Promotion Exercise - 2020-21

MCQs on Law & Practices

Prepared By,

Mrs. M.R. Srividya,

Senior Manager & Faculty

Under the guidance of

Mr. Mohan N
Chief Manager & Learning Head

With the support of

Mr. J. Rajesh Kumar, Chief Manager & Faculty
Mr. P.V. Sudhanidhi, Senior Manager & Faculty
Mrs. V. Neethi Selvi, Senior Manager & Faculty

BARODA ACADEMY, CHENNAI

1) Banks can allow loans against minted gold coins upto ___________ per borrower
a. 200 gm b. 150 gm c.100 gm d. 50 gm

2) Loan to value ratio for a home loan above Rs 30 lac and upto Rs 75 lacs is
a. 90% b. 75% c.80% d. 70%

3) LEF is
a. Loan efficiency
b. Large Exposure Framework
c. Large Exposure Failure’
d. Loan Exposure Framework

4) A bank cannot grant loan and advances against its own shares, under provisions of which
Act?
a. Sec 19(B) of Banking Regulation Act
b. Sec 21 (3) of Banking Regulation Act
c. Sec 20(1) of Banking Regulation Act
d. Sec 21(B) of Banking Regulation Act

5) Banks can grant loans to which of the following :

(i) Against bullion gold
(ii) Silver bullion dealers
(iii) Hall –marked golden jewellery
a. (i) and (II)
b. (i), (ii) and (iii)
c. (i) only
d. (iii) only

6) Loans to senior officers or their relatives are required to be reported to Board of the Bank.
For this purpose, the senior officer means officer in :
a. Scale IV & above
b. Scale V & above
c. Scale VI & above
d. Scale VII

7) What is CRILC?
a. Central Repository of information on Large Credit
b. Central Repository of information on Letter of Credit
c. Credit Information linked Capital Subsidy
d. Central Rural Insurance Linked Credit

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8) RFA refers to
a. Rural Financial Assets
b. Red Flagged Accounts
c. Red Financial Asset
d. Rural Fixed Asset

9) The Limit for RFA classification is

a. Rs 50 crore
b. Rs 10 crore
c. Rs 3 crore
d. Rs 25 crore

10) TreDS is
a. Timely Receipt of Discounting Standard Assets
b. Trade Receivables Discounting System
c. Trade Receivables Debt System
d. Trade receipt discounting system

11) A cash credit account becomes NPA

a. If principal not repaid for 90 days
b. If the account remains out of order for120 days
c. If the account remains out of order for 180 days
d. If account is out of order for 90 days.

12) SMA0 account is a

a. Standard - regular account
b. Standard – irregular account
c. Sub standard account
d. NPA account

13) Fill the Banker customer relationship in the following table is correct:
Transaction Bank Customer
Deposit in Bank Creditor Debtor
Locker Lessee Lessor
Pledge Pawnee Pawnor
Safe custody Bailee Bailor
Mortgage Mortagor Mortgagee
Collection of cheques Agent Principal
Loans given by Bank Creditor Debtor

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14) The obligation for secrecy is extinguished when the
a. Customer is no more
b. When the account is closed
c. When he takes loan from us.
d. None of the above

15) Which of the following is not a circumstance under which Banker may disclose
information regarding a customer’s account?
a. Disclosure in the interest of the Bank or Nation
b. Disclosure under law
c. Disclosure with express or implied consent of the customer
d. Disclosure upon death of a customer.

16) Under Sec(4) of which act, a certified copy of an entry in a banker’s book shall, in all
legal proceedings, be received as prima facie evidence.
a. Recovery of Debts Due to Banks and Financial institution, 1993
b. Banker’s Book Evidence Act , 1891
c. Code of Civil Procedure
d. SARFAESI Act, 2002

17) Under which of the circumstances, the Banker customer relation does not terminate ?
a. Death of the customer
b. Closure of the account at the will of customer
c. Insolvency of the customer
d. Minor attaining Majority

18) For a Loan raised, a person assigns his LIC policy in favour of the Bank. The relationship
between Banker and Customer will be
a. Plegder & Plegdgee
b. Mortagor & mortgagee
c. Beneficiary & trustee
d. Assignor & assignee

19) In case of collection of bills / cheques, relationship of Banker with customer is

a. Agent – Principal
b. Trustee- beneficiary
c. Assignor-Assignee
d. Bailor-Bailee

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20) General Lien is defined in ____________________
a. Sec 170 of Indian contract Act, 1872
b. Sec 171 of Indian contract Act, 1872
c. Sec 173 of of Indian contract Act, 1872
d. Sec 71 of of Indian contract Act, 1872

21) Banker’s general lien is subject by Law of Limitation

a. True False

22) Limitation period is the time limit within which the parties to a legal agreement, can take
action in a court of law to enforce their legal right.
a. True False

23) As per Limitation Act 1963, Limitation period can be extended by acknowledgement
a. True False

24) The Limitation period for DPN is restricted to __________ years from the date of DPN,
unless Letter of Acknowledgement of debt obtained
a. 1
b. 2
c. 3
d. 4

25) The Limitation period of Loan secured by mortgage would be

a. 3 years
b. 5 years
c. 10 years
d. 12 years

26) The Limitation period for execution of a decree

a. 3 years
b. 5 years
c. 10 years
d. 12 years

27) A loan account has become time barred loan and bank wants that the limitation should be
available again. It can be done by:
a. By obtaining fresh loan documents with old loan being the consideration.
b. By obtaining acknowledgement of debt.
c. By asking the borrower for part payment of the loan
d. All the given options are correct.

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28) For Term Loan, the limitation period is 3 years from :
a. Date of documents
b. Date of default
c. Date of sanction
d. Date of default of each instalment.

29) Which section of Limitation Act, 1963 provides extension of Limitation period if Letter
of acknowledgement of Debt is obtained?
a. 15
b. 16
c. 17
d. 18

30) A Loan secured by mortgage of immovable property is repayable on Demand. The period
of Limitation for this mortgage would be
a. 3 years from mortage
b. 12 years from mortgage
c. 10 years from mortgage
d. 5 years from mortgage

31) Which of the following sections of Indian Contract Act, 1872 defines a “Guarantee”
a. 127
b. 126
c. 128
d. 130

32) A Guarantee is a contract to perform the promise or discharge liability of a third person,
in case of default.
a. True False

33) The 3 parties involved in a guarantee are

a. Principal debtor, indemnifier, indemnity holder
b. Principal debtor, Principal Creditor, indemnifier
c. Principal debtor, Principal creditor, surety
d. Principal debtor, Principal Creditor, beneficiary.

34) In a contract of Bank Guarantee, the Bank is

a. Principal Debtor
b. Principal Creditor
c. Surety
d. Indemnifier

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35) Who invokes a Bank Guarantee
a. Principal Debtor
b. Principal Creditor or beneficiary
c. Surety
d. Bank

36) When a guarantor discharges the liabilities of the principal debtor, he assumes which of
the following rights?
a. Right of demption
b. Right of prosecution
c. Right of handholding
d. Right of subrogation

37) The creation of right in favour of Bank, depending on the various type of securities,
which a loan facility is given by Bank, is known as
a. Mortgage creation
b. Documentation
c. Charge creation
d. According sanction.

38) A charge creation on an asset whose identity does not change during the period of a loan
is
a. Fixed charge
b. Floating charge
c. Paripassu charge
d. First charge

39) In a floating charge, the security is allowed to be used in the ordinary course of business
until the charge crystallises.
a. True False

40) ____________ charge is created in favour of several creditors where they have apriority
on proportionate basis in the ratio of the loans.
a. Exclusive charge
b. First charge
c. Second charge
d. Pari passu charge

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41) Only one creditor having a charge on the assets is called_____________
a. Exclusive charge
b. First charge
c. Second charge
d. Pari passu charge

42) When an asset is charged to a creditor on first basis and subsequently the charge is
created by another creditor with a condition that his rights are subject to the rights of the
first charge holder. The second creditor has ________________ charge
a. Exclusive charge
b. First charge
c. Second charge
d. Pari passu charge

43) Name the kind of charge created over securities

Nature of security Types of security Kind of charge

Immovable property Land & building Mortgage
Actionable claims LIC, NSC etc., Assignment
Movable property/ goods Plant & Machinery, stocks , Hypothecation
vehicle etc.,
Jewel Loan Pledge

43) Pledge is defined u/s ____________ of Indian Contract Act

a. 172
b. 173
c. 169
d. 174

44) A bailment of goods as security for payment of Loan is

a. Hypothecation
b. Safe custody
c. Plegde
d. Assignment

45) Mortgage is defined in Section 58 of

a. Indian Contract Act, 1872
b. WDRA , 2007
c. Limitation Act, 1963
d. Transfer of Property Act, 1882

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46) A transfer of interest in specific immovable property for the purpose of securing the
payment of a debt or guarantee is
a. Assignment
b. Pledge
c. Mortgage
d. Hypothecation.

47) When a mortgagor delivers documents of title deeds to the immovable property, with an
intent to create a security , the mortage created is
a. Simple mortgage
b. Equitable mortgage
c. English mortgage
d. Usufructuary mortgage

48) As per Sec 11 which which Act, a minor is incompetent to contract and all agreements
with minor are void ab-initio
a. Indian Majority Act, 1875
b. Transfer of Property Act, 1872
c. Indian Contract Act, 1872
d. Limitation Act, 1963

49) As per Sec 26 of NI Act, 1881, a minor can endorse or negotiate a cheque or a bill but he
cannot be held liable on such cheque.
a. True False

50) Which of the following is not correct:

(a) As Per Sec 30 of Indian Partnership Act, 1932, a minor can be admitted into benefits
of partnership with the consent of other partners.
(b) He is liable for lossess of the firm.
(c) He is not liable for the losses of the firm
(d) All are correct depending on circumstances.
Ans:
(i) Only a
(ii) Only b
(iii) Only b & d
(iv) only a&d

51) Where a minor is appoint as agent, the principal is responsible to third parties for the acts
of the minor, as agent.
(a) True False

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52) A Minor can give nomination in his account
(a) True False

53) A minor can be nominated by an account holder, along with the name of guardian.
(a) True False.

54) Which of the following is not correct

(a) Account can be opened in the name of the minor after 10 years and they can single
operate the same.
(b) Account can be opened in the sole name of the minor along with the guardian
(c) Account can be opened in the name of the minor jointly with the guardian
(d) Account can be opened in sole name of the minor and he can mandate the
guardian to operate.

55) No loan can be given against a deposit held in the name of a minor
(a) True False

56) The age of majority for a minor, where guardian is appointed by the court is
(a) 16 years
(b) 18 years
(c) 20 years
(d) 21 years

57) U/s 4 of Partnership Act 1932, a partnership is the relationship between two or more
persons who agree to share the profits ( or losses) from business , carried on by all or any
of them acting for all.
(a) True False

58) Who among the following can be a partner?

(a) Insolvent person
(b) HUF
(c) Company
(d) NBFC

59) A partnership firm is a separate legal entity

(a) True False

60) The liability of partners is unlimited and they are jointly and severally liable for debts of
the firm
(a) True False

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61) A partnership firm cannot have more than
(a) 20 members
(b) 10 members
(c) 50 members
(d) 100 members

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“Disclaimer”
This reading material is intended to facilitate learning and enhance knowledge of the subject only. It
should not be construed as a substitute to Bank’s operational guidelines issued from time to time.
Though care has been taken to keep the reading content updated, learners are advised to refer to
Bank’s guidelines/circulars while taking business/operational decisions.This question bank is for
refresher purpose and it is not an exhaustive coverage of all the expected questions in the promotion
test, for which readers are expected to be thorough Hand book/ manuals / circulars of the bank.

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