INDIAN INSTITUTE OF BANKING & FINANCE JAIIB MODULE (A & B) LEGAL ASPECTS OF BANKING OPERATIONS Thursday, 06 April, 06 T M C VASUDEVAN

01. Identify the Act which regulates entry into banking business by licensing. A.. Banking Regulation Act, B.. Reserve Bank of India Act,1934 C.. Indian Constitution D.. All the above.

02.. Raj has appointed Kumar as the nominee for his Fixed deposit, whereas Kunwar was appointed as the nominee for the Safe deposit Locker contents. Incase Kumar dies. A. Raj can have Kunwar to be the nominee for Locker B. Raj is also permitted to continue his locker C. The death of Kumar, the nominee will not alter the position D. All the above are correct.

03.. Suraj has approached the drawee bank to handover the original cheque issued by him and since paid to the debit of his account. A.. Bank need not oblige B.. Bank to refuse C.. At the most they can provide a Xerox Copy only D.. None of these

04.. The Scheduled banks have to submit their returns to the Reserve Bank of India about their demand and time liabilities as per the provisions of the A.. Banking Regulation Act,1949 B.. Reserve Bank of India Act.1934 C.. Banking Regulation Act,1970 D.. State Bank of India Act,1955

05.. As per the provisions of the Reserve Bank of India Act,1934, a banking company to file within 30days of the close of each financial year a return of unclaimed deposits. A.. The above statement is True B.. The above statement is incorrect. C.. The correct position is Banking Regulation Act,1949. D.. Even the answer C is only partially correct

06.. In case of winding up of the banking company, each depositor will have to make the claim within 15days of the winding up order. A.. True B.. False C.. The claims of every depositor deemed to have been filed for the amount as shown in the books of the banking company standing to his credit.. D.. Ans ( C ) is partially correct.

07.. Making any false statement in any return, balance sheet or other documents or information given under the BR act (sec46) punishable. A.. The above is incorrect B.. The above is not incorrect. C.. Punishment is not for any as stated above. D.. Punishment is applicable only when there is willfully any false statement and so on.

08..The State Bank of Hyderabad has been established as per the provisions of A.. Hyderabad State Bank Act B.. State Bank of Hyderabad Act C.. State Bank Of India Act D.. Reserve Bank of India Act

09.. For State Bank Of India Audit who can be eligible to conduct Audit. A.. Director of the Bank B.. Not a member of Local Board C.. Member of a Local Committee D.. An Office of the State Bank of India

10..State Bank of Mysore was established as per the provisions of A.. State Bank of Mysore Act B.. State Bank of India Act C.. Reserve Bank of India Act D.. None of the above

11.. The Commercial Banks were Nationalised as per A.. The Bank Nationalistion Act (Banking Companies (Acquisition and Transfer of Undertakings)Act,1970 B.. The Banking Companies (Acquisition and Transfer of Undertakings) Act,1980. C.. Both A& B are incorrect D.. Both A & B are not incorrect.

12.. The State Bank of India is empowered under Section 47 to inspect the subsidiary banks. A.. The above statement is true. B.. The above statement is not true C.. Only RBI can inspect and not State Bank D.. None of these

13..The issued capital of the Regional Rural Bank is held as 15 %:50%:35% by A.. Regional Rural Bank : State Government : Sponsor Bank B.. State Government : Central Bank (RBI): Sponsor Bank C.. State Government : Reserve Bank of India : State Bank of India D.. None of these

14..The Licensing part of the Co- operative Banks is looked after by the A.. Reserve Bank of India B.. The Registrar of Co-operatives C.. Both A & B D.. The State Government where the headquarters of the Co-operative Bank is.

15..Displaying of an audited balance sheet to be done not later than the first Monday in October of any where the banking business held. A.. Applicable to all banks B.. Only applicable to Foreign Banks C.. Applicable to New Private Banks D.. None of the above

16.. As per BR Act the return on Liquid Assets to be filed within A.. 7 days from the end of the month to which it relates. B..15 days from the end of the month to which it relates C.. 20 days from the end of the month to which it relates D.. 30 days from the end of the month to which it relates

17.. Banking Ombudsman is A.. Discontinued and a new company has been set up. B.. Not applicable to delays in receipt of export proceeds C.. Applicable to adherence to prescribed working hours by branches. D.. All the above are not True.

18.. * A Co-operative Bank functioning in more than one State is known as A.. Primary Co-operative Bank B.. Urban Co-operative Bank C.. Multi – Force Co-operative Bank D.. None of these

19.. Garvita has issued a cheque favouring Deva for Rs.27750/= The cheque has been otherwise in order and the account has enough balance. A.. The Collecting Bank will refuse payment B.. The Collecting Bank will receive payment C.. The Drawer’s Bank will not make the payment D.. The Drawee Bank will not make the payment.

20.. V & S are holding a joint Savings Bank account with bank U. A cheque has been paid by the said bank in clearing, bearing two signatures of both S& V. After some days it was identified that S’s signature has been forged. The Paying Bank’s protection A.. Will be there under Sec 85 of NI Act,1881 B.. Will not be there under Sec 10 of NI Act1881 C.. Will not be there under Sec 06 of NI Act 1881 D.. Will not be there under Sec 10 & 85 of NI Act 1881.

21.. After paying a cheque it has come to t he notice of the bank that one of the endorsements has been forged. A.. The paying bank is protected B.. It is a payment in due course C.. If endorsements are regular he gets protection D.. In addition to a,b & c it is the duty of the collecting banker to verify and not the paying banker.

22.. Which cannot be transferred by way of an assignment A.. The right on receivables B.. The right over a Term deposit of the Bank C.. The right over an Life Policy D.. None

23.. A cheque has been paid bearing a visible alteration on the date and words. The bank A.. Will get protection under Sec10 of NI Act 1881 B.. Will get protection under Sec89 of NI Act 1881 C..Will get protection under both these sections D..Will not get protection under both these sections

24.. As per Section 89 of NI Act,1881 a bank can seek protection only if there is a material alteration in the cheque and does not appear to have been altered. A.. The above is correct B.. The above is in correct C.. The material alteration will not alter the position. D.. The material alteration will to some extent alter the postion.

25.. Bank K opened an account 13 months ago. The bank had obtained the signature of an existing account holder of another branch in the application form. They did not make proper enquiries. When the banker collected a demand draft on which the payment was released. After few days the bank came to know that the said demand draft was so altered as to place of payment as well as amount. A.. The Collecting bank will get protection. B.. The Paying bank will get protection C.. The Collecting bank will be held responsible D.. Both banks are responsible

26.. An arbitrator under Banking Ombudsman * 1.. CMD of one of the Nationalised Banks * 2.. One of the Deputy Governors of RBI * 3.. Finance Ministry Representative * 4.. Banking Ombudsman himself

27.. A performance guarantee has been issued on behalf of its client. The guarantee has been invoked by the beneficiary. There is no sufficient balance in the account of the client. A.. The Bank can postpone paying the guarantee amount. B.. The Bank has to honour the claim C.. Later on they can rely on Counter guarantee to recover D.. Both B & C

28..On a Bank Guarantee, the court will not interfere, since it is a commitment by an individual banker to the beneficiary. A.. True B.. False C.. Unless a fraud or forgery the court will not interfere D.. None of the above

29..Reimbursing bank is appointed by A.. Negotiating Bank B.. Confirming Bank C.. Paying Bank D.. None of the above

30.. The Red Clause LC and Green Clause LC are one and the same. A.. True B.. False C.. Green Clause LC is the refinement of Red Clause D.. Both are ordinary LCs.

31..The Combined Transport Bill is known as A.. Multiple Bill of exchange B.. Multiple Bill of Lading C.. Multiple Bill of Entry D.. None of these

32.. The issuing bank should advise the credit and any amendments there to through A.. any bank B.. the same advising bank C.. any bank as per convenience of the opener D.. None of these

33.. All Letter of Credits need not contain a clause of last date of shipment and expiry. A.. The statement is not incorrect B.. The statement is not True C.. It is the discretion of the bank D.. It is the understanding between importer and exporter

34..Both Bank guarantee and Letter of Credit are A.. One and the same B.. Different C.. One has contingent liability D.. One is more important than the other

35..The Guarantees could be A.. Performance Guarantee B.. Advanced Payment Guarantee C.. Deferred Payment Guarantee D.. All of these

36.. As per the provisions of the NI Act,1881, if no rate of interest is specified in the instrument, interest due thereon shall be calculated at the rate of A.. 18% p.a B.. 02% p.m C.. 06% p.a D.. 12% p.a

37..Which instrument need not be stamped? A.. Promissory Note B.. Bill of Exchange C.. Power of Attorney D.. Cheque

38.. The Sec 130 of the Transfer of Property Act, permits assignment of A.. Negotiable Instrument B.. Irrevocable Power of Attorney C.. Actionable Claim D.. All the above

39..A Private Ltd Company has availed Certain credit facilities including a supply bill limit of Rs.5.00 lacs. Then A.. Charge need not be registered with ROC B.. Since it is a clean advance no charge registration required C.. Charge has to be registered with ROC D.. None of the above

40.. One of the following need not be accepted. Identify A.. After sight Bill B.. Time Bill C.. Usance Bill D.. At Sight Bill

41..Which is correct? A.. Hypothecated goods could be pledged to another banker B.. Under pledge the property pledged will be with the owner C.. English Mortgage Private Sale not allowed D.. For Simple Mortgage no stamp duty

42..Generally the banker as a Creditor will have the right and not the possession in respect of A.. Mortgage and Pledge B.. Hypothecation and Mortgage C.. Pledge and Third Party Pledge D.. Hypothecation and Pledge

43..In which type of mortgage possession is with the mortgagor. A.. Simple Mortgage B.. English Mortgage C.. Equitable Mortgage D.. All the above

44..A bank relying on the contents of their Pledge agreement, have sold the gold ornaments without intimating the owner. A.. The Bank is not in order B.. The Bank should have given a reasonable Norice C.. The Bank is perfectly in order otherwise the agreement becomes meaningless D.. In case of Hypothecation Notice required and not for Pledge

45..Which one is not correct A.. Valid Pledge can be created by endorsement of RR B.. Actual Delivery not necessary. C.. Constructive Delivery acceptable D.. None of these

46..Which statement is correct? A.. Hypothecation can be converted into Pledge B.. Mortgage can be converted into Hypothecation C.. Pledge can become Mortgage if needed D.. Assignment represents Negotiation

47.. On Minor’s deposit a loan can be considered A.. Not allowed B.. False C.. Natural Guarantor has to sign the documents D. None

48..One of the partners of UMTV & Co died in UK. Then the operation in the account A.. to be discontinued B.. to be allowed C.. to be allowed if the partnership deed is silent D.. to follow the contents of partnership deed

49.. Banker has to be more careful in handling A.. A Trust Account B.. A Recurring Deposit Account C.. A Fixed deposit of Rs.5555/- D.. A Government Department Account

50..Bank GT has terminated the overdraft account of the borrower since his operation in the account has not been satisfactory. A.. Bank relied on the contents of Overdraft agreement B.. Bank should have given an opportunity to him in writing C.. Bank has the right to terminate D.. There is no need for the bank to intimate as the borrower has to know the conditions of the bank.

51.. Which type of finance to a Limited Company charge need not be registered with ROC. A.. Assignment of Book Debts B.. Vehicle Loan for the Managing Director’s son C.. Term Loan for Building D.. Cash credit (Hypothecation)

52.. A person has been appointed as the Manager of the property charged. He has to give notice to the Registrar of Companies within A.. 30 days B.. 30 days of his appointment C.. 30 days of his taking charge of the post D..30 days from the date of liquidation

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