Objectives

Tick √ YES or NO for the following statements.

Retail banking means managing of individual customers on bothassets and liabilities side.Yes No

1.

Customer segmentation refers to classification of customers intodifferent groups for the purpose of identifying their financialrequirements.Yes No

2.

The Basel II Accord deals in capital adequacy norms to befulfilled by the banks.Yes No

3.

Bundling of products means availability of various options withinthe main product/service.Yes No

4.

The success of retail lending depends on assessment of futurerequirements of customer needs and to prepare for the same now.Yes No

5.

Housing loan can be sanctioned to a property situated in anyindustrial area.Yes No

6.

Housing loan can also be considered for the purchase of a plot.Yes No

7.

The maximum moratorium under a housing loan is 30 months.Yes No

8.

Stamp duty/registration charges do not form a part of the projectcost in housing loans.Yes No

9.

Under the flip method, the installments are graduated with a risein the income level of the borrower.Yes No

10.

Appendix: Objective-Type Questions on Commercial Banking - Manag... https://www.safaribooksonline.com/library/view/management-of-bankin...

1 of 9 22-08-2015 00:47

The maximum IRR (installment to recovery ratio) to beconsidered is 25 per cent under housing loans.Yes No

11.

A third party can join as co-applicant in the case of housing loans.Yes No

12.

There is no restriction on the number of co-applicants in housingloans.Yes No

13.

The house/property proposed to be purchased/constructed onbanks finance need not be held jointly by all the applicants.Yes No

14.

Cross guarantee under group housing scheme can be permitted.Yes No

15.

Delay in payment or instalment attracts penal interest in the caseof housing loans.Yes No

16.

Second charge on house/property for extending finance underhousing loan scheme can be permitted, subject to certain termsand conditions.Yes No

17.

Finance to state-owned corporations and involved housingprojects and statutory bodies like housing boards can be treatedas ‘direct housing finance’.Yes No

18.

Finance to firms/companies under the vehicle loan scheme maybe permitted.Yes No

19.

Consumer durable loans backed by hypothecation of assets canbe termed as ‘secured’ personal loan.Yes No

20.

Margin under clean personal loan is 25 per cent.Yes No

21.

Loan against mortgage (LAP) can be permitted to meet anypurpose/requirement.Yes No

22.

The minimum margin under loan against mortgage is 50 percent.Yes No

23.

The maximum quantum of loan under the education loan schemeis Rs. 15 lakh.Yes No

24.

Loans above Rs. 4 lakh under education loan require tangiblesecurity.Yes No

25.

Minimum margin under education loan in 25 per cent.Yes No

26.

The repayment period under education loan is study period plusone year or study period plus 6 months after securingemployment, whichever is earlier.Yes No

27.

The allowable expenses under education loans include theamount paid towards development fund.Yes No

28.


2 of 9 22-08-2015 00:47

Yes NoLoan against shares will be considered only if the shares are inthe demat form.Yes No

30.

Loan can be granted against pledge of share of any company.Yes No

31.

Maintaining pension account is not mandatory in case loan is tobe considered for a senior citizen.Yes No

32.

Top-up loans are a kind of supplementary finance extended tohome loan borrowers.Yes No

33.

Loan against rent receivables is granted against total rentreceivable for the unexpired lease period.Yes No

34.

Recovery in loans against rent receivables is ensured by debitingthe customers account.Yes No

35.

The security under loan against rent receivable, the collateralsecurity should necessarily be the same property from which thelease rentals are derived.Yes No

36.

The maximum repayment tenure allowed in the case of loanagainst rent receivables is to the extent of unexpired period oflease or 84 months, whichever is earlier.Yes No

37.

Banks’ individual credit policy governs the internal policies andcontrol with regard to credit dispensation.Yes No

38.

Finance can be extended even to those activities which aredeclared as low priority in credit policy of individual banks.Yes No

39.

Rating of the borrower is one of the risk mitigating tools andtherefore it is mandatory in respect of all credit proposals.Yes No

40.

Verification of authenticity of various documents is a part of duediligence exercise.Yes No

41.

The EMI can be permitted up to 50 per cent of gross monthlyincome.Yes No

42.

Floating rate of interest varies as and when there is change ininterest rate without a change in the BPLR.Yes No

43.

Credit monitoring function is to ensure constant vigil on conductand operations of loan account.Yes No

44.

By crediting the loan amount to the account of the customer, enduse of funds can be ensured.Yes No

45.

Management information system (MIS) can be used as one of thecredit monitoring tools.Yes No

46.


3 of 9 22-08-2015 00:47

Yes NoNon-security documents, such as application forms and letters ofundertaking can be admitted as the main documents of evidencein the court of law.Yes No

48.

In the case of DP note executed by a partnership firm, the wordsjointly and severally need to be inserted.Yes No

49.

The liability of guarantor arises only in the event of failure of theprincipal borrower.Yes No

50.

The limitation period in the case of guarantee commences fromthe date of execution of the guarantee itself.Yes No

51.

Even if the principal borrower is absolved of his liability by virtueof the DP noted getting time barred, the guarantor shall continueto be liable for the debt.Yes No

52.

Equitable mortgage does not attract any stamp duty, though, ofdate, some of the state governments introduced stamp duty evenon equitable mortgage to increase revenue.Yes No

53.

Search report and non-encumbrance certificate are not requiredfor creation of mortgage.Yes No

54.

Security charged as prime security in the case of one loan accountcan be extended as collateral security in the case of another loan.Yes No

55.

Physical inspection of assets charged to the bank is necessary tocorroborate with the information furnished by the customer.Yes No

56.

If two mortgages are created on the same property—one is by wayof simple mortgage and another by way of equitable mortgage,the second mortgage can enforce his right only after the debtsecured by the first mortgage is fully satisfied.Yes No

57.

NEFT is an electronic fund transfer facility and came into forcewith effect from 1 June, 2006.Yes No

58.

Facility under NEFT is available only at select branches.Yes No

59.

NEFT is distinct from RTGS.Yes No

60.

Transaction under NEFT is on a gross settlement basis.Yes No

61.

ECS facilitates bulk payment system easier.Yes No

62.

Transactions under ECS are cleared through the NationalClearing House of the RBI.Yes No

63.

RTGS is an electronic fund transfer system amongst differentbank's branches.Yes No

64.


4 of 9 22-08-2015 00:47

Yes NoEach bank is allotted a code under RTGS called ‘IFS code’.Yes No

67.

Service under RTGS is not available on three national holidaysnamely 26 January, 15 August and 25 December.Yes No

68.

The settlement under RTGS is carried through a settlementaccount called the RTGS settlement account.Yes No

69.

In the case of shortfall in the RTGS settlement account, the RBIwill not give any liquidity support.Yes No

70.

The first ATM was installed in 1967 in the USA.Yes No

71.

The present day ATMs in many of the places are only cashdispensing machines.Yes No

72.

Motorised card system is convenient from the customer's point ofview as it enables transaction in a row without requiring the cardto be inserted every time.Yes No

73.

The transaction in the ATM is routed through the ATM switch ofthe individual bank.Yes No

74.

The transactions effected through service provider likeVISA/MasterCard/AMEX are settled on a monthly basis.Yes No

75.

Alliance with other banks for sharing ATMs is a part of thestrategic management of banks.Yes No

76.

Considering the ATM network in China and South-East Asiancountries like South Korea, the ATM network in India isadequate.Yes No

77.

All settlements of transactions through VISA are settled througha ‘settlement account opened for this purpose’.Yes No

78.

ATM-cum-debit card tagged to VISA/MasterCard can be used inany ATM without any extra charge.Yes No

79.

Credit card business is not a profitable venture.Yes No

80.

The full form of CVV is credit value verification and being a secretcode, it should neither be disclosed nor made accessible to others.Yes No

81.

The credit card contains 18 digits on the fact of it eight digits ofwhich are allotted by VISA/Master Card/AMEX and the rest bythe individual bank concerned.Yes No

82.

Card limit will be fixed on the basis of the income level of thecustomer.Yes No

83.

The cash withdrawal limit does not exceed 10 per cent of the total84.


5 of 9 22-08-2015 00:47

merchant establishments.Yes NoCommission earned through POS will be passed on to the cardissuing bank in full.Yes No

86.

Details of customer name, card limit and cash withdrawal limitare encrypted on the magnetic tape on the back side of the card.Yes No

87.

Customers enjoy 2 months credit under credit cards.Yes No

88.

Transaction cost and finance charges under credit card are low.Yes No

89.

USP stands for Unique Selling Proposition, which refers todistinct features of a product, which are not available in thecontemporary market with the competitors dealing in the sameproduct or service.Yes No

90.

Correct answers for these objective-type questions are availableon Web site of the book.


6 of 9 22-08-2015 00:47


7 of 9 22-08-2015 00:47


8 of 9 22-08-2015 00:47


9 of 9 22-08-2015 00:47

Documents

Objectives