Jaiib i 50q-Principles

8/18/2019 Jaiib i 50q-Principles

1/33

PRINCIPLES OF BANKING

Model Questions & Answers

(Solutions gien !t t"e end#

$# A bank accepts a deposit from a Corporate house. The features of the deposit are:

i) accepted at a discounted value

ii) stamp duty is borne by the bank

iii)issued as usance promissory note

iv)TDS is not applicable

Identify the deposit

a) commercial paper

b) certificate of deposit

c) flexi deposit

d) caution deposit

%# A bank finances an ariculturist to buy a tractor. The

loan is secured by:

a) !ypothecation of the tractor

b)"ortae of the tractor c)#lede of the tractor

d)Assinment of the tractor

#$hich of the follo%in statement&s is&are True'

i) Commercial #aper is issued by a Corporate

ii) Certificate of Deposit is issued by a (ank

iii)etter of Credit is non fund based line of credita) i and iii

b) i

c) i*ii and iii

d) ii and iii


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'# (anks evaluate a credit proposal based on %hich of the

parameters'

i) character* capital* condition ii) capacity* collateral* compliance

iii) capital* collateral

iv) capacity* compliance

a) i

b) ii

c) i*iv

d) i*ii

# (anks cannot accept +C,- ( deposits in

a) Canadian dollar

b) Sinapore dollar

c) /S dollar

d) Australian dollar

)# $hich of the follo%in statement is True:a) A ,on resident Indian 0,-I) can open a +C,- 0()

account in Indian -upees

b) A ,on resident Indian 0,-I) can open a ,-1 a&c

in Canadian Dollar

c) A ,on resident Indian 0,-I) can open a ,-1 a&c

in Indian -upees

d) A ,on resident Indian 0,-I) can open a +C,- 0()

recurrin deposit account in 1uro


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*# "atch the follo%in:

i) ,arashimam Committee A Current -atio

ii) Short term solvency ( 1xport +inance

iii) 1C2C C 3 Standard Assets iv) Stand by l&c D Trade +inance

a) i) D ii) A iii) ( iv) C

b) i) C ii) A iii) ( iv) D

c) i) A ii) ( iii) C iv) D

d) i) ( ii) D iii) C iv) A

e) i) ( ii) A iii) D iv) C

+# An account holder dra%s a che4ue on a :

a) banker of the payee

b) banker of the dra%ee

c) banker of the dra%er

d) banker of the endorsee

,# As per prudential norms bank assets are not

classified as: a) Standard assets

b) 5uality assets

c) Dobutful assets

d) oss assets

$-# As reards cooperative banks * -(I does not:

a) issue licence b) permit forex business

c) appoint&approve stautory auditors

d) conduct inspection


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$$# Central (ank of India* is a nationali6ed bank. It is

classified as:

a) Cooperative Society reistered under the Co

operative Societies Act b) (ody corporate constituted under special statute&s

c) Company reistered under the Indian Companies

Act*789

d) either b or c

$%# The maximum (ank -ate is: a) ;<

b) < c) =.9<

d) ,one of the above

7;) The -eserve (ank of India Act*78;> does not deal

%ith:

a) financial supervision of banks&financial institutions

b) policy plannin of cooperative banks c) manaement of forex&forex reserves

d) capital manaement and business of banks

$'# C-- and S- are not applicable to

a) a certificate of deposit

b) credit balance in a cc account

c) a flexi deposit

d) a commercial paper


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$# (ancassurance is a) an insurance scheme to insure bank deposits

b) an insurance scheme exclusively for the employees

of banks c) a composite financial service offerin both bank and

insurance products

d) a bank deposit scheme exclusively for employees of

insurance companies

$)# A bank installed an AT" at a -ail%ay Station.Identifythe marketin mix:

a) promotion b) place

c) packae

d) product

$*# Tele bankin is based ona) virtual bankin

b) online bankinc) voice processin

d) core bankin

7?) (ankin -eulation Act*78>8 %as enacted to reulate:

a) -eserve (ank of India

b) bankin companies c) cooperative land development banks

d) primary aricultural credit socities


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$,# (ank A rants an overdraft to A(C td aainst book

debts. This is secured by:

a) hypothecation

b) pledec) mortae

d) assinment

%-# @#I, in a AT" card is :

a) #ermanent Information ,umber

b) #ersonal Identification ,umber

c) #rofessional Identification ,umber d) #ermanent Identification ,umber

%$# B(uy ,o% 3 #ay ,o% is commonly used for

a) credit cards

b) AT" Cards

c) chare Cards

d) none of the above

%%# on +orm Audit -eport 0+A-) is prepared&

sumitted by:

a) banks concurrent auditor&s

b) -(I inspector&s

c) statutory auditors

d) all of the above

%# $hich of the follo%in asset&s is&are not ,#As:


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a) fixed assets

b) standard assets

c) both a and b

d) neither a nor b

%'# nsite inspections of banks is based on

methodoloy.

a) C-ISI

b) CA"1S

c) CCI

d) +A-

%# A che4ue is received for payment %ith amount

mentioned only in %ords. The banker %ould:

a) as per ,I Act*honour the che4ue for the amount in

%ords

b) dishonour the che4ue because no amount ismentioned in fiures

c) to safe uard the banks interest return the

che4ue %ith reason:%ords and fiure differs


%)# Identify the document of title to oods:

a) (ill of exchane b) (ill of ladin

c) (ill of entry

d) any one of the above


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%*# In a 2arnishee rder* the banker on %hom a

arnishee order served is the

a) Eudement debtors creditor

b) Eudement creditors creditor c) Eudement creditors debtor

d) Eudement debtors debtor

%+# Sec ?9 of ,I Act*7??7 extends protection to the

a) payin banker

b) collectin banker

c) advisin banker

d) issuin banker

%,# pools money from investors and invests

in stocks*bonds* shares

a) a bank

b) a merchant banker c) a factor

d) a mutual fund

-# -am and Shyam t%in brothers aed 79 years.

They %ant to open a Eoint account in your bank. Fou

%ill allo% them* to open a Eoint account

a) to be operated Eointly b) %ith operatin instructions either or survivor

c) %ith operatin instructions former or survivor

d) %ith operatin instructions any one or survivor


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$# credit risk is:

a) default of the banker to maintain C--

b) default of the banker to issue credit card

c) default of the banker to release credit to the borro%er on time

d) default of the customer to repay the loan

%# In respect of -eional -ural (anks* the share

holdin pattern is:

a) Central 2overnment 9G


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fixed deposit receipt he needs to furnish

a) a po%er of attorney

b) a uarantee

c) a letter of creditd) an indemnity bond

# "r. Hayaraman maintains a S( account %ith your bank.

!e has iven a #A to his son * to operate his S( account.

The relationship bet%een the bank and "r.Hayaraman is:

a) debtor and creditor

b) principal and aentc) donor and donee


)# A bank rants a CC of -s.7G crores lineof credit to a client* aainst hypothecation of stocks.

The is marin of 9


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*# $hich is not the function of -(I'

a) reulates forex activities %ith the help of +1"A*7888

b) decides (ank rate*C-- and S- from time to time

c) opens and maintains S( accountsd) prescribes the capital ade4uacy ratio

+# /nder act* a copy of an entry in a bankers

records*certified by an officer of a bank may be treated as

prima facie evidence of a correspondin transaction in any

leal proceedins.

a) -eserve (ank of India Act*78;>

b) (ankin -eulation Act*78>8c) (ankers (ook 1vidence Act*7?87

d) -iht of Information Act*GG9

,# As reards deposit insurance %hich of the follo%in

statement&s is&are True'

i) insurance cover for deposits 0demand and term) upto

-s.7*GG*GGG.GG is availableii) insurance cover is provided by eneral insurance

companies

iii) insurance premium is to be paid semi annually by the

bank and not customer&s

a) i and iii

b) ii

c) ii and iii

d) iii


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'-# State %hich of the follo%in statement&s is&are True'

i) open ended schemes are offered by mutual funds

ii) banks cannot setup mutual funds* %ithout -(Is

permissioniii) bank branches are used as a distribution channel for

insurance products is called bancassurance

a) i*ii

b) ii*iii

c) i*iii

d) i*ii*iii

>7) $hat are the features of a bankers lien'a) called as implied plede

b) banker can retain the security

c) banker riht to sell in case of default

d) a*b and c

>) -ule in claytons case is an example of:a) riht of lien

b) riht of setoff

c) riht of transfer

d) riht of appropriation

>;)Section of ,I Act*7??7 defines a che4ue as


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a bill of exchane.State %hich statement&s is&are

false'

a) a che4ue and the bill of exchane is one and the

same b) a che4ue is al%ays payable on demand*%hereas

a bill of exchane can be payable after a particular

time

c) a che4ue can be crossed* but not a bill of exchane

d) a che4ue is dra%n on a banker* a bill of exchane

can also be dra%n on a client

>>)$hat is a personal deposit account'

a) a current account opened and maintained by an

individual

b) a hih net %orth client opens a special account

offered by the bank personal bankin division

c) an account opened %ith bank&s* by certain overnment departments* authori6ed by the

Accountant 2eneral



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>9)ne of the key area of Asset iability

"anement of banks is the interest manaement.

(anks analyse interest trends based on:

a) ap analysis b) value at risk

c) duration analysis

d) all of the above

>) #rovisions of S-+A1SI Act*GG is not

applicable to

a) a plede of movables as per Sec 7= of Indian

Contract Act

b) any interest for repayment 0upto -s one lakh

for secured loans and upto -s ten lakhs for

unsecured loans

c) any one of a or b

d) both a and b

>=) Securitisation is the process of ac4uisition of

loans classified as :

a) standard assets

b) book debts

c) non performin assets



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>?) If* in a companys overnment share holdin is

more than 97< * it is classified as:

a) #ublic td

b) 5uasi overnmentc) #rivate td

d) 2overnment

>8) $hat is a Demat a&c:

a) acronym for Demat is demateriali6ation of shares

b) demateriali6ation is a paperless book entry form

of shares

c) demat accounts can be opened by banks

d) all of the above

9G) ,1+T is:

a) ,ational 1lectronic +unds Transfer system offers

an efficient*secured*economical facility b),1+T is available for retail customers

c) ,1+T is an end to end and covers only the

net%orked branches

d) all of the above

Solutions:


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7) b 77) b 7) d ;7) d >7) d

) a 7) d ) c ;) b >) d

;) c 7;) b ;) c ;;) a >;) a

>) d 7>) d >) b ;>) a >>) c9) b 79) c 9) c ;9) a >9) d

) c 7) b ) b ;) d >) d

=) b 7=) c =) d ;=) c >=) c

?) c 7?) b ?) a ;?) c >?) d

8) b 78) d 8) d ;8) a >8) d

7G) c G) b ;G) a >G) d 9G) d

1. AGRI / RURAL LOAN PRODUCTS

TOPIC ANSWER EXPLANATION

PURCHASE OF

AGRICULTURE

LAND

3 to 5 km. Near the rural area

9 to 12 years Repayment of agri loan

20% Margin

Weaker sectionsmall! marginal farmer

"gricultural # lan$less laourers

AGRI CLINICS

Rs. 5 lakhs "gri &ra$uates

Rs.10 lakhs 'ro(ect cost

25% usi$y N")"R*

33.33 % usi$y +,-

CROP LOANS

2% nterest susi$y

Rs.3 lakhs Ma/imum susi$y

arest $ay)asis for calculation of interest for

short crop loans

ery months )asis for normal crop loan

2 crop seasons hort $uration crops N'"

1 crop season 4ong $uration crop N'"

COLD STORAGE

"ny area t can e opene$.

"griculture $irect torage for "gri pro$ucts

"griculture in$irect 4easingrunning6 of storage areas

torage for Non agri pro$ucts

Non priority4easing of storage of non agri

pro$ucts


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GODOWN

Rural # semi uran area t can e opene$

"griculture $irect torage for "gri pro$ucts

"griculture in$irect 4easingrunning6 of storage areas

torage for Non agri pro$ucts

Non priority 4easing of storage of non agri pro$

15% usi$y for in$ii$uals

25% usi$y for partnership

33.33% +ooperatie ocieties

POULTRY 7% nterest susi$y

)ir$ flu affecte$ units +lassifie$ as stan$ar$

HORTICULTURE

25% Rs. Ma/imum 20

lakhsnterest susi$y

Within 1 year fro $ate of

sanction.

4etter of in$ent must go to the

horticulture oar$.

KVIC LOAN

25% usi$y for Rs. 10lakhs10% usi$y for aoe Rs. 10 lakhs

'M&' N R8R"4 ) :;+

Within 15 $ays from the

first $isursement

usi$y statement shoul$ e

sumitte$

SGSY 5 years Minimum repayment perio$

SME

Rs. 10 4akhs Micro serice

< Rs. 10 4akhs up to Rs.

2 croremall serice

Rs. 25 4akhs Micro Mfg

< Rs. 25 4akhs up to Rs.

5 +roremall Mfg

< Rs. 5 +rore up to Rs.

10 +roreMe$ium Mfg

< Rs. 2 +rore up to Rs.

5 croreMe$ium serice

8p to Rs. =.50 crore -urnoer metho$ to e applie$ to

Rs. 50 lakhs +&-M loan coerage

Rs. 3=.50 4akhs. "mount coere$ =5%6

Micro ent !Rs. 5 lacsWomen N states

ncrease$ coerage of >0%

+ , - ?nly =5% +oerage

Within 7 @eeks 4oan application to e $isurse$

70% of total M -arget for Micro serices

0% Risk @eight for coerage un$er


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+&-M

50%Risk @eight for coerage un$er

+&+

1.5% &uarantee fee one time6

0.=5% "nnual fee

)oth fun$ an$ non fun$

ase$ facilities+oere$ un$er +&-M

*) Monitors M

Rs. 10 lakhs Ma/imum un$er -8A

25% an$loom susi$y general6

33.33% Aor +, -


19/33

--

1.:+ stan$s for :no@ our +ity :no@ our +ustomer :no@le$ge for our +ustomer serice None of the aoe

2.R*" is the areiation of nsurance rules for $eelopment an$ authority nsurance regulator an$ $eeloper of n$ia nsurance Regulatory an$ *eelopment authority

None of the aoe

3."-M stan$s for anytime money automatic teller machine "utomate$ teller machine None of the aoe

7.;aluation of inentory is $one using arious metho$s. ?ne such is A4?. -he full form of this is first in lost out first in last out firm in lest out

none of the aoe

5.+"R is capital reBuire$ to e rought in y a ank in relation to its total assets n relation to its risk @eighte$ assets n relation to its $eposits None of the aoe

.Which one of the follo@ing type of assets cannot e taken y anks un$er ple$ge agricultural pro$uce gol$ (e@ellery stocks of in$ustrial pro$ucts perishale goo$s

=.+onsumer protection "ct is create$ y &? to a$$ress to the grieances of arious consumers.-his mechanism operates from

+entral! state an$ $istrict leels ?nly from $istrict an$ state leels ?nly from state an$ central leels Arom central! state! $istrict an$ taluka leels

>."-Ms are typically $eploye$ y anks forCCCCCC


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@holesale anking merchant anking retail anking all the aoe

9." ankDs Ai/e$ *eposits is characteriEe$ yCCCC

Ai/e$,Aloating interest rate as agree$ @ith the customer at the time of the $eposit Ai/e$ perio$ of the $eposit 'erio$ical Repayment of interest

10.Ai/e$ $eposits cannot e CCCCC Rene@e$ for a further perio$ on maturity $ate -ransferre$ to thir$ parties 'reFpai$ efore the maturity $ate "ll the aoe

11. :no@ our +ustomer :+6 gui$elines are inten$e$ to CCCC stalish i$entity @ith resi$ence proof of the customers 'reent fictitious or G)enamiD transactions

'rotect the ank from the risk of not acting in goo$ faith "ll the aoe

12.Mr." is not maintaining the minimum alance in his account an$ is in the hait of issuingcheBues @ithout maintaining sufficient alance.!is account has ecome an un$esirealeaccount $ue to unsatisfactory operations.e $oes not agree to close the account een afterrepeate$ oral reBuests .n this case!the ank has CCC

right to close the account once cheBue ook gets e/hauste$ . right to close the account after sering notice an$ can close the account on e/piry of

the notice perio$ c. right to close the account after giing pulic notice in the notice oar$ of the ank no right to close the account un$er the )anking ?mu$sman scheme

13. "n actionale claim is assigne$ in faour of more than one assignee at $ifferent points oftime.-he priority of charge is $etermine$ @ith reference to the $ate of CCCC

e/ecution of notice of assignment e/ecution of the @ritten instrument for assignment receipt of notice of assignment receipt of @ritten instrument for assignment

17.-he $ocument to e erifie$ to ascertain the orro@ing po@ers of $irectors is CCCC Memoran$um of "ssociation "rticles of "ssociation +ertificate of incorporation )oar$ Resolution

15. -he follo@ing are security issues relating to internet anking 1.+onfi$entiality of transactions2.ntegrity of transactions 3.NonFrepu$iation of transactions y customers 7.'riacy of transaction+hoose the most appropriate ans@er from the follo@ing

"ll the aoe 7 statements are concerne$ @ith security issues tatement 1!2 an$ 3 only are concerne$ @ith security issues tatement 1 an$ 2 only are concerne$ @ith security issues tatement 1 only is concerne$ @ith security issues

1. M+R +heBues are use$ for clearing in n$ia. -he +entre +o$e in M+R contains 9 $igits


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> $igits = $igits $igits "ll the aoe

1=. -he follo@ing is not a feature of R-&HReal -ime &ross ettlement ystemI nstruction 'rocessing ettlement 'rocessing 4iBui$ity Management 'rofitaility Management

1>. -he follo@ing is not a operational risk Aailure of "-M +ar$ Arau$ through mart +ar$ Money laun$ering through +re$it +ar$ Aailure to issue a replacement car$

19.'N in mart +ar$ is calle$ FFF

'ermanent n$e/ Numer

'ersonal $entification Numer 'ersonal n$e/ Numer 'ermanent $entification Numer

20.mart +ar$ is J

pecial purpose +ar$s Microprocessor +ar$s 'rocessing unit contains memory for storing $ata 'rocessing unit for soft@are han$ling

21.-he @or$ KA-'D stan$s for FFFFF Aile -ranslate 'rotocol Aile -ransit 'rotocol

Aile -yping 'rotocol Aile -ransfer 'rotocol

22 -he term G-M4D connotes J yper -e/t Markup 4anguage yper -ranscription Markup 4anguage igh -e/t Markup 4anguage igh -erminal Markup 4anguage

23 Which one of the follo@ing is an e/ample of NonFfun$ ase$ cre$it facilityL +ash +re$it &uarantee -erm 4oan

*eman$ 4oan

27 +ash +re$it facility is grante$ y a ank to finance the orro@erDsCCCCC nentories or stocks of goo$s Ai/e$ assets -emporary liBui$ity nee$s )oth a6 an$ c6 aoe

25 4+ is a popular pro$uct of anks. -his is a fun$ing facility calle$ letter of cre$it


22/33

it is fun$e$ facility calle$ line of cre$it it is a nonFfun$ facility calle$ line of cre$it none of the aoe

2 +)4 is an organiEation @hich is engage$ in collecting an$ $istriuting information to anks collecting application $etails an$ sumitting applications to anks collecting an$ recommen$ing loans to anks an$ guaranteeing the same collecting an$ maintaining cre$it recor$ of oth in$ii$ual an$ usiness customers for the

enefit of anks

2= M stan$s for lectronic me$ia interface Buate$ monthly instalment Bual monthly interest None of the aoe

2> )anks are generally engage$ in @hich of the follo@ing leasing actiity operational lease serice lease

financial lease leerage$ lease

29 +"R is capital reBuire$ to e rought in y a ank in relation to its total assets n relation to its risk @eighte$ assets n relation to its $eposits None of the aoe

30 )anks hae to otain licence for opening ranches from +entral &oernment R) tate &oernment in @hich they @ant ranches

None of the aoe

31 " ank accepts $eposits of money from memers of CCCCCC "ll classes of the society irrespectie of income leels mi$$le class people @ho are salary earners rich class people @ho hae high $isposale income poor class of people @ith meagre income

32 " ankDs Ai/e$ *eposits is characteriEe$ yCCCC Ai/e$,Aloating interest rate as agree$ @ith the customer at the time of the $eposit Ai/e$ perio$ of the $eposit 'erio$ical Repayment of interest

"ll the aoe 33 -eleanking $oes not proi$e the follo@ing anking facilities to customers

ReBuest for "ir -icket ReBuest for +heBue )ook ReBuest for +ash With$ra@al ReBuest for 4oan against *eposit

37 -he 8tility erice 'roi$ers like telephone companies! electricity oar$s! gas companies!


23/33

insurance companies otains an authoriEation from the customer to $eit his specifie$ ankaccount @ith the amount of the ills at regular interals. -his is kno@n as

*eit +learing ystem +re$it +learing ystem tan$ing nstructions ystem "uthoriEation ystem

35 -he follo@ing is,are computer har$@are 16Mo$em 26thernet +ar$ 36?perating ystem76'orts +hoose the most appropriate ans@er from the follo@ing

1 only is correct 1 an$ 2 are correct 1!2 an$ 3 are correct 1!2!3 an$ 7 are correct

3 )uy No@ J 'ay No@ is commonly use$ for FFF *eit +ar$s ;ault +ar$s +re$it +ar$s Fpurse

3= " Recurring *eposit account reBuires the customer toCCCCCCC *eposit any amount at specifie$ interals for a specifie$ perio$ *eposit a fi/e$ amount at @ill for a specifie$ perio$ *eposit a fi/e$ amount at specifie$ interals for any perio$ *eposit a fi/e$ amount at specifie$ interals for a specifie$ perio$

3> Nomination is not applicale in the case ofCCCCCC "ccount of an in$ii$ual oint account of t@o or more in$ii$uals "ccount of in$u 8n$ii$e$ Aamily 8A6 "ccount of a company

39 Working capital cre$it facilities are inten$e$ to meet the orro@erDsO CC

hortFterm cre$it reBuirements Me$iumFterm cre$it reBuirements 4ongFterm cre$it reBuirements "ll the aoe

70 Aor nternet )anking a customer reBuiresCCCCC 'ersonal +omputer an$ telephone link 'ersonal +omputer! telephone line! mo$em an$ nternet erice 'roi$er 'ersonal +omputer! telephone link an$ mo$em 'ersonal +omputer! telephone link an$ nternet erice 'roi$er

71 -he $istinction et@een A an$ A* is While As inest in in$ustries A*s inest in capital markets

While As inest in +apital markets A*s inest in in$ustries )oth can inest in +apital markets None of the aoe

72 N'"s are critical for the health of a ank. -hese are FF Ne@ 'erforming "ssets NonF'erforming "ssets Ne@ 'romising "$ances None of the aoe


24/33

73 M stan$s for lectronic me$ia interface Buate$ monthly instalment Bual monthly interest None of the aoe

77 -he core functions of a ank compriseCCCCCCC $epositFtaking from the pulic len$ing of money an$ inestment in &oernment ecurities fun$s transfer, remittances in the form of M-,--,** all the aoe

75 )ank $eposits are preferre$ y customers oer other types of saings instruments ecauseofCCCC

afety an$ liBui$ity of capital igh returns -a/Ffree returns "ll the aoe

7 ")+ )ank 4t$ file$ a suit e/clusiely against the guarantor an$ $i$ not opt to procee$ against

the [email protected] this case!@hich of the follo@ing is correctL &uarantor is a faoure$ $etor an$ the anks action is legally not tenale the ank has no right to procee$ against the guarantor @ithout concurrently procee$ing

against the orro@er the ank can not procee$ against the surety as surety stan$s $ischarge$ y such action

of the ank the ank can procee$ against the Buarantor an$ the ankDs action is certainly tenale

CCCCCCis the process in @hich the physical moement of cheBues @ithin or et@eenanks an$ clearing house is curtaile$,eliminate$ an$ replace$ y electronic recor$s of theircontent for further processing,transmission .

+heBue truncation *igital imaging

"utomate$ +learing Micro filming

7= -he 8tility erice 'roi$ers like telephone companies! electricity oar$s! gas companies!insurance companies otains an authoriEation from the customer to $eit his specifie$ ankaccount @ith the amount of the ills at regular interals. -his is kno@n as

*eit +learing ystem +re$it +learing ystem tan$ing nstructions ystem "uthoriEation ystem

7> n ?er$raft account @ith a ank! oer$raft refers to the $ra@ingsCCCCCCC ?er an$ aoe the cre$it alance in the account

Within the cre$it alance in the account ?er the sanctione$ limit )oth a6 an$ 6 aoe

#-I,CI#1S + (A,JI,2

I./ LE00ER OF CRE1I0


25/33

-$/ A do2u3ent!r4 2redit is ! lin5 6etween 777777777 !nd 7777777 8!2ilit!ting intern!tion!l

tr!de/

($# Bu4er (%# Sellers (# $ 9 % ('# None

-%/ It is !n undert!5ing 64 t"e o:ening 6!n5 to :!4 su6;e2t to 2onditions l!id t"erein/ 0rue <

F!lse

-/ 0"e 6u4er o8 t"e goods= o:ening !n LC is !lso 2!lled A::li2!nt/ 0rue < F!lse

-'/ Intern!tion!l C"!36ers o8 Co33er2e "!s issued guidelines :r!2ti2es 8or LC tr!ns!2tions=

5nown !s

($# >CP1C (%# In 2o ter3s (# >RC ('# All

-/ 0"e LC w"i2" 8!2ilit!tes 8in!n2ing to t"e su::lier :rior to s"i:3ent is 5nown !s

($# Red (%# Green (# Sig"t ('# None

-)/ An LC 2!n 6e tr!ns8erred in 8!our o8 !not"er 6ene8i2i!r4 is 2!lled 0r!ns8er!6le LC/ 0rue <

F!lse

-*/ ?"en !n LC is o:ened 8or :ro2ure3ent o8 goods= on t"e 6!25ing o8 !n e@:ort LC= it is 2!lled

($# B!25 to 6!25 (%# St!nd64 (# Adised ('# Con8ir3ed/

-+/ St!te w"et"er t"e 8ollowing st!te3ents !re 0rue or F!lse/

(!# 0"e issuing 6!n5 gener!ll4 !dises LC t"roug" !dising B!n5/

(6# 0"e rei36ursing 6!n5 negoti!tes t"e do2u3ents !nd :!4s to t"e 6ene8i2i!r4/

(2# 0"e !::li2!nt "!s not o6lig!tion to inde3nit4 6!n5s !g!inst !n4 o6lig!tions

i3:osed 64 8oreign l!ws/(d# Adising B!n5 un!6le to in8or3 2ont!2t i33edi!tel4 issuing 6!n5/

(e# A::li2!nt is li!6le 8or !2ts due to 8oreign l!w/

(8# Bill o8 E@2"!nge is dr!wn 64 t"e 6ene8i2i!r4 o8 t"e LC on t"e o:ening 6!n5/

(g# Inoi2e is ! Co33er2i!l do2u3ent/

("# Bill o8 L!ding is ! do2u3ent eiden2ing s"i:3ent o8 goods/

(i# 0"e Curren24 o8 issu!n2e o8 t"e insur!n2e :oli24 3ust 6e s!3e !s t"e 2urren24 o8

LC/

(;# In 2!se o8 us!n2e t"e 8oreign 2urren24 li!6ilit4 would 6e 2r4st!llied on t"e due d!te=

into Indi!n Ru:ees/

(5# 0"e i3:orter is reuired to su63it Bill o8 Entr4= eiden2ing i3:ort o8 goods into

Indi!/

(l# B!n5s s"ould o:en Letter o8 Credit on Be"!l8 o8 t"eir Regul!r Custo3ers onl4/

(3# St!nd 64 Letters o8 Credit !re ! su6stitute o8 Gu!r!ntee/(n# St!nd64 LCs !re issued 64 6!n5s !s ! do2u3ent o8 :ro3ise in res:e2t o8 Non

Per8or3!n2e

(o# >ni8or3 rules 8r!3ed 64 ICC 8or 6!n5to6!n5 Rei36urse3ent !re set out in

:u6li2!tion .RR %/

(:# 0"e rei36ursing 6!n5 is in no w!4 2on2erned or 6ound 64 t"e :roisions

in2or:or!ted in t"e Letter o8 Credit/

(# 0"e rei36urse3ent !ut"orit4 3ust not "!e !n E@:ir4 d!te/

(r# Rei36urse3ent 2l!i3 3ust not 6e :resented $- d!4s :ior to due d!te 8or 2l!i3ing

rei36urse3ent/

(s# 0"e rei36ursing 6!n5 2"!rges !re nor3!ll4 on !22ount o8 Issuing 6!n5/

(t# >CP1C D LC= In2oter3s D In2ludes w"!t 2ost= >RR D Rei36urse3ent >RC D

2olle2tion

,/ Fill in t"e 6l!n5s/

(i# It is t"e res:onsi6ilit4 o8 t"e 77777777777 6!n5 to e@!3ine t"e do2u3ents= 6e8ore

3!5ing :!43ent/

(ii# 0"e !dising 6!n5 3ust ensure 77777777777777 o8 LC 6e8ore !dising t"e s!3e to

t"e 6ene8i2i!r4/

(iii# In 2!se t"e rei36urse3ent 6!n5 does not :!4 to t"e negoti!ting 6!n5= t"e ulti3!te

li!6ilit4 lies wit" t"e 777777777777777 6!n5/

($# O:ening B!n5 (%# Con8ir3ing (# Genuiness ('# None


26/33

.III/ NRI (0rue < F!lse#

-$/ A :erson 3ust 6e o8 Indi!n origin or !n Indi!n :!ss:ort "older= st!4ing !6ro!d 8or

Inde8inite :eriod= to u!li84 8or st!tus o8 !n NRI/

-%/ 0"e 3ini3u3 :eriod 8or NRE ter3 de:osit is $ e!r//

-/ NRE s!ings !22ount is ! Ru:ee !22ount/

-'/ FCNRB A22ounts !re ne2ess!ril4 0er3 de:osit !22ounts 3!int!ined in design!ted ) 8oreign2urren2ies/

-/ Interest e!rned on 6onds= inested 6e8ore getting NRI st!tus= 2!n 6e 2redited to NRO

!22ount/

-)/ An !3ount u: to >S1 $ Million 2!n 6e re:!tri!ted out o8 6!l!n2es "eld in NRO !22ount= 8or

:er3issi6le tr!ns!2tions/

-*/ 0"e 3!@i3u3 :eriod 8or FCNRB de:osits is 4e!rs/

-+/ In FCNRB de:osits t"e de:ositor does not 6e!r E@2"!nge ris5/

-,/ NRNR !nd NRSR s2"e3es "!e sin2e 6een dis2ontinued/

$-/ 0"e 3!turit4 :ro2eeds o8 t"e NRNR !22ount 2!n 6e 2redited to NRE !22ount/

$$/ NRIs 2!nnot 2!nnot !2uire s"!res or :ro:ert4 64 w!4 o8 in"erit!n2e 8ro3 ! :erson resident

outside Indi!/

$%/ NRI 2!n !2uire s"!res 6ot" on re:!tri!6le !nd nonre:!tri!6le 6!sis/

$/ NRIs 2!nnot inest in !n4 :!rtners"i: 8ir3 !s owners


27/33

these deposits shall from part of the assets of the company on %hich the creditors in India

shall have the first chare.

;>.. Declaration of dividend by banks re4uire a minimum 8< of CA- and ,et ,#As not

exceedin =?.. -(I is authori6ed to reulate interest rates on loans and advances as %ell as deposits.M The /surious oans Act. 787? prohibits lendin at exorbitant rates. The la% has

been made to protect the %eaker borro%ers from the po%erful moneylenders

M -(I has issued uidelines in respect of internet bankin. These cover a..

Technoloy and Security issues b.. eal issue and c . -eulatory andsupervisory issues

99..The uidance 0(asel committee) entitled 1nhancin Corporate 2overnance for (ankin rani6ations hihlihts the importance of the roles of boards of directors 0%ith

a focus on the role of independent directors) and senior manaement.

. effective manaement of conflicts of interest

. the roles of internal and external auditors* as %ell as internal control functions

. overnin in a transparent manner* especially %here a bank operates in Eurisdictions*

or throuh structures* that may impede transparency and

. the role of supervisors in promotin and assessin sound corporate overnance practices

7..(anks have to file a return on their unclaimed deposit %ithin ;G days of the end of each calendar year.

.. All deposits not operated in 7G years

.. +or term deposits* the period of 7G years starts from the expiry of the period of thedeposit

=..Selective Credit Control seeks to influence the demand for credit by


28/33

0i). makin borro%in more costly for certain purposes %hich are considered relatively

inessential or

0ii). by imposin strinent conditions on lendin for such purposes. r 0iii). by ivin concessions for certain desired types of activities

?..The tools employed for exercisin SCC are0i) .. minimum marins for lendin aainst selected commodities

0ii) .. ceilins on the levels of credit

0iii).. charin of minimum rate of interest on advances aainst specified commodities.

=..The -eserve (ank of India 0Amendment) Act*GG0Section >9$) empo%ers the

(ank* in public interest or to reulate the financial system of the country to its advantae*to determine the policy relatin to interest rates or interest rate products and ive

directions in that behalf to all aencies or any of them* dealin in securities* money

market instruments* forein exchane * derivatives* or other instruments of like nature as

the (ank may specify from time to time.

=;..(ankin mbudsman is an authority established under the (ankin mbudsmanScheme* 7889 by the -(I. The purpose is to resolve and settle the complaints of bankin

public aainst the commercial banks and the scheduled primary cooperative banks

%ithout resortin to courts.=>..(ankin mbudsman scheme applicable to all commercial banks* --(s and

schedules primary cooperative banks.

.. Disputes bet%een t%o banks can also be taken up %ith the (ankin mbudsman

..A bankin ombudsman may act as an arbitrator

?..Appropriation of any amount from the reserve fund or the share premium account hasto be reported to -(I %ithin 7 days of such appropriation.

.. 1very scheduled bank has to submit a return to -(I sho%in the demand and time

liabilities and borro%ins from banks in India

?9..In the case of bankin companies %hich are not scheduled banks* as per the

provisions of (- act* the cash reserve need not be maintained %ith -(I. It may be %ith

the bank itself* or in a current account %ith -(I or by%ay of net balance in currentaccounts or in one or more of these %ays

?=..1very bankin company has to maintain in India certain amount of assets as per the provisions of (- act.

.. At the close of business on the last +riday of every 4uarter* such assets shall not be less

than =9< of the demand and time liabilities of the bankin company in India.


29/33

?8..1very bankin company has to submit ; copies of its balance sheet and profit and loss

account to -(I %ithin ; months from the end of the period to %hich it relate. The period

may be extended by the -(I by a further period not exceedin ; months.

8>..-(I is empo%ered to order special audit of the accounts of any bankin company.

The expenses relatin to the special audit to be borne by the concerned bankincompany.

.. 1very month* a bankin company has to submit to the -(I a return sho%in its assets

and liabilities in India as at the close of business on the last +riday of the previous month

7G..$ithin 79 days of the %indin up order* the li4uidator has to ive notice callin for

claims for preferential payment and other claims form every secured and unsecured

creditor. The depositors need not make claims. The claims of every depositor of a bankin company is deemed to have filed for the amount as sho%n in the books of the

bankin company standin to his credit.

7G>..State (ank of India %as established under sec ; of the State (ank of India Act*7899to take over the undertakin of the then Imperial (ank and to carry on the business of

bankin and other business in accordance %ith that act... The Central 2overnment can ive directions to S(I on matters of policy involvin

public interest in consultation %ith the 2overnor of -(I and the Chairman of the State

(ank.

7G..The State (ank %ill act as an aent of -(I at the places %here it has a branch and

%here -(I has no branch.

.. To handle overnment and other business as re4uired by -(I.

.. The terms and conditions shall be as areed bet%een them.

7G=.. The Central 2overnment may after consultation %ith the S(I and -(I by order in

%ritin authori6e a subsidiary bank to undertake other form of business.

..The State (ank is empo%ered to inspect the subsidiary banks

..The auditors are appointed by State (ank of India in consultation %ith -(I

7G8.. -eional -ural (anks have the holdin pattern such as Central 2overnment 9G< *

Sponsor (ank ;9< and State 2overnment 79<M T%o or more --(s may be amalamated by the Central 2overnment by

notification in the fficial 2a6ette

M77;.. In respect of ,ationali6ed (anks* the shares other than those held by the Central

2overnment are freely transferable. ,o shareholder other than the Central 2overnment

can exercise votin rihts in excess of 7 < of the total votin rihts of all theshareholders

77>..The directors of ,ationali6ed banks are nominated by the Central 2overnment or

elected from shareholders.


30/33

.. Amon others one Chartered Accountant %ith not less than 79 years of experience

nominated in consultation %ith -(I.

.. ,ot more than directors to be nominated by Central 2overnment

77=.. State (ank of India act %as amended to divide capital into shares of -s.7G each

instead of -s.7GG&M The (ankin Companies 0Ac4uisition and Transfer of /ndertakins) Act

amended to facilitate public holdins of shares.

M Authori6ed capital could be up to -s.79GG& crore divided into shares of -s.7G&each and also to increase or reduce the authori6ed capital bet%een -s.79GG crore

and -s.;GGG crore

778..The minimum paid up capital and reserves to start bankin business by a cooperative bank is not less than -s.7.GG lac

.. A cooperative bank not to lend on its o%n shares& unsecured loans or advances to its

directors& any company or associates %herein the director has interest

7G.. -estrictions not applicable for unsecured loans& advances made by a cooperative

bank aainst bills for supplies or services made to overnment or bills of exchanearisin out of bona fide* commercial or trade transactions.

.. A cooperative bank to et permission of -(I to open a branch in a ne% place.

7>>.. $hen the customers sinature on the che4ue is fored there is no mandate to the

bank to pay. As such a banker is not entitled to debit the customers account on such

fored che4ue.

.. The dra%ee of a che4ue havin sufficient funds of the dra%er in his hands properlyapplicable to the payment of such che4ue must pay the che4ue %hen duly re4uired to do

so* and* in default of such payment* must compensate the dra%er for any loss or damae

caused by such default.

7>9..B#ayment in due course means payment in accordance %ith the apparent tenor of the instrument in ood faith and %ithout nelience to any person in possession thereof

under circumstances %hich does not afford a reasonable round for believin that he is

not entitled to receive payment of the amount therein mentioned.

Interest free e4uity loan

,ational e4uity loan mahila udayam scheme

7. proEect cost 9G lakhs 7G lakhs. "arin 7G< 7G<

;. (ank loan 9< 9<

>. 14uity loan 9< 9<

9. "ax. 7G lakhs .9 lakhs


31/33

. (oth ents and %omen %omen only

=. refinanace from SID(I reimbursement from SID(I

?. -epayment period = years = years.

#-D/CTS +-" 1C2C

#ICF 2/A-A,T11

7. to exporters to banks

. importer risk exporter risk ;. contract* shipment*standard* pre* post shipment uarantee*

Specific* commercial* political* production finance* finance*

1xchane rate fluctuations*small performance* transfer uarantee

1xporter policy

1ducational loan

local studies 7G lakhs* forein studies G lakhs* nil marin upto > lakhs* no collateral

upto =.9 lakhs* simple interest* interest subsidy* holiday period.

!ousin loan to rural poor #roEect cost 9GGGG* loan ;9GG* subsidy 7GGGG * marin =9GG

+inancial inclusion#oor people* no minimum balance* no frill account* no JFC* loan* atm card* che4ue book

facility* concession in service chares.

"icro7. Service. Investment in plant and machinery not to exceed 7G lakhs

. "anufacturin.Investment in plant and machinery not exceed 9 lakhs

;. C2+T cover from SID(I from =9< to ?9<4. Included in Priority sector advances

5. Minimum 40% target on total SME advances upto loan Rs.5 lakhs

Q1. The debt equity ratio –1] compares the investment of owners to long termborrowings;2] is used to determine the mi of term borrowings and sta!eof owners and in ma!ing up the capital structure of theorgani"ation satisfactory;#] indicates the soundness of the long term $nancial policy ofthe unit;%] all the three above;&] none of these. '() *


32/33

Q2. )tatutory +iquidity ,atio -)+,] for scheduled ban! isregulated by the ,eserve an! of /ndia under the powersconferred upon it by –1] ,/ 'ct0 1#%;2] , 'ct0 1%;

#] ompanies 'ct0 1&3;%] 4nion 5inistry of 6inance;&] none of these. '()

Q#. 7ne of the important means of bridging the gap betweenthe wor!ing capital required and the permissible ban! $nance$nance is the net wor!ing capital or the liquid surplusavailable as per the last balance sheet of the unit. (etwor!ing capital is –

1] The equity of the owerns sta!e in the business;

2] the amount of current assets ;#] the ecess of current assets over current liabilities;%] only -1] and -2] above;&] none of these. '(*

Q%. ' bill discounted by the an! is returned unpaid asdishonoured. The ban! will –1] debit the party account without prior notice;2] debit the party account with prior arrangement;#] ta!e a fresh bill and ad8ust the amount with the dishonouredbill and the proceeds thereof ;

%] !eep the dishonoured bill pending for some time;&] none of these. '()

Q&. The 9overnment securities are called gilt edged securitiesbecause –1] the carry $ed rate of interest;2] they are easily reali"able and title thereto is not di:cult toascertain;#] their prices do not uctuate adversely;%] all of the above;

&] none of these. '() *

Q3. /n partnership $rm0 one of the partners is a sleepingpartner and has no authority to operate the account as peroperational instructions; one day he writes to the an! to stoppayment of a particular cheque. /n such a case –


33/33

1] refuse to accept such stop payment instructions;2] we will have to honour his request;#] the matter will be referred to other partners for theircon$rmation;%] payment of the cheque should be postponed till the

con$rmation in writing from other partners;&] none of these. 'ns b

Q

Documents

Jaiib i 50q-Principles