MODEL QUESTIONS PRINCIPLES OF BANKING

1)An account holder draws a cheque on a : a)Banker of the Payee b)Banker of the Drawee c)Banker of the Drawer d)Banker of the Endorsee Answer: c

2) Obligation of a Banker to maintain secrecy is applicable to a) Existing deposit accounts b) Existing safe deposit accounts c) Closed deposit accounts d) a, b and c (existing/closed) Answer 2: d

a) A bank allows one of its clients 3)A holder for value is : a) A bank allows one of its clients to withdraw against clearing of a cheque. b) A bank which maintains high net worth customers accounts c) A bank which collects cheques for non customers d) A bank which handles high value clearing cheques Answer 3: a

4)State which of the following is/are incorrect: i) A Certificate of Deposit (CD) is issued by a banker ii) In a garnishee order, the banker on whom the order is issued is judgement debtor’s debtor iii) A book debt advance is secured by a mortgage iv) CAMEL model is used by RBI inspectors a) i and ii b) ii c) ii and iv d) iii Answer 4: d

a)Real Time Settlement System b)Real Time Gross Settlement System 5) RTGS stands for : a)Real Time Settlement System b)Real Time Gross Settlement System c)Real Gross Settlement System d)Real Gross Time Settlement System Answer 5: b

6) Your bank receives a cheque in inward clearing which has not been signed by the account holder. Which one of the following reasons you will select to return the cheque? a) Cheque is not signed by the payee b) Refer to the drawer c) Cheque is not signed by the drawee d) Cheque is not signed by the endorsee Answer 6: b

7) A purchaser of a demand draft for Rs.500,000.00, lost the DD To obtain a duplicate draft he needs to furnish a)A Power of Attorney b)A letter c)An Indemnity d)A mandate Answer 7: c

8) Which of the following is a material alteration? a) An open cheque is crossed with two lines across the cheque b) The purchaser of a DD changes the word “order” to “bearer” c) In a bearer cheque, the holder of the cheque changes the word “bearer” to “order” by striking “bearer” with a line d) A blank endorsement on a cheque is converted into a full endorsement Answer 8: b

9) At a Big shopping mall, Hari withdraws cash from ATM of Central Bank of India. Central Bank of India is a: a) Paying Banker b) Collecting Banker c) Advising Banker d) Correspondent Banker Answer 9: a

10) An order cheque is endorsed as “without recourse to me” by the endorser. This endorsement is known as a)Blank endorsement b)Restrictive endorsement c)Endorsement in full d)Sans recourse endorsement Answer 10: d

ii) Garnishee Order B) Judgement debtor iii) ATMs C) Assignment 11) Match the following: i) IRDA A) Insurance ii) Garnishee Order B) Judgement debtor iii) ATMs C) Assignment iv) Book debt D) E- Banking a) i-D,ii-C,iii-A,iv-B b) i-A,ii-B,iii-D iv-C c) i-B,ii-A,iii-D,iv-C d)i-D,ii-C,iii-B,iv-A Answer 11: b

i)Classification of Assets A) Narasimham ii)Allonge B) Endorsement 12) Match the following: i)Classification of Assets A) Narasimham ii)Allonge B) Endorsement iii)Funds Transfer C) EFT iv)Crossed cheques D) Collecting banker a) i-A,ii-B,iii-C,iv-D b) i-D,ii-C,iii-A,iv-B c) i-A,ii-D,iii-B,iv-C d) i-B,ii-A,iii-C,iv-D Answer 12: a

13) Which one of the following is secured by a mortgage? a) A cash credit against inventory b) An overdraft against book debts c) A term loan against land and building d) An educational loan Answer 13: c

14) In case of a Non Resident Indian, which of the following is permitted? a)A SB account in joint names in Candian dollars b)A Fixed deposit account in Australian dollars c)A NRNR account in Indian rupees d)An EEFC account in Indian rupees Answer 14: b

15)”Once a Bearer is always a bearer” is applicable in respect of a) A bill of exchange payable after 90 days b) A cheque c) A demand promissory note d) A Certificate of Deposit Answer 15: b

16) State which of the following statement/s is/are correct? i) KYC norms is applicable only to deposit accounts ii) Either or survivor is applicable to all joint accounts iii) A cash credit facility is a fund based limit iv) An incomplete negotiable instrument is called as an inchoate instrument a) i and ii b)ii and iii c)iii and iv d)iv Answer 16: c

17) A stop payment instruction of a cheque can be issued by: a) The payee b) The endorsee c) The drawer d) The drawee Answer 17: c

18) A customer has the flexibility to select the number of instalments and also vary his monthly instalment amounts subject to certain conditions. Identify the account a) An EEFC account b) A variable recurring deposit account c) A flexi deposit account d) A roaming current account Answer 18: b