Multi-option Question Bank


Set - 1


01 Which of the following better explains the meaning of risk :
a loss arising on happening of some event
b loss arising on non-happening of some event
c probability of loss that could arise due to uncertainty
d probability of risk that could arise due to uncertainty
e risk due to loss as a result of uncertainty

02 Risk that could arise due to legal actions or uncertainty of interpretations of contracts and agreements is called:
a counter-party risk
b contract risk
c country risk
d uncertainty risk
e legal risk

03 Risk on account of uncertainty about availability of cash when required or cash in excess of requirement:
a counterparty risk
b legal risk
c credit risk
d liquidity risk
e settlement risk

04 Risk that is associated with inability/failure of banks in payment of amount representing clearing cheques presented by different banks:
a liquidity risk
b settlement risk
c credit risk
d legal risk
e clearing process risk

05 Risk that is associated with failure of internal processes of a bank or business organization:
a settlement risk
b procedural risk
c operational risk
d credit risk
e none of the above

06 A part of credit exposure of a bank that will not be recovered in the event of default on a specified obligation is called:
a credit risk
b loss given default
c credit loss risk
d counterparty default
e credit exposure risk

07 Debt financing that can magnify the risk and reward for an investment is called:
a leverage
b reward risk
c derivative
d investment risk
e loss given default

08 The risk that a bank faces on account of trading in govt. securities or other investments is called:
a trading risk
b investment risk
c liquidity risk
d market risk
e credit risk

09 Exposure to uncertainty in economic value of an investment that could not be marked to market is called:
a trading risk b business risk
c market risk d liquidity risk
e investment risk

10 The risk that may arise due to failure of a counterparty to perform an obligation:
a counterparty risk
b credit risk
c market risk
d performance risk
e market risk

JAIIB BASED QUESTIONS
(Que No.11 to 52 are part of our Correspondence Course for JAIIB)
REGULATION OF BANKING BUSINESS

11 RBI can issue direction to banks under which of the following provisions:
a Section 21 of B R Act
b Section 35A of B R Act
c Section 22 of RBI Act
d a and b
e a to c all

12 Under Section 21, directions relating to which aspect of banking, can be issued by RBI to banks:
a directions relating to deposits
b directions relating to export credit
c directions relating to priority sector
d directions relating to advances
e directions on general aspects of banking

13 The term ‘unclaimed deposit’ stands for which of the following:
a deposits where the depositor has expired and not claimed
b deposit where the legal heirs have claimed the deposit after death of the depositor
c deposit which have not been operated for a long time
d deposits not operated for 10 years
e all the above

14 Which of the following actions are required to be taken by the bank in connection with unclaimed deposits:
a annual return is required to be submitted to RBI
b annual return is to be prepared as on Dec 31 for submission to RBI
c annual return is to be submitted within 30 days of end of each calendar year
d a to c all
e a and c

15 Directions on loans and advances are issued by RBI u/s 21 of B R Act, for which of the following aspects:
a purpose of the advance
b margin to be maintained
c maximum amount of advance
d rate of interest
e all the above

16 What kind of restriction is imposed by RBI u/s 20 of B R Act on the banks:
a banks should fix margins on advances as per RBI directives
b rate of interest can be fixed by banks as per their discretion
c maximum and minimum period of deposits should be as per RBI directives
d banks cannot grant advances on the security of their own shares
e all the above

17 The Usurious Loans Act prohibits :
a loans without obtaining security
b loans by obtaining extra-ordinary security
c loans at exorbitant rates of interest
d loans with high margin percent
e none of the above

18 Protection to a bank from scrutiny by courts is available u/s 21A of B R Act relating to interest rate being excessive:
a if interest is as per RBI directives
b if interest is not exorbitant
c if interest is at bank rate
d if interest rate is linked to bank rate
e none of the above

19 To build Statutory Reserver, banks have to transfer ____% out of ____ to a reserve fund, u/s 17(1) of B R Act
a 20%, profits,
b 20%, profits before tax
c 25%, profits before dividend
d 20%, profits before dividend
e none of the above

20 When does the requirement of transfer to reserve fund u/s 17 (1) as above is not there:
a when it is waived by RBI
b when bank makes such request and RBI agrees
c when Central Govt. on RBI recommendation allows such exemption
d when Central Govt. of its allows such exemption.
e none of the above

21 When Central Govt. can exempt a bank from transferring its profits to reserve fund on RBI recommendations:
a when reserve fund is adequate to meet capital adequacy
b when capital adequacy ratio is above the minimum required
c when reserve fund and share premium balance is not less than paid up capital
d when reserve fund is equal to paid up capital
e none of the above

22 Appropriation, if any, from the Reserve Fund and Share Premium account is required to be reported to ___ within ____ days:
a ROC, 30 days
b Company Law Board, 21 days
c Central Govt, 30 days
d SEBI, 21 days
e RBI, 21 days

23 Non-scheduled banks have to maintain cash reserve u/s ___ of Banking Regulation Act at ___ % of demand and time liabilities:
a 18, 5% b 42, 3%
c 18, 3% d 24, 25%
e none of the above

24 To be a scheduled bank, a bank has to be one of the following:
a state cooperative bank,
b company defined u/s 3 of Companies Act
c an institution notified by Central Govt.
d a company incorporated outside India under Foreign Law
e any of the above

25 To be a scheduled bank, what is the minimum paid-up capital and reserves requirement of a bank:
a Rs.1 lac b Rs.2 lac
c Rs.5 lac d Rs.10 lac
e Rs.20 lac
26 What is true with regard to return to be submitted to RBI for cash reserve ratio:
a return gives details of demand and time liabilities
b return is as at the close of business on each alternate Friday
c return is to be submitted not later than 7 days after date to which it relates
d RBI can permit submission of the return on a monthly basis to be submitted within 20 days in case of difficulty with geographical position of the bank and branches
e all the above

27 If the relevant Friday on which the return is to be submitted is a holiday as per NI Act, the return relating to CRR is to be submitted:
a as on close of next day
b as on close of the preceding business day
c as at close of the preceding working day
d on the previous working day
e not required to be submitted

28 What penalty can be imposed by RBI on non-compliance with requirement of cash reserve ratio:
a 3%
b 3% above bank rate during the 1st fortnight
c 5% above bank rate during the 2nd fortnight
d b and c
e none of the above

29 If default in CRR still continues beyond first two fortnights, what is the penalty:
a director, manager or secretary can be imprisoned
b director, manager or secretary can be fined
c director can be removed
d all the above
e none of the above

30 What return is required to be furnished to RBI for SLR purpose:
a A monthly return to be submitted within 15 days
b A monthly return to be submitted within 7 days from close of the month
c A monthly return to be submitted within 20 days from end of the month to which it relates
d A monthly return to be furnished by close of the next month
e none of the above

31 SLR is to be maintained as at:
a close of each month
b close of each fortnight
c close of each week
d close of each business day
e none of the above

32 What penalty can be imposed by RBI on non-compliance with requirement of SLR ratio:
a 3%
b 3% above bank rate during the 1st fortnight
c 5% above bank rate during the 2nd fortnight
d b and c
e none of the above

33 What is the requirement u/s 25 of B R Act, to be fulfilled by banks in India:
a Banks are to maintain 75% of the demand and time liabilities as assets in India.
b These assets would be there as on last Friday of each quarter
c If such Friday is holiday, the preceding working day would be deemed to the relevant day
d Quarter for the above purpose is of 3 months
e all the above

34 Cash reserve of 3% of demand and time liabilities u/s 18 of B R Act is required to be maintained by:
a cooperative banks
b scheduled commercial banks
c financial institutions
d non-scheduled banks
e all the above

35 Which of the following is not a correct statement:
a Only scheduled banks are to maintain cash reserve u/s 42 of RBI Act
b Non-scheduled banks are to maintain cash reserve u/s 18 of B R Act
c Additional cash reserve can be prescribed to be kept by Central Govt.
d Interest is required to paid by RBI on cash balances maintained with it u/s 24 of B R Act
e Banking companies are required to maintain reserve fund u/s 17 of B R Act

RETURNS, INSPECTION AND WINDING UP

36 As per Section 29 of B R Act, the balance sheet and profit and loss account is required to be prepared by a banking company as on:

a end of each calendar year
b expiry of 12 month period ending with any other date which Central Govt. may notify
c as on last working day of the year or the period
d a to c e a and b

37 Balance sheet and profit and loss account are prepared by a bank as per:
a 3rd Schedule of RBI Act
b 2nd Schedule of RBI Act
c Schedule VI of Companies Act
d 3rd Schedule of B R Act
e none of the above

38 Banks are required to publish their balance sheets in ______ :
a in a news paper in circulation at place of principal office of the banking company
b in two news paper in circulation at place of principal office of the banking company
c in a news paper and magazine in circulation at place of principal office of the banking company
d on website of the bank concerned
e none of the above

39 Banks are to furnish to RBI ___ copies of balance sheet within ___ months from end of the period to which they relate:
a 2, 3 months
b 2, 6 months
c 3, 3 months
d 3, 6 months
e none of the above

40 Each bank has to get its balance sheet audited from qualified auditors appointed by:
a Central Govt. b RBI
c Institute of Chartered Accountants of India
d Bank Board e b and c

41 Approval of which of the following authority is required for appointment, reappointment or removal of auditors by a banks:
a Central Govt. b RBI
c Institute of Chartered Accountants of India
d SEBI e b and c

42 Which of the following is not true in connection with special audit of banks:
a special audit can be ordered by RBI and SEBI
b special audit can be ordered in public interest
c special audit can be ordered to safeguard interest of depositors
d special audit can relate to any transaction or a class of transactions
e special audit can be by the same auditor or another auditor

43 Which of the following is not true with regard to preservation of records by banks:
a rules for preservation are framed under section 45Y BR Act
b rules are framed by Reserve Bank
c rules specify the period of preservation books, accounts and other documents
d rules specify the period of preservation of different instruments
e RBI can order longer period for preservation of any record than the prescribed u/s 45Y

44 A customer demands return of certain cheques issued by him and paid by the bank. What option is not correct:
a paid cheques cannot be returned at all.
b paid cheques can be returned by keeping copy of the instrument
c customer has to follow the preservation rules of Section 45Y of BR Act
d authority to return the paid instruments is available to banks u/s 45Z of B R Act
e none of the above.

45 Section 35 of B R Act concerns with which of the following aspects:
a return of paid instruments
b issue of directions in public interest
c audit of accounts of banks
d inspection of banks by RBI
e issued of directions on loans and advances

46 Which of the following is correct with regard to inspection of banks by RBI:
a inspection can be carried by RBI u/s 35 of B R Act
b inspection can be ordered by Central Govt. also
c a copy of inspection report is required to be given to bank
d inspection team can require the bank to furnish any statement or information
e all the above

47 In order to verify some fact, the inspecting official wants to examine a senior officer of a bank on oath. Whose permission is required:
a RBI
b Central Govt.
c Board for Financial Supervision of RBI
d he himself is authorized
e a and c

48 On the basis of inspection report of a bank, if Central govt. decides to take stern action such as prohibition of acceptance of fresh deposits, what it is required to do:
a give opportunity to the bank
b decision of prohibition can be deferred
c can impose additional terms and conditions
d can publish the report
e all the above

49 Who among the following are not the members of Board for Financial Supervision:
a Governor RBI
b Dy. governors
c 4 directors from Central Board of RBI
d 2 directors from Local Boards of RBI
e none of the above

50 What is the quorum for meeting of Board for Financial Supervision:
a of 3 members one of which should be chairman or vice-chairman
b of 4 members including Chairman
c of 3 members
d of 2 members if they are chairman and vice chairman
e none of the above

51 Central Govt. can prohibit a bank from acceptance of fresh deposit, due to which of the following:
a if RBI carries inspection and finds that deposits are not insured by DICGC
b if RBI carries scrutiny of the bank and finds that there are complaints from depositors
c if bank is incurring losses
d if bank not complying with requirement of RBI Act
e if business is being conducted to the detriment of interest of depositors

52 Which of the following is not a correct statements:
a annual accounts of foreign banks relate to their business in India.
b RBI can order special audit of a bank, without Central govt. permission
c banks are to furnish three copies of balance sheet to RBI
d It is mandatory to give copy of scrutiny report to the bank by RBI
e Board for Financial Supervision is set up u/s 58 of RBI Act

For solution to this quiz, kindly refer to December 2005 issue of Banking Events Update.

Set - 2

01 Which among the following is correct with regard to RBI scheme for one-time settlement for small and medium enterprises RBI’s OTS for SMEs) :
a the scheme is available both for standard loan accounts and substandard accounts
b the scheme is available for sub-standard, doubtful accounts and loss accounts
c the scheme is available for doubtful accounts and loss accounts
d the scheme is available for loss accounts only
e the scheme is available for doubtful accounts only.

02 Banks can not entertain which of the following kinds of loan accounts under the RBI’s OTS for SMEs:
a cases where action has already been initiated under SARFAESI Act 2002
b cases that are pending with DRT
c cases that are pending with BIFR
d cases that are pending with a court
e none of the above

03 The last date for receipt of applications under RBI’s OTS for SMEs is :
a Sept 30, 2005 b Dec 31, 2005
c Feb 28, 2006 d Mar 31, 2006
e Jun 30, 2006

04 What is the amount that could be accepted by banks under RBI’s OTS for SMEs for doubtful or loss accounts as on March 31, 2004:
a 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs
b 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus the interest at simple rate.
c 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest at bank rate
d 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest at BPLR of the bank
e 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest & other charges due

05 What is the amount that could be accepted by banks under RBI’s OTS for SMEs for sub-standard accounts as on March 31, 2004, which became doubtful subsequently:
a 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs
b 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus the interest at simple rate.
c 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest at bank rate
d 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest at existing BPLR from April 1, 2004 till the date of final payment.
e 100% of o/s balance in the a/cs on the date of categorisation as doubtful NPAs plus interest & other charges due

06 Which of the following options are available to the borrowers for repayment under RBI’s OTS for SMEs:
a full amount has to be paid up front
b 25% can be paid up front and balance in instalments
c 25% can be paid up front and balance 75% in instalments within three years with interest
d 25% can be paid up front and balance 75% in instalments within one year without any interest payment
e 25% can be paid up front and balance 75% in instalments within one year with interest at existing PLR till date of payment.

07 Under Debt-Restructuring mechanism for SME, which of the following kinds of loans are not eligible:
a all non-corporate SME irrespective of amount of bank dues
b all corporate SMEs dealing with one bank irrespective of amount of bank dues.
c all corporate SMEs having consortium arrangement with total fund limits of Rs.10 crore.
d a and c e b and c

08 Which of the following types of loan accounts are eligible under Debt-Restructuring mechanism for SME:
a should not be a loss account
b Units that could become viable in 7 years
c Units that could ensure repayment not exceeding 10 years
d BIFR cases e all the above

09 What is the permissible time norm for working out the restructuring under Debt-Restructuring mechanism for SME:
a one month from date of account becoming sub-standard
b one month from date of receipt of information from the borrower
c 30 days from date of receipt of request
d 60 days from date of receipt of request
e 90 days from date of acknowledgement of request.

10 Under consortium advances, which bank could work out the restructuring:
a the bank having maximum share
b the bank having maximum share alongwith the 2nd largest bank
c all the banks together
d banks having 51% share
e none of the above

11 What is the time period when a complaint can be entertained by the Ombudsman:
a when referred by the customer directly to the Ombudsman.
b when referred by the customer after bank did not send any satisfactory reply within one month.
c when bank did not send any reply within 2 months of a reference of complaint to the bank.
d when bank makes a reference to Ombudsman
e a to c all.

12 What is the maximum amount of compensation that Ombudsman can allow, for a case referred to it:
a Rs.2 lac b Rs.4 lac
c Rs.6 lac d Rs.8 lac
e Rs.10 lac

13 What remedy is available to the bank when Ombudsman passes an award directing the bank to make the payment:
a Bank can go in for appeal in a court of law
b Bank can go in for appeal to RBI
c Bank can make a request for review to Review Authority
d Bank can file a suit against the decision with DRT
e none of the above

14 What remedy is available to the customer when Ombudsman passes an order with which customer is not satisfied:
a can make a review application to Ombudsman
b can make a review application to Review Authority
c can go in for appeal in DRT
d can proceed for any remedy deemed appropriate by him
e can file a suit in a Consumer Court only.

15 What is the time period during which the bank is to implement the order of Ombudsman:
a within 15 days of date of receipt of order
b within 30 days of date of receipt of order
c within one month from date of receipt by the bank, of customer’s acceptance of the award with in 15 days of receipt of order by him
d within one month from date of receipt by the bank of the acceptance of award, any time.
e none of the above

16 What is the amount of dispute that could be referred to Ombudsman for arbitration:
a between bank to bank Rs. 5 lac
b between bank to bank Rs. 10 lac
c between bank to customer Rs. 10 lac
d a and c e b and c

17 What is the time period during which Ombudsman is expected to render his award in case of arbitration.
a 3 months from date of receipt
b 1 months from date of receipt
c 6 months from date of first hearing
d within 6 months from date of receipt of the case
e c and d, whichever earlier.

18 What is the time period during which the bank can file a review application with Review authority:
a within 2 months from date of award
b within 1 month from date of receipt of copy of award
c within 1 month from date of award
d within 3 months from date of order
e within 6 months from date of receipt of award.

19 Which of the following type of complaint regarding loans cannot be lodged by the customer with the Ombudsman:
a non-observance of RBI directives
b delay in sanction or disbursement
c non-acceptance of loan application without valid reasons
d non-observance of time schedule for disposal of loan applications
e none of the above

20 Ombudsman scheme has been formulated by RBI under provisions of:
a RBI Act Section 21
b RBI Act Section 35
c Banking Regulation Act Sec36-A
d Banking Regulation Act Section 35-A
e Ombudsman Act Section 35

21 Which among the following are not eligible for deposit insurance from DICGC:
a foreign banks
b regional rural banks
c district central banks
d primary cooperative societies
e none of the above

22 Which of the following kinds of deposits are not insured under DICGC scheme:
a inter bank deposits
b deposits from government,
c deposits of State Land Dev Banks with State Coop Banks
d deposit received outside India
e all the above

23 What is the amount of insurance up to which a deposit is insured:
a Rs.1 lac per depositor per branch of a bank
b Rs.1 lac per depositor per bank
c Rs.1 lac per depositor from the banking system
d Rs.1 lac per depositor held singly or jointly
e all the above

24 On which amount/balance of deposit, the deposit insurance cover is available from DICGC
a date of cancellation of licence of the bank
b date of liquidation of the bank
c date of amalgamation comes into force
d date of merger comes into force
e any of the above

25 If two banks are closed on the same day, what is the position of availability of insurance cover to the depositor, having deposit with both the banks:
a cover is applicable to the maximum extent of Rs.1 lac
b cover available separately to the extent of Rs.1 lac for each bank
c cover not available as that amounts to violation of basic cover of Rs.1 lac
d cover available but maximum amount would be Rs.1 lac to be claimed pro-rata from both the banks
e none of the above

26 What is the time period during which DICGC is expected to meet its claim liability:
a two months from date of receipt of claim list from the liquidator
b two months from date of receipt of claim list from the transferee bank
c two months from date of receipt of claim list from the insured bank/transferee bank
d a to c all e a and b only

27 What is true with regard to periodicity and the amount of premium payable on deposit insurance:
a 10 p per Rs.100 per annum
b payable yearly
c payable half-yearly
d a and b e a and c

28 On what basis, the premium payable in advance to DICGC is to be calculated by the banks:
a last working day of March
b last working day of Mar and Sept
c last reporting Friday of March
d Last Friday of the year
e none of the above

29 What is the time schedule during which the premium is to be finally paid:
a within 1 month from beginning of the year
b within 2 months from beginning of the year
c within 2 months from beginning of the respective half year
d within 2 months from last day of the previous year
e none of the above

30 What are the circumstance under which a bank is disqualified to be covered under deposit insurance scheme of DICGC:
a where the bank fails to make the payment of premium
b where the bank has been prohibited from accepting the deposits by RBI
c where RBI has cancelled the licence
d where the bank ceases to be a banking company
e all the above

31 On dishonour of a cheque, what kind of remedy is available to the holder of the cheque under NI Act:
a holder can file complaint with Ombudsman
b holder can file the case in a normal court
c holder can file a complaint with metropolitan magistrate or 1st class judicial magistrate
d holder can file a complaint with RBI
e all the above

32 The remedy under Section 138 of NI Act, to file complaint is not available to the holder under which of the following circumstances:
a where the cheque has been issued without consideration
b where the cheque has been issued to discharge the liability
c where the cheque has been issued to discharge the liability but its payment has been stopped.
d where the cheque has been issued to discharge the liability and holder has been asked not to present the cheque
e where the cheque has been dishonoured for insufficiency of funds.

33 What is the time period during which the cheque is to be presented u/s 138 of NI Act:
a before the bank fails
b before the drawer stops the payment of the cheque
c during the validity period
d maximum within 6 months of date of issue.
e c and d

34 Which of the following is an essential condition for filing complaint, by the holder:
a to issue notice to the drawer within 30 days of date of receipt of the information about dishonour.
b to issue notice to the drawer within 15 days, of date of receipt of information about dishonour
c drawer should be given 15 days period, from date of receipt of the notice by him, to make the payment.
d a and c e b and c

35 What is the time period, to make complaint by the holder:
a within 30 days from date of receipt of information about dishonour by the holder
b within 30 days from date of issuing notice to the drawer to make the payment
c within one month from date of cause of action
d within two months from date of non-receipt of reply from the drawer, in response to the notice from holder
e any of the above, whichever is later.

36 X has received a cheque from Y as gift on his birthday. When cheque is presented, it is dishonoured. What is the time period during which the complaint can be filed by X in this case:
a within 30 days from date of receipt of information about dishonour by the holder
b within 15 days from date of issuing notice to the drawer to make the payment
c within two months from date of cause of action
d within three months from date of non-receipt of reply from the drawer, in response to the notice from holder
e no complaint can be filed

37 What punishment is prescribed under NI Act, for dishonour of cheque:
a fine equal to the amount of cheque.
b fine double the amount of cheque
c imprisonment up to 2 years
d a and c e b and c

38 If an offence is compounded by the court, what is the punishment under NI Act for dishonour of cheque:
a fine double the amount of the cheque
b fine up to Rs.5000
c imprisonment up to 1 year
d imprisonment up to 2 year
e b and c

39 What is the mode of service of summons by the court on the drawer of the cheque:
a normal postal services
b speed post
c authorized courier
d a and b e a to c

40 What is true with regard the liability of a director of a company, in case of dishonour of cheque, issued by a company:
a all the directors are liable
b nominated directors also liable
c directors responsible for conduct of the business of the company including managing director
d only those directors who are responsible for accounts maintenance of the company
e all the above

41 KYC guidelines have been issued by RBI, under which of the following:
a Section 21 of Banking Regulation Act
b Section 31 A of RBI Act
c Section 35 A of RBI Act
d Section 31 of NI Act
e None of the above

42 Which among the following is the objective of issuing KYC guidelines by RBI:
a check fraudulent activities of the borrowers
b check money laundering activities
c avoid undesirable customer to enter the banking system
d a and b e b and c

43 Which of the following is the basic document, on the basis of which KYC guidelines have been issued:
a Financial Action Task Force
b Anti-money laundering standards
c UNO Resolution on Iraq war
d a and b e b and c

44 What is the cut off amount of transactions for which the banks are required to keep record and report to the designated authority:
a all debit and credit transactions
b all debit and credit transactions in cash only
c all cash withdrawals and deposits of Rs.10 lac and above
d all withdrawals and deposits of Rs.10 lac and above
e all withdrawals of above Rs.1 lac in cash.

45 What is the amount of bank draft that can be issued by banks in cash under KYC directives of RBI:
a Rs.50000 or less
b Rs.50000 or more
c Less than Rs.50000
d More than Rs.50000
e More than Rs.1 lac

46 What is the time period during which the record of transactions is to be kept by banks under KYC directives:
a 3 years b 4 years
c 5 years d 6 years
e time frame prescribed by Central Govt.

47 What is the periodicity of reporting of transactions to designated authority under KYC:
a fortnightly b monthly
c quarterly d half yearly
e yearly.

48 Which of the following is not the key element of KYC policy to be framed by individual banks, as per RBI directives:
a customer acceptance policy
b customer identification procedure
c monitoring of transactions
d risk management
e none of the above

For solution to this quiz, kindly refer to November 2005 issue of Banking Events Update.

Set - 3

1. Mr. X a customer of another bank approaches your branch to deposit in safe custody, his term deposit receipt, issued by the said bank:
a it can be accepted, provided the other bank has no objection to this
b it can be accepted, if the customer provides indemnity bond
c it can be accepted, as a normal customer
d it cannot be accepted, since it is a term deposit issued by another bank, which has primary lien on the deposit.
e it cannot be accepted. Bank should refuse.

2.     Your branch receives from a customer, a Rs.500 bank note, that you find is a fake note. Which among the following action is required to be taken:
a the note will be cut into pieces and pieces handed over to the tenderer
b the police would be called and tenderer would be handed over to police.
c the note would be marked ‘fake’ and handed over to the tenderer
d the note would be impounded and kept in safe custody
e the note would be impounded, a statement would be obtained from the tenderer & both would be sent to police

3.  X draws a bill of exchange on Y in consideration of sale of goods. He does not mention the date of payment of the bill. What would be date of payment of the bill?
a it will be treated as usance bill and due date would be worked out after acceptance of the bill
b it will be treated as a demand bill and payment would be claimed as per mutual consent of both the party
c it will be treated as a demand bill and paid accordingly
d it will be treated as an ambiguous instrument and as such invalid
e it not a valid document. Hence X has to withdraw the instrument

4.  Bank makes use of selling rate in case of a foreign exchange transaction, in which of the following situations:
a encashment of foreign travellers’ cheques
b collection of a foreign currency bank draft
c negotiation of bill tendered by the exporter
d receipt of loan proceeds of a foreign currency loan from abroad
e issue of a foreign currency demand draft

5.  A foreign bank maintains a rupee account with a bank in India in Delhi. This account will be called ____ account by the foreign bank and ____ by the bank in India:
a loro and vostro
b nostro and vostro
c loro and nostro
d vostro & nostro
e vostro and mirror account

6.  Which among the following is true with regard to pension accounts in banks:
a life certificate should be from a Doctor
b life certificate should be obtained in the month of May and Nov every year
c When payment is obtained by the pensioner himself, there is no need for life certificate
d life certificate should be obtained once in a year during May
e life certificate should be obtained once in a year during November

7.  A borrower defaults in repayment of loan. Under which of the following, he can be covered:
a it is part of the credit risk
b the appraisal of the loan is definitely defective
c bank can recover the dues through filing of suit only
d it is part of the operational risk
e it is part of the liquidity risk

8. Substandard loan account of a firm was rescheduled by the bank on Sept 20, 2004 with a moratorium of 6 months. The firm commenced the repayment as per reschedulement and continued to repay the loan regularly. The account would be treated Standarad asset wef:
a Sep 20, 2005 b- Mar 20, 2005
c Sep 20, 2006 d- Mar 20, 2006
e Sep 20, 2004

9.    A farmer has been allowed an advance for irrigation equipment. He normally produces wheat and paddy. He has failed to repay the due instalment of his loan, which had fallen due during July 2005. The loan will  become NPA after :
a one harvest season
b one crop season
c two harvest seasons
d two crop seasons
e maximum within one year

10  In which of the following methods, a bank can calculate capital adequacy ratio:
a capital / risk weighted assets
b capital + reserves / risk weighted asset
c capital fund / credit assets
d capital fund / risk weighted assets
e risk weighted assets / capital fund

11.  Which among the following is purpose of investment fluctuation reserve:
a to cover the interest payment on investment in capital market
b to cover the loss arising from valuation and from interest rate movements in investment in govt. securities
c to cover the risk of fluctuation in value of capital market securities
d to cover the risk on account of govt. loans
e c and d above

12. RBI has cautioned banks to take more precautions in respect of housing finance advances, due to which of the following:
a increasing advances in housing finance
b frauds taking place in housing finance in one particular bank
c increasing incident of frauds and increasing NPAs
d due to increasing exposure of few banks in housing finace
e a to d all

13.  Under Credit Guarantee Fund Scheme, the maximum amount of claim for non-fund based limits is:
a Rs.10 lac b Rs.15 lac
c Rs.18.75 lac d Rs.25 lac
e Non-fund limits are not covered.

14.  Which of the following committees is associated with improvement in the working of weak banks:
a RH Khan Committee
b S S Tarapore Committee
c Padmanabhan Committee
d S L Kapoor Committee
e Verma Committee

15.  Which among the following is true in case of objective of setting up of CIBIL?
a to collect information about bank NPAs
b to collect credit information on behalf of RBI and CVC
c to collection information about bank business for helping RBI
d to collect positive and negative credit information and disseminate the same
e a to c all

16.  What is true with regard to the provision that is required to be maintained on standard loan assets:
a it is 1% on all regular standard assets
b it is 1% on all regular and irregular standard assets
c it is 0.25% on all regular standard loan accounts
d it is 0.25% of global loan portfolio of standard loan assets
e it is 0.25% on all advances of the bank.

17.  A customer tenders to the bank an outstation cheque of Rs.10000 for collection and also requests for instant credit of the cheque, to which bank agrees. What would be bank be called: 
a agent of the customer
b holder for value
c holder
d holder in due course
e special holder in due course

18.  A cheque has been issued by X in favour of Y, who crosses the same as ‘not negotiable’ and endorses to Z for a valuable consideration. Which among the following is true with regard to the cheque:
a Y has no liabiity if the cheque is dishonoured.
b Z becomes a holder in due course
c X’s liability on the cheque is a secondary liablity
d no one would be holder in due course on this cheque
e Such cannot be endorsed, as the transferability has been restricted.

19.  A cheque dated Oct 12, 2004 is presented for payment on Oct 27, 2004. It is however observed that the cheque book from which the cheque was issued was issued to the customer on Oct 22, 2004 only. What would the bank do with the cheque?
a this is ante dated cheque and would be paid, if otherwise in order
b the cheque would be paid, if drawer confirms that he put the date intentionally
c the cheque would be returned, as apparent tenor of the drawer is not clear
d the cheque being post-dated cheque would be returned
e the cheque being ante-dated would be returned.

20.  What is overbought position in case of Foreign Exchange, at a particular point of time?
a when foreign exchange purchased is less than foreign exchange sold
b when foreign exchange sold is more than foreign exchange purchased
c when foreign exchange sold is equal to foreign exchange purchased
d when foreign exchanged purchased is more than foreign exchange sold
e when foreign exchange purchase become risk-prone due to price variation

21.  What is the amount of family income for eligibility under DRI scheme in rural areas:
a Rs.6250 p.a. b Rs.6400 p.a.
c Rs.7200 p.a. d Rs.7500 p.a.
e Rs.11200 p.a.

22.  You are approached by an SSI units that is engaged in an industry, where raw material is available in a particular season of two months only. The assessment of working capital for this would be made by the bank:
a as per cash budget method
b as per turnover method of Nayak Committee
c as per Chore Committee method
d as per 1st method of Tandon Committee
e as per 2nd method of Tandon Committee

23.  Which among the following is true with regard to objective of getting signature of the person obtaining payment of a bearer cheque?
a to get it endorsed properly
b to get final discharge of the instrument
c to create proof that the instrument was presented
d to get receipt of payment
e a to c all

24 The comparison of the balance sheet of a firm reveals that increase in its long term uses are 125% of increase in its long term sources. Which of the following must be true:
a debt equity ratio changed
b current ratio changed
c stock turnover ratio changed
d debt service coverage ratio changed
e nothing changed

25 Which among the following is correct with regard to family income in case of Prime Minister Rozgar Yojna (PMRY)?
a for income purpose family comprises husband and wife and their childern
b the maximum income separately for husband and wife is Rs.40000 p.a.
c the maximum income of husband/wife Rs.40000 p.a. from all sources and that of parents separately Rs.40000 p.a.
d the maximum income of husband/wife and that of parents is Rs.80000 p.a. from all sources
e c and d both are correct

26 Which of the following categories of borrowers are not eligible for assistance under KVIC’s margin money scheme?
a Partnership firm
b individuals
c cooperative societies
d trust registered with KVIC
e none of the above

27 Section 269-T of Income Tax Act 1961, deals with which of the following aspects of banking transactions?
a payment of term deposit in cash up to Rs.20000 only
b deduction of tax at source on term deposits
c payment of bank drafts in cash up to Rs.50000 only
d preparation of bank drafts in cash up to Rs.50000 only
e all the above.

28 Bank drafts are issued by banks payable to order only while customers can issue cheques payable to bearer also:
a due to restriction imposed by Govt.
b because that would be risk prone
c as per provisions of RBI Act
d as per directives of Banking Regulation Act
e because is draft is a value paid instrument while cheque is value payable.

29 Which of the following is not correct with regard to ‘Know Your Customer guidelines’ ?
a Guidelines have been issued u/s 35 A of Reserve Bank of India Act
b Guidelines relate to identification of depositors
c Guidelines help to control financial frauds
d Guidelines help in identification of money laundering and suspicious activities
e Guidelines are applicable to all accounts including foreign currency accounts.

30 Which among the following can be exercised by a bank on a term deposit the maturity date of which expired 2 months back:
a right of assignment
b right of appropriation
c right of subrogation.
d right of forclosure
e right of set off

31 When a bank has oversold position in foreign currency in an appreciating market which of the following would be true?
a bank will be gaining while covering its position
b bank may incur loss while covering its position
c there will not be any impact, since bank has already sold the currency
d bank will gain while purchasing the fresh currency
e none of the above

32 In order to sell an asset charged to the bank under SARFAESI Act, which among the following is true?
a any kind of asset can be sold if it is charged to the bank
b all kinds of loans are covered except agriculture loans
c before possession 30 day’s notice and before sale 60 days’ notice is required
d before possession 60 days’ notice and before sale 30 days’ notice is required
e sale can be made after getting permission from DRT.

33 In which of the following circumstances, the relationship between the bank and customer is not correctly stated:
a shares given for sale - agent & princial
b garnishee order - debtor & creditor
c payee of draft - trustee & beneficiary
d articles left by mistake - agent & principal
e standing instruction - agent/principal

34 In which of the following circumstances, there can be more than one nominee
a joint term deposit accounts
b deposit accounts of pensioners
c joint safe deposit of aritcles
d locker accounts in either/survivor account
e joint operation locker accounts

35 Your branch receives a cheque of Rs.2500 drawn in favour of Mr.Tyagi for payment across the counter. It is observed that the name of the payee Mr. Tyagi in the cheque is written in Hindi while the other particulars are in English:
a Bank will return the cheque
b Bank will ask Mr. Tyagi to write the name in English also
c Bank will ask the payee to get it corrected in English from the drawer
d Bank will make the payment of the cheque
e Bank will make the payment, after enquiring from the drawer.

36 Illegal interference in the property of another person, that becomes a punishable offence, is called:
a tress-passing
b marshalling
c securitisation
d negotiation
e conversion

37 What is the amount of court fee for filing a case in a Lok Adalat?
a Minimum Rs.750.
b Above the amount of Rs.5 lac, Rs.100 for each Rs.1 lac
c Max amount is Rs.10000
d No court fee is payable
e Court fee is discretion of Lok Adalat.

38 In case of small scale industrial units, which among the following is correct with regard to the sub-target to be achived by banks:
a 25% of SSI advances should be to SSI with investment in plant & machinery up to Rs.25 lac
b 20% of SSI advances should be to SSI with investment in plant & machinery above Rs.5 lac & up to Rs.25 lac
c Minimum 40% of SSI advances should be to SSI with investment in plant & machinery above.25 lac
d 20% of SSI advances should be to SSI with investment in plant & machinery above Rs.25 lac
e all the above

39 X issues a cheque in favour of A, who crosses the cheque as ‘ account payee only’. This direction of A is:
a direction of drawer to paying bank
b direction of the payee to collecting bank
c direction of drawee to the payee
d direction of the drawer to collecting bank
e direction of the drawer to the payee

40 Mr. G guaranteed the loan raised by Mr. Y who failed to pay. When money was demanded from Mr. G he paid the loan and asked for handing over the securities available in the loan. Which right Mr. G has used to demand the securities:
a Right of foreclosure
b Right of subrogation
c Right of redemption
d Right of marshalling
e Right of novation

41 B appoints X as his agent on January 01, 2004. X signs a post dated cheque dating it as March 30, 2005. He expires on March 25, 2005. The cheque is presented on Sept 29, 2005
a the cheque will not be paid
b the cheque would not be paid because the signatory has died
c the cheque would be paid as the customer is alive
d the cheque would be paid as cheque has not become stale as yet
e cheque would be returned as with death of the agent the authority ceasd to operate.

42 For which kind of following accounts, the banking cash transaction tax is to be deducted:
a all deposit and loan accounts
b for all non-saving bank accounts whether deposit or loan accounts
c cash withdrawal from non-saving accounts of individuals/HUF of Rs.25000 and above
d cash withdrawal from non-saving accounts of others of less than Rs.1 lac and above
e c and d

43 Under which of the following systems, is an alternative method of effecting bulk payment transactions which would obviate the need for issuing and handling paper instruments and thereby facilitate improved customer service by the banks and companies / Corporations Govt. department effecting payment.
a electronic funds transfer
b electronic clearing services
c special electronic funds transfer
d real time gross settlement
e all the above

44 In which of the following styles, a locker account cannot be opened:
a joint account in the name of more than 3 persons
b joint operations by more than two persons
c either or survivor
d former or survivor
e the account can be opened in all forms such as joint operation, either/survivor and former/survivor

45 X and Y deal with each other by sale and purchase of goods. X draws a bill of exchange on Y which Y accepts for payment, but no sale purchase has taken place for this bill. In this case the bill is :
a. clean bill of exchange
b. documentary bill of exchange
c. foreign bill
d. genuine bill
e. accommodation bill

For solution to this quiz, kindly refer to October 2005 issue of Banking Events Update.

Set - 4

1 A reputed company approaches your bank to provide them credit support for raising external commercial borrowing under automatic route. What kind of facility can be provided to them:
a a guarantee for the ECB can be given
b a standby letter of credit can be opened
c letter of undertaking can be issued
d letter of comfort can be issued
e None of the above is permitted

2 What is the role of advising bank in case of a letter of credit:
a to forward to the seller and to negotiate documents
b to verify the genuineness of LC and forward it to the seller/beneficiary
c to give confirmation that payment would be made by it in case the issuing bank fails to make the payment
d to allow preshipment credit if asked for by the beneficiary
e all the above

3 While providing finance to a project, the term Net Present Value method represents which of the following:
a to find out the present value of the investment made in the project
b a tool to understand as to what shall be the present value of the loan being given at the end of a particular period.
c present value of the cash flows which the project would generate over a time period on the basis of a discount factor .
d present value of the cash outgo over the life time of the project so as to understand the actual outlay
e the discount rate at which the present value of future cash flows becomes zero taking into account the investment.

4 Which among the following banks has been permitted by RBI, a higher overall ceiling (above 5%) in respect of exposure to capital market:
a State Bank of India
b HDFC Bank c StanChart Bank
d ICICI Bank e IDBI Ltd

5 Which among the following is the first bank to return capital to the Central Governnent:
a State Bank of India
b Punjab National Bank
c Oriental Bank of Commerce
d Canara Bank
e Corporation Bank

6 Project A has higher fixed cost than the project B. What will be true with regard to Break even point of these project, other things being equal:
a project A has higher break-even and scope of better profits
b project A has higher break-even and scope of lower profits
c project B has higher break-even and scope of better profits
d project B has higher break-even and scope of lower profits
e Break even shall be equal based on the cash flows

7 A company has been formed to undertake the business of software development. This objective of the company would be found in which of the following documents:
a Certificate of Incorporation
b Certificate of Commencement of Business
c Resolution from Board of Directors
d Articles of Association
e None of the above

8 Under which of the following methods of depreciation on fixed assets, the annual amount of depreciation decreases:
a Written down value method
b Straight line method
c Annuity method
d Insurance policy method
e a and c above

9 An importer has imported from Australia (invoicing Aus Dollar) certain plant and machinery the payment of which is to be made 2 months after. On the basis of prevailing situation the home currency is expected to record depreciation compared to Aus Dollar. What should be importer do:
a He must go for a swap of Aus Dollar with Rupee
b He must arbitrage in Aus Dollars
c He should book a forward contract and purchase Aus Dollar
d He should sell Aus Dollars immediately
e He should purchase Aus Dollars spot

10 The rate of discount at which the present value of cash inflows becomes equal to the present value of cash outflows over the period of a project is called:
a net present value
b discounted cash flow
c debt service coverage ratio
d internal rate of return
e project appraisal technique

11 A stand-by letter of credit opened for import of gold on loan basis provides for which of the following:
a the usance period should not exceed 90 days
b the usance period shall be need based as per contract
c the tenor of the letter of credit should be in line with the period of gold loan
d a to c all
e a and c

12 The methodology that focuses on eliminating the defects and facilitating data drivern decision making:
a management by objectives
b customer relation management
c six sigma
d strategic management
e Total quality management

13 A bank carries positive gap in its asset liability position i.e. rate sensitive assets are higher than the rate sensitive assets. What would the impact of increase in interest rates:
a Net interest margin would decrease
b Net interest margin would increase
c Market value of the assets would increase
d Market value of the liabilities would increase
e There will be no impact.

14 Collection period of its sundry debtors has been increasing in respect of a firm but the period available to it for payment to sundry creditors has been decreasing. This would lead to:
a increase in its working capital requirements
b decrease in its working capital needs
c no change in its working capital needs
d higher amount of interest payment
e No impact on any of the financial parameters

15 A process under which it is expected that a combined entity (combination of two or more) would be able to exceed the individual earning of the entities being combined:
a six sigma
b total quality management
c synergy
d internal rate of return
e management by profiteering

16 Which of the following foreign nationals of non-Indian origin cannot remit foreign exchange from India:
a Who has retired from employment in India
b Who has inherited assets from a person resident in India
c Who is widow of a Indian Citizen
d all the above
e none of the above

17 What is the maximum amount that a foreign nationals of non-Indian origin can remit foreign exchange from India:
a $ 50000 b $ 100000
c $ 500000 d $ 1000000
e $ 2500000

18 The facility of remittance is not available to which of the following types foreign nationals of non-Indian origin:
a Citizens of Australia & Canada
b Citizens of Nepal & Bhutan
c Citizens of Nepal and Bangladesh
d Citizens of Bhutan and Pakistan
e None of the above

19 Remittance of sale proceeds of immovable of property can be allowed by Authorised Delaers to which of the following:
a Citizens of Nepal and Bangladesh
b Citizens of Sri Lanka & Afghanistan
c Citizens of Pakistan & Iran
d Citizens of China and Bhutan
e None of the above

20 A person of Indian origin approaches to remit funds from his Non-Resident Ordinary account. How the bank should deal with his request:
a Can be allowed up to $ 1 million
b Can be allowed up to $ 100000
c Can be allowed with permission of RBI
d Can be allowed up to Rs.1 million
e Can not be allowed

21 An NRI wants to remit the sale proceeds of the immovable properties from India. Which of the following documents will not be required to be furnished by him:
a evidence in support of inheritance
b Reserve Bank permission
c Document for legacy of assets
d An undertaking by the remitter
e CA certificate as per prescribed format

22 What is the residential status of a student from India having gone abroad for studies purpose:
a a person of Indian origin
b a Non-resident Indian
c a resident Indian
d a foreign National
e none of the above

23 What kind of remittance facilities are available for a student from India having gone abroad for studies purpose:
a same as in case of Resident India
b same as in case of a foreign national
c same as in case of an NRI
d same as in case of person of Indian origin
e No such facility is permitted.

24 Who among the following can open an NRO account in India:
a a non-resident Indian only
b a person of Indian origin only
c Any person/entity resident outside India
d a foreign national only
e none of the above

25 Which of the following types of credit can be freely allowed by Authorised Dealers to NRO accounts:
a from FCNR accounts and vice versa
b from NRE accounts and vice versa
c transfers from rupee accounts of non-resident bank
d all the above
e none of the above

26 What is the extent of debits that can be allowed by ADs for remittance from NRO account of NRI/PIO:
a $ 1 million per calendar year
b $ 1 million per financial year
c $ 100000 per calendar year
d $ 100000 on one occasion
e $ 100000 per financial year

27 A foreign national visiting India wants to open an NRO account during his visit:
a account can be opened
b account cannot be opened
c account can be opened with RBI permission only
d account can be opened for foreign currency transactions
e none of the above

28 The compliance of which of the following conditions is required to be ensured in respect of NRO account of a foreign national:
a the account can be opened maximum for a period of 6 months
b no credit from local funds will be permitted
c interest can be credited
d balance can be allowed to be converted into foreign currency for payment to the account holder at the time of his departure from India
e all the above

29 A resident Indian proceeds to Nepal for taking up employment. His saving bank with your branch in India will be designated as:
a FCNR account
b A non-resident external account
c An NRO account
d A resident account
e none of the above

30 A non-resident Indian has been visiting India to meet his old parents. During his visit to India, his NRO account would be treated as:
a an NRE account
b A resident account
c An NRO account
d an FCNR account
e none of the above

31 A request is received by your branch from the nominee, to credit the balance lying in the deceased person’s NRO account to his account:
a it cannot be done if nominee is resident
b it cannot be done if nominee is non-resident
c request can be accepted if he is non-resident only
d request can be accepted if he non-resident or resident India
e RBI permission is required for such request.

32 A non-resident Indian has returned to India for employment for uncertain period. His NRO account would be treated as:
a an NRE account
b A resident account
c An NRO account
d an FCNR account
e none of the above

33 An NRI has been issued a credit card by your bank. The balance drawn by him under the card shall be adjusted by which of the following:
a remittances from abroad
b transfer from his NRE account
c transfer from his FCNR account
d transfer from his NRO account
e any of the above modes

34 A resident India allowed loan by your bank has become non-resident. What treatment should be given by the bank to his loan account:
a loan should be recovered before he leaves India
b banks can use their commercial judgement about continuation of the loan
c if loan is allowed, it can be adjusted by his relatives
d if loan is allowed, it can not be adjusted by his income in India
e if loan is allowed, it can not be adjusted out of remittances

35 What is meant by the word ‘deposit’ in the context of FCNR-B scheme
a a saving bank deposit
b a current account deposit
c a term deposit
d a saving, current or term deposit
e none of the above

36 In which of the following currencies, an FCNR-B cannot be allowed to be opened:
a US $ and Euro
b Euro & Australian Dollar
c Canadian Dollar & Pound
d Japanese Yen and Euro
e Singapore Dollar and Dinar

37 Which of the following categories of persons can open an FCNR-B account:
a Overseas Company
b Overseas firm
c Overseas corporate body
d NRI of Indian nationality or origin
e c and d

38 Deposit under FNCR-B scheme can be accepted maximum for which of the following maturities:
a 1 year b 2 years
c 3 years d 4 years
e 5 years

39 What is true with regard to payment of interest on FCNR-B accounts:
a the no. of years is to be taken 360
b for deposits of maturity of up to one year, interest is not to be compounded
c for deposits of more than year, compounding to be done with an interval of 180 days.
d all the above
e none of the above

40 For payment of additional interest on FCNR-B deposit account, the word family in respect of a staff member does not include:
a spouse of the member/deceased member
b dependent parents
c dependent children
d dependent brothers/sisters
e none of the above

41 An NRI customer comes to get his FCNR-B term deposit cancelled after 8 months of its date of issue as he needs money urgenty to meet the cost of medical expenses in India. What interest rate would be paid to him:
a as applicable for domestic saving bank account
b as applicable for NRE account saving bank account
c as applicable to the period, the deposit was with the bank less penalty
d as applicable to the period, the deposit was with the bank, without any penalty
e no interest to be paid

42 A customer holding FCNR-B term deposit wants to convert his deposit to NRE deposit:
a it can be allowed without any penalty
b it cannot be allowed with RBI permission
c it can be allowed subject to recovery of penalty
d it can be allowed without paying any interest
e it can be allowed and interest can be paid as per saving bank deposit on NRE accounts

43 An NRI customer holding FCNR-B term deposit and returning to India for permanent settlement wants to convert his deposit to Resident foreign currency deposit:
a it can be allowed without any penalty
b it cannot be allowed with RBI permission
c it can be allowed subject to recovery of penalty
d it can be allowed without paying any interest
e it can be allowed and interest can be paid as per saving bank deposit on NRE accounts

44 An FCNR-B term deposit is maturing on Saturday and customer demands its payment. It will be paid:
a on Saturday with interest up to Friday
b on Saturday with interest up to Saturday
c on Monday with interest up to Monday
d on Friday with interest up to Friday
e None of the above.

45 Which among the following is not part of the External Commercial Borrowing:
a buyer’s credit
b seller’s credit
c securitized assets
d bank loans
e NRI deposit

46 What is the time period of minimum average maturity for external commercial borrowing:
a 1 year b 2 years
c 3 years d 4 years
e 5 years

47 For which among the following purposes, the external commercial borrowing funds cannot be raised, under the automatic route:
a investment in the form of capital goods import
b Investment in infrastructure
c investments in joint venture and wholly owned subsidiaries abroad
d meeting the working capital needs
e none of the above

48 A software that restricts the access to and from a network and is designed to protect from outside intrusion is called:
a firewall technology
b network protection technique
c virus protection technology
d total protection technique
e morphing

49 The break-even point in terms of capacity utilization of a project in its 2nd and 3 year would be 55% and 50% respectively while the actual level of operation is 52% and 54% respectively:
a there will be substantial profit
b it will incur loss
c there will be loss in the 2nd year and profit in the 3rd year
d there will be profit in the 2nd year and loss in the 3rd year
e there will be neither profit nor loss

50 In computer software, the term ‘Morphing’ refers to which of the following:
a animation technique in which one image is gradually turned into another
b data conversion technique by way of use of codes
c conversion of digital picture to analog images
d a soft ware that saves a network from intrusion
e software that links one server to another

For solution to this quiz, kindly refer to September 2005 issue of Banking Events Update.

Set - 5

1 Which of the following terms represent ‘one point basis’:
a one percent
b one tenth of one percent
c one hundredth of a percent
d one hundred percent
e one thousandth of a percent

2 Bombay stock exchange index ‘Sensex’ is based on the value of top 30 shares of:
a Fortune 500 companies
b Government Companies
c Strong World level companies
d Indian blue chip companies
e Asian companies

3 Which of the following kind of mutual funds operates continuously without any limit for entry for subscriptions and redemptions:
a open ended
b closed ended
c growth fund
d fixed income fund
e specific fund

4 A person is not interested in buying the rights issue shares offered to him and he decides to give this right to one of his relatives. This is called:
a Transfer of shares
b Rejection of shares
c Renunciation of shares
d Surrender of shares
e None of the above

5 Which of the following instruments represent the share in Indian companies in India being traded in America/Europe?
a GDR/ADR b IDR/ADR
c GDR/IDR d Zero Coupon Bonds
e Debentures

6 The customer day in a public sector bank bank is on and customers are allowed to meet the top officials of the bank branch on this day in every month:
a 5th b 7th
c 10th d 15th
e 25th

7 The term ‘evergreening’ means
a to plant green trees all the times
b a healthy asset cover
c provide additional loan facility to an NPA account to make the asset standard
d to paint the bank building with green paint
e none of the above

8 One of the female staff members of workman staff had a miscarriage and has applied for a 6-month maternity leave. What would be done?
a No leave permissible for miscarriage. Hence request would be rejected.
b Leave would be sanctioned after verification of the fact.
c Sanction the leave after getting it approved from Head Office
d Allow 6 weeks’ leave and for the balance period, ordinary leave account would be debited
e none of the above

9 A minor can be allowed to open a saving bank account, where he:
a could sign and his age is at least 12 years
b his age is above 16 years
c could sign in English and his age is 16 years
d could sign and his age is 10 years or above
e could sign in Hindi and his age is 10 years or above

10 Mr. Dharmesh, an important customer of your branch informs you that Mr. Ramesh Kumar, another customer has snatched Rs.25000 from him and deposited in his account.
a By debiting account of Ramesh, amount would be paid to Dharmesh
b Advise him that bank cannot take any action on his complaint
c Guide him to lodge a complaint with the police and if necessary, bank will provide a certificate that amount has been deposited.
d Since amount belongs to Dharmesh, the balance would be earmarked.
e none of the above

11 As per extant guidelines, who among the following can sign the notice for possession under SARFAESI Act 2002, on behalf of the bank?
a Any official of the bank
b Any officer of the bank
c Any manager of the bank
d Any Law Officer of the bank
e An officer in Scale IV or above

12 The limitation period of 12 years, in case of a registered mortgage begins with reference to :
a date on which the loan falls due
b date on which the mortgage was created
c date of documents
d b and c whichever is earlier
e none of the above

13 After State Bank of India, who among the following are major shareholders of Asset Reconstruction Co. India Limited:
a ICICI/IFCI b IDBI/IFCI
c ICICI/PNB d IDBI/ICICI
e IDBI/BoB

14 Advances allowed by banks to which of the following, are not part of the advances to sensitive sectors:
a against shares
b to share brokers
c to builders
d against the security of commodities
e loan to tobacco industry

15 As per RBI directives, the exposure of the banks in capital market is restricted to:
a 5% of the SLR investments
b 5% of the total investments
c 5% of total outstanding advances of (last day of) previous year
d 7.5% of total outstanding advances
e 5% of the total outstanding advances on on-going basis.

16 The following risk has been introduced in the Basel II accord, for the first time for the banking industry:
a operational risk b liquidity risk
c settlement risk d market risk
e credit risk

17 Under the provisions of SARFEASI Act 2002, where the defaulting borrower contests the seizure of the assets proposed for possession, whom can he approach:
a Supreme Court
b High Court having the jurisdiction
c DRT having jurisdiction
d DRAT e Distt Court

18 Govt. policy to raise additional resources through taxation and allocation of expenditure as per its priorities, is called:
a economic policy
b 5-year plan
c expenditure and income policy
d fiscal policy
e none of the above

19 The terms TIN and CIN under the OLTAS system represent, which of the following
a tax information network & challan identification number
b tax information network and customer identification number
c tax indentification network and challan identification number
d tax identification net work and customer identification number
e none of the above

20 The Nayak Committee method for sanction of composite loans is applicable to which kind of SSI units being financed:
a maximum amount of Rs.100 lac
b maximum amount of Rs.200 lac
c maximum amount of Rs.500 lac
d maximum amount of Rs.10 cr
e none of the above

21 Which among the following maturity period of FCNR-B deposits is not available as per RBI directives:
a 1 year and above but less than 2 years
b 2 years and above but less than 3 years
c three years only
d 1 year to 5 years any maturity
e a to c

22 A customer of a bank desires, transfer of funds from his NRE account to an FCNR-B account and later on from FCNR-B to NRE account:
a from NRE to FCNR will be allowed
b from FCNR to NRE will be allowed
c From NRE to FCNR will not be allowed
d From FCNR to NRE will not be allowed
e Allowed both ways

23 Interest on FCNR-B term deposit of 2 years, which is cancelled after 8 months of its deposit would be :
a applicable for the period less penalty,
b applicable for the period on date of deposit less penalty
c applicable for the period on date of withdrawal less penalty
d no interest to be paid
e none of the above

24 Current account convertibility in terms of foreign exchange transactions, represents which of the following transactions:
a sale of shares at NSE and investment at NASDAQ
b purchase of immovable property in India by a foreign national by remitting funds from abroad
c export of goods and surrender of foreign exchange representing export proceeds to an authorized dealer
d export of services for investing the proceeds permanently outside India
e none of the above

25 Which of the is not correct with regard to a Kissan Credit Card :
a the amount is based on operational holding and scale of finance
b the card has validity of 3 years
c cheque book can be issued to select customers
d contingent requirement can also be financed
e none of the above

26 When a country decides to conduct trade on favourable terms with another country for mutual benefits, this is called:
a FTA system b MFN status
c Bilateral trade d Counter trade
e None of the above

27 A bank finds it difficult to repay the short term deposits on maturity to its deposits because the funds of the bank are locked in long term loans or investments. The risk arising from this situation is called:
a Interest rate risk
b Liquidity risk
c Operational risk
d Market risk e Credit risk

28 The liquidity position assessment of a company can be made by which of the following parameters:
a debt equity ratio
b total outside liabilities to tangible net worth ratio
c debt service coverage ratio
d current ratio
e fund flow statement pattern

29 A company is found to be carrying high debt equity ratio. To improve the ratio, the bank will suggest the company to:
a increase the equity by way of bonus issue
b issue rights shares to existing shareholders
c raise long term loans from institutions
d raise long term interest free loans from friends and relatives
e all the above

30 Which among the following would be classified as application of funds by a business firm:
a raising loans from banks
b raising the equity through a public issue
c sale of fixed assets
d purchase of fixed assets
e earning handsome profits

31 Which of the following is correct with regard to shifting a bank branch within the same municipal area:
a RBI license is necessary
b RBI permission is required
c State govt. clearance is required
d Bank Board’s approval is required
e no permission is required.

32 The Asset Liability Committee in a bank makes the assessment of which of the following:
a Credit risk
b Foreign Exchange fluctuation risk
c Liquidity risk
d operational risk
e all the risks

33 Additional provision on sub-standard assets classified as unsecured is to be made at 20%. For this purpose, the unsecured loan would mean, where the realizable value of security is less than ____ of the outstanding:
a 10% b 15%
c 25% d 50%
e 100%

34 Which of the following is the objective for introduction of Senior Citizen Saving Scheme:
a Mobilise additional deposit for banks
b provide assured return to senior citizens
c increase the govt. borrowing
d attract retirement funds
e none of the above

35 If a financial transaction is carried, processed and settled instantantly, this is called:
a automated teller machine
b electronic funds transfer
c reconciliation transaction
d real time gross settlement
e none of the above

36 Financial transactions are transmitted through ‘encryption process”. This stands for:
a change of data into coded form
b user having the access through a pass word
c sending the data through internet
d sending the information through CD or floppy
e none of the above

37 Cheque truncation means which of the following:
a tearing the cheque into pieces
b sending a zerox copy of the cheque for collection
c electronic image of a cheque
d providing details of the cheque over phone
e sending original cheque to paying bank and retaining an electronic image by the collecting bank

38 Broad band connectivity facilitates which of the following:
a continuous offline internet for 24 hours
b provision of internet faster than dial up tone facility
c cheaper connectivity
d broad screen computer based internet facility
e all the above

39 Which among the following could be taken under ‘mixed farming’?
a agricultural and allied activity
b agricultural and manufacturing activity
c agricultural and trading activity
d agricultural and servicing activity
e all the above

40 A shortfall in achievement of priority sector overall target by a commercial bank can be partly made good by:
a investing in SIDBI bonds
b investing in RIDF
c investing in RBI bonds
d investing in Treasury Bills
e all the above

41 Which of the following can open an account under the Public Provident Fund Scheme in its present form:
a an individual
b an HUF
c a Charitable trust
d a society for handicapped persons
e all the above

42 What is the extent of provision that a bank is required to make for net position after segregating all debit and credit entries in inter-branch accounts:
a 2.5% of the net amount
b 10% c 20%
d 50% e 100%

43 A partnership firm having its current account with your branch withdraws cash in the morning amounting to Rs.45000. At noon it withdraws more amount of Rs.27000. In the evening yet another withdrawal of Rs.28000 is made by the firm. What is status of application of Banking Cash Transaction Tax:
a bank is required to deduct the tax as the total amount of withdrawal on a single day is Rs.1 lac
b bank is not required to deduct because the amount is not more than Rs.1 lac
c bank is not liable to deduct because the amount of single withdrawl is less than Rs.1 lac
d bank is required to deduct as the amount of each withdrawal is above Rs.25000
e none of the above

44 A company is having its current account with 3 branches of your bank and on a single days makes cash withdrawals of Rs.40000 from one branch, Rs.35000 from the 2nd branch and Rs.25000 from the 3rd branch. What is the status of application of Banking Cash Transaction Tax:
a bank is required to deduct the tax as the total amount of withdrawal on a single day is Rs.1 lac
b bank is not required to deduct because the amount is not more than Rs.1 lac
c bank is not liable to deduct because the amount of single withdrawl is less than Rs.1 lac
d bank is required to deduct as the amount of each withdrawal is of Rs.25000 or above
e Bank is not required to deduct as the amount is less than Rs.1 lac for each branch and the amount withdrawn from all branches is not to be aggregated

45 Which of the following types of operation modes are permitted under the Senior Citizens Saving Scheme 2004:
a generally single account
b joint mode with the spouse
c joint operation with any one
d a and b only e a to c all

46 What is the amount of balance in a deceased depositor’s account, where the bank, depending upon the circumstances, may ask for a legal representation such as succession certificate, letter of administration, probate:
a in case of joint survivorship accounts, no requirement
b in case of nomination accounts, no requirement
c in case of accounts with no nomination or survivorship provision, discretion of the bank
d Banks cannot ask for such representations
e a to c

47 What is the maximum time limit for the banks to settle the claims in respect of a deceased depositors and release payments to the survivors/nominees :
a 7 days b 10 days
c 15 days d 30 days
e no time limit

48 The cases of deceased depositors where the claims have been received and are pending beyond the stipulated period are required to be reported to which of the following:
a Board of Directors of the bank
b Ombudsman
c Reserve Bank of India
d Customer Service Committee of the Board
e All the above

49 Which of the following kinds of joint accounts cannot be categorized as an account opened with survivorship clause:
a either or survivor
b anyone or survivor
c former or survivor
d letter or survivor
e none of the above

50 X opened an account with your branch under the Senior Citizens Saving Scheme 2004 for 3 years. He needs the funds to meet his medical expenses by raising a loan on the basis of pledge of the deposit. What precautions would be taken by the bank:
a the loan cannot be sanctioned under the scheme
b the loan amount should not be more than 80% of the amount of original deposit
c the loan amount will be linked to present maturity value of the deposit
d the loan would be allowed after obtaining a written request supported by a estimate from hospital
e none of the above

51 What is the age criteria for under Senior Citizen Saving Scheme 2004 for opening the account:
a 55 years
b 65 years
c 60 years
d 55 years in case of those who are retiring voluntarily
e c and d

For solution to this quiz, kindly refer to August 2005 issue of Banking Events Update.

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