Digital banking

Digital Banking: Very important

National Payments Corporation of India (NPCI) – Its Products & Services National Payments Corporation of India (NPCI), is the umbrella organisation for all retail payment systems in India, which aims to allow all Indian citizens to have unrestricted access to e-payment services. Founded in 2008, NPCI is a not-for-profit organisation registered under section 8 of the Companies Act 2013. The organisation is owned by a consortium of major banks,[3] and has been promoted by the country’s central bank, the Reserve Bank of India. Its recent work of developing Unified Payments Interface aims to move India to a cashless society with only digital transactions. It has successfully completed the development of a domestic card payment network called RuPay, reducing the dependency on international card schemes. The RuPay card is now accepted at all the ATMs, Point-of-Sale terminals and most of the online merchants in the country. More than 300 cooperative banks and the Regional Rural Banks (RRBs) in the country have also issued RuPay ATM cards. More than 250 million cards have been issued by various banks, and it is growing at a rate of about 3 million per month. A variant of the card called ‘Kisan Card’ is now being issued by all the Public Sector Banks in addition to the mainstream debit card which has been issued by 43 banks. RuPay cards are also issued under the Jan Dhan Yojana scheme. NPCI has taken over NFS (National Financial Switch) operations from 14 December 2009 from IDRBT. Membership regulations and rules are being framed for enrolling all banks in the country as members so that when the nationwide payment systems are launched, all would get included on a standardized platform.
The key products of NPCI are: National Financial Switch (NFS) which connects 1, 98, 953 ATMs of 449 banks (91 Member Banks, 358 Sub- Member). Immediate Payment Service (IMPS) provided to 84 member banks, with more than 8.49 crore MMID (Mobile Money Identifier) issued, and crossed 10 million transactions. National Automated Clearing House (NACH) - has close to 400 banks on board. Aadhaar Payments Bridge System (APBS) has more than 358 banks. Cheque Truncation System (CTS)

has fully migrated in 3 grids - southern, western & northern grids from MICR centres. Aadhaar-enabled payment system (AEPS) - has 36 member banks. RuPay – Domestic Card Scheme- has issued over 20 crore cards and enabled 10, 70, 000 PoS terminals in the country. The newest and most advanced addition to the NPCI revolution is the Unified Payments Interface (UPI) which has been launched on 11 April 2016. RuPay PaySecure - Over 20 banks now offer this authentication mechanism to their RuPay cardholders. The new transaction flow of Card + OTP has infused more simplicity to cardholders. More than 70,000 merchants accept Rupay cards online. RuPay PaySecure is live on 10 acquiring banks which includes Union Bank of India, Kotak Mahindra Bank, Citi Bank, ICICI Bank, HDFC Bank, State Bank of India, IDBI Bank, IndusInd Bank, Bank of Baroda and Bank of India.
NPCI service portfolio now and in the near future include:
 National Financial Switch (NFS) - network of shared automated teller machines in India.
 Unified Payment Interface (UPI) - Single mobile application for accessing different bank accounts
 BHIM App - Smartphone app built using UPI interface.
 Immediate Payment Service (IMPS) - Real time payment with mobile number.
 *99# - mobile banking using USSD
 National Automated Clearing House (NACH)-
 Cheque Truncation System -online image-based cheque clearing system
 Aadhaar Payments Bridge System (APBS) -
RuPay - card scheme
 Bharat Bill Payment System (BBPS) - integrated bill payment system
IMPS (Immediate Payment Services)
Immediate Payment Service (IMPS) is an instant real-time inter-bank electronic funds transfer system in India. IMPS offers an inter-bank electronic fund transfer service through mobile phones. Unlike NEFT and RTGS, the service is available 24/7 throughout the year including bank holidays. When one initiates a fund transfer via IMPS, the initiator bank sends a message to IMPS, which debits the money and sends it to the receiving account. All this happens within 5-10 seconds.
IMPS is an innovative real time payment service that is available round the clock. This service is offered by National Payments Corporation of India (NPCI) that empowers customers to transfer money instantly through banks and RBI authorized Prepaid Payment Instrument Issuers (PPI) across India.
Benefits of IMPS Instant Available 24 x7 (functional even on holidays) Safe and secure, easily accessible and cost effective Channel Independent can be initiated from Mobile/ Internet / ATM channels

Debit & Credit Confirmation by SMS to both sender and receiver
National Unified USSD Platform (NUUP):
NUUP (National Unified USSD Platform) is a USSD based mobile banking service from NPCI that brings together all the Banks and Telecom Service Providers. In NUUP, a customer can access banking services by just pressing *99# from his/her mobile phones. This service works across all GSM mobile handsets.
IMPS transactions can be sent and received 24X7, (round the clock), including on holidays. Both sender & receiver get SMS confirmation.
For using IMPS on mobile phones, a customer will have to register for mobile banking with his/her individual bank. However, for initiating IMPS using Bank branch, Internet banking and ATM channels, no prior Mobile banking registration is required. Both banked as well as un-banked customer can avail IMPS. However, unbanked customer can initiate IMPS transaction using the services of Pre-Paid Payments instrument issuer (PPI). MMID - Mobile Money Identifier is a 7 digit number, issued by banks. MMID is one of the input which when clubbed with mobile number facilitates fund transfer. Combination of Mobile no. & MMID is uniquely linked with an Account number and helps in identifying the beneficiary details. Different MMID’s can be linked to same Mobile Number. (Please contact your bank for getting the MMID issued)
Options available for a customer for doing IMPS transaction
• Using Beneficiary Mobile no. and MMID
• Using Beneficiary Account no. and IFS Code
• Using Beneficiary Aadhaar Number
Bharat Interface for Money (BHIM) Bharat Interface for Money (BHIM) is an app that lets you make simple, easy and quick payment transactions using Unified Payments Interface (UPI). You can make instant bank-to-bank payments and Pay and collect money using just Mobile number or Virtual Payment Address (VPA). The following are the features of BHIM: 1. Send Money: User can send money using a Virtual Payment Address (VPA), Account Number & IFSC, Aadhaar Number or QR code. 2. Request Money: User can collect money by entering Virtual Payment Address (VPA). Additionally through BHIM App, one can also transfer money using Mobile No. (Mobile No should be registered with BHIM or *99# and account should be linked) 3. Scan & Pay: User can pay by scanning the QR code through Scan & Pay & generate your QR option is also present. 4. Transactions: User can check transaction history and also pending UPI collect requests (if any) and approve or reject. User can also raise complaint for the declined transactions by clicking on Report issue in transactions.

5. Profile: User can view the static QR code and Payment addresses created or also share the QR code through various messenger applications like WhatsApp, Email etc. available on phone and download the QR code. 6. Bank Account: User can see the bank account linked with his/her BHIM App and set/change the UPI PIN. User can also change the bank account linked with BHIM App by clicking Change account provided in Menu and can also check Balance of his/her linked Bank Account by clicking “REQUEST BALANCE” 7. Language: Up to 8 regional languages (Tamil, Telugu, Bengali, Malayalam, Oriya, Gujarati, Kannada ,Hindi) available on BHIM to improve user experience. 8. Block User: Block/Spam users who are sending you collect requests from illicit sources. 9. Privacy: Allow a user to disable and enable mobilenumber@upi in the profile if a secondary VPA is created (QR for the disabled VPA is also disabled). **BHIM APP is available in play store (for android User) and App Store (for Apple User)** Bharat QR In a major push for seamless cashless transactions, Govt. of India has launched Bharat QR Code, which is world’s first interoperable payment platform. National Payments Corporation of India (NPCI), which is the umbrella organisation for all digital and online retail payment systems in India, has developed this platform, which is expected to inspire and encourage more digital payments, without using debit or credit card. QR Codes are black and white two-dimensional machine readable code, which stores information about the merchant’s bank accounts and URLs. With Bharat QR Code interface, merchants need to take a printout of their QR code (or have a soft copy) and show it to the consumer, who can simply scan the code using his or her smartphone, and the payment would be made. Instantly, seamlessly and without any hassles. We had reported last year that Govt. is considering to create a common QR Code based payment mechanism, which has now been officially launched. The Retail industry is excited by its possibilities because QR code-based payments solves two major problems in a single go: a) less time consumed to make the payment, compared to debit/credit card b) no requirement to actually flash your credit/debit cards for making the payment. Here are some interesting facts about Bharat QR Code payment system, which every debit/credit holder (who is also a bank account holder) should be aware of: Smart Cards
The smartcards have increased data security, an active anti-fraud capabilities, multipurpose capabilities, flexibility in applications, and off-line validation. These functions are more or less inter-related but the most important of all is the high level of security provided by the smartcard compared to the other type of cards in operation. This makes it possible the use the smart cards in transactions dealing with money, property and personal data.

The Reserve Bank of India has set a target for banks to upgrade all ATMs by September 2017 with additional safety measures to process EMV chip and PIN cards in order to prevent skimming and cloning of debit and credit cards.
While the POS terminal infrastructure in the country has been enabled to accept and process EMV chip and PIN cards, the ATM infrastructure continues to process the card transactions based on data from the magnetic stripe. As a result, the ATM card transactions remain vulnerable to skimming, cloning, etc. frauds, even though the cards are EMV chip and PIN based.
It has become necessary to mandate EMV (Europay, MasterCard, Visa) chip and PIN card acceptance and processing at ATMs also. Contact chip processing of EMV chip and PIN cards at ATMs would not only enhance the safety and security of transactions at ATMs but also facilitate preparedness of the banks for the proposed “EMV Liability Shift” for ATM transactions, as and when it comes into effect.
Further, in order to ensure uniformity in card payments ecosystem, banks should also implement the new requirements at their micro-ATMs which are enabled to handle card-based payments.
CVV OR CSC NUMBER The CVV Number ("Card Verification Value") on credit card or debit card is a 3 digit number on VISA, MasterCard and Discover branded credit and debit cards. On American Express branded credit or debit card it is a 4 digit numeric code. The CVV number can be located by looking on credit or debit card, as illustrated in the image below: Providing the CVV number to an online merchant proves that one actually has the physical credit or debit card - and helps to keep one safe while reducing fraud. CVV numbers are NOT the card's secret PIN (Personal Identification Number). One should never enter one’s PIN number when asked to provide the CVV. (PIN numbers allow one to use one’s credit or debit card at an ATM or when making an in-person purchase with debit card or a cash advance with any credit card.) CVV numbers are also known as CSC numbers ("Card Security Code"), as well as CVV2 numbers, which are the same as CVV numbers, except that they have been generated by a 2nd generation process that makes them harder to "guess". In 2016, a new e-commerce technology called Motioncode was introduced, designed to automatically refresh the CVV code to a new one every hour or so.

Jaiib legal last minute revision

JAIIB - LAST MINUTE JAIIB LEGAL IMPORTANT:: posted by anandrao sir



☑ 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 for which a company has been formed are given in: Memorandum of Association



☑ 10. Full form of 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 ermission of RBI.



☑ 26. Under the Ombudsmen scheme, the Bank has to reply to the objection of the complainant within: one month



☑ 27. A post dated cheque is passed in the account of a customer. But another cheque which was in order was 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 of wrongful 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 /Whole sale Banking, (c)Retail Banking, (d)Other Banking Business. The geographical segments are 'domestic' and 'international'.



☑ 30. Customer of your bank asks for cash payment of crossed DD. 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 bank will 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 a Private Limited company can be a partner with Public Limited company to forma Partnership?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 by Rs.700/-. The tenderer credited the amount of shortfall and the cheque was 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 furnished within prescribed time under Right to Information Act: Rs. 250 per day with maximum being 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 judgment HUF



☑ 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 partly written in English &partly in regional language is presented for-payment What 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 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?: Cheque may 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 Any one 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 to weaker section?: 25%



☑ 68. Maximum time with in which reply must 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 cheque will 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 1.1.08 whereas_____ 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 wrong ful 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 its movable property, the company is required to file particulars of charge with: Registrar of Companies



☑ 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 written without two parallel lines. This will 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 by B.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 refund within: 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. Bank can charge collection charges of not more than for_outstation cheques of Rs.10000 to Rs1 lac in saving bank:Rs.100



☑ 113. Which of the following cheques can not be paid by the bank? : A cheque on which 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 perNI Act: 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: 21 years



☑ 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:- As per Section 19 of the Banking Regulation Act 1949, no bank can hold more than 30% of the paid up capital of a company or 30% of its own paid up capital and reserves, whichever is less, whether it is a pledgee, absolute owner or as mortgagee



☑ 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 inorder



☑ 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 a Bill of exchange or promissory note, the document which was executed abroad is required to be stamped 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. A private limited company with Registered office at Bangalore has raised loan from a branch located at Mumbai. For creating equitable mortgage, title deeds can be deposited at: Mumbai, Kolkatta, Chennal or any other notified place.



☑ 176. A cheque is presented for payment in which amount in figures is mentioned as Rs 10,000 where as the amount inwords is mentioned as Rs Ten lakh only. In terms of section 18 of the NI Act,what should the bank do?: The amount written in words 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 to whom: To the bearer



☑ 192. On, other than a negotiable instrument, what is the time period for payment of stamp duty, if the ocument 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.500, which customer wants back. What the bank should do : Impound the currency note, but No credit of full amount to customer.(No credit to customer’s account is to be given for counterfeit notes) Master Circular DCM(FNVD)G - 4/16.01.05/2017-18 dated July 20, 2017



☑ 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 can celled.Who can do so: Drawer



Note: if any thing wrong answer correct yourself with revelvant RBI guide line

Jaiib legal recollected

JAIIB LEGAL RECOLLECTED:: Most important Previous years questions

1. Section on which partners are defined
2. Tenure of director of banking company
3. Preservation of records
4. Maximum share in company related one question
5. Question to the condition on which depositor has to deposit-25% amount
6. Who has power to inspect bank-rbi officer, state officer,police officer, custom officer
7. Bfs-one director nominated by
8. Central government power in banking
9. Term loan given and default occurs-limitation period-3 years
10. A issued a check with amount 300 and left space in both side i.e. in words as well as
figure. Some employee forged it to 3300 unknowingly and sign style was little different
but it was cleared-who should be responsible
11. Question related to responsibility of collecting banker
12. A cheque is a drawn on some bank what collecting bank should do
13. Check crossing related one question
14. Liability of paying banker
15. There is one partnership firm ABC. With operation E/S upto the limit of 5000. A
draws cheque to B for 4553. B transfers it to his account…then who is liable wand what
is the role of bank here
16. A minor shares profit of the firm does he will be have liability with the firm if
something went wrong
17. An OD facility is given the customer he but he has drawn beyond his limits and also
many cheques have been returned-what a bank should do?
18. To which type of company there is restriction on transfer of share-private company
19. Main objective and other objective are mentioned in-MOA
20. Question based on types non fund based credit facility21. No of parties in indeminity-2
22. A lost FD and asking bank to reissue duplicate bank issues it- what is the role of A
here?-indemnifier
23. Right of indemnity holder related one question
24. Types of bank guarantee based one question
25. Liability of a bank to honor BG
26. What does negotiating bank does?
27. Question related to with recourse and without recourse lc
28. DPG-deffered payment guarantee based question
29. One case study was given with relation to simple mortgage and equitable mortgageratio
of share on default was asked
30. Types of mortgage with examples, gold loan, car lone, home loan, lic policy arrange
it
31. What is fixed charge
32. Registration of charge-central registry
33. Banking ombudsman:
a. Matters where complain ts can be made
b. If not satisfied with BO then to whom w e should approach
34. Effects of non-registered company
35. DRT AND DRAT based question:
a. who is higher authority of drat
b. power to modify drt-central go vt
c. case related where only it can be handled by DRT
d. Property is somewhere loan is taken from another place where drt has to be
approached?
36. SARFAESI ACT based question:
a. Validity
b. Security interest
c. Security receipts
d. Cancellation of re gistration of SRC
e. Powers and its applicability , enfor cement of security interest
37. A guarantees OD for his son that it will be paid- which type of financing it is?
38. Bankers book evidence-prima facie related question
39. Consumer complaints
40. Who is the head of state consumer protection council-minister in charge of the
consumer affair?
41. Question related to tds and TAN NUMBER
42. CONDITION of contract
43. Liability of surety
44. Bailment of goods
45. Right of unpaid seller
46. Rti applicability area
47. Supply bills related 2-3 questions
a. It is related to whom
b. To whom it should be financed- 2 marks
48. Hypothication
49. Pledge
50. Mortgage
51. Charge
52. Contract of sale
53. Minor account
54. Question from FEMA
55. Reverse mortgage
56. Fees of RTI
57. Term of director of bank
58. Who is regulatory authority of DRT
59. Security receipt
60. Floating charges/Fixed charge

1. Members of public and private company - Public - Min-7, Max-No Restriction. Private -
Min-2, Max-200
2. No. Of directors in public and private company - Public - 3 to 15, Private - 2 to 15
3. Interest payable by RBI on CRR - 0 %
4. Pledge hypothetican
5. What is equitabe mortgage
6. NI Act
7. RTI
8. Questions based on limitation period
9. Diff b/w partenership and company
10. Questions on mortgage and cheque
11. Heads of object of memorandum of association
12. Related equitable mortgage
13. BR act
14. Partnership accounts
15. Person appeal to drt after receiving reply from sc with in period of
16. payment and settlement system regulated by
17. About mortgage types 4 questions
18. FEMA deals with transactions of
19. Bailment & pleadge
20. Equitable morgatge
21. Lc
22. Deferred payment guarantee
23. Limitation
24. In how many days TDS file to gov
25. For cancel of lease or rent how many month notice?

1. Section 131
2. Actionable claim
3. Which one is NI
4. Equitable mortgage
5. Mortgage deed is necessary foe which mortgage
6. Which LC is called anticipatory credit
7. Members and directors of pvt and public company (2questions)
8. Which is not a company classified under liability category
9. With what memo a cheque should be returned if collected by one bank and presented
by other bank
10. When a partnership will dissolve
11. Demand notice period under SARFAESI-ACT
12. DRT is applicable for : SBI, nationalised, RRB, all
13. DRT
14. Bank Guarantees
15. Many questions on mortgages
16. Income tax act
17. Preference shares
18. LC
19. Bill of exchange
20. Agreement
21. Hypothecation
1. Clatons rule
2. Minimum directors-3&2
3 Around 8 qtns from mortgage. like english, equitable, act for mortgage etc.
4. 4 qtns from MOA & AOA of company
5. Doctine of constructive
6. Diff. partnership and company
7. Indemnity-loss of fdr
8. Hypothication
9. Ddiff. pledge and lien
10. Consumer complaint act-complainant
11. Credit card award-1 lakh
12. Common seal
13. Green letter of credit
14. Negotiating bank
15. Surity is -secondary
16. Deffered guaranty
17. DRAT head post
18. Chq alteration not visible to naked eyes bank not liable
19. SARFAESI Act apeal to drt in how many days 45
20. LC credit related question credit allow something like that ans green lc
21. BO related complain how many days to dispose by BO.
22. RTI how many days to required by the PIO to settle the information.
23. Not registerd partnership firm related question can sue or not.
24. Min No of director in public and private
25. Arbitrage

Under which section of income tax donations come? - 80G of the Income Tax Act
Min and max no of member in private companies - 2 & 200
No. of members in public limited co (Min & Max) - 7 & unlimited
Banking ombudsman applicable - in whole india
Indemnity which type of liability? - Contingent.
Who can rectify the clerical or arithmetical errors in order passed by DRT? - Presiding
officer
Which income doesn't come under service tax? - Interest income
Within how many days can a consumer file complaint if he is not satisfied with the
service? - 30 Days
Which is the negotiating bank in case of LC? - Exportrs country bank
Relationship between bank n customer in case of pledge - pawnor-pawnee'
Debt recovery tribunal established by - Government of India under an Act of Parliament
(Act 51 of 1993)
How many types of LC ? - 8
Jurisdiction of appellate tribunal - The Central Government is also empowered to decide
and specify the areas within which the tribunal may exercise jurisdiction for entertaining
and deciding the applications filed before it.
DRT applicable - Above 10 Lakhs
DRT is controlled by - Recovery of Debts Due to Banks and Financial Institutions Act
(RDDBFI Act), 1993
RTI is not applicable to - J&K
UCPDC 600 is in respect of - Letters of credit
Pay as you earn is a...... tax - is a withholding tax on income payments to employees
20% profits should maintain with rbi - NBFC
NI act application - Whole India
Cersai time limit - within 30 days of creation of mortgage
Bills payable on demand are - paid when the payee asks for it.
Term of every member in national commission - 5 years or up to the age of seventy
years, which ever is earlie

A securitization company carries out the function of - Acquisition of financial asset from
the originator
Limitation period of for takng immovable property under sarfaesi? - 12 Years
Amount of TDS should be submitted before how many days? - 7th of the next month
Number of directors of private company? - 2 to 15 (Min & Max)
Casual vacancies of directors can be filled by? - the Board of Directors at a meeting of
the Board
Collecting bank will get safety under NI act for what - Forged sign of endroser
Which is not consider as NI - Share
Tax dedcuted from salary has to be payed as on - Monthly basis
Limitation perod for foreclosure is - 30 Years
Llimitation perod for possession of immovable property is - 12 years
Banking regulation act 1949 - Regulates banking

Banking ombudsman 4 questions
DRT appllete is headed by ........appointed by central govt.
LC 3 questions case study 1
Advising banking is called......
Whether advising bank is to take part in liability of LC
Macmillan book back questions 5-6 - Average 3-5 questions coming
Key used to create digital signature.....Private key
RTI Act .....Getting info from.....Public authorities
Exemption of RTI Act
Bankers book evidence 2 questions one from Macmillan book
How much we have to pay to get copy from the abovesaid paper n copies...
Sarfaesi 3-4 questions out of one case study....
What type of charge in case of goods under manufacturing.....
Under pledge unlike mortgage....Some differences were given in the options
N deposit in bank Z with branch manager C .L is the introducer of N.N got LOD from
that bank.Who has lended to whom?
R has shares in limited company.R dies what will happen to shares.....?
In case of safe deposit vault, customer is called as....
X a customer lost the TDR and bank gave duplicate receipt receiving indemnity from
X.Here who is indemnified to whom?
Parties in a contract......
Bank guarantee 2 questions...

What is reverse mortgage
Tenure of banking ombudsman
Fee require for RTI
Mode of accepting complain by banking ombudsman
One question on arranging orders for different type of mortgage
One question on arranging orders for different type of charges
Limitations period will be extended,-on credits to ac
Material alteration of cheque without authentiaction of bearer
Bank buy a cheque from A and give advance but cheque got returned-from whom bank
will recover
A presented a cheque for clearing and went abroad, cheque got returned for financial
reason after I year. A returned and found no credit in his account and bank lost the
cheque- responsibility of bank and customer
Lmitaton period of of account
Lok adalat is conducted by....

No. of max members in pvt company - 200
........................................
Pawnor pawnee
The bailment of goods as security for payment of a debt or performance of a promise is
called "pledge". The bailor is in this case called the "pawnor". The bailee is called the
"pawnee".
............... .........................
Min deposit to appeal to DRAT - 50000
........................................
Min and max directors in public limited co -
........................................
Complaints can lodge to banking ombudsman through - Authorised Representative
........................................
Safe custody of articles.. Bailment
........................................
Clubs n societies r registered under - either under the Companies Act, 1956 or under the
Societies Registration Act or the Co-operative Societies Act
........................................
Sale notice period ie. 30 days
........................................
Authorized officer of public sector bank min designation.. Chief manager
........................................
Jurisdiction of filing suit - at place of mortgaged property situated
1.Deffered credit
2.minimum and maximum members in private company..
3.accalaration.
4.equity mortgage..
5.demand biill also called as sight bill.
6.presiding officer tunere...
7.relationship in safe locker ..bank customer.
8.relatioanaship in loan on FD..
9.pladge..
10..origanater.
11.about drt
12.3days for book evidence..
Under how many phases is cases of sarfaesi settled under civil courts?
EM is required to be done in specified town of property
Payment to minor
Right of member in a company
Fund based non fund based
Metropolitan Magistrate
Endorsement in cheque
Advantages of corporate form of enterprises
To whom the assignment notice send in case of loan taking against insurance policy
Lok adalat max compensation?
Banking ombudsman
Title deed not required to be deposited in whch type of mortgage?
Mortgage-transfer of property act
Sale of goods act

partnership
Huf law
Safe deposit locker
FEMA
3 - 4 case studies on protection to collecting banker and paying banker
Appointment of banking ombudsman , regulation of tenure of banking ombudsman
Minimum and maximum number of members in private company
2-3 questions from MoA and AoA
Object is described in MOA /AOA
Difference between partnership and company..
If a director in company wants get member of another company what needs to effect in
both companies article of Asso.
For how many years a banking company use non banking assets- 10, 11,12 or 15 years
Mutual fund transaction which kind of account in dealing foreign transaction.
RTI act not applicable which of the following
Renounce sport board
Cabinet ministry
AD bills
Floating charge
Fixed change
If a customer deposit an order cheque to A bank and A bank put a collection stamp on it
but customer take the cheque and deposit to B bank but B bank return the cheque.What
The B bank site the return reason
National commission tenure
What is the conversion?
HUF created by
Who pays money to beneficiary in LC
Appeal days in DRT
............................. ...........

E filing system in charge registration
........................................
Contract two to three questions
........................................
SARFAESI act applicability
...................................... ..
DRT Applicability
......................... ...............
Banking omb
..................... ...................
According to tax lawas income definition
........................................
Major powers of RBI
.............................. ..........
Rti act
........... .............................
Law of limited for foreclosure of mortgage
........................................
What is called judgment of Banking ombdsuman is.Award
........................................
Indemnity
security or protection against a loss or other financial burden.
security against or exemption from legal responsibility for one's actions.
........................................
Deferred payment guarantees



Jaiib Legal Recollected: 2018 May

Lc se question tha

Lok adalat

Ni

Indemnity

Gurantee

Collecting banker

Awards under banking ombundsman

5 questions from FEMA

Limitations act lot of 2 marks

Bailee bailor pledge mortgage

Mortgage 3-4 question English n equitable

Paid up capital
Securities questions
Saffaesi 2-4 questions
Lok adalat 3 questions
Ultra vires questions

Equity mortgage questions

Collecting bank 2 questions

Basel

BASEL

01.A subordinate debt with remaining maturity of 30 months will be taken as part of Tier II capital at a discount of: 60%

02.An exposure is called Retail Exposure as per implementation of Basel II, if it is not more than:5 crore.

03.As per Basel II, banks are required to bring capital for __risk in addition to capital for credit risk and market risk: Operational risk

04.As per BASEL III Guidelines, the Loans guaranteed by State Govt will attract Risk weight of: (i)20% (ii) 50% (iii) 100% (iv) 75% (v)

0%: 20%

05.As per BASEL III, what is the risk weight on exposure to Govt securities issued by Central Government?: 0%

06.As per Basel-II, RBI has recommended adoption of __approach for operational risk : basic indicator approach

07.BASEL Accords are related to: Capital Adequacy.

08.Basel II consists __Pillars and number 2 pillar is __ : 3 pillars, Supervisory Review is Pillar no.2

09.Basel II norms to be completed by Foreign banks and banks having foreign branches by 31,03.2008.

10.For banks which do not have overseas braches, Basel II norms have to be implemented with effect from: 31.3.09

11.For being part of Tier II capital, Rupee Denominated subordinated debts should have minimum maturity period of and maximum

maturity period of : Minimum maturity:5 years Maximum: Perpetual(no maturity prescribed

12. In Basel II, Pillar I covers which types of risks: Credit Risk, Market Risk, Operational Risk.

13.Subordinate Debts are part of: Tier-II capital

14.Supervisory Review according to which Central Bank of the country is to ensure that proper capital has been provided for risk

exposure and maintain proper system for the same is provided under?: Pillar II of Basel IL

15.The minimum capital adequacy ratio implemented in India, by RBI is __% and as per Basel II recommendations it is __ % : 9%, 8%

16.The objective of the Pillar III as per BASEL-II is ____: Market discipline through public disclosures

17.The revaluation reserves as per Balance Sheet of a bank is Rs 200 lakh. How much of it will be taken as part of Tier II capital?: Rs

90 lakh (Revaluation Reserve are taken as part of Tier II capital at 55% discount)

18.Under BASEL II, for calculating capital for Operational Risk which method is to be applied for the time being: Basic Indicator

Approach

19.Under BASEL-II, what is the RiskWeightage on the Loans and advances given to Staff of the bank secured by Mortgage /

superannuation benefits: 20%

20.Upper Tier 2 -minimum maturity is 15 years for Debt capital

21.What is the date for final implementation of Basel III? 31.03.2019.( Now extended till next year)

22.Which of the following is part of Tier II Capital? (a) Statutory Reserves (b) Other disclosed reserves (c) Capital reserves from

sale of assets (d) Revaluation Reserve e)none pf these Ans is E

Risk management important mcqs

RISK Management Very important MCqs



01.ALM not responsible for: achieving budgets and targets (it helps in managing liquidity risk and interest rate risk).

02.At present banks are required to maintain capital adequacy ratio of 9% and Tier II capital should not be more than Tier I. It

means that banks are required to bring Tier I capital of at least 4.5% of the risk weighted assets. With effect from which date,

banks will be required to bring Tier I capital of 6% of the risk weighted assets?: 31't March 2010.

03.Documents not stamped properly is what kind of risk?: Legal Risk

04.For calculation of capital adequacy ratio, the risk weight for Commercial Real Estate for commercial bldg is : 100%

05.For capital adequacy purposes, risk weight for personal loans is : 125%

06.Fraud – what type of risk : Operational risk

07.General Insurance works on principle of: Spreading the Risk.

08. If an Outsourcing agency does not serve properly – which type of Risk is faced by the bank?: Reputation Risk and Operational

Risk

09. Investment in perpetual bonds is risky because: the interest is not payable if the CRAR falls below the stipulated target.

10.Legal risk is part of: operational risk.

11.Loss due to inadequacy or failure of system, process, people or due to external events is called: Operational risk

12.Risk weight for claim on Banks which complies to Min CRAR requirement : Scheduled Banks 20%

13.Risk weight for exposure to Scheduled Commercial Bank that maintains CRAR as per RBI requirement: 20%

14.Sub-prime is an risk. (Operational and Credit Risk)

15.The capital adequacy ratio is computed by the following formula: Capital/Risk Weighted Assets

16.Tier 2 - general provisioning & loss reserves only up to 1.25% of total risk weighted assets.

17.Tier I should be at least 6% of Risk weighted assets and should be achieved before by all scheduled commercial banks:



31.3.2010.

18.What are the components of credit risk?: Transaction risk or default risk and portfolio risk

19.When does liquidity risk arises?: Liquidity risk arises when maturing liabilities are more than maturing assets-

20.While doing Risk Rating, an asset is downgraded from A+ rating to A rating. What type of risk is involved: Credit Risk

Very important bfm case study point of view

Summary of Major Issues in LC Transactions



Check List for Issuing/Accepting L/C

• Quality of Issuing Bank

• Method of Payment: Sight or Deferred Basis

• Transport Documents

• Other Documents

• Documents: Banks deal in documents not in goods, services or performance

• Should not refer to underlying contract

• Timing: UCP norm is max. 21 days after shipment date for presentation of

documents

Responsibilities and Obligations of Banks

• Irrevocable unless otherwise mentioned

• Issuing Bank: Prime obligation

• Advising Bank: Only obligation to authenticate the credit and passing it on promptly

to beneficiary



• Confirming Bank: takes over payment responsibilities of the issuing bank as far as the

beneficiary is concerned

• Reimbursing Bank: Responsibility of Issuing Bank to provide proper reimbursement

instructions

• Applicability of Force Majeure clause limiting banks’ liability on account of Acts of

God, riots, etc.

• Banks have five banking days to examine documents after receipt of documents

• Banks will examine documents with reasonable care

• Documents should be consistent with each other and complete

• Documents should conform with the terms of the credit

• Documents should comply with the provisions of UCP

Common Defects in Documentation

Commonly found discrepancies between the letter of credit and supporting documents

include:

• Letter of Credit has expired prior to presentation of draft.

• Bill of Lading evidences delivery prior to or after the date range stated in the credit.

• Stale dated documents.

• Changes included in the invoice not authorized in the credit.

• Inconsistent description of goods.

• Insurance document errors.

Treasury management

Treasury Management ::

 (Read nice article)

Banks not only lend money to customers but also invest in securities such as Bonds and

Debentures of Government as well as Corporates. These instruments are easily tradable

in the capital and money market. The tradability of securities makes investments an

attractive option for banks for deployment of their funds. Further, banks buy securities

not only to trade but also to hold them till maturity to take advantage of the attractive

returns with relatively lower risk. Banks are allowed to invest in shares of companies.

However, the volumes are low due to associated high risk besides regulatory restrictions.

The investment portfolio of the banks broadly divided into three groups viz.,

Trading Book – Securities purchased with the intention of selling them within 90 days

are held in the trading book. Trading opportunities arise in the market on account of

fluctuation in interest rates and arbitrage opportunities.

Available for Sale (AFS) – Securities which are bought with the intention of selling

them but not necessarily within 90 days is considered to be AFS securities. They are also

part of the trading portfolio of the bank but only the time frame is different. Both the

trading and AFS securities have to be “Marked to Market” every quarter while finalization

of quarterly results.

Held to Maturity (HTM) – These securities are meant to be held till their date of

maturity and the purpose investing in them is to earn reasonable steady income. These

securities are carried in the books at cost or purchase price till maturity. Hence, HTM

securities need not be “Marked to Market” as the bank is certain of receiving the

maturity value on the specified date. Banks are not allowed to shift securities freely from

trading and AFS to the HTM book as this may lead to overstating of profit figures.

However, banks can opt for shifting only once in a year to adjust their overall portfolio.

Banks are permitted to exceed the limit of 25% of total investments under HTM category

provided (a) the excess comprises of only of SLR securities and (b) the total SLR

securities held in the HTM category is not more than 23% by March 2014.

Call Money Markets: Call and notice money market refers to the market for short term

funds ranging from overnight funds to funds for a maximum tenor of 14 days. Under Call

money market, funds are transacted on overnight basis where as in case of notice

money market; funds are transacted for the period of 2 days to 14 days.

Coupon Rate: It is a rate at which interest is paid, and is usually represented as a

percentage of the par value of a bond. It refers to the periodic interest payments that

are made by the borrower (who is also the issuer of the bond) to the lender (the

subscriber of the bond) and the coupons are stated upfront either directly specifying the

number (e.g.8%) or indirectly tying with a benchmark rate (e.g. MIBOR+0.5%).

Zero Coupon Bond / Deep Discount Bond: The bond is issued at a discount to its

face value, at which it will be redeemed. When such a bond is issued for a very long

tenor, the issue price is at a steep discount to the redemption value. The effective

interest earned by the buyer is the difference between the face value and the discounted

price at which the bond is bought. The essential feature of this type of bonds is the

absence of intermittent cash flows.

Commercial Paper (CP): It is a short-term instrument to enable non-banking

companies to borrow short-term funds through liquid money market instruments. CPs is

therefore part of the working capital limits as set by the maximum permissible bank

finance (MPBF). CP issues are regulated by RBI Guidelines issued from time to time

stipulating term, eligibility, limits and amount and method of issuance. CP can be issued

for maturities between a minimum of 7 days and a maximum up to one year from the

date of issue. The maturity date of the CP should not go beyond the date up to which the

credit rating of the issuer is valid. CP can be issued in denominations of `5 lakh and

multiples thereof. It is mandatory that CPs should be rated by credit rating agencies. In

a bid to make CPs attractive, the RBI has allowed issuers to buyback these instruments

through the secondary market before maturity. It attracts stamp duty.

Certificates of Deposits (CDs): It is a negotiable money market instrument and

issued in dematerialized form or as a Usance Promissory Note, for funds, deposited at a

bank or other eligible financial institutions to raise short-term resources within the

umbrella limit fixed by RBI. CDs may be issued at a discount on face value. CDs differ

from term deposit as they involve the creation of paper, and hence have the facility for

transfer and multiple ownerships before maturity. Banks use the CDs for borrowing

during a credit pickup, to the extent of shortage in incremental deposits. Minimum

amount of a CD should be one lakh and in multiples thereof. The maturity period of CDs

should be not less than 7 days and not more than one year. However FIs are allowed to

issue CDs not exceeding 3 years from the date of issue. Banks have to maintain the

appropriate reserve requirements (CRR/SLR) on the issue price of the CDs. It attracts

stamp duty. Banks/Fis cannot grant loans against CDs.

Mumbai Inter Bank Offered Rate (MIBOR) - Currently there are two calculating

agents for the benchmark viz., Reuters and the National Stock Exchange (NSE). The NSE

MIBOR benchmark is the more popular of the two and is based on rates polled by NSE

from a representative panel of 31 Banks / Institutions / Primary Dealers. It is used by

different Indian banks either for interbank lending of the surplus funds or for interbank

borrowing for meeting their short term liquidity requirements. MIBOR has been in use as

a reference/benchmark rate by the financial institutions for deciding interest rates for

the different financial instruments like Interest Rate Swaps, Forward Rate Agreements,

Floating Rate Debentures and Term Deposits, Loans of different maturities and

mortgages, etc. It is also the benchmark for the Call Money Market Rates.

Securitization is an effective tool to reduce the mismatches in the maturities of assets

and liabilities. It is a financing technique that involves pooling and re-packing of illiquid

financial assets in to marketable securities. There are six players viz., Borrowers,

Lending Banker (who becomes an originator for the Securitization transaction), Special

Purpose Vehicle (SPV), Credit Rating Agency, Investors and Service Providers. The

process of securitization involves identification of financial assets, rating of these assets

by the rating agency, creation of a SPV for handling the securitization transaction,

assignment of future receivables in favour of the SPV, issuance of marketable securities

based on these underlying financial assets and selling the same to the investors. The

service providers recover the amount periodically and remit to the SPV and who in turn

pass the benefit to the investors.

Asset and Liability Management – RBI Guidelines: Of late, it is observed that PSBs

have been accepting Bulk Deposits/Certificate of Deposits route to increase balance

sheet size at very high interest rates, adversely affecting the profitability besides

exposing the banks to ALM Risk. RBI directed banks not to accept Bulk Deposits beyond

10% of the total deposits and the total of Bulk Deposits & Certificates of Deposits should

not exceed 15% of total deposits of the bank at any given point of time. An appropriate

time-bound strategy for reduction of such existing bulk deposits should be put in place.

Adjusted Net Bank Credit (ANBC) denotes Net Bank Credit plus investments made

by banks in non-SLR bonds held in HTM category. However, investments made by banks

in the Recapitalization Bonds and Inter-bank exposures will not be taken into account for

the purpose of priority sector lending targets/sub-targets.

Subordinate Debt is a debt owed to an unsecured creditor that in the event of

liquidation can only be paid after the claims of secured creditors have been met.

Normally, subordinate debt ranks below other secured loans with regard to claims on

assets or earnings.

Loans and advance s including balance sheet

LOANS AND ADVANCES INCLUDING BALANCE SHEET ANALYSIS



1. ˜Credit Rating Agencies in India are regulated by: RBI

2. ˜CRISIL stands for: Credit Rating Information Services of India Ltd.

3. ˜Deferred Payment Guarantee is : Guarantee issued

when payment by applicant of guarantee is to be made in installments over a period of time.

4. ˜If Break Even Point is high, it can be construed that the margin of safety is ____: Low.

5. ˜Long Term uses – 12; total Assets – 30; Long Term source 16; What is net working capital : 4

6. ˜On which one of the following assets, depreciation is applied on Straight line method: Computers.

7. ˜Projected Turnover is Rs.400 lacs, margin by promoter is Rs. 20 lacs. What is maximum bank

finance as per Annual Projected Turnover method: 80 lakhs.

8. ˜Rohit was a loanee of the branch and news has come that he has expired. On enquiry, it was

observed that he left some assets. Upto what extent the legal heirs are liable to the Bank? Legal heirs are

liable for the liabilities upto the assets inherited by them.

9. ˜The appraisal of Deferred Payment Guarantee is same as that of a) Demand Loan b) OD c) Term

Loan d) CC : Term Loan.

10. A cash credit account will be treated as NPA if the CC limit is not renewed within ___days from the

due date of renewal: 180 days.

11. 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.

12. A firm is allowed a limit of Rs.1.40 lac at 30% margin. It wants to avail the limit fully. How much will

be the value of security : Rs.2 lac

13. A guarantee issued for a series of transactions is called: Continuing guarantee

14. 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.

15. A letter of credit which is issued on request of the beneficiary in favour of his supplier: Back to Back

LC

16. 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.

17. 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

18. 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.

19. A negotiating bank and issuing bank are allowed days each for scrutiny of documents drawn

under Letter of credit to ensure that documents are as per LC: 5 banking days each.

20. Age limit staff housing loan: 70 years;

21. 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.

22. 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

23. Authorised capital is Rs.10 lac. Paid up capital Rs.6 lac. The loss of previous year is Rs.1 lac. Loss in

current year is Rs3 _ lac. The tangible net worth is : Rs.2 lac

24. Authorised capital= 10 lac, paid-up capital = 60%, loss during current year = 50000, loss last year =

2 lacs, what is the tangible net worth of the company? : 3.5 lac

25. Bailment of goods by a person to another person, to secure a loan is called : Pledge

26. Balance outstanding in a CC limit is Rs.9 lakh. Value of stock is Rs.5 lakhs. It is in doubtfUl for more

than two years as on 31 March 2012. What is the amount of provision to be made on 31-03-2013?: Rs.9

lakhs (100% of liability as account is doubtful for more than 3 years)

27. Balance Sheet of a firm indicates which of the following – Balance Sheet indicates what a firm

owes and what a firm owns as on a particular date.

28. Bank limit for working capital based on turn over method: 20% of the projected sales turnover

accepted by Banks

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

30. Banks are required to maintain -a margin of ___ for issuing Guarantee favouring stock exchange on

behalf of share Brokers.

31. Banks are required to obtain audited financial papers from non corporate borrowers for granting

working capital limit of: Rs.25 lakh &above

32. 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.

33. Benchmark Current Ratio under turn over method is: 1.25

34. Break Even Point: No profit no loss. ( TR-TC=Zero)

35. Calculate Debt Equity ratio – Debenture – Rs 200, capital 50; reserves – 80; P& L account credit

balance – Rs 20: 4: 3 ( 200 divided by 150).

36. Calculate Net working capital– Total assets 1000; Long Term liabilities 400; Fixed assets, Intangible

assets and Non current assets (i.e. long term uses) Rs 350; What is net working capital : 400- 350= Rs

50

37. Calculate Tangible Net Worth: Land and building: 200 Lacs; Capital:80000 intangible asset:15000:



65,000

38. CALCULATION OF INTEREST IN LOAN ACCOUNT: MONTHLY

39. CARE stands for : Credit Analysis & Research Ltd

40. Cash Budget method is used for sanctioning working capital limits to : Seasonal Industries

41. CC limit Rs 4 lacs. Stock 6 lacs. Margin 25% . What is drawing power? : NOTIONAL - 4.5 lacs, BUT

ACTUAL Rs. 4 LAC.

42. Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) is a

government company licensed under Section 25 of the Companies Act, has been incorporated to operate

and maintain the Central Registry under the provisions of _____: SARFAESI Act 2002.

43. CIBIL is the agency that provides information to the member banks on (i) Credit Rating (ii)

Information on credit History: Information on Credit History of borrowers

44. Contribution means : profit + fixed cost

45. Current Assets 600, Long Term sources - 600, Total Assests1000, what is NWC and Current Ratio: CR

1.5 : 1; NWC = 200 .

46. Current Liabilities are those liabilities which are to be paid: within one Year

47. Current Ratio = 2:1, Net working Capital=60000, What is the Current Liability of the firm? : 60000

48. Current ratio indicates: Liquidity of the firm (ability of a firm to pay current liabilities in time)

49. Current Ratio is 1.33:1, Current Assets is 100, what will be the amount of Current Liability: 75 lakhs

Compiled by Sanjay Kumar Trivedy, Divisional Manager, Canara Bank, Govt. Link Cell, Nagpur 138 | P a g e

50. Debt Equity Ratio indicates: Long term solvency or capital structure of the firm.

51. Debt Securitization refers to: Conversion of receivables into debt instruments.

52. Debt Service coverage ratio is used for: Sanction of Term Loans

53. Deferred Payment guarantee is: Financial Guarantee

54. Deferred payment guarantee issued by a bank is a : Contingent Liability.

55. Difference between Long Term Source and Long Term Use is called: Net Working capital.

56. DSCR indicates: Ability of firm to repay term loan instalments

57. DSCR is for evaluating: Term Loan repayment-surplus generating capacity.

58. Duty of confirming bank: Only to verify the genuineness of L/C.

59. Equitable Mortgage is created by deposit of title deeds with bank at – (a) any where in India; (b)

state capital; (c) only at Mumbai, Chennai or Kolkatta; (d) Any place notified by state government for this

purpose: Correct answer is (d).

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

financial obligations in short term.

61. Expand CRILC: Central Repository of Information on large credits.

62. Expand IRR : Internal Rate of Return

63. Finance for construction of road and port is classified as: Infrastructure Finance.

64. 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

65. For assessing Fund Based Working Capital limit for MSME upto _______Turnover method is followed

under Nayak committee: Rs.5 crore.

66. 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.

67. For Takeover of accounts from other Banks, the account copies of all the borrower accounts with the

present bankers / financial institution shall be obtained at least for the last ______: 12 months.

68. Formation of consortium, when essential : When bank touches its exposure ceiling

69. Full form of DSCR: Debt Service coverage ratio;

70. Gold is pledged with bank as security for a Bank Guarantee by a borrower. Bank Guarantee stands

expired. Whether a temporary overdraft availed by the borrower which is overdue can be got adjusted by

selling the Gold held as security for issue of guarantee: Yes, because Bankers lien is a general lien and is

an implied pledge. Further, the Gold was deposited in the ordinary course of business.

71. Green field project is related to : setting up new projects

72. Guarantee issued by a bank in favour of Custom department that party will fulfill export obligation for

availing exemption from custom duty regarding tax. Such guarantee is called: Financial Guarantee

73. Guarantee issued by a bank which is still outstanding is shown in the Balance Sheet as: Contingent

Liability.

74. 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.

75. Holiday period given for repayment of installements in a loan is termed as: Moratorium period

76. How DSCR is calculated?: (Profitafter tax + Depreciation + Interest on Term Loan) divided by (Annual

instalment of term loan+ interest on term loan)

77. How much additional risk weight has been provided on restructured loans?: 25%

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

79. Hypothecation described under SARFEASI Act.

80. If a businessman start a business with a Capital investment of Rs.3,00,000/- and withdraw

Rs.25,000/- later. If Net Profit is Rs.1,20,000/- and income tax paid thereon is Rs.30,000/-, what is the

position of capital account (net worth) at the end of the year – 395000; 365000; 360000; nil:

Rs.3,65,000/-

81. If a LC contains a clause "about" regarding the amount and quantity of goods, how much tolerance is

permitted?: 10%

82. If current ratio is 2:1, net working capital is Rs 20,000, current asset will be: Rs 40,000

83. If debtors are Rs 4 lac, annual sale is 60 lac, what is the Debt collection period: 0.8 months

84. If Debtors velocity ratio increases, it means debt collection period has increased or sales have

decreased.

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

or 5 days after.

86. If in a Guarantee issued is silent, what will be the limitation period: 3 yrs and in case of Govt

guarantee it is 30 years.

87. If in a LC words around is written with date then variation of is allowed in the period: +/- 5 calendar

days

88. If limit is 3 lacs, margin is 25% what should be stock to avail full limit?: Rs4 lac

89. 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

90. 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.

91. 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

92. If the projected sale of a-small (manufacturing) enterprise is Rs 80 lakh, margin available with the

borrower is Rs 4 lakh, then as per turnover method, working capital limit will be: Rs 16 lakh.

93. If working capital limit to a borrower is Rs 10 crore and above, then as per RBI guidelines, the loan

component should be at least: as per bank's discretion.(earlier it used to be 80%).

94. 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

95. In A current account OD of Rs. 12000 is made. The FDR has become due later on if the right of

appropriation can be used. The borrower has objected that he never requested for overdraft, hence

payment can not be appropriated. The customer is right.

96. In a letter of credit, it is written that documents can be negotiated about 30th June. In this case, the

documents can be negotiated: Before or after 5 clays of 30th June.

97. In case of a loan under consortium, each bank can have Maximum working capital limit of Rs-No

rule in this regard. Rules of consortium to be framed by members of consortium.

98. In case of loan given by more than one bank under a consortium, how the asset classification is done

by various banks?: Each bank will classify the account based on its record of recovery.

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

II capital of the bank?: 45%

100. In Letter Of Credit jmporter is called: Opener of Letter of Credit

101. In project finance, Debt Equity Ratio requirement for other than Infrastructure finance is: 2:1

102. In respect of a project report, the feasibility which is given least importance by the preparers of the

report, but very important for a banker is : a) Commercial b) Technical c) economic d) financial Ans: C

103. In the Balance Sheet of a bank, Contingent Liabilities are shown as: footnote to the Balance Sheet.

104. 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

105. Interest rate on advances is related to – Bank rate; Base Rate; PLR: MCLR Rate

106. Limit sanctioned Rs 5 lac; Stock Rs 6 lac; Margin 25%; What will be Drawing power: Rs 4.5 lac

107. Loan Delivery System is not applicable to: a) Loan to Soft ware industry b) export credit: export

credit

108. Loan Delivery System suggested by Rashid Mani Committee is applicable on borrowers with working

capital limits of: Rs 10 crore and above

109. 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

110. Lorry Receipts issued by Transport Operators approved by IBA are preferred. The reason is the

Transport Operators will take care of: Carriers Risk.

111. 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)

112. Standard Score under CIBIL: 300 to 900

113. Stock Audit is required in respect of loans of : Rs.1.00 crore & above

114. Subordinate Debt is shown as part of in the Balance Sheet of a bank: Other Liabilities and

Provisions

115. Tangible Net Worth (TNW) is calculated as: Total paid up capital + Reserves – Intangible Assets.

116. The appraisal of deferred payment guarantee is similar to term loan: The difference is outlay of funds.

117. THE APPRAISAL OF DEFERRED PAYMENT GUARANTEE IS SIMILAR TO: TERM LOAN

118. The Audited Balance sheet for the latest financial year is to be obtained within ______ to finalise

credit rating and re-fix interest accordingly: 6 months.

119. 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.

120. The Borrower has to bring funds as his contribution for loan from: Long term Sources

121. The charge on stocks is created by: Hypothecation ( also by pledge or lien)

122. The concept of Base Rate is not applicable in the case of: Loan against Bank’s own deposit

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

124. The long term liability to tangible net worth ratio implies : Long term solvency of the firm .

125. The main distinction between Hypothecation and Pledge is on accountof : Possession

126. The Meaning of Debtor Velocity Ratio is: Cycle of Debt Collection Period

127. The procedure used for ascertaining Customers Credit worth is called: Credit Rating

128. Time Limit for registration of equitable mortgage with CERSAI: 30 days from date of deposit of

title deeds. (Normally 30days and then delay can be condoned up to 30days on payment of penalty).

129. To improve Current Ratio of 2:1, what has to be done? a) Recover cash from Receivables b) Cash

sales c) Decrease the Bills payables.

130. Total Indebtedness Ratio is represented by: Total outside liabilities divided by Tangible Net Worth

131. What is "pari passu" means: Sharing in the ratio of outstanding.

132. What is a Break even point-The level of sales at which a firm does not earn any profit and does not

incur any loss.

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

134. What is Deffered Payment Guarantee?: Guarantee issued when payment by applicant of

guarantee is to be made in instalments over a period of time.

135. What is Mortgage? Transfer of interest in specific immovable property to secure an existing

or future debt.

136. What is nature of Banker's Lien?: It is implied pledge because Banker can dispose-off the goods after

giving notice to the borrower.

137. What is Pari Passu charge?: In case of consortium advance sale proceeds of security will be

shared among banks in proportion to their outstanding.

138. What is Real Rate of Interest?: Prevailing interest rate minus inflation rate

139. What is the meaning of Group in Exposure Norms: Commonality of management & Effective Control

140. What is the relationship between bank and customers in case of overdraft?: Creditor and Debtor

141. What is the risk weight for Personal Loans? 125%

142. What is the risk weight for Unrated companies?: 100%

143. What is the type of liability for the bank on account of issue of Bank Guarantee?: Contingent Liability

144. What type of bank gaurentee bank gives when a customer purchases a machine on instalment basis?:

Deferred Payment guarantee.

145. What type of Guarantee is Deffered Payment Guarantee: Financial Guarantee

146. What type of liability is represented by Bank Guarantee?: Contingent Liability and shown as a

footnote in the Balance Sheet.

147. What will be the tangible net worth if total assets are Rs 35 crore; total outside liability Rs 30 crore;

intangible assets Rs 3 crore: Rs 2 crore

148. What will happen in case of negative working capital limit: Current Liabilities are more than

Current Assets

149. Which is not a Credit Rating Agency – CRISIL, CARE, SMERA, ICRA, CIBIL: CIBIL

150. Which is not found in operating expenses statement of P&L statement - Salaries, Rent, Power: Power

151. Which is not included in Contingent liability – Bank Guarantee; Letter of Credit; Forward Contract;

Bills Payable: Bills payable

152. Which of the following is a contingent liability – deposits, borrowings, capital, guarantee: Bank

Guarantee

153. Which of the following is a Credit Information company – CIBIL, FIMDA, AMFI, CRISIL: CRISIL

154. Which of the following is part of the Solvency Ratios: debt equity ratio.

155. Which of the following represent Debt Service Coverage Ratio: (Net Profit after tax + Depreciation

+ Interest on Term loan) divided by (Annual instalment of term loan + interest on term loan)

156. Which of the items will not be an asset in banks bal sheet: Advances/Fixed Asset / Deposits :

Deposits

157. Which one of following is credit information company?: Equifax

158. Which system replaced Benchmark Prime Lending rate in banks: Base Rate

159. While arriving Drawing Power for financing against book debts, only Book Debts _____and below are

to be taken in to consideration. (other than MSME advances): 90 days

160. While doing Project Appraisal, sensitivity analysis is useful for: Viability and sustainability of project.

161. While financing for TL, Bank should look for the ability of the firm to generate the income to service

the debt

162. While granting loans to a partnership, banks generally insist that the firm should be registered

whereas registration of a partnership firm is optional. What is the reason for the same?: An

unregistered firm can not sue its debtors for recovery of its dues whereas other can sue the

firm for recovery of their dues

163. While undertaking technical appraisal, the following is not considered: cost of production and sales (it

is used for economic viability).

164. Who is bound to file particulars of charge with the Registrar of Companies under MCA 21, when a

company creates charge of somebody on its movable or immovable property except by way of

pledge?: officials of the company.

165. 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.

166. Why banks ensure that charge created on any asset of the company should be registered with ROC

within stipulated period?: If charge is not registered, bank will become unsecured creditor.

167. Why banks prefer financing of bills?: because the advance is self liquidating

168. 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.

169. Why loan against Partly Paid Shares are not preferred by banks?: Because partly paid shares

represent contingent liability. In case company makes 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

170. Working capital requirement of a firm is required to be met through : Short term sources and surplus



of long term sources over long term uses