Types of endorsement

Types of Endorsements:-

1)     Blank Endorsements: section 16(1) it means endorser only signs his name with adding any words or directions this endorsement makes the instrument payable to bearer.

2)     Endorsement in Full: - The endorser added the name of endorsee specifically.

3)     Conditional Endorsement: Here the endorser puts some conditions for endorsee Here the binding of conditions is between endorsee and endorser only.

4)     San recourse Endorsement: - Endorser added the words without recourse to me.

5)     Facultative Endorsement: - Where an endorser waives the condition of notice of dishonour.

6)     Endorsement on Bearer Cheque: - The endorsement on bearer cheque is meaning less as the cheque once bearer is always bear.

Crossing:-

General Crossing (Sec.123): Two parallel transverse lines on the face of instruments with or without word ‘Not negotiable’. It is direction to the paying bank that do not pay the cheque across the counter.

Special Crossing (Sec.124): In addition of general crossing the cheque bears the name of collecting bank either with or without the words ‘Not negotiable’.

Collection of cheques:-

Section 131: a banker who has in good faith and without negligence received payment for a customer of a cheque (not available for B/E and P/N) crossed generally or specially.  The present section gives protection provided following conditions are fulfilled…

a)    The bank must have acted in good faith and without negligence.

b)    Bank has received the payment as an agent for collection.

c)    Bank has collected the cheque in the duly introduced account of customer only.

d)    The cheque collected must be crossed.

Payment of cheques:-

Liability of drawee (paying banker): It is obligation of the banker to honour the cheques of a customer provided there is sufficient balance and the cheque is otherwise in order.  Section 31 of NI act provides that “The Drawee of a cheque:

a)    Must have sufficient funds in the account.

b)    Properly applicable to the payment of such cheque.

c)    Must pay the cheque when duly required to do so.

d)    In default of such payment, must compensate the drawer for any loss or damage.

Protection for paying banker in case of cheque:-

Regularity of endorsement Section 85(1): Paying banker’s liability is to ensure the regularity of the endorsement and is not concerned with genuineness of endorsement.  The genuineness of endorsement is the liability of collecting banker.  Therefore, protection is available to the paying banker in case of forged endorsements.

Payment in due course (Section-10):-

a)    In accordance with the apparent tenor of the instrument.

b)    In good faith and without negligence.

c)    To the person in possession of the instrument.

d)    Under the circumstances which do not afford a reasonable ground for believing that he is not entitled to receive the payment of the amount mentioned therein.

When bank should not pay:-

a)    The death of the drawer in case of individual’s account terminates the contractual relationship.

b)    Insane customers: in case of insanity.

c)    Insolvent drawers: The bank should stop the operation of such account as if drawer adjudged insolvent and balance in the account vested with official receiver/assignee.

d)    Countermanded by drawer: on receipt of valid stop payment instruction by the drawer.

e)    Others: when a cheque is post dated, with insufficient balance in the account, cheque is of doubtful legality, or cheque is irregular, ambiguous, materially altered or stale etc.

Dishonour of cheques (Sec. 138-147):-

The payee or holder in due course should give notice to drawer within 30 days of return of cheque with the reason “Insufficient balance” and demanding payment within 15 days of his receiving information of dishonour. Drawee can make payment within 15 days of the receipt of notice and only if he fails to do so prosecution could take place.  The complaint is to be made with in one month of the cause of action arising that is expiry of the notice period.

Punishments:

a)    Summary proceedings: fine up to Rs. 5000/- and imprisonment up to one year or both.

b)    Regular proceedings: fine up to the double the amount of cheque or imprisonment up to 2 years or both.

Green Banking

Green Banking
Green Banking is when a normal bank takes into consideration all the social and environmental factors
while carrying on its basic operation of lending and raising deposits. It is also called ethical banking.
Green banks are regulated by the same authorities as traditional banks and have to abide by
the same rules.
All banks play an intermediary role in the economy; because of this the possibility for banks
contributing to sustainable development is high.
Banks can adopt a ‘carrot-and-stick’ approach, where environmental and social front-runners
would pay less interest than the market price for borrowing capital, while environmental
laggards would pay a much higher interest rate.
Some areas in which green banking is being adopted by banks are:
i. Online Banking facility and mobile banking– helps in saving paper, energy and
expenditure of natural resources.
ii. Green checking accounts like ATMs, Self-Service Kiosks, special touch screens.
iii. Supporting environmental friendly residential projects by offering various concessions
both for the project and individuals who avail home loans.
iv. Using solar and wind energy by installing wind mills for captive use.
v. Installing solar powered ATMs.
vi. Going in for rain water harvesting in their premises.

Whatvis priority lending certificate

What is priority lending certificate?
The priority sector lending certificates are certificates issued by banks that have over reached their priority sector
lending targets. PSLCs thus can be issued only up to the extent of their over lending to the stipulated sectors. Buyers of
PSLCs are usually those banks who could not meet their priority sector lending targets. The price of PSLCs will be
determined on the basis of demand and supply that will be reflected in the auction under the RBI‟s e-Kuber training
platform.
As per RBI guidelines, Banks can issue four types of PSLCS including three subsector PSLCs – agriculture, small and
marginal farmers, micor enterprises and one PSLC for general.

RBI plans to set up a ‘college of supervision’ (BL 27.12.19)

RBI plans to set up a ‘college of supervision’ (BL 27.12.19)



To ensure that irregularities in the financial sector, which are increasingly becoming complex and interconnected, do not escape the attention of its inspectors, the Reserve Bank of India is planning to set up a ‘college of supervision’. “Skill imparting is not a one-time affair. They (inspectors) have to be re-skilled from time-to-time because things are evolving, things are changing, becoming more complex. So, more emphasis can be given on improvement of skills. “...And, therefore, for better training, we are creating a college of supervision. We are also creating within the Department of Supervision and Regulation, an internal research and analysis group,” said RBI Governor Shaktikanta Das, during an interaction. The proposed college will improve the skillset of inspectors so that when they assess risk in regulated entities such as banks, non-banking finance companies, urban co-operative banks and payment system providers, they are mindful of the lurking dangers. This move comes in the backdrop of the letter of undertaking scam at Punjab National Bank, the IL&FS group and DHFL defaulting on debt servicing, and Punjab and Maharashtra Co-operative Bank being brought to its knees due to a large irregular exposure to a real estate company. Post these developments, the RBI created a unified Department of Supervision and a unified Department of Regulation. Earlier, there were three separate supervision departments (one each for banking, non-banking and co-operative banks) and three separate regulation departments (one each for banking, banking and co-operative banks).

Msme recollected questions on 28.12.2019

Msme recollected questions on 28.12.2019

Investment in P&M, Equipment, Partnership, public and private limited company, Joint Hindu Family, Partnership, women entrepreneurs categories, ITCOT, US small business act, KVIC, SIDC, BCSBI loan application disposal time norm, venture capital fund, smera, cgtmse, angel funds, hybrid capital, collateral free loan, pmegp, red and green clause LC, back to back LC, 5 Cs, credit appraisal, ratios analysis and balance sheet related questions, nayak and other methods of lending,  risk types, PS targets, BDS, Tequp, RRTUFs, back ended subsidy, clusters, rehabilitation n restructuring, drt, arc, mudra, wto, clearancs for setting up unit,  items included in P&M etc... reading of entire book and updated changes is must.

Certified Risk management recollected questions on 28.12.2019

Certified Risk  management  recollected questions on 28.12.2019


1. Calculate geometric mean, harmonic mean.
2. Question on probability related to card.
3. Calculation of duration, mod duration and convexity.
4. Problems on forex. Spot rate given , buy and sell problem
5. Theoretical questions were also many
6. Gap calculation regard to net interest income.
7. Risk weight assets given. Calculation of cet 1, tier 2 and at 1. Tier 1 along with ccb.
8. Calculation of vertical disallowance, horizontal disallowance and capital charge of market risk.

CTP recollected questions on 28.12.2019

Certified treasury professional exam  28.12.19
1)question on price yield curve like nature of curve,meaning of intersection of curve with price axis, etc 5 question
2)option question... Like in the money, at the money, out of money, time Valueof option, intrinsic, call put questions on option based on strike and spot price
3)forward rate agreement.. Numerical 5 marks as per mac mill an book with some changes
4)repo question numerical like forward leg ready leg numerical as per mc millian book
5)bond question npv of coupons and principal related questions 5 marks
6)commercial paper theory questions 5 marks like who can issue, whether cp gives coupon, net worth for issuing cp etc.. Read Mac millian book ,all questions answerable
7)question on forex tt rate bill rate based on nature of transactions which rate to be selected.. 5 questions
8)numecrical on yield calculations and prices calculations for t bills.. Numerical similar to what has been given in appendix at back of Macmillan book 5 question
9)theoretical question were also conceptual.. Question related to bond option derivative swap
Overall questions were medium level of toughness for those who have not worked in this area
These questions I can recollect
Best of luck to those who wish to appear for CTP exam.

Numerical based on FRA, CURRENCY EXCHANGE, REPO TRANSCATION, BOND/YTM, YIELDS ON T-BILL, CURRENT YIELD
A 5 MARKS EASY SET OF QUESTION FROM COMMERCIAL PAPER

Other Theory questions from Bond theorem, Delta, gama etc.
35-40 marks numerical is there.

*PPF (Public Provident Fund) Scheme 2019 – 5 Important Changes*

*PPF (Public Provident Fund) Scheme 2019 – 5 Important Changes*

Recently Government notified the PPF rules by withdrawing the earlier notifications. This notification is called as PPF (Public Provident Fund) Scheme 2019 which removed the earlier notifications with respect to Public Provided Scheme 1968.Let us see the major changes that happened in this new PPF (Public Provident Fund) Scheme 2019.

*PPF (Public Provident Fund) Scheme 2019 – 5 Important Changes*



*# Premature Closure is allowed for NRIs*
When in the year 2016, PPF premature rules were announced, the Government introduced certain eligibility to opt for premature closure of the account and they are as below. (Refer my old post “Premature closure of PPF account – New Rules 2016“)
Premature closure of the account is allowed in the event of the death of the account holder (This is the old rule and will continue).
Premature closure of account is allowed in the event of serious ailments of holder, spouse, parents or children.
Premature closure of the account is allowed in the event of the amount required for the higher education account holder or minor account holder.
However, with the new PPF (Public Provident Fund) Scheme 2019 rules, if the account holder turned NRI, then they are allowed to opt for premature closure. Refer the notification wordings “on change in residency status of the account holder on production of copy of Passport and visa or Income-tax return”. This facility of premature closure of account for NRIs will be available only after the completion of 5 years of period.
*# Interest Rate on the PPF Loan is reduced*
If you took a loan against your PPF Account, the PPF Scheme 1968 laid down an interest rate of 2% per annum above the prevailing PPF interest rate. For example, suppose the prevailing interest rate is 7.9%, then you used to pay the interest of 9.9% on your loan on PPF.This interest rate on PPF loan is reduced to 1% from the older 2%. Hence, if the prevailing interest rate is 7.9%, then the applicable interest rate on PPF loan is 8.9%. I think this is a big booster for many who can easily avail this rather than going for other forms of loans like a personal loan.In both cases, the interest is levied from the first day of the month in which the loan is taken to the last day of the month in which the last installment of the loan is paid.
*# No upper limit on the number of deposits in a Financial Year*
Earlier, the maximum number of deposits you are allowed to deposit in PPF is restricted to 12. The meaning of the year is FINANCIAL YEAR. In other words, you can make deposits to the PPF account as many times as you want, subject to the maximum limit.This gives a big booster and flexibility for many investors. Because if one has to fill Rs.1,50,000 a year, then his every contribution should be Rs.12,500 as he has to fill the maximum limit within 12 installments. With this change, PPF turned more flexible.
*# Deposit in the multiple of Rs.50*
Earlier the minimum deposit in a year was Rs.500 and thereafter in the multiple of Rs.5. This now increased to Rs.50. This change is required as there is no value for Rs.5. Hence, I think it is a good move.
*# Change in the Forms*
To streamline the process, the PPF(Public Provident Fund) Scheme 2019 rules changed the complete form structures and the new forms are as below.
Account Opening Form-Form 1 (Earlier it was Form A)
Contribution Form-Earlier it was Form B. However, nothing is specified under the new scheme.
Partial withdrawals- Form 2 (Earlier it was Form C)
Account closure after maturity: Form 3 (Earlier it was Form C)
PPF Loan- Form 2 (Earlier it was Form D)
Extension Form- Form 4 (Earlier it was Form H)
Premature Closure: Form 5 (This was not specified earlier)
Nomination-Form 1 (Earlier it was Form E)

Terminologies in forex

TERMINOLOGIES IN FOREIGN EXCHANGE MARKET

Cash date or
Trade date

The date of the transaction, say
“today”
If today is 04-02-2019, then Cash
date is 04-02-2019

Tom date Tom is short for “tomorrow” and is
the next working day from the Cash
date
If today is 04-02-2019, then Tom
date is 05-02-2019

Spot date Second working day from the Cash
date, or day after tomorrow
If today is 04-02-2019, then spot
date 06-02-2019
Spot Rate The rate quoted and transacted
today for settlement (debit/ credit) on
the Spot date
All the forex transactions get
settled on spot by default unless
specified as cash or tom.
Cash Rate The rate applicable for settlement
(debit/ credit) today itself, on the
Cash date
This is usually lower than the Spot
Rate. The difference between the
two rates is known as the Cash-
Spot rate or Cash-Spot difference.
Tom Rate The rate quoted and transacted
today for settlement (debit/ credit)
tomorrow, on the Tom date
This is lower than the Spot Rate,
but higher than the Cash Rate

OTC
(Over
the counter)
A decentralized market, without a
central physical location, where
market participants trade with one
another through various
communication modes such as the
telephone, email and proprietary
electronic trading systems.
OTC markets are primarily used to
trade bonds, currencies,
derivatives and structured
products.

Bid rate Buying rate USD/INR = 71.67/69, 71.67
buying rate

Ask rate
/Offer rate
Selling rate USD/INR = 71.67/69, 71.69 is
selling rate
Spread The difference between the bid rate
and the ask rate
USD/INR = 65.01/03,
Spread is 0.02 paise


1. Nostro account It refers to an account that a bank holds in a foreign currency with
another bank. This account is used to facilitate foreign exchange
and trade transactions. E.g SBI, FD, maintaining an account with
SBI, New York or Citi Bank New York.
2. Vostro account It is an account a correspondent bank holds on behalf of another
bank. These accounts are an essential aspect of correspondent
banking in which bank holding the funds acts a custodian for or
manages the account of a foreign counterpart
3. Derivatives It is a financial instrument whose value is derived from the value of
another asset, which is known as the underlying.
When the price of the underlying changes, the value of the
derivative also changes.
This underlying can be an asset, index or interest rate
4. Uses of derivatives It can be used for a number of purposes, including insuring against
price movements, increasing exposure to price movements for
speculation or getting access to otherwise hard to trade assets or
markets.
Examples of derivatives: Forwards, Futures, Options, Swaps
5. Forward contract It is a customized contract between two parties to buy or sell an
asset at a specified price on a future date.
Forward contract can be customized to any amount and any
delivery date or delivery period, which is provided at the initiation of
a forward contract. (Such option period of delivery shall not extend
beyond one month).
In such an arrangement, the risk of loss which might accrue
because adverse movement in the rate of exchange is sought to be
removed. It helps the exporter to crystallize the amount realizable in
terms of his own currency. Similarly, the importer is also able to
determine the cost of imports in terms of his own currency.
Similarly, it renders debtors and creditors free from the risk arising
through fluctuations in the exchange rate
6. Futures It is a standardized forward contract, a legal agreement to buy or
sell something at a predetermined price at a specified time in the
future, between parties not known to each other
7. Options It is an agreement between a buyer and seller that gives the
purchaser of the option the right to buy or sell a particular asset at a
pre-determined price on a specified date or period.
The advantage of buying an option is the opportunity of the
unlimited profit. And the opportunity loss is limited to the premium
paid.

Strike price The strike price is the price at
which a buyer of a call option can
buy the security (Foreign
currency) while for put options it is
the price at which the security
(Foreign currency) can be sold
(Put option). The strike price is
fixed in the contract and does not
fluctuate with any change in the
underlying security.
Strike price is also known as exercise
price. Option holder is the buyer of call
option/put option. Option holder has the
right but not the obligation.
Option style
An option contract can be either
American style or European style
American style options can be
exercised any time before
expiration while European style
options can only be exercise on
expiration date itself
American style option
Delivery period e.g.
1 Mar till 31 Mar, 18 Feb to 17 Mar, etc.
European Style (Fixed date)
1 Jan, 15 Feb, 23 Mar etc
Underlying
asset
The underlying asset is
the financial instrument (such as
stock, futures, a commodity, a
currency or an index) on which
a derivative's price is based
Premium In exchange for the rights
conferred by the option, the option
buyer must pay the option seller
(usually a bank) a premium for
carrying on the risk that comes
with the obligation. The option
premium depends on the strike
price, volatility, as well as the time
remaining to expiration. (In simple
terms, amount paid for buying the
option)
This can be related to an insurance
premium where the buyer of the option
must pay for having the right but not the
obligation.
Buy Call Buying a call option gives the right
to the buyer and not the obligation
to buy the currency at the strike
price.
Call option Strike Price
USDINR=72.00
Market Scenario (Spot price) on due date
USD/INR=71
USD/INR=72
USD/INR=73
@71, buyer will not exercise the call
option and will go to the forex market to
buy dollars at spot price at $ 71 which is
less than strike price of $72. (option is not

exercised)
@73, buyer will exercise the option to buy
the dollars from bank at 72(strike priceoption
exercised)
@ 72, no impact (the holder may not
exercise option, the maximum loss is the
premium paid for buying the call option)
Buy Put Buying a put option gives the right
to the buyer and not the obligation
to sell the currency at the strike
price.
Put option Strike Price
USDINR=72.00
Market Scenario (Spot price) on due date
USDINR=71
USDINR=72
USDINR=73
@71, buyer will exercise the put option
and will sell dollars at strike price(Right)
@73, buyer will not exercise the option,
and will sell the dollars in the market at
spot price (no obligation)
@ 72, no impact
ATM(At the
money)
At the money is a situation where
an option's strike price is identical
to spot price. Both call and put
options are simultaneously at the
money
(Call option (Spot-Strike Price =0)
Put option (Spot-Strike price=0)
Strike Price
USDINR=72.00
Market Scenario (Spot price) on due date
USDINR=72
Call option
72-72=0
Put option
72-72=0
ITM(In the
money)
ITM is term used to describe a call
option with a strike price that is
lower than the market price of the
underlying asset, or a put
option with a strike price that is
higher than the market price of
the underlying asset.
Call option, Spot-Strike price>0
Put option, Spot – strike price<0 p="">Strike Price
USDINR=72.00
Market Scenario (Spot price) on due date
USDINR=73
Call option (in the money)
73-72=>0
Put option
71-72<0 in="" money="" p="" the="">OTM(out of
the money)
Out of the money (OTM) is term
used to describe a call option with
a strike price that is lower than
the market price of the underlying
asset, or a put option with a strike
Strike Price
USDINR=72.00
Market Scenario (Spot price) on due date
USDINR=71
USDINR=72


price that is higher than the market
price of the underlying asset where
the option goes unexercised.
Call option, Spot-Strike price<0 p="">Put option, Spot – strike price>0
USDINR=73
Call option-OTM when market price is
USD/INR=72 as 71<72 p="">Put option- OTM when market rate
USD/INR =73 as 73>72
73-72>0
S.No Terminology Explanation
8. Swaps It is a derivative contract through which two parties exchange
financial instruments. These instruments can be almost anything,
but most swaps involve cash flows based on a notional principal
amount that both parties agree to. Usually, the principal does not
change hands. Each cash flow comprises of one leg of the swap.
One cash flow is generally fixed, while the other is variable, that
is, based on a benchmark interest rate, floating currency
exchange rate, or index price.
9. Interest rate swap It is a contractual agreement between two parties to exchange
interest payments.
10. Foreign Currency
Swap
It Is an agreement to exchange currency between two foreign
parties. The agreement consists of swapping principal and
interest payments on a loan made in one currency for principal
and interest payments of a loan of equal value in another
currency.
11. Credit Exposure
Limit
It is the sum total of Current Credit Exposure (CCE) and Potential
Future Exposure (PFE).
A common credit exposure limits (CEL) to be sanctioned for
booking forward contracts or derivatives. It needs to be assessed
and sanctioned along with regular credit limits as part of regular
appraisal. As per RBI guidelines, the exposure under derivatives
and forwards is categorized under off-balance sheet exposures
for capital adequacy norms and will form part of total
indebtedness of the customer. CEL should be grouped under
Non find based limits as other off balance sheet exposure such
as LC and BG. A separate limit needs to be calculated for imports
and exports. A single limit to be sanctioned for both Contracted
(documentary evidence) and probable exposures (past
performances)
Current Credit Exposures (CCE): Sum of negative MTMs (Mark
to Market) of the customer of the outstanding contracts
Potential Future Exposure (PFE): Notional principal times CCF
(Credit Conversion Factor) based on nature of instrument and
residual maturity
Mark to Market: It is an accounting method that records the value
of an asset per its current market price.
12. Foreign currency
loan and its types
To provide access to the international markets to the Indian
exporters, for making the exports competitive, Reserve Bank of


India has introduced this loan facility of financing the Working
Capital and Term Loan requirements by way of Foreign Currency
Loans through deployment of FCNRB funds of the commercial
Banks. FCNRB(DL) / FCNRB(TL) can be availed in USD, GBP,
EURO and YEN, subject to availability of funds
FCNRB(DL) – For working capital purposes
FCNRB(TL) – For capital expenditure
13. Buyer’s credit It is a short-term credit available to an importer from overseas
lenders for financing their imports.
The overseas banks usually lend the importer based on the letter
of comfort issued by the importer’s Bank.
14. Supplier’s credit It relates to credit for imports into India extended by the overseas
suppliers.
15. External
commercial
borrowing
It is basically a loan availed by an Indian entity from a
nonresident lender in foreign currency.
Benefits: The cost of funds is usually cheaper from external
sources if borrowed from economies with a lower rate of interest.
Routes available for raising ECB: Automatic and Approval
Methods of availing ECB
Track I Medium term foreign currency denominated
ECB with min. average maturity of 3/5
years
Track II Long term foreign currency denominated
ECB with min. average maturity of 10 years
Track III INR denominated ECB with min. average
maturity of 3/5 years
ECB - End uses falling under Negative List
• Investment in Real Estate
• Purchase of Land
• Investment in capital market
16. Foreign Currency
convertible bond-
FCCB
It is a type of convertible bond issued in a currency other than the
issuer’s domestic currency. In other words, the money being
raised by the issuing company is in the form of a foreign
currency. A convertible bond is a mix between debt and equity
instrument. The bonds also give the option to bondholder to
convert the bond into stock.
Advantages of FCCB
• FCCB issuance allows companies to raise money outside
the home country thereby enabling tapping of new markets
for investment options
• FCCBs Aare generally issued by companies in the

currency of those countries where interest rates are
usually lower than the home country.
• FCCB holder may choose to convert the bonds into equity
to benefit out of the equity price appreciation that may
have taken place.
• FCCB holder enjoy the safety of guaranteed payments on
the bond and may opt to continue with the bond if equity
conversion is not beneficial.
17. “All in cost” in
Trade credits
It includes arranger fee, upfront fee, management fee,
handling/processing charges, out of pocket and legal expenses if
any. In trade credit the ceiling is 6 M LIBOR plus 350 basis points
as advised by RBI
18. American
Depository Receipt
(ADR)
It is a security issued by a bank or a depository in United States
of America against underlying rupee shares of a company
incorporated in India.
19. Global Depository
Receipt
It is a security issued by a bank or a depository outside India
against underlying rupee shares of a company incorporated in
India.
20. Foreign Direct
Investment (FDI)
It is the investment through capital instruments by a person
resident outside India (a) in an unlisted Indian company; or (b) in
10 percent or more of the post issue paid-up equity capital on a
fully diluted basis of a listed Indian company.
21. Foreign Portfolio
Investment (FPI)
It is any investment made by a person resident outside India in
capital instruments where such investment is (a) less than 10
percent of the post issue paid-up equity capital on a fully diluted
basis of a listed Indian company or (b) less than 10 percent of the
paid-up value of each series of capital instruments of a listed
Indian company.
22. Joint Venture (JV)/
Wholly Owned
Subsidiary (WOS)
It means a foreign entity formed, registered or incorporated in
accordance with the laws and regulations of the host country in
which the Indian party makes a direct investment.
A foreign entity is termed as JV of the Indian Party when there
are other foreign promoters holding the stake along with the
Indian Party. In case of WOS entire capital is held by the one or
more Indian Company.
23. Escrow account It is a third-party account. It is a separate bank account to hold
money which belongs to others and where the money parked will
be released only under fulfillment of certain conditions of a
contract. It is a temporary pass through account as it operates
until the completion of a transaction process, which is
implemented after all the conditions between buyer and the seller
are settled. An escrow account is an arrangement for
safeguarding the seller against its buyer from the payment risk for
the goods or services sold by the seller to buyer. This is done by
removing the control over cash flows from the hands of the buyer

to an independent agent. The independent agent, i.e. the holder
of the escrow account would ensure that the appropriation of
cash flows is as per the agreed terms and condition between the
transaction parties. In India, it is widely used in Public partnership
projects in infrastructure. RBI has also permitted banks to open
escrow accounts on behalf of Nonresident corporate for
acquisition/ transfer of shares/convertible shares of an Indian
company
24. Factoring It is a financial transaction in which an exporter sells its accounts
receivable (i.e. invoices) to a third party (called a factor) at a
discount. Factoring involves the selling of all the accounts
receivable to an outside agency (Factor). A business will
sometimes factor its receivable assets to meet its present
immediate cash needs. It is a short-term financing of receivables
up to 90 days.
Benefits of Factoring
• A non-recourse factor will assume the risk of bad debt.
• Factoring is not a loan and therefore no debt obligation on
the exporter
• Improved cash flow enhances the productivity.
25. Forfeiting It is a method of export financing in which the forfeiter purchase
an exporter’s receivables at a discount price and takes all the risk
of non-payment of the importer. Forfeiting is a buying a long term
long term receivables.
Benefits to Exporter
• 100% Financing without recourse and bank credit limits
are freed to that extent.
• Receivables becomes current cash and improves financial
status of the exporter.
• The exporter can save his cost of administration and
management of the receivables.
26. Bond It is a debt instrument in which an investor loans money to any
entity(typically corporate or government) which borrows the funds
for a defined period at a variable or fixed interest rate. Owners of
bonds are debt holders or creditors of the issuer.
27. Government
Security
(G-Sec)
It is a tradeable instrument issued by the Central Government or
the State Governments. It acknowledges the Government’s debt
obligation. Such securities are short term (usually called treasury
bills with original maturities of less than one year) or long term
(usually called Government bonds or dated securities with
original maturities maturity of one year or more). In India, the
Central Government issues both, treasury bills and bonds or
dated securities while the State Government issue only bonds or
dated securities, which are called the State Development Loans
(SDLs). G-Secs carry practically no risk of default and hence are
called risk free gilt edged instruments.


28. Treasury Bills (TBills)
They are money market instruments, are short term debt
instruments issued by the Government of India and are presently
issued in three tenors, namely 91 day, 182 day and 364 day.
Treasury bills are zero coupon securities and pay no interest.
They are issued at a discount and redeemed at the face value at
maturity.
29. Packing credit It is a loan/advance granted to an exporter for financing the
purchase, processing, manufacturing and/or packing of goods
prior to shipment.
30. Packing credit in
foreign currency
(PCFC)
Preshipment/Packing Credit granted in a foreign currency is
called PCFC. The aim is to provide the access of credit to
exporters at internationally competitive rates.
31. Bills Discounting It is a facility where bank pays the amount of the bill to the drawer
in advance. These instruments are in the nature of usance or
time bills or in other words there are also bills drawn with a credit
period (usance) which are payable after the credit period. They
become due on a specified date say 60 or 90 days from the date
of drawing, after which sales proceeds are realised from the
drawee. The interest for the usance period is deducted up-front
while creating a loan.
32. Bill Purchase It refers to demand bills which are paid immediately by the bank
in advance before realisation of proceeds. This is typically the
case with sight bills, where fixed maturity is not known. The loan
will be created for the full value of the draft and the interest will be
recovered when the actual payment comes. If a bank lends
against such bills receivable, it is called as bill purchase.
33. Bill Negotiation Negotiation of bill happens if shipment is under LC terms, the
bank verifies and satisfies all necessary terms and conditions
under letter of credit and negotiate thee export bills. The invoice
amount under the said shipment is credited to exporters account.
After realization of the export proceeds from the overseas buyer,
the bank deducts the necessary bank interest from the
negotiation date till realization.

MSME recollected questions April 2019

MSME FOR BANKERS (EXAM DATED 27.04.2019)

1. MSME represent ------- policies of Government of India which emphasized to use foreign exchange for imports etc (Ans: Socio Economic)

2. Objectives of MSME identification which among is not an objective (Page 4 of Text Book)

3. Limitations of MSME. Identify which among is correct (Page 4 of Text Book)

4. The MSME is made important subject in development in (Ans: Worldwide including countries like USA, Japan)

5. The classification of industries is based on different factors. Which among the following is wrong (Ans: Loan Amount)

6. Explanation of export oriented Unit (Ans: Industry that undertakes to export 30% of annual production at the end of third year)

7. Which among the following is not falls in Small Business (Ans: Wholesale Trade)

8. For the transport operator is categorized as MSE, if total vehicle owned does not exceed (Ans: 10)

9. The de reservation of items as per Sec 29 B of Industries act 1951. Find out wrong features (Page 10 of Text Book)

10. Micro Enterprises Manufacturing & service investment criteria (Ans. 25 Lacs & 10 lacs)

11. Which among the following is the example of indirect finance (Ans: MFI lending to co-operatives of producers)

12. Which among the following is not a feature of Sole Proprietary firm (Ans: Income is distinguished for taxation)

13. Mr. Ram a minor turned major on 01.02.2016, who was admitted to a partnership firm during his minority. What is the maximum time before which he can repudiate his liability (Ans: 6 months from date )

14. Which among the following is not a feature of partnership firm (Ans: A partnership firm can be a partner in another firm)

15. Which among the following is a feature of partnership firm (Ans: A partnership firm not require compulsory registration of deed)

16. The usage of common seal is explained in which document. (Ans: Articles of Association)

17. Maximum number of share holders in Private Limited Company is (Ans: 200)

18. Which among the following is not a feature of Public Limited Company (Ans: The shares are freely not transferrable)

19. For getting environmental clearance for the setting up of an enterprises one must (Ans: Obtain clearance from the pollution board)

20. If the ownership of any enterprise is individually or jointly hold by women above 51%, the same is termed as (Ans: Woman Enterprises)

21. The gender discrimination in Market is by (Ans: Differential wage for the same work)

22. Which among the following is not a classification of categories of Women Entrepreneurs (Ans: Literate and illiterate women)

23. Exclusive scheme to provide equity support to women entrepreneurs (Ans: Mahila Udhyam Nidhi)

24. Which among the following is not a supportive measures for Women’s economic activities (Ans: Refer Page ; 24 in text book)

25. MSME DO is earlier known as (Ans; Small industries Development Organization)

26. The development of MSME is a (Ans: State Subject )

27. An industrial undertaking, a company with interests in industry can invest up to _____ in a MSE unit (Ans; 24%)

28. Similarity features identification between LLP & a Private Limited Company (Ans: Refer Page ; 45 in text book)

29. TReDS full form (Ans: Trade Receivables Discounting system )

30. Which among the features pertains to Priority Sector Lending Certificates

31. CERSAI is formed as per the (Ans: SARFAESIA act of 2002)

32. Calculation for maximum CGTMSE coverage available for unit with Rs 30.00 Lacs fund based & 15 Lacs non fund based limit.

33. The current liability is 50000. The current ratio is 2.5. calculate Current asset

34. The CLSS scheme gives subsidy of ( 15% or 0.15)

35. Which among the given option is not a rating agency (Ans; NSIC)

36. Which among the following is give overall guidelines of SIDO (Ans; Directorate of industries)

37. Features of HUDCO. Select the one wrongly explained (Ans: Refer Page ; 61 in text book)

38. Activities of TCO. Which among is correct combination (Ans: Refer Page ; 62 in text book)

39. Which among the following is features of KVIC (Ans: Refer Page ; 63 in text book)

40. The credit limit up to 5 Lacs to be disposed in maximum of (Ans; 2 Weeks)

41. Which among the following is wrongly stated regarding the functions of SIDBI (Ans: Refer Page ; 70 in text book)

42. Major problems faced by MSME in the given option (Ans: Refer Page ; 92 in text book)

43. Which among the following is not a feature for commercial banks or promoting the MSE advance portfolio (Ans: Low NPA)

44. Identify which are the following is bill financing

45. Which among the following is example of post shipment finance (Ans: Refer Page ; 109 in text book)

46. RED Clause LC Feature (Ans: Refer Page ; 111 in text book)

47. Specialized MSME branch (Ans: if advance is 60% MSE portfolio)

48. BCSBI guidelines for MSE regarding acknowledgement of application & issuance of rejection letter with reason

49. Which among the given option is not associated with 5 Cs of the borrower (Ans: CIBIL score )

50. Identify and add the total assets from the given balance sheet component

51. What is the implication and effect in increase of Sundry Debtors or creditors (Ans; Refer Page ; 124 in text book)

52. Maximum Limit of loan that can be sanctioned under Turnover method (Ans: Rs 500.00 Lacs)

53. Factors affecting/determine the working capital limit (Ans: Refer Page ; 138 in text book)

54. Calculation using II method of lending (Ans; Refer Page ; 143 in text book)

55. Overview of Risk features , by way of match the following (Ans: Refer Page ; 145 in text book)

56. Features and requirement of credit rating (Ans: Refer Page ; 148 in text book)

57. Economic benefits of MSME. Identify the features (Ans: Refer Page ; 165 in text book)

58. The common parlance and practices of BDS is (Ans: Operational)

59. Identify the support by BDS (Ans: Refer Page ; 170 in text book)

60. Nature of deficiencies and remedial measures in cluster development (Ans; Refer Page ; 198 in text book)

61. Growth phase of MSE cluster features

62. Role of CDE in the cluster (Ans; Refer Page ; 209 in text book)

63. Why agricultural land is not taken as collateral security for securing the loan

64. Delayed payment of the bill raised by the MSE entrepreneur is compensated by (Ans: 3 times of bank rate announced by RBI)

65. RBI definition of Sick unit

66. Identify which among the following is external cause of sickness (Ans: Power Shortage)

67. When long term source is used for short term uses, the same is amounts to (Ans; Diversion of funds)

68. Feature of an enterprises tending towards sickness (Ans: Refer Page ; 242 in text book)

69. Symptoms of incipient sickness in activity (Ans; Refer Page ; 243 in text book)

70. Explanation of SICK GREY AREA

71. Hand holding stage features (Ans: Refer Page ; 253 in text book)

72. The account of NPA with dues of Rs 2.00 lacs, who will finalize the viability (Ans: Branch manager)

73. Viability criteria (Ans: Refer Page ; 256 in text book)

74. Primary purpose of secured creditors with NPA asset is (Ans; To sell off for the purpose of loan)

75. The 13(2) notice to be given as per SARFAESIA for how many days (Ans: 60 days )

76. Asset Reconstruction companies are registered with (Ans: RBI)

77. The reason for the existence of MFI (Ans: Refer Page ; 273 in text book)

78. Multiple lending and over indebtedness of MFI (Ans: Refer Page ; 276 in text book)

79. Primary Objectives of Mudra Bank (Ans: Refer Page ; 279 in text book)

80. Primary security & Collateral security features

81. Customer DNA means

82. Insolvency & Bankruptcy difference between two

83. Features of Bank’s Board Bureau

84. Impact of WTO agreements in domestic industry (Ans: Refer Page ; 305 in text book)

85. Which sector among the given option is contributing to exports (Ans: Textile)

86. Calculation of Plant & machineries value from given options (Ans: Not to include Jigs, generator sets etc)

87. Which among the following is not a participant of importance/much role in an LC? (Ans: Beneficiaries’ Bank)

88. Explanation of LC, which among the given options is correct

89. Which among is pre shipment finance?

90. Which among the following is not correct for loan sanction in MSME segment (Ans: Compulsory to give collateral free loan till 100 lacs)

Risk management and credit rating

Risk Management and credit rating::

The risk that the banking business faces, can be:
· Credit risk
· Market risk (resulting from adverse movement of prices of govt. securities, interest rates, forex etc.)
· Operational risk (resulting from staff errors, failure of internal processes, external events etc.)
Credit Risk : It refers to the possibility of loss that the bank or financial institution may suffer as a consequence of inability of
the counterparty (i.e. the borrower, who is operating in an environment having many uncertainties resulting in threat to the
viability and sustainability of the activity) to meet its repayment or other commitment/s as per agreed conditions and commit
default.
Reserve Bank of India states that the credit risk or default risk involves inability or unwillingness of a customer or counterparty to
meet commitment in relation to lending, trading, hedging, settlement and other financial transactions.
In terms of the guidelines issued by RBI, the credit risk is generally made up of (I) transaction risk or default risk and (2) portfolio
risk. The portfolio risk in turn comprises intrinsic and concentration risk.
· The transaction risk is the risk arising from an individual transaction or a counterparty or b orrower's default in meeting the
commitment.
· The intrinsic risk is the risk which is inherent in respect of an activity due to the operating environment. This is also termed as
industry or activity risk.
· The concentration risk refers to the risk which arises as a result of undertaking exposure in only few industries or activities or
lines of business or borrowers and borrowing groups without ensuring the diversification of the portfolio.
Why does credit risk arise ?
The credit risk arises due to operation of a number of external and internal factors.
The external factors are the state of the economy of the concerned country or state or even global economy, wide swings in the
prices of various commodities, foreign exchange rates, interest rates, trade restrictions, economic sanctions, Govt. policies, natural
calamities etc.
The internal factors are the factors which may be internal to the borrower or internal to the financing institution.
· The factors internal to the borrowing entity may be planning factors, execution factors, finance factors, marketing factors,
management factors etc.
· The factors internal to the financing banks or institutions relate to the deficiencies in loan policies/administration,
absence of prudential credit concentration limits, inadequately defined lending limits for loan officers/credit committee,
deficiencies in appraisal of borrowers' financial position, excessive dependence on collaterals and inadequate risk pricing,
absence of loan review mechanism and post sanction surveillance etc.
Steps for credit risk mitigation:
The objective of mitigation is the restrict the risk within an acceptable limit and it involves steps to be taken at (a) macro level in
the bank and (b) micro level in the bank.
At Macro Level:
i. Frequent review of norms and fixing internal limits for aggregate commitments to specific sectors of industry and business.
2. periodical review of loan policies.
3. classification of portfolio based on certain parameters of quality
At Micro Level:
i. framing of policy regarding credit appraisal standards, sanction and delivery process, monitoring and review of individual
borrowers, obtaining collaterals.
2. obtaining credit rating and their updation.
Credit rating
The credit risk differs for each project and each promoter. The appraisal of proposal done with a view to measure the risk involved
and its quantification by using a credit rating method, with following objectives:
i. to take a decision whether to accept or reject a proposal without or without modification
2. to determine the rate of interest (risk pricing)
3. to help in. macro evaluation of the total credit portfolio by classifying the individual loan account in a specific category,
depending up on the rating.
Rating Models:
The rating can be done by using internal rating model available with the bank. Most of the banks have their rating models.
The rating can also be got done by using service of external rating agencies such as CRISIL, SMERA, CARE, ICRA etc.

Credit rating methodology:

Banks the credit rating model, based on which they are able to place their borrower in a particular rating category. The broader
categories of risk area that the rating models take into account are:
1. Management related aspects
2. Security related aspects
3. Financial aspects on the basis of financial statements
4. Business risk
These ratings are required to be reviewed periodically, in view of dynamic nature of the business of the borrower.
Derivative instruments for Credit Risk Management
The derivative instruments are used to hedge the inherent credit risk without transferring the loan account. Simple techniques for
transferring credit risk are available with the banks for very long time which include guarantors, collateral securities, credit
insurance from agencies like DICGC, CGTMSE. In recent some new instruments have also been introduced that include (a) Credit
default swaps and (b) credit linked notes.
Credit default swaps (CDS) : It is a contract between the financing bank (risk seller) and protection seller, whereby the protection
seller provides protection against credit events (i.e. default). For this purpose, the risk seller makes payment of premium to the
protection seller. The credit events include bankruptcy, failure to pay, restructuring etc.
Credit linked notes (CLN): In this arrangement, the protection seller (normally a special purpose vehicle — SPV) issues notes linked
to underlying credit. These notes can be purchased by general public as investors and the SPV purchases high rated securities with
that amount. On maturity, these securities are sold and money is returned to investors, if there is no credit default. In case of
credit default, the funds are used to make payment to risk seller.
The risk seller makes regular payment of premium.
New Capital Accord (Basel 2) : Implications on Credit Risk
The Basel Committee on Banking Supervision has proposed 3 approaches, viz.,
1. Standardised and
2. Foundation Internal Rating Based Approach
3. Advanced Internal Rating Based Approach
In India, presently the Standardized approach has been implemented.
Under the standardised approach, preferential risk weights in the range of o%, 20%, 50%, 100% and 150% are assigned by RBI for
certain risk weighted assets and some discretion has been given to bank where they can allot risk weight on the basis of external
credit assessments.
Internal Rating Based Approach
There are two approaches — foundation and advanced - as an alternative to standardised approach for assigning preferential risk
weights. Under the foundation approach, banks, which comply with certain minimum requirements viz. comprehensive credit
rating system. The adoption of these approaches requires substantial upgradation of the existing credit risk management systems.
The time schedule fixed by RBI for migrating to Internal Rating Based approach is as under: The earliest date of making application by
banks to RBI — April 01, 2012 Likely date of approval by RBI — March 31, 2014.
The banks have been advised by RBI to undertake an internal assessment of their preparedness for migration to advanced approaches,
in the light of the criteria envisaged in the Basel II document, as per the aforesaid time schedule, and take a decision, with the approval
of their Boards, whether they would like to migrate to any of the advanced approaches. The banks deciding to migrate to the advanced
approaches should approach us for necessary approvals, in due course, as per the stipulated time schedule. If the result of a bank's
internal assessment indicates that it is not in a position to apply for implementation of advanced approach by the above mentioned
dates, it may choose a later date suitable to it based upon its preparation.
It may be noted that banks, at their discretion, would have the option of adopting the advanced approaches for one or more of the
risk categories, as per their preparedness, while continuing with the simpler approaches for other risk categories, and it would not
be necessary to adopt the advanced approaches for all the risk categories simultaneously. However, banks should invariably obtain
prior approval of the RBI for adopting any of the advanced approaches

Kyc aml mcqs

AML-KYC
1. In the process of customer identification, the customer identification data should be updated __________ in 5 years in case of low risk category, and __________ in case of medium and high risk category customers.
1. Twice; 1 year
2. Once; 1 years
3. Twice; 2 years
4. Once; 2 years*
2. ____________ is the process of keeping the amount lower than that fixed for reporting and building similar transactions till the amount planned to be laundered is reached fully.
1. Entrailing
2. Lading
3. Slushing
4. Smurfing*
3.What information about the correspondent bank must be available
1. Major business activities
2. The bank's management
3. Level of AML/KYC compliance
4. All of the above*
4. Which of the following acts defines the offence of Money Laundering as under – “Engaging directly or indirectly in a transaction that involves property, that is proceeds of crime (or) derived from proceeds of crime (or) knowingly receiving, possessing, concealing, disguising, transpiring, converting, disposing off within the territories of India, removing form or bringing into the territory of India the property that is proceeds of crime”
1. Anti-Money Laundering Act, 2005
2. Active Money Laundering Act (AMLA), 2003
3. Prevention of Money Laundering Act (PMLA), 2002*
4. Impediment of Money Laundering Act (PMLA), 2002
5. Which of the following is a high risk activity?
1. A customer purchasing a car from a local garage
2. Printing a statement for a customer
3. A loan for home improvement
4. Money transfer to unknown third parties*
6. Please read the KYC practice given below. Identify the KYC element which best relates to the stated practice. Well-developed and applied customer assessments enable identification and classification of potentially high-risk customers. This is known as _____________.
1. customer acceptance*
2. customer identification
3. accounts and transaction monitoring
4. risk management
7. Which of the crime is not included under PMLA, 2002 for proceeds of crime
1. Drug trafficking
2. Kidnapping
3. Murder
4. None of the above*
8. Who file a report onward to the FIU-IND, if the Bank concludes that a transaction is suspicious
1. PO*
2. senior management
3. Internal Audit and Control team
4. None of the above
9. Laundering might attempt a series of small currency transaction over time because _____________.
1. a provision of the bank secrecy act requires the filing of CTR for a transaction exceeding Rs. 10 Lakhs*
2. Larger amount are too risky to carry around
3. that's the way in which launderers take in the funds
4. None of the above
10. The three stages of money laundering are ____________.
1. Layering, Placement, Refining
2. Placement, Refining, Integration
3. Refining. Integration, Layering
4. Integration, Layering, Placement*
11. What should awareness and training of staff on AML/KYC, should cover
1. need to know the true identity of the customer
2. need to know enough about the nature of business activities expected
3. to know what might constitute suspicious activity
4. All of the above*
12. Money laundering involves three independent steps that often occurs simultaneously. Which of the following best explains the layering in the process of money laundering?
1. Physically placing bulk cash proceeds
2. Separating the proceeds of criminal activity from their origin, through complex level of financial transactions*
3. Providing a legitimate explanation for the illicit proceeds
4. None of the above
13. What is not audited by Internal Audit and Control teams of the banks
1. adequacy of policies
2. adequacy of procedures
3. system support to detect suspicious and potential money laundering transaction
4. None of the above*
14. What should you consider when managing AML/CTF in your business?
1. Knowing your customer
2. Destination of funds
3. Methods of delivery such as cash, telephone and internet banking
4. All of the above*
15. When is induction training provided to employees
1. start of their employment*
2. end of their employment
3. Depends upon trainer availability
4. Depends upon training schedule
16. What services are offered by correspondent banks
1. International wire transfers
2. Cheque clearing
3. Cash/fund transfers
4. All of the above*
17. ____________ is a bank which is incorporated in a country where is no physical presence and is not affiliated to any regulated financial group.
1. Correspondent Bank
2. Shell Bank*
3. Respondent Bank
4. Compendium Bank
18. Which element of an effective transaction monitoring process, involves scrutiny of the transactions carried out by the customer over a longer period of time
1. Analysis of transactions*
2. Identification of Exceptional transactions
3. Enhanced Due Diligence
4. None of the above
19. Which of the following should be treated as a ‘customer’ for prudent KYC analysis?
1. any person or company which can conduct a transaction in relation to an account offered by a ban
2. any person who is a signatory to an account offered by a building society
3. any person or company which holds an account issued by a credit union
4. All of the above*
20. Customer verification is vital to any KYC procedure. What is acceptable in verifying an individual customer? Select the incorrect response from the alternatives below. In verifying an individual customer, you can rely on ____________.
1. a certified copy of a birth certificate in conjunction with the customer's drivers licence and Medicare card
2. sighting original identification such as birth certificate and drivers licence
3. a reference from a good friend*
4. None of the above
21. ________________ services are used to buy or sell foreign currencies, to consolidate small denomination bank notes into larger ones, or to exchange financial instruments. Criminals are attracted to this method of laundering as they are not as heavily regulated as traditional financial institutions.
1. Remittance
2. Bureaux De Change*
3. Back-to-Back Loans
4. Collection Accounts
22. ________________ are fake companies that appear on paper, but may not physically exist.
1. Shell Companies*
2. Front Companies
3. Offshore Banking
4. Hawala Systems
23. During customer acceptance and identification activities, on which of the following customers should enhanced due diligence be conducted?
1. trustees, nominees, and fiduciaries
2. non-face-to-face customers
3. correspondent accounts
4. All of the above*
24. Which one of the following is a Valid document available to the bank for customer identification?
1. Election ID card*
2. Ration Card
3. Bank statement of account
4. Photograph
25. Which of the following terms is used to describe the process of sending money through multiple financial institutions to make it difficult to track?
1. Integration
2. Camouflage
3. Placement
4. Layering*
26. What should be recorded regarding records of employee training on AML/KYC
1. date of training
2. nature of the training received
3. attendance
4. All of the above*
27. Money derived from criminal activity is known as _______________.
1. Proceeds Possession
2. Proceeds of Crime*
3. Dirty Money
4. Crime Laundering
28. Money laundering is the result of crime and the persons behind the crimes appear to be using banking channels for the purpose of _______________. (I) fund transmission (II) creating a legal front of money raised through illegal and humanity demeaning methods.
1. Only (I) above
2. Only (II) above
3. Both (I) and (II) above*
4. None of the above
29. What should employees be aware about the handling of transactions which may involve money laundering
1. potential effect on the bank
2. potential effect on bank's employees
3. potential effect on bank's customers
4. All of the above*
30. Which of the following are required documents to establish both the identity and the correct address while opening accounts of companies? (I) Certificate of incorporation and Memorandum of Articles of Association (II) Resolution of Board of Directors to open an account, and identification of those who have the authority to operate the account (III) Power of Attorney granted to a partner or an employee of the firm to transact business on its behalf (IV) Copy of PAN allotment letter (V) Copy of telephone bill
1. (I), (II), (III) and (IV) above
2. (I), (II), (IV) and (V) above
3. (II), (III), (IV) and (V) above
4. (I), (II), (III), (IV) and (V) above*
31. _______________ is the provision of banking services by one bank to another bank.
1. Respondent Banking
2. Crude Banking
3. Correspondent Banking*
4. None of the above
32. While monitoring of customer transaction it should be ensured that there is no _________ i.e., manipulation of the size of transaction so that if seen individually they fall below the threshold that needs to be reported to the monitoring authority.
1. Entrailing
2. Structuring*
3. Lading
4. Slushing
33. AML/KYC guidelines are issued under ____________.
1. BR Act,1949
2. PMLA,2002
3. RBI Act
4. Both A and B above*
34. _____________ is a matrix of different components (such as source of funds, level of income, volume and frequency of transaction etc) that helps arrive at a benchmark transaction for individual customer transactions, against which a comparison can be made.
1. KYC Profile
2. Customer Risk Profile
3. Transaction Profile*
4. Interim Profile
35. Please read the KYC practice given below. Identify the KYC element which best relates to the stated practice. High-risk customer activity is regularly reviewed and substantial high-risk customers are personally known to management. This is known as _____________.
1. customer acceptance
2. customer identification
3. accounts and transaction monitoring*
4. risk management
36. Money Laundering refers to ____________.
1. Conversion of cash in to gold
2. Conversation of assets into cash
3. Conversion of assets into cash
4. Conversion of money which is illegally obtained*
37. How does KYC checks be communicated to customers of bank
1. Incorporating the requirements in the account opening forms
2. Publishing relevant information on the websites of the bank
3. Providing a ready reckoner on frequently asked questions related to KYC
4. All of the above*
38. As a manager/Compliance officer, it is a part of your job to ____________.
1. Maintain your companies AML Program
2. Ensure that proper reports are filed and records are maintained
3. Ensure that all employees report suspicious activities
4. All of the above*
39. What factors and characteristics come into play for the process of customer profiling
1. buying patterns
2. creditworthiness
3. purchase history
4. All of the above*
40. CTR stands for ____________.
1. Custom Trafficking Report
2. Current Transaction Receipt
3. Currency Transaction Report*
4. Criminal Trading Raid
41. ______________ are engaged in selling goods and providing services, with large volume of business and often engaged in cash dealings.
1. Shell Companies
2. Front Companies*
3. Offshore Banking
4. Hawala Systems
42. Which of the following document/s can be accepted by banks as a proof of Customer Identification?
1. Electricity Bill
2. Salary Slip
3. Income/Wealth Tax Assessment Order
4. Election I card*
43. What should relevant employees be aware of
1. Policies and procedures put in place to prevent money laundering
2. Procedures put in place to prevent money laundering
3. KYC/AML guidelines issued by the RBI
4. All of the above*
44. What objective parameters can be used for enhanced due diligence
1. Customer location
2. Financial status
3. Nature of business
4. All of the above*
45. PAN (Permanent Account Number) is compulsory for Fixed Deposits, Remittances like DDs/TTS/RTCs etc _________.
1. if the amount exceeds Rs.10,000
2. if the amount exceeds Rs.25,000
3. if the amount exceeds Rs.50,000*
4. no such limit is fixed by the Income Tax Authorities
46. What are not the responsibility of the senior management
1. Appointment of PO
2. Managing the risk of money laundering
3. Internal Reporting Procedures
4. None of the above*
47. Which of the following is an example of smurfing?
1. Wiring money to a foreign country
2. A broker buying dollars with rupees
3. A drug dealer asking a stranger to buy money order with drug money*
4. All of the above
48. A lawyer who banks with you is a sole practitioner. He wants to open a trust account for a client. He provides you with the trust documents and the name and address of the trust beneficiary but is unable to provide additional details due to a client confidentiality obligation. You notice that the address is from an overseas jurisdiction. What level of due diligence would be required?
1. This situation does not require enhanced due diligence. You know the lawyer well and you have been provided with the trust documents and identity of the beneficiary.
2. This situation requires enhanced due diligence because an offshore jurisdiction is involved*
3. This situation requires enhanced due diligence because the lawyer is clearly hiding something when he says he is under a client confidentiality obligation
4. None of the above
49. Please read the KYC practice given below. Identify the KYC element which best relates to the stated practice. Effective information-gathering strategies enable building of a solid information base about each customer. This is known as ______________.
1. customer acceptance
2. customer identification*
3. accounts and transaction monitoring
4. risk management
50. What suspicion does frequent cash deposits in the account followed by ATM withdrawals at different locations with no valid explanation, can lead to
1. Doubtful source of cash deposited in bank account
2. Doubtful use of safe deposit locker
3. Suspicious use of ATM card*
4. None of the above
===============================

CCP recollected October 2109

Questions were mainly from conceptual undestandings Export Credit (LC), Tandon Committee, IRAC norms, Priority Sector Lending Certificates, Restructuring, Financial Ratios

CP
WC(1nd and 2nd method)
Break even case study
ICR
Ratios interpretation
WCG
Syndication
Consortium

Minors
Public ltd company
Charge creation

Mortgage

Very Very useful general banking bits

Very Very useful general banking MCQs

1. ______is a money market instrument, which enables collateralized short term borrowing through Govt. securities: Repo
Rate.
2. While issuing DD of Rs.50,000/- and above what should not be accepted: By cash
3. Call option stands for: Right to Buy but without obligation to buy.
4. ˜Call Money market refers to the market for short term funds ranging from _____: Overnight funds
5. ˜In Ultra Small Branches, a designated offi cer will visit the connected to Bank’s central server (CBS): Bank discretion.
6. ˜Maximum deposit in PPF in a FY: Rs.1,50,000
7. CRR decided by: RBI
8. ˜Public Debt Office (PDO) is an ______: Autonomous body and Investment Banker to Central Govt.
9.Clean Audit Report means : An audit report without any qualifications
10. ˜What is full form of USB: Ultra Small Branch.
11. cross selling: Offering banks products to existing customers
12. What is callable security: which can be called at any predetermined date.
13. Under Atal Pension Yojana (APY), the Central Govt will contribute 50% of total contribution or Rs 1000 whichever is lower, to
eligible subscribers account, for a period of: 5 years.
14.A bank cannot grant loan against security of which type of shares - other bank’s shares, own shares: own shares.
15.A cheque will be valid for: 3 months from date of issue
16.A DD is required to be crossed with account payee crossing if the amount of DD is: Rs 20000 and above
17.A Financial that derives its value from another financial product is called: Derivative.
18.A granted power of attorney to B for operating account of A. You receive information about death of A and simultaneously a
cheque signed by B on account of A is presented for payment. What should the Bank do?: Cheque will not be paid.
19.A minor will attain majority at the age of: 18 years
20.A private limited company must have minimum ___directors?: 2
21.After 6 months of successful transaction, which facility will be provided for accounts opened under PMJDY scheme?: Overdraft
22.Age limit in PrimeMinisters Jeeven Jyoti Bima Yojna: 18 —50
23.All scheduled commercial banks to convert their opening balance sheet as at April 1, 2013 in compliance with the IFRS.
24.An officer does not require permission of Branch Manager for: making payment of a pay order which was issued on account of
purchase of furniture by the bank.
25.Appeal against decision of Banking Ombudsman can be made to: Deputy Governor RBI.
26.Application for information under RTI Act 2005 should be disposed off within: 30 days
27. As per Atal Pension Yojana (APY), the minimum age of joining the scheme is 18 years and maximum age is and the age of
exit and start of pension would be 60 years: 40 years
28.As per Atal Pension Yojana (APY), the minimum period of contribution by the subscriber
29.As per KYC guidelines, Demand draft of how much amount cannot be issued against cash?: Rs 50,000 and above
30.As per latest change, what is the maximum PPF contribution that can be paid in a F.Y?: Rs 150,000
31.As per Official Language Policy, in Region "C", how much percentage of the Sign Boards should be in Hindi?: No specific target.
32.As per Pradhan Mantri Suraksha Bima Yojana (PMSBY) Scheme, all saving bank account holders are entitled to join the scheme in
the age between: 18 to 70 years.
33.As per RBI guidelines, Base rate is to be reviewed by bank on _______: Quarterly basis.
34.As per RBI Guidelines, the charges for closure of bank account before stipulated period should not exceed: not applicable as
banks are free to fix account closure charges
35.As per RTI Act, information is required to be given by public authority within how many days?: 30days
36.As per RTI Act, information related to life and liberty should be submitted within: 48 hrs.
37.As per section 107 and 108 of Indian Evidence Act, a person can be presumed to have died if he is missing for : 7 years
38.As per Supreme Court who cannot be a partner? HUF.
39.At present, who is the Governor of RBI?: Dr Raghuram Rajan
40.Atal Pension Yojana (APY) offers fixed amount of pension ranging between depending upon the contribution which will be based
on the age of joining the APY: Rs 1000 to Rs 5000
41.Balance lying in the account of a company. When winding up proceedings of the company started funds in the account will be at
disposal of: Official Liquidator
42.Bank Customer relation in safe custody: Bailee- Bailor.
43.Banker customer relationship in standing instruction: Agent and Principal
44.Banking Codes and Standards Board of India (BCSBI) is a – (a) subsidiary of RBI (b) Department of Ministry of Finance (c)
Department of Indian Banks Association: None of these as it is an independent and autonomous watch dog to monitor and ensure
that the Banking Codes and Standards adopted by the banks are adhered to.
45.Banks are required to maintain Minimum and maximum CRAR of: Min 9% in India. There is no maximum.
46.Banks should disclose the details of fees/remuneration received in respect of the Bancassurance business undertaken by them, in
the ‘Notes to Accounts’.
47.BCSBI is affiliated or regulated by? An independent body
48.Best indicator of country's growth?: GDP
49.Bharathi Airtel tie up with which bank regarding payment bank?: Kotak Mahindra Bank.
50.Break even point: Level of sales at which there is no profit no loss
51.Broad money is represented by: M3.
52.Business correspondent appointed by bank work as- (a) Bank dealers; (b) Agent of the Bank (c) Customer's agent; (d) RBI agents
(e) RRB Agents (f) Trustees of customer: Agents of the bank.
53.Business correspondent in bank are for banking business: Bank is the Principal and correspondent is the Agent.
54.Call money is available for: one day
55.Call option stands for: Right to Buy but without obligation to buy.
56.CAMEL rating is done by: RBI to judge the health of banks
57.Capital account convertibility means the freedom to convert to financial assets in to foreign financial assets and vice versa.
58.Capital adequacy ratio related to? : CRAR- capital fund.
59.Carbon credits relates to: environment
60.CARE STANDS FOR : CREDIT ANALYSIS & RESEARCH LTD
61.Certificate of incorporation issued by: Registrar of Companies
62.Chairman of SEBI: U K Sinha.
63.Clayton’s Rule is related to which of the following rights?: Right of Appropriation
64.Clean Audit Report means : An audit report without any qualifications
65.Contact less Debit Card has been issued by: ICICI Bank.
66.Contract of Insurance is a contract of: Indemnity.
67.Contract to perform the promise or discharge the liability of a third person in case of his default can be termed as - (a)Guarantee;
(b) Indemnity; (c) Contingency; (d) Subrogation: Guarantee.
68.Cost push inflation is due to: High cost of production
69.Counter Cyclic Buffer required as per Basel III will be made at: normal times
70.CP is issued for amount of: Rs.5.00 lac and multiples of Rs 5 lac.
71.CPPC STANDS FOR : CENTRAL PENSION PROCESSING CELL
72.Cross selling: Offering banks products to existing customers
73.CRR decided by: RBI
74.CRR is based on which act: Sec 42(1) of RBI Act
75.CRR is calculated on: net demand & time liability.
76.Current account operated by finance director of a limited compnay. Cheque signed by him presented for payment after his death:
Cheque should be paid
77.Customer day is observed by banks at what periodicity?: once in a month (15th day of every month)
78.DEATH CLAIM SETTLEMENT IN HOW MANY DAYS? : 15 DAYS
79.Delayed collection beyond abnormal period: SB Rate + 2%.
80.Distribution of Insurance products as Corporate Agents is called: Bancassurance
81.DRP: Disaster Recovery Plan
82.DSB Returns relate to: Off Site Surveillance
83.Duplicate DD to be issued in how many days?: 14 days from the date of request
84.Elasticity of Demand is least in the case of: Items of necessity.
85.Existing total No. of RRBs as on 31-03-2012: 82
86.Expand IFRS -International Financial Reporting System
87.Expand the abbreviations GAAS: Generally Accepted Auditing Standards
88.Facility for Exchange of Notes and Coins: The facility of exchange of cut/mutilated banknotes, in addition to soiled notes and issue
of good quality clean banknotes/coins, should be made available at all bank branches (including those of co-operative banks and
RRBs). This facility should be provided to all members of public without discrimination on all working days
89. FIR is required to be filed in case where the counterfeit notes found are acknowledgement is to be obtained from the concerned
police authorities: Five pieces and above.
90.First Unique Identification Card (Aadhar card) was issued in which state – Maharashtra; Sikkim; Manipur; Karnataka?:

Maharashtra ( To Ranjana Sonawne of Tembhli village in Maharashtra)
91.For counterfeit notes a consolidated report as per prescribed format to be submitted to police authorities if in a single Txn note
is: five pieces or more in one transaction and if four pieces then consolidated report through nodal office to local police station.
92.For creation of Equitable mortgage, the town for deposit of title deeds to be notified by – (a)State Govt; (b) RBI; (c) Central Govt;
(d) Bank: State Govt
93.For injection of liquidity Txn done by RBI: Repo Rate.
94.For seeking information under RTI what is not required?: Reason for seeking information not to be disclosed.
95.For Ultra Small Branches a designated officer will visit the village on a prefixed date and time every ______with laptop and will be
connected to Bank’s central server (CBS): Week
96.Forged currency note: not to be returned & should be impounded
97.Fraudulent Draft presented and paid, who is to lodge complaint: Paying banker
98.FSDC: Financial Stability and Development Council
99.Full form of FDI: Foreign Direct Investment
100. Full form of IRDAI is: Insurance Regulatory & Development Authority of India.
101. Full form of MUDRA: Micro Units Development and Refinance Agency Ltd (MUDRA)
102. Full form of NIM: Net Interest Margin
103. Full form of Nrega: National Rural Employment Guarantee
104. Full form of PRAN?: Permanent Retirement Account No
105. Funds received in Consolidated Fund of India are maintained with: RBI (Reserve Bank of India is the main banker of the
Government and other authorised Banks function as its agents while handling Government transactions).
106. General insurance works on which principle: Principle of utmost faith.
107. Gift City: Gandhi Nagar, Gujarat;
108. Govt securities are known as: Gilt edged securities
109. Govt. infused capital in 9 PSBs in the beginning of 2015 amounting to: Rs.6990 crore
110. Green revolution is related to production of : Wheat and Rice
111. Growth of people in a country is reflected in: real per capita income
112. Guidelines on having Investor Protection Funds by Stock exchanges issued by: SEBI.
113. Head Office of Asian Development Bank is located at: Manila (Philippines)
114. Head Office of International Labour Organisation is located at: Geneva
115. Head office of NABARD is located at: Mumbai (S!DBI Head Office at Lucknow)
116. How much exemption from income is allowed as per section 80 C of Income Tax Act for the financial year 2015-16?: Rs
150,000
117. Hyper inflation- when a country experiences very high and usually accelerating inflation. The general price level within a
specific economy increases rapidly as the functional or internal currency, loses its real value very quickly.
118. IBPP STANDS FOR : INTERNET BILL PRESENTATION & PAYMENT
119. ICAAP full form: Internal Capital Adequacy Assessment Process.
120. If a Garnishee Order is received by the bank in which amount to be attached is not mentioned, what should the bank do?:
Full amount to be attached
121. If there is delay in reporting to RBI by currency chest or there is double/excess reimbursement, what is the rate of
interest charged by RBI?: Bank rate+2%.
122. in 1969, the 14 Bank Nationalised. At that time the Prime Minister of India: Smt. Indira Gandhi
123. In a partnership formed under Indian Partnership Act 1932, what is the liability of a partner?: Partner is liable jointly and
severally i.e. as partner as well as in his personal capacity. Therefore, liability is unlimited
124. In which type of charge possession is with creditor and ownership is with debtor?: Pledge
125. Income Rs.1.00 lac- Tax Rs.0.10 lac, Income Rs.2.00 lacs: Tax Rs.0.30 lacs, Income Rs.0.50 lac-Tax Rs.0.03 lac-This is
example of Progressive Tax
126. Inflation in India is measured on the basis of : Wholesale Price Index
127. Insurance amt in PMJDY: Rs 1 lac.
128. Insurance sector in India is regulated by: IRDA
129. Internal audit is meant for : internal operational check ups
130. Investment Fluctuation Reserve is calculated on which type of security? Available for Sale category and Held for Trading
category.
131. Investment Fluctuation Reserve is maintained on securities classified as: "Held for Trading" and "Available for Sale '
132. Investment Fluctuation Reserve is part of which type of capital: Tier I Capital.
133. Islamic banking has the features of : Conservative banking
134. CMD of a public sector bank is appointed by: Central Govt.
135. Issue of Rs 5 coins to commemorate the occasion of "150th Birth Anniversary of Swami Vivekananda": The Government of

India has minted the above mentioned coins.
136. Issue of Rs 5 coins to commemorate the occasion of "60th year of India Government
137. Job rotation for clerical staff should be done in every ______: 6 months.
138. Kisan Vikas Patra scheme was discontinued in 2010 due to which reason?: Fraud
139. Kite flying means accommodation receipts and payments and not genuine trade transactions
140. KV Kamat has become first chairman/President of which bank?: New Development Bank (NDB) of BRICS
141. LAFAR is submitted by whom?: Statutory Auditor
142. Letter received in Hindi in Region B, answer to be given in %age: 100%
143. LFAR returns relate to: Statutory audit
144. Life Certificate of pensioners is taken in which month?: November
145. Loan should not be granted to a director of the bank against: shares of own bank ( Loan can be granted against bank’s own
deposits; insurance policy; govt security).
146. Main Objective of Infrastructure Development Corporation is : Development of infrastructure of the country.
147. Marginal standing facility rate: 7.75%
148. Maximum period for filing case with Ombudsman: 12 months from receiving reply from bank
149. May I help you counter on how much staff: 10 and above.
150. Meeting of the Official Language Committee is held: Quarterly
151. MGNREGA: Mahatma Gandhi National Rural Employment Guarantee Act
152. MIN SUBSCRIPTION IN PPF CANNOT BE LESS THAN: Rs.500/-
153. Minimum amount of CD – Rs.1. lakh
154. Minimum and Maximum amount that can be deposited in PPF account is _____: Minimum Rs. 500/- & Maximum Rs. 1.50
lacs.
155. Money market mutual funds are regulated by: RBI
156. Mutual fund Market regulated by: SEBI
157. Name of device used by Business Correspondents: Biometric device.
158. Net Interest Income is Equal to: Interest received on assets о /ŶƚĞƌĞƐƚ ƉĂLJŵĞŶƚƐ ŽŶ ůŝĂďŝůŝƟĞƐ
159. New name of Planning Commission: “National Institution for Transforming India” or “NITI”
160. NITI full form: National Institution for Transforming India (Chairman PrimeMinister; Dy Chairman Arvind Panagariya).
161. Nobel Price for Microcredit: Muhammad Yunus
162. Number of directors in a public limited company can be: between 3 to 15. For more than 15, special resolution passed by
shareholders is required
163. Payment of DD more than 20000 only by crediting to account and not in cash as per: RBI guidelines
164. PERIODICITY OF CUSTOMERMEET IN A BRANCH: MONTHLY.
165. Perpetual Non redeemable preference share is a part of: Tier -1 capital
166. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) Scheme offers a life insurance cover of: Rupees 2 lakh
167. Premium in Prime Minister Suraksha Bima Yojana: Rs.12 per year and claim available is Rs.2 lac in case of accidental death
only.
168. Primary Deficit is Fiscal deficit?: Always less
169. Purchaser of DD cannot do the following: Stop the DD
170. Rating of Bank is carried by RBI on CAMELS criteria, what do “C” stands for? Capital Adequacy.
171. RBI at which rate purchases or rediscounts B/E or other Commercial Bks: Bank Rate (7.75%)
172. RBI can issue bank note upto: Rs 10000
173. RBI gives credit to bank on which rate: Repo rate
174. RBI Governor's main concerns in monetary Policy: Inflation and Fiscal Deficit
175. RBI has issued star series notes for replacement of wrongly printed currency notes. Currently, these notes have been
issued in the denomination of : Rs 10, Rs 20, Rs 50, Rs 100.
176. Regulator of Capital market: SEBI
177. Reporting time before 15 minutes from starting of public dealings in: Metro/urban/Semi Urban & Rural area.
178. Revaluation Reserve discounting factor to be taken to which capital: 55% & Tier II Capital.
179. Review of RBI credit and monetary policy: Bi-Monthly
180. RTI: Person seeking information need not give reason as to why he is seeking the information.
181. Sabbatical can be availed maximum: 24 months and two times in your tenure.
182. Safe custody of Articles comes under which act: Indian Contract Act
183. Safe deposit locker – maximum deposit that can be asked is: 3 year advance rent plus locker breaking charges.
184. SAFTA is related to :TRADE
185. Security officer visit for high risk branches: Once in a quarter.
186. Sensex of 30 scrips is related to: Bombay Stock Exchange (BSE)
187. Shares transferred in electronic form: Dematerialization.
188. Spread in the context of bank profit loss account means: Interest earned - interest expended
189. Statutory Audit of banks is done as per provisions of: Banking Regulation Act
190. Subordinate Debt should not be more than % of tier-I capital? 50%
191. Subordinated debt instruments together with all other instruments of Tier - II capital are to be limited to ___ of Tier I: 100%.
192. Subordinated Debt which is a component of Tier II capital, is shown in the balance sheet as a part of: Other Liabilities and
Provisions on the liability side
193. Subprime crisis means : Problem created by lending to borrowers not meeting the credit rating criteria.
194. The Branch Level Customer Service Committee may meet to study complaints/ suggestions, cases of delay, difficulties
faced / reported by customers / members of the Committee and evolve ways and means of improving customer service: at least
once a month
195. The charge levied by banks for under utilization or non utilization of sanctioned CC/OD limits is called: Commitment charge.
196. The Committee on Listing of Stock Exchanges was headed by Dr Bimal Jalan. The Committee has recommended against
listing of Stock Exchanges.
197. The country of Euro Zone facing crises is: Greece and Cyprus (latest Cyprus)
198. The liability of Introducer in case of fraud by the customer: No legal liability
199. The main source of infrastructure finance are: FDI investment, Pension funds, Insurance funds.
200. The police seeks information regarding conduct of an account being maintained in your branch in connection with some
investigation. Can the bank pass on the information? : Yes, if the information is asked by an official of the rank of incharge of Police
Station or above and in writing.
201. The present Bank Rate is: 7.75%
202. The recent committee on urban coop banks was headed by: R. Gandhi
203. Tier I capital also known as: core capital.
204. Tier II capital can be maximum up to : 100% of Tier -1 capital.
205. Total number of Banking Ombudsman in India: 15
206. Transfer of interest in specific immovable property to create security for a debt is called: Mortgage
207. Treasury bill is issued for: 91 days,182 days,364 days
208. UCBs will start TDS at source if interest on term deposit in a financial year is more than Rs.10,000/- from which date: 1st
June 2015
209. Unclaimed deposits with banks which have not been claimed for last 10 years will be transferred to: Depositor Education
and Awareness Fund.
210. Under new pension scheme- minimum subscription in a year: Rs.6000 in a year ( min 500 at one time and for max there is
no upper limit)
211. Under Pardhan Mantri Suraksha Bima Yojana (PMSBY) Scheme, the uniform premium amount of Rs plus service tax
should be applicable per annum per person: Rs 12
212. Under PMJDY Scheme announced by PrimeMinister the debit card will be issued to every account holder. The type of debit
card will be: Rupay Card;
213. Under PMJDY, what is the time limit for lodging a claim in respect of the accident as covered under accident insurance
cover:Within 90 days of accident.
214. Under Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) Scheme, the uniform premium amount of is
applicable per annum per member: Rs 330
215. Under Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) scheme, the individual is eligible to join the scheme at the age
between: 18 years to 50 years
216. UNDR NPS MINIMUM SUBSCRIPTION IN A YR : Rs.6000
217. Uniformity in Intersol Charges: Banks should follow a uniform, fair and transparent pricing policy and not discriminate
between their customers at home branch and non-home branches. Accordingly, if a particular service is provided free at home
branch the same should be available free at non home branches also. There should be no discrimination as regards intersol charges
between similar transactions done by customers at home branch and those done at non-home branches. Cash handling charges may
not be included under intersol charges
218. Upon finding the counterfeit currency note on the counter, the action of the bank should be: Impound the currency note
but credit full amount to customer. Receipt not to be issued to depositor.
219. Voting rights to an individual shareholder in Private banks not to exceed: 10 % (being increased to 26%)
220. What are the total number of digits in Aadhar Card: 12
221. What does LAF stands for_____: Liquidity Adjustment Facility.
222. What is a special purpose vehicle? A special purpose vehicle is a legal entity (usually a limited company of some type or,
trust or a limited partnership) created to fulfill narrow, specific or temporary objectives. Its operations are limited to the acquisition
and financing of specific assets.
223. What is Accrual concept: Every income or expense is taken in to account when becomes due irrespective of the fact
whether it is received or paid or not.
224. What is age limit in PMJeeven jyoti Bima yojna?: Eligible all saving accounts holder in the age of 18 to 50 years; Benefits
Rs. 2 lac on death due to any reason; Premium – Rs. 330 per annum per member.
225. What is Certificate of Incorporation?: Certificate issued by Registrar of Companies to a limited company, which is a
conclusive evidence of existence of company as a separate body corporate.
226. What is Debt securitization: Converting illiquid financial assets in to liquid marketable securities.
227. What is factoring?: Purchasing of Book debt
228. What is forfaiting?: Without recourse discounting of export bills
229. What is full form of FDI?: Foreign Direct Investment
230. What is full form of GDP?: Gross Domestic Product
231. What is full form of GST?: Goods and Service Tax
232. What is full form of IFRS?: International Financial Reporting Standards.
233. What is full form of ULIP?: Unit Linked Insurance Plan
234. What is guarantee corpus in MUDRA bank or funds allocated for MUDRA: Rs 20000 crore
235. What is Hybrid debt instrument? a) Debenture b) Bond c) Preference
shares d) Convertible Bonds.
236. What is incorrect about RTI?: Reason for seeking information to be mentioned in RTI application
237. What is meant by 'sensitivity' in economics terms? Sensitivity analysis (SA) is the study of how the variation (uncertainty) in
the output of a statistical model can be attributed to different variations in the inputs of the model. It is a technique for
systematically changing variables in a model to determine the effects of such changes
238. What is Personal Accident insurance cover for death and permanent disability due to accident in PrimeMinister Jan Dhan
Yojana (PMJDY): Rs.1.00 Lac
239. What is rate of Premium in Pradhan Mantry Suraksha Bima Yojana (PMSBY)?: Premium payable Rs. 12 per annum per
member; sum insured Death / permanent disability Rs. 2 lacs; Partial disability Rs. 1 lac.
240. What is short selling?: Selling securities by a dealer which he does not possess at the time of sale.
241. What is the age limit for coverage under Prime Minister Suraksha Bima Yojna (PMSBY): 18 years to 70 Years
242. What is the amount of insurance cover in case of PrimeMinister Jeevan Jyoti Bima Yojan (PMJJBY): Rs 2 lakh
243. What is the cut off point for reporting of Non Cooperative Borrowers – Rs.5. Crore and above.
244. What is the date for final implementation of Basel III?: 31.03.2019
245. What is the effect of Bonus Issue of Shares on Debt-equity ratio? No effect at all as neither there is a change in term liability
nor in net worth of the company.
246. What is the full form of QIP?: Qualified Institutional Placement.
247. What is the full from of GIFT city?: Gujarat International Financial Tech City.
248. What is the impact of increase in Inflation rate?: Purchasing power decreases
249. What is the initial tax exemption limit for Normal Senior Citizens i.e. aged between 60 years to less than 80 years? Rs 3 lakh
250. What is the liability of a bank in case of payment of forged cheque?: Bank is liable to drawer for having made payment
without authority as also for wrongful dishonor of another cheque due to insufficient funds.
251. What is the lock in period for deposits under PPF scheme: 15 years
252. What is the main concern of Indian Economy today?: Rising Inflation
253. What is the maximum age of Govt’s nominee on Board of Directors of a bank?: 70 years
254. What is the maximum amount for which award can be given by Banking Ombudsman in cases other than complaints
relating to credit card: Rs 10 Lac
255. What is the maximum amount of award that can be given by Banking Ombudsman in case of credit cards?: Rs 1 lakh
256. What is the meaning of delegation? Delegation means the granting of authority subordinates to operate within the
prescribed limits. It means subdivision and sub-allocation of powers to the subordinates in order to achieve effective results.
Authority can be delegated but responsibility cannot be delegated.
257. What is the meaning of financial closure? Financial Closure occurs when there is legally binding commitment of private
sponsors to mobilize funding or provide services.
258. What is the minimum paid capital required for setting up a payment bank?: Rs 100cr
259. What is the nature of business of Insurance Co: indemnifying the insured, collective sharing of risks
260. What is the objective of selling mutual fund product by a bank?: To earn non interest income
261. What is the percentage in Region A to bring training materials bilingually?: 100%
262. What is the period of 12th Five year plan :2012-2017
263. What is the Purpose of nomination? To settle claims easily and quickly in case of death of depositor
264. What is the reason for allowing appointment of a Non Banking Financial company as BC?: For increasing financial inclusion.

265. What is the relation between debenture holder and company: Creditor and debtor
266. What is the relation between purchase of a DD and Bank?: Creditor and Debtor
267. What is the relationship between bank and customer in case of Garnishee order?: Debtor and Creditor
268. What is the role of nominee in term deposit?: He is trustee of legal heirs
269. What is the Service Charge for a remittance of Rs.20,000/- to Nepal if payee not customer of NSBL: Rs 100
270. What is the stake of Central Govt., Sponsoring Bank and State Govt. in RRB capital structure: 50:35:15.
271. What is the time within which death of account holder under Prime Minister Jan Dhan Yojna (PMJDY) should be advised to
bank? 30 days
272. What is the transaction code no for DD in the MICR cheques: 16
273. What is Variable cost:Which changes with production like Raw material, wages, power etc.
274. What refers to P-Notes: Participatory Notes used by Foreign Institutional Investors for investment by overseas investors
who are not registered with SEBI.
275. What right is available to paying bank in respect of DD - stop payment, cancellation, revalidation: revalidation
276. What should the minimum holding of Government in public sector banks?: 51%
277. What was the target for opening accounts under PrimeMinister Jan Dhan Yojana which was to be achieved by 26 Jan 2015?
Initially 7.5 crore accounts which was later increased to 10 crore accounts.
278. When a bank in addition to accepting deposits and making advances, provides various other types of financial services, it is
called: Universal Banking
279. When a complainant receives copy of award from Bank Ombudsman, within how many days, he is required to give his
acceptance?: 30 days from date of receiving the copy of award.
280. When banks borrow fund for overnight, what is it called: call money
281. When does the right of a nominee start in case of deposits? On the death of all account holders.
282. When is customer day celebrated : 15th of each month
283. When letter of administration issued: When a person dies intestate.
284. When remittance done to currency chest, counting in front of bank officials will be done for denomination of: Rs.500 and
Rs.1000 notes.
285. Which company has got license to start new private sector bank in the year 2014?: Bandhan Financial Services Ltd.
286. Which describes insurance business most?: Disaster risk cover.
287. Which is example of Direct Tax: Income Tax
288. Which is not the function of ALCO?: Fixing Budgets and Targets
289. Which is the central bank of India? : Reserve Bank of India.
290. Which is the first Credit information company of India?: COL
291. Which is the largest source of liquidity in equity market? FII
292. Which of the following can not be done by the purchase of a Demand Draft – (a) Stop payment of DD; (b) Obtain duplicate
DD in case of loss; (c) Getting the DD revalidated; (d) endorse the DD: Stop payment of DD.
293. Which of the following does not come under Tier II capital? a) Capital reserves b) Undisclosed reserves c) Revaluation
reserves d) Cumulative Perpetual shares: Capital Reserves.
294. Which of the following does not have share in RRB? (a) Sponsor Bank (b) Central govt (c) State govt (d) Nabard: Nabard.
295. Which of the following has become new member of Asian Clearing Union: Maldives Monetary Authority. (Other members
are Bangladesh Bank, Royal Monetary Authority of Bhutan, Reserve Bank of India, Central Bank of the Islamic Republic of Iran,
Central Bank of Mynamar, Nepal Rashtra Bank, Central Bank of Sri Lanka, State Bank of Pakistan)
296. Which of the following is a Direct Tax - Excise duty, custom duty, service tax, VAT, gift tax: Gift Tax
297. Which of the following is an indirect tax? Sales Tax
298. Which of the following is Chairperson of NABARD: Sh. Prakash Bakshi
299. Which of the following is index of National Stock Exchange – (a) Nifty; (b) Sensex; : Nifty
300. Which of the following is the financial capital of India – Delhi, Ahmedabad, Mumbai: Mumbai
301. Which of the following will be reduced with increase in inflation? (i) Purchasing Power of money (ii) Interest rate (iii) Cannot
say (iv) CRR (v) None of these: Ans is Purchasing power of Money.
302. Which of the following-is a subsidiary of Standard & Poor? CRISIL
303. WHICH OF THE ITEMS WILL NOT BE AN ASSET IN BANKS BAL SHEET – ADVANCES/FIXED ASSET/ DEPOSITS/
: Deposits
304. Which one is not under core sector: automobile
305. Which sector has highest share in GDP of India?: Services
306. Which tax has been abolished in Budget 2015-16?: Wealth tax
307. Which type of charge to be created on Bank’s FD?: Assignment
308. While giving guarantee favouring stock exchange on behalf of brokers, minimum margin should be (a) 50 % out of which
minimum 25% should be cash margin (b) 50 % out of which minimum 20 % should be cash margin (c) 50 % out of which 10 % should

be cash margin: Ans is (a)
309. While increasing or decreasing interest rate, we often hear basis point. 100 Basis point will be equal to: 1 %.
310. Who can stop payment of a Demand Draft?: Nobody
311. Who decides Saving Bank rate: Bank- ALCO committee.
312. Who has never been Governor of RBI – (a) C Rangarajan; (b) Y V Reddy; (c) Bimal Jalan; (d) Pratip Kumar: Pratip Kumar
313. Who headed the committee appointed by RBI for financial inclusion?: Nachiket Mor (The Committee on Comprehensive
Financial Services for Small Businesses and Low Income Households)
314. Who is Drawee in case of DD - paying branch, collecting bank, issuing branch; purchaser, holder?: Paying branch of issuing
bank.
315. Who is not promoter of CIBIL: RBI....
316. Who is regulator of commodity market in India? 1)sebi 2) Ncedex 3) mcx 4) Forward Market Commission: Forward Market
Commission.
317. Who is the regulator of capital market?: SEBI
318. Who is the regulator of insurance sector?: IRDA
319. Who is the Regulator of LIC: IRDA
320. Who issue Garnishee Order: Court
321. Who was President of India before Ms Pratibha Patil: A P J Abdul Kalam
322. Who will decide Base Rate of a Bank?: Bank itself.
323. Wholesale Price Index is calculated on which basis?: Weekly basis for food inflation and monthly for aggregate inflation.
324. Why International Financial Reporting System (IFRS) should be implemented: For comparison of financials of companies
operating in two different international jurisdictions.
325. Within how many days appeal against Ombudsman can be filed?: 30 days
326. Within how many days, appeal can be made by a bank against the Award of Banking Ombudsman to the Appellate Authority
i.e. Deputy Governor RBI: 30 days from receiving the acceptance from customer
327. You need to issue a Demand draft for Rs 10,000 favouring Mr X of Chandigarh.Which one of the following will not be the
option while issuing DD – (i) Payee will be Mr X or Bearer (ii) Payee will be Mr X Chandigarh (iii) Payee will beMr X State Bank of India
A/C 31435195901: Mr X or Bearer