NI Act_ Qnr

7/27/2019 NI Act_ Qnr

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VIJAYA BANK

LEARNING SYSTEM

Study Material For Pre-Promotion Test -Negotiable Instruments Act

Sl.No Questions

1. The Negotiable Instruments Act 1881 came into effect from

a) 1st

January 1881

b) 1st July 1881

c) 1st March 1881

d) 1st

March 1882

2. The Negotiable Instruments Act 1881 is applicable in

a) All states comprising of erstwhile British India

b) The whole India excluding Jammu & Kashmir

c) The whole India including Jammu & Kashmir

d) The whole India excluding Sikkim & Bengal

3. Negotiable instruments are defined under

a. Sec 52 of B R Act

b. Sec 13 of NI act

c. Sec 25 of RBI Act

d. Sec 4 of NI Act

e. None of these

4. Cheque, Bill of exchange and promissory note are defined in the NI Act

respectively in Sections

a. 4,5,6

b. 5,4,6

c. 6,5,4

d. 4,6,5

e. None of these

5. A Pro-note cannot be issued

a. payable to bearer on demand

b. payable to the order of a person on demand

c. payable to a bank

d. All these can be issued

e. None of these

6. Withdrawal forms used are _______instruments

a. special instruments

b. not negotiable

c. quasi negotiable

d. negotiable

e. None of these

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7. The restriction that a bill of exchange or pronote cannot be issued payable on

demand to bearer is contained in

a. Sec 31 of RBI Act

b. Sec 31 of NI Act

c. Sec 31 off Indian Currency Act

d.

Sec 31 of B R Acte. None of these

8. Cheque, Bill of exchange and promissory note are defined in the NI Act

respectively in Sections

a. 4,5,6

b. 5,4,6

c. 6,5,4

d. 4,6,5

e. None of these

9. A Pro-note cannot be issued

a. payable to bearer on demand

b.

payable to the order of a person on demandc. payable to a bank

d. All these can be issued

e. None of these

10. The restriction that a bill of exchange or pronote cannot be issued payable on

demand to bearer is contained in

a. Sec 31 of RBI Act

b. Sec 31 of NI Act

c. Sec 31 off Indian Currency Act

d. Sec 31 of B R Act

e. None of these

11.

When a cheque is drawn by the borrower and made payable to the same bank branch

a. The drawer and drawee are same

b. The payee and the drawer are same

c. The drawee and payee are same

d. The drawer, payee and drawee are same

e. None of these

12. A bill of exchange can not be drawn payable to the order of

a. drawer

b. drawee

c. payee

d.

banker e. None of these

13. The drawee of a cheque is always a

a. Bank

b. Customer

c. Firm

d. Company

e. None of these

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14. Which of the following instruments can not be made payable otherwise than on

demand?

a. Hundi

b. Pronote

c. Cheque

d.

Bill of exchangee. None of these

15. Demand drafts issued by banks are

a. Promissory Notes

b. Bill of exchange

c. Allonge

d. Special order

e. None of these

16. Payment of a cheque is complete if

a. The token is issued

b. If the account is debited by the counter staff

c.

If the cheque is authorized by the officer d. The cash payment is made

e. None of these

17. Cheques are not stamped because

a. it would be costly

b. they are exempted from stamp duty

c. a separate receipt is obtained from the payee by the drawer

d. bank is taking a separate receipt from the drawer

e. None of these

18. Hundies are governed by the provisions of

a. NI Act

b.

B R Actc. Usage and customs

d. RBI Act

e. None of these

19. A cheque for Rs.900 is presented for payment with amount written in English

and other particulars in the Regional language of the place. The handwriting

and the ink also differ. But the drawers signature tallies. The cheque

a. Can be paid

b. Cannot be paid

c. Should be confirmed by the drawer

d. A declaration should be obtained from the payee

e. None of these20. A cheque becomes stale after

a. 12 months

b. 6 months from the date of delivery

c. 6 months from the date of the cheque

d. 6 months from the date presented to the bank

e. None of these

21. A cheque issued by a customer as ‘Valid for one month’ is presented for

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payment after 2 months from date of issue. We should

a. return the cheque

b. the cheque may be paid

c. return with the reason ‘conditional order’

d. cheque should be paid as a cheque is valid for 6 months as per practice

e. None of these22. If a cheque is dated as 30-12-2010, and presented on 10-01-2011, then the

cheque is called

a. Post dated cheque

b. Stale cheque

c. Ante dated cheque

d. Invalid cheque

e. None of the above

23. A cheque has the amount written only in figures and not in words. The cheque.

a. should be paid

b. the cheque should not be paid

c.

should be paid if the cheque is presented in clearingd. should be completed by the banker after getting confirmation

from the customer.

e. e. None of these

24. Who cannot endorse a cheque?

a. An illiterate

b. A pardanashin lady

c. A minor

d. All of them

e. None of them

25. On 30t Novemeber 2010, a customer presents a cheque across the counter for

cash payment. The cheque bears the date 31/11/2010. the chequea. Should be returned with the remark ‘Impossible date’

b. The cheque is payable on 30 th Nov 2010

c. The cheque is payable on 01st Dec 2010

d. The date should be changed and signed by the drawer to be passed

e. None of theses

26. Mr.Ram opened an account in your branch on 30.12.2010 and a cheque book

was issued on 13-01-2011. On 19-01-2011 you received a cheque in clearing,

dated 16.12.2010, for Rs.5000.00. The cheque

a. should be returned

b. you can make the payment after getting confirmation from the drawer

c.

if there is sufficient balance, the cheque can be paidd. Should be returned ‘Account opened only on 30.08.2009

e. None of these

27. A cheque for Rs.100 is presented in clearing where payee’s name is not written.

The cheque should be

a. can be paid by ascertaining the payee’s name from the collecting branch

b. The cheque should be returned with reason ‘Cheque incompletely drawn.’

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c. as the amount involved is very small, the manager can pass the cheque at his

discretion

d. Should be paid as it is presented through clearing

e. None of these

28. For converting an order cheque into a bearer one it is necessary that the

alteration is authenticated bya. The drawer’s full signature

b. The drawee’s full signature

c. The payee’s full signature

d. Changing order to bearer is not a material alteration at all

e. None of these

29. A bearer uncrossed cheque for Rs.12500.00 favouring ABB & Co Ltd is

presented by a stranger on the counter for cash payment. The bank can:

a. Pay it

b. Not to pay

c. pay only order cheque

d.

Can be paid across the counter only if known person from thefirm is coming

e. None of these

30. An endorsement on a cheque is valid for a period of

a. six months from the date of endorsement

b. three months from the date of endorsement

c. one month from the date of endorsement

d. no such stipulation

e. None of these

31. The maximum number of endorsement that can appear on a cheque is

a. 6

b.

12c. Till the space is exhausted

d. No limit

e. None of these

32. While returning a cheque unpaid, the paying banker gives in writing the reason

for non payment because it is required under

a. Clearing house rules

b. NI Act

c. Banking Regulation Act

d. Best Practice Codes

e. None of these

33.

Which of the following is payment in due coursea. Payment of crossed cheque at counter

b. Payment of cheque which bears a forged signature of the drawer

c. Payment of bearer cheque with forged endorsement

d. Payment made to one bank when it is specially crossed to some other

bank

e. None of these

34. A pronote should have minimum of _______parties.

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a. 3

b. 4

c. 2

d. Only one

e. None of these

35.

Inchoate Negotiable Instrument means: a. Post-dated cheque b. Pre-dated cheque

c. Lost Instrument

d. Incomplete Instrument e. None of these

36. Which of the following about the post dated cheques are correct a. A post dated cheque is only a bill of exchange when it is drawn and it

becomes a cheque when it becomes payable on demand

b. A post dated cheque becomes cheque on the date which is written on it c. Both of these

d. None of these

37. A cheque payable to ‘self or bearer’ is presented for payment

a. the bank should pay only to the drawer

b. the bank can pay to the person presenting the cheque

c. the cheque should be returned

d. the payment should be made only through account

e. None of these

38. Crossing can be done

a. only on the left hand top corner of the cheque

b. only at the middle of the cheque

c. anywhere on the face of the cheque

d. anywhere on the cheque, even on the backside

e. None of these

39. The effect of crossing a cheque is

a. The payee is compelled to open a bank account

b. The bank is to keep a separate account of such cheque

c. The payee will have to endorse the cheque to the bank

d. The payee/endorsee can collect only through the bank

e. None of these

40. A cheque presented to our Raipur branch bears two crossing stamps- Canara

Bank, Villupuram and Canara Bank Raipur. The cheque

a. should be returned with reason ‘ crossed to two banks’

b. can be paid

c. should be returned with reason – ‘endorsement of Villupuram

branch required

d. should be returned – ‘Not a valid crossing’

e. None of these

41. Account payee crossing on a cheque indicate that

a. the paying banker should make payment only to the payee

b. the collecting banker should collect it for the payee

c. the paying bank should render accounts to payee

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d. the payment should be made only to drawer

e. None of these

42. A holder of a cheque cannot

a. cross a cheque

b. convert a general crossing to special crossing

c.

convert ‘& co ‘ crossing into not negotiable crossing d. cancel a crossing

e. None of these

43. The obligation of the bank to pay cheques of the customer is contained in

a. Sec. 31 of B R Act

b. Sec. 30 of NI Act

c. Sec. 31 of NI Act

d. The rules of the individual banks

e. None of these

44. ‘Allonge’ refers to

a. the stamp affixed on an usance bill

b. the sheet of paper used in writing a billc. the sheet of paper attached to a negotiable instrument for making

endorsement

d. the cheque return memo used by the bankers

e. None of these

45. An endorsement made by affixing a facsimile or rubber stamp is

a. valid as per the customs

b. legally valid

c. invalid

d. valid if the customer’s signature tallies with facsimile signature

e. None of these

46. A negotiable instrument meansa. Bill of Exchange

b. Cheque payable to bearer

c. Demand Draft

d. Cheque, Bill of Exchange and Promissory Note

e. None of these

47. A minor is incompetent to be a

a. payee

b. drawer

c. drawee

d. endorser without being bound by the endorsement himself

e. None of these

48. As per NI Act, a Minor may appear in a promissory note as a

a. Drawer

b. Drawee

c. Payee

d. Endorsee

e. None of these

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49. A negotiable instrument may be negotiated by

a. transfer deed

b. endorsement only

c. delivery or by endorsement and delivery

d. delivery only

e. None of these50. A negotiable instrument payable to bearer is negotiable by

a. delivery

b. endorsement

c. endorsement and delivery

d. transfer deed

e. None of these

51. A negotiable instrument payable to order is negotiable by

a. endorsement only

b. delivery only

c. endorsement and delivery

d.

assignmente. None of these

52. A negotiable instrument can :

a. be negotiated only once

b. be negotiated within a period of six months from the date it

bears

c. always be negotiated until it has been paid up or satisfied

d. only within a period of one year

e. None of these

53. How many parties are there in a Bill of Exchange?

a. Two

b.

Four c. Three

d. Only one

e. None of these

54. A cheque is always payable on

a. a specified future date

b. On demand

c. the will of the paying banker

d. the last day of the grace

e. None of these

55. If a cheque is partially written in Hindi and partially in English, the cheque

a.

should not be paid b. can be paid, after getting a declaration from the drawer

c. can be paid, if the cheque is presented by a bank

d. should be paid

e. none of these

56. Stop payment instruction remains valid for a period of

a. Three years

b. 12 years

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c. Six months unless revoked by customer

d. As long as the account is alive

e. None of these

57. To fix the liability of the drawer under Sec.138, the following conditions

should be fulfilleda. The cheque should have been issued by the drawer against valid

consideration

b. The cheque should have been presented to the paying banking within its

validity time

c. The payee or the holder in due course, gives notice in writing to the

drawer within 30 days of his receiving the information of dishonour

from the bank

d. The drawer should be given 15 days time from the date of receipt of the

notice to make the payment

e. All of these

58. A promissory note can be drawn for a maximum period of

a. five years

b. seven years

c. ten years

d. No limit

e. None of these

59. An undated cheque is

a. not considered invalid

b. considered invalid

c. considered not negotiable

d.

all of thesee. None of these

60. An Ante dated cheque is the one bears

a. the date of issue

b. a date before the date of issue

c. an impossible date

d. a date falling on Sunday or national holiday

e. None of these

61. In case a cheque is post dated, if affects the rights of

a. the payee

b. the paying banker

c.

the holder in due coursed. the drawer

e. none of these

62. In case of a post dated cheque

a. there can never be a holder in due course

b. there may be a holder in due course

c. there will always be a holder for value

d. the holder will have a defective title

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e. None of these

63. Within the meaning of Section 5 of the Negotiable Instruments Act 1881, a

cheque

a. may be drawn for any amount

b. may be drawn to the extent of balance maintained by the customer in

the accountc. must be for a sum certain in money

d. all of these

e. none of these

64. A cheque drawn in foreign currency is

a. invalid

b. illegal

c. valid

d. subject to discretion of the paying banker

e. None of these

65. A cheque may be drawn payable to

a. a specified person b. a specified person or to his order

c. a specified person or to the bearer of the instrument

d. all of these

e. None of these

66. Which of the following is not recognized by the NI Act 1881?

a. General Crossing

b. Special Crossing

c. Not negotiable crossing

d. Account Payee crossing

e. None of these

67. A cheque bears the words ‘Not Negotiable’ across its face without the paralleltransverse lines. Please answer whether

a. this will constitute general crossing

b. this will constitute special crossing

c. the cheque will not be deemed to be crossed within the meaning

of the Negotiable Instruments Act

d. this will constitute simple crossing

e. None of these

68. Account payee crossing is addressed to

a. Collecting Banker

b. Payee

c.

Drawee Banker d. Endorser

e. None of these

69. Account payee crossing is defined in Sec ____ of NI Act

a. Sec 85

b. Sec 86

c. Sec 100

d. Sec 131

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e. None of these

70. Account Payee crossing is

a. special crossing

b. general crossing

c. restricted crossing

d.

All of thesee. None of these

71. The crossing which does not confer a better title on the transferee than the

transferor himself is known as

a. Qualified crossing

b. Account payee crossing

c. Special crossing

d. Not Negotiable crossing

e. None of these

72. Which of the following will not be considered as Special Crossing?

a. The name of the bank in a Round Stamp

b. The words ‘Indian Bank’ without any transverse parallel lines c. The name of two banks between two transverse parallel lines

d. The name of a bank between two transverse parallel lines

e. None of these

73. A negotiable instrument can be endorsed by signing the same on

a. a slip of paper annexed to the instrument

b. the back thereof

c. the face thereof

d. the back or face or a slip of paper annexed thereto

e. None of these

74. An endorsement in pencil is

a. illegal b. undesirable

c. specifically permissible under section 15 of NI Act

d. makes the instrument invalid

e. None of these

75. You receive a cheque for payment from the account of your customer Shekhar,

but it is endorsed with pencil. The endorsement is otherwise regular. Then it is

a. void

b. undesirable

c. prohibited under NI Act

d. permitted under NI act

any of the above76. Mr.Ramesh opened an account in your branch on 14.03.2010. He has issued a

cheque to Mr.Suresh , which is bearing the date ’01.01.2010’. The cheque

a. can not be paid as the account was opened on 14.03.2010 only

b. the cheque can be paid, provided a declaration is taken from the drawer

c. The cheque can be paid

d. The cheque can be paid, if it is presented through a bank

e. None of these

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77. When an endorsement is made in blank, the cheque becomes

a. payable to drawer only

b. payable to bearer

c. void, as blank endorsement is not permitted

d. payable through the banker

e.

None of these78. Who is incompetent to endorse an instrument?

a. Minors

b. Married Women

c. Illiterate

d. Blind persons

e. None of these

79. In case an endorsement is not dated

a. it is considered invalid

b. the date of the instrument is taken to be the date of the endorsement

c. the date of maturity is taken to be the date of the endorsement

d.

it is not invalide. None of these

80. An endorsement in blank means the endorsement

a. of a blank instrument

b. of an inchoate instrument

c. which does not specify any endorsee but merely consists of the

signature of the endorser written on the instrument.

d. Signature taken on a blank cheque

e. None of these

81. Inchoate instrument means

a. a negotiable instrument which is incomplete as to its date, amount or

name of the payee. b. An instrument which has been lost

c. A cheque, the payment whereof has been stopped by the drawer

d. A post dated cheque

e. None of these

82. The authority to complete the inchoate instrument vests with the

a. drawer

b. paying banker

c. holder

d. collecting banker

e.

None of these83. Mr. Ravi drew a cheque payable to Mrs.Suma on ABC Bank Ltd for

Rs.7000.00. When Mrs.Suma presented the cheque, the bank refused payment

because the teller has entered the wrong account number, where the balance

was only Rs.5000.00, wherein the account of Mr.Ravi was having a balance

of Rs.25000.00. The bank would be liable for

a. stop payment orders

b. Insufficient funds

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c. Wilful dishounour

d. Wrongful dishonour

e. None of these

84. Mr. Ram is issuing a cheque to Mr.Shyam for a sum of Rs.1000.00. When the

cheque was presented in clearing, by ABC Bank, dishonoured wrongfully. The

bank is liable toa. Mr.Shyam

b. Mr.Ram

c. Mr. Ram & Mr.Shyam

d. ABC Bank


85. Collecting banker is protected under NI Act Secion

a. 132

b. 138

c. 10

d. 131

e.

None of these86. Protection to paying banker is available if the cheque is

a. forged and if the forgery is very clear and not easily detectable

b. the signature of the endorser is forged

c. Cheque is paid as per the apparent tenor with good faith and without

negligence

d. B & c above


87. Protection to the collecting banker is not available if

a. the cheque is crossed

b. if the cheque not collected for the customers

c.

If the cheque is purchasedd. b and c


88. The effect of ‘Not negotiable’ crossing is

a. It makes the cheque void

b. It stops the bank from collecting the cheque

c. If deprives the special feature of negotiability

d. It affects the transferability


89. A cheque can be crossed only by

a. drawer

b.

holder c. payee

d. Endorser

e. any one of the above

90. A material alteration is one which

a. varies the rights, liabilities or legal position of the parties,

ascertained by the deed in its original state.

b. varies the legal effect of instrument as originally expressed

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c. changes the mandate originally intended by the drawer

d. all of these

e. None of these

91. Which of the following is not a material alteration?

a. Changing the date of the cheque

b.

Changing the payee namec. Changing the amount of the cheque

d. Converting order cheque to bearer cheque


92. Material alteration should be confirmed only by

a. the payee

b. the drawer

c. the collecting bank

d. the endorser

e. None of these

93. Which of the following is a material alteration?

a. Changing bearer to order b. Changing general crossing to special crossing

c. Filling up the date which was originally blank

d. Changing the initials of the payee, which was wrongly mentioned

e. None of these

94. Material alteration implies an alteration in the

a. date

b. payee

c. amount

d. all of these

e. none of these

95. Under Sec 138 of Negotiable instrument Act, the punishment for bouncing of cheque is not applicable in case if

a. The cheque is issued for a vendor who supplied a machine

b. The cheque is issued for discharging a term loan

c. The cheque is issued to a friend from whom the drawer has borrowed

some money

d. The cheque issued to a charity club

e. None of these

96. The punishment for dishonour of cheque is applicable only for

a. Current accounts

b. Savings Accounts

c.

Overdraft / Cash credit accountsd. All of these

e. None of these

97. Under Section 138, the maximum punishment for dishonour of cheque for want

of funds is

a. imprisonment for a term which may extend to two years

b. imprisonment for a period of one year

c. fine which may extend to twice the amount of the cheque

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d. a or c or both

e. None of these

127. Under Sec 131 of NI Act the word conversion means

a. Transfer of title to a holder in due course

b. Transfer of title to a person who is not a true owner

c.

Paying the value for a foreign currency instrument in Indian Rupeesd. Changing the type of deposit

e. None of these

98. A cheque is written on March 31, 2010. But it is dated as April 2n

2010 This

will be called

a. ante-dated cheque

b. post-dated cheque

c. stale cheque

d. invalid cheque

e. none of these

99. A cheque of Mr.A is presented in clearing. Bank receives a message that the

customer has passed away. Thena. The cheque can be passed as it was already presented by a bank in

clearing

b. The cheque can be passed if the legal heirs give a letter to pass that

c. The cheque can be passed if the payee is a Government Entity

d. The cheque is to be returned

e. None of these

100. Public holidays are declared under section _____ of NI Act.

a. 21

b. 22

c. 13

d.

25e. None of these

Documents

NI Act_ Qnr