused, by forgery, the bank shall not be liable
C. customer should inform the bank as it is his duty to do so.
D. none of the above
D The customer has no duty to inform the bank and if there is any loss to the customer due to action of a bank on such cheque such as due to
forgery, the bank shall be liable.
214 A collecting bank gets protection for collecting a cheque, subject to certain conditions, u/s ___ of ____:
A. 131, NI Act
B. 31, NI Act
C. 31, RBI Act
D. 131A, NI Act
A Protection to collecting bank is available against conversion, in the process of collection of a cheque u/s 131 of NI Act and for collection of
DD u/s 131A of NI Act.
215 A collecting bank gets protection for collecting a demand draft subject to certain conditions, u/s ___ of ____:
A. 131, NI Act
B. 31, NI Act
C. 31, RBI Act
D. 131A, NI Act
D Protection to collecting bank is available against conversion, in the process of collection of a cheque u/s 131 of NI Act and for collection of
DD u/s 131A of NI Act.
216 If a bank collects a cheque for a customer, which actually does not belong to him, it is called:
A. material alteration
B. forgery
C. fraud
D. conversion
D Dealing with the property of 3rd parties unauthorisedly, is called conversion. Hence if a bank collects a cheque for a customer, which
actually does not belong to him, it is called conversion. Such offence is punishable.
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217 Which of the following conditions is an essential condition for getting protection against conversion by a bank:
A. collection is for a customer
B. collection is of a crossed cheque
C. collection is in good faith and without negligence
D. collection should be of an order cheque only
D To get protection, the conditions at (a), (b) and (c) only, are mandatory.
218 If a bank has collected a cheque in a newly opened account after complying with KYC guidelines, but the first deposit was not in cash
and conversion takes place in the account:
A. the bank shall still get the protection in case of conversion
B. the bank shall not get the protection in case of conversion
C. the bank shall get the protection in case of conversion if the amount of cheque is nominal
D. the bank shall not get the protection in case of conversion if the amount of cheque is large
A If an account has been opened after complying with KYC requirement and first deposit is not in the form of cash, it does not affect rights
of the bank to get protection, in case of conversion.
219 A bank receives a cheque from its customer for collection which he had not crossed. Bank collects the cheques by putting its own stamp
for the purpose of collection. Later on it turned out to be a case of conversion:
A. the bank shall not get the protection
B. the bank shall get the protection as crossing is not an essential condition
C. the bank shall get the protection since at the time of collection, the cheque was specially crossed
D. the bank shall get protection, if the cheque was a bearer cheque.
C One of the condition for protection against conversion, is that the cheque should be crossed, generally or specially. By putting the stamp,
the bank has crossed the cheque specially. Hence, bank gets protection.
220 To show that the bank was not negligent for getting protection against conversion:
A. the customer has to prove that bank has not taken all precautions that are required of a prudent bank in collecting a cheque
B. the customer has to prove that bank was negligent in taking all precautions that are required of a prudent bank in collecting a cheque
C. the bank will have to prove that bank had taken all precautions that are required of a prudent bank in collecting a cheque
D. it will be assumed that the bank had taken all precautions that are required of a prudent bank in collecting a cheque
C To show that the bank was not negligent for getting protection against conversion, the bank will have to prove that bank had taken all
precautions that are required of a prudent bank in collecting a cheque
221 A bank branch, newly established in a locality, opened a saving bank account in the name of X, on the introduction of a municipal
councilor, who is not having an account. Later on conversion took place in the account:
A. bank is liable for the conversion for not obtaining information from an existing customer
B. bank is liable for conversion for not following appropriate procedure
C. bank is not liable if bank had verified the antecedents of municipal councilor
D. bank is liable if bank even if it verified the antecedents of municipal councilor
C Bank shall be protected against conversion, if bank had verified the antecedents of the introducer.
222 Under the current KYC norms, which of the following documents cannot be obtained for the purpose of identification of the customer:
A. letter from a recognised public authority
B. telephone bill
C. identity card issued by his employer to bank satisfaction
D. passport or PAN
B The documents to be used for identification include pass port, PAN card, Voter I-card, driving licence, I-Card issued by his employer to
bank satisfaction, letter from recognised public authority. Telephone bill is the document that can be taken for proof of residence.
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223 Under the current KYC norms, which of the following documents cannot be obtained for the purpose of verification of proof of
residence of the customer:
A. bank account statement
B. electricity bill
C. ration card
D. driving licence
D The documents include telephone bill, electricity bill, bank statement, ration card, letter from relative with whom the account holder
resides. The driving licence is used as a document for identification.
224 To get protection against conversion, the cheque or demand draft should be crossed as:
A. generally crossed
B. specially crossed
C. not-negotiable or account payee crossed
D. any of the above
D The condition regarding crossing is that the instrument should be crossed in any manner i.e. general crossing or special crossing or not-
negotiable or account payee crossing.
225 X appointed Y his agent and authorised Y that he can get cheques in X name collected through account of Y. Later on Y
misappropriated the amount of certain cheques:
A. the bank was negligent in accepting such instruction. Hence bank is liable
B. the bank did not take adequate precaution due to which bank is liable
C. bank is not liable, as there was express authority from the customer
D. despite express authority from customer, the bank is liable for conversion.
C Where the customer has given specific authority to the agent to use his own account for the transactions relating to the principal, the bank
gets protection, as account of the agent shall be treated to be account of the principal.
226 In which of the following situations, the collecting bank shall not be held liable for conversion:
A. cheque deposited by X in his personal account while it was drawn in his name in his official capacity
B. cheque of a large amount deposited by Y in his account although bank was aware about the poor financial position of Y
C. cheque in the name of partnership firm, deposited by one partner in his personal account
D. cheque in the name of a proprietorship firm, which were deposited by the proprietor in his individual account
D If a cheque in the name of a proprietorship firm is deposited by the proprietor in his personal account, it is deemed as same account.
Hence bank shall not be held liable for conversion.
227 The law relating to indemnities is laid down as per:
A. Section 131 and 133 of Negotiable Instrument Act
B. Section 121 and 122 of Indian Evidence Act
C. Section 124 and 125 of Indian Contract Act
D. Section 126 and 127 of Indian Contract Act
C The law relating to indemnities is laid down as per Section 124 and 125 of Indian Contract Act.
228 X entered into a contract with Y whereby X undertook to save Y from the loss caused to him by conduct of X or conduct of any other
person. Such contract is a contract of :
A. indemnity
B. guarantee
C. insurance
D. any of the above
A Where in a contract, one party promises to save the other party from loss caused to him by the conduct of promisor himself or the conduct
of any other person, it is called indemnity as per Section 124 of Indian Contract Act.
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229 Indemnity is defined u/s ___ of ____:
A. Section 126, Indian Contract Act
B. Section 125, Indian Contract Act
C. Section 124, Indian Contract Act
D. Section 126, Indian Evidence Act
C The definition of indemnity is found in Section 124, Indian Contract Act
230 Where a person promises to another, to save him from the loss caused due to conduct of promisor or the conduct of 3rd parties, such
person is called:
A. promisor
B. guarantor
C. indemnity holder
D. indemnifier
D The person who gives indemnity is called, indemnifier and the person who is indemnified is called indemnity holder.
231 If a person promises to another to save him from the loss caused due to conduct of promisor or the conduct of 3rd parties, the person to
whom promise is made, is called:
A. promisor
B. guarantor
C. indemnity holder
D. indemnifier
C The person who gives indemnity is called, indemnifier and the person who is indemnified is called indemnity holder.
232 A contract of insurance is an example of:
A. contract of guarantee
B. contract of indemnity
C. contract of guarantee or indemnity
D. none of the above
B A contract of insurance is an example of a contract of indemnity, wherein the insurance company promises to save the person against the
loss caused by conduct of insurance company or 3rd parties.
233 In a contract of indemnity, there are ___ parties:
A. one party, the indemnifier
B. two parties, the insurer and the insured
C. two parties, the indemnifier and the indemnity holder
D. two parties, the guarantor and the beneficiary.
C In a contract of indemnity, the two parties are the indemnifier and the indemnity holder.
234 In a contract of indemnity, the liability of:
A. indemnifier is primary
B. indemnifier is secondary
C. indemnity holder is primary
D. indemnity holder is secondary
A In a contract of indemnity, the liability of the indemnifier is primary and indemnity holder is not a liable party.
235 In a contract of indemnity, which of the following parties does not exist:
A. indemnifier
B. indemnity holder
C. the person on whose behalf the indemnity is given
D. none of the above
C In a contract of indemnity there is no person on whose behalf the indemnity is given. There are only two parties i.e. indemnifier and
indemnity holder.
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236 Which of the following statements is a correct statement:
A. the liability of the indemnifier occurs due to actions of 3rd parties
B. the liability of the indemnifier occurs due to his own actions
C. the liability of the indemnifier occurs when the indemnity holder suffers loss
D. none of the above
C The liability of the indemnifier occurs when the indemnity holder suffers loss. That loss may be due to conduct of the indemnifier or the
3rd parties.
237 Which of the following statements are correct:
A. customers can demand issue of duplicate demand draft without indemnity
B. indemnities given by customers are mere formalities and do not have any legal value
C. the indemnities obtained by the bank cover only the principal amount.
D. none of the above
D Customer can demand duplicate draft by giving indemnity only. The indemnities can be enforced and these are not mere formalities. The
indemnities cover the principal as well as the interest and other costs associated with the transaction.
238 If the indemnity holder wants to be compensated he should ensure that (which one is not correct):
A. he acts within the scope of his authority
B. he does not contravene any direction of the indemnifier
C. he does not suffer any loss
D. none of the above
C Indemnity holder has to ensure that he acts within the scope of his authority and does not contravenes the direction given by the
indemnifier.
239 What is the maximum extent up to which the indemnity holder can be indemnified:
A. for the damage suffered.
B. for the costs associated with the transactions
C. for the amount paid for compromise of a suit
D. all the above
D The indemnity holder is entitled to be indemnified for the damages, costs and the amount paid for compromise of a suit.
240 In the situation of a compromise, the indemnity holder need not satisfy which of the following conditions for recovering the amount from
the indemnifier:
A. the compromise is in line with the order of the indemnifier
B. the compromise is otherwise prudent
C. the indemnifier had specifically authorized the indemnity holder to compromise
D. none of the above
D In case of a compromise, the indemnity holder should satisfy all the conditions at (a), (b) and (c) for recovering the amount from the
indemnifier:
241 In case of indemnity, the risk covered is:
A. subsisting
B. continuous
C. contingent
D. all the above
C In case of indemnity, the risk is contingent (i.e. may arise or may not arise) and in case of guarantee, it is subsisting.
242 In a contract of indemnity, the indemnifier is to make good the loss:
A. as soon as it occurs
B. within the prescribed period in the contract of indemnity
C. after the person on whose behalf the indemnity is given has not made good the loss
D. all the above
A In a contract of indemnity, the indemnifier is to make good the loss as soon as it occurs without waiting for whether the person on whose
behalf the indemnity has been given has made good the loss or not.
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243 In which of the following situations, the banks do not ask for indemnity:
A. issue of duplicate demand draft or travellers cheque
B. issue of duplicate FDR
C. settlement of deceased account claim case in favour of legal heirs
D. none of the above
D Banks ask for indemnity in all the cases given at (a), (b) or (c) to save themselves from the loss caused to the banks for such actions.
244 Which of the following statement is not correct in the context of indemnity:
A. indemnities obtained by banks are stamped as agreements
B. if the agreement of indemnity is witnessed, it becomes indemnity bond
C. on an indemnity bond, the stamp duty rate is ad valorem.
D. none of the above
D All the statement given in the question, are correct.
245 In a bank guarantee, the banks undertake to guarantee the:
A. financial commitments of their borrowers only
B. performance of contracts by their borrowers only
C. financial commitments of their borrowers and performance of contracts by their borrowers
D. none of the above
C In a bank guarantee, the banks undertake to guarantee the financial commitments of their borrowers and/or performance of contracts by
their borrowers
246 In case of a guarantee, there are ___ contracts:
A. one contract between the bank and the beneficiary
B. two contracts i.e. between the bank and the beneficiary and between the beneficiary and bank customer
C. three contracts i.e. between the bank and the beneficiary, the beneficiary and bank customer and between the bank customer and the bank
D. none of the above
C In case of a guarantee, there are three contracts i.e. between the bank and the beneficiary, the beneficiary and bank customer and
between the bank customer and the bank.
247 If a bank guarantee is issued by a bank in lieu of customer requirement to deposit a cash security or earnest money, it is a:
A. financial guarantee
B. performance guarantee
C. deferred payment guarantee
D. any of the above
A It is a financial guarantee where in bank promises the beneficiary to pay, if the applicant fails to pay.
248 Bank B issued a guarantee whereby it assured a 3rd party that the borrower will perform the contract entered into between the
borrower and the 3rd party, failing which the bank shall compensate the 3rd party. It is:
A. an indemnity
B. a financial guarantee
C. a performance guarantee
D. a deferred payment guarantee
C It is a performance guarantee, since bank is guaranteeing the performance of the contract between the borrower and the 3rd party.
249 Banks make payment on invocation of a guarantee by the beneficiary:
A. when the applicant i.e. borrower allows them to do so
B. after obtaining proof of non-performance of contract by the applicant
C. on the basis of mere demand by the beneficiary due to default by the applicant
D. after receipt of court orders
C Generally the banks do not go into the technicalities of the transactions. The guarantees are issued with such provisions, that the demand
made by the beneficiary will be met by the bank, once the beneficiary declares default by the applicant.
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250 Which of the following is correct regarding a contract of guarantee:
A. it is dependent on the underlying contract between the beneficiary and the applicant
B. the liability under the contract will be determined by the applicant and the beneficiary together
C. it is independent contract despite the fact that there is an underlying contract between the beneficiary and the applicant
D. the payment shall be made by the bank when the default is proved beyond doubt and the applicant accepts the default.
C The contract of guarantee is independent contract despite the fact that there is an underlying contract between the beneficiary and the
applicant
251 If buyer of machinery wants to purchase machinery from supplier on a long term credit basis and the machinery supplier is agrees to
supply the machinery on the basis of a bank guarantee, which type of guarantee shall be required:
A. financial guarantee
B. performance guarantee
C. deferred payment guarantee
D. performance-cum-deferred payment guarantee
C In such circumstances, the deferred payment guarantee is required. The payment is to be made by the buyer in this case over a long time
period (i.e. on a deferred basis).
252 If bank has to issue a deferred payment guarantee (which one is not true):
A. bank has to carry appraisal similar to in case of sanction of a term loan
B. bank has to assess the ability of the borrower to honour payment of instalment on due date
C. bank has to assess the sources of funds to honour payment of instalment on due date.
D. all the above
D A deferred payment guarantee covers a transaction similar to a term loan where the long term viability has to be established, to ensure
that the borrower shall be able to meet his future liability on a long term basis out of the future profits.
253 Which of the following statement is correct in the context of a bank guarantee:
A. the liability of the bank is secondary and that of the borrower primary
B. the liability of the bank is primary and that of the borrower secondary
C. the liability of the bank and that of the borrower is primary
D. the liability of the bank as well as that of the borrower secondary
B When the bank issues a bank guarantee, on the contract of guarantee, the liability of the bank is primary and that of the borrower
secondary although the bank is to recover the money from the applicant.
254 Courts normally refuse to grant injunctions against banks from making payment under the guarantee:
A. except in case of special equities in favour of the person on whose behalf the guarantee has been given
B. except in case of frauds
C. because guarantees are based on commercial contracts
D. all the above
D Courts normally refuse to grant injunctions against banks from making payment under the guarantee except in case of special equities in
favour of the person on whose behalf the guarantee has been given or in case of frauds, because guarantees are based on commercial
contracts.
255 Supreme Court has a general direction for courts that injunctions should not be granted against banks from making payment except in
case of fraud or in case of irretrievable injustice, because:
A. the banks are not to see the technicalities
B. the banks are to make payment on mere notice of default and demand for payment
C. trust in internal and international commerce would be irreparably damaged.
D. all the above
C As per Supreme Court direction, the commitments of banks should be free from interference by the courts. Otherwise, trust in internal
and international commerce would be irreparably damaged.
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256 Bank-B gave bank guarantee on behalf of XYZ Limited, which later on went into liquidation. The beneficiary demands payment from
the bank:
A. bank is liable to make the payment
B. bank is not liable since the transactions between the applicant and the beneficiary has become void due to operation of law
C. bank is not liable since the bank will not be able to recover the amount from the applicant.
D. bank is not liable since the applicant has recourse against the liquidator.
A Here the applicant has changed his position due to operation of law (winding up) due to which the bank is not discharged from its
liability, as the guarantee is an independent contract from the contract between the applicant and the beneficiary.
257 Which of the following parties in a bank guarantee are properly named:
A. the borrower on whose behalf the guarantee is issued - beneficiary
B. the party in whose favour the guarantee has been issued - applicant
C. the bank that has issued the bank guarantee - surety
D. none of the above
C The party on whose request the bank guarantee is issued is called applicant, in whose favour it is issued is called beneficiary and the bank
is called surety i.e. guarantor.
258 What is the liability of the bank under a bank guarantee where the main contract on the basis of which the guarantee was issued, has
been suspended:
A. bank is not liable since the recovery of amount of guarantee from applicant has become doubtful
B. bank is not liable since the transactions between the applicant and the beneficiary does not exist any more
C. bank is liable to make the payment
D. bank is not liable since the terms of main contract do not exist any more.
C As the guarantee is an independent contract from the contract between the applicant and the beneficiary, the bank continues to be liable.
259 If there are exceptional circumstances which make it impossible for the bank as a guarantor, to reimburse himself, even if the bank
ultimately otherwise would have succeeded to recover:
A. bank can be stopped by the courts from making payment under the guarantee
B. bank cannot be stopped by the courts to make the payment under the guarantee
C. bank will still has to make the payment
D. none of the above
A As per Supreme Court direction, the courts can grant injunction on payment by the bank in case of fraud and special equity in favour of
the guarantor i.e. irretrievable loss.
260 While issuing a bank guarantee, the banks should ensure that (which one is not correct):
A. the amount of maximum liability must be indicated
B. the period up to which the guarantee should be indicated
C. bank should obtain counter indemnity from the customer on whose behalf the guarantee is issued
D. none of the above
C Bank should obtain counter guarantee from the customer on whose behalf the guarantee is issued.
261 While issuing bank guarantees, the banks make mention of the period during which the guarantee shall subsist. In addition, the period
during which the claim should be made is also indicated. These time periods are called:
A. claim period, guarantee period
B. guarantee period, claim period
C. guarantee period, guarantee period
D. claim period, claim period
B The period during which the guarantee shall subsist is called validity period and the period during which the claim should be made is
called claim period.
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262 If a claim is not made by the beneficiary during the claim period mentioned in the guarantee:
A. the bank is absolved of its liability
B. the bank remains liable for unlimited period
C. the claim can be made within the prescribed period of limitation under Limitation Act 1963
D. the claim can be made maximum within 3 years.
C If a claim is not made by the beneficiary during the claim period mentioned in the guarantee, the claim can be made within the prescribed
period of limitation under Limitation Act 1963 as per amendment to Section 28 of the Act wef January 01, 1997.
263 For a bank, the bank guarantee issued is:
A. a current liability
B. a contingent liability
C. a recorded obligation
D. an asset
B The bank guarantee is a contingent liability for the bank, as the liability to pay may arise if the applicant defaults in meeting his financial
commitment. But if there is not default, the bank shall not be called up to pay.
264 Before making payment of a bank guarantee, the bank is to ensure that the invocation is properly made. Which of the following may not
be an important element for treating the invocation as proper:
A. the invocation has been made by the person competent to make the invocation
B. the cause of action arose during the validity period
C. the amount is within the amount limit of the guarantee
D. the invocation is within the claim period given in the guarantee
D While the precautions at (a), (b) and (c) are essential, the invocation can be within the limitation period as per provisions of Limitation
Act instead of as per the claim period mentioned in the guarantee.
265 Which of the following is correct regarding the time limit during which the bank can be sued from date of cause of action, on a bank
guarantee, issued by the bank:
A. 30 years in case of guarantees issued in favour of govt. and 3 years in favour of other persons
B. 30 years in case of guarantees issued in favour of other persons
C. 3 years in all cases
D. 3 years in case of guarantees issued in favour govt.
A From date of cause of action, the bank can be sued in a court within 30 years, if the guarantee is in favour of Govt. and 3 years in other
cases, which is the limitation period prescribed under Limitation Act.
266 A party on whose request the opening bank issues the letter of credit is called:
A. beneficiary
B. applicant
C. supplier
D. seller
B The party is called applicant. The beneficiary is the person in whose favour the LC is issued.
267 The party in whose favour the LC is issued by the opening bank is called:
A. buyer
B. importer
C. applicant
D. beneficiary
D The party in whose favour the LC is issued by the opening bank on he request of the buyer of goods i.e. applicant, is called, the
beneficiary i.e. the seller or exporter.
268 The bank that issues the LC undertakes to (which one is more appropriate):
A. make payment to the beneficiary
B. pay to the beneficiary, whether it is able to recover from applicant or not, against the documents
C. pay to the beneficiary, whether it is able to recover from applicant or not
D. pay to the beneficiary, whether it is able to recover from applicant or not, against the documents mentioned in the LC
D The obligation of the issuing bank arises only when the beneficiary delivers the documents stated in the letter of credit.
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269 The bank that issues the letter of credit is known as:
A. confirming bank
B. advising bank
C. opening bank
D. negotiating bank
C The bank that issues the LC is called issuing bank. The one that hands over the LC to the beneficiary after verification of its apparent
authenticity is called, advising bank. The bank that makes payment to the beneficiary against receipt of documents, is called negotiating
bank and the bank that gives guarantee of the opening bank, for payment, is called confirming bank.
270 The bank that makes payment to the beneficiary on receipt of documents as per terms of LC is called:
A. confirming bank
B. advising bank
C. opening bank
D. negotiating bank
D The bank that issues the LC is called issuing bank. The one that hands over the LC to the beneficiary after verification of its apparent
authenticity is called, advising bank. The bank that makes payment to the beneficiary against receipt of documents, is called negotiating
bank and the bank that gives guarantee of the opening bank, for payment, is called confirming bank.
271 The bank that verifies the apparent authenticity of the LC and then hands over the LC to the beneficiary is called:
A. confirming bank
B. advising bank
C. opening bank
D. negotiating bank
B The bank that issues the LC is called issuing bank. The one that hands over the LC to the beneficiary after verification of its apparent
authenticity is called, advising bank. The bank that makes payment to the beneficiary against receipt of documents, is called negotiating
bank and the bank that gives guarantee of the opening bank, for payment, is called confirming bank.
272 The bank that gives guarantee of the opening bank to make the payment, if the opening bank fails to pay, is called:
A. confirming bank
B. advising bank
C. opening bank
D. negotiating bank
A The bank that issues the LC is called issuing bank. The one that hands over the LC to the beneficiary after verification of its apparent
authenticity is called, advising bank. The bank that makes payment to the beneficiary against receipt of documents, is called negotiating
bank and the bank that gives guarantee of the opening bank, for payment, is called confirming bank.
273 The advising bank is also known as:
A. confirming bank
B. notifying bank
C. negotiating bank
D. opening bank
B The advising bank is called notifying bank also.
274 What is the obligation of the advising bank:
A. to make payment of documents when presented
B. to send the documents to opening bank, when received from the beneficiary
C. to confirm the apparent authenticity of the LC
D. to handover the LC to the beneficiary without verifying the genuineness of LC
C The advising bank has no obligation to make payment against documents. It has to verify the apparent authenticity of the LC and send
the LC to the beneficiary, thereafter.
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275 Which of the following banks is called the negotiating bank:
A. the bank that verifies the apparent authenticity of LC
B. the bank that makes the payment to the beneficiary on receipt of documents as mentioned in LC
C. the bank that guarantees the payment to the beneficiary in case the opening bank does not pay
D. the bank that purchases the documents at a discount, if these are not drawn as per terms of LC
B The negotiating bank makes payment to the beneficiary and then claims the payment from the opening bank, on the basis of documents
mentioned in the LC.
276 If name of the bank which shall make the payment, is also mentioned by the opening bank, such bank is called:
A. confirming bank
B. nominated bank
C. opening bank
D. Notifying bank
B Where the LC specifies the bank which is to negotiate the document, the bank is called nominated bank.
277 The liability of a confirming bank is:
A. similar to the advising bank
B. similar to the negotiating bank
C. similar to the opening bank
D. to pay even when the documents are not as per terms of LC
C The confirming bank liability is similar to the opening bank, as it has given guarantee for payment by the opening bank.
278 The bank that makes payment to the negotiating bank as per instructions of the opening bank, is called:
A. confirming bank
B. reimbursing bank
C. advising bank
D. negotiating bank
B The bank that makes payment to the negotiating bank as per arrangement with the opening bank, is called the reimbursing bank.
279 If under an LC, the payment of the bills is to be made by the applicant immediately, these are called:
A. irrevocable LCs
B. acceptance LCs
C. revolving LCs
D. sight LCs
D If under an LC, the payment of the bills is to be made by the applicant immediately, these are called sight LCs. The documents are
delivered to the applicant, against full payment only.
280 The LCs under which the payment of the bills is to be made after a pre-fixed period, are called:
A. irrevocable LCs
B. acceptance LCs
C. revolving LCs
D. sight LCs
B Such LCs are called usance LCs or acceptance LC, where the documents are delivered to the beneficiary against his acceptance of
documents for payment.
281 The LC that can be cancelled or amended by the opening bank is called:
A. revolving LC
B. revocable LC
C. irrevocable LC
D. standby LC
B Such LCs are called revocable LCs. But if it could not be cancelled or amended, it is called irrevocable LC.
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282 If nothing is stated whether the LC is revocable or not,
A. it is treated irrevocable
B. it is treated revocable
C. it is treated as invalid
D. it not an LC. It is called a bank guarantee
A As per UCPDC rules, such LCs are treated as irrevocable LC, which cannot be cancelled or amended.
283 Under an LC, the bills of exchange are also called:
A. documents
B. documents
C. document of title to goods
D. promissory notes
B The term draft is used for bill of exchange in a letter of credit.
284 An airway bill is a (which one is correct):
A. receipt of goods issued by the airlines company
B. document of title to goods
C. negotiable instrument
D. none of the above
A An airway bill is a receipt of goods issued by the airlines company, but it is not a document of title to goods nor it is a negotiable
instrument.
285 A bill of lading is (which one is not correct)
A. a receipt of goods issued by the shipping company
B. a document of title to goods
C. a negotiable instrument
D. none of the above
D A bill of lading is a receipt of goods issued by the shipping company. It is a document of title to goods and a negotiable instrument.
286 Which letter of credit involves three banks i.e. issuing bank, advising bank and a 3rd bank:
A. red clause LC
B. back to back LC
C. standby LC
D. without recourse LC
B In a back to back LC, the 2nd LC is issued by a 3rd bank on the strength of original LC.
287 The LC in which the beneficiary is not liable, if the documents are dishonoured by the opening bank, once these are negotiated by the
negotiating bank:
A. red clause LC
B. back to back LC
C. standby LC
D. without recourse LC
D In a without recourse LC, if the documents are dishonoured by the opening bank, once these are negotiated by the negotiating bank, the
beneficiary is not liable.
288 In a letter of credit, all the parties to a transaction are required to comply with the terms of LC:
A. as far as possible
B. strictly
C. should appear to have made efforts
D. should make effort to comply
B The terms are required to complied with strictly by all the parties to a transaction in LC.
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289 If the documents submitted by the beneficiary of an LC are not as per terms of LC:
A. these can be accepted by the negotiating bank
B. these can be accepted by the negotiating bank for confirmation of the applicant
C. these cannot be accepted by the negotiating bank
D. these can be accepted by negotiating bank subject to consent of the opening bank
C If the documents submitted by the beneficiary of an LC are not as per terms of LC, these cannot be accepted by the negotiating bank.
290 In a letter of credit, the invoice is a document:
A. recording only the quantity of the goods sold
B. evidencing sale of goods by the seller to the buyer
C. recording only the price of the goods sold
D. evidencing the despatch of the goods by the seller to the buyer
B The invoice is a document that evidences the sale of goods by the seller to the buyer.
291 Which of the following types of LCs can be confirmed:
A. revocable LC
B. irrevocable LC
C. without recourse LC
D. acceptance LC
B Only the irrevocable LCs can be confirmed, since in case of revocable LC, the confirming bank shall remain liable, even when the LC is
cancelled.
292 In which of the following types of LCs, the beneficiary can transfer his rights in favour of 3rd parties:
A. without recourse LC
B. revocable LC
C. transferable LC
D. back to back LC
C In case of transferable LCs, the beneficiary can transfer his rights in favour of 3rd parties. But such transfer can take place only once.
293 The LC in which the beneficiary is given the pre-shipment credit facility on the strength of the LC, is called:
A. transferable LC
B. green clause LC
C. red clause LC
D. back to back LC
C The red clause LC provides for availability of pre-shipment credit to the beneficiary. In the green clause LC, in addition to pre-shipment,
there can be facility of warehouse storage of goods.
294 The LC in which the beneficiary is given the facility of pre-shipment credit and may given the facility the warehouse storage of goods, on
the strength of the LC, is called:
A. transferable LC
B. green clause LC
C. red clause LC
D. revolving LC
B The red clause LC provides for availability of pre-shipment credit to the beneficiary. In the green clause LC, in addition to pre-shipment,
there can be facility of warehouse storage of goods.
295 In a letter of credit there is a provision of repeated negotiation of documents subject to payment of previously negotiated documents by
the applicant. It is called:
A. transferable LC
B. green clause LC
C. red clause LC
D. revolving LC
D In a letter of credit there is a provision of repeated negotiation of documents subject to payment of previously negotiated documents by
the applicant and within the overall total limit.
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296 If two parties are doing regular trade and use LC and want to avoid issue of LC repeatedly, which of the following is most suitable LC:
A. transferable LC
B. green clause LC
C. red clause LC
D. revolving LC
D In a letter of credit there is a provision of repeated negotiation of documents subject to payment of previously negotiated documents by
the applicant and within the overall total limit. Such LC is most suitable for such parties.
297 Which of the following types of bill of lading is normally accepted in a letter of credit:
A. shipped bill of lading
B. received for shipment bill of lading
C. transportation bill of lading
D. charter party bill of lading
A Banks prefer the shipped bill of lading because other types of Bills of lading carry additional risk.
298 As per UCPDC-600, the negotiating bank gets a reasonable period, maximum ___ days after receiving the documents from the
beneficiary to make the payment:
A. 5 working days
B. 5 banking days
C. 7 working days
D. 7 banking day
B The negotiating bank gets maximum 5 banking days to pay or refuse to pay. Similarly, the issuing bank after receiving documents from
negotiating bank also gets maximum 5 banking days.
299 As per UCPDC-600, the opening bank gets a reasonable period, maximum ___ days after receiving the documents from the negotiating
bank to examine whether the documents are as per LC or not:
A. 5 working days
B. 5 banking days
C. 7 working days
D. 7 banking day
B The negotiating bank gets maximum 5 banking days to pay or refuse to pay. Similarly, the issuing bank after receiving documents from
negotiating bank also gets maximum 5 banking days.
300 Which of the following is not correct in connection with UCPDC-600:
A. it has come into operation wef July 01, 2007
B. it has 39 Articles
C. it has 12 additional articles to cover the electronic transactions called eUCP
D. it has totally changed the UCPDC 500 document
D The UCPDC 600 has brought modifications to UCPDC 500 and has not totally changed the UCPDC 500.
301 Deferred payment guarantee is issued by bank in case of following type of business transactions:
A. guarantee for purchase of raw material by the applicant (buyer)
B. guarantee for purchase of capital goods by the applicant on instalment basis
C. guarantee for performance of a contract
D. guarantee for payment of tax liabilities over a no. of year
B Deferred payment guarantee is issued by bank in case purchase of capital goods by the applicant in instalment, on a long term basis.
302 The period of transaction that is covered by a deferred payment guarantee is generally:
A. between 6 months to 3 years
B. between 6 months to 7 years
C. between 3 years to 7 years
D. between 1 year to 5 years
C Since the buyer of capital asset is to make the payment in instalment to the supplier, the period is on the pattern of a term loan.
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303 Before the deferred payment guarantee is issued, the appraisal of the proposal is carried by banks, similar to :
A. letter of credit limit
B. term loan
C. cash credit limit
D. any of the above
B In DPG, the repayment is involved in instalments over a long period out of future profits, hence the appraisal is on the pattern of term
loan.
304 What is the similarity between a term loan and a deferred payment guarantee (which one is not correct)
A. these are sanctioned for a common purpose i.e. purchase of capital assets
B. these are repaid over a long period of 3 to 7 years or more
C. these are repaid out of the future profits and not by sale of the asset purchased
D. both are recorded in schedule 9 of balance sheet of the bank
D A TL and DPG have the above similarities. The DPG is not recorded in the main balance sheet. Rather it is recorded in the notes on
accounts.
305 How term loan and deferred payment guarantee are different from each other (which one is not correct):
A. term loan is fund based and DPG is non-fund based
B. the outlay of funds in TL is immediate and in DPG it is contingent
C. DPG is recorded in the main part of the balance sheet of the bank while the TL is recorded as a contingent liability in notes on accounts
D. none of the above
C TL is recorded in the main part of the balance sheet of the bank while the DPG is recorded as a contingent liability in notes on accounts
306 Normally, what is the amount of advance payment made by the buyer to the seller:
A. 15-20%
B. 10-15%
C. 10-20%
D. 5-10%
B Normally the advance payment is in the range of 10-15%. Further, 10-15% is paid on receipt of capital equipment and the balance is paid
in instalment of 3-7 years.
307 Bank is required to make payment against DPG, if:
A. if one or more instalments have become due and not paid by the applicant (buyer)
B. the major portion has become due for payment and not paid by the applicant (buyer)
C. the entire amount has become due for payment and not paid by the applicant (buyer)
D. the entire amount has become due but partly paid by the borrower
A Bank is required to make the payment, when even a single instalment has become due and bank has not paid.
308 Which of the following terms are mandatorily included in a deferred payment guarantee:
A. the supply of capital goods is on a long term credit basis
B. the schedule for payment of instalment and interest
C. unconditional and irrevocable undertaking of the bank to make payment on invocation of the guarantee by the supplier
D. all the above
D All the above conditions at (a), (b) and (c) are mandatory requirements.
309 From bank point of view, the bills financing has advantages over the cash credit system due to which of the following:
A. the transaction is easily identifiable
B. the date of payment is definite
C. if the bill is on a usance basis, the bank has more than one party liable from which the amount can be recovered.
D. all the above
D There are all the above advantages.
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310 The bill of exchange is defined as unconditional order of the drawer to pay a certain sum of money to or to the order of a particular
person. This definition is as per:
A. Section 13 of NI Act
B. Section 5 of NI Act
C. Section 5 of Indian Contract Act
D. Section 22 of B R Act
B Bill is negotiable instrument and it is defined u/s 5 of NI Act.
311 Which of the following parties is properly matched in case of a bill of exchange:
A. the person who is make the order - drawee
B. the person who is to make the payment as per order - drawer
C. the person who is to receive the payment as per order - payee
D. none of the above
C The person that makes the order is drawer and the person to make the payment is called drawee. The person to obtain the payment is
called payee.
312 What is the liability of the drawer of a usance bill of exchange:
A. before acceptance secondary and after acceptance, primary
B. before acceptance primary and after acceptance secondary
C. since the drawee is liable to make payment, the drawer has no liability
D. the liability of the drawer remains even though the payment is made by the drawee
B If the bill is dishonoured by the drawer for non-acceptance, the drawer is liable. If it dishonoured for non-payment, the drawee is
primarily liable and the drawer is also liable.
313 Which of the following provisions regarding rate of interest on a bill of exchange is correct, if the rate of interest is not stated:
A. rate at 18% p.a. is payable
B. rate at 12% p.a. is payable as per Section 80 NI Act
C. no interest is payable on such bill of exchange
D. bill of exchange is not a valid, if the interest is not mentioned.
A If rate of interest is mentioned, the interest is payable at specified rate as per Section 79. But if it is not mentioned, it is payable at 18%
p.a. as per Section 80 of NI Act.
314 For a bill to be treated as Inland bill of exchange as per Section 11 of NI Act, which of the following condition is mandatory:
A. drawn or made in India and made payable in India only
B. drawn or made in India and made payable in India or drawn upon a person resident in India
C. drawn or made in India and drawn upon a person resident in India only
D. drawn or made in India and made payable in India or outside India
B For a bill to be an Inland bill it should be (a) drawn or made in India and (b) made payable in India or drawn upon a person resident in
India.
315 The classification of which of the following bills does not match:
A. bill drawn in Delhi and payable in Mumbai by a foreigner - Inland bill
B. bill drawn in Delhi and payable in Mumbai by an Indian - Inland bill
C. bill drawn in Delhi and payable in London by a person resident in India - Foreign bill
D. bill drawn in Delhi and payable in London by a foreigner - Foreign bill
C The bill drawn in Delhi and payable in London by a person resident in India is an Inland bill and not a foreign bill.
316 No time period for payment of a bill of exchange is mentioned. Such bill of exchange is treated:
A. a demand bill
B. a usance bill
C. either demand bill or usance bill at discretion of the drawee
D. it is ambiguous bill
A Where no period of payment is mentioned, it is payable on demand as per provisions of Section 11 of NI Act. In such a bill, the payee is
entitled to get the value on demand and on presentation.
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317 Which of the following bills is called, a sight bill:
A. an ambiguous bill
B. a demand bill
C. a usance bill
D. all inland bills are sight bills
B A sight bill is a demand bill. In such a bill, the payee is entitled to get the value on demand and on presentation.
318 The bills which are payable after sight have following features (which one is not correct):
A. these are called usance bills
B. the payment is made on the due date
C. for calculating due date, 3 days of grace are to be added in all cases
D. if due date is a holiday, the payment is to be made on the next preceding business day.
C For calculating due date, the 3 days are to be added if no contrary instruction is given by the drawer. If the days of grace are withdrawn,
no days of grace are to be given.
319 Which of the following is not a feature of clean bill of exchange:
A. it is issued for discharge of a debt or claim
B. it is the bill which is not accompanied by any document of title to goods
C. it is a bill where the goods are directly sent to the buyer with mutual consent
D. none of the above
D A clean bill of exchange has all the above features.
320 When the goods are supplied to a govt. department and the payment is covered by a bill of exchange. Such bills are called:
A. clean bills
B. documentary bills
C. supply bills
D. sight bills
C When the goods are supplied to a govt. department and the payment is covered by the supply bills.
321 If a bill of exchange is on a usance basis, what type of credit facility is given by the bank:
A. advance against bills
B. bills discounting
C. bills purchasing
D. no facility can be given as the payment shall be made in future
B Since the value is not payable immediately, the bank makes the payment of the value by discounting it.
322 If a bill of exchange is on a sight basis, what type of credit facility is given by the bank:
A. advance against bills
B. bills discounting
C. bills purchasing
D. no facility can be given as the payment shall be made in future
C Since the value is payable immediately, the bank makes the payment of the value by purchasing the bill.
323 A documentary bill of exchange is one:
A. where documents are attached to the bill
B. where the documents such as invoice and insurance are attached.
C. where the documents of title to goods are attached
D. all the above
C A documentary bill of exchange is one where the document of title to goods are attached. Other documents such as invoice or insurance
may also be accompanying.
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324 When a bill of exchange is purchased or discounted by a bank, what type of legal status the bank acquires:
A. bank becomes drawer of the bill
B. bank becomes holder for value (holder in due course)
C. bank becomes drawee of the bill
D. bank becomes the debtors
B The bank acquires the rights of the payee i.e. holder in due course and is called holder for value.
325 If the bill of exchange is purchased or discounted by a bank and it is dishonoured for non-payment, what recourse, does the bank have:
A. it can recover the value from drawee only
B. it can recover the value from the drawer only
C. it can recover the value both from the drawer and drawee
D. it cannot recover the value from any of these
C The bank has recourse, both against the drawer and the drawee.
326 When a bank allows bill acceptance facility to a borrower (which one is not correct):
A. bank undertakes to pay the bills to the drawer of the bills
B. the facility is just like a cash credit working capital limit
C. the bills accepted by the bank are debited to bills discounted limit of the borrower
D. none of the above
C The bills accepted by the bank are debited to drawee bills discounting account and the borrower makes the payment on due date.
327 In case of which of the following loan facilities, the bank becomes a guarantor:
A. bills purchase
B. bills co-acceptance
C. bills discounting
D. bills acceptance
B Where the bank is a co-acceptor of a bill of exchange, it is guaranteeing the repayment due to which its capacity is just like a guarantor.
328 Which of the following is an important requisites of a good and acceptable security (which one is not correct):
A. it may be easily marketable
B. the title of the borrower on the security should be defect free
C. there should not be any encumbrance on the security
D. its value should not fluctuate frequently
A The security should be easily market and not may be easily marketable.
329 Before acceptance the land and building as a collateral security, the banks normally ask for non-encumbrance certificate for a period of:
A. 1 year
B. 3 years
C. 10 years
D. 12 years of 30 years
D The limitation in case of land and building is 12 years (and 30 years in case of govt. claim) due to which the banks insist on a non-
encumbrance certificate for 12 / 30 years, issued by the revenue department.
330 Which of the following is not a disadvantage for accepting land as a collateral security:
A. its value may decline or appreciate
B. its valuation is difficult
C. the realization of the security is not easy
D. creating charge on land involves lot of cost.
A The value of land normally does not decline. It generally increases with the passage of time.
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331 If a bank accept simple mortgage of a land and the value/amount of ____ is ______, the registration of mortgage, is mandatory:
A. land, Rs.10 lac
B. loan, Rs.100
C. land, Rs.100
D. loan, Rs.1 lac
B If the amount of mortgage money (i.e. loan) is more than Rs.100 and it is secured by simple mortgage, the registration of mortgage is
mandatory.
332 If land and building is accepted as a security, which type of charge is created:
A. assignment
B. pledge
C. mortgage
D. hypothecation
C As per provisions of Transfer of Property Act, mortgage is required to be created if immovable property like land and building is
accepted as a security.
333 Which is not the essential requirement, if mortgage is created through a written agreement:
A. it can be created through a mortgage deed
B. mortgage deed requires payment of stamp duty
C. mortgage deed requires witnessing
D. mortgage deed requires compulsory registration
D Mortgage deed requires compulsory registration only if the amount of loan is Rs.100 or more.
334 When the loan is given by accepting shares as a security, the shares can be:
A. of one type only i.e. equity shares
B. of two types only i.e. equity shares or preference shares
C. of three types i.e. ordinary shares, equity shares or preference shares
D. b or c.
B The shares are either preference shares or the equity shares (which are called ordinary shares also).
335 What is the disadvantage to a bank, if the loan is given by accepting partly paid shares as security (which one is not correct):
A. bank does not get any charge on such shares
B. bank may be called up on to pay the unpaid amount
C. the value of such shares may violently fluctuate
D. the bank may not be able to maintain proper margin once it has to pay the unpaid amount to avoid forfeiture.
A Bank gets charge over such shares. But other options are correct.
336 The banks retain very high margin on the security of shares. Which of the following is not a reason for that:
A. the value may violently fluctuate due to market sentiment
B. the value may decline due to poor performance of the company whose shares have been accepted as security.
C. the amount of loan may increase due to non-servicing the interest by the borrower
D. bank may not be able to sell the shares.
D The maintenance of higher margin has nothing to do with the sale of shares.
337 The document issued by a company acknowledging its indebtedness to the registered holder is called:
A. equity share
B. debenture
C. preference share
D. ordinary share
B Such document is called debenture. It is also called loan stock. In case of equity share the holder is joint owner of the company and in case
of debenture the holder is creditor of the company.
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338 A share is different from a debenture in respect of which of the following (which one is not correct)
A. a debenture earns dividend and a share earns interest
B. a debenture is a loan to a company and the share confers ownership rights
C. a debenture is redeemable and a share is not redeemable
D. none of the above
A A debenture earns interest and the share earns dividend.
339 Which of the following is not a feature of a debenture:
A. it ranks in priority in case of repayment on liquidation of the company
B. it is normally issued on a secured basis
C. it earns interest on a regular basis
D. there is no fluctuation in its market price like in case of share where there are violent fluctuations.
D The debentures that are listed on stock exchanges, face price fluctuations depending up on the financial position of the company that has
issued the debentures.
340 Which of the following securities will be more preferable by a bank from liquidity point of view:
A. land and building
B. shares and debentures
C. goods and merchandise
D. book debts of reputed companies
B The shares and debentures are most preferred due to easy liquidity.
341 Which of the following securities will be more preferable by a bank from point of view of increasing value of the security:
A. land and building
B. shares and debentures
C. goods and merchandise
D. book debts of reputed companies
A The value of land and building normally increases over a given time period.
342 Which of the following securities will be more preferable by a bank from cost of creating charge and maintenance of the security :
A. land and building
B. shares and debentures
C. goods and merchandise
D. book debts of reputed companies
B Creation of charge on shares and debentures is very easy and cost effective. There is no maintenance cost.
343 To sanction a cash credit limit, which of the following types of security is taken as primary security:
A. land and building
B. shares and debentures
C. goods and merchandise
D. life insurance policy
C Cash credit is the credit facility to finance working capital. Hence current assets like stocks and goods are taken as security that are of self
liquidating nature.
344 Which of the following types of security is not in tangible form:
A. land and building
B. shares and debentures
C. goods and merchandise
D. book debts of companies
D The book debts of companies are not in tangible form. Their realisability depends on the financial position of the company concerned.
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345 Which of the following matches the description of a trust receipt:
A. a receipt of goods issued by a Trust
B. acknowledgement issued by one party in having received the goods in trust from another party
C. acknowledgement for receipt of goods from the creditor by the debtor for a specific purpose and return of the goods.
D. goods kept in trust by the bank when the goods are left by mistake by the customer
C It is acknowledgement of goods by the borrower for having received the goods in trust, from the bank with a promise to return as per
commitment.
346 For the purpose of allowing loan against the security of goods and merchandise, the valuation is done by the bank on following basis:
A. cost price
B. market price
C. cost price or market price whichever is lower
D. cost price of market price whichever is higher
C The valuation of goods is done on the basis of cost price or market price / realisable values
347 The document of title to goods include a bill of lading, a railway receipt etc. These are defined as per:
A. Section 2 (6) of Indian Contract Act
B. Section 2 (4) of Sale of goods Act
C. Section 2 (5) of NI Act
D. Section 2 (12) of Indian Contract Act
D The definition of document of title to goods is available as per Section 2 (4) of Sale of Goods Act.
348 Which of the following is not a feature of document of title to goods u/s 2(4) of Sale of Goods Act:
A. a proof of possession of goods
B. document of control of goods
C. document that can be transferred by endorsement and delivery
D. the transferee gets defect free title even when the title of the transferor is defective.
D The transferee gets similar title that is possessed by the transferor.
349 Which of the following is not a document of title to goods:
A. bill of lading
B. airway bill
C. railway receipt
D. warehouse receipt
B Airway bill despite being receipt of goods is excluded from the list of title to goods.
350 What is the demerit of document of title to goods as a security:
A. it is in the nature of not-negotiable crossed document which means that the transferee right is similar to the right possessed by the transferor.
B. the document can be a forged document also that will not convey any title
C. if the buyer has not paid for the goods, the goods may be stopped in transit by the seller
D. all the above
D The document of title to goods carries all the above demerit as a security for bank loan.
351 Under the provisions of Presidency Towns Insolvency Act 1909 or Provincial Insolvency Act 1920, the goods covered under the
document of title to goods:
A. cannot be sold by the receiver or assignee
B. cannot be included by the receiver or assignee in the assets of the insolvent
C. can be sold by the receiver or assignee but payment has to be made to the creditor
D. none of the above
B Under the provisions of Presidency Towns Insolvency Act 1909 or Provincial Insolvency Act 1920, the goods covered under the document
of title to goods cannot be included by the receiver or assignee in the assets of the insolvent. Hence bank remains secured even in the event
of insolvency of the borrower.
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352 If a bank has to cover itself while releasing the goods to the borrower but otherwise charged in bank favour, the bank obtains:
A. letter of hypothecation
B. trust receipt or letter of trust
C. pledge agreement
D. agreement of assignment
B If a bank has to release the goods to the borrower which are charged in bank favour, the bank obtains trust receipt or letter of trust.
353 Which of the following is an important feature of a Trust Receipt:
A. the borrower has to recognise the right of the bank in the goods as security
B. the borrower undertakes to hold the goods in trust for the bank
C. in case of realization of sale proceeds, the borrower undertakes to deposit the amount in the bank
D. if goods remains unsold, the borrower shall keep the goods until sold and in no case returns the goods to the bank
D If goods remain unsold the borrower shall dispose of the goods as per direction given by the bank.
354 In case of a life insurance policy, the value of security and amount of loan is based on:
A. face value
B. surrender value
C. maturity value
D. any of the above, whichever is higher
B The loans is granted on the basis of surrender value of the insurance policy.
355 If borrower defaults in payment of loan where the loan is secured by a charge on life insurance policy, the loan is recovered:
A. from insurance company only
B. from borrower only
C. with permission of the borrower from insurance company only
D. directly from the insurance company and if there is shortfall, from the borrower.
D If borrower defaults in payment of loan where the loan is secured by a charge on life insurance policy, the loan is recovered, directly from
the insurance company and if there is shortfall, from the borrower.
356 What type of charge is created on the life policy, when it is accepted as a security for the loan:
A. hypothecation
B. assignment
C. lien
D. pledge
B Life insurance policy is an actionable claim, due to which the charge called assignment secures the loan.
357 Which of the following is not a demerit for accepting the life insurance policy as a security:
A. if the premium is not paid regularly, the policy can lapse
B. the insurance contract is a contract of utmost good faith and any misrepresentation by the borrower while obtaining the policy, can lead to
making the policy void.
C. the policy may be containing restrictive clauses that may restrict the liability of the insurance company.
D. if the policy remains in force for a longer period, the surrender value declines.
D If the policy remains in force for a longer period, the surrender value increases and offers a better security. Hence it is a merit and not
demerit.
358 When the bank gives loan on the security of book debts, which of the following types of charge is created:
A. hypothecation
B. assignment
C. lien
D. pledge
B The book debts of companies are actionable claim, due to which the charge called assignment, secures the loan.
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359 Which of the following is an essential condition for creating the assignment:
A. assignment can be oral as well as in writing
B. the notice of assignment must be given to the original debtor
C. the original debtor must acknowledge the assignment in favour of the bank
D. the assignment may be absolute or by way of a charge
A The assignment cannot be oral. It must be in writing only.
360 When the bank serves the notice on assignment, the original debtor must confirm:
A. the amount of debt
B. details of his own right of set-off, if any
C. details of previous notice of assignment, if any.
D. all the above
D The original debtor should provide all the above information.
361 What type of charge is available to the bank, when the loan is granted against the security of fixed deposit receipt:
A. hypothecation
B. assignment
C. lien
D. pledge
B The fixed deposit receipt is an actionable claim, due to which the charge called assignment, secures the loan. In practice, the banks use the
word lien while giving loan on the security of fixed deposit receipt.
362 Against which of the following types of fixed deposit receipt, the loan can be allowed by the bank to a person called X:
A. the FDR issued by another bank in the name of X
B. the FDR issued by the bank in name of minor child of X
C. the FDR issued by the bank in the name of X jointly with his wife which is discharged by both of them
D. the FDR in the name of X kept by him as his clients money.
C The loan cannot be allowed against the FDR of other bank or FDR in the name of the minor or FDR which is not kept in the same
capacity, in which the loan is raised. Hence the loan can be given against FDR, may in the joint name, provided the discharge is given by
all the FDR holders.
363 In case of supply bills, the document evidencing the movement of goods from the seller to the buyer is called:
A. warehouse receipt
B. delivery challan
C. wharfingers certificate
D. supply bill
B The document that evidences the supply of goods by the seller to the govt. department is called delivery challan.
364 When the bank has to allow advance against the supply bills, which of the following document is normally not required to be submitted
compulsorily:
A. hundi or bill of exchange
B. receipted challan or delivery challan
C. inspection note
D. railway receipt or goods receipt
D The goods are directly delivered due to which there is need for receipted challan instead of RR or GR.
365 In case of advance against supply bills, the bank shall receive the payment directly from the govt. department on the basis of:
A. documents sent by the bank to the govt. department
B. charge assignment acknowledged by the govt. department
C. power of attorney executed by the borrower and registered by the govt. department with them
D. all or any of the above
C In case of advance against supply bills, the bank shall receive the payment directly from the govt. department on the basis of, power of
attorney executed by the borrower and registered by the govt. department with them.
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366 If a property is mortgaged in favour of the bank and loan amount or value of the property is Rs.____, the permission of the Income Tax
Deptt. is required to be obtained:
A. Rs.10 lac and above
B. Rs.30 lac or above
C. Rs.50 lac or above
D. none of the above
D There is no such permission required from the Income Tax Deptt. But in case of sale of property of Rs.30 lac or more, information is
required to provided under Annual Information Return (AIR) system, by the registration authority to the Income Tax Deptt.
367 If a property is mortgaged in favour of bank to secure a loan and later on certain arrears of tax against the property are noticed:
A. the recovery of bank loan shall have priority
B. the recovery of arrears shall have priority
C. there will be pro-rata sharing of sale proceeds
D. the arrears of tax shall be recovered first and if there is deficit, the bank will have to make up the deficit.
B If a property is mortgaged in favour of bank to secure a loan and later on certain arrears of tax against the property are noticed, the
recovery of arrears shall have priority over the recovery of bank loan.
368 What type of charge is created when the security for the loan is the document of title to goods (such as Railway receipt):
A. hypothecation
B. lien
C. pledge
D. assignment
C The document of title to goods represent the control over the goods. Hence these documents are pledged to the bank to secure the loan.
369 Which of the following order of securities is preferable, to secure a loan, if options are available to the bank:
A. national saving certificates, bank FDR, life insurance policy, book debts
B. bank FDR, life insurance policy, national saving certificates, book debts
C. life insurance policy, bank FDR, national saving certificates, book debts
D. bank FDR, national saving certificates, book debts, life insurance policy,
B In order of the tangibility and easy realization the order should be bank FDR, life insurance policy, national saving certificates, book
debts.
370 Which of the following is true in the context of a life insurance policy:
A. the policy is issued by the life insurance corporation or general insurance corporation
B. the contract of insurance is a contract of utmost reliability
C. the assignee of life policy cannot sue in his own name
D. the insured should have insurable interest in the policy
D The policy can be issued by life insurance corporation and the contract of insurance is a contract of utmost good faith. The bank can sue
in his own name.
371 The transfer of interest in the immovable property by a person, to secure payment of loan obtained, is called:
A. mortgage
B. assignment
C. pledge
D. hypothecation
A As per section 58 (a) of Transfer of Property Act, the transfer of interest in the immovable property by a person, to secure payment of
loan obtained, is called mortgage.
372 The mortgage can be created:
A. only orally
B. in writing only
C. both in writing as well as orally
D. it cannot be created simultaneously as oral and in writing.
C Mortgage can be created orally as well as in writing. At one point of time two mortgages can be created and one of these can be oral and
other can be in writing.
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373 When mortgage is created in writing, what type of document has to be created:
A. mortgage agreement
B. mortgage deed
C. contract of mortgage
D. none of the above
B To create the mortgage, the mortgage deed which is basically the agreement covering the mortgage transaction, has to be made.
374 In case of a mortgage:
A. only the interest in the property is transferred by the owner
B. only the property is transferred by the owner
C. the interest in the property as well as the property is transferred.
D. none of the above
A As per definition in Section 58 (a) of Transfer of Property Act, only interest in the property is transferred and not the property itself.
375 Which of the following types of mortgages is not created in writing:
A. simple mortgage
B. mortgage by conditional sale
C. usufructuary mortgage
D. none of the above
D Equitable mortgage is the mortgage which is not created in writing. All the mortgages given in the options, are created in writing only.
376 Out of the following which mortgage can be created orally:
A. English mortgage
B. simple mortgage
C. equitable mortgage
D. anomalous mortgage
C Equitable mortgage called oral mortgage is not created through a document in writing. It is created orally by deposit of document of title
deed.
377 A mortgage which is not ____ is a anomalous mortgage
A. simple mortgage or mortgage by conditional sale
B. usufructuary mortgage or English mortgage
C. equitable mortgage
D. all the above types of mortgages
D A mortgage that is not simple mortgage OR mortgage by conditional sale OR usufructuary mortgage OR English mortgage OR equitable
mortgage is an anomalous mortgage as per provisions of Section 58 (g) of Transfer of Property Act.
378 Which of the following is not a feature of simple mortgage:
A. it is without delivery of possession of property to the bank
B. borrower is personally liable for the mortgage money
C. property can be sold without court intervention.
D. sale proceeds are to be applied for payment of mortgage money, in case of sale of property
C The property can be sold through court only, except under SARFAESI Act if applicable, where the sale can be without court intervention.
379 Which of the following is a feature of usufructuary mortgage:
A. borrower is personally liable for the mortgage money
B. the possession of property is delivered to the bank and bank recovers the loan from income of the property
C. property can be sold without court intervention.
D. proceeds of sale proceeds of the property are to applied for payment of mortgage money, in case of sale of property
B In a usufructuary mortgage, the borrower is not personally liable to repay the loan, the property cannot be sold and bank recover the
loan from income of the property as possession of the property remains with the bank, as long as the loan outstands.
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380 In which type of mortgage, the property ownership is transferred in the name of the bank, subject to certain conditions as per provisions
of Transfer of Property Act:
A. simple mortgage
B. English mortgage
C. mortgage by deposit of title deed i.e. equitable mortgage
D. mortgage by conditional sale.
B In case of English mortgage the ownership of the property is transferred in the name of bank subject to the condition that bank shall
retransfer the property if mortgage money is paid.
381 To create equitable mortgage, three ingredients are essential:
A. a debt, deposit of title deed, deposit at a notified place
B. a debt, deposit of title deed, intention that the deposit of title deed is to secure the loan
C. deposit of title deed, intention that the deposit of title deed is to secure the loan, deposit of title deed at a notified place
D. any of the above
B To create equitable mortgage, the ingredients such as (a) a debt, (b) deposit of title deed, (c) intention that the deposit of title deed is to
secure the loan, are essential:
382 The equitable mortgage can be created by deposit of title deeds provided the title deed is deposited at:
A. Mumbai, Kolkata and town notified by the state Govt.
B. Mumbai, Kolkata, Delhi and town notified by the state Govt.
C. Mumbai, Kolkata, Chennai and town notified by the state Govt.
D. Mumbai, Delhi, Bangalore and town notified by the state Govt.
C The deposit of title deed should take place at Bombay, Madras and Calcutta or the town notified in the official gazette by the State Govt.
383 The territorial restriction in case of deposit of title deed to create equitable mortgage is related to:
A. place of location of the property only
B. place of deposit of title deed only
C. place of location of property as well as place of deposit of title deed both
D. none of the above
B The territorial restriction in case of deposit of title deed to create equitable mortgage is related to place of deposit of title deed only.
384 A company has its registered office in Mumbai, the head office in Kolkata and a building in Chennai. It obtains a loan in Delhi and to
secure the loan, the Chennai building is to be equitably mortgaged. The mortgage can be created at:
A. Mumbai only being location of registered office
B. Chennai only being location of the property to be mortgaged
C. Delhi only being the place of loan to be taken
D. Mumbai, Chennai and Kolkata only.
D The mortgage can be created in Mumbai, Chennai or Kolkata only and not Delhi unless Delhi is also stated to be a notified town.
385 In which of the following types of mortgage, no stamp duty is required to be paid, in creation of mortgage:
A. English mortgage
B. equitable mortgage
C. simple mortgage
D. usufructuary mortgage
B Equitable mortgage is created orally and not in writing, due to which no payment of stamp duty is required. Other mortgages are
required to be registered due to which the stamp duty has to be paid at the time registration.
386 In the context of mortgage, the right of foreclosure stands for:
A. right of the mortgager to repay the loan and get the mortgage cancelled
B. right of the mortgager not to pay the loan and ask the mortgagee to sell the property and recover the loan
C. loss of right of mortgager to possess the property after repayment of the mortgage money
D. the right of the mortgagee to stop the mortgager to pay the mortgage money.
C Foreclosure means the loss of right with the mortgager to redeem the mortgage property and take back the possession.
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387 In which of the following types of mortgages, the mortgagee can sue for foreclosure:
A. English mortgage
B. mortgage by conditional sale
C. simple mortgage
D. usufructuary mortgage
B The mortgagee can sue for foreclosure in this mortgage where the property has been sold on a provisional basis i.e. mortgage by
conditional sale.
388 To enforce a mortgage, the limitation period available in Limitation Act 1963 is:
A. 3 years
B. 10 years
C. 12 years
D. 30 years
C If the loan is to be recovered by enforcing the mortgage, the limitation period is 12 year from the date the mortgage debt becomes due.
389 The limitation period for filing suit for foreclosure, as per provisions of Limitation Act 1963 is:
A. 3 years
B. 10 years
C. 12 years
D. 30 years
D The limitation period for filing suit for foreclosure, as per provisions of Limitation Act 1963 is 30 years from the date the money secured
by mortgage becomes due.
390 Equitable mortgage was created in favour of Bank-A by a firm on Jan 29, 2009 on a property to secure a loan. The same property was
mortgaged to Bank-B as simple mortgage on Jan 27, 2009 and was registered with the Registrar of Assurances on Jan 31, 2009. Which
bank is having priority of charge.
A. Bank-A because the mortgage was created before registration in favour of other bank
B. Bank - B because the mortgage was created before Bank-A
C. Bank A and Bank B on a pro-rata basis, since in case of Bank-B the mortgage was created earlier but registered later.
D. Bank A, because equitable mortgage has always priority
B Mortgage was created in favour of Bank-B earlier than Bank-A. Once the mortgage is registered, the effect of mortgage begins from date
of mortgage.
391 The features of which of the following mortgages do not match:
A. English mortgage - ownership is transferred in the name of the bank
B. Usufructuary mortgage - possession is with the bank
C. equitable mortgage - does not require registration
D. simple mortgage - property cannot the sold but borrower is personally liable.
D The property can be sold through court, in case of non-repayment of the loan. Borrower is also personally liable.
392 Enforcement of mortgage is governed by the provisions of:
A. Civil Procedure Code 1908
B. Transfer of Property Act 1882
C. Indian Contract Act 1872
D. Indian Evidence Act
A The enforcement of mortgage is governed by Civil Procedure Code 1908, due to which suit for sale of property is filed in a civil court,
within whose jurisdiction the mortgage property is situated.
393 In a suit for sale of mortgaged property, the court passes:
A. only the final decree
B. preliminary decree and final decree simultaneously
C. first the preliminary decree and then final decree
D. first the preliminary decree and then final decree after 30 days
C In a suit for sale of mortgaged property, the court passes first the preliminary decree (which means the mortgagor is given a definite
period to pay the mortgage money) and then final decree (if the mortgage money is not paid).
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394 If suit is to be filed to enforce mortgage, it will be filed with:
A. the DRT within whose jurisdiction the mortgage property is situated.
B. the court within whose jurisdiction the mortgage property is situated.
C. the court within whose jurisdiction the mortgager resides.
D. the court within whose jurisdiction the mortgagee is located.
B The enforcement of mortgage is governed by Civil Procedure Code 1908, due to which suit for sale of property is filed in a civil court,
within whose jurisdiction the mortgage property is situated.
395 Which of the following statement is not a correct statement:
A. in mortgage, the interest in the property is transferred
B. equitable mortgage is created in a place notified by the Central govt.
C. in conditional mortgage, the property is sold with the condition that the sale will become void in case of payment of the mortgage money
D. the priority of mortgages is with reference to date of creation and not date of registration.
B Equitable mortgage can be created in Mumbai, Kolkata and Chennai and towns notified by the State Govt.
396 The bailment of goods for providing security for payment of debt or performance of promise is called:
A. bailment
B. lien
C. pledge
D. hypothecation
C As per provisions of Section 172 of Indian Contract Act, the bailment of goods for providing security for payment of debt or performance
of promise is called, pledge. Bailment means the delivery of goods.
397 Under provisions of Section 172 of Indian Contract Act, in case of a pledge, the bailor and bailee are called:
A. pawnee and pawnor
B. pawnor and pawnee
C. pledger and pledgee
D. pledgee and pledger
B The bailor i.e. borrower is called pawnor and the bailee i.e. the bank is called pawnee as per Section 172 of Indian Contract Act.
398 In case of pledge, the position of ownership and possession of goods is as under:
A. possession with the bank and ownership with the borrower
B. possession with the borrower and ownership with the bank
C. possession and ownership with the borrower
D. possession and ownership with the bank
A In case of pledge, the possession is with the bank and ownership is with the borrower
399 In case of hypothecation, the position of ownership and possession of goods is as under:
A. possession with the bank and ownership with the borrower
B. possession with the borrower and ownership with the bank
C. possession and ownership with the borrower
D. possession and ownership with the bank
C In case of hypothecation, the possession and ownership is with the borrower.
400 When the goods are in a godown and the borrower hands over the key of the godown to the bank, it is called:
A. actual pledge
B. constructive pledge
C. symbolic pledge
D. it is not a pledge at all
C When the goods are in a godown and the borrower hands over the key of the godown to the bank, it is called symbolic pledge.
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401 If the goods are lying in a public warehouse and the warehouseman acknowledges to the bank that he holds the goods on behalf of the
bank, it is called:
A. actual pledge
B. constructive pledge
C. symbolic pledge
D. it is not a pledge at all
B If the goods are lying in a public warehouse and the warehouseman acknowledges to the bank that he holds the goods on behalf of the
bank, it is called constructive pledge.
402 In which of the following types of goods, the charge pledge can be created by the borrower:
A. the goods that are in possession of the borrower
B. the future goods also that are to be in his possession
C. also the goods that the borrower is likely to get into his possession subsequently
D. all the above type of goods
A In pledge immediate delivery of goods is involved. Hence pledge can be created on the present goods.
403 Pledge can on the basis of:
A. only an agreement in writing
B. only on the basis of implied agreement from the nature of transaction
C. on the basis of written agreement or implied agreement from the nature of transaction
D. none of the above
C Normally, the pledge should be on the basis of written agreement but it is possible on the basis of implied agreement from the nature of
transaction.
404 Which of the following cannot create pledge:
A. owner of the goods
B. a mercantile agent subject to fulfillment of certain conditions
C. seller of goods in possession of the goods even after sale subject to certain conditions
D. none of the above
D All the above type of persons can create a valid pledge.
405 A pawnee wants to pledge the goods under his pledge:
A. he can do so without consent of the pawner
B. he can do so with consent of the pawner
C. he cannot do so
D. if he does, the pawner cannot recover the goods even after payment of loan
A A pawnee can pledge the goods further but the pledge will be valid to the extent of his interest in the goods. When original pledger makes
the payment, he is entitled for return of the goods immediately.
406 Under Section 173 of Indian Contract Act, the pawnee can retain the goods for:
A. amount of principal only
B. amount of principal and interest only
C. amount of principal, interest other charges only
D. amount of principal, interest, other charges and maintenance expenses
D Under Section 173 of Indian Contract Act, the pawnee can retain the goods for recovery of amount of principal, interest, other charges
and maintenance expenses
407 If the pawnee has to incur extra-ordinary expenses on the goods pledged:
A. he can recover the amount from the goods
B. he can recover the amount from the goods if the amount was incurred with consent of the pawner
C. he cannot recover from the goods but he has to file suit for recovery
D. none of the above
C If the pawnee has to incur extra-ordinary expenses on the goods pledged, he cannot recover from the goods but he has to file suit for
recovery.
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408 Where the pawner defaults in making payment of the loan, which of the following right is not available to the pawnee:
A. he may sue the pawner upon the debt or promise
B. he may retain the goods as collateral security for that loan or any other loan
C. he may sell it after giving reasonable notice to the pawner
D. none of the above
B Where the pawner defaults in making payment of the loan, he may retain the goods as collateral security for that loan only and not for
any other loan.
409 If goods are damaged while in the possession of the pawnee:
A. he is liable for the loss
B. he is not liable for the loss
C. he is not liable for the loss if adequate care was exercised
D. he is liable for the loss even when adequate care was exercised
C If goods are damaged while in the possession of the pawnee, he is not liable for the loss if adequate care was exercised. However, if the
loss is due to negligence of the pawnee, he is liable.
410 X despatched certain goods through railway and pledged the railway receipt (by way of endorsement) to Y. Railways failed to deliver
the goods to Y:
A. Y can enforce the rights of owner of goods i.e. X against the railways
B. Y has to involve X for recovery of the goods
C. Y is not entitled to recover since he is only the endorsee and not the owner
D. Y and X both have to file suit.
A The pawnee acquires all the rights of the owner against 3rd parties as per Supreme Court judgement in Morvi Mercantile Bank Ltd vs
Union of India (1965).
411 XYZ pledged certain goods to Bank-A to take the loan. Subsequently, the bank received a notice from the sales tax department of the
govt. to handover the possession to them, for recovery of tax arrears:
A. the bank charge on the goods is subject to recovery of govt. tax
B. the bank charge will prevail over the recovery of govt. dues, due to which, first recovery of bank dues shall take place
C. the recovery of bank loan and the recovery of govt. dues shall be on a pro-rata basis
D. the govt. dues shall be recovered first and if there is any surplus that can be used for recovery of bank loan.
B As per Supreme Court judgement in Bank of Bihar vs State of Bihar (1971), in case of pledge, the bank right prevails over the recovery of
govt. dues. Hence the recovery of bank loan shall be from the goods pledged and if there is any surplus that can be used for recovery of
govt. dues.
412 Certain goods were pledged by XYZ with the Bank-B. Later on, due to increase in the market price of the goods, XYZ requested the
return of a part of the goods and retain the goods of the value that covered the advance of the bank:
A. the pawner can demand the return of goods provided the balance quantity of goods covered the loan of the bank
B. the bank is under obligation to return the excess quantity of goods
C. the pawner cannot demand the return of goods because the value of goods can decline later only
D. the pawner cannot demand the return of goods because the accretion in value to the goods forms part of the pledged property.
D As per Supreme Court judgement in StanChart Bank vs Custodian (2000), if there is accretion to the value of pledged goods, the pawnee
shall retain it.
413 The definition of the term hypothecation is available as per:
A. SARFAESI Act 2002
B. Indian Contract Act 1872
C. General Clauses Act
D. not available
A Till enactment of SARFAESI Act 2002, no definition of Hypothecation was available. But hypothecation is now defined u/s 2 of the Act.
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414 As per definition of Hypothecation u/s 2 of SARFAESI Act, which of the following feature of hypothecation is not correct:
A. it is charge on existing moveable property
B. it is charge on future moveable property
C. it is charge without delivery of the moveable property
D. none of the above
D All the feature given in these options are correct.
415 Hypothecation differs from mortgage in the following aspects (which one is not correct):
A. mortgage is of immovable property
B. hypothecation is of movable property
C. in mortgage there is transfer of property in favour of the bank
D. in hypothecation there is no transfer of property but only obligation to repay the money
C In mortgage there is transfer of interest in the property and not the transfer of the property in favour of the bank u/s 58 (a) of Transfer of
Property Act.
416 Hypothecation created by a company carries less risk compared to a partnership firm because:
A. financially the company is much stronger and healthy
B. registration of charge with Registrar of Companies is public notice for the charge created on the movable property
C. recovery of the loan is easier from a company
D. all the above
B Hypothecation charge created by a company carries less risk compared to a partnership firm because the registration of charge with
Registrar of Companies is deemed a public notice for other parties, for the charge created on the movable property.
417 In which of the following cases, creation of only hypothecation is possible (and not pledge):
A. stock in process
B. a running retail trader shop
C. where the goods have to be constantly handled in bulk such as a rice mill or oil mill
D. all the above
D In all the above cases, the charge pledge will not be possible since the goods will have to be used by the borrower and will not remain in
the possession of the bank.
418 If hypothecation is created by a company, the floating charge (i.e. hypothecation) created within ___ preceding the commencement of
winding up, becomes invalid under certain circumstances u/s 534 of Companies Act:
A. 1 month
B. 3 months
C. 6 months
D. 12 months
D If hypothecation is created by a company, the floating charge (i.e. hypothecation) created within 12 months preceding the commencement
of winding up, becomes invalid under certain circumstances u/s 534 of Companies Act.
419 What type of legal right is available to the bank in case of hypothecation:
A. if loan is being repaid as per terms, there is no right available
B. if loan is not repaid, the borrower is required to handover the possession to the bank
C. if loan is not repaid, the bank can demand possession of the security
D. if loan is not repaid, the bank cannot demand possession the goods but can file suit for sale of security
C If loan is not repaid, the bank demand possession of the goods. If borrower gives the possession, the hypothecation is converted into
pledge and bank can sell the security. If possession is not given, bank has to file suit for sale of security.
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420 For a loan given by the bank, which of the following is not liable personally due to which the loan cannot be recovered from them
personally:
A. minor
B. insolvent
C. insane
D. all the above
D All these persons are not competent to contract u/s 11 of Indian Contract Act and any contract with them, cannot be enforced in a court
of law. Hence there is no personal liability.
421 A relationship between persons who have agreed to share the profits of the business is called partnership as per:
A. Section 2 of Indian Partnership Act
B. Section 4 of Indian Partnership Act
C. Section 2 of Companies Act
D. Section 11 of Companies Act
B The above definition of partnership is given in Section 4 of Indian Partnership Act.
422 What is the legal status of a partnership firm:
A. it is a separate legal entity
B. it is a separate legal entity when registered
C. it is not a separate legal entity from its partners. It is only abbreviated name of the partners
D. it is not a separate legal entity but it becomes separate legal entity when registered.
C A firm is abbreviation of names of the partners. It is not a separate legal entity.
423 Which of the following is not correct regarding the registration of the partnership firm:
A. registration is optional
B. a registered firm can sue other parties in its own name
C. banks can insist for registration of the firm as it provides sound legal base for the firm and beneficial both to the firm and the bank
D. registration is possible with registrar of firms
C The banks can not insist, they can only suggest for registration of the firm as it provides sound legal base to the firm to sue in its own
name and beneficial both to the firm and the bank.
424 To bind other partners, a partner of firm must act:
A. in usual course of business of the firm only
B. in the usual way of doing the business only
C. as a partner on behalf of the firm and not solely on his behalf only
D. all the above together
D If a firm wants to use the implied authority u/s 19 of Indian Partnership Act, he has to ensure compliance of all the above conditions.
425 By action of one partner, in which of the following cases, the other partners will not be liable:
A. withdrawal of suit filed in a court
B. appointment of agent for the firm
C. mortgage of property of the firm to secure a loan given to a partnership firm
D. to give guarantee on behalf of the firm when the firm is engaged in the business of giving guarantees.
D U/s 19 (2) of Indian Partnership Act, there are restrictions on use of implied authority by a partner and the situation at (a), (b) and (c) is
covered by that restriction. Situation (d) is the action in normal course of business, hence other partners will be liable for such guarantee.
426 If a firm maintaining bank account is declared insolvent (which one is not correct):
A. bank can not exercise right of set-off
B. the credit balance becomes payable to official receiver.
C. if there is a debit balance in the account bank has to prove the debt before the court.
D. if debt of the bank is proved, the bank is entitled to receive from the official receiver, either in full or as per ratio declared by the court.
A The bank can exercise the right of set off and if the bank does not want to exercise the right of set off, the credit balance becomes payable
to the official receiver appointed by the court.
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427 If a partner of a firm becomes insolvent (which of the following is correct):
A. the partnership continues
B. the operations in the account can be continued
C. the cheques signed by the insolvent partner can be paid
D. none of the above
D If a partner is declared insolvent, the firm is dissolved. Hence operations in the account are not to be allowed and the cheques signed by
the insolvent partner or any other partner cannot be paid.
428 If a partner is declared insolvent or expires, the banks stop operations in the account if it is a loan account. If operations are continued,
the estate of the insolvent / deceased may not remains liable due to:
A. operation of principle of estoppel only
B. operation of rule in Garner and Murray case only
C. operation of rule in Clayton Case only
D. operation of all the above rules/principles
C If operations are continued, the estate of the insolvent / deceased may not remains liable due to operation of rule in Clayton case.
429 The provisions relating to HUF are available as per:
A. Hindu Succession Act
B. Joint Hindu Family Act
C. Hindu Code 1908
D. customary Law among Hindus
D HUF is not defined in any Act. It is only a practice based on customary law among Hindus.
430 Which of the following is not an important feature of HUF:
A. the family business or property is owned jointly by the coparceners
B. the coparceners have a common ancestor
C. the senior most coparcener is called Karta or manager
D. the females and minors cannot become Karta although they can be coparceners.
D The females and minors can also become Karta if they happen to be the senior most coparceners.
431 Which of the following is not an important feature about Karta:
A. he has the authority to manage the HUF business
B. his liability like other coparceners is limited to the share in joint property / business
C. he can appoint agent for HUF business
D. he can take loan for HUF business and to secure such loan he can create charge on HUF property / business
B Liability of Karta is unlimited while the other coparceners have no personal liability. It is restricted to their share in the HUF property /
business.
432 HUF cannot become a partnership firm as per Supreme Court judgement because:
A. HUF cannot enter into agreement with 3rd parties for any transaction
B. HUF cannot make itself liable for actions of other parties i.e. other partners, because it is not creation of agreement between parties.
C. HUF cannot make other parties liable for its actions
D. all the above
B HUF cannot make itself liable for actions of other parties i.e. other partners, since it is not creation of agreement between parties.
433 Which of the following is not an important feature of a company:
A. company is a juristic person created by law
B. company has a perpetual succession which means it continues even when there is no shareholder.
C. company has a common seal distinct from its members
D. none of the above
B The company has a perpetual succession which means it shall continue as long as it fulfills the conditions relating to minimum no. of
shareholders.
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434 The no. of partners in a partnership firm is restricted to:
A. 10 in case of banking business and 20 for other business
B. 20 in case of banking business and 10 for other business
C. 20 in case of banking business and for other business
D. 10 in case of banking business and for other business
A The no. of partners in a partnership firm cannot be more than 10 in case of banking business and 20 for other business as per provisions
of Section 11 of Companies Act.
435 The provisions relating to no. of partners in a partnership firm are given as per:
A. Section 11 of Indian Contract Act
B. Section 4 of Indian Partnership Act
C. Section 11 of Companies Act
D. Section 11 of Indian Evidence Act
C The provisions relating to no. of partners in a partnership firm are given as per Section 11 of Companies Act which provides that if the
no. exceeds 10 or 20, it will become an illegal association.
436 An association of more than 10 persons for banking business and 20 for other business can be registered as a:
A. Partnership with Registrar of Firms
B. Partnership with Registrar of Company
C. Company with Registrar of Company
D. Joint venture with Registrar of Assurances
C As per provisions of Section 11 of Companies Act, an association of more than 10 persons for banking business and 20 for other business
can be registered as a company.
437 The minimum no. of members of a company should be:
A. 7 in case of private company and 2 incase of a public company
B. 2 in case of private company and 7 incase of a public company
C. 2 in case of private company and 3 incase of a public company
D. 7 in case of private company as well as incase of a public company
B The minimum no. of members of a company should be 2 in case of private company and 7 incase of a public company.
438 Which of the following document relating to a company does match its purpose:
A. Memorandum of Association states the business / objects and the Certificate of Incorporation states the internal rules governing the company.
B. Certificate of Commencement of Business states the business / objects and the Articles of Association states the internal rules governing the
company.
C. Memorandum of Association states the business / objects and the Articles of Association states the internal rules governing the company.
D. Articles of Association states the business / objects and the Memorandum of Association states the internal rules governing the company.
C The Memorandum of Association states the business / objects and the Articles of Association states the internal rules governing the
company. Both these documents are prepared by the shareholders at the time of formation of a company.
439 Which of the following is called, the Charter of the company:
A. Certificate of Incorporation
B. Certificate of Commencement of Business
C. Articles of Association
D. Memorandum of Association
D The Memorandum of Association is called, the Charter of the company.
440 Which of the following information is not provided by the Memorandum of Association of a company:
A. objects of the company
B. liability of the members of the company
C. no. of directors of the company
D. share capital and its division
C The no. of directors is an internal matter for the company which is mentioned in the Articles of Association.
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441 Which of the following information is mentioned in the Memorandum of Association only and not in the Articles of Association:
A. borrowing powers of the Board of the company
B. State in which the registered office of the company is located
C. procedure for transfer of shares
D. procedure for conducting the meetings of the company
B The information at (a), (c) and (d) is internal to the company and given in the Articles of Association.
442 As per Section 3 (1) (iii) Companies Act, which of the following is not feature of a private company:
A. there are restrictions on the right to transfer of its shares
B. prohibition as to participation by general public in its capital requirement
C. limitation on the no. of members to maximum 50 including the employees and ex-employees.
D. none of the above
C There is ceiling on the no. of members to maximum 50 excluding the employees and the ex-employees of the company.
443 Which of the following is not included in the classification of a public company:
A. limited liability company
B. unlimited liability company
C. limited by guarantee company
D. none of the above
D The companies mentioned at (a), (b) and (c) are included in the classification.
444 A public company is a govt. company, if at least ___ of its shareholding is held by the govt.
A. 26%
B. 49%
C. 51%
D. 74%
C A public company is a govt. company, if at least 51% of its shareholding is held by the Govt.
445 Which of the following can be classified as a foreign company:
A. which has branches in foreign countries
B. which is registered in a foreign country
C. which is doing business in foreign countries
D. all the above
B A company is a foreign company when registered in a foreign company.
446 If a company holds at least __ % capital of another company, is called the ___, of the other company:
A. 33%, subsidiary company
B. 50%, holding company
C. 51%, holding company
D. 51%, subsidiary company
B If a company holds at least 50 % capital of another company, is called the holding company of the other company whose shares are held.
447 If at least __ % capital of a company, held by another company, the company whose shares are held is called the ___, of the other
company:
A. 33%, holding company
B. 50%, subsidiary company
C. 51%, subsidiary company
D. 51%, holding company
B If a company holds at least 50 % capital of another company, the other company whose shares are held is called the subsidiary company
of the other company.
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448 Where an organization is established under an Act of the Parliament it is called:
A. public sector undertaking
B. public sector enterprise
C. statutory corporation
D. any of the above
C Where an organization is established under an Act of the Parliament it is called a statutory corporation such as SBI or Nationalized
Banks created under special Acts passed by the Parliament.
449 A club can be registered under provisions of:
A. Companies Act only
B. Cooperative Societies Act only
C. Societies Registration Act only
D. any of the above
D A club can be registered under Companies Act or Coop Societies Act or Societies Registration Act.
450 Which of the following name of the Act does not match in the context of Trusts:
A. Public Trusts are governed by Public Trust Act
B. Private Trusts are governed by Indian Trust Act
C. Hindu trusts are governed by Religious and Endowment Act
D. Muslim Trust are governed by Muslim Act
D The Muslim Trust are governed by Wakf Act.
451 Which of the following authorities supervise the activities of the public trusts:
A. Court of Trust
B. Trust Boards
C. Charity Commissioners or Commissioners of Endowments
D. any of the above
C The activities of public trusts are supervised by Charity Commissioners or Commissioners of Endowments.
452 The trustee of the Muslim Trust (Muslim Wakf) is called:
A. Trustee
B. Mutawali
C. Wakf
D. none of the above
B The trustee of the Muslim Trust (Muslim Wakf) is called Mutawali.
453 Based on funds outflows, the credit facilities allowed by banks can be grouped as:
A. secured and unsecured
B. fund based and non-fund based
C. working capital & term loans
D. for current assets and for capital expenditure
B Based on funds outflows, the credit facilities allowed by banks can be grouped as fund based and non-fund based.
454 Which of the following credit facilities is not a fund based facility sanctioned a borrower:
A. drawee bills acceptance
B. overdraft
C. deferred payment guarantee
D. bills finance
C DPG is a non-fund based facility while other facilities are fund based.
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455 Which of the following credit facility sanctioned by a bank to its borrower is a fund based facility:
A. letter of credit
B. bank guarantee
C. drawee bills acceptance
D. deferred payment guarantee
C Drawee bills acceptance is a fund based limit sanctioned on behalf of the borrower to make payment of usance bills drawn on the
borrower, the payment of which is made immediately by the bank and recovered from the borrower on due date.
456 If a customer overdraws an account although there is no sanctioned overdraft limit and later on refuses to repay it, what remedy is
available with the bank:
A. bank can recover the amount of principal only
B. bank can recover the amount of interest only
C. bank can recover both the principal and interest
D. bank cannot recover the amount, as there is no sanctioned overdraft.
C As per judgement in case of Bank of Maharashtra vs United Construction Co. and Other (1986) if a customer overdraws an account
although there is no sanctioned overdraft limit and later on refuses to repay it, the bank can recover the principal and interest.
457 Rule in Clayton case is based on which of the following premise:
A. each debit and credit in a running account shall be combined together
B. each debit in a running account is separate loan and any credit to such account is deemed to be repaying first debit in the account
C. each debit is a common loan but each credit is a separate credit entry
D. none of the above
B Rule in Clayton case is based on the premise that each debit in a running account is separate loan and any credit to this account is deemed
to be repaying first debit in the account
458 Bank-B allowed overdraft to firm ABC on a no. of occasion but later on, on a particular day, returned the cheque and did not allow the
overdraft.
A. the bank is within its rights to do so
B. the bank cannot do so without giving notice to the party regarding its intention not to continue the overdraft
C. the bank cannot do so if there is debit balance in the account, since its recovery can become a problem for the bank.
D. the bank can do so after recovering the entire amount in the previous overdraft balance.
B As per decision in Indian Overseas bank vs Narain Prasad Govindlal Patel (1980), the bank cannot do so without giving notice to the
party regarding its intention not to continue the overdraft.
459 Which of the following features of loan account do match:
A. where credit facility is available on a revolving basis - overdraft
B. where the disbursement is allowed only once and repayment is made in instalments - demand loan
C. where the disbursement is allowed only once and repayment is made on demand - term loan
D. all the above
A Where the disbursement is allowed only once and repayment is made in instalments it is called term loan. In demand loan the repayment
in made on demand preferably in lump sum.
460 The period of term loan classification in which of the following does not match:
A. short term loans - repayable within one year
B. medium term loans - repayable after 1 year but up to 7 years
C. long term loans - repayable in period of more than 7 years
D. none of the above
D The classification given is correct.
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461 Bank-B sanctioned a term loan to XYZ limited within the condition that if the borrower failed to pay 2 instalments, the entire amount of
the loan will become payable immediately. If the borrower defaults in making the repayment of 2 instalments, in such case:
A. the bank can treat the entire amount due for payment and can demand payment
B. such agreement is against law of natural justice due to which bank cannot do so
C. such agreements are void i.e. illegal and cannot be enforced.
D. the bank can recover the amount of due instalments only.
A In such circumstances, the bank and the borrower have to follow the terms of the agreement between them as per judgement in case of
PK Achuthan vs State Bank of Travancore (1974).
462 Which of the following is correct regarding, limitation in case of term loan accounts:
A. it begins from date of first disbursement
B. it begins from due date of first instalment for the entire amount
C. if begins from due date of each instalment i.e. separate for each instalment.
D. if part of amount has become due, the limitation begins for the entire amount
C In case of term loans, the limitation begins from due date of each instalment separately. Which means for each instalment limitation
period is different. With one instalment becoming due, the limitation begins for that instalment only and not for the entire outstanding
balance.
463 In case of demand loan, the limitation:
A. begins from date of document
B. begins from the date the loan has become due
C. begins from the date the loan is demanded back by the bank
D. limitation begins from the date whichever is earlier out of the above dates.
A In case of demand loans the limitation is three years from date of document.
464 If a borrower is selling goods on credit, to finance his credit sales, which of the following types of bills facility shall be allowed:
A. bills purchase
B. bills discounting
C. drawee bill acceptance
D. bills co-acceptance
B If a borrower is selling goods on credit, to finance his credit sales, he will be requiring bills discounting facility.
465 Which of the following facility is not part of non-fund based facility:
A. derivative products
B. underwriting
C. credit guarantee
D. none of the above
D All the above facilities are off-balance sheet exposures i.e. non-fund based facilities.
466 Which of the following is not a correct statement regarding unsecured loans:
A. it is a loan in which the banks rely upon the personal integrity of the borrower
B. there is no tangible security for repayment of such loan due which such loans are called clean loans also
C. bank cannot file suit in a court of law, since there is no security.
D. repayment of such loans depends up to financial strength of the borrower to pay in future
C Banks can file suit against the borrower for his personal liability and get his assets attached for recovery of the loan.
467 The secured loans are those loans (which one is not correct):
A. for which there is some tangible security available to secure the loan
B. viability of the activity in such cases is of secondary importance only
C. primary importance in such loans is that of the security
D. all the above
B Besides, the security, the banks invariably ensure that the activity for which the loan is given is viable. For realization of the loan, the
dependence on security is only if the borrower otherwise fails to pay.
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468 Banks prefer secured loans over the unsecured loans because:
A. the economic success itself does not assure the repayment
B. willingness of the borrower to repay is an important factor
C. if borrower is not willing to pay or economic activity turns out to be unviable, loan could be recovered from the security.
D. all the above
D All the above reasons are correct due to which the banks prefer secured loans over the unsecured ones.
469 The procedure to deal with the registration of the firms is contained in:
A. Section 4 of Indian Partnership Act
B. Section 11 of Companies Act
C. Section 56 to 68 of Indian Partnership Act
D. Section 66 to 68 of Indian Partnership Act
C The procedure to deal with the registration of the firms is contained in Section 56 to 68 of Indian Partnership Act.
470 Which of the following statement regarding registration of firm is not correct:
A. registration of firm is optional and not compulsory
B. registration of firm is done by Registrar of Firms
C. Registration of firm and partnership deed takes place simultaneously.
D. none of the above
C Registration is required of the firm and not of the partnership deed.
471 The registrar of firms when satisfied that the provisions of Section ___ of Indian Partnership Act have been duly complied with, records
an entry in the register of firms:
A. Section 59
B. Section 58
C. Section 57
D. Section 56
B The registrar of firms when satisfied that the provisions of Section 58 of Indian Partnership Act have been duly complied with, records an
entry in the register of firms:
472 A firm is deemed to have been registered when:
A. all the formalities connected with registration are completed
B. application for registration is filed by the firm with RoF
C. when entry is made by the Registrar u/s 59 of Indian Partnership Act
D. when certificate of registration is issued by the Registrar
D A firm is deemed to have been registered when certificate of registration is issued by the Registrar of Firms.
473 If a registered firm changes its name or principal place of business, the alternation is required to be registered with a period of:
A. 30 days from date of making such alternation
B. 2 months from date of making such alteration
C. 3 months from date of making such alteration
D. there is no time limit.
D If a registered firm changes its name or principal place of business, the alternation is required to be registered but without any time limit.
474 If the Registrar of firms refuses to make amendment in the entry in the Registrar of Firms:
A. he can be directed by the State Govt. to do so
B. Ministry of Corporate Affairs, Govt. of India can direct him to do so
C. a competent court can direct him to do so
D. Company Law Board can direct him
C If the Registrar of firms refuses to make amendment in the entry in the Registrar of Firms, a competent court can direct him to do so
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475 If some person provides wrong information to Registrar of Firms for registration, what is the punishment:
A. imprisonment up to 1 month only
B. imprisonment up to 1 month and fine
C. imprisonment up to 2 months and fine
D. imprisonment up to 3 months and fine
D If some wrong information is provided to Registrar of Firms for registration, the punishment imprisonment up to 3 months and fine.
476 If a firm is not registered, it cannot file suit against 3rd parties to enforce a right arising from a contract, under provisions of :
A. Section 69 of Indian Partnership Act
B. Section 58 of Indian Partnership Act
C. Section 58 of Companies Act
D. Section 58 of Indian Contract Act
A Under provisions of Section 69 of Indian Partnership Act, if a firm is not registered, it cannot file suit against 3rd parties to enforce a
right arising from a contract.
477 A partner of an erstwhile un-registered partnership firm wants to bring a suit to enforce a right arising out the contracts:
A. he can do so
B. he can do so by making an application for registration before filing the suit
C. he cannot do so simply by making an application for registration before filing the suit.
D. none of the above
C A partner of an erstwhile un-registered partnership firm wanting bring a suit to enforce a right arising out the contracts, cannot do so
simply by making an application for registration before filing the suit, as per Supreme Court judgement in Loon Karan Sethia (1977).
478 A partner of an unregistered firm wants to file a suit for dissolution of a firm or to enforce a right to realize the property of the dissolved
firm:
A. he cannot do so as the firm is unregistered firm
B. he can do so under Section 69 (3) of Indian Partnership Act.
C. he can do so after getting the firm registered
D. none of the above
B He can do so under Section 69 (3) of Indian Partnership Act.
479 An unregistered firm u/s 69 of Indian Partnership Act can not file suit to enforce its right but as an exception, the suit can be filed by
unregistered firm also, if the amount does not exceed:
A. Rs.100
B. Rs.1000
C. Rs.10000
D. Rs.1 lac
A Suit can be filed by unregistered firm also, if the amount does not exceed Rs.100.
480 The judgement of House of Lords in the case of Salomon vs Salomon & Co. Ltd relates to:
A. procedure for incorporation of a company
B. procedure for liquidation of a company
C. the principle that the company has corporate personality
D. the principle that the company is a legal entity
C The judgement of House of Lords in the case of Salomon vs Salomon & Co. Ltd relates to the principle that the company has corporate
personality i.e. the company is a separate legal person separate from its shareholders.
481 Which of the following is a correct statement:
A. for all types of actions, the firm is liable for the actions of a partner
B. for actions of a company, the shareholders are liable personally
C. for the actions of a shareholder, the company is liable
D. for actions of a partner in normal course of business, done for a firm, the firm is liable
D Company and shareholders are separate entities due to which for the actions of the company or of the shareholder, they are not liable to
each other. For actions of the partner, a firm is liable only when the actions are for the firm and in normal course of business and in a
normal manner.
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482 At the time of incorporation of a company, the promoters are required to submit ___ suitable names in order of preference, that can be
approved for the new company (to check the availability of names):
A. one
B. two
C. three
D. five
C The promoters are to furnish 3 names out of which, if available, the Registrar shall allot the preferred name.
483 It is mandatory that each company should suffix the word limited. But in case of ____ companies, the word limited can be dispensed :
A. Companies incorporated under a special Act of the Parliament
B. Section 25 Companies
C. Companies promoted by the Govt.
D. Section 23 Companies
B Section 25 companies can be exempted from including the word limited in their name after obtaining licence from Regional Director.
484 If the word limited are not to be included in the name of the company, this can be done by obtaining ___ from ____:
A. permission, Ministry of Corporate Affairs
B. licence, SEBI
C. licence, Regional Director
D. no such permission or licence is required.
C Section 25 companies can be exempted from including the word limited in their name after obtaining licence from Regional Director.
485 Which of the following is correct regarding name of a company:
A. name should not be prohibited under the Emblems and Names (Prevention of Improper Use) Act 1950.
B. name should not be identical or too nearly resembling the name of an existing company
C. the name should not be misleading or is not intended to deceive with reference to its objects clause
D. all the above are correct
D All the statements at (a), (b) and (c) are correct.
486 When the Articles of Associations are signed by the promoter:
A. it should be in the presence of at least one witness
B. it should be in the presence of at least two witnesses
C. it should be in the presence of at least two witnesses which should be another signatory to the Articles
D. there is no requirement of witnessing
A When the Articles of Associations are signed by the promoter, it should be in the presence of at least one witness.
487 Which of the following documents is conclusive evidence that the company has come to existence:
A. memorandum of association
B. certificate of incorporation
C. articles of association
D. certificate of commencement of business
B When the certificate of incorporation has been issued, it is conclusive evidence that the company has come to existence.
488 A public company was constituted with 7 shares holders out of which 5 were minors. On behalf of the minors, the Memorandum of
Association was signed by the guardians of the minors.
A. the validity of issue of certificate of incorporation is questionable
B. the validity of issue of certificate of incorporation is partly questionable
C. the validity of issue of certificate of incorporation can not be impeached
D. the validity of issue of certificate of incorporation can be impeached
C The validity of issue of certificate of incorporation cannot be questioned i.e. the certificate of incorporation cannot be impeached.
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489 Which of the following document is required by a public company and not by a private company:
A. memorandum of association
B. certificate of incorporation
C. articles of association
D. certificate of commencement of business
D The certificate of commencement of business is required by a public company only u/s 149 of Companies Act.
490 Under provisions of Section 125 (4) of Companies Act, which of the following types of charge is not required to be registered:
A. a charge to secure the debentures
B. a charge on any immovable property
C. a charge on book debts of a company
D. none of the above
D All the above type of charges require registration with Registrar of Companies.
491 Which of the following types of charges require registration with Registrar of Companies as per provisions of Section 125 (4) of
Companies Act:
A. pledge of stocks
B. loan against document of title to goods
C. loan against deposits
D. hypothecation of goods
D The hypothecation being floating charge and not being pledge requires registration.. In other cases, Section 125 (4) is not applicable.
Hence, these do not require registration.
492 When term loan for purchase of machinery is given, it falls in which of the following category of charges:
A. floating charge
B. fixed charge
C. first charge
D. exclusive charge
B Where the charge extends to a specific property like machinery, it is called fixed charge.
493 When cash credit limit is allowed against hypothecation of stocks, it falls in which of the following category of charges:
A. floating charge
B. fixed charge
C. first charge
D. exclusive charge
A Where the charge extends to the present as well as future property of a company and is not attached to a particular property, like in case
of stocks that keep on rotating, in cash credit hypothecation of stocks.
494 What represents the crystallization of floating charge into a fixed charge:
A. when the company defaults in repayment of term loan instalment and interest
B. when the company defaults in servicing the interest in the cash credit account
C. when the rotation of stocks stops and same stock continues to be held as security, for some reason
D. in all the above situations
C When the rotation of stocks stops, say due to stoppage of production and movement of goods hypothecated to the bank and same stock
continues to be held as security, for any reason, the floating charge gets converted into a fixed charge.
495 To get the charge created in favour of a bank, registered with Registrar of Companies, a company gets a period of:
A. 30 days from date of creation of charge
B. 30 days from date of first disbursement of the loan
C. 30 days from date of last disbursement of the loan
D. any of the above, whichever is earlier.
A The companies get 30 days to file the particulars of charge to get it registered within 30 days from date of creation of charge.
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496 If a company fails to file the particulars within the stipulated initial period of 30 days, the particulars can be filed for registration with
permission of Registrar of Companies within :
A. next 270 days
B. next 60 days
C. next 30 days
D. next 10 days
C If a company fails to file the particulars within the stipulated initial period of 30 days, the particulars can be filed for registration with
permission of Registrar of Companies within next 30 days.
497 Which of the following forms do not match for filing the particulars:
A. for a filing particulars for the first time - Form 8
B. for modification of the charge already registered - Form 13
C. for satisfaction of charge on adjustment of the loan - Form 17
D. none of the above
B For modification, Form 10 is required to be used instead of Form 13. Other details are correct.
498 The basic responsibility for filing of particulars of charge lies with:
A. the bank only
B. the company only
C. the bank and company both
D. primarily the bank and secondarily the bank
B U/s 134 of Companies Act, it is the responsibility of the company. But if company is failing in its duty, the bank as a creditor, can get the
charge registered by filing the particulars.
499 If a company fails to get the charge registered, the effect of the non-registration is that:
A. in case of liquidation, the charge will not be valid charge against the liquidator
B. in case of liquidation, the charge will not be valid against the other secured creditors
C. as against the company itself, if it does not go into liquidation, the charge will be valid and can be enforced
D. all the above are correct
D All the statements at (a), (b) and (c) are correct.
500 What are the provisions of Section 141 of Companies Act:
A. the authority of Registrar of Companies to allow the company to file particulars of charge after 30 days
B. the authority of Registrar of Companies to allow the company to file particulars of charge after 60 days
C. the authority of Company Law Board to allow the company to file particulars of charge after 60 days
D. the authority of Registrar of Companies to allow the company to file particulars of charge any time
C Section 141 of Companies Act deals with authority of Company Law Board to allow the company to file particulars of charge after 60
days (i.e. 30 days discretion of the company + 30 days discretion of the Registrar of Companies)
501 The basic objective of enactment of SARFAESI Act was:
A. to improve the quality of bank lending
B. to enable banks and FIs to recover bad loans by laying hands on the security without court intervention
C. to sell the assets of the borrower without going to a court of law
D. to reduce the NPAs
B The basic objective was to provide a tool to banks and FIs to recover bad loans by laying hands on the security (i.e. enforcement of
security interest) without court intervention.
502 The SARFAESI Act has introduced which of the following (which one is not correct):
A. securitization and reconstruction of financial assets
B. financial assets means the non-performing loans only
C. enforcement of security interest without court intervention
D. setting up of central registry for registration of securitization transactions
B Financial assets for the purpose of SARFAESI Act means non-performing loans as well as investments.
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503 Which of the following is not correct regarding SARFAESI Act?
A. it extends to entire India including J & K
B. it came into effect wef June 21, 2002
C. it is applicable to housing finance companies
D. those assets of the borrower can also be sold on which the bank did not create any charge
D Under SARFAESI Act only those securities can be sold on which the borrower has created some charge, say hypothecation, assignment or
mortgage.
504 The constitutional validity of SARFAESI Act was examined by Supreme Court in which of the following cases:
A. Mardia Chemicals vs Union Bank of India
B. Maheshwari Chemicals vs Union Bank of India
C. Mardia Chemicals vs Union of India & others
D. Madari Chemicals vs Union Bank of India
C The case is Mardia Chemicals vs Union of India and others.
505 Which particular provision was suggested by Supreme Court to be removed from the SARFAESI Act, in case of Mardia Chemicals vs
Union of India and others:
A. deposit of 75% of amount of loan if the borrower wants to approach DRT against possession of security.
B. deposit of 50% of amount of loan if the borrower wants to approach DRT against possession of security.
C. deposit of 50% of amount of loan if the borrower wants to appeal to DRAT against DRT.
D. deposit of 75% of amount of loan if the borrower wants to appeal to DRAT against DRT.
A The provision u/s 17 (2) i.e. deposit of 75% of amount of loan if the borrower wants to approach DRT against possession of security, was
found to be unreasonable and oppressive by Supreme Court.
506 After amendment to Section 17 (2) of SARFAESI Act, what new provision has been made:
A. borrower can approach DRT without depositing any amount but to approach DRAT against decision of DRT he has to deposit 75% of the due
amount.
B. borrower can approach DRT without depositing any amount but to approach DRAT against decision of DRT he has to deposit 50% of the due
amount.
C. borrower can approach DRT without depositing any amount but to approach DRAT against decision of DRT he has to deposit 75% of the due
amount which can be reduced to NIL.
D. borrower can approach DRT without depositing any amount but to approach DRAT against decision of DRT he has to deposit 50% of the due
amount which can be reduced to NIL.
B The amended provision is that the borrower can approach DRT without depositing any amount but to approach DRAT against decision
of DRT he has to deposit 50% of the due amount.
507 If a security is in possession of the bank, and bank wants to sell the security to recover the due loan:
A. it can do so under SARFAESI Act
B. it can do so under Indian Contract Act
C. it can do so under Recovery of Debt due to Banks and FIs Act 1993
D. it can do so under any of the above
B If a security is in possession of the bank, and bank wants to sell the security to recover the due loan, it can do so under provisions of
Indian Contract Act such as in case of pledge of goods.
508 What is the position of sale of immovable property by a bank where it is charged to the bank:
A. under SARFAESI Act, it can be sold after obtaining possession
B. under Indian Contract Act, it cannot be sold
C. under Transfer of Property Act, it can be sold through court intervention only
D. all the above are correct
D All the options given above are correct.
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509 The provisions of SARFAESI Act are applicable in case of:
A. all assets of the borrower
B. only movable assets of the borrower
C. only those securities which have been charged to the bank to secure the loan
D. only those securities which are already in possession of the bank.
C The provisions of SARFAESI Act are applicable in case of only those securities which have been charged to the bank to secure the loan
and are not already in bank possession.
510 SARFAESI Act is not applicable in which of the following category of banks.
A. banking companies
B. SBI & Associates and nationalized banks
C. Regional Rural Banks
D. cooperative banks
C SARFAESI Act is not available for RRBs.
511 Under SARFAESI Act, the term borrower does not include which of the following:
A. the person who has been granted financial assistance from bank or FI
B. the person who has given guarantee for the loan
C. the person who has created mortgage etc. to secure the loan
D. none of the above
D All the above persons are covered under the definition of borrower under SARFAESI Act.
512 All transactions relating to asset securitization or reconstruction or creation of security interest are required to be registered with ____
under provisions of SARFAESI Act:
A. Security and Exchange Board of India
B. Central Registry
C. Registrar of Companies
D. Registrar of Assurances
B All transactions relating to asset securitization or reconstruction or creation of security interest are required to be registered with Central
Registry to be created by Central Govt. under provisions of SARFAESI Act.
513 The priority of charge under the Central Registry provisions, under SARFAESI Act shall be on the basis of:
A. charge created over the security first, shall have the priority
B. first in time registered to get priority over the person doing registration at a later time
C. priority shall be determined by the authority heading the Central Registry
D. priority shall be with reference to the purpose of loan given against the security
B The priority of charge under the Central Registry provisions under SARFAESI Act shall be on the basis of first in time to register to get
priority over the person doing registration at a later time.
514 Which of the following is not correct as per provision of SARFAESI Act:
A. the Act becomes applicable only when there is a default
B. the bank can classify an account as NPA as per its decision
C. only secured creditors can proceed under SARFAESI Act. The provisions of the Act cannot be used by unsecured creditor
D. the Central Registry will also serve the purpose of maintaining credit information of the lenders.
B The banks cannot classify the account as NPA as per their decision. They are required to follow RBI guidelines as per opinion expressed
by Supreme Court in Mardia Chemicals vs Union of India case.
515 Under SARFAESI Act, which of the following is not covered under Financial Assistance:
A. loan or advance made by the bank
B. subscription to bonds and debentures
C. given guarantee or issued letter of credit
D. none of the above
D Under provisions of SARFAESI Act, all the above are covered under the term Financial Assistance.
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516 Before enactment of SARFAESI Act, which of the following types of charge, was not defined in any Act:
A. Pledge
B. Assignment
C. Hypothecation
D. Mortgage
C Before enactment of SARFAESI Act, hypothecation was not defined in any Act:
517 Which of the following is not an important feature of definition of Hypothecation as given in SARFAESI Act:
A. it is charge on immovable assets
B. the assets can be existing or future asset
C. it is a charge without delivery of possession
D. it is created by the borrower in favour of the creditor
A Hypothecation is a charge which is created on moveable assets and not immovable property. On immovable assets mortgage is created
under provision of Transfer of Property Act.
518 Under provisions of SARFAESI Act, the term non-performing asset means the account of a borrower which is classified by the bank as
____ as per ___:
A. sub-standard only, RBI directives
B. sub-standard or doubtful, bank discretion
C. sub-standard or doubtful or loss, RBI directives
D. sub-standard or doubtful or loss, bank rules
C Under provisions of SARFAESI Act, the term non-performing asset means the account of a borrower which is classified by the bank as
sub-standard or doubtful or loss, RBI directives.
519 Under provisions of SARFAESI Act, the term originator and obligor means:
A. borrower, securitization company
B. bank or FI, borrower
C. securitization company, bank or FI
D. securitization company, borrower
B Originator means the person who had given the loan or made the investment originally and the obligor means the person liable i.e. the
borrower.
520 Under provisions of SARFAESI Act, the term property means (which of the following is not included)
A. intangible assets such as patents, copy rights
B. movable and immovable assets/property
C. debts or receivables
D. none of the above
D All the above type of assets are included in the term property as per provisions of SARFAESI Act.
521 Which of the following is not included in the term Qualified Institutional Buyers (QIB) within the meaning of SARFAESI Act:
A. financial institution or insurance company
B. banks or asset management companies
C. state financial corporation or state industrial development corporation
D. companies registered under Companies Act.
D Companies registered under Companies Act are not QIB unless they get registration from SEBI.
522 Under SARFAESI Act, the reconstruction company means:
A. a financial institution or insurance company
B. a company set up under Companies Act for the purpose of asset reconstruction
C. an asset management company
D. subsidiaries of Banks
B Under SARFAESI Act, the reconstruction company means a company set up under Companies Act for the purpose of asset
reconstruction.
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523 When a reconstruction company issues security receipts to the Qualified Institutional Buyers representing undivided interest in the
financial assets, the transaction is known as:
A. reconstruction of financial asset only
B. securitization of financial asset only
C. reconstruction or securitization
D. asset reconstruction
B When a reconstruction company issues security receipts to the Qualified Institutional Buyers representing undivided interest in the
financial assets, the transaction is known as securitization of financial asset.
524 Within the meaning of SARFAESI Act, the term security interest represents any right or title or interest upon a property created in
favour of any secured creditor and does not include:
A. mortgage
B. hypothecation
C. assignment
D. pledge or lien
C Within the meaning of SARFAESI Act, the pledge or lien are not included in the term security interest because under Indian Contract
Act, the sale of security without court intervention is already permitted.
525 Which of the following instrument is issued by a securitization company for securitization of a financial asset, that represents undivided
interest in the security, under provisions of SARFAESI Act:
A. pass through certificate
B. debenture certificate
C. security receipt
D. security sharing certification
C The instrument called security receipt is issued by a securitization company for securitization of a financial asset, that represents
undivided interest in the security.
526 On the request of the secured creditor (bank or FI), who can take possession of the security to handover it to the secured creditor under
provisions of SARFAESI Act:
A. Distt. magistrate or the Chief Metropolitan Magistrate
B. Distt. Police Chief or the Chief Judicial Magistrate
C. Distt. magistrate or the Distt. Police Chief
D. any of the above
A On the request of the secured creditor (bank or FI), Distt. magistrate or the Chief Metropolitan Magistrate can take possession of the
security to handover it to the secured creditor.
527 The provisions of SARFAESI Act can be invoked by a bank to recover the loan if:
A. bank is of the opinion that recovery of the loan should be made
B. there is direction from RBI to recover the loan
C. loan is declared NPA as per RBI guidelines and security is charged to bank
D. loan is declared NPA as per policy of the bank and security is charged to bank
C The provisions of SARFAESI Act can be invoked by a bank to recover the loan if loan is declared NPA as per RBI guidelines and security
is charged to bank.
528 Under provisions of SARFAESI Act, a securitization or reconstruction company can commence the business of securitization or
reconstruction, if the following conditions are satisfied (which one is not correct):
A. it has got it self registered with RBI
B. it has got itself registered with SEBI for this business
C. its owned funds are not less than Rs.100 cr.
D. its owned funds are at least 15% of the total financial assets acquired
B With SEBI, registration is not required. But registration with RBI is mandatory for securitization and reconstruction activities.
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529 The certificate of registration issued by RBI to a securitization or reconstruction company under SARFAESI Act, can be cancelled if:
A. company does not carry the business of securitization or reconstruction
B. company has stopped to receive or hold any investment from QIBs
C. company failed to comply with the conditions of registration certificate issued by RBI
D. all the above
D The certificate of registration issued by RBI to a securitization or reconstruction company under SARFAESI Act, can be cancelled if any
of these conditions is fulfilled.
530 If the registration of a securitization or reconstruction company is cancelled by RBI, under SARFAESI Act:
A. it can request RBI Central Board to reconsider the issue within 15 days
B. it can appeal to Central Govt. within 30 days
C. it can appeal to Central Registry within 30 days
D. it can file suit in a civil court
B If the registration of a securitization or reconstruction company is cancelled by RBI, under SARFAESI Act, it can appeal to Central
Govt. within 30 days from date of communication of such order.
531 If the registration of a securitization or reconstruction company has been cancelled by RBI under SARFAESI Act and it still has not
paid the dues of the investors along with interest, within the period specified by RBI:
A. the registration shall be deemed to have been continuing
B. the registration shall be deemed to have been cancelled
C. the registration shall be treated as available for 2 months
D. the registration shall be treated as cancelled after 3 months
A If registration of a securitization or reconstruction company has been cancelled by RBI under SARFAESI Act and it still has not paid the
dues of the investors along with interest within the period specified by RBI, the registration shall be deemed to have been continuing
532 A securitization transaction by a securitization company is completed in __ stages i.e.___, under SARFAESI Act:
A. two stages i.e. acquiring the assets from banks and making payment of security receipts
B. two stages i.e. acquiring the assets from banks and then issuing security receipts
C. three stages i.e. acquiring the assets from banks, issuing security receipts and then making payment to QIBs
D. none of the above
B A securitization transaction by a securitization company is completed in two stages i.e. acquiring the assets from banks and then issuing
security receipts.
533 When the security receipt is issued by a securitization company to QIB representing undivided security interest, what are the provisions
regarding registration under SARFAESI Act:
A. registration with Registrar of Companies is mandatory
B. registration is required with registrar of assurances
C. registration is not required
D. registration is required with Central Registry
C When the security receipt is issued by a securitization company to QIB representing undivided security interest, no registration is
required under SARFAESI Act.
534 For realization of the acquired financial assets by an asset reconstruction company (ARC), under SARFAESI Act, which of the
following option is not available:
A. to take over the management of the business of the borrower
B. to sell or lease the business or enforce security interest as per SARFAESI Act
C. rescheduling the payment of debts
D. none of the above
D All the above options are available to ARC for realization of financial asset acquired by it from banks or FIs.
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535 Which of the following is not correct in the context of a securitization company:
A. it can not undertake any other business i.e. other than securitization or reconstruction
B. it can raise deposits to finance its activities
C. normally the assets should be realized within 5 years as per RBI guidelines
D. none of the above
B Securitization companies cannot raise deposits.
536 What time period is available as per RBI guidelines to a securitization or reconstruction company to realize an acquired financial asset
under SARFAESI Act:
A. the time to be determined by the company
B. maximum 3 years
C. maximum 5 years
D. depending upon the condition of the financial asset
C As per RBI guidelines, the Securitization or Reconstruction companies are allowed a period of 5 years to realize the financial asset
acquired by them.
537 A securitization or reconstruction company is required to maintain capital adequacy ratio of:
A. minimum 8%
B. minimum 9%
C. minimum 10%
D. minimum 15%
D A securitization or reconstruction company is required to maintain capital adequacy ratio of minimum 15% of total assets acquired.
538 Which of the following statement does not match:
A. Right of acquisition of financial asset by securitization or reconstruction company subject to prior agreement about the assets - false
B. offer document, debenture, agreement and security receipt are the documents involved in a securitization transaction - true
C. Acquisition of a financial assets by securitization or reconstruction company is with the liability attached to such asset - true
D. on the basis of security receipt, the holder is entitled to undivided interest in the security - true
C Acquisition of a financial assets by securitization or reconstruction company is not subject to the liability attached to such asset before
acquisition.
539 If an existing company incorporated for securitization wants to undertake securitization activities after application of SARFAESI Act:
A. it has to incorporate a separate company
B. it is deemed to have acquired the rights to undertake securitization activities under SARFAESI Act
C. it is required to obtain registration with RBI within 6 months from commencement of the Act.
D. the existing companies do not require any registration with RBI
C If an existing company incorporated for securitization wants to undertake securitization activities after application of SARFAESI Act, it
is required to obtain registration with RBI within 6 months from commencement of the Act.
540 Before taking possession of a security under SARFAESI Act, the bank is required to issue notice to the borrower under provisions of:
A. Section 10 (3) of SARFAESI Act
B. Section 13 (2) of SARFAESI Act
C. Section 14 (1) of SARFAESI Act
D. Section 17 (2) of SARFAESI Act
B The notice giving 60 days time to the borrower is required before taking possession of the security.
541 Under SARFAESI Act, before taking possession, a ___ notice is required to be given to the borrower:
A. one week
B. one month
C. 45 days
D. 60 days
D The notice giving 60 days time to the borrower is required before taking possession of the security.
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542 If the borrower has raised objection to the possession of the security by the bank, the bank is required to send reply to the borrower
justifying the possession under SARFAESI Act:
A. one week
B. one month
C. 45 days
D. 60 days
A The period for justifying the possession, to the borrower is one week.
543 Under SARFAESI Act, which of the following courts can take cognizance of the issues relating to dispute between the borrower and the
secured creditor (bank or FI)
A. a distt. court
B. High Court
C. DRT or DRAT
D. any of the above
C Under SARFAESI Act, only DRT or DRAT can take cognizance of the issues relating to dispute between the borrower and the secured
creditor (bank or FI)
544 In case of consortium advances, the action under SARFAESI Act can be initiated if there is consent of ___ banks:
A. 75% banks by value and 60% by number
B. 75% banks by value
C. 60% banks by value
D. 75% banks by number and 60% banks by value
B In case of consortium advances, the action under SARFAESI Act can be initiated if there is consent of 75% banks by value.
545 Under SARFAESI Act, the action on behalf of the bank or FI can be initiated by an authorised officer, who can be:
A. an officer authorised by the competent authority
B. an officer in Scale IV only
C. an officer authorised by the Board of the bank only
D. an officer in Scale IV or above or authorised by the Board of the bank
D Under SARFAESI Act, the action on behalf of the bank or FI can be initiated by an authorised officer, who should be an officer in Scale
IV or above or authorised by the Board of the bank.
546 If the borrower wants to approach DRT against the possession of the security by the bank, he can do so within :
A. one week
B. one month
C. 45 days
D. 60 days
C If the borrower wants to approach DRT against the possession of the security by the bank, he can do so within 45 days.
547 If the borrower wants to approach DRT against the possession of the security by the bank, he can do so by depositing:
A. 75% of the amount due
B. 50% of the amount due
C. 50% of the amount due that can be reduced to 25% by DRT
D. no amount is required to be deposited.
D If the borrower wants to approach DRT against the possession of the security by the bank, he can do so without depositing any amount as
per amendment to original Section 17 (2) of SARFAESI Act on direction of Supreme Court.
548 If the borrower wants to appeal DRAT against the decree of DRT for possession of the security by the bank, he can do so within :
A. one week
B. 30 days
C. 45 days
D. 60 days
B If the borrower wants to appeal to DRAT against DRT decision for the possession of the security by the bank, he can do so within 30 days.
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549 If the borrower wants to appeal to DRAT against DRT decree for the possession of the security by the bank, he can do so by depositing:
A. 75% of the amount due which can be reduced to 25% by DRAT
B. 50% of the amount due which can be reduced to NIL by DRAT
C. 50% of the amount due that can be reduced to 25% by DRAT
D. no amount is required to be deposited.
C If the borrower wants to appeal to DRAT against DRT decision for the possession of the security by the bank, he can do so by depositing
50% of the amount which can be reduced to 25% by DRAT.
550 With regard to sale price of the security, which of the following is not correct:
A. the minimum sale price can be the reserve price
B. the reserve price is fixed by the borrower and the bank together
C. if sale is below reserve price, the consent of the borrower is required
D. none of the above
B The reserve price is fixed by the bank on the basis of valuation of the security before sale.
551 Before sale of a security, a ___ days notice is required to be given to the borrowers as per SARFAESI Act.
A. one week
B. 30 days
C. 45 days
D. 60 days
B Before sale of a security, a 30 days notice is required to be given to the borrowers as per SARFAESI Act.
552 The buyer of the assets sold by the bank under SARFAESI Act is required to pay ___ at the time of sale to confirm the sale:
A. 10%
B. 15%
C. 20%
D. 25%
D The buyer of the assets sold by the bank under SARFAESI Act is required to pay 25% of the purchase price, at the time of sale to confirm
the sale.
553 The buyer of the assets sold by the bank under SARFAESI Act is given ___ time to make payment of the balance amount.
A. one week
B. 10 days
C. 15 days
D. 25 days
C The buyer of the assets sold by the bank under SARFAESI Act is given 15 days time to make payment of the balance amount.
554 The powers to take possession of the security are vested with under SARFAESI Act:
A. with the police authority
B. with the judicial authority
C. with the secured creditors
D. any of the above
B The powers to take possession of the security are vested with under SARFAESI Act with the judicial authority i.e. Chief Metropolitan
Magistrate or Distt. Magistrate and then to handover the possession to the secured creditor.
555 When the management of a business is taken over by the secured creditor under SARFAESI Act, for the loss of office, the directors of
that company:
A. are entitled to subsistence allowance
B. compensation for loss
C. right of employment in the company
D. no right is available
D When the management of a business is taken over by the secured creditor under SARFAESI Act, for the loss of office, the directors of
that company, no right or compensation is available.
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556 What is the time period is available to DRT to dispose off the application received from the aggrieved party by the measures taken by
the secured creditor, under SARFAESI Act
A. within 30 days
B. within 45 days
C. within 60 days
D. within 90 days
C The application has to be disposed off by DRT within 60 days and in exceptional cases in 4 months.
557 Which of the following types of loans are eligible for action under SARFAESI Act:
A. where the outstanding balance is Rs.1 lac or more
B. the agriculture loans
C. the loan on the basis of pledge or lien
D. the loan against the bank deposit
B Agriculture land cannot be sold but agriculture loans are eligible. The balance in the account should be above Rs.1 lac for eligibility.
558 Which of the following types of loans are not eligible for action under SARFAESI Act?
A. if the amount to be recovered does not exceed 20% of the principal and interest
B. if the limitation has expired in the account
C. if the security is not charged to the bank
D. all the above
D All the above types of loans are not eligible for action under SARFAESI Act.
559 If the borrower raises objections to the notice of possession sent by the bank under SARFAESI Act, how should the bank dispose off the
same:
A. it should be ignored
B. it should be replied to within one week without any fresh consideration
C. the bank should give due consideration to the objection and then reply within one week
D. the bank need not give any importance to notice and reply should be sent as a matter of legal formality.
C If the borrower raises objections to the notice of possession sent by the bank under SARFAESI Act, the bank should give due
consideration to the objection and then reply within one week as per direction given by Supreme Court in Mardia Chemicals vs Union of
India & others.
560 What should be priority (1st payment) for appropriation of sale proceeds realized from sale of property under SARFAESI Act. (1)
payment of dues of the secured creditor (2) payment of dues of labour (3) payment of cost, charges and expenses for preservation and
protection of securities, insurance premium etc. (4) payment o legal cost incurred by the creditor for taking possession and for affecting
sale.
A. for (1)
B. for (2)
C. for (3)
D. for (4)
C The priority for appropriation should be for payment of cost, charges and expenses for preservation and protection of securities,
insurance premium etc.
561 Which of the following can set up a Central Registry under SARFAESI Act:
A. Reserve Bank of India
B. Debt Recovery Tribunal
C. Registrar of Companies
D. Central Govt.
D Under SARFAESI Act, the Central Govt. has to authority to set up Central Registry.
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562 Which of the following types of transactions are not required to registered under Central Registry under SARFAESI Act:
A. charge created by way of pledge or lien
B. securitization of financial assets
C. reconstruction of financial assets
D. creation of security interest under SARFAESI Act.
A The transactions at (b), (c) and (d) are required to be registered with Central Registry under SARFAESI Act.
563 If a registration with Central Registry takes place under SARFAESI Act, in which of the following laws, the registration shall not be
required:
A. Companies Act
B. Registration Act
C. Motor Vehicles Act
D. none of the above
D A registration with Central Registry does not mean the registration provisions in other Laws shall be waived. So registration will
continue with other Acts also, as required.
564 What is the time period during which the registration with Central Registry under SARFAESI Act should be made:
A. within 15 days of transaction or creation of security interest
B. within 30 days of transaction or creation of security interest
C. within 45 days of transaction or creation of security interest
D. within 60 days of transaction or creation of security interest
B The time period is 30 days of date of such transaction or creation of security interest
565 If there is delay in getting the registration with Central Registry, who can condone such delay and allow the registration, under
SARFAESI Act.
A. Central Registrar can condone the delay up to 10 day after initial period of 30 days
B. Central Registrar can condone the delay up to 15 day after initial period of 30 days
C. Central Registrar can condone the delay up to 30 day after initial period of 30 days
D. Central Registrar can condone the delay up to 60 day after initial period of 30 days
C If there is delay in getting the registration with Central Registry, the Central Registrar can condone the delay up to 30 day after initial
period of 30 days.
566 If there is any modification to the security interest already registered, the modification is required to be registered, under SARFAESI
Act:
A. it is not required to be registered.
B. it is to be registered within 10 days .
C. it is to be registered within 20 days
D. it is to be registered within 30 days
D If there is any modification to the security interest already registered, the modification is required to be registered within 30 days.
567 If particulars are filed for satisfaction of security interest with the Central Registry, it sends a notice to the secured creditor within __ as
to why the satisfaction should not be recorded, under SARFAESI Act:
A. 10 days
B. 14 days
C. 25 days
D. 30 days
B The notice period is 14 days.
568 If there is any satisfaction of the security interest already registered, the satisfaction details are required to be submitted to Central
Registry within, under SARFAESI Act:
A. not required to be registered.
B. to be registered within 10 days .
C. to be registered within 20 days
D. to be registered within 30 days
D If there is any satisfaction of to the security interest already registered, the satisfaction report is to be filed within 30 days.
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569 If a charge is satisfied on a security interest it is to be reported within 30 days by ____, under SARFAESI Act:
A. the borrower
B. the owner of the asset
C. the secured creditor
D. any of the above
C The duty to report the satisfaction is that of the secured creditor, if a charge is satisfied on a security interest.
570 Under Section 23 of SARFAESI Act, if the particulars of charge are not filed with the Central Registry, there is provision for:
A. fine up to Rs.1000 per day for default period and imprisonment up to 2 months
B. fine up to Rs.1000 per day for default period
C. fine up to Rs.5000 per day for default period and imprisonment up to 6 months
D. fine up to Rs.5000 per day for default period
D Under Section 23 of SARFAESI Act, if the particulars of charge are not filed with the Central Registry, there is provision for fine up to
Rs.5000 per day for default period.
571 U/s 12 of SARFAESI Act, if a securitization company fails to comply with RBI directions, it can be fined up to ___ by ___:
A. Rs.1 lac, Central Registrar
B. Rs.1 lac, RBI
C. Rs.5 lac, Central Registrar
D. Rs.5 lac, RBI
D U/s 12 of SARFAESI Act, if a securitization company fails to comply with RBI directions, it can be fined up to Rs.5 lac by RBI.
572 U/s 12 of SARFAESI Act, if a securitization company fails to comply with RBI directions and there is further continuation of the
offence, there is provision for additional fine up to ___ by RBI:
A. Rs.10 lac
B. Rs.5000 per day of default
C. Rs.10000 per day of default
D. Rs.25000 per day of default.
C U/s 12 of SARFAESI Act, if a securitization company fails to comply with RBI directions and there is further continuation of the offence,
there is provision for additional fine up to Rs.10000 per day by RBI.
573 If a person contravenes or attempts to contravene or abets the contravention of provisions of SARFAESI Act, there is provision for:
A. fine up to Rs.5 lac
B. fine up to Rs.3 lac and imprisonment up to 3 year
C. imprisonment up to one year or a fine or both
D. imprisonment up to 3 years or a fine or both
C If a person contravenes or attempts to contravene or abets the contravention of provisions of SARFAESI Act, there is provision for
imprisonment up to one year or a fine or both
574 No court below the rank of ___ can take cognizance of offences under SARFAESI Act:
A. DRT
B. DRAT
C. High Court
D. Metropolitan Magistrate or Judicial Magistrate of First Class
D No court below the rank of Metropolitan Magistrate or Judicial Magistrate of First Class can take cognizance of offences under
SARFAESI Act.
575 There are certain securities/loans, that are excluded from the purview of SARFAESI Act such as lien, pledge etc. u/s ___ of SARFAESI
Act.
A. Section 31
B. Section 32
C. Section 33
D. Section 34
A The exclusions fall u/s 31 of SARFAESI Act.
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576 In which of the following cases, the SARFAESI Act is not applicable:
A. creation of security interest in any vessel under Merchant Shipping Act or any aircraft under Aircraft Act
B. properties not liable for attachment or sale u/s 60 of Civil Procedure Code 1908
C. rights of unpaid seller u/s 47 of Sale of Goods Act 1930
D. all the above
D In all the above cases, the provisions of SARFAESI Act are not applicable.
577 On receipt of a notice of possession from the bank under SARFAESI Act, the borrower repaid a major portion of the loan amounting to
about 81% of the principal and interest:
A. bank can continue with possession process to recover the balance under SARFAESI Act
B. bank can seek DRT direction to continue with possession process to recover the balance under SARFAESI Act.
C. bank cannot continue with action under SARFAESI Act.
D. none of the above
C Since the amount due is less than 20% of the principal and interest, the action under SARFAESI Act is not possible.
578 If on a particular point, the provisions of Transfer of Property Act and SARFAESI Act differ:
A. Transfer of Property Act shall prevail
B. SARFAESI Act shall prevail
C. the decision shall be made by a civil court
D. the decision shall be made by DRT
B If on a particular point, the provisions of Transfer of Property Act and SARFAESI Act differ, the provisions of SARFAESI Act shall
prevail.
579 A cause of action arose on a loan recovery about 4 years back. The bank wants to enforce the sale of security charged to the bank:
A. the bank will have to give notice of possession and then proceed
B. the bank will have to comply with the required procedure to proceed
C. the bank cannot initiate action
D. the bank can initiate action with the permission of a civil court
C The limitation in the account has expired (assuming a period of 3 years) due to which action under SARFAESI Act is not possible.
580 Rules framed by the Central Govt. under SARFAESI Act become valid when:
A. these are notified by the Gazette
B. the competent authority approves the rules
C. both the Houses of Parliament approve the rules
D. any of the above, whichever is earlier
C Rules framed by the Central Govt. become valid when both the Houses of Parliament approve the rules.
581 Which of the following is not the objective of Ombudsman Scheme formulated by RBI.
A. to resolve customer complaints relating to banking services
B. to facilitate the satisfaction or settlement of customer complaints
C. to resolve the dispute between banks and customers and between banks, through conciliation or arbitration
D. all the above
C Objectives at (a) and (b) are correct but at (c) is not fully correct because, the dispute between banks are not resolved by Ombudsman
after the scheme was revised in 2006.
582 Which of the following is not correct regarding the Ombudsman scheme.
A. scheme extends to whole of India including J&K
B. scheme is applicable to all banks in India
C. scheme is funded by RBI
D. none of the above
D All the above facts are correct
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583 The decision or order of the Ombudsman, in the scheme is called:
A. Decree of the Ombudsman
B. Award of the Ombudsman
C. Order of the Ombudsman
D. Judgement of the Ombudsman
B It is called Award of the Ombudsman.
584 The appellate authority under the Ombudsman scheme to whom appeal can be made by the bank or the customer is:
A. Governor RBI
B. any Dy Governor of RBI
C. Dy Governor of RBI, the in charge of the Deptt. implementing the scheme
D. Ministry of Finance
C Dy Governor RBI, the in charge of the Deptt. implementing the scheme, is the Appellate Authority under the scheme.
585 The complaint under Ombudsman scheme can be made in :
A. paper form only
B. electronic form only
C. paper and electronic form
D. paper, electronic or any other mode
C The complaint can be made in paper form or in electronic form, at the option of the customer.
586 Which of the following can be appointed as Ombudsman and for how much time?
A. General Manager of RBI only for 5 years at a time.
B. General Manager or Chief General Manager of RBI for 3 years at a time.
C. Chief General Manager of RBI only for 3 years at a time.
D. Any other suitable person as per criteria fixed by RBI, for 3 years at a time.
B General Manager or Chief General Manager of RBI can be appointed as Ombudsman, for 3 years at a time.
587 Which of the following statement is correct regarding the Ombudsman Scheme:
A. disputes amongst two banks can be taken up by Ombudsman
B. the cooperative banks and RRBs are not covered under the scheme
C. Ombudsman is appointed by the Central govt.
D. the Ombudsman deals with the complaints received from customers subject to fulfillment of procedure to be adopted by the customer
D Under Ombudsman scheme, all banks are eligible, disputes amongst banks cannot be covered and Ombudsman is appointed by RBI.
588 A promise has been made by the sales agent of the bank and it is not fulfilled by the bank:
A. no complaint lies with the Ombudsman
B. complaint lies with the Ombudsman if bank had agreed to fulfill that promise
C. complaint can be made with the Ombudsman
D. the complaints relating to outsourcing are not covered.
C The complaints arising out of outsourcing arrangement are also covered due to which the complaint can be entertained by the
Ombudsman.
589 Some amount has been fraudulently withdrawn from account of a customer and bank is not restoring the amount:
A. being a criminal case, complaint on this issue cannot be entertained by Ombudsman
B. this aspect is covered by the Ombudsman scheme. Hence complaint can be entertained
C. as the loss is of civil liability nature, the customer has to file suit in a civil court only
D. Ombudsman can proceed in the matter as suggested by the Police, if the customer has lodged the FIR.
B This aspect is covered by the Scheme due to which the complaint can be entertained.
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590 Which of the following can make complaint to the Ombudsman:
A. customer himself
B. Reserve Bank of India on behalf of the customer
C. Central govt. on behalf of the customer
D. all the above
D The complaint can be made by the customer himself or on his behalf by RBI or Central govt.
591 The limitation period for making complaint under the scheme is ___ and it begins from ___:
A. one year, from date of receipt of reply from the bank where customer is not satisfied or from expiry of one month, after making the complaint to
the bank, which bank has not replied.
B. two years, from date of receipt of reply from the bank where customer is not satisfied or from expiry of one month, after making the complaint
to the bank, which bank has not replied.
C. 3 years, from date of receipt of reply from the bank where customer is not satisfied or from expiry of one month, after making the complaint to
the bank, which bank has not replied.
D. one year, from date of receipt of reply from the bank where customer is not satisfied or from expiry of one month, after making the complaint to
the bank, which bank has not replied, whichever is earlier.
D It is one year, from date of receipt of reply from the bank where customer is not satisfied or from expiry of one month, after making the
complaint to the bank, which bank has not replied.
592 A customer is illiterate and finds it difficult to represent himself before the Ombudsman. He engages an advocate to handle his
complaint:
A. a person can engage his representative including an advocate as per the scheme
B. advocate can be engaged with permission of Ombudsman
C. services of advocate are not permitted to be availed under the scheme to represent the complainant.
D. advocate can be engaged provided he does not claim any professional fee.
C Under the scheme, the services of advocate are not permitted to be availed to represent the complainant..
593 A bank refuses acceptance of small denomination notes from a customer:
A. the complaint can be entertained by Ombudsman on this issue
B. the complaint cannot be accepted, as this relates to extra work load
C. the complaint can be entertained, if the customer proves that he was ready to pay extra charges for small denomination notes
D. this is excluded from grounds of complaint. Hence complaint cannot be made.
A The complaint can be made by the Customer on this issue as this one of the grounds of making complaint to the Ombudsman.
594 The bank has refused to open bank account in the name of a customer on valid reasons.
A. the complaint can be entertained by the Ombudsman
B. the complaint cannot be entertained by the Ombudsman
C. the complaint cannot be entertained, as the person has not become bank customer, as yet.
D. the complaint can be entertained by the Ombudsman if customer could prove that he is correct.
B If the reasons of refusal for not opening the account are valid, the complaint is not maintainable.
595 A person approached the bank for sanction of loan but the bank refused the sanction of the loan:
A. the complaint can be entertained by the Ombudsman
B. the complaint cannot be entertained by the Ombudsman
C. the complaint cannot be entertained, as the person has not become customer of the bank, as yet.
D. the complaint can be entertained by the Ombudsman if customer could prove that he is a creditworthy customer.
B The decision to sanction a loan or not is a commercial judgement of the bank, which cannot be questioned. Hence complaint is not
maintainable.
596 The appeal can be made by the customer against the Award of the Ombudsman to Dy. Governor RBI, within __:
A. 15 days of date of order
B. 30 days of date of order
C. 45 days of date of order
D. none of the above
D The period to make appeal is 30 days from date of receipt of copy of the order by the customer and not from date of order.
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597 In order to settle a complaint, the Ombudsman wants some information from the bank:
A. he has to decide the case on the basis of information provided by the customer
B. he has to decide the case on the basis of information provided by the bank of its own
C. to decide the case he can call information from the bank.
D. Ombudsman has to decide the case on the basis already available with his office and cannot call for further information as that is time
consuming process.
C In order to settle a complaint, the Ombudsman can call information from the bank.
598 What are the provisions for compensation to the customer, by the Ombudsman in his award.
A. the compensation of Rs.10 lac can be allowed
B. the amount of compensation can be actual loss suffered by the customer subject to maximum of Rs.10 lac.
C. the compensation can be allowed irrespective of the loss suffered by the customer.
D. there is no provision for compensation in the revised scheme.
B The amount of compensation can be actual loss suffered by the customer subject to maximum of Rs.10 lac.
599 What are the provisions regarding appeal against grounds of rejection of complaint by the Ombudsman :
A. the customer can appeal against the grounds of rejection of complaint to Governor RBI
B. the customer can appeal against the grounds of rejection of complaint within 45 days
C. the customer can appeal against the grounds of rejection of complaint to Dy. Governor RBI within 30 days
D. the customer can appeal against the grounds of rejection of complaint to Dy. Governor RBI within 45 days
C The customer can appeal against the grounds of rejection of complaint to Dy. Governor RBI within 30 days
600 Which of the following types of complaints are not entertained by Ombudsman:
A. if the issue has already been decided by Ombudsman
B. if the matter is pending in court or decided by a court
C. if the matter is frivolous or vexatious in nature
D. all the above
D All the above types of complaints are not entertained by Ombudsman.
601 The bank is required to implement the Award passed by Ombudsman within:
A. 30 days from date of order
B. 30 days from date of receipt of acceptance of the order from the customer
C. 30 days from date of receipt of order by the bank
D. 45 days from date of receipt of order by the bank
B The bank is required to implement the Award passed by Ombudsman within 30 days from date of receipt of acceptance of the order from
the customer. If customer does not give acceptance, the award is not binding on the bank.
602 If the bank wants to appeal against the award under Ombudsman Scheme with the permission of (which one is not correct):
A. its Chairman
B. its Executive Director
C. its Board of Directors
D. its Chief Executive
C To file the appeal bank need consent of its Chairman or Executive Director or Chief Executive. There is no need for Board permission.
603 Which of the following decision is not possible for an appeal to be made under Ombudsman Scheme:
A. dismissal of the appeal
B. allow the appeal and set aside the award
C. modify the award
D. pass any order as it may deem appropriate including keep it pending
D The appeal cannot be kept pending. It has to be decided.
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604 RDDB Act (DRT Act) 1993 came into operation wef ___ and its applicable:
A. 24.6.1993, through out India except J & K
B. 22.12.1993, through out India including J & K
C. 23.9.1993, through out India except J & K
D. 26.8.1993, through out India including J & K
A The Act came into operation wef 24.6.93, through out India except J & K.
605 RDDB Act (DRT Act) 1993 is not applicable for which of the following:
A. public sector banks and RRBs
B. private banks and foreign banks
C. cooperative banks
D. financial institutions and consortium of banks
C RDDB Act (DRT Act) 1993 is not applicable on cooperative banks as per Supreme Court judgement.
606 The loans covered under RDDB Act (DRT Act) 1993 should have a minimum recoverable amount of:
A. Rs.10 cr
B. Rs.1 cr
C. Rs.10 lac
D. Rs.1 lac
C The loans covered under RDDB Act (DRT Act) 1993 should have a debt due, amounting to Rs.10 lac.
607 Debt recovery tribunal and Debt recovery appellate tribunals are headed by (which one is correct)
A. presiding officers
B. Chairpersons
C. DRT by presiding officer and DRAT by Chairperson
D. DRT by Chairperson and DRAT by presiding officer
C Debt recovery tribunal and Debt recovery appellate tribunals are headed by DRT by presiding officer and DRAT by Chairperson.
608 Which of the following is covered by the term debt under RDDB Act (DRT Act) 1993:
A. money overdrawn by the customer without any overdraft facility
B. payment made by the bank by mistake
C. any liability including interest
D. all the above
D The term debt has wider meaning and it covers the money overdrawn by the customer without any overdraft facility OR payment made
by the bank by mistake (as per Court Judgement - Madras High Court. Secured or unsecured loans, both are covered.
609 Which of the following types of amounts do not form part of the term debt under RDDB Act (DRT Act) 1993:
A. fraud committed by an employee
B. any liability payable under a mortgage or money payable under a decree or civil court
C. any liability for which there is no security
D. none of the above
A As per Supreme Court judgement in Bank of India vs Vijay Ramniklal (1997) the amount recoverable from employee under a fraud, is
not a debt).
610 A bank had given loan to a party with outstanding balance of Rs.10.15 lac although the sanctioned limit was Rs.9.50 lac, which has
become difficult of recovery.
A. the suit has to be filed in a civil court as the limit is Rs.9.50 lac
B. the bank can decide regarding in which court, the suit is to be filed
C. bank can file this case in DRT only, which has the jurisdiction.
D. bank can file this case in High Court directly.
C If the amount due for recovery is Rs.10 lac or above, the DRT only has the jurisdiction, where the case has to be filed.
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611 The authority to establishment DRT or DRAT lies with:
A. State Govt. concerned
B. Central Govt.
C. Supreme Court
D. High Court of respective States
B DRT or DRAT can be set up by Central Govt. as per provisions of RDDB Act (DRT Act) 1993.
612 Which of the following statement is not correct regarding the Presiding Officer of DRT:
A. he should be qualified to be a Distt. judge
B. he is appointed for 3 years
C. he can hold office until he attains the age of 62 years
D. none of the above
B The presiding officer is appointed for 5 years and he can hold office until he attains the age of 62 years, whichever is earlier.
613 Which of the following statement is not correct regarding the Chairperson of DRAT:
A. he should be qualified to be a High Court judge
B. he is appointed for 5 years
C. he can hold office until he attains the age of 62 years
D. none of the above
C The presiding officer is appointed for 5 years and he can hold office until he attains the age of 65 years, whichever is earlier.
614 The Presiding Officer of DRT or Chairperson of DRAT (which statement is correct)
A. can resign by giving one month notice
B. they can be removed by order of State Govt./Central Govt.
C. they can be removed on ground of proved misbehaviour or incapacity after enquiry
D. all the above
C They can resign by giving 3 months notice. They can be removed by Central Govt. only and not by the State Govt.
615 The execution of decree passed by which of the following court, can be entertained by DRT:
A. DRT
B. Civil Court
C. Foreign Court
D. all the above
D DRT can entertain the execution of decree passed by DRT, a civil court or even a foreign court (Bank of India vs Harshadrai Odhavji
Mody - 2002, Bombay High Court).
616 If there is request for transfer of application from one DRT to another DRT:
A. it can be transferred by the DRT already handing the application
B. it can be got transferred by the DRT which has been asked to entertain the case after transfer
C. it can be transferred by any DRAT
D. it can be transferred by the DRAT having jurisdiction over both the DRTs
D If there is request for transfer of application from one DRT to another DRT, it can be transferred by the DRAT having jurisdiction over
both the DRTs. It can be transferred even on its own motion by giving notice to the parties.
617 If a DRT is set up, which of the following courts cannot exercise the jurisdiction for cases of Rs.10 lac and above:
A. Distt. courts
B. High Courts
C. Supreme Courts
D. all the above
D High Courts and Supreme Court can exercise the jurisdiction under Article 226 and 227 of the Constitution of India. Only DRT has the
jurisdiction for loan recovery issues.
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618 An order was passed by a civil court after enactment of RDDB Act (DRT Act) 1993 but before the establishment of DRT having
jurisdiction for that particular area:
A. order passed by civil court was not in its jurisdiction
B. order passed by civil court was in jurisdiction of DRT
C. order passed by civil court was in its jurisdiction
D. none of the above
C Such order passed by civil court was in its jurisdiction as it was passed before establishment of DRT, as per Supreme Court judgement in
Bhanu Construction Company Ltd vs Andhara Bank (2002).
619 Bank-A wants to file a suit in a DRT. The suit can be filed within the local limits of which of the following DRT (which one is not
correct):
A. where the defendant resides or carries on the business
B. where any of the defendants (where there are more than one) resides or carries on the business
C. where the cause of action has arisen
D. it is at the discretion of the bank
D The statement given at (a), (b) and (c) is correct and not (d).
620 Bank-A has filed a suit in DRT on XYZ. Bank-B also has to file the suit:
A. Bank-B can join the Bank-A at any time
B. Bank-B has to file a fresh suit
C. Bank-A will have the priority in recovery if Bank-B files a fresh suit
D. Bank-B can join the Bank-A at any stage of the suit before the final order is passed.
D U/s 19 (20 of RDDB Act (DRT Act) 1993, if a has filed a suit in DRT and other bank also has to file the suit, the other bank can join the
earlier bank at any stage of the suit before the final order is passed.
621 When an application is received by DRT from a bank, it issues summons to the defendant requiring him to show cause within a period of
____, as to why the relief prayed by the bank should not be granted.
A. 15 days
B. 30 days
C. 45 days
D. 60 days
B The notice period is 30 days of service of the summons, to show cause by the defendant.
622 Which of the following type of order can be passed by DRT as an interim order against the defendant:
A. debar him from transferring of any property
B. debar him from alienating of any property
C. debar him from dealing with or disposing of any property
D. all the above
D DRT can pass an interim order debarring the defendants from transferring, alienating or otherwise dealing with or disposing of any
property.
623 An interim order passed by DRT debarring the defendant from dealing with his property can be in the form of:
A. injunction order
B. stay order
C. attachment order
D. any of the above
D An interim order passed by DRT debarring the defendant from dealing with his property can be in the form of injunction, stay or
attachment order.
624 If a bank wants that the properties of the defendant should be attached (which one is not correct):
A. the bank has to specify the property
B. the bank has to provide proof of ownership of the property by the defendant
C. the bank has to provide the estimated value of the property
D. none of the above
B Bank has to specify the property and advise the estimated value of the property.
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625 If an order is passed by a DRT covering the properties relating to other DRTs also, the DRT will send copy of that order to (which one
is not correct):
A. the defendant
B. the bank (i.e. applicant)
C. all the other tribunals
D. the DRAT having jurisdiction over other DRTs to pass on the copy of the order to respective DRT for action.
D If an order is passed by a DRT covering the properties relating to other DRTs also, the DRT will send copy of that order to the defendant,
the applicant and the other DRTs.
626 The appeal against an order of the DRT, can be made by any of the party to ___
A. High Court
B. DRAT
C. Supreme Court
D. any of the above
B The appeal against an order of the DRT, can be made by any party to DRAT only, having the jurisdiction over the DRT concerned. But
no appeal lies, if the order was made with consent of the parties.
627 The period for making appeal against order of DRT to DRAT is:
A. within 30 days from date of order
B. within 30 days from date of receipt of order
C. within 45 days from date of order
D. within 45 days from date of receipt of order
D The appeal can be made within 45 days from date of receipt of order
628 If the borrower wants to appeal against the order of DRT to DRAT, he has to deposit ___% of the amount of the decree of DRT which
can be reduced by DRAT to ___%.
A. 75%, 25%
B. 75%, zero
C. 50%, 25%
D. 50%, Zero
B Where the borrower wants to appeal against the order of DRT to DRAT, he has to deposit 75% of the amount of the decree of DRT
which can be reduced by DRAT to nil.
629 The maximum period during which the DRT is expected to dispose of the application is:
A. 90 days
B. 180 days
C. 1 year
D. to be decided by DRT.
B The maximum period during which the DRT is expected to dispose of the application is 180 days.
630 The maximum period during which the DRAT is expected to dispose of the appeal is:
A. 3 months
B. 6 months
C. 1 year
D. to be decided by DRT.
B The maximum period during which the DRAT is expected to dispose of the appeal is 6 months from date of receipt of appeal.
631 If the borrower or bank is not satisfied with the decision of the Appeal by DRAT, they can file appeal with:
A. High Court
B. Another DRAT
C. Supreme Court
D. there is no provision for appeal.
D If the borrower or bank is not satisfied with the decision of the Appeal by DRAT, there is no provision for appeal. But writ jurisdiction of
High Court under Article 226 of Constitution and supervisory jurisdiction of High Court as well as Special Leave Petition before
Supreme Court are available.
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632 Which of the following statement is correct:
A. jurisdiction of DRT is w.r.t. to the location of Head Office of the bank
B. if a case is already filed with a civil court and is transferred to DRT, fresh court fee is required to be paid.
C. a counter-claim before the DRT has the same effect as a plaint in cross suit
D. DRT cannot pass interim orders like attachment or injunction or stay
C Statement at (c) only is correct. DRT can pass interim order and if case is transferred from civil court to DRT, no fresh court fee is
required to be paid.
633 For recovery of the debt, the Recovery officer of DRT can (which not correct):
A. attach the moveable assets
B. sell the moveable assets
C. cannot attach or sell the immovable property
D. can appoint receiver for management of property of the defendant
C Recovery officer can attach or sell the immovable property
634 If a situation warrants that the defendants has to be arrested for recovery of a loan, which one is wrong (under DRT Act):
A. he can be arrested as per order of presiding officer of DRT only
B. he can be arrested as per order of recovery officer
C. there is minimal fair proof of the willful failure of the defendants to pay inspite of sufficient means.
D. none of the above
A The defendant can be arrested on the order of recovery officer provided there is minimal fair proof of the willful failure of the defendants
to pay inspite of sufficient means, as per a Supreme Court judgement.
635 If a party wants to have a review of the recovery certificate issued by the DRT on the ground that error is apparent, he can make an
application to ___ within ___:
A. Presiding Officer, 60 days
B. Presiding Officer, 30 days
C. Recovery officer, 60 days
D. Recovery officer, 45 days
A Such review application can be made by any party within 60 days to the presiding officer of DRT. Recovery officer has no authority to
have any such review.
636 If in an appeal, the amount of recovery is amended by the Chairperson of DRAT, what happens to the recovery certificate already
issued by DRT:
A. it may be withdrawn by recovery officer
B. it may be amended by recovery officer
C. it may be withdrawn or amended by the presiding officer
D. any of the above
C The recovery certificate already issued may be withdrawn or amended by the presiding officer.
637 To recover the due amount from the borrower, the Recovery officer of DRT has powers, similar to __ (which one is not correct)
A. Tax recovery officer as per Section 226 of Income Tax Act
B. Passing of Garnishee orders under Civil Procedure Cod
C. Seizure of goods under Criminal Procedure Code
D. none of the above
C The recovery officer has similar powers as mentioned at (a) and (b).
638 Bank-A received an attachment order from recovery officer of DRT on the current account of the defendant.
A. the bank has to make the payment similar to the payment of an attachment order
B. the bank shall make the payment after having confirmation from DRT presiding officer
C. the bank shall make payment, with consent of the defendant
D. the bank shall ignore such order.
A The bank has to make the payment similar to the payment of an attachment order.
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639 A person aggrieved by the order of the Recovery officer can appeal to ___ within ____:
A. No appeal lies against order of the recovery officer
B. presiding officer, 30 days
C. chairperson, 30 days
D. presiding officer, 15 days
B The appeal can be made to presiding officer within 30 days from date of copy of receipt of such order.
640 If a company is under liquidation proceeding and bank wants to proceed with a suit with DRT:
A. it can be done with the leave of Company Law Board
B. it can be done with the leave of High Court
C. it can be done with the permission of Liquidator
D. it does not require any permission / leave
D If a company is under liquidation proceeding and bank wants to proceed with a suit with DRT, it does not require any permission since
RDDB Act (DRT Act) 1993 has overriding effect on other Acts.
641 When RDDB Act (DRT Act) and Companies Act are in contradiction to each other:
A. the company court will take a decision
B. the High Court will take a decision
C. the RDDB Act (DRT Act) will prevail over the Companies Act
D. the Companies Act will prevail over the RDDB Act (DRT Act)
C When RDDB Act (DRT Act) and Companies Act are in contradiction to each other, the RDDB Act (DRT Act) will prevail over the
Companies Act.
642 If a case is pending in DRT and bank wants to initiate action under SARFAESI Act:
A. it can do so with permission of High Court only
B. it can do so if the DRT specifically decides about that
C. it can do so i.e. simultaneous action under DRT Act and SARFAESI Act is possible
D. it cannot be done, as at one point of time, only one legal remedy can be pursued.
C If a case is pending in DRT and bank wants to initiate action under SARFAESI Act, it can do so i.e. simultaneous action under DRT Act
and SARFAESI Act is possible as per Supreme Court judgement in Transcore vs Union of India and others (2006).
643 A company is under winding up process on the order of High Court. Bank wants to proceed against the company in DRT:
A. it can be done without any permission
B. it can be done only after permission of DRAT
C. it can be done only after permission of High Court that ordered the winding up
D. it cannot be done
A The RDDB Act (DRT Act) provisions prevail over the provisions of Companies Act due to which no permission from High Court is
required.
644 Where 2 more remedies are available for a case but there is inconsistency between these remedies and the party has choice to opt for one
of them, which doctrine comes into play:
A. doctrine of choice of remedy
B. doctrine of election
C. doctrine of election
D. principle of natural justice
B Where 2 more remedies are existing for a case but there is inconsistency between these remedies and the party has choice to opt for one of
them only, the doctrine of election comes into play.
645 Which of the following statement is correct in the context of RDDB Act (DRT Act):
A. the borrower can raise a plea before recovery officer of DRT for correctness of the amount ordered to be paid
B. recovery officer can initiate action for recovery, as available for recovery of Income Tax under Income Tax Act
C. if recovery certificate has come clerical error, it can be corrected by recovery officer
D. none of the above
B If there is clerical error in the recovery certificate, it can be corrected by presiding officer of DRT. Further the borrower can raise the
plea before the presiding officer regarding correctness of the amount of order, to be paid.
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646 The provisions of Bankers Book Evidence Act apply on the banks that are maintaining their records:
A. in physical /paper form only
B. in electronic form only
C. both in physical as well as in electronic form
D. records in electronic form though recognised by law are not possible to be produced in physical form
C The provisions of Bankers Book Evidence Act apply on the banks that are maintaining their records whether in physical form or in
electronic form.
647 Under provisions of Bankers Book Evidence Act a certified copy of any entry in bankers books, is considered, in a court, as ____ of
existence of such entry on bankers books.
A. substantial evidence
B. good evidence
C. prima facie evidence
D. any of the above
C A certified copy of any entry in bankers books, is considered, in a court, as prima facie evidence of existence of such entry on bankers
books.
648 Under provisions of Bankers Book Evidence Act, the ____ can be compelled to produce ____, by a court order:
A. parties, records
B. bank officers, copies of records
C. bank officers, original books
D. parties, original records.
C Under provisions of Bankers Book Evidence Act, the bank officers can be compelled to produce original books by a court order.
649 A party has produced a certified copy of books of account and the defendant party wants the bank officer as a witness to prove the
contents of copy:
A. the defendant party has no such right
B. the defendant party has the right to call the bank officer
C. the certified copy being prima facie evidence is admissible as evidence. Hence no requirement of calling the bank officer to prove.
D. the certified copy being prima facie evidence is admissible as evidence. But still the defendants has the right of calling the bank officer to prove.
C Under provisions of Bankers Book Evidence Act, the certified copy being prima facie evidence is admissible as evidence. Hence there is no
requirement of calling the bank officer to prove.
650 Which of the following, does not form part of the bankers book under provisions of Bankers Book Evidence Act:
A. ledgers
B. day book and cash book
C. other records used in ordinary course of business
D. none of the above
D Under provisions of Bankers Book Evidence Act, all the above, form part of the bankers books.
651 As per provisions of Bankers Book Evidence Act, if a court is to call a bank officer to appear as witness, the order shall be served on the
bank, giving ___ days before the order is obeyed.
A. 2 working days
B. 3 clear business days
C. 3 clear working days
D. 3 days.
C As per provisions of Bankers Book Evidence Act, if a court is to call a bank officer to appear as witness, the order shall be served on the
bank, giving 3 clear working days before the order is obeyed.
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652 To make a person liable mere entries in the books of account are not sufficient (which of the following is wrong under provisions of
Bankers Book Evidence Act):
A. if a person accept the correctness of the book, he becomes liable
B. if there has been further proof of payment of money by the bank which appear in the books of account, the person becomes liable.
C. if a person disputes the payment but there is entry in the books of the bank, the person is deemed to be liable.
D. none of the above
B Conditions at (a) and (b) have to be complied with as per Supreme Court judgement in Chandrahdar Goswami vs Gauhati Bank Ltd.
653 Name the Act under which the Lok Adalts are constituted:
A. Civil Procedure Code 1908
B. Legal Services Authority Act 1987
C. SARFAESI Act
D. RDDB Act (DRT Act)
B Lok Adalts are constituted under provisions of Legal Services Authority Act 1987 Act.
654 Which of the following types of cases are handled by Lok Adalts:
A. where the amount is small and disputed by the borrower
B. where the amount is small and bank and borrower have no agreement on the amount
C. where the borrower and bank agree to compromise, irrespective of the amount
D. in all the above cases.
C Lok Adalts entertain the cases where both the parties agree to a compromise. Dispute cases are not taken up by Lok Adalts.
655 If one party agrees to refer a matter to the Lok Adalt and other party disputes:
A. the case can be referred to Lok Adalt
B. on the request of one party, Lok Adalt can be constituted
C. the Lok Adalt cannot entertain such cases being a dispute issue
D. the Lok Adalt of DRT only can entertain such cases
C Lok Adalts entertain the cases where both the parties agree to a compromise. Dispute cases are not taken up by Lok Adalt.
656 The appeal against the award of Lok Adalt can be made to which of the following:
A. in case of normal Lok Adalt, to Distt. Court
B. in case of normal Lok Adalt, to High Court
C. in case of Lok Adalt of DRT, to DRT
D. no appeal is possible.
D Against the award of the Lok Adalt, no appeal is possible.
657 If a dispute is referred to Lok Adalt by a court and the parties do not reach an agreement:
A. the Lok Adalt shall announce its own decision
B. the Lok Adalt shall start the procedure similar to a civil court
C. the Lok Adalt shall refer the case back to the court, which had referred the case to Lok Adalt.
D. none of the above
C If a dispute is referred to Lok Adalt by a court and the parties do not reach an agreement, the Lok Adalt shall refer the case back to the
court, which had referred the case to Lok Adalt.
658 Which of the following cannot organize a Lok Adalt:
A. State Authority or Distt. Authority
B. Supreme Court legal Services Committee
C. High Court Legal Services Committee
D. none of the above
D All the above can organize the Lok Adalt.
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659 A normal Lok Adalt can entertain the disputes involving an amount of:
A. Rs.20 lac or more
B. up to Rs.20 lac
C. less than Rs.20 lac
D. up to Rs.10 lac
B A normal Lok Adalt can entertain the disputes involving an amount up to Rs.20 lac.
660 A Lok Adalt organized by DRT can entertain the disputes involving an amount of:
A. Rs.20 lac or more
B. up to Rs.20 lac
C. more than Rs.20 lac
D. up to Rs.10 lac
C A DRT Lok Adalt can entertain the disputes involving an amount above Rs.20 lac.
661 Which of the following is not correct regarding the award of Lok Adalt:
A. it is deemed to be the decree of a civil court
B. the court fee if already paid, shall not be refunded
C. The award is binding on all the parties to the disputes
D. all the above
B The court fee if already paid, shall be refunded in the manner provided under the Court Fees Act 1870
662 The objective of enactment of Consumer Protection Act 1986 is:
A. to help bank customer to file suit in a consumer court
B. better protection of the interests of the consumers
C. quick remedy to the consumer though normal courts
D. all the above
B The objective of enactment of Consumer Protection Act 1986 is better protection of the interests of the consumers.
663 Which of the following is correct regarding the Consumer Protection Act:
A. The Act is applicable on all India basis including J & K State
B. the Act applies generally to all goods and services
C. the goods covered for resale or for commercial purpose and services rendered free of charge.
D. all the above
B The Act is not applicable in J & K. Further the Act does not cover the goods covered for resale or for commercial purpose and services
rendered free of charge.
664 Which of the following can make complaint under Consumer Protection Act (which one is wrong):
A. the consumer himself
B. the voluntary consumer association
C. the Central or State Govt.
D. in case of death of the consumer, the complaint cannot be made
D In case of death of the consumer, the complaint can be made by the legal heirs or representatives.
665 Under provisions of Consumer Protection Act, the complaint can be made for (which is incorrect):
A. unfair or restrictive trade practice
B. the goods suffering from defects
C. deficiency in services which are availed for a cost or free of cost
D. charging of the excessive price.
C For deficiency of services, the complaint can be made only if payment has been made for the services availed. For free services, no
complaint is admissible.
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666 Bank-B had sanctioned a loan to XYZ but it found to be inadequate to start the business, by the borrower:
A. complaint under Consumer Protection Act is possible
B. complaint under Consumer Protection Act is possible only if the borrower suffers loss and able to prove that
C. complaint under Consumer Protection Act is not tenable
D. complaint under Consumer Protection Act is tenable if court find the case genuine
C As per judgement in SBI vs Jagannath Meher, the complaint is not tenable under Consumer Protection Act as the decision of the bank
regarding use of discretionary powers cannot be questioned.
667 Which of the following does match with regard to jurisdiction of the consumer courts:
A. Distt. Forum - covering the Distt.
B. State Commission - Covering the State
C. Apex Commission - Covering the entire country
D. none of the above
C The consumer court covering the entire country is called National Commission.
668 If there is contravention of provisions of Consumer Protection Act with any other Act (which one is correct):
A. the provisions relating to other Act will not over-ride the provisions of Consumer Protection Act
B. the provisions of Consumer Protection Act shall over-ride the provisions of other Act.
C. the provisions of Consumer Protection Act are additional means of obtaining remedy by a consumer and if the remedy is barred in any Act, the
consumer forum shall not grant such remedy.
D. none of the above
C The provisions of Consumer Protection Act are additional means of obtaining remedy by a consumer. If the remedy is barred in any other
Act, the consumer forum shall not grant such remedy. This means the provisions of the other Act shall prevail over the Consumer
Protection Act.
669 The agencies appointed under Consumer Protection Act are:
A. completely judicial in nature
B. not judicial in nature
C. quasi judicial in nature
D. none of the above
C The agencies appointed under Consumer Protection Act are quasi judicial in nature.
670 X purchased DD from Bank-B in favour of Y. DD has been misplaced in transit and bank has delayed the issue of duplicate DD due to
completion of formalities:
A. Y can file complaint in consumer court
B. X and Y, together can file complaint in consumer court
C. Y cannot file complaint as he has not purchased any service from the bank
D. Y can file complaint with permission of X
C The person filing complaint in a consumer court should have availed service but not free of charges.
671 The central consumer protection council is headed by:
A. The Secretary of Ministry of Consumer Affairs in the Central Govt.
B. Minister of Consumer Affairs in the Central Govt.
C. Judge of the Supreme Court
D. any person nominated by the President of India
B The central consumer protection council is headed by Minister of Consumer Affairs in the Central Govt.
672 The central consumer protection council holds meetings, the periodicity of which is:
A. once in a year
B. twice in a year
C. once in every quarter
D. once in every month
A The meetings are held at least once in a year.
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673 The District consumer protection council holds meetings, the periodicity of which is:
A. once in a year
B. twice in a year
C. once in every quarter
D. once in every month
B The meetings are held at least twice in a year.
674 The State Consumer Protection council is appointed by:
A. Central Govt. Ministry of Consumer Affairs
B. State Govt.
C. Central Govt. in consultation with the State Govt.
D. State govt. in consultation with the Central govt.
B The State Consumer Protection Council is appointed by the State Govt.
675 The Distt. Forum under Consumer Protection Act consists of which of the following:
A. Person qualified to be a Distt. Judge to be president and three other members one of whom to be a women.
B. Person qualified to be a Distt. Judge to be president and 2 other members one of whom to be a women.
C. Person qualified to be a Distt. Judge to be president and one other member
D. Person qualified to be a Distt. Judge to be president and one other member who should be a woman
B The Distt. Forum consists of a person qualified to be a Distt. Judge to be president and 2 other members one of whom to be a women.
676 The members of Distt. Forum under Consumer Protection Act are appointed by which of the following:
A. High Court of the concerned State
B. Central Govt. Ministry of Consumer Affairs
C. State Govt.
D. Distt. Magistrate
C The members of Distt. Forum are appointed by State Govt.
677 A member of the Distt. Forum under Consumer Protection Act holds office for a period of:
A. 3 years or till he attains the age of 62 years
B. 3 years or till he attains the age of 65 years
C. 5 years or till he attains the age of 62 years
D. 5 years or till he attains the age of 65 years
D A member of the Distt. Forum holds office for a period of 5 years or till he attains the age of 65 years.
678 The Distt. Forum under Consumer Protection Act has to ordinarily decide within ___ from date of receipt of the complaint about
admissibility of a case.
A. 7 days
B. 10 days
C. 21 days
D. 30 days
C The Distt. Forum has to ordinarily decide within 21 days from date of receipt of the complaint about admissibility of a case.
679 If a complaint is admitted by the Distt. Forum under Consumer Protection Act, it can be transferred to ___ on ____:
A. any other court, request of the consumer
B. any tribunal, order of the said tribunal
C. any authority, with the consent of the said authority
D. it cannot be transferred.
D If a complaint is admitted by the Distt. Forum, it cannot be transferred.
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680 The time period to take a decision on a complaint, as available to the Distt. Forum under Consumer Protection Act is:
A. one month
B. two months
C. three months
D. five months
C The time period to take a decision on a complaint, as available to the Distt. Forum is three months from date of receipt of notice by the
opposite party. The period is 5 months, if laboratory test are essential.
681 If loss has been suffered by a no. of consumers who are not identifiable conveniently, the Distt. Forum under Consumer Protection Act
may order to pay such sum which shall not be less than __% of the value of such goods:
A. 20%
B. 15%
C. 10%
D. 5%
D If loss has been suffered by a no. of consumers who are not identifiable conveniently, the Distt. Forum may order to pay such sum which
shall not be less than 5% of the value of such goods.
682 Bank-B demanded collateral security valuing 2 times the amount of loan and the borrower approached the Consumer Court for a
direction to the bank against the excessive value of collateral security, as per IBA rules:
A. the complaint is maintainable in the respective consumer court
B. the complaint is not maintainable
C. the complaint is maintainable with special permission of RBI
D. the complaint is maintainable with permission of IBA only
B The complaint is not maintainable. The discretion of the bank cannot be questioned by the consumer courts.
683 If a person is aggrieved by the order of Distt. Forum, under Consumer Protection Act, he can appeal to ___ within ___:
A. Distt. court, 2 months
B. State Commission, 30 days
C. High Court, 30 days
D. no appeal is possible.
B If a person is aggrieved by the order of Distt. Forum, he can appeal to State Commission within 30 days from date of order.
684 If appeal is to be made by a person against decision of Distt. Forum, under Consumer Protection Act, declared liable to make the
payment, he has to deposit:
A. 50% of the amount of the order or Rs.25000 whichever is higher
B. 50% of the amount of the order or Rs.25000 whichever is less
C. 75% of the amount of the order or Rs.25000 whichever is higher
D. 75% of the amount of the order or Rs.25000 whichever is less
A If appeal is to be made by a person against decision of Distt. Forum, declared liable to make the payment, he has to deposit 50% of the
amount of the order or Rs.25000 whichever is higher.
685 What is the constitution of State Commission under Consumer Protection Act:
A. Person qualified to be a High Court Judge to be president and 2 other members, one of whom to be women.
B. Person qualified to be a Distt. Court Judge to be president and 2 other members, one of whom to be women.
C. Person qualified to be a High Court Judge to be president and 3 other members, one of whom to be women.
D. A High Court Judge to be president and 2 other members, one of whom to be women.
A A person qualified to be a High Court Judge to be President and 2 other members, one of whom to be women.
686 A member of the State Commission under Consumer Protection Act, holds office for a period of:
A. 3 years or till he attains the age of 62 years
B. 3 years or till he attains the age of 67 years
C. 5 years or till he attains the age of 62 years
D. 5 years or till he attains the age of 67 years
D A member of the Distt. Forum holds office for a period of 5 years or till he attains the age of 67 years.