SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURED ASSETS ORDINANCE 2002 - SARFAESI Act - 2002

SECURITISATION & RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF

SECURED ASSETS ORDINANCE 2002 - SARFAESI Act - 2002

1. Is it necessary to classify the account as NPA for initiating action under the Act? YES

2. The above Act is applicable in respect of debts due to Nationalised Banks only

3. The Provisions of the Act are applicable in respect of All NPA a/cs with liability above Rs. 1 lac

4. Enforcement is not possible under this Act in respect of Time barred debts, where the present

liability is less than 20% of principal + int. &where the secured asset is an Agricultural Land

5. Whether limitation is suspended or saved while proceeding under the act? No

6. Movables seized under this Act have to be got valued by Valuer in the panel approved by the

Board of the Bank

LIMITATION ASPECTS

LIMITATION ASPECTS
1. Law of Limitation bars only the right and not the remedy (for eg. right to sell the seized goods,
pledged goods, right of set off etc Can be resorted to in time barred accounts)
2. The number of times the AOD can be obtained from the borrower without getting a fresh set of
documents is No such stipulation
3. Limitation period for applying for final decree Three years (from the date given/expiry of time
given) in the preliminary decree
4. The limitation period in the case of guarantees obtained by the bank from the borrower is:
is not renewed
5. AOD obtained after expiry of pronote - Not valid

JAIIB LEGAL VERY IMPORTANT 3 BANKING LAWS - NI,BR & RBI ACT

BANKING LAWS - NI,BR & RBI ACT
1. As per section 26 of the Negotiable Instruments Act, a Minor can draw, endorse, accept a
negotiable instrument but he can not : bind himself
2. A has granted Irrevocable Power of Attorney in favour of B for one year. After 3 months, A
revokes the Power of Attorney. A cheque signed by B is presented for payment_ What will you do?
The cheque will not be paid because POA can be withdrawn before maturity and once it is
revoked, no cheque signed by agent can be debited to account of Principal
3. What is the Doctrine of Ultra Vires in the context of a limited company?: Any act by the directors
beyond the object of the company is considered ultra vires the company and company is not bound by
such act.
4. A minor who was admitted to the benefits of partnership has become major. Within how much
period, he has to decide to remain partner in the firm or not?: within 6 months of attaining majority or 6
months of knowing that he is the partner in the firm whichever is later.
5. If on a cheque words "Account Payee" is written between two parallel lines or with the name of a
bank, then: the cheque can not be endorsed.
6. Which type of crossing is required to be done if the drawer wants that in case of endorsement, the
title of transferee of the cheque should not be better than the title of the transferor: Not Negotiable Crossing
7. In the case of dishonour of a cheque due to insufficient funds, for enforcing rights under section 138
of the Negotiable Instruments Act 1881, the holder should send a notice to the drawer within: 30 days from
the date of receipt of notice regarding dishonour of the instrument.
8. The Limitation period for filing case in case of dishonour of cheque due to insufficient funds is: 1
month from the date of cause of action.
9. Objectives forwhich a company has been formed are given in:Memorandumof Association
10. Full formof BCBS is Basel Committee on Banking Supervision.
11. Direct Impact of increase in CRR is : Controlling Liquidity
12. Banks can not issue Demand Draft payable to Bearer as per provisions of : Section 31 of the RBI Act
13. Grace Period is allowed in the case of : Usance Bills and Usance Promissory Notes
14. Indian Banks are required tomaintainminimumCapital AdequacyRatio of : 9%
15. In the case of individuals and HUF, tax will be deducted at source if the interest on term deposit in
a financial year is : more than Rs 10,000
16. If Power of Attorney is executed outside India it should be stamped within:90 days of its first arrival in
India
17. For its implementation, the complainant should accept the award given by Ombudsman within: 30
days of the receipt of the copy of the award.
18. When proceeds of cheque are given before clearance of the cheque the banker will be called:
Holder for Value
19. In the case ofWrongful dishonour of cheque, towhomthe bank is liable?:Drawer
20. If date on a cheque is prior to the date of its presentation, it is called: Ante Dated cheque
21. What isminor's liability in HUF Account:Minor is not liable
22. When does the right of nominee starts in respect of a deposit account?: After death of all depositors
23. For injectingmoney in themarket which type of transaction is undertaken?: (a) Repo (b) ReverseRepo
24. RBI controlsmoney supply through: change in CRR
25. Loan given to a director can be waived: after permission of RBI.
26. Under theOmbudsmen scheme, theBank has to reply to the objection of the complainantwithin: onemonth
27. A post dated cheque is passed in the account of a customer. But another cheque whichwas in orderwas
dishonoured due to insufficient funds.What is the liability of the Banker?: Bank is liable to the drawer for paying
post dated cheque as bank is not justified in paying post dated cheque. The bank will be liable to drawer for
damages on account ofwrongful dishonour of cheque.
28. Which type of preferential shares are treated as part of Tier I capital of the Bank?: Perpetual Non
Cumulative Preference Shares.
29. As per RBI guidelines, all banks are required classify business in various business segments with effect from
31-03-2008. The segments are: (a) Treasury (b)Corporate /WholesaleBanking, (c)Retail Banking, (d)Other
Banking Business. The geographical segments are 'domestic' and 'international'.
30. Customer of your bank asks for cash payment of crossedDD.What would you do? Generally payment only
through bank account.However, bank can pay after duly satisfying the genuineness of the draft and payee but bankwill
continue to be liable to true owner if recipient is not true owner.
31. A cheque is presented for payment in which the amount in words and figures is different. Bank
should pay which amount?: amount written in words will be paid.
32. Whether aPrivateLimited companycan be a partnerwith PublicLimited companyto formaPartnership?Yes

33. In the context of Nomination, which is correct statement?:Signatures of nominee not required
on nomination form. Nominee's name should be mentioned on FDR if agreed by the customer.
34. A bearer cheque of Rs.7,000/- was presented. The cashier informed that the cheque can not be passed as
the balance is less byRs.700/-. The tenderer credited the amount of shortfall and the chequewas paid. Customer
disputed the transaction.Whether bank is liable?: Yes. For disclosing balance to third party, bank is liable to
account holder.
35. When an order passed by Banking Ombudsman is accepted by the complainant, the same
should be complied within: 1 month from the date of receipt of acceptance from the complainant.
36. Penalty for delay is per day if information is not furnishedwithin prescribed time under Right to
Information Act: Rs. 250 per daywithmaximumbeing Rs. 25,000/
37. A crossed DD was paid by cash. What risk is there for the Bank: Bank will be liable to true
owner of the DD if payment made to a person other than true owner (Section 129 of N I Act).
38. A cheque is written in English and Regional Language. Whether it can be paid?: Yes. A cheque
written in different language can be paid if otherwise in order.
39. Who cannot become a partner in a firm as per supreme court judgmentHUF
40. Introducers liability / responsibility in case of an account holder defrauding Bank is : To assist
the Bank in locating the a/c holder - does not have legal liability
41. Nomination -Minor can be a nominee.
42. Inoperative accounts: 2 Years&above not operated.
43. RTI Act - party seeking information need not disclose the reasons for which the information
sought for.
44. Counterfeit notes returned after police verification, the same has to be preserved for 3 years
subject to half yearly verification.
45. Validity period of cheque reduced to 3months from1.4.12 as per : RBI Guidelines under sec 35A of B R
Act
46. Crossed cheque payment across the counter to the authorized Officer of collecting Bank - can be
made and there are no violation as per NI Act. 255.
47. The consequence of non registration of Partnership - firm cannot sue others for its dues.
48. Banks are required to implement the award of Ombudsman unless a decision is taken to appeal
against the same within one month from the date of receipt of acceptance of the award by the
complainant.
49. Account holder A & B want to substitute their name with the name of their sons C & D in the
account. What should the bank do?: Substitution of all names is not allowed. At least one of the
original account holder should be retained in the account.
50. When only image of cheque is sent to the paying bank while sending cheque for collection
instead of sending the physical cheque, the process is called: Cheque Truncation
51. A Cheque partlywritten in English &partly in regional language is presented for-paymentWhat
should the bank do?:May be paid, if otherwise in order and the language other
than.English is the regional language of the area where the cheque is presented.
52. An authority has been granted in an account You have received information about the death of the
Principal. Today, you receive a cheque signed by the agent which is dated prior to the death of the Principal.What
should the bank do? : Cheque can not be paid as authority of agent comes to end with the death of the
Principal.
53. You aremaintaining current account in the name of the Trust.You receive notice of death of one of the
trustees. After this notice, a cheque signed by the deceased trustee is presented for payment.What should the bank
do?: Chequemay be paid, if otherwise in order.
54. As per Consumer Protection Act, the period for filing appeal to State Commission against
decision of the District Forum is: maximum 30 days
55. Who can not be full fledged partner:Minor
56. Can Karta of HUF appoint Agent or delegate the powers to other co-parcener: Yes, he can do so.
57. Money deposited after receiving order may be attached in the case of: attachment order
58. Original & duplicate draft presented simultaneously for payment: Duplicate should be paid &
original should be returned.
59. Company has registered office at Delhi, factory at Kolkata & loan taken at Mumbai. For creating
equitable mortgage title deeds can be deposited at: any notified city.
60. Reasons for avoiding advance to Un-Registered Partnership Firm: Firm can not sue against
anyone for recovery of its debts but anyone can sue against the firm.
61. What is the effect of 'Not Negotiable Crossing'?: Transferee does not get better title than the transferor.
62. Payment of cheque can be stopped by: only Drawer of the cheque
63. Account payee crossing defined in:-Not defined anywhere
64. What is the current rate of interest paid on CRR?:NIL
65. How can be the transferability of Bill of exchange can be restricted? Bymaking restrictive endorsement
66. If on a Bill-of Exchange, two parallel lines are drawn and not negotiable is written between the lines,
what kind of the crossing will be there: Provisions relating to crossing are not applicable to Bill of Exchange.
67. Within priority sector,what is the allocation toweaker section?: 25%
68. Maximumtimewithinwhich replymust be given under Right to information act? 30 days
69. What is the status of Nominee? Trustee of Legal heirs

70. Safe deposit vault is governed by provisions of: Transfer of Property act
71. A cheque signed by agent has been presented after his death for payment.What should the bank do?: The
chequewill be paid if otherwise in order.
72. Purpose of star series notes: To replace defectively printed notes
73. Customer-bank relationship in locker account: Lessee-Lessor
74. Uptowhat amount District forumcan be approached under Consumer ProtectionAct?: Rs.20 Lacs
75. Appeal against the award of Ombudsman can be made by the bank within: 30 days of receiving
the acceptance from the complainant.
76. Cheque issued by director of a company and presented after his death will be: Passed if in order
77. What would be the action of central bank in recession?: create liquidity by decreasing CRR and
lower the repo rate.
78. Ante dated cheque like cheque dated 15.12.07 is presented for payment on 1.1.08whereas_ the account was
opened on 20.12.07 : Cheque should be passed
79. If amount in words and figures differ on a cheque and amount written in words is higher than the
amount written in figures, then as per sec.18 of NI Act, which amount should be paid?: amount written in
words
80. Nomination facility is not available in the case of : Trust A/c.
81. customer service Committee meeting held on :Monthly basis
82. A person wants to open a joint account with his wife in such a way that the account can be operated
by him only during his lifetime and she should be able to operate the account only after his death. The
account has to be opened with the instructions: 'Former or survivor'.
83. For wrongful dishonour of the cheque the bank is liable to: the drawer of the cheque
84. Banks print cheque books having similar particulars. The format of cheque is prescribed by which
Act : Not defined in any Act. It is as per practice. CTS 2010 advised by RBI
85. Which crossing takes away the feature of assumption of defective free title available to the
transferee : Not negotiable crossing
86. Who is appointed to tackle public complaints against the public authorities : Ombudsman
87. The facility of nomination is not available to Trust account because it is account : Non-individual
(facility of nomination is available only in the case of individual(s).
88. The true owner of a cheque has been deprived of his right by collection of the cheque for a
different person. This is called Conversion
89. As per recent RBI/Govt. guidelines, pensioners can open account jointly with: spouse, to be
operated as either or survivor or former or survivor.
90. While paying a bearer cheque, signatures are obtained on the back side of the cheque. Why ? : As
evidence of payment
91. Whether Minor can nominate ? no. On his behalf nomination will be done by a person legally
competent to act on his behalf.
92. Cheque is dated before date of its presentation is called: Antedated cheque
93. An endorsement inwhich endorser excludes his liability is called : sans recourse
94. When a company is financed against the security of hypothecation ormortgage of itsmovable property, the
company is required to file particulars of chargewith: Registrar ofCompanies
95. Who is called as Holder as per N I Act?: Who is entitled to possession of the instrument in his
own name (actual possession is not necessary).
96. If a cheque is dishonoured due to insufficient funds, then as per section 138 of N I Act, court may
award imprisonment up to: 2years
97. On the face of a cheque, the name of a bank is writtenwithout two parallel lines. Thiswill amount to : special
crossing
98. A/c payee crossing is defined in : it is not defined in any Act. It is as per practice
99. Nomination facility for deposit accounts is available under: 45ZA&45 ZB of the BR act
100. Maximum amount of deposit which a bank may ask while allowing locker facility to a customer:
Advance rent for 3 years and locker breaking charges
101. Asolicitor has account in his name and in the name of his client.Garnishee order is received in the name of
the solicitor.Whether the samewill be applicable in the name of client also: No because two accounts are not in the
same right and same capacity.
102. Which of the following is not amaterial alteration? Changing bearer to order
103. A bill issued without consideration is called: Accomodation Bill
104. There is a joint account in the name ofA&B.Acheque is drawn byAbut the alteration in the amount is
authenticated byB.Whether bank can pay the cheque: Yes provided the operation is either or survivor.
105. The term used for conversion or transfer of property derived from a criminal offense for the
purpose of concealing, or disguising, the illicit origin of the property is called: Money laundering
106. In which of the following situations bank will not be a holder in due course?: When bank credits
the account of the customer after receipt of funds on account of cheque sent for collection
107. The rate at which RBI rediscounts the usance bills of banks is called: Bank Rate
108. In the case of IPO, the company is required to allot shares ormake refundwithin: 30 days of the closure of
the issue in case of fixed price public issues; 15 days in case of book built issues and 15 days in case of right issues
112. Bankcanchargecollectionchargesofnotmorethanfor_outstationchequesofRs10000toRs1lacinsavingbank:Rs.100
113. Which of the following cheques can not be paid by the bank? : Acheque onwhich signatures of drawer
have been forged irrespective of the cleverness in forgery and though these appear to be same as that of the drawer.
114. FIU stands for : Financial Intelligence Unit (India)
115. Two cheques have been presented to you as paying banker.One is dated prior to opening the account and
other is dated prior to issue of cheque book.What will you do as paying banker?: Both chequeswill be paid.
116. KYC and FIU in India are associated with: preventing money laundering
117. Articles of Association mentions: directors' powers
118. Garnishee order is not applicable on: (a)cash received after two hours of receipt of Garnishee order
(b) amount received for safe custody (c) undrawn balances in cash credit accounts
119. A person having locker has expired. The nominee comes. A sealed cover is found. What will you
do ? : It will be delivered to him as part of locker contents without opening the packet.
120. A bill was presented on 10.5.2005 and accepted on 12.5.2005. The bill was due for payment on
29.07.2005 and was returned. The last date for filing suit in this case is : 29.07.2008
121. A listed bank has to prepare and publish balance sheet on quarterly basis as per: SEBI guidelines
122. There are certain instruments defined as negotiable instruments under lawand certain instruments used as
negotiable instruments as per practice.Which of the following is not a negotiable instrument as perNIAct: Dividend
warrant
123. On repayment of_debt of a company, satisfaction of charge shbuld be filedwith ROCwithin: 30 days
124. A Trust Deed is silent about loans by the trust. The trustee approaches for a loan. Under these
circumstances what should the bank do?: No loan can be raised
125. Which of the following un/under-stamped document can not be revalidated by paying penalty: None of
these as all documents can be revalidated. (However, as per question Demand Promisory note cannot be
revalidated).
126. A person of 65 years of age can not nominate which of the following persons: Trust
127. The aggregate limit for capital market exposure of a Bank is: 40 0/0 of net worth at the end of previous
year
128. A minor approaches for a loan. Which type of loan can be given to him: loan can not be sanctioned
other than for necessities.
129. Which of the following does not match in banker/customer relation : Locker facility - Bailee/Bailor
130. Committee on Procedures and Performance Audit of Public Services (CPPAPS) was headed by:
S.S. Tarapore
131. Customer service code has been mentioned in : Banking Codes and Standards Board of India.
132. Cheque received in clearing signed by whom will not be passed out of the following: signed by a
person who has ' been declared insolvent.
133. Whether a customer can approach Ombudsman without first approaching the Bank : Approaching
the bank first is a pre-condition.
134. In case a forged note is detected in the cash tendered at bank counter, what should the bank do?:
The Note should be impounded and not returned to the tenderer.
135. If a guardian is appointed by court, minor will become major at the age of: 18years
136. A Cheque with forged signatures is presented for payment and is paid. Bank will be liable to:
Customer (Drawer of the cheque)
137. Protection is available to the collecting banker in case of : Crossed cheques
138. Which is not a General Crossing: Name of a bank written between two parallel lines
139. If time is not mentioned on a Bill of Exchange, it will be payable: on demand
140. In an account of Club with you, cheque has been been presented for payment signed by the
secretary who has died. What should the bank do?: It will be paid if it not dated subsequent to date of death.
141. Garnishee order is applicable for: credit balance in OD and not for cheque sent for collection.
142. Bank Guarantees are issued as per provisions of : Indian Contract Act
143. cheque truncation means: converting physical cheque to electronic image and stopping physical
flow of a paper cheque. 660_ Foreign currency paid to taxi driver, shop keeper, can be accepted by:
Authorised persons.
144. A bank cannot acquire either as owner or as pledgee shares in a company more than:. 10 % of paid
capital of the company or 10% of the•paid up capital and reserves of the bank, whichever is lower.
145. For formation of a company, Registrar of Companies will issue : certificate of incorporation
146. Co is in liquidation, funds are at the disposal of : Liquidator
147. Guardian appointed by will of the father is called: testamentary guardian
148. Which of the following documents does not constitute document of title to goods:Airway bill
149. DD can be revalidated within: any time (practice may differ In different banks)
150. Which crossing is a Special Crossing : Name of Bank is written in the cheque with or without parallel
lines
151. Supervision of banks is done by RBI under which act: RBI Act / BR Act / Jilani Committee Report
/ NI Act: Banking RegulationAct
152. A minor is aged 15 years, who is illiterate. Which type of self operated a/c can be opened -SB/ RD /
FD none
153. Which of the following can open SB a/c? State Electricity Board/ Indian Bank Association/
Municipal corporation: Indian Bank Association.
154. In a Flying club, the Secretary&Treasurer are authorized to sign.ACheque is presented for payment across

the counter. In between it has been informed that Secretary has died,what youwill do? :Will be paid, if otherwise in
order
155. Revival of limitation for recovery of a time barred loan is possible by: obtaining fresh promise to
pay under provisions of Indian Contract Act.
As per Supreme court decision,HUF cannot be a partner because:HUF is not a natural or legal person
156. As per Prevention of Money laundering Act, preservation of records relating to closed accounts
upto: 5 yr from date of closure of account.
157. Banks can provide information about the customer to another Bank: General in nature, without any
responsibility
158. Board of Directors want to borrow money in excess of paid up capital and reserves of the company:
can be done through a resolution passed by shareholders in the general meeting
159. Other than aBill of exchange or promissory note, the documentwhichwas executed abroad is required to bestamped
on its arrival in India within: 3 months of its arrival
160. Administrator is appointed in case of: to realize assets and pay off liabilities of a person who has
died without writing a will.
161. Under Ombudsman scheme, which type of case not entertained?: advocate representing the customer
162. Which of the following is not a valid cheque for payment by the bank-l)different ink & handwriting
2) cheque with prior date 3) cheque with impossible date 4) Mutilated cheque: Mutilated cheque
163. The liability of the drawer of bills of exchange is prime till it is not accepted by the drawee after
that prime liability becomes of Drawee.
164. Whether Pvt Ltd. Co. can be partnerwith Partnership Firm: Yes
165. Counterfeit note received at the counterwhat to be done?: Impound the currency note.
166. No noting on currency note, directions issued byRBI under section 35Aof BR Act.
167. Cross cheque can be paid at counter if presented by other bank.
168. Payments of a forged draft.Who will lodge FIR paying or collecting bank: Paying Bank.
169. Borrowing powers of board of directors are contained in: Articles of Association
170. Locker can be broken open after notice to the hirer if the same is not operated for:more than three years for
mediur-n risk category or one year for a higher risk category, and the locker-hirer does not respond nor operates the
locker.
171. If a complainant is not satisfied with the award or his complaint is rejected by the Banking ombudsmen, he
can prefer an appeal to DeputyGovernor, RBIwithin: 30 days of the of the date of receipt of communication
regarding award or rejection of the complaint.
172. In case ofwrongful dishonour of cheque, bank is liable to: account holder only
173. Who can seek information under.Right to InformationAct:Any citizen of India can ask for information
174. The Garnishee Order is applicable on the account of a customer when the relationship between
banker customer is: Debtor & Creditor.
175. Aprivate limited companywith Registered office at Bangalore has raised loan froma branch located at
Mumbai. For creating equitablemortgage, title deeds can be deposited at:Mumbai,Kolkatta, Chennal or any other
notified place.
176. Acheque is presented for payment inwhich amount in figures ismentioned asRs 10,000whereas the amount
inwords ismentioned as Rs Ten lakh only. In terms of section 18 of theNIAct,what should the bank do?: The amount
written inwords should be paid.
177. When a letter is signed by the borrower and based on that letter bank delivers the document of title
to goods to the borrower, such letter is called as: Trust Receipt
178. How much charges are charged in addition to normal collection charges and out of pocket expenses
for providing instant credit facility for outstation cheques:Nil
179. A limited company has registered office at Chennai whereas loan has been raised from bank branch
at Mumbai. The charge will be registered with the ROC at: Chennai
180. A partnership firm conducting business other than the banking business has more than 20 members
as partners. Whether this is allowed?: Such association is called illegal association as per Companies Act
181. Under Prevention of Money Laundering Act, banks are required to send cash transaction report in
respect of cash deposit or withdrawal of more than Rs 10 lakh in a month from one account within: 15 days
from the close of the month.
182. Who is primarily liable on Bill of exchange which has been accepted?: Acceptor (Drawee) of the
Bill.
183. A cheque crossed specially to a bank is presented by the same bank to paying bank for cash
payment. What should the paying bank do? Bank can make cash payment.
184. Who can make nomination in the deposit account of a minor?: Guardian on behalf of the
minor.
185. Who can be a nominee?: Only an individual
186. If a depositor dies, payment to nominee or legal heirs should be made within: 15 days of
completion of formalities.
187. What is the relationship between bank and customer if he has left certain goods with the bank by
mistake: Bank is trustee and Customer is beneficiary
188. Appeal against the award of the Banking Ombudsman can be made to Deputy Governor, RBI
within days of the receipt of copy of award from the Ombudsman: 30 days
189. A cheque was dishonoured despite sufficient balance in the account. The bank will be liable to:

Drawer of the cheque and not to the payee.
190. Maximum amount of fine under section 138 of N I Act for dishonour of cheque due to insufficient
funds is: twice the amount of cheque.
191. Bearer uncrossed cheque can be paid towhom: To the bearer
192. On, other than a negotiable instrument, what is the time period for payment of stamp duty, if the
document is executed outside India : 3 months
193. May I help you counter is to be provided by bank branches other than : Small branches
194. In case of a jointly operated joint account, the nominee can obtain payment,when : none of the account holder
is alive
195. A bank branch receives a counterfeit note of Rs.1000, which customer wants back. What the bank
should do : Impound the currency note but credit full amount to customer. Receipt not to be issued to
depositor.
196. When rate of interest is expressed by adjusting the impact of inflation, this is called : Real rate of
Interest
197. Banks can ask for deposit of advance rent on hiring a locker for a period up to : 3 years
198. The crossing on a cheque is required to be cancelled.Who can do so:Drawer

JAIIB LEGAL VERY IMPORTANT 2 CUSTOMERS & THEIR ACCOUNTS

01. Relaxation in KYC norms is permitted if the depositor undertakes that the balance outstanding in
his account will not be more than and credits in a financial year will not exceed . Rs
50,000; Rs 100,000
02. MinimumMaturity Period for Certificate ofDeposit is : 7 days
03. Why KYC guidelines have been issued by RBI under section 35 A of the Banking Regulation Act:
To prevent Money Laundering -
04. If payment of Rs 20000/- ismade in cash in case of FDR what is the penalty: equal to the amount paid
05. In Senior Citizen Saving Scheme account,who can be joint account holder?:Spouse
06. TDS not deposited in time. What is the interest payable?: _Bank to pay the amount with interest ©
1.5% per month simple.
07. What is the special feature of Basic banking Account? Account can be opened with nil or very
small amount and there are no requirement of minimum balance.
08. Current balance is Rs.6000/-. A cheque of Rs.18,000/- is presented. Branch passed the cheque by allowing
TOD. After few days, fixed deposit of the same party matured and TOD was cleared by crediting the proceeds to CA.
Customer disputes the transaction.Whether bank is having right in doing so? : Normally no without specific request
of the party. However, if bank has a specific clause in the account opening formto allow overdraft in such cases
and customer has consented to such clause, then temporary overdraft can be allowed and recover the same
fromthe account holder even if there is no specific request fromthe party.
09. TDS collected to be deposited with the Income Tax Deptt within: 7th day of succeeding month
during which it is collected.
10. TDS at the rate of 10% is to be deducted at source in case of individuals and HUF„ if the rent payable in a
financial year exceeds : Rs.1,80,000
11. You are maintaining current account in the name of the Trust. You receive notice of death of one of the
trustees. After this notice, a cheque signed by the deceased trustee is presented for payment.What should the bank
do?: Chequemay be paid, if otherwise in order.
12. Quarterly statement for TDS on salary should be submitted on form 24-Q within: 15days of the close of the
quarter
13. Pensioner account can be opened jointly with? Spouse as Either of Survivor or Former or Survivor.
14. Photograph is obtained at the time of opening the a/c. What is the purpose for the same?: for
identification of the prospective customer
15. Amount that can not be paid in cash in respect of term deposit by the bank as per Income Tax rules:
Rs 20,000 and above.
16. Interest rate on Saving Bank is fixed by : Banks themselves w.e.f. 25.10.11
17. A, having SB a/c with you, deposited Rs.25000. A public Prosecutor sent notice to bank informing thatMr
A is involved in forgery and requested not to permit withdrawal in the a/c. In between one cheque of Rs.20000 has
been presented for payment. What should be done by the bank?: Pay the cheque as Public Prosecutor is not
authorized to freeze the a/c.
18. There is an SB a/c in the name of A & B .They have given power of Attorney to 'C' for operation in
A/C, The cheque signed by the 'C' is presented in the bank after death of 'B' :
cheque will not be passed
19. Encashment of FDR with interest - payment can bemade in cash if it is less than Rs 20000
20. There is a credit balance in the saving account and there is a overdraft in the current account amounting to Rs
555. Both accounts are in the same name. Bank wants to adjust credit balance of saving bank account towards
payment of overdraft. As per which right, bank can do this?: Right of Set Off.
21. Maximum amount of deposit under Tax Saver fixed deposit is: Rs 150,000
22. Theminimum&maximumperiod of certificate of deposit is : 7 days, 12months

23. Call money deposit is part of the sector : Organised sector
24. The terms used for hidingmoney to avoid tax is :Money laundering
25. Which of the following formswill be used for allowing exemption to a depositor aged 61 years : Form15H
26. Missing person treated as having expired if missing for: 7 years
27. Super senior citizen after: 80 years of age
28. DD of Rs.50000/- in cash : not allowed
29. For the purpose of KYC rules any addition & modification on which recommendation: Financial Action Task
Force
30. In case of Minor what is wrong? Minor can make himself liable for his actions.In case of a Deposits
account customer wants the Nomination in his account. What is mentioned on Pass book
31. In case Fixed Deposits account the rate of interest fixed by whom: Board of Directors of respective bank.
32. In an account Mr. X Gives irrevocable power of attorney to Y for 1 yr. After 4 Month, X withdraw the
irrevocable power of attorney. What is action of the Bank? Bank will rely the revocable application of the Hence the
cheque signed by Y returned.
33. In case of Deposit Insurance whether it mandatory or not: It is Mandatory for all banks.
34. in which type of account where TDS not deduct in fixed Deposits Account: NRE and FCNR(B) only.
35. BC work as : Bank’s Agent
36. Cash Transaction Report ( CTR) should be submitted to FIU within how much period: 15
days of the close of the month.
37. Which of these rates are periodically reviewed by RBI?: Repo rate, Bank rate, but not
Savings Bank Rate.
38. Interest rate on Savings accounts: Not regulated by RBI
39. As per RBI guidelines, Demand draft of Rs 50,000 and above should be issued against : by
debit to account but not against cash
40. If pan no not submitted rate of TDS will be: 20%
41. Account is treated as inoperative if there is no operation for : 24 months
42. If a customer makes nomination, the bank is required to register in its books the nomination, and should give
acknowledgement to the depositor in writing. The bank should also indicate the fact of nomination on the face of
passbook/deposit receipt with the legend (a) Nomination Registered (b) Nomination marked (c) Nomination done (d)
Nomination acknowledged: Nomination Registered
43. Which of the following facilities are allowed to visually impaired persons who open account with bank – issue
of cheque book, ATM card, internet banking: All of these
44. What is the main motive of financial inclusion – (a) to give loans to poor persons (b) to issue credit card (c) to
provide banking services to distressed persons at affordable cost: Ans is C
45. Banks are required to deduct tax at source from interest payable to an individual if the interest credited or to
be credited in a financial year is more than Rs 10,000. This is as per provisions of (a) Income Tax Act (b) Goods and
Service Tax Act (c) Service Tax Act (d) RBI Act: Income Tax Act
46. Tax is not deducted at source in respect of which of the following income – (a) Interest on Bank deposits (b)
Rent on land and building (c) Brokerage (d) Dividend paid by listed company: Dividend paid by listed company
(However Dividend u/s 2(22)(e) is taxable for shareholder and thus TDS rate on such dividend is 10%)
47. Which of the following can be done by a minor?: A minor may draw, indorse, deliver and negotiate a
promissory note, bill of exchange or cheque so as to bind all parties except himself.
48. What is the responsibility of an introducer in an account opened by a person with a bank – (a) he is legally
liable (b) he is morally liable (c) he is bound to trace the account holder: He is morally liable.
49. Direct Tax Code will replace which of the following – Income Tax Act, Corporate Tax Act: Income Tax Act.
50. As per KYC Guidelines, Records of transactions to be maintained for at least ten years from the dateof
transaction, instead of _________from the date of cessation of transactions, and records pertaining to identification of
the customer and his address to be preserved for at least ten years after the business relationship is ended: ten years
51. What type of activity can be performed by Business Correspondent - (a) processing and submission of
applications to banks; (b) disbursal of small value credit, (c) recovery of principal / collection of interest (iv) collection of
small value deposits: All of these
52. E TDS - 26Q (tax deduction other salaries) to be filed for the month of September, before: 15th October
(Statement of TDS to be submitted within 15 days from close of quarter)
53. A Minor has extended Guarantee to a loan. It can be ratified by whom? It cannot be ratified by any
one.
54. In Limited Liability Partnership account, who are not eligible for becoming partners: a) HUF b) Minor c) body
corporate?: Ans: a & b
55. Insurance of deposit is done by DICGC up to: Rs 1 lac per depositor per bank.
56. What is the periodicity of review of risk classification of customers?: Every six months
57. Which is not a proof of Identity?: Ration card.
58. A customer who does not complete all KYC norms, what type of account is opened for him? No Frill
account in which cannot be more than Rs.50000 and credits in the Financial Year cannot be more than
Rs.100000.
59. There were three cash withdrawals of Rs 5.80 lac ,Rs 4.90 lac & 0.25 lacs from an account in a month.
Which of these transactions is/are will be reported to Financial Intelligence Unit as part of CTR? Cash withdrawals
of Rs 5.8 lac and Rs 4.9 lac.
60. Under Prevention of Money Laundering Act, banks are required to preserve records relating to opening the
account for how much period?: 10 years from date of closure of account.
61. As per KYC Norms, banks are required to update record of customer regarding proof of address, and identity
etc. of medium risk customers within how many yrs?: 2 year
62. Which of the following is not the key element of KYC policy a) Customer Acceptance Policy; b) Customer
Identification Procedures; c) Monitoring of Transactions; d) Risk Management e) Customer Awareness Policy: Ans is
E i.e. Customer Awareness Policy.
63. What is the distance criteria for office of Business Correspondent?: The distance between the place of
business of a retail outlet/sub-agent of BC and the base branch should ordinarily not exceed 30 kms in rural,
semi-urban and urban areas and 5 kms in metropolitan centers.
64. On whose recommendations, KYC norms came into force? (a) Goiporia Committee (b) Ghosh Committee (c)
FATF: Ans is FATF
65. Under KYC Norms, Documents relating to opening the account like proof of address and identity and
photograph should be taken again at what interval? (a) once in 5 years for low risk customer (b) once in 2 years for
medium risk customers (c) once in 1 year for high risk customers (d) Both (a) and (b): Ans is (d)
66. Record of cash receipt and payment under KYC to be maintained if cash receipt or payment in a single day
from one account is more than Rs 10 lakh.
67. Banks should have the responsibility of currency management entrusted to a nodal official of the rank not
less than that of a General Manager and will be accountable for the obligations cast upon currency chests by the
Reserve Bank.

JAIIB LEGAL VERY IMPORTANT 1

JAIIB LEGAL VERY IMPORTANT 1

1. Charged created by Bailment of goods to secure payment of a debt is called: Pledge 2. Guarantee is defined in: Indian Contract Act 3. If on a letter of credit it is not mentioned whether it is revocable or irrevocable, then as UCPDC 600, it will be treated as : Irrevocable LC 4. A director of a bank wants to raise loan of Rs 10 lakh from his bank against Life Insurance Policy with surrender value of more than Rs 15 lakh. What will be done?: Bank can sanction. 5. In which of the following cases, the document is required to be attested by two witnesses?: (a) Pledge (b) Hypothecation (c) Mortgage (d) Lien 6. A document was executed by three partners in different dates. When shall the limitation period start?: The limitation period will start from the last date i.e. when the document was executed by the last partner. 7. Loan to a company engaged in construction of projects, which method of financing is to be used: Cash Budget method. 8. What is the meaning of Group in Exposure Norms: Commonality ofmanagement 9. The procedure used for ascertaining Customers Creditworth is called: CreditRating 10. Green field project is related to : setting up new projects 11. What is Real Rate of Interest?: Prevailing interest rate minus inflation rate 12. Themain distinction between Hypothecation and Pledge is on accountof : Possession 13. In Letter Of Credit jmporter is called: Opener of Letter of Credit 14. Cash Budgetmethod is used for sanctioningworking capital limits to : Seasonal Industries 15. Bank's charge over LIC Policy is created by: Assignment 16. Guarantee issued by a bankwhich is still outstanding is shown in the Balance Sheet as: Contingent Liability. 17. Why loan against Partly Paid Shares are not preferred by banks?: Because partly paid shares represent contingent liability. In case companymakes demand and the borrower does not pay the amount then the bank will have to pay the amount otherwise share may be forfeited.Moreover it is prohibited by RBI 18. Return on Investment is calculated to ascertain of the unit.: Profitability 19. For ascertaining that a firm will be able to generate sufficient profit to repay instalments of term loan, which ratio is computed?: Debt Service Coverage Ratio 20. In the Balance Sheet of a bank, Contingent Liabilities are shown as: footnote to the Balance Sheet. 21. Finance for construction of road and port is classified as: Infrastructure Finance.

22. Banks are required to declare their financial results quarterly as per provisions of : SEBI

23. Loanwas raised fromthe bank against NSC byMr.Xand noting to this effect was recorded in the issuing

PostOffice.Xdies. The nominee approaches post office for payment ofNSC.Whowill have priority i.e. bank or

nominee?: Bankwill have prior claimagainstNSC.

24. Hypothecation can be converted to pledge by: taking possession with the consent of the borrower.

25. What charge to be created for demat shares with bank as security: Lien

26. Perpetual bonds and perpetual non cumulative preference shares as part of tier I capital can be up to%of tier I capital:

40%

27. Provisions on standard Assets are shown under which head in the balance sheet of the Bank?: Other

Liabilities and Provisions on Liabilities side.

28. For classification of assets in consortium accounts, which of the following is to be considered?:

In consortium accounts, each bank will classify the account as per its record of recovery.

29. Who is bound to file particulars of chargewith theRegistrar of Companies underMCA21,when a

company creates charge of somebody on itsmovable or immovable property except byway of pledge?: officials of

the company.

30. Credit ofRs.20,000/-was taken asRs.2000/- and as a result a chequewas returned in the account forwant

of funds. Bank has already sent statement of account to the depositorwho has acknowledged receipt of the statement

of account.Whether bank is liable?:Yes. Liable to drawer of cheque.

31. Advance to a companyagainstTrust receiptwhere document of title goods transferred to bank and goods to be

released against payment by the company.Whether a charge is to be registeredwith theRegistrar ofCompanies under

MCA21?:NotRequired

32. Under multiple banking system, exchange of information between the banks is to be done for the limits of

crores and above and periodicity is : Rs.5 crores and Quarterly

33. If a LC contains a clause "about" regarding the amount and quantity of goods, howmuch tolerance is

permitted?: 10%

34. What is the type of liability for the bank on account of issue of BankGuarantee?:Contingent Liability

35. To arrive at group concern, factors to be looked into are : commonality ofmanagement + effective

control.

36. The limitations of financial statements are : only quantitative not qualitative.

37. Hypothecation described under SARFEASI Act.

38. Off Balance sheet / On Balance sheet exposure- if altered the risk will be Credit Risk.

39. Guarantors Liability: Recall the a/c and cause demand against the borrower and guarantor.

Balance in guarantor's SB a/c cannot be appropriated directly.

40. Excess of current liability over current assets means the firm may face difficulties in meeting its

financial obligations in short term.

41. If documents are to be presented in about July month: these can be presented within 5 days before

or 5 days after.

42. Pledge is defined in: Indian Contract Act

43. When limitation will not extend: Balance Confirmation signed after expiry of limitation period

45. Onmaturity of bank guarantee, an intimation is send to customer and if no response received in 30 days,

vouchers are reversed. This is done for following reason? Bank has to maintain capital on Bank

Guarantee for the purpose of capital adequacy norms.

46. Which of the following is not a disadvantage of CC account? Issuance of cheque book

47. In case of revaluation of fixed assets, what percentage of revaluation reserve will be added to Tier

II capital of the bank?: 45%

48. When a loan is recovered from guarantor for dues payable by the Principal Debtor, debtor

becomes entitled to all rights and remedies which the creditor had against the Principal Debtor. This right

of guarantor is called: Right of subrogation.

49. in case of loan against bank deposit charge is created by: assignment

50. in case of loan against NSC, charge is created by: assignment

51. What is cash loss : net loss before depreciation (Net loss minus depreciation)

52. Why fund flow statement is taken from the borrower?: To know sources from where funds have

been raised and how funds have been utilized and to know changes in net working capital position.

53. Stand by LC is just like : Financial guarantee (A guarantee of payment issued by a bank on behalf

of a client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment

with a third party. Standby letters of credit are created as a sign of good faith in business transactions, and

are proof of a buyer's credit quality and repayment abilities)

54. Banks provide term loans and deferred payment guarantee to finance capital assets like plant and

machinery. What is the difference between these two: Outlay of funds.

55. For the purpose of creation of equitablemortgage, the place for deposit of the title deed is notified by :

56. Number of days allowed to opening bank and negotiating bank to verify that documents are as per

terms of LC is: 5 banking days each

57. In the case of hypothecation : both possession&ownership is with borrower

58. If stock statement is not submitted for 3 months from its due date and DP is allowed on the basis of

old stock report, then the account will be considered NPA after:90 days

59. Limitation period formortgage :12 years

60. Loan is in the name of A&B. Both have signed documents. A signs the Balance Confirmation but B

does not. In this case limitation will extend against: both 61. What is negative Lien?: A declaration by borrower that he will not sell or create charge of any body on a particular asset without consent of the bank 62. Why banks do not grant loan to a minor?: A minor is not competent to contract Therefore, Ioan given to a minor can not be recovered. 63. Normally bank can not grant advance to its directors. However, there are certain exemptions to this rule. Thus a bank can grant a loan to its director against the security of: Government securities, life insurance policies or fixed deposit; 64. If on a Letter of Credit, date is mentioned as "end of the month", then as per UCPDC 600, it will mean: 21st to last day of the month. 65. A minor was given loan. On attaining majority he acknowledges having taken loan and promises to pay. Whether the loan can be recovered? : He can not ratify the contract. Hence recovery not possible. 66. A loan was sanctioned against a vacant land. Subsequently a house was constructed at the site. What security is available now to the bank? : Both 67. Preoperative expenses forms part of the following: Intangible assets 68. Aand B raised a loan jointly and both are liable jointly and severally.When the limitation period is approaching,Aacknowledges the debtwhile Bwas away fromIndia. Limitation expires before B comes to India and after coming, he denies acknowledging the debt. Bank can proceed for recovery of the loan as per limitation act from: Both 69. An L/C is expiring on 10.05.2008. A commotion takes place in the area and bank could not open. Under these circumstances can the LC be negotiated?: The L/C can not be negotiated because expiry date of LC can not be extended if banks are closed for reasons beyond their control. 70. A loan is given by the bank on hypothecation of stock to Mr. A. Bank receives seizure order from State Govt. What should bank do?: Bank will first adjust its dues and surplus if any wilt be shared with the Govt. 71. 3 partners signed a document on 3 different dates. Limitation period starts from: Date of last signatures. 72. Acknowledgement of Debt can be obtained for how many number of times : No limit 73. In the case of advance to a limited company for purchase of vehicle, the charge is registered with Regional Transport Authority in addition to registration of charge with. Registrar of Companies. Why this is done?:So that borrower can not sell the vehicle without intimation to the bank 74. Why banks prefer financing of bills?: because the advance is self liquidating 75. Formation of consortium, when essential :When bank touches its exposure ceiling 76. A letter of credit which is issued on request of the beneficiary in favour of his supplier: Back to Back LC 77. As per internal policy of certain banks, the net worth of a firm does not include: a. Paid up capital b. Free Reserve c. Share Premium d. Equity received from Foreign Investor : Revaluation Reserves 78. A lady who has taken a demand loan against FD come to the branch and wants to add name of her minor son, as joint a/c holder. What you will do?: Name can be added only after adjustment of the loan. 79. Guarantee issued by a bank in favour of Custom department that party will fulfill export obligation for availing exemption fromcustomduty regarding tax. Such guarantee is called: FinancialGuarantee 80. Particulars of satisfaction of charge by a company are to be filed within: 30 days from date of adjustment of loan. 81. In a company, the registration of charges is required for: a)loan against FD b)lien on Govt Securities c) assignment of Book Debts d) lien on Shares : Book Debts 82. LoanDelivery Systemis not applicable to: a) Loan to Soft ware industry b) export credit: export credit 83. Stamp duty in usance bill of exchange: 0.25 per 1000/ 0.75 per 1000 / 1 per 1000 / none : It is according to value and time i.e. Advalorem(it is Rs 0.65-per Rs 1000 up to 3 months usance) 84. Property equitably mortgaged on 08/03/08. A registered mortgaged created on this property, on 05/03/2008 whichwas got registered on 08/03/2008.Whichwill have priority: registeredmortgage as itwas created earlier. 85. The Bank did not disclose all material facts regarding loan to the guarantor while obtaining guarantee. Can guarantor escape liability?: Guarantor cannot escape from his liability as it is not necessary to disclose all the materials facts with regards to the loan. 86. Banks are required to obtain audited financial papers from non corporate borrowers for granting working capital limit of: Rs.25 lakh &above 87. In the case ofHypothecation: neither possession nor ownership come to Bank. 88. Negative lien means: Undertaking by the borrower not to sell or create charge on a particular property without consent of the Bank. 89. RecentlyRBIwarned banks against charging: excessive interest to small borrowers. 90. Which of the following is correct regarding reverse mortgage?: The scheme is available to senior citizens only; the property should be self occupied by the owner. 91. What are the rules relating to advance against Kisan Vikas Petra?: It can be granted provided KVP is assigned to the bank. 92. Bailment of goods to secure a debt is called: pledge. 93. Deferred payment guarantee issued by a bank is a : Contingent Liability. 94. When mortgage is created by a person by deposit of title deed orally, it is called mortgage : Equitable

95. For the purpose of creation of equitablemortgage, the place for deposit of the title deed is notified by : State Govt. 96. Under SARFAESIAct 2002 the banks give notice for payment of due amount to the borrower / owner of charged assets 97. Action under SARFAESI Act can be taken simultaneously in DRT/Suit filed cases without taking permission from the Competent Court 98. For enforcing right under SARFESAI Act, in the case of consortium advances, consent of which bankers is required?: consent of 60% bankers by value is required. 99. SupervisoryReviewaccording towhich Central Bank of the country is to ensure that proper capital has been provided for risk exposure andmaintain proper systemfor the same is provided under?: Pillar II of Basel IL 100. Chargewhere SARFAESI action can not taken: Pledge 101. For taking action under SARFAESI, the outstanding should be:More than Rs.1.00 lac 102. Limit for filing suit in DRT: Rs.10 lacs and above 103. For acquiring securities charged to the bank under SARFAESI, notice of days is required to be given to the borrower and for sale of securities so acquired notice of days is 60 & 30 days 104. As per a recent judgement of the Supreme Court,while initiating action under SARFAESI, the position in case of suit filed in DRT would be: that no permission is required fromDRT and action under SARFAESI can be initiated as both the cases can run together. 105. For taking action under SARFAESI, the outstanding should be:More than Rs.1.00 lac 106. In case of SARFAESI Act, before preferring appeal to DRAT, how much amount is to be deposited by the borrower with DRAT?: 50% of the claim amount which can be reduced to 25% by the DRAT. For making application to DRT, no amount is to be deposited

NEGOTIABLE INSTRUMENTS ACT

NEGOTIABLE INSTRUMENTS ACT

1. What is the Section which contains the provisions relating to bouncing of cheques? Sec 138 to

147 of NI Act

2. What is the characteristic of a negotiable instrument? It must be transferable by delivery. & b) It

must enable the holder to sue in his own name

3. Who is the holder in the context of the negotiable instruments? Holder is the person who is

entitled to the possession of the instrument and to receive the amount of the instrument in his own

name

4. A cheque dated 3rd Jan 2005 bears the striking of the pre-printed year 19., can be passed? YES.

Striking need not be authenticated and cheque can be passed.

5. Whether protection is available to the paying banker in case of a cheque where drawer‘s signature

is forged? No.

LOK ADALAT:

LOK ADALAT:
1. Lok Adalats can handle the following disputes Fresh disputes not pending with courts and disputes
on which suits are Pending in the court
2. On the award made by the Lok Adalat No appeal is provided
3. Execution of the Award of Lok Adalat can be done by Civil Court
4. Lok Adalat is a Legal Authority under Legal Services Authority Act, 1987.
5. When a dispute is under consideration of Lok Adalat No change in the limitation period
6. Lok Adalat is organised for settling the disputes in respect of All commercial Banks
7. The cases to be referred to Lok Adalat are All recovery cases, wherein Borrower has expressed his

DRT MATTERS

DRT MATTERS

1. The normal cut off limit to file an application in DRT shall be Rs. 20 lakhs and above

2. Where the cases before Debt Recovery Tribunal are decided, Tribunal awards Certificate of

Recovery (RC – Recovery Certificate).

3. The appeal on a DRT judgment is to be filed at Appellate Tribunal at respective centres

4. Whether already decreed accounts in various courts can be transferred to DRT YES, Where E P

amount reaches Rs. 20 Lakhs & above

5. Cases before DRT are presented by- Empanelled Advcoate



6. An appeal against the decision of DRT can be filed by customers - Before appellate tribunal (DRAT)

7. Time limit for filing application with DRT for Recovery Certificate in respect of civil court decrees

passed for less than Rs.20 lakhs 3 years from the date when the decretal amount accrues to Rs. 20

lakhs

GENERAL ASPECTS

1. Garnishee order is issued by: Any competent court

2. An income tax attachment order has been received in the name of Mr. Mishra who has an FDR

with your branch. The FDR has already matured for payment. Before payment to IT authorities -The

bank need not insist on production of FDR

3. A banker owes to his customer certain duties as implied contract out of which the most important

duty is - Duty of secrecy

4. Under Bankers Book Evidence Act, 1891 certified copies of banks books are admissible as

evidence in the court.

5. Bank A requests the Bank B for opinion on one of its customers. Bank B Will give information in

general terms disclaiming any responsibility

6. The person attesting the thumb impression/furnishes the attestation in Form No.821 must know

the language in which the loan documents are executed

7. Following documents need not be witnessed Agreement, hypothecation, Pledge etc

8. Which of the following documents need attestation? Mortgage Deed, Sale Deed, Will, Indemnity

Bond etc

9. When an advance is made to a Joint Hindu Family, the Loan documents are to be Signed by Only

the Kartha. However it is advisable to get it signed by all major members including female members

and minors to be represented by respective natural guardians.

10. Registration of documents is compulsory under Section 17 of the Registration Act in the case of

Gift, Sale Deed, Simple Mortgage etc

11. Payment of a cheque is complete: When cash is parted with

12. The Registration of a Will is: Optional



13. Average Clause ― in the insurance policy restricts the amount of claim in proportion to amount

of insurance and value of security.

14. Following documents can be treated as legally valid only originally typed copy of loan agreement

(not on copy/ carbon copy)

15. Legally, Bank is in order if part of the blank columns in the loan papers are filled up subsequent

to execution, if The executants put their signature authorising such filling up, after filling up

16. Stop payment instructions can be issued by Drawer

17. When cheques or bills of exchange are collected by the bank on behalf of its customer, the

relationship between them is that of A principal and an agent

18. What is the alternative if presenter of a cheque refuses to sign on its reverse? Money can be paid

after obtaining receipt on separate paper

19. A corporate customer requests the bank for returning to them the cheques drawn by them and

already paid by the bank - The cheques can be returned periodically after retaining the true copies

on record. The cost to be borne by the customer

20. Can the original cheques be returned to the drawer after payment?

YES, the bank can return the paid cheques if requested within the period for which bank is required

to preserve them

21. The banker and purchaser of a demand draft have a relationship of Seller and purchaser

22. The Banker can disclose information about the customer - When the customer expressly or

impliedly permits disclosure/when the Banker is compelled by law/when the Banks own interest is to

be protected.

23. In case of telegraphic transfer (RTGS/NEFT) of funds the relationship between the banker and

the remitter is that of Principal and agent

24. Collection of supply bills is undertaken by banks on the strength of Power of Attorney given by

supplier in favour of bank

25. Presentment of the bills received for collection to the drawees is done at - The address

mentioned in the bill/hundi

26. Whether protection is available to the bank for collection of inward bills received by it Under N I

Act NO

27. Banks keep cash in currency chest as a bailee

28. Supply bills are Not accompanied by Document of Title to Goods, are actionable claims and not

governed by N I Act

29. A suit against a common carrier for loss of or injury to goods entrusted to him for carriage

cannot be filed - Unless a written notice of such a loss is given within 6 months from the date of

notice of loss before institution of suit

30. Whether partner‘ s interest in a firm can be attached before judgment YES

31. The time limit for impleading legal heirs in a pending suit is 90 days from the notice of the date

of death

32. The Stop-Payment Instruction given by one of the two joint account holders can be lifted by:

Both of them jointly

33. The periodical interest payable on such deposits should be credited... Credited to respective loan

account, if any loan is a sanctioned against it.

34. With in how many days the rectification and compliance report of shortcomings pointed by

Labour enforcement officials during their inspection under Payment of Gratuity Act, 1972, Equal

Remuneration Act, 1976 and Payment of Bonus Act, 1965 should be sent to Deputy Chief Labour

Commissioner/Regional Labour Commissioner and Labour Enforcement Officer -Within 2 days by

Regd Post

LIMITED LIABILITY PARTNERSHIP ACT - 2008
Need for the New Corporate Entity – LLP

Concept, Condensed form of the Act
1. With the growth of the Indian economy, the role played by its entrepreneurs as well as
its technical and professional manpower has been acknowledged internationally.  It is
felt opportune that entrepreneurship, knowledge and risk capital combine to provide a
further impetus to India’s economic growth.  In this background, a need has been felt
for a new corporate form that would provide an alternative to the traditional partnership,
with unlimited personal liability on the one hand, and, the statute-based governance
structure of the limited liability company on the other, in order to enable professional
expertise and entrepreneurial initiative to combine, organize and operate in flexible,
innovative and efficient manner.
2.   The Limited Liability Partnership (LLP) is viewed as an alternative corporate business
vehicle that provides the benefits of limited liability but allows its members the flexibility
of organizing their internal structure as a partnership based on a mutually arrived
agreement. The LLP form would enable entrepreneurs, professionals and enterprises
providing services of any kind or engaged in scientific and technical disciplines, to form
commercially efficient vehicles suited to their requirements. Owing to flexibility in its
structure and operation, the LLP would also be a suitable vehicle for small enterprises
and for investment by venture capital.
3.  Keeping in mind the need of the day, the Parliament enacted the Limited Liability
Partnership Act, 2008 which received the assent of the President on 7th January, 2009.
The salient features of the LLP Act 2008 inter alia are as follows:
(i) The LLP shall be a body corporate and a legal entity separate from its partners. Any two
or more persons, associated for carrying on a lawful business with a view to profit, may
by subscribing their names to an incorporation document and filing the same with the
Registrar, form a Limited Liability Partnership.  The LLP will have perpetual succession.
(ii) The mutual rights and duties of partners of an LLP inter se and those of the LLP and its
partners shall be governed by an agreement between partners or between the LLP and
the partners subject to the provisions of the LLP Act 2008.  The act provides flexibility to
devise the agreement as per their choice.  In the absence of any such agreement, the
mutual rights and duties shall be governed by the provisions of proposed the LLP Act.
(iii) The LLP will be a separate legal entity, liable to the full extent of its assets, with the
liability of the partners being limited to their agreed contribution in the LLP which may
be of tangible or intangible nature or both tangible and intangible in nature. No partner
would be liable on account of the independent or un-authorized actions of other partners
or their misconduct. The liabilities of the LLP and partners who are found to have acted
with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or
any of the debts or other liabilities of the LLP.

(iv) Every LLP shall have at least two partners and shall also have at least two individuals as
Designated Partners, of whom at least one shall be resident in India. The duties and
obligations of Designated Partners shall be as provided in the law.
(v) The LLP shall be under an obligation to maintain annual accounts reflecting true and fair
view of its state of affairs.  A statement of accounts and solvency shall be filed by every
LLP with the Registrar every year.  The accounts of LLPs shall also be audited, subject to
any class of LLPs being exempted from this requirement by the Central Government.
(vi) The Central Government have powers to investigate the affairs of an LLP, if required, by
appointment of competent Inspector for the purpose.
(vii) The compromise or arrangement including merger and amalgamation of LLPs shall be in
accordance with the provisions of the LLP Act 2008.
(viii) A firm, private company or an unlisted public company is allowed to be converted into
LLP in accordance with the provisions of the Act. Upon such conversion, on and from the
date of certificate of registration issued by the Registrar in this regard, the effects of the
conversion shall be such as are specified in the LLP Act. On and from the date of registration
specified in the certificate of registration, all tangible (movable or immovable) and
intangible property vested in the firm or the company, all assets, interests, rights,
privileges, liabilities, obligations relating to the firm or the company, and the whole of
the undertaking of the firm or the company,  shall be transferred to and shall vest in the
LLP without further assurance, act or deed and the firm or the company,  shall be
deemed to be dissolved and removed from the records of the Registrar of Firms or
Registrar of Companies, as the case may be.
(ix) The winding up of the LLP may be either voluntary or by the Tribunal to be established
under the Companies Act, 1956. Till the Tribunal is established, the power in this regard
has been given to the High Court.
(x) The LLP Act 2008 confers powers on the Central Government to apply provisions of the
Companies Act, 1956 as appropriate, by notification with such changes or modifications
as deemed necessary.  However, such notifications shall be laid in draft before each
House of Parliament for a total period of 30 days and shall be subject to any modification
as may be approved by both Houses.
(xi) The Indian Partnership Act, 1932 shall not be applicable to LLPs.


A brief overview
ü An LLP is a body corporate.
ü Apart from individuals, even body corporates may be partners.
ü Minimum two partners and two Designated Partners who must be individuals, but no
limit on the maximum number of partners. Designated Partners are liable for compliance.
If any compliance is not carried out, they will be liable for all penalties.
ü LLP may carry on any lawful business, trade, profession, service or occupation. Unlike
the Naresh Chandra Committee Report, the flexibility has been provided for LLPs to be
incorporated in such manner as they deem fit.
ü Inter se relationship, rights and duties between partners is governed by LLP Agreement
(which would also require to be registered). In the absence of agreement principles set
out in schedule 1 apply (general principles of equality, in terms of sharing of profits and
losses, etc).
ü The Name of the LLP must end with either the words ‘Limited Liability’
‘Partnership’ or the acronym ‘LLP’
· Agency: Every partner is an agent of the LLP and not of the other partners
· Unauthorised Acts: An LLP is not bound by unauthorized acts of any partner in dealing
with a third person provided such third person
(a) is aware that the acts are unauthorised; or
(b) does not know or believe that the partner is a partner of the LLP
v Wrongful Acts or Omissions: An LLP is liable for wrongful acts or omissions
of partners in the course of business of the LLP or with its authority–The
partner(s) committing such act or omission will be personally liable – Other
partners not to be liable for such wrongful act or omission.
v An obligation of the limited liability partnership is solely the obligation of the
limited liability partnership.
v The liabilities of the limited liability partnership shall be met out of the property
of the limited liability partnership. Accordingly, unlike the Texas first law, even
liability for debt is limited.
Right to share profits transferable
v Right of a partner to share profits is transferable (either wholly or in part)
v Transfer does not imply that the transferor/assignor has ceased to be a Partner
v Transferee/ assignee not entitled to participate in the management of the LLP
v Transferee/assignee not entitled to any information relating to transactions of LLP
v Statements of Accounts and Solvency: An LLP must prepare a ‘Statement of Accounts’

v Why is there a need for a statutory provision of this nature?
v Would this prohibit subordinate debt, where partners agree not to recover their debts
until external debt is paid off?
v Section 71 – The provisions of this Act would be in addition to, and not in derogation of,
the provisions of any other law for the time being in force.
v Therefore one would need to analyse provisions of various statutes governing professionals
to decide whether they can take advantage of this LLP.
v For instance, the Chartered Accountants Act, 1949, provides uses in a number of places
the term “firm”, which would usually refer to a firm under the Indian Partnership Act,
1932. The said Act also prohibits companies from practicing as chartered accountants.
Are amendments necessary?
v For instance, for lawyers, under the Advocates Act, only Advocates can appear before
courts. As a firm is not a person in the eyes of law, a partnership firm is permitted. In
light of the LLP Act, where a firm would be treated as a person in the eyes of law with
perpetual succession, it is difficult to see how an LLP can be a firm under the provisions
of the Advocates Act, which could be recognised as having a right to practice. For instance,
even today, a lawyer cannot be part of a company and a company cannot be the lawyer
appointed for a client.
v Filing of accounts–Accounts of a firm is a private affair, except for disclosures which have
to be made to the income tax authorities Now accounts would have to be filed with the
Registrar.
v Would this be acceptable to the Indian legal firms, chartered accountants and other
professionals?
v One issue that arose in proposing a bill for limited liability partnerships was that paper
thin LLPs should not be permitted as they could completely undermine the credibility of
LLPs.
v At that point of time the Naresh Chandra committee had suggested that there should be
provisions for Compulsory Insurance under the LLP Act.
v The proposal has disappeared in the winds of changes.
v The entire proposal of LLPs is based on a one way street.
v While you can convert from a firm or a company to an LLP, there are no provisions for
erring and deciding to reconvert back into a partnership or a company.
v In such a case, the decision has to be well weighed realising that there is no “U turn”
available down the road.
v Section 27(4) of the Act states that the liabilities of a limited liability partnership shall be
met out of the property of the limited liability partnership.
v One issue that arises is whether this would preclude in any manner, lenders and contracting
parties from obtaining personal and corporate guarantees from the partners as a
precondition to providing any loans.
v The arguments against this is that the principles of a guarantee arise from contract law
and this would not preclude the application of such principles.
v The argument in favour of treating such guarantees as void is that this is a special law
that mandates that the liability is to be met out of the property of a limited liability
partnership.
v Perhaps the absence of the words “exclusively” or “only” would be a determinant in the
event any litigation happens around this point.
v Questions arise, whether like a traditional partnership, there could be paid partners,

Difference between company and partnership
Partnership and Company are the most familiar terms for the people who are pursuing business education or commerce education. Besides being very familiar, many of us can’t able to correctly differentiate these two forms of business. This article presents you the top differences between Partnership Firms and Companies.

PARTNERSHIP
Indian Partnership Act, 1932 defines Partnership as ” Partnership is a relationship between two or more persons who have agreed to share the profits of a business carried on by all partners or any one partner acting for all”. The members of the Partnership firm are called as Partners. There are different types of partners such as Active partner, Sleeping partner, Nominal partner, Minor partner, Etc.

Partnership Frim is created by agreement between two or more people by registering the partnership firm with Registrar of Firms according to Indian Partnership Act, 1936.

Registration of a partnership firm is very simple process and Application for registration of firm must contain the following details

✔ Name of the firm
✔ Names of the partners and their addresses
✔ location where the business is carried on.
✔ Partnership tenure between the partners
✔ The main office of the firm, etc.


COMPANY
Indian Companies Act, 2013 defines Company as ” A Company formed and registered under this Companies Act or under any previous company law”. A company is defined easily as an association of two or more persons which is formed for doing business collectively and registered with Registrar of Companies according to Indian Companies Act, 2013.There are different types of companies like One Person Company, Private company and Public Company, etc.

To get registered with Registrar of Companies, the promoters are required to submit the copies of Articles of Association and Memorandum of Association which consists of various information relating to internal management and external management of the company.

The company exhibits certain special characteristics, such as

✔ It have a Separate Legal Entity
✔ It contains Common Seal under its name
✔ It has limited liability
✔ It acts as an artificial person, Etc.

COMPARISON

PARTNERSHIP COMPANY
The members of the Partnership firm are called as Partners. The members of the company are called as shareholders of a company.
 Enacted by
Partnership Form of business is governed by "The Indian Partnership Act, 1932." Company Form of business is governed by "The Indian Companies Act, 2013”.
 Number of Members
Partnership firm must have Minimum of 2 partners and maximum of 20 partners. A Company must have Minimum of 2 and maximum of 200 in the case of private company. Minimum 7 and maximum is unlimited number of members in case of public company
 Created by
Partnership Firm is Created by Contract between two or more people. Company Firm is Created by Law i.e created by incorporation of a company under company law.
 Regulation Authority
It is regulated by the Registrar of Firms which comes under State Government. It is regulated by the Registrar of Companies which comes under Central Government.
 Registration procedure
The registration of a Partnership firm is Not Mandatory. The registration of Company with Registrar of Companies is Mandatory.
 Documents Required
Partnership Deed(Agreement Document) is the mandatory document for creation of a Partnership Firm. Memorandum of Association(MoA) and Articles of Association(AoA) are the main documents to the incorporation of the company.
 Separate Legal Entity
Partnership firm is not a separate legal entity from partners. The Partners of the firm are collectively referred as a Partnership firm. A company is a separate legal entity, It is a separate entity from its members, directors, promoters, etc.
 Liability of Members
The partners have Unlimited Liability in all the matters relating to Partnership Firm. The Shareholders and promoters have Limited liability to Capital of the company.
 Accounts and Audit
Partnership Firm has to maintain accounts as per the conditions stated in partnership deed. A Company should maintain accounts and auditing of accounts by certified Chartered Accountant are Compulsory.
 Common Seal
A Common Seal is not required for Partnership Firm. A Common Seal in the form of a stamp is required for the company for legal and functional purposes.
 Management
Management of the activities of a Partnership Firm is usually done by the working partners. Management of the activities of a Company is done by Board of Directors.
 Change of Name
The name of the Partnership Firm can be changed easily by having a discussion between partners. The name of the company cannot be changed easily and a prior approval of Central Government is required to change the name.

CONCLUSION
The Indian Partnership Act, 1932 laid down certain rules and regulations on matters relating to Rights of partners, Liabilities of Partners, Duties of Partners, etc. Indian Companies Act, 2013 laid down various principles relating to the functioning of companies to protect the shareholders and investors of companies. Both Partnership and Company form of businesses is very prevalent in the world.

COMPANIES & PARTNERSHIP ACT
1. A modification of charge under Section 125 of Companies Act, 1956, is registered by using which
Form Nos. Form Nos 8 & 13. The revised system for registration of charge with ROC is through
Electronic mode – MCA 21 (E-filing)
2.While granting advances to a company with charge created on securities which require registration
under Section 125, what is to be seen as a banker? As a banker, we should ensure that there is no
prior charge on the same securities by inspecting register of mortgages and charges at the office of
registrar of companies
3.Under Section 125 of Companies Act, a charge created by a joint stock company is required to be