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Multi-option Question Bank

Set - 1

01 Which of the following better explains the meaning of risk :a loss arising on happening of some eventb loss arising on non-happening of some eventc probability of loss that could arise due to uncertaintyd probability of risk that could arise due to uncertaintye risk due to loss as a result of uncertainty

02 Risk that could arise due to legal actions or uncertainty of interpretations of contractsand agreements is called:a counter-party riskb contract risk

c country riskd uncertainty riske legal risk

0 Risk on account of uncertainty about availability of cash when re!uired or cash inexcess of re!uirement:a counterparty riskb legal riskc credit riskd li!uidity riske settlement risk

0" Risk that is associated with inability#failure of banks in payment of amountrepresenting clearing che!ues presented by different banks:

a li!uidity riskb settlement riskc credit riskd legal riske clearing process risk

0$ Risk that is associated with failure of internal processes of a bank or businessorgani%ation:a settlement riskb procedural riskc operational riskd credit riske none of the above

0& ' part of credit exposure of a bank that will not be recovered in the event of default ona specified obligation is called:a credit riskb loss given defaultc credit loss riskd counterparty defaulte credit exposure risk

0( )ebt financing that can magnify the risk and reward for an investment is called:

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a leverageb reward riskc derivatived investment riske loss given default

0* +he risk that a bank faces on account of trading in govt, securities or otherinvestments is called:a trading riskb investment riskc li!uidity riskd market riske credit risk

0 .xposure to uncertainty in economic value of an investment that could not be markedto market is called:a trading risk b business riskc market risk d li!uidity riske investment risk

10 +he risk that may arise due to failure of a counterparty to perform an obligation:a counterparty riskb credit riskc market riskd performance riske market risk

/' '.) 34.+5673ue 6o,11 to $2 are part of our 8orrespondence 8ourse for /'9R.4;'+56 5< '6=6 46.

11 R can issue direction to banks under which of the following provisions:

a ection 21 of R 'ctb ection $' of R 'ctc ection 22 of R 'ctd a and be a to c all

12 4nder ection 21> directions relating to which aspect of banking> can be issued by Rto banks:a directions relating to depositsb directions relating to export creditc directions relating to priority sectord directions relating to advancese directions on general aspects of banking

1 +he term ?unclaimed deposit@ stands for which of the following:a deposits where the depositor has expired and not claimedb deposit where the legal heirs have claimed the deposit after death of the depositorc deposit which have not been operated for a long timed deposits not operated for 10 yearse all the above

1" Which of the following actions are re!uired to be taken by the bank in connection withunclaimed deposits:

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a annual return is re!uired to be submitted to Rb annual return is to be prepared as on )ec 1 for submission to Rc annual return is to be submitted within 0 days of end of each calendar yeard a to c alle a and c

1$ )irections on loans and advances are issued by R u#s 21 of R 'ct> for which of thefollowing aspects:a purpose of the advanceb margin to be maintainedc maximum amount of advanced rate of intereste all the above

1& What kind of restriction is imposed by R u#s 20 of R 'ct on the banks:a banks should fix margins on advances as per R directivesb rate of interest can be fixed by banks as per their discretionc maximum and minimum period of deposits should be as per R directivesd banks cannot grant advances on the security of their own sharese all the above

1( +he 4surious ;oans 'ct prohibits :a loans without obtaining securityb loans by obtaining extra-ordinary securityc loans at exorbitant rates of interestd loans with high margin percente none of the above

1* Arotection to a bank from scrutiny by courts is available u#s 21' of R 'ct relating tointerest rate being excessive:a if interest is as per R directivesb if interest is not exorbitant

c if interest is at bank rated if interest rate is linked to bank ratee none of the above

1 +o build tatutory Reserver> banks have to transfer BBBBC out of BBBB to a reservefund> u#s 1(719 of R 'cta 20C> profits>b 20C> profits before taxc 2$C> profits before dividendd 20C> profits before dividende none of the above

20 When does the re!uirement of transfer to reserve fund u#s 1( 719 as above is not

there:a when it is waived by Rb when bank makes such re!uest and R agreesc when 8entral ovt, on R recommendation allows such exemptiond when 8entral ovt, of its allows such exemption,e none of the above

21 When 8entral ovt, can exempt a bank from transferring its profits to reserve fund onR recommendations:a when reserve fund is ade!uate to meet capital ade!uacy

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2 f default in 8RR still continues beyond first two fortnights> what is the penalty:a director> manager or secretary can be imprisonedb director> manager or secretary can be finedc director can be removedd all the above

e none of the above

0 What return is re!uired to be furnished to R for ;R purpose:a ' monthly return to be submitted within 1$ daysb ' monthly return to be submitted within ( days from close of the monthc ' monthly return to be submitted within 20 days from end of the month to which itrelatesd ' monthly return to be furnished by close of the next monthe none of the above

1 ;R is to be maintained as at:a close of each monthb close of each fortnightc close of each weekd close of each business daye none of the above

2 What penalty can be imposed by R on non-compliance with re!uirement of ;Rratio:a Cb C above bank rate during the 1st fortnightc $C above bank rate during the 2nd fortnightd b and ce none of the above

What is the re!uirement u#s 2$ of R 'ct> to be fulfilled by banks in ndia:a anks are to maintain ($C of the demand and time liabilities as assets in ndia,

b +hese assets would be there as on last

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& 's per ection 2 of R 'ct> the balance sheet and profit and loss account is re!uiredto be prepared by a banking company as on:

a end of each calendar year

b expiry of 12 month period ending with any other date which 8entral ovt, may notifyc as on last working day of the year or the periodd a to c e a and b

( alance sheet and profit and loss account are prepared by a bank as per:a rd chedule of R 'ctb 2nd chedule of R 'ctc chedule D of 8ompanies 'ctd rd chedule of R 'cte none of the above

* anks are re!uired to publish their balance sheets in BBBBBB :a in a news paper in circulation at place of principal office of the banking companyb in two news paper in circulation at place of principal office of the banking companyc in a news paper and maga%ine in circulation at place of principal office of the bankingcompanyd on website of the bank concernede none of the above

anks are to furnish to R BBB copies of balance sheet within BBB months from end ofthe period to which they relate:a 2> monthsb 2> & monthsc > monthsd > & monthse none of the above

"0 .ach bank has to get its balance sheet audited from !ualified auditors appointed by:a 8entral ovt, b Rc nstitute of 8hartered 'ccountants of ndiad ank oard e b and c

"1 'pproval of which of the following authority is re!uired for appointment> reappointmentor removal of auditors by a banks:a 8entral ovt, b Rc nstitute of 8hartered 'ccountants of ndiad . e b and c

"2 Which of the following is not true in connection with special audit of banks:a special audit can be ordered by R and .

b special audit can be ordered in public interestc special audit can be ordered to safeguard interest of depositorsd special audit can relate to any transaction or a class of transactionse special audit can be by the same auditor or another auditor

" Which of the following is not true with regard to preservation of records by banks:a rules for preservation are framed under section "$E R 'ctb rules are framed by Reserve ankc rules specify the period of preservation books> accounts and other documentsd rules specify the period of preservation of different instruments

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e R can order longer period for preservation of any record than the prescribed u#s "$E

"" ' customer demands return of certain che!ues issued by him and paid by the bank,What option is not correct:a paid che!ues cannot be returned at all,

b paid che!ues can be returned by keeping copy of the instrumentc customer has to follow the preservation rules of ection "$E of R 'ctd authority to return the paid instruments is available to banks u#s "$F of R 'cte none of the above,

"$ ection $ of R 'ct concerns with which of the following aspects:a return of paid instrumentsb issue of directions in public interestc audit of accounts of banksd inspection of banks by Re issued of directions on loans and advances

"& Which of the following is correct with regard to inspection of banks by R:a inspection can be carried by R u#s $ of R 'ctb inspection can be ordered by 8entral ovt, alsoc a copy of inspection report is re!uired to be given to bankd inspection team can re!uire the bank to furnish any statement or informatione all the above

"( n order to verify some fact> the inspecting official wants to examine a senior officer ofa bank on oath, Whose permission is re!uired:a Rb 8entral ovt,c oard for due to which of the

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following:a if R carries inspection and finds that deposits are not insured by )88b if R carries scrutiny of the bank and finds that there are complaints from depositorsc if bank is incurring lossesd if bank not complying with re!uirement of R 'ct

e if business is being conducted to the detriment of interest of depositors

$2 Which of the following is not a correct statements:a annual accounts of foreign banks relate to their business in ndia,b R can order special audit of a bank> without 8entral govt, permissionc banks are to furnish three copies of balance sheet to Rd t is mandatory to give copy of scrutiny report to the bank by Re oard for 200&e /un 0> 200&

0" What is the amount that could be accepted by banks under R@s 5+ for G.s fordoubtful or loss accounts as on Garch 1> 200":a 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A'sb 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plus the

interest at simple rate,c 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest at bank rated 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest at A;R of the banke 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest H other charges due

0$ What is the amount that could be accepted by banks under R@s 5+ for G.s forsub-standard accounts as on Garch 1> 200"> which became doubtful subse!uently:

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a 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A'sb 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plus theinterest at simple rate,c 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest at bank rate

d 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest at existing A;R from 'pril 1> 200" till the date of final payment,e 100C of o#s balance in the a#cs on the date of categorisation as doubtful 6A's plusinterest H other charges due

0& Which of the following options are available to the borrowers for repayment underR@s 5+ for G.s:a full amount has to be paid up frontb 2$C can be paid up front and balance in instalmentsc 2$C can be paid up front and balance ($C in instalments within three years withinterestd 2$C can be paid up front and balance ($C in instalments within one year without anyinterest paymente 2$C can be paid up front and balance ($C in instalments within one year with interestat existing A;R till date of payment,

0( 4nder )ebt-Restructuring mechanism for G.> which of the following kinds of loansare not eligible:a all non-corporate G. irrespective of amount of bank duesb all corporate G.s dealing with one bank irrespective of amount of bank dues,c all corporate G.s having consortium arrangement with total fund limits of Rs,10 crore,d a and c e b and c

0* Which of the following types of loan accounts are eligible under )ebt-Restructuringmechanism for G.:a should not be a loss accountb 4nits that could become viable in ( years

c 4nits that could ensure repayment not exceeding 10 yearsd which bank could work out the restructuring:a the bank having maximum share

b the bank having maximum share alongwith the 2nd largest bankc all the banks togetherd banks having $1C sharee none of the above

11 What is the time period when a complaint can be entertained by the 5mbudsman:a when referred by the customer directly to the 5mbudsman,b when referred by the customer after bank did not send any satisfactory reply within onemonth,c when bank did not send any reply within 2 months of a reference of complaint to the

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bank,d when bank makes a reference to 5mbudsmane a to c all,

12 What is the maximum amount of compensation that 5mbudsman can allow> for a case

referred to it:a Rs,2 lac b Rs," lacc Rs,& lac d Rs,* lace Rs,10 lac

1 What remedy is available to the bank when 5mbudsman passes an award directingthe bank to make the payment:a ank can go in for appeal in a court of lawb ank can go in for appeal to Rc ank can make a re!uest for review to Review 'uthorityd ank can file a suit against the decision with )R+e none of the above

1" What remedy is available to the customer when 5mbudsman passes an order withwhich customer is not satisfied:a can make a review application to 5mbudsmanb can make a review application to Review 'uthorityc can go in for appeal in )R+d can proceed for any remedy deemed appropriate by hime can file a suit in a 8onsumer 8ourt only,

1$ What is the time period during which the bank is to implement the order of5mbudsman:a within 1$ days of date of receipt of orderb within 0 days of date of receipt of orderc within one month from date of receipt by the bank> of customer@s acceptance of theaward with in 1$ days of receipt of order by him

d within one month from date of receipt by the bank of the acceptance of award> any time,

e none of the above

1& What is the amount of dispute that could be referred to 5mbudsman for arbitration:a between bank to bank Rs, $ lacb between bank to bank Rs, 10 lacc between bank to customer Rs, 10 lacd a and c e b and c

1( What is the time period during which 5mbudsman is expected to render his award incase of arbitration,a months from date of receipt

b 1 months from date of receiptc & months from date of first hearingd within & months from date of receipt of the casee c and d> whichever earlier,

1* What is the time period during which the bank can file a review application with Reviewauthority:a within 2 months from date of awardb within 1 month from date of receipt of copy of awardc within 1 month from date of award

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d within months from date of ordere within & months from date of receipt of award,

1 Which of the following type of complaint regarding loans cannot be lodged by thecustomer with the 5mbudsman:

a non-observance of R directivesb delay in sanction or disbursementc non-acceptance of loan application without valid reasonsd non-observance of time schedule for disposal of loan applicationse none of the above

20 5mbudsman scheme has been formulated by R under provisions of:a R 'ct ection 21b R 'ct ection $c anking Regulation 'ct ec&-'d anking Regulation 'ct ection $-'e 5mbudsman 'ct ection $

21 Which among the following are not eligible for deposit insurance from )88:a foreign banksb regional rural banksc district central banksd primary cooperative societiese none of the above

22 Which of the following kinds of deposits are not insured under )88 scheme:a inter bank depositsb deposits from government>c deposits of tate ;and )ev anks with tate 8oop anksd deposit received outside ndiae all the above

2 What is the amount of insurance up to which a deposit is insured:a Rs,1 lac per depositor per branch of a bankb Rs,1 lac per depositor per bankc Rs,1 lac per depositor from the banking systemd Rs,1 lac per depositor held singly or Iointlye all the above

2" 5n which amount#balance of deposit> the deposit insurance cover is available from)88a date of cancellation of licence of the bankb date of li!uidation of the bankc date of amalgamation comes into forced date of merger comes into force

e any of the above

2$ f two banks are closed on the same day> what is the position of availability ofinsurance cover to the depositor> having deposit with both the banks:a cover is applicable to the maximum extent of Rs,1 lacb cover available separately to the extent of Rs,1 lac for each bankc cover not available as that amounts to violation of basic cover of Rs,1 lacd cover available but maximum amount would be Rs,1 lac to be claimed pro-rata fromboth the bankse none of the above

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2& What is the time period during which )88 is expected to meet its claim liability:a two months from date of receipt of claim list from the li!uidatorb two months from date of receipt of claim list from the transferee bankc two months from date of receipt of claim list from the insured bank#transferee bank

d a to c all e a and b only

2( What is true with regard to periodicity and the amount of premium payable on depositinsurance:a 10 p per Rs,100 per annumb payable yearlyc payable half-yearlyd a and b e a and c

2* 5n what basis> the premium payable in advance to )88 is to be calculated by thebanks:a last working day of Garchb last working day of Gar and eptc last reporting to file complaint is not available to the holderunder which of the following circumstances:a where the che!ue has been issued without considerationb where the che!ue has been issued to discharge the liabilityc where the che!ue has been issued to discharge the liability but its payment has beenstopped,d where the che!ue has been issued to discharge the liability and holder has been askednot to present the che!uee where the che!ue has been dishonoured for insufficiency of funds,

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What is the time period during which the che!ue is to be presented u#s 1* of 6 'ct:a before the bank failsb before the drawer stops the payment of the che!uec during the validity periodd maximum within & months of date of issue,

e c and d

" Which of the following is an essential condition for filing complaint> by the holder:a to issue notice to the drawer within 0 days of date of receipt of the information aboutdishonour,b to issue notice to the drawer within 1$ days> of date of receipt of information aboutdishonourc drawer should be given 1$ days period> from date of receipt of the notice by him> tomake the payment,d a and c e b and c

$ What is the time period> to make complaint by the holder:a within 0 days from date of receipt of information about dishonour by the holderb within 0 days from date of issuing notice to the drawer to make the paymentc within one month from date of cause of actiond within two months from date of non-receipt of reply from the drawer> in response to thenotice from holdere any of the above> whichever is later,

& J has received a che!ue from E as gift on his birthday, When che!ue is presented> itis dishonoured, What is the time period during which the complaint can be filed by J inthis case:a within 0 days from date of receipt of information about dishonour by the holderb within 1$ days from date of issuing notice to the drawer to make the paymentc within two months from date of cause of actiond within three months from date of non-receipt of reply from the drawer> in response to thenotice from holder

e no complaint can be filed

( What punishment is prescribed under 6 'ct> for dishonour of che!ue:a fine e!ual to the amount of che!ue,b fine double the amount of che!uec imprisonment up to 2 yearsd a and c e b and c

* f an offence is compounded by the court> what is the punishment under 6 'ct fordishonour of che!ue:a fine double the amount of the che!ueb fine up to Rs,$000c imprisonment up to 1 year

d imprisonment up to 2 yeare b and c

What is the mode of service of summons by the court on the drawer of the che!ue:a normal postal servicesb speed postc authori%ed courierd a and b e a to c

"0 What is true with regard the liability of a director of a company> in case of dishonour of

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che!ue> issued by a company:a all the directors are liableb nominated directors also liablec directors responsible for conduct of the business of the company including managingdirector

d only those directors who are responsible for accounts maintenance of the companye all the above

"1 =E8 guidelines have been issued by R> under which of the following:a ection 21 of anking Regulation 'ctb ection 1 ' of R 'ctc ection $ ' of R 'ctd ection 1 of 6 'cte 6one of the above

"2 Which among the following is the obIective of issuing =E8 guidelines by R:a check fraudulent activities of the borrowersb check money laundering activitiesc avoid undesirable customer to enter the banking systemd a and b e b and c

" Which of the following is the basic document> on the basis of which =E8 guidelineshave been issued:a

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"* Which of the following is not the key element of =E8 policy to be framed by individualbanks> as per R directives:a customer acceptance policyb customer identification procedurec monitoring of transactions

d risk managemente none of the above

For solution to this quiz, kindly refer to #ovember 2005 issue ofBanking Events !date"

Set - 3

1, Gr, J a customer of another bank approaches your branch to deposit in safe custody>his term deposit receipt> issued by the said bank:a it can be accepted> provided the other bank has no obIection to thisb it can be accepted> if the customer provides indemnity bondc it can be accepted> as a normal customer

d it cannot be accepted> since it is a term deposit issued by another bank> which hasprimary lien on the deposit,e it cannot be accepted, ank should refuse,

2, Eour branch receives from a customer> a Rs,$00 bank note> that you find is a fakenote, Which among the following action is re!uired to be taken:a the note will be cut into pieces and pieces handed over to the tendererb the police would be called and tenderer would be handed over to police,c the note would be marked ?fake@ and handed over to the tendererd the note would be impounded and kept in safe custodye the note would be impounded> a statement would be obtained from the tenderer H bothwould be sent to police

, J draws a bill of exchange on E in consideration of sale of goods, Ke does notmention the date of payment of the bill, What would be date of payment of the billLa it will be treated as usance bill and due date would be worked out after acceptance ofthe billb it will be treated as a demand bill and payment would be claimed as per mutual consentof both the partyc it will be treated as a demand bill and paid accordinglyd it will be treated as an ambiguous instrument and as such invalide it not a valid document, Kence J has to withdraw the instrument

", ank makes use of selling rate in case of a foreign exchange transaction> in which ofthe following situations:a encashment of foreign travellers@ che!ues

b collection of a foreign currency bank draftc negotiation of bill tendered by the exporterd receipt of loan proceeds of a foreign currency loan from abroade issue of a foreign currency demand draft

$, ' foreign bank maintains a rupee account with a bank in ndia in )elhi, +his accountwill be called BBBB account by the foreign bank and BBBB by the bank in ndia:a loro and vostrob nostro and vostroc loro and nostro

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d vostro H nostroe vostro and mirror account

&, Which among the following is true with regard to pension accounts in banks:a life certificate should be from a )octor

b life certificate should be obtained in the month of Gay and 6ov every yearc When payment is obtained by the pensioner himself> there is no need for life certificated life certificate should be obtained once in a year during Gaye life certificate should be obtained once in a year during 6ovember

(, ' borrower defaults in repayment of loan, 4nder which of the following> he can becovered:a it is part of the credit riskb the appraisal of the loan is definitely defectivec bank can recover the dues through filing of suit onlyd it is part of the operational riske it is part of the li!uidity risk

*, ubstandard loan account of a firm was rescheduled by the bank on ept 20> 200"with a moratorium of & months, +he firm commenced the repayment as perreschedulement and continued to repay the loan regularly, +he account would be treatedtandarad asset wef:a ep 20> 200$ b- Gar 20> 200$c ep 20> 200& d- Gar 20> 200&e ep 20> 200"

, ' farmer has been allowed an advance for irrigation e!uipment, Ke normallyproduces wheat and paddy, Ke has failed to repay the due instalment of his loan> whichhad fallen due during /uly 200$, +he loan will become 6A' after :a one harvest seasonb one crop seasonc two harvest seasons

d two crop seasonse maximum within one year

10 n which of the following methods> a bank can calculate capital ade!uacy ratio:a capital # risk weighted assetsb capital M reserves # risk weighted assetc capital fund # credit assetsd capital fund # risk weighted assetse risk weighted assets # capital fund

11, Which among the following is purpose of investment fluctuation reserve:a to cover the interest payment on investment in capital marketb to cover the loss arising from valuation and from interest rate movements in investment

in govt, securitiesc to cover the risk of fluctuation in value of capital market securitiesd to cover the risk on account of govt, loanse c and d above

12, R has cautioned banks to take more precautions in respect of housing financeadvances> due to which of the following:a increasing advances in housing financeb frauds taking place in housing finance in one particular bankc increasing incident of frauds and increasing 6A's

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d due to increasing exposure of few banks in housing finacee a to d all

1, 4nder 8redit uarantee the maximum amount of claim for non-fundbased limits is:

a Rs,10 lac b Rs,1$ lacc Rs,1*,($ lac d Rs,2$ lace 6on-fund limits are not covered,

1", Which of the following committees is associated with improvement in the working ofweak banks:a RK =han 8ommitteeb +arapore 8ommitteec Aadmanabhan 8ommitteed ; =apoor 8ommitteee Derma 8ommittee

1$, Which among the following is true in case of obIective of setting up of 8;La to collect information about bank 6A'sb to collect credit information on behalf of R and 8D8c to collection information about bank business for helping Rd to collect positive and negative credit information and disseminate the samee a to c all

1&, What is true with regard to the provision that is re!uired to be maintained on standardloan assets:a it is 1C on all regular standard assetsb it is 1C on all regular and irregular standard assetsc it is 0,2$C on all regular standard loan accountsd it is 0,2$C of global loan portfolio of standard loan assetse it is 0,2$C on all advances of the bank,

1(, ' customer tenders to the bank an outstation che!ue of Rs,10000 for collection andalso re!uests for instant credit of the che!ue> to which bank agrees, What would be bankbe called:a agent of the customerb holder for valuec holderd holder in due coursee special holder in due course

1*, ' che!ue has been issued by J in favour of E> who crosses the same as ?notnegotiable@ and endorses to F for a valuable consideration, Which among the following istrue with regard to the che!ue:a E has no liabiity if the che!ue is dishonoured,

b F becomes a holder in due coursec J@s liability on the che!ue is a secondary liablityd no one would be holder in due course on this che!uee uch cannot be endorsed> as the transferability has been restricted,

1, ' che!ue dated 5ct 12> 200" is presented for payment on 5ct 2(> 200", t ishowever observed that the che!ue book from which the che!ue was issued was issued tothe customer on 5ct 22> 200" only, What would the bank do with the che!ueLa this is ante dated che!ue and would be paid> if otherwise in orderb the che!ue would be paid> if drawer confirms that he put the date intentionally

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c the che!ue would be returned> as apparent tenor of the drawer is not cleard the che!ue being post-dated che!ue would be returnede the che!ue being ante-dated would be returned,

20, What is overbought position in case of at a particular point of

timeLa when foreign exchange purchased is less than foreign exchange soldb when foreign exchange sold is more than foreign exchange purchasedc when foreign exchange sold is e!ual to foreign exchange purchasedd when foreign exchanged purchased is more than foreign exchange solde when foreign exchange purchase become risk-prone due to price variation

21, What is the amount of family income for eligibility under )R scheme in rural areas:a Rs,&2$0 p,a, b Rs,&"00 p,a,c Rs,(200 p,a, d Rs,($00 p,a,e Rs,11200 p,a,

22, Eou are approached by an units that is engaged in an industry> where rawmaterial is available in a particular season of two months only, +he assessment ofworking capital for this would be made by the bank:a as per cash budget methodb as per turnover method of 6ayak 8ommitteec as per 8hore 8ommittee methodd as per 1st method of +andon 8ommitteee as per 2nd method of +andon 8ommittee

2, Which among the following is true with regard to obIective of getting signature of theperson obtaining payment of a bearer che!ueLa to get it endorsed properlyb to get final discharge of the instrumentc to create proof that the instrument was presentedd to get receipt of payment

e a to c all

2" +he comparison of the balance sheet of a firm reveals that increase in its long termuses are 12$C of increase in its long term sources, Which of the following must be true:a debt e!uity ratio changedb current ratio changedc stock turnover ratio changedd debt service coverage ratio changede nothing changed

2$ Which among the following is correct with regard to family income in case of ArimeGinister Ro%gar EoIna 7AGRE9La for income purpose family comprises husband and wife and their childern

b the maximum income separately for husband and wife is Rs,"0000 p,a,c the maximum income of husband#wife Rs,"0000 p,a, from all sources and that ofparents separately Rs,"0000 p,a,d the maximum income of husband#wife and that of parents is Rs,*0000 p,a, from allsourcese c and d both are correct

2& Which of the following categories of borrowers are not eligible for assistance under=D8@s margin money schemeLa Aartnership firm

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b individualsc cooperative societiesd trust registered with =D8e none of the above

2( ection 2&-+ of ncome +ax 'ct 1&1> deals with which of the following aspects ofbanking transactionsLa payment of term deposit in cash up to Rs,20000 onlyb deduction of tax at source on term depositsc payment of bank drafts in cash up to Rs,$0000 onlyd preparation of bank drafts in cash up to Rs,$0000 onlye all the above,

2* ank drafts are issued by banks payable to order only while customers can issueche!ues payable to bearer also:a due to restriction imposed by ovt,b because that would be risk pronec as per provisions of R 'ctd as per directives of anking Regulation 'cte because is draft is a value paid instrument while che!ue is value payable,

2 Which of the following is not correct with regard to ?=now Eour 8ustomer guidelines@ La uidelines have been issued u#s $ ' of Reserve ank of ndia 'ctb uidelines relate to identification of depositorsc uidelines help to control financial fraudsd uidelines help in identification of money laundering and suspicious activitiese uidelines are applicable to all accounts including foreign currency accounts,

0 Which among the following can be exercised by a bank on a term deposit the maturitydate of which expired 2 months back:a right of assignmentb right of appropriation

c right of subrogation,d right of forclosuree right of set off

1 When a bank has oversold position in foreign currency in an appreciating marketwhich of the following would be trueLa bank will be gaining while covering its positionb bank may incur loss while covering its positionc there will not be any impact> since bank has already sold the currencyd bank will gain while purchasing the fresh currencye none of the above

2 n order to sell an asset charged to the bank under 'R which among the

following is trueLa any kind of asset can be sold if it is charged to the bankb all kinds of loans are covered except agriculture loansc before possession 0 day@s notice and before sale &0 days@ notice is re!uiredd before possession &0 days@ notice and before sale 0 days@ notice is re!uirede sale can be made after getting permission from )R+,

n which of the following circumstances> the relationship between the bank andcustomer is not correctly stated:a shares given for sale - agent H princial

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b garnishee order - debtor H creditorc payee of draft - trustee H beneficiaryd articles left by mistake - agent H principale standing instruction - agent#principal

" n which of the following circumstances> there can be more than one nomineea Ioint term deposit accountsb deposit accounts of pensionersc Ioint safe deposit of aritclesd locker accounts in either#survivor accounte Ioint operation locker accounts

$ Eour branch receives a che!ue of Rs,2$00 drawn in favour of Gr,+yagi for paymentacross the counter, t is observed that the name of the payee Gr, +yagi in the che!ue iswritten in Kindi while the other particulars are in .nglish:a ank will return the che!ueb ank will ask Gr, +yagi to write the name in .nglish alsoc ank will ask the payee to get it corrected in .nglish from the drawerd ank will make the payment of the che!uee ank will make the payment> after en!uiring from the drawer,

& llegal interference in the property of another person> that becomes a punishableoffence> is called:a tress-passingb marshallingc securitisationd negotiatione conversion

( What is the amount of court fee for filing a case in a ;ok 'dalatLa Ginimum Rs,($0,b 'bove the amount of Rs,$ lac> Rs,100 for each Rs,1 lac

c Gax amount is Rs,10000d 6o court fee is payablee 8ourt fee is discretion of ;ok 'dalat,

* n case of small scale industrial units> which among the following is correct with regardto the sub-target to be achived by banks:a 2$C of advances should be to with investment in plant H machinery up toRs,2$ lacb 20C of advances should be to with investment in plant H machinery aboveRs,$ lac H up to Rs,2$ lacc Ginimum "0C of advances should be to with investment in plant H machineryabove,2$ lacd 20C of advances should be to with investment in plant H machinery above

Rs,2$ lace all the above

J issues a che!ue in favour of '> who crosses the che!ue as ? account payee only@,+his direction of ' is:a direction of drawer to paying bankb direction of the payee to collecting bankc direction of drawee to the payeed direction of the drawer to collecting banke direction of the drawer to the payee

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"0 Gr, guaranteed the loan raised by Gr, E who failed to pay, When money wasdemanded from Gr, he paid the loan and asked for handing over the securitiesavailable in the loan, Which right Gr, has used to demand the securities:a Right of foreclosure

b Right of subrogationc Right of redemptiond Right of marshallinge Right of novation

"1 appoints J as his agent on /anuary 01> 200", J signs a post dated che!ue dating itas Garch 0> 200$, Ke expires on Garch 2$> 200$, +he che!ue is presented on ept 2>200$a the che!ue will not be paidb the che!ue would not be paid because the signatory has diedc the che!ue would be paid as the customer is alived the che!ue would be paid as che!ue has not become stale as yete che!ue would be returned as with death of the agent the authority ceasd to operate,

"2 the banking cash transaction tax is to bededucted:a all deposit and loan accountsb for all non-saving bank accounts whether deposit or loan accountsc cash withdrawal from non-saving accounts of individuals#K4< of Rs,2$000 and aboved cash withdrawal from non-saving accounts of others of less than Rs,1 lac and abovee c and d

" 4nder which of the following systems> is an alternative method of effecting bulkpayment transactions which would obviate the need for issuing and handling paperinstruments and thereby facilitate improved customer service by the banks andcompanies # 8orporations ovt, department effecting payment,a electronic funds transfer

b electronic clearing servicesc special electronic funds transferd real time gross settlemente all the above

"" n which of the following styles> a locker account cannot be opened:a Ioint account in the name of more than personsb Ioint operations by more than two personsc either or survivord former or survivore the account can be opened in all forms such as Ioint operation> either#survivor andformer#survivor

"$ J and E deal with each other by sale and purchase of goods, J draws a bill ofexchange on E which E accepts for payment> but no sale purchase has taken place forthis bill, n this case the bill is :a, clean bill of exchangeb, documentary bill of exchangec, foreign billd, genuine bille, accommodation bill

For solution to this quiz, kindly refer to $ctober 2005 issue of Banking

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Events !date"

Set - 4

1 ' reputed company approaches your bank to provide them credit support for raisingexternal commercial borrowing under automatic route, What kind of facility can beprovided to them:a a guarantee for the .8 can be givenb a standby letter of credit can be openedc letter of undertaking can be issuedd letter of comfort can be issuede 6one of the above is permitted

2 What is the role of advising bank in case of a letter of credit:a to forward to the seller and to negotiate documentsb to verify the genuineness of ;8 and forward it to the seller#beneficiaryc to give confirmation that payment would be made by it in case the issuing bank fails tomake the payment

d to allow preshipment credit if asked for by the beneficiarye all the above

While providing finance to a proIect> the term 6et Aresent Dalue method representswhich of the following:a to find out the present value of the investment made in the proIectb a tool to understand as to what shall be the present value of the loan being given at theend of a particular period,c present value of the cash flows which the proIect would generate over a time period onthe basis of a discount factor ,d present value of the cash outgo over the life time of the proIect so as to understand theactual outlaye the discount rate at which the present value of future cash flows becomes %ero taking

into account the investment,

" Which among the following banks has been permitted by R> a higher overall ceiling7above $C9 in respect of exposure to capital market:a tate ank of ndiab K)

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( ' company has been formed to undertake the business of software development, +hisobIective of the company would be found in which of the following documents:a 8ertificate of ncorporationb 8ertificate of 8ommencement of usinessc Resolution from oard of )irectors

d 'rticles of 'ssociatione 6one of the above

* 4nder which of the following methods of depreciation on fixed assets> the annualamount of depreciation decreases:a Written down value methodb traight line methodc 'nnuity methodd nsurance policy methode a and c above

'n importer has imported from 'ustralia 7invoicing 'us )ollar9 certain plant andmachinery the payment of which is to be made 2 months after, 5n the basis of prevailingsituation the home currency is expected to record depreciation compared to 'us )ollar,What should be importer do:a Ke must go for a swap of 'us )ollar with Rupeeb Ke must arbitrage in 'us )ollarsc Ke should book a forward contract and purchase 'us )ollard Ke should sell 'us )ollars immediatelye Ke should purchase 'us )ollars spot

10 +he rate of discount at which the present value of cash inflows becomes e!ual to thepresent value of cash outflows over the period of a proIect is called:a net present valueb discounted cash flowc debt service coverage ratiod internal rate of return

e proIect appraisal techni!ue

11 ' stand-by letter of credit opened for import of gold on loan basis provides for which ofthe following:a the usance period should not exceed 0 daysb the usance period shall be need based as per contractc the tenor of the letter of credit should be in line with the period of gold loand a to c alle a and c

12 +he methodology that focuses on eliminating the defects and facilitating data driverndecision making:a management by obIectives

b customer relation managementc six sigmad strategic managemente +otal !uality management

1 ' bank carries positive gap in its asset liability position i,e, rate sensitive assets arehigher than the rate sensitive assets, What would the impact of increase in interest rates:a 6et interest margin would decreaseb 6et interest margin would increasec Garket value of the assets would increase

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d Garket value of the liabilities would increasee +here will be no impact,

1" 8ollection period of its sundry debtors has been increasing in respect of a firm but theperiod available to it for payment to sundry creditors has been decreasing, +his would

lead to:a increase in its working capital re!uirementsb decrease in its working capital needsc no change in its working capital needsd higher amount of interest paymente 6o impact on any of the financial parameters

1$ ' process under which it is expected that a combined entity 7combination of two ormore9 would be able to exceed the individual earning of the entities being combined:a six sigmab total !uality managementc synergyd internal rate of returne management by profiteering

1& Which of the following foreign nationals of non-ndian origin cannot remit foreignexchange from ndia:a Who has retired from employment in ndiab Who has inherited assets from a person resident in ndiac Who is widow of a ndian 8iti%end all the abovee none of the above

1( What is the maximum amount that a foreign nationals of non-ndian origin can remitforeign exchange from ndia:a N $0000 b N 100000c N $00000 d N 1000000

e N 2$00000

1* +he facility of remittance is not available to which of the following types foreignnationals of non-ndian origin:a 8iti%ens of 'ustralia H 8anadab 8iti%ens of 6epal H hutanc 8iti%ens of 6epal and angladeshd 8iti%ens of hutan and Aakistane 6one of the above

1 Remittance of sale proceeds of immovable of property can be allowed by 'uthorised)elaers to which of the following:a 8iti%ens of 6epal and angladesh

b 8iti%ens of ri ;anka H 'fghanistanc 8iti%ens of Aakistan H rand 8iti%ens of 8hina and hutane 6one of the above

20 ' person of ndian origin approaches to remit funds from his 6on-Resident 5rdinaryaccount, Kow the bank should deal with his re!uest:a 8an be allowed up to N 1 millionb 8an be allowed up to N 100000c 8an be allowed with permission of R

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d 8an be allowed up to Rs,1 millione 8an not be allowed

21 'n 6R wants to remit the sale proceeds of the immovable properties from ndia,Which of the following documents will not be re!uired to be furnished by him:

a evidence in support of inheritanceb Reserve ank permissionc )ocument for legacy of assetsd 'n undertaking by the remittere 8' certificate as per prescribed format

22 What is the residential status of a student from ndia having gone abroad for studiespurpose:a a person of ndian originb a 6on-resident ndianc a resident ndiand a foreign 6ationale none of the above

2 What kind of remittance facilities are available for a student from ndia having goneabroad for studies purpose:a same as in case of Resident ndiab same as in case of a foreign nationalc same as in case of an 6Rd same as in case of person of ndian origine 6o such facility is permitted,

2" Who among the following can open an 6R5 account in ndia:a a non-resident ndian onlyb a person of ndian origin onlyc 'ny person#entity resident outside ndiad a foreign national only

e none of the above

2$ Which of the following types of credit can be freely allowed by 'uthorised )ealers to6R5 accounts:a from

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e none of the above

2* +he compliance of which of the following conditions is re!uired to be ensured inrespect of 6R5 account of a foreign national:a the account can be opened maximum for a period of & months

b no credit from local funds will be permittedc interest can be creditedd balance can be allowed to be converted into foreign currency for payment to theaccount holder at the time of his departure from ndiae all the above

2 ' resident ndian proceeds to 6epal for taking up employment, Kis saving bank withyour branch in ndia will be designated as:a his 6R5 account would be treated as:a an 6R. accountb ' resident accountc 'n 6R5 accountd an

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c if loan is allowed> it can be adIusted by his relativesd if loan is allowed> it can not be adIusted by his income in ndiae if loan is allowed> it can not be adIusted out of remittances

$ What is meant by the word ?deposit@ in the context of current or term deposite none of the above

& n which of the following currencies> an the deposit was with the bank> without any penaltye no interest to be paid

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"2 ' customer holding

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respectively:a there will be substantial profitb it will incur lossc there will be loss in the 2nd year and profit in the rd yeard there will be profit in the 2nd year and loss in the rd year

e there will be neither profit nor loss

$0 n computer software> the term ?Gorphing@ refers to which of the following:a animation techni!ue in which one image is gradually turned into anotherb data conversion techni!ue by way of use of codesc conversion of digital picture to analog imagesd a soft ware that saves a network from intrusione software that links one server to another

For solution to this quiz, kindly refer to %e!tember 2005 issue ofBanking Events !date"

Set - 5

1 Which of the following terms represent ?one point basis@:a one percentb one tenth of one percentc one hundredth of a percentd one hundred percente one thousandth of a percent

2 ombay stock exchange index ?ensex@ is based on the value of top 0 shares of:a

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1 'fter tate ank of ndia> who among the following are maIor shareholders of 'ssetReconstruction 8o, ndia ;imited:a 88#

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e none of the above

21 Which among the following maturity period of b applicable for the period on date of deposit less penaltyc applicable for the period on date of withdrawal less penaltyd no interest to be paide none of the above

2" 8urrent account convertibility in terms of foreign exchange transactions> representswhich of the following transactions:a sale of shares at 6. and investment at 6')'3b purchase of immovable property in ndia by a foreign national by remitting funds fromabroadc export of goods and surrender of foreign exchange representing export proceeds to an

authori%ed dealerd export of services for investing the proceeds permanently outside ndiae none of the above

2$ Which of the is not correct with regard to a =issan 8redit 8ard :a the amount is based on operational holding and scale of financeb the card has validity of yearsc che!ue book can be issued to select customersd contingent re!uirement can also be financede none of the above

2& When a country decides to conduct trade on favourable terms with another country formutual benefits> this is called:

a

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d Garket risk e 8redit risk

2* +he li!uidity position assessment of a company can be made by which of the followingparameters:a debt e!uity ratio

b total outside liabilities to tangible net worth ratioc debt service coverage ratiod current ratioe fund flow statement pattern

2 ' company is found to be carrying high debt e!uity ratio, +o improve the ratio> thebank will suggest the company to:a increase the e!uity by way of bonus issueb issue rights shares to existing shareholdersc raise long term loans from institutionsd raise long term interest free loans from friends and relativese all the above

0 Which among the following would be classified as application of funds by a businessfirm:a raising loans from banksb raising the e!uity through a public issuec sale of fixed assetsd purchase of fixed assetse earning handsome profits

1 Which of the following is correct with regard to shifting a bank branch within the samemunicipal area:a R license is necessaryb R permission is re!uiredc tate govt, clearance is re!uiredd ank oard@s approval is re!uired

e no permission is re!uired,

2 +he 'sset ;iability 8ommittee in a bank makes the assessment of which of thefollowing:a 8redit riskb

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e none of the above

$ f a financial transaction is carried> processed and settled instantantly> this is called:a automated teller machineb electronic funds transfer

c reconciliation transactiond real time gross settlemente none of the above

&

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segregating all debit and credit entries in inter-branch accounts:a 2,$C of the net amountb 10C c 20Cd $0C e 100C

" ' partnership firm having its current account with your branch withdraws cash in themorning amounting to Rs,"$000, 't noon it withdraws more amount of Rs,2(000, n theevening yet another withdrawal of Rs,2*000 is made by the firm, What is status ofapplication of anking 8ash +ransaction +ax:a bank is re!uired to deduct the tax as the total amount of withdrawal on a single day isRs,1 lacb bank is not re!uired to deduct because the amount is not more than Rs,1 lacc bank is not liable to deduct because the amount of single withdrawl is less than Rs,1 lac

d bank is re!uired to deduct as the amount of each withdrawal is above Rs,2$000e none of the above

"" ' company is having its current account with branches of your bank and on a singledays makes cash withdrawals of Rs,"0000 from one branch> Rs,$000 from the 2ndbranch and Rs,2$000 from the rd branch, What is the status of application of anking8ash +ransaction +ax:a bank is re!uired to deduct the tax as the total amount of withdrawal on a single day isRs,1 lacb bank is not re!uired to deduct because the amount is not more than Rs,1 lacc bank is not liable to deduct because the amount of single withdrawl is less than Rs,1 lac

d bank is re!uired to deduct as the amount of each withdrawal is of Rs,2$000 or abovee ank is not re!uired to deduct as the amount is less than Rs,1 lac for each branch andthe amount withdrawn from all branches is not to be aggregated

"$ Which of the following types of operation modes are permitted under the enior8iti%ens aving cheme 200":

a generally single accountb Ioint mode with the spousec Ioint operation with any oned a and b only e a to c all

"& What is the amount of balance in a deceased depositor@s account> where the bank>depending upon the circumstances> may ask for a legal representation such assuccession certificate> letter of administration> probate:a in case of Ioint survivorship accounts> no re!uirementb in case of nomination accounts> no re!uirementc in case of accounts with no nomination or survivorship provision> discretion of the bankd anks cannot ask for such representationse a to c

"( What is the maximum time limit for the banks to settle the claims in respect of adeceased depositors and release payments to the survivors#nominees :a ( days b 10 daysc 1$ days d 0 dayse no time limit

"* +he cases of deceased depositors where the claims have been received and arepending beyond the stipulated period are re!uired to be reported to which of the following:

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a oard of )irectors of the bankb 5mbudsmanc Reserve ank of ndiad 8ustomer ervice 8ommittee of the oarde 'll the above

" Which of the following kinds of Ioint accounts cannot be categori%ed as an accountopened with survivorship clause:a either or survivorb anyone or survivorc former or survivord letter or survivore none of the above

$0 J opened an account with your branch under the enior 8iti%ens aving cheme 200"for years, Ke needs the funds to meet his medical expenses by raising a loan on thebasis of pledge of the deposit, What precautions would be taken by the bank:a the loan cannot be sanctioned under the schemeb the loan amount should not be more than *0C of the amount of original depositc the loan amount will be linked to present maturity value of the depositd the loan would be allowed after obtaining a written re!uest supported by a estimatefrom hospitale none of the above

$1 What is the age criteria for under enior 8iti%en aving cheme 200" for opening theaccount:a $$ yearsb &$ yearsc &0 yearsd $$ years in case of those who are retiring voluntarilye c and d

For solution to this quiz, kindly refer to &ugust 2005 issue of BankingEvents !date"

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