THE TIP OF INDIAN BANKING PART II

What do you mean by real investment trusts?

A real estate investment trust is very similar to a mutual fund.

It invests in real estate properties, passing on the income and/or profits to the investors.
They are very popular real investment vehicles in some of the developed countries and also
very liquid.
In our country, the government and the regulators are still trying to put in place the right
structure with the right tax treatment that is best suited to the investors.
There are several types of real estate investment trusts namely equity, mortgage and
hybrid.
Equity real estate investment trusts invest in real estate projects and take a stake in those
properties.
The returns after the close of the projects are passed on to the investors.
Mortgage real estate investment trusts invest in real estate properties that generate rental
income and pass on the money to the investors.
Hybrid real estate investment trusts as the name suggests invest part of their money in real
estate projects and take a stake and the other part in income yielding projects like
mortgage real estate investment trusts

What do you mean by fiscal deficit?

One of the most talked about figure in each budget is the amount relating to fiscal deficit
which is expressed as a percentage of the gross domestic product.
If it is too high, say above 4.5% of the gross domestic product or more, it becomes a cause
for concern for the government.
On the other hand, if it is contained well within the budgeted level, the finance minister is
appreciated.
Fiscal deficit is the difference between a governments revenues and expenditure for
particular year.
If the two do not match and expenses are more than the earnings, the government usually
borrows money to bridge this shortfall.
Higher government spending, lower revenue earnings and higher inflation leading to higher
interest outgo could lead to fiscal deficit.
Higher deficit number could mean the government is spending more, earning less or it is a
combination of the two.
Higher level of spending by the government can also lead to higher inflation thus leading to
even a higher fiscal deficit figure in subsequent years.
A large deficit number means either the government or the economy is not performing
properly and is an indication of troubles ahead.

What do you mean by growth investing?

Growth investing is where the investor buys the stock of a company expecting that the
company will grow at a rate which will be higher than the rate of growth of the market as a
whole or the sector to which the company belongs to
Since the company grows at a higher rate than the markets rate, the stock will appreciate
at a faster rate than the market benchmark.
Often, growth investing is perceived to be opposite or very different from value investing,
but two very famous investors Warran Buffett and Peter Lynch believe the two styles
could be mixed for great results.
Lynch who over a twenty year period as a fund manager of Fidelitys Magellan Fund gave an
annual average return of 29%, the best by any fund over such a long period of time, had
followed an investment philosophy of growth at reasonable price GARP
This investment philosophy mixed both value and growth styles of investing and made
Magellan one of the best schemes in the history of mutual funds

What do you mean by capital asset pricing model?

Capital asset pricing model is a mathematical model used to price risky assets like stocks
through a relationship between risk associated with such assets and the return that could be
expected by the buyer of that asset.
The basic idea behind CAPM is that a buyer of a risky asset should be compensated by the
risk he/she is taking.
This compensation is done through two ways time value of money and the risk involved
Time value of money is defined by the risk free return that the investor could get if the
same amount of money is invested in a risk free security like government bonds over the
same period of time for which he is investing in a risky asset
Here, the risk is measured by an element called beta which is the extra amount of money
that the investor could get for taking an additional risks

What are the investments for the purpose of saving tax?

At present an individual can get an income tax rebate upto Rs. 1.50 lakhs provided he
invests the entire amount in specific schemes like public provident fund, mediclaim policy,
life insurance policy, national savings certificate or to the extent of amount spent for
payment of tuition fees to children
There are people who think about investments from the perspective of savings tax;
however, in reality it is not the right approach
Saving tax can be one of the objectives; however not the main objective
Often, it is seen that with tax saving being main objective, people miss out on investment
opportunities which can offer one better post-tax returns than the tax saving instruments
one invests into.

At the time of investing funds in certain investments, it is better to give an importance to

post tax returns rather than not on the perspective of investing to save tax.

What do you mean by stop loss?

Stop loss is considered to be the tool of the stock market trader to minimize the losses. At
times, even the investors use this tool to great use.
An investor who is having a stock at Rs. 100/- can instruct his broker or system to sell the
entire stock when the price of the stock touches to Rs. 95/By means of this activity, the investor is not gaining any profit; however, he minimizes his
loss.

What do you mean by inflation indexation?

Inflation indexation is called as indexation in finance. It points to a process where the

terminal value of an investment is adjusted for the rate of inflation.
When it comes to mutual funds, debt schemes enjoy indexation benefits and thus the
incidence of tax on the final value of a debt fund could be adjusted to pay lower tax.
Equity funds on the other hand, enjoy full tax exemption for investments of more than one
year and hence no indexation benefit kicks in here.
There is a myth about the balanced funds namely the balanced funds are always equally
balanced between equity and debt.
Although ideally this should be the base, this is not always true.
In India, most balanced funds have 65 percent invested in stocks and the balanced in debt.
This is because the income tax laws allow a scheme with 65 percent stocks to enjoy
advantageous tax status compared to the ones with lower equity exposure.

What do you mean by fixed maturity plan?

Bank fixed deposits are one of the most popular investment vehicles in the country.
The following is found to be one of the prime reasons for the popularity of the fixed deposit
scheme Fixed deposit provide the investor guaranteed returns.
When an investor invests an amount of Rs. 10000/- in a fixed deposit account for a period
of one year at 10% rate of interest, at the end of the year, the investor gets a definite
amount of Rs. 11000/- including the principal amount.
Another reason for the popularity of the scheme is lack of knowledge about alternative and
attractive investment schemes which are equally good and sometimes better than fixed
deposits in some respect.

Fixed maturity plan is an attractive plan and it is a debt mutual fund with a fixed matured
tenure that has gained popularity during the last two years after the rate of interest in the
economy went up to keep pace with the rising rate of inflation.
FMP has a fixed maturity ranging from as little as fifteen days to several years and the
popular maturity period is 365 days or little more.
When an investor starts investing his money in this scheme, despite the facts that they are
listed, the exit options are very low.
The amount received through FMPs are invested in debt market instruments like treasury
bills, bonds, government securities, money market instruments which have very short term
fixed tenures.
FMPs provide capital protection along with appreciation, FMPs are available as open ended
and closed ended. In India, most FMPs are closed ended schemes
The tenure of FMP directly depends on the maturity period of instruments where the funds
are invested.
For example, when a 91 day FMP is invested in 95% in treasury bills, then the fund yield
will be arrived at based on returns that those treasury bills generate during this period of
time.
FMPs are also available as interval funds and in this case, the investors get exit
opportunities at fixed intervals.
Interval funds are FMPs that have lock in periods of a quarter; half a year or a year with
maturities on specific dates.

What do you mean by RBI Repo rate?

RBI repo rate refers to the rate at which banks can borrow money from Reserve Bank of
India to meet their short term requirements for funds
Banks typically meet their funding needs from deposits. Repo is only a residuary facility.
The demand for funds depends on the demand for loans from the banks
Repo rate is a benchmark rate set by the Reserve Bank of India and the rate signals the
rates for all other lending and borrowing activities in the system.
Repo is short for repurchase, which refers to the structure of the transaction. Banks offer
securities to Reserve Bank of India when they borrow and repurchase them back when
returning the money so borrowed from Reserve Bank of India.
A fall in repo rate by 0.25% to 7.25% means that Reserve Bank of India has reduced its
lending rates to banks. Banks in turn are expected to reduce their loan and deposit rates to
their customer

What do you mean by the building blocks for any loan?

Loan amount: The amount sanctioned as a loan to the borrower or the limit permitted as
overdraft depends upon the income generation of the borrower or the wealth of the
borrower apart from the value of collaterals offered as securities for the loans granted to
him by the banker.

Rate of interest: The lenders charge depends upon the term of the loan, base rate, type of
loan and the profile of the borrower. The rate of interest can be fixed or variable depending
upon the choice of the borrower.
Tenure of the loan: Depending upon the income generation of the borrower, the tenure of
the loan is fixed and the borrower has to repay the entire loan along with interest within the
time permitted to him. The borrower, however, can prepay the entire loan earlier.
Processing fee: Non refundable charges for various processes such as assessing loan
eligibility and evaluating the collateral

What are the reasons for which the cheques are returned by the
bankers?

Bankers return the cheques on account of various reasons

When the amount of the cheque is more than the free balance available in the drawers
bank account, the cheque is returned to the customer with the reason Insufficient funds
Sometimes the signature of the drawer on the cheque may not be matching with the
specimen signature lodged with the bank and in such cases the cheque is returned with the
reason Drawers signature differs.
The validity period of the cheque is three months and when the date of presentation of the
cheque is beyond three months from the date of the cheque, the cheque is returned with
the reason Stale cheque
When the date of presentation of the cheque is even one day earlier to the date of the
cheque, the banker returns the cheque with the reason Post dated cheque
Normally alterations are not permitted on the face of the cheque. However, the drawer can
authenticate the alteration if any, on the face of the cheque by means of additional
signatures in the case of alterations done on name of the payee, amount written in words
and/or in figures etc., In the abovementioned cases, the cheques are returned with the
following reasons Alterations on the cheque require authentication by the drawer
In the case of the orders from a court or government thereby freeing the account of the
customer, the banker dishonours the cheque presented by any customer on behalf of the
customer for the reason Account frozen as per court/government orders

What do you mean by fee and fund based products?

A bank or NBFC offers two types of products namely fee based and fund based. The
proportion between the two impacts the amount of capital required and income earned.
Loans are fund based products. In order to lend an amount as a loan to a borrower, the
bank or NBFC has to borrow money and ensure that the cost of borrowing is less than the
cost of lending.

When it sells a mutual fund or insurance product, it earns a fee or commission for doing so.
These are third party products which do not require the bank to fund them.
Fund based products are also subject to capital adequacy norms and tighter regulation for
non performing assets.
The profit margins in the case of fee based products may be lower; however, since they do
not require high capital investment, they are profitable. The existing infrastructure is usually
extended to offer them.

What do you mean by an overdraft facility available from a commercial

bank?

An overdraft facility is a credit agreement made with a bank that allows an accountholder to
use or withdraw more money than what he has in his current account upto the approved
limit.
The time period for which the overdraft limit is permitted depends upon the requirement of
the customer. When a customer is in need of funds to meet the day to day expenses
namely; wages payable to the workers, repairs and maintenance charges, cost of raw
materials, tools and other implements etc., on account of the facts that he may not be in a
position to receive the expected amount from his creditors immediately towards meeting the
above expenses. Basing upon the request of the customer subject to his furnishing the
required details, the bankers permit overdraft limit upto certain limit namely one month
requirement or two months requirements.
The line of credit is typically given based on the accountholder balances and as presanctioned loans against assets such as bank fixed deposits, shares and bonds offered as
collateral.
The sanctioned overdraft limit and the interest charged will vary based on the nature of the
asset offered as collateral.
The overdraft facility works like a loan. Money can be withdrawn as and when required and
the interest has to be paid only on the amount borrowed and only for the time for which it
was borrowed.
Establishing an overdraft facility with a bank can help individuals or small businesses with
short term cash flow issues although the negative balance needs to be repaid within a
month.

What are the components of the capital structure of a limited company

?

BANK EXAMINATIONS GENERAL ASPECTS

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In respect of a limited company, the capital structure consists of authorized capital,

issued capital, subscribed capital and paid up capital
Balance sheet reflects the financial position of a business unit at any point of time and
itcontains the aggregate figures of assets and liabilities under various heads
The five Cs of credit are called as character, capacity, capital, conditions and
collateral
Capital refers to the funds available to operate a business of which there are two primary
considerations, the amount of equity capital the owners have invested in the
business and how effectively the total capital including creditor capital is
employed.
Reserves are classified into two types revenue reserve and capital reserve
Revenue reserves are held in several forms like general reserve, investment allowance
reserve, capital redemption reserve etc.
Capital reserves arise out of gains which are not related to the business operations of the
company like fixed asset revaluation reserve and share premium reserve
Revenue reserve is available for distribution of profits
Capital reserves are not available for distribution as dividend among the share
holders
Secured loans are borrowings made by the company by creating a specific charge on the
assets of the company namely; debentures
Unsecured loans are borrowings made by the company for which no specific security is
furnished and the examples are fixed deposits, loans from promoters/directors, inter
corporate deposits and unsecured loans from banks etc.
Sundry debtors represent the amount owed by the customers and they are reported less
of allowance for bad debts
Prepaid expenses are expenses incurred for which services are yet to be received
Cost of production represents the consumption of raw materials(including stores)
and spares, power and fuel, direct labour, repair and maintenance, other
manufacturing expenses plus opening balance of stock in process and minus
closing balance of stock in process
Cost of sales represents Cost of production plus opening stock of finished goods
minus closing stock of finished goods
Operating profit represents net sales minus cost of sales minus interest and
selling, general and administrative expenses
Net profit before tax operating profit plus other income minus other expenses
Retained profit net profit minus dividend paid/declared
Net sales gross sales minus excise duty and returns
Ratios present a profile of firm, its economic characteristics, competitive approach
and its unique operative, financial and investment characteristics
Activity analysis evaluates revenue and output produced by the firms assets
Liquidity analysis measures the adequacy of firms cash resources to meet its near
term cash obligations
Profitability analysis measures income of the firm relative to its revenues and invested
capital
Performance analysis examines the revenues and expenses of the firm, either to look at
cost structure or relating to sales performance to the amount of assets used in
creating sales
ECS stands for electronic clearing service
Dr. R.B. Barman is associated with cheque truncation
IDRBT is Institute for development and research in banking technology at
Hyderabad
Infinet is the network of Reserve Bank of India
NEFT stands for national electronic funds transfer

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Memory cannot be treated as part of the computer hardware

The popular electronic payment products are credit card, debit card, automated
teller machines and electronic clearing service
The electronic process that makes simultaneous use of sound, video and text is
calledmultimedia
The resolution of the computer screen is determined by pixels
The memory which is volatile in nature is called RAM random access memory
OLTAS- Online tax accounting system pertains to collection of direct tax online
Electronic cheque is a negotiable instrument
ISP refers to Internet service provider
Computerisation of Indian Banking industry is the outcome of Rengarajan committee
A high tech bank within a bank was recommended by Vasudevan committee
Infinet refers to Indian financial network
Information technology has resulted in improved efficiency, innovative products,
effective delivery system and enhanced productivity
Data mining techniques can be applied in predicting future trends based on
information available, credit risk analysis, analyzing demographic information
about the customers
A full duplex transmission is capable of providing simultaneous two
waycommunications
The terminal connection to server is known as client and/or node
PIN refers to personal identification number stored in magnetic strip of the card
MODEM does the following modulates digital signals into analog and demodulates
analog signals into digital signals
Under core banking solution system branches are connected to a central host;
branch automation modules and delivery channels are incorporated and
transactions are done centrally and through online
Some of the network equipments are routers, switches and hubs
The dedicated telephone connection provided to the branches for CBS connectivity is
leased line connection
The card capture at ATMs may be due to hot listed card, expired card, card holder
timed out (failure to collect card within permissible time)
After three invalid PIN retries at automated teller machines the card status becomes
inactive and gets activated after 12 midnight
NAP stands for network aggregation point
Skimming is illegal act of capturing credit/ATM/debit card numbers and PIN by
certain devices/gadgets
The domain name of internet banking website differs according to banks
PING refers to Packet Internet Groper used to check the connectivity between
computers
The risks mitigated by the use of RTGS are systemic risk and settlement risk
Under the Indian stamp act, stamping is required on demand promissory note,
usance bill of exchange, letter of credit, bill of lading, debentures, transfer of LIC
policy, proxy, receipt etc
In the case of demand bills stamp duty is not payable
Stamping on pronote should be cancelled by affixing the full signature so that the
stamps cannot be used again
When the agreements embossed with special adhesive stamps cannot be used, they are
to be surrendered to the stamp collector
Any instrument executed by or on behalf of or in favour of the government isexempted
from stamp duty
Stamp duty chargeable has been waived by the government in respect of usance bills in
the following cases arising out of genuine trade transactions; which are payable

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not more than three months after date of signature and which are drawn on or in
favour of commercial/cooperative banks/SIDBI
Stamp duty is determined by the state laws for acknowledgment of debt, indemnity,
EMT, registered mortgage, lease deed, agreement, sale deed etc.
An understamped agreement can be set right by paying the penalty as prescribed by
the appropriate authority
The non judicial stamp paper was purchased on 1.05.2012 from the stamp vendor and this
has been used by the bank to record an agreement covering the transaction dated:
01.04.2012 and this is not a valid agreement.
In the case of doubt as to stamp duty on an instrument, when it should be
adjudicated ? it should be adjudicated prior to the document being executed or at
latest within a period of one month from the execution thereof
Stamping on DPN should be cancelled by the executants
Stamp duty is charged depending upon the place of execution and kind of document
Pronote, usance bills and documents requiring stamping of value above 0.10 paise even
if not adequately stamped at the time of execution can be admitted in case they
are validated by payment of penalty with required stamp duty
When documents are executed at a place other than the advancing branch, stamp duty
payable at the time of execution is as applicable at the place of executing branch
Stamps in the pronote are affixed vertically one below the other but duly cancelled is not
improper stamping and is considered as valid
Non judicial stamp paper should be cancelled by writing part of the document on the
stamp paper duly signed by the executants
Transfer of shares to the banks name where it is the pledge of the shares involves
payment of nominal stamp duty only
The stamp duty on receipts payable for Rs. 5000 no stamp duty is payable for
receipts upto and inclusive of Rs. 5000.00 and only from Rs. 5001/- onwards
stamp duty is payable
In view of the amendment, the bill of exchange and promissory notes not duly stamped
can be revalidated on payment of the due stamp duty along with penalty
While granting advances to a company with charge created on securities which require
registration under section 125 or the companies act the banker should ensure that
there is no prior charge on the same securities by inspecting register of mortgages
and charges at the office of the registrar of companies
Under section 125 of the companies act, a charge created by a joint stock company is
required to be registered with registrar of companies under whose jurisdiction
companys registered office is located
The charges required to be registered with the registrar of companies under section 125 of
the companies act charge on plant and machinery, hypothecation of stocks,
furniture and fixtures, stores, spares, EMT, registered mortgage etc.
The board of directors of a company can exercise powers to borrow money in excess of the
limit specified in section 293(1)(d) provided such a resolution is passed in the general
body of shareholders
An advance to a limited company does not require registration of charges with the
registrar of companies if the advance is in the nature of pledge of stocks
The execution of security documents by a limited company should be by affixing
common seal only if required by articles of association
The effect of non registration of charge within the time limit is that the advance
becomes an unsecured advance
The ceiling imposed by the companies act, 1956 for a public limited company to borrow
from the banks under section 293 1) (d) is paid up capital + free reserves
The resolution of a company to borrow from a bank must be passed by the ordinary
resolution in a board meeting

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In the case of a company advance, the secured creditor can stand outside the winding up
and satisfy his debt out of the property charged without proving his claim before
the liquidator
The winding up order of a company is effective from date of petition of winding up
The secured creditor of a company can file a winding up petition despite the creditor
having security.
In the case of partnership firm, mandate may be revoked by any partner
Partnership is to be registered with registrar of firms before an advance is granted to
the customer
When the partnership firm is not registered the firm cannot sue others legally
For the partnership firms where one or more of the partners are hindu undivided family
no fresh finance shall be provided
A mandate may not continue to be operative in cases of death of agent, lunacy of
agent, insolvency of agent etc
The term power of attorney refers to an instrument by which one person acts on
behalf of another
A minor can be admitted to a firm as a beneficiary
When the customer hands over money to the bank for remittance, the relationship
between the customer and the banker is principal and agent
For recovering the dues the bank can enforce the security by selling movable
properties pledged to it after giving due notice
The right of set off can be exercised only when the right to sue has not expired and it can
be exercised even for time barred debts
Right of subrogation is the right available to a guarantor and not to an indemnifier
The contract of insurance is a contract of indemnity
The right of lien is not barred by limitation

Committees and working groups

BANK EXAMINATIONS GENERAL ASPECTS

COMMITTEES AND WORKING GROUPS

Working group headed by O P Sodhani
Working group headed by Rashid Jilani
Shere committee
Sodhani committee
I T Vaz
Jilani

NRI Investments
Internal control and systems in banks
Electronic fund transfer
Forex markets
Lending norms for working capital
Working capital to parties by way of cash
credit as supplemental source of
finance

J V Shetty
Goswami Panel

Consortium Lending
Industrial sickness and corporate
restructuring
Irregularities in financial market
Small Scale Industries
Money market
Mutual funds
Trading in public sector bonds and units
of Mutual funds
Rural lending
Functioning and financial viability of
Regional Rural Banks
Financial companies
Review of inspection system in banks
Customer service in banks
Frauds and malpractices in banks
Restructuring the banking system
Syndicated form of lending
Non Banking Finance Companies
supervision
Capital adequacy ratio
Weak banks
Weak banks
Legal compliance frauds
Fair Practices Code
Capital account convertibility

Janakiraman
P R Nayak
Vaghul
S A Dave
SNadkarni
Dr Ojha
Kelkar
A C Shah
Pendharkar
Goiporia
Ghosh
Narasimhan
Kannan
P R Khanna
Basel
M S Verma
Talwar committee
Mitra Committee
Janki Ballabh
Tarapore

Recent committees and working groups

BANK EXAMINATIONS GENERAL ASPECTS

RECENT COMMITTEES AND WORKING GROUPS

Deepak Mohanty
Deepak Mohanty
Usha Thorat
P. Vijaya Bhaskar Rao
Usha Thorat
Dr Rakesh Mohan and Tiff Macklem
Dr. Rakesh Mohan
Dr. C. Rengarajan
Dr. Rakesh Mohan

On Benchmark Prime Lending Rate - BPLR

Working group on surveys
High Level Committee to review Lead Bank Scheme
To review business correspondent model
On systems and procedures for currency distribution
G20 working group enhancing sound regulation and
strengthening transparency
Committee on financial sector assessment
On estimation of savings and investment
Committee on the global financlal system on Capital
Flows and Emerging Market Economics

A K Bera
Prof Amitabh Kundu
G. Padmanabhan
R. Gandhi
G. Srinivasan
V K Sharma
K C Chakrabarthy
Dr Balwant Singh
C P Swarankar
K G Karmakar
S S Johi
K S R Rao
R. B. Burman
N D Jadhav
P K Pain
N. Sadasivam
M P Besbaruah
Sanal Kumar Velayutham
H R Khan
Anand Sinha
A V Sardesai
Prashant Saran
R. Gandhi
A. Vaidyanathan
G Srinivasan
R.M. Patil
A. Vaidyanathan
Shyamala Gopinath
N. Sadhasivan
V S Vyas
A S Ganguly
G. Padmanabhan
Usha Thorat
Barman
B. Mahapatra
Jaspal Bandra
A L Narasimhan
R H Patil

Task force for diamond sector

Technical advisory group on development of housing
start up index in India
On cost of ICT solutions for Regional Rural Banks
On IT support for Urban Cooperative Banks
On technology upgradation of Regional Rural Banks
Interest rate futures
On rehabilitation of sick small and medium enterprises
On seasonal movements in inflation
To examine procedures and processes of agricultural
loans
Task force on empowering Regional Rural Bank boards
for operational efficiency
To suggest measures to assist distressed farmers
Technical advisory group on development of leading
economic indicators for Indian economy
Technical advisory group on development of leading
economic indicators for Indian economy
Working group on compilation of state government
liabilities
Working group on cost of NRI remittances
Working group to formulate a scheme for ensuring
reasonableness of bank charges
Advisory committee on ways and means advances to
state governments
Need and use behavior for small denomination coins
Internal group to examine issues relating to Rural credit
and microfinance
Working group to review export credit
Internal working group on Regional Rural Banks
Working group on ware house receipts and commodity
futures
Working group on regulatory mechanism for cards
Tasks force on revival of cooperative credit institutions
Special group for formulation of debt restructuring
mechanism for medium enterprises
Working group on screen based trading in government
securities
Expert group on internet deployment of central
database management system CDBMS
Monitoring of financial conglomerates
On development financial institutions
Advisory committee on flow of credit to agriculture
Working group on flow of credit to SSI sector
Rupee interest rate derivatives
Working group on instruments of sterilization
On cheque truncation and E-cheques
Working group on introduction of credit derivatives in
India
Working group on rupee derivatives
Committee on computer audit
Committee on payment systems

G. Ramachandran
Deepak Mohanty
M R Ramesh
Zarir J Cama
S. R Iyer
R.B. Burman
Vipin Malik
Y V Reddy
N.L. Mitra
C R Muralidharan
Jagdish Kapoor
Madhav Rao
N H Siddiqui

Review group on working of the Local Area Bank

Scheme
Technical group on Statistics of International Trade in
Services
Working group for suggesting operational and
prudential guidelines on Stripes (Separately Traded
Registered Interest and Principal of Securities)
Working group on electronic money
Working group to examine the Role of credit
Information bureaus in collection and dissemination of
information on suit filed accounts and defaulters
Information systems audit policy for the banking and
financial sector
On consolidated accounting and other quantitative
methods to facilitate consolidated supervision
Expert Committee to review the system of administered
interest rates and other related issues
On legal aspects of bank frauds
Technical group on market integrity
Task force to study the cooperative system and
suggest measures for its strengthening
High power committee on Urban Cooperative Banks
Working group for setting up credit information bureau
in India

Whether signatures obtained in nominations forms are to be

witnessed?

BANK EXAMINATIONS GENERAL ASPECTS- PART:: 14

01.

Signatures of the bank accountholders obtained in nomination forms DA1; DA2;

DA3 need not be attested by witnesses.
02.
In terms of banking companies (nomination) rules, 1985, the thumb impression of
the accountholder obtained on nomination forms DA1, DA2, DA3 are required to be
attested by two witnesses.
03.
Nomination facility is available for joint deposit accounts also with or without
either or survivor mandates opened by customers
04.
The term Banking is defined in Banking Regulation act, 1949
05.
Reserve Bank of India is called as the regulator for the commercial banks in
the country
06.
A right of general lien is available to the bankers, policy brokers, wharfingers,
attorney of court.
07.
A garnishee order is issued at the instance of judgment creditor
08.
A power of attorney refers to an authority to act on behalf of another person
09.
A negotiable instrument payable to order is negotiated by endorsement and
delivery
10.
A post dated cheque affects the risks of the paying banker

11.

DRT act was passed in the parliament for establishment of tribunal in order to
effect expeditious recovery of debts due to banks and financial institutions.
12.
A crossing of a cheque means two transverse parallel lines placed on top left
hand corner of a cheque
13.
Converting a cheque from order to bearer is considered to be material
alteration in the cheque
14.
As per section 138 of Negotiable Instruments act, 1881, the payee of a cheque may
initiate criminal action when the cheque is returned for the reasons insufficient funds.
15.
A demand draft is an order to pay money drawn by a bank upon itself or upon
another bankto pay a certain sum of money either to or to the order of a specified
person.
16.
While collecting a cheque/bill etc., for a customer, the bank acts as an agent of
the customer
17.
The monetary jurisdiction of the debt recovery tribunal is Rs. 10 lakhs and
above
18.
Charging a security means making the security available as a cover for an
advance in the case of default by the borrower
19.
A mortgage means transfer of an interest in specific immovable property for the
purpose of securing a loan
20.
In the case of equitable mortgage no mortgage deed is required to be
executed
21.
The liability of the guarantor is co extensive with that of a principal debtor
22.
When the bank grants overdraft facilities to a customer; however, the account is in
credit balance, the banker is a debtor and the customer is a creditor
23.
Right of set off in the case of a banker refers to setting of an amount due from
the customer on the dues from some other customer.
24.
Legal proceedings can be initiated in cases where the debtor is unwilling to
pay or refuses to pay the overdue debt.
25.
Nomination in respect of banks deposit accounts does not affect the right of
claim
26.
Inchoate instrument is one which is incomplete as to its date, amount or
name of the payee
27.
Once a draft is issued it is open to the purchaser to get the draft cancelled
before it is delivered to the payee
28.
The role functions and tasks of the recovery agents will be generally mentioned in
the debt recovery agreement with the bank
29.
The securitization and reconstruction of financial assets and enforcement of banking
security interest act SARFAESI act allowed the banks to take possession of the assets of
defaulting borrowers and charged to the bank without entering into any legal
process
30.
A mortgage involves transfer of interest
31.
Term deposits cannot be transferred to third parties
32.
Salaried employees, people belonging to lower economic strata, government
departments, government owned companies and regulatory and statutory bodies are
called as low risk customers or level I customers
33.
High net worth customers, nonresident customers, blind people and pardanishin
women are called as medium risk customers or level 2 customers
34.
Trusts, charities, NGOs, companies having close family share holding or beneficial
ownership, firms with sleeping partners, accounts under foreign contribution act are
called as high risk customers or level 3 customers
35.
Politically exposed persons of foreign origin, those with dubious reputation as per
public information available, accounts of non face to face customers, high net worth non

resident accounts and bullion dealers are called as high risk customers or level 3
customers.
36.
Periodical updation of customer data has to be done by obtaining
latest photograph and address proof as per KYC guidelines
37.
Periodical updation of KYC guidelines once in five years for low risk customers
38.
Periodical updation once in two years in the case of medium and high risk
customers
39.
Periodical updation has to be done on quarterly basis in April, July, October and
January.
40.
Trusts, NGOs, charities and organizations receiving foreign funding are to be
treated as high risk customers.
41. Savings bank deposit is called as the mother of deposits
42.
Savings bank accounts should not be opened for government departments,
bodies depending on budgetary allocation for performance of the functions
43.
Minimum balance is waived while opening the account in the case of Non Resident
Indians, students, pensioners drawing pensions through the bank, employees of the bank
and ex employees of the bank who are eligible for preferential rate of interest.
44.
The unique identification number project of Government of India headed by Nandan
Nilekeni is called as AADHAAR
45.
Right of set off is applicable in the case of two or more accounts having debit and
credit balance in same or different branches
46.
Right of set off can be exercised if there is a relationship of debtor and creditor,
creditor and debtor simultaneously, in the same name and capacity
47.
Right of set off cannot be exercised when garnishee order or attachment order
has been served on the account
48.
The status of nominee is the trustee for legal heirs
49.
Nomination can be for individual accounts and proprietorship accounts only and not
for partnership accounts, companies, trusts, societies or hindu undivided family
50.
Nomination can be in favour of individuals only and he can be a resident
individual, nonresident individual, minor or an insolvent person.
51.
A minor can be a nominee; however, he cannot appoint a nominee
52.
In the case of either or survivor account, anyone can operate the account till both
are alive and after death of either of them, the bank can pay the balance to the
survivor without any formality
53.
In the case of accounts payable jointly, when anyone dies, the bank would pay
the balance to the survivor along with the legal heirs of the deceased person.
54.
According to section 183 of Indian contract act 1982, a minor cannot appoint an
agent; he cannot delegate powers to others and a minor can be appointed as an
agent and bind his principal on his appointment as an agent
55.
The cheque which contains the exact mirror image of a paper cheque with the use
of digital signatures is called as electronic cheque or truncated cheque
56.
When it comes to endorsement by minor, a minor can endorse under section 26 of
negotiable instruments act, but he will not be liable as an endorser
57.
According to section 85A of Negotiable Instruments act 1881, the demand draft is
an order to pay money, drawn by one office of the bank upon another office of the same
bank for a sum of money payable to order on demand.
58.
The instruments which have been legally recognized as negotiable instruments as
per customs and usages of the trade are pay orders, bankers cheques, government
promissory notes, certificate of deposits, commercial papers, treasury bills, hundi,
bill of lading, railway receipts, dock warrants, warehouse receipts (wharfinger
certificates) delivery orders, GRs issued by transport operators approved by
Indian Banks Association, Lorry receipts approved by Indian Banks Association

59.

Airway bill is neither a document to title to goods nor recognized as negotiable

instruments
60.
In the case of promissory notes payable in instalments on default in payment of one
instalment, the entire amount becomes payable
61.
In the case of safe deposit lockers, the bank is called as the lessor and the
customer is called as the lessee
62.
In the case of locker hired jointly with joint operations and nomination, if any hirer
dies, the access will be given jointly to survivor and nominee
63.
Cases upto Rs. 20 lakhs can be entertained in Lok adalats and above Rs. 20 lakhs
to be referred to DRT Loak adalat
64.
Lok adalat was created under legal service authority act, 1987
65.
No appeal against the decisions taken by Lok adalat as the decree is the
consent decree
66.
Banks can call Lok Adalat with application to high court
67.
Savings deposit is called as the mother of all deposits
68.
Joint accounts can be opened for savings bank accounts with maximum of four
persons

The official language policy came into force in India from which date?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 013

OFFICIAL LANGUAGE

01. The Official Language Policy came in to force with effect from 26.01.1950. The act
was passed during the year, 1963

02. The Parliamentary Committee on Official Language has to be constituted with 30

members 20 from Lok sabha and 10 from Rajya Sabha
03. Official Language rules were framed during 1976
04. Official Language Rules are applicable- to all states and union territories except
Tamil Nadu
05. Under Rule 5, all letters received in Hindi are to be replied in Hindi only
06. As per Rule 10c of the Official Language act: - a letter received in Hindi is to be
replied in Hindi only
07. It is the responsibility of administrative head of each branch/office/department to
ensure that the provisions of Official Language act are complied with (rule 12(1)
08. Canara Bank Rajabasha Akshay Yojana
usage of Hindi

Award is given to branches/offices for

09. Canara Bank Rajabasha Puraskar Yojana Award is given to - employees for using
Hindi in day to day official work
10. Indira Gandhi Official Language award scheme is given by Government to - Ministries,
Banks, Financial Institutions for using of Hindi
11. Indira Gandhi award for original books written by employees in Hindi First Prize
Rs. 10000.00; Second Prize: Rs.8000.00; Third Prize: Rs. 5000.00
12. All branches to have Official Language Implementation Committee with branch
head- as the Exofficio Chairman. At least one meeting every three months
13. The Official Language Committee has to be - reconstituted every year
14. As per Section 3(3) of Official Language Act, 1963,- general orders, instructions,
circulars, notices etc have to be issued invariably in Hindi and English
15. The quarterly Progress Report on Official Language is due on last day of every
quarter
16. Hindi Day is celebrated on 14th September every year to commemorate the
constitutional recognition accorded to Hindi as the Official Language on
14.09.1949
17. Region A Himachal Pradesh; Haryana, Rajasthan; Madhya Pradesh; Bihar; Uttar
Pradesh; Uttarkhand; Jharkhand, Chattisgarh, Union Territory of Delhi, Andaman and
Nicobar Islands
18. Region B Maharashtra, Gujarat, Punjab, Union territory of Chandigarh
19. Region C All other remaining states

20. In Parliament Hindi and English are used for transaction of business
21. As per section 3(3) of the act, certain specified documents are to be bilingual
22. Script of official language- Hindi is Devanagari
23. The in house distance education programme of Canara bank is CANBANK HINDI
PATHRACHAR PATHYAKRAM
24. When 80% of the staff members working in organization attain working knowledge in
Hindi in any branch/office, the name of the branch/office will be notified in the
gazette under Rule 10(4)
25. Rule 11 specifies that manuals, codes,
bilingual

stationery items etc should be in

26. As per Rule 12, responsibility of compliance of Official Language rules lies with the
administrative head
27. The order of language in the name plates of any Bank in Region C should be Regional
Language, Hindi and English
28. Periodicity of Official Language Implementation Committee meetings quarterly
calendar quarter
29. Town Official Language Implementation Committee TOLIC meetings once in six
months
30. 50% of total library budget in any organization should be used for purchase of Hindi
Books
31. If any staff member passes Banking Praghya, it will be treated that he possesses
working knowledge in Hindi
32. IT initiatives in the field of Official Language Implementation Shabdaratna word
processor, Akruti-MS office, Bankscript bilingual interface for pass sheet, FDR, leave
proceedings etc.
33. Under Canara Bank Rajabasha Akshay Yojana branches/offices are awarded
prizes
34. Under Canara Bank Rajabasha Puraskar Yojana staff members are awarded prizes
35. Canara Bank has won the consolation prize for the best implementation of Official
Language Hindi for the year 2003/2004 from Government of India (Indira Gandhi
Rajabasha Shield)
36. If an employee passes matriculation or equivalent or higher examination with Hindi as a
medium of examination he will be treated as having proficiency in Hindi

37. If any typist types 300 notes/letters/drafts in Hindi in a quarter he will be eligible for
an allowance of Rs. 80/- per month
38. Incentive to officers for giving dictations in Hindi 5 letters etc. per day or 250
letters/drafts per quarter Rs. 1000.00 per month in Region:C
39. If an employee passes Pragya Examination under correspondence course with 70% and
above marks he will be eligible for an incentive amount of Rs.900.00 in some banks
40. Hindi magazine published by Canara Bank, Head Office, Bangalore CANJYOTHI
41. Hindi divas is celebrated on 14 th September, each year
42. The articles of constitution dealing with official language are 343 to 351
43. Hindi was declared
from 14.09.1949

as

official

language

of

the

Indian

Union

with

effect

44. Hindi Pakhwara (Hindi fortnight) is celebrated from September 1 to 14 each year.

What is the difference between lien and set off?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 012

DIFFERENCES

DIFFERENCES
LIEN
SET OFF
It is the right of a creditor who holds It is a cross claim for liquidated amount
the securities/goods of debtor to
retain the same till the debt is
cleared
To have the right of lien, the creditor Both the claim and set off must be
should have acquired possession of mutual debts due from and to the same
the goods in the ordinary course of parties under the same right
business
Lien is an indirect charge on the
In case the account is stopped by death
security
or insolvency of the customer, banks
right of set off accrues automatically
Right of lien implied
To exercise the right of set off notice is

NOMINATION

a must
DEATH CLAIM SETTLEMENT

Nomination is done by the depositor Legal heirs get their rights by

relationship
Nominee may be different for each Legal heirs are the same for all deposits
deposit
Nominee gets his right only on the Legal heirs rights are based on
death of the depositor
devolution of property
Claim is settled only to one nominee Claim is settled to one or more legal
heirs
Discharge from nominee is adequate Discharge from all legal heirs is
necessary
PLEDGE
HYPOTHECATION
Means bailment or delivery of goods
or documents by the borrower to
the creditor with an intention to
create a charge thereon as security
for the debt
Ownership is with the borrower and
possession is with the lender
The right of sale of goods can be
exercised by sending a notice to the
borrower
Being contract of bailment, the
banker has the right of duties of
pledge
If the borrower is a limited
company, the registration of charge
is not necessary
GUARANTEE

Hypothecation is an equitable charge in

lenders favour over goods

Issued by the bank guaranteeing

performance of a promise
Contingent liability on the part of
the bank
Protective clause is a must
Issued in the format as required by
the customer subject to approval by
Legal section

It is a certificate which conveys the

solvency of the customer
No such certificate

GUARANTEE

Both ownership and possession is with

the borrower
Sale of goods can be made only with
court intervention
No such duties and responsibilities are
thrust upon the lender
Registration of charge is a must

SOLVENCY CERTIFICATE

No such clause is required

Issued in the prescribed format
designed by the bank by the branch
where the application is submitted
INDEMNITY

It is a contract to perform the

promise or discharged liability of a
third person in case of his default

A contract by which one party promises

to save another from the loss caused to
him by the conduct of the
promisor(indemnifier) by the conduct of
any other person
The surety undertakes his obligation No such request is required.
at the request of the principal
Indemnifier agrees on his own
debtor
Three parties Principal debtor,
Two parties indemnifier and the
beneficiary(creditor) and the
beneficiary
surety(guarantor)
The liability of the surety is
Depends on the possibility of risk or
dependant on the default of the
some loss
third party
Surety on payment of debt to the
Indemnifier cannot sue third parties his
creditor, can proceed on his own
own
name against the principal
debtor(right of subrogation)
GARNISHEE ORDER
ATTACHMENT ORDER
Issued by the court on the
Attachment orders are issued by the
application made by the judgment assessing officer or tax recovery officer
creditor in a situation where the
on the bank having any type of deposit
judgment debtor refuses to pay debt in the name of the assessee from whom
payable to him
money is due or may become due
First order NISI and then order
Always in the absolute forms
absolute
Recovery of private dues
Recovery of dues as arrears of income
tax
On clear balance available in the
Applicable on subsequent balance upto
account at the time of receipt
the time total amount is not recovered
SAFE CUSTODY OF ARTICLES
SAFE DEPOSIT LOCKERS
Bank is bailee and the customer is The bank is a lessor (landlord) and the
bailor
customer is a lessee (tenant)
No space is leased out to the
A small locker in the lockers cabinet is
customer
leased out to the customer
There is no involvement of the
The locker is opened jointly by the bank
customer with the operation of the with master key and by the customer
vault where the valuables have been with hirers key
kept by the bank
No requirement of password
Password must be asked before

The customer delivers the

valuables/articles to the bank for
keeping in safe custody
The customer can take charge
according to the size of the articles

allowing the operation

The customer himself keeps the articles
in the locker
The customer operates the locker itself
and may take out any article as per
need

Summons are to be issued to the defendants within how many days?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 11

CIVIL PROCEDURE CODE

01. Summons are to be issued to defendants: within 30 days from the date of filing
suit
02. Written statement has to be filed by the defendants within 30 days of service of
the summons which can be extended to 90 days by the court
03. Time fixed for any act under the code can be extended not exceeding 30 days in
total
04. The plaintiff has to produce documents and pay requisite fee within seven days of
orders of the court
05. If the summons are returned plaintiff has to apply for a fresh summons within
seven days of return failing which suit shall be dismissed
06. Adjournments will not be granted for more than three times during the hearing of
suit
07. Summons can be served by private Courier- approved by High court/district court
or through email, fax registered post-ack due
08. No appeal can be filed other than question of law if the suit amount does not
exceed Rs. 10000.00
09. No second appeal can be filed from the decree of money suit if the amount does not
exceed Rs. 25000.00
10. No arrest of Judgment debtor can be made if decree amount does not exceed Rs.
2000.00
11. No arrest of judgment debtor in a civil suit can be made - irrespective of the
amount if she is a lady
12. If the decreed amount exceeds Rs. 2000.00 - but does not exceed Rs. 5000.00
arrest can be made for a period not exceeding six weeks
13. If the decreed amount exceeds Rs. 5000.00 arrest can be made for a period not
exceeding three months
14. Fine for non-compliance of summons - is Rs. 5000.00
15. In execution of decree by civil court - basic things like cooking vessels, clothes.
personal ornaments as per religious use, tools for making livelihood, family
pension, gratuity wages of labourers, dwelling house wages of labourers etc.
cannot be attached

16. In execution of decree by civil court if the house is mortgaged it can be enforced
17. In execution of decree by civil court the salary to the extent of first Rs. 1000.00
and 2/3 of remainder cannot be attached
CONSUMER PROTECTION ACT- 1986(COPRA)
18. Deficiency
means - any
fault,
imperfection,
shortcoming
in
quality/nature/manner of service
19. Complaint has to be filed - within two years from the cause of action
20. District forum claims upto Rs. 20 lakhs
21. State commission claims of above Rs. 20 lakhs upto Rs. 1 crore
22. National commission claims of above Rs. 1 crore
23. Bank has to file its version within 30 days of notice
24. Non compliance of orders of forum will attract a fine of upto Rs. 10000.00 or
imprisonment for three years or both
25. Appeal to be filed against orders of District Forum in State forum after depositing
50% of the amount granted by State Forum or Rs. 35000 whichever is less
26. Appeal against the orders of National Forum can be filed before Supreme Court
after depositing 50% of the decreed amount by the National Commission or Rs.
50000 whichever is less
27. Limitation for filing of appeals 30 days from the orders
BANKIING OMBUDSMAN SCHEME
28. In order to proceed under the scheme the customer has to first write to the
bank
29. If the bank has not replied within one month or rejected the complaint or if the reply
of the bank is not satisfactory to the customer then he can prefer complaint with the
banking ombudsman
30. Limitation for filing Complaint is - one year from the date of reply from the bank
31. When no reply is received from the bank - then one year and one month from the
date of complaint
32. The award by Banking Ombudsman would be - actual amount of loss or Rs. 10
lakhs whichever is less
33. Bank has to settle complaint within one month of receipt of the same
34. Bank has to honour the award - within one month from the date of acceptance of
award by the complainant
35. Any person aggrieved by the award may prefer an appeal within 30 days before
the appellate authority (RBI Deputy Governor)
36. In case the bank has to file an appeal they have to obtain permission of
Chairman and Managing Director and in his absence, permission of Executive
Director for preferring appeal has to be obtained
HRD MEASURES OF THE BANK
37. Study circle is a forum to expand the knowledge horizon of employees and it
helps employees know various information through persons skilled in those areas
38. Brainstorming sessions it is a forum for obtaining feedback from the
participants during a predetermined forum for discussion on specific topics and
elicit ideas/views/suggestions on relevant topics through discussions so that it
can instill thinking process amongst the participants

39. Circle Management Board To formally review all aspects of Circle/s functioning
and determine ways and means to improve the working and to monitor the level of
implementation of various ideas, schemes, programmes etc.
40. Employees suggestion scheme It is a scheme through which various
suggestions are obtained from all sections of employees. Suggestions are obtained
in regard to changes/modifications in procedures/systems of the bank
41. Branch visits/interface To review and monitor the branchs functioning and to
guide the personnel in all matters
42. Training To induct the employees, develop skills, impart knowledge on
functional and behavioural areas and to develop potentiality and personality of the
individual
43. Quality Circle It is a voluntary group of employees working in the same work
area coming together to solve work related problems
44. Employees Recognition Scheme All employees are motivated to take part in
various developmental activities like deposit mobilization, recovery, clientele build
up and they are awarded for their contributions by enrolling them in various clubs
like Chairmans Club, EDs Club and GMs club etc
45. Staff Meeting To foster team building and to provide a forum for individual
development. Corporate objectives can be propagated and the talents of
employees can be recognized. It promotes a two way communication and is an
useful tool for improvement in work culture
46. Entry interview To introduce the details of history and culture of the bank to
the new entrant and to make the new entrant comfortable to the new atmosphere
47. Exit interview To get a free and frank feedback from the person leaving the
organization and to bid a warm farewell to the outgoing employee

FOREX AT A GLANCE
48. FEMA- Foreign Exchange Management Act replacing FERA Foreign Exchange
Regulations act came into effect from 01.06.1999
49. Schedule I prohibited TXN
50. Schedule II Central Government permission required
51. Schedule III deals with purpose, limits where RBI permission is required in
cases like gifts exceeding USD 5000; donations exceeding USD 5000; Private
visits exceeding USD 10000 per financial year; private visits exceeding USD 25000
per occasion
52. Release of forex upto US dollar 1 lakh for medical treatment
53. Education, emigration and employment mere documentary proof of exchange
can be released
54. For beyond documentary proof for release of forex RBI permission is required
55. LRS - Liberalised Remittance Scheme for individuals
56. Individuals can remit USdollar 2 lakhs per financial year
57. Individuals can conduct any permissible current account and capital
transactions
58. Who can open LRS ? a banker can allow any customer who has completed one
year of satisfactory dealings can open(provision of PAN is a must)
59. Each individual in a family can individually enjoy the limits indicated
60. NRIs (Non Resident Indians) any person residing abroad for more than 182
days during the preceeding financial year; any person going abroad for gainful
employment or circumstances indicating indefinite period of stay abroad; wife
accompanying Non Resident Indian abroad is also treated as NRI; Officials

deputed to Embassies, UNESCO etc; Indian students going abroad for studies
abroad whether he earns or not
61. Persons of Indian Origin Foreign Nationals whose parentage can be traced
back to India and their parents or grant parents holding Indian passport or they
are citizen of India
62. Foreign tourists visiting India can open Non Resident Ordinary account for six
months period
63. RBI permission is required to retain the account beyond six months period
64. Foreign Nationals visiting India with work permits for studies, for business and their
spouse accompanying them to say in India can open domestic savings bank accounts
and KYC has to be satisfied
65. For students certificate from educational institution is a must
66. For opening accounts of Nationals belonging to Pakistan, Bangladesh RBI
permission is required
67. Foreign nationals of Foreign Origin are eligible to open NRO account
68. QA 22 account discontinued
69. Foreign entities can also open NRO account
70. TDS in NRO account normally 30%; educational cess: 3%
71. Interest income can be repatriated - subject to payment of income tax
72. Repatriation upto USdollar 1 million per financial year for all bonafide purposes
subject to documentary proof
73. NRO casual overdrawings: No limit/no ceiling as per FEMA as per
discretion of the bank
NON RESIDENT EXTERNAL ACCOUNT
74. TDS not applicable to NRE account ( no tax liability on income earned
through interest)
75. Joint accounts NRI along with NRO not permitted
76. NRE account letter of authority can be issued to NRO
77. Letter of authority holder only for local payments
78. Power of attorney holder in NRE account apart from local payments investment
is also permitted
79. Loans to power of attorney holder permitted with specific provision and
independent permission is required
80. Power of attorney holder cannot open/close the account
81. Transfer from NRE to NRE account permitted freely if the depositor himself
gives instructions
82. NRE TOD Rs. 50000/- as per FEMA guidelines
83. NRO TOD No limit
84. NRE term deposit LIBOR SWAP rate prevailing on the last day of the month
applicable to USD for the corresponding maturity plus 175% basis points
85. FEDAI (Foreign Exchange Dealers Association of India) displays the rate - in their
websites
FCNR(B)
86. LIBOR (London Inter Bank Operations Rate) swap rate prevailing on the last
day of the month applicable to respective currency for corresponding period plus
100 basis points
87. Banks are generally permitted to open accounts in US dollars,GBP, Euro, AUD,
CAD, YEN

88. FCNR (B) accounts not opened in Yen in Canara Bank

89. FCNR FDR minimum one year
90. FCNR KDR minimum one year + one day
91. FCNR FDR Interest payable at the time of maturity if accepted for a minimum
period of one year
92. If interest is to be paid before maturity date like monthly/quarterly interest etc
minimum period is one year + one day
93. No interest is payable if closed before one year
94. Joint deposits If one party dies and the account is closed, no penalty is levied
95. Latest guidelines party is closing FCNR account before maturity in US dollar;
but wants to invest in EURO, then penalty will be 0.5%(however normally penalty
is 1%)
96. Loan against NRE deposit maximum loan NRE/FCNR:Rs. 20 lakhs only
irrespective of number of deposits held by the depositor
97. Opening of account in third currency is permitted
98. Loan is granted in native currency (say rupee)
99. Interest on loan if it is remitted in Indian rupees BPLR minus 3.5%
100.Loan in Indian Rupees not to be credited to NRE account and only to NRO
account and loan in foreign currency amount can be credited to NRE account or
repatriated however, closure of loan account from NRE account only or
adjustment of NRE deposits

What is the formula for calculating tangible networth?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 10

(RELATED TO BALANCE SHEET)
01. Tangible net worth is calculated by the formula: Share capital + General Reserves
intangibles and fictitious assets
02. Miscellaneous expenditure and preliminary expenses are called as - fictitious assets
03. Goodwill, patents, copyrights etc. which have no physical form are called as intangible
assets
04. Net working capital means: Total current assets less total current liabilities
05. Net working capital is also called as: Long term sources less long term assets
06. Long term liabilities are also called as - long term sources
07. Long term assets are also called as long term applications or long term uses
08. Balance sheet - is a statement showing the business details called as assets and
liabilities of a firm as on a particular date
09. Working capital gap means total current assets less total current liabilities other
than bank borrowings
10. The operating profit is called as gross profit
11. Net profit means operating profit plus other income minus other expenses and
provisions for taxes
12. Net sales means Gross sales minus excise duty and sales returns
13. Contingent liabilities like guarantees, letter of credits etc - will not appear in a balance
sheet

14. Profit and loss account is - a statement showing the income earned and expenditure
incurred by a firm during a specific period
15. The process of reducing a large amount of historical financial data to a similar set of more
useful information for decision-making purposes is called as financial analysis
16. Profits made in the normal course of a business and retained in the business is called
as general reserves
17. Current assets are those which are forming part of the operation cycle or realizable
within a period of twelve months
18. Current liabilities are those which are forming part of the operation cycle or payable
within a period of twelve months
19. Margin money for issue of any letter of credit or a guarantee can be considered as part
of current assets
20. The ratio which indicates the ability of quick assets in meeting the current liability or quick
liability is called as quick ratio
21. Quick assets are nothing but current assets less inventory
22. Quick liabilities are nothing but current liabilities less bank borrowings
23. When operations of a business result in losses, it would reduce shareholders funds
24. Bills purchased by the bank will be reflected as under in the analysis of the balance sheet
bills purchased is shown under current liability and bills under sundry debtors in
current assets
25. Advance payment from customers will be treated as current liabilities
26. Advance payment paid to suppliers will be treated as current assets
27. The positive current ratio of a firm will indicate the presence of net working capital
28. The negative current ratio of a firm will indicate the absence of any net working
capital
29. Current liabilities more than current assets denotes the absence of net working
capital
30. Similarly long term assets more than long term sources (liabilities) denotes the
absence of net working capital
31. Absence of net working capital is also called as negative current ratio
32. The ratio which could give an idea of the availability of net working capital is called as
current ratio
33. Margin on working capital is brought by a unit from long term sources
34. Current assets less inventory or stock is also called liquid assets(quick assets)
35. Guarantees, letter of credits are called as off balance sheet items
36. Undervaluation of closing stock in the balance sheet will result in decreasing the gross
profit of the firm
37. Investments made in government securities are not part of shareholders funds
38. Debtors velocity ratio indicates the credit period allowed on sales
39. Temporary investments of a borrower (for the purpose of investing short term surplus) in
money market instruments like Commercial Paper, Money Markets Mutual Funds, Certificate
of deposits etc. can be classified as current assets
40. Investments in shares/debentures of subsidiaries and associates are to be classified as
non current assets
41. The statement which shows where the money has come from and where money has gone is
called as funds flow statement
42. Sale of goods will result as - in sources of funds
43. Increase in liabilities(capital, reserves, term loan, bank overdraft, sundry creditors,
provision for taxes, advance payment received from customers etc) are sources of
funds
44. Decrease in liabilities(capital, reserves, term loan, bank overdraft, sundry creditors,
provision for taxes, advance payment received from customers etc) are uses of funds

45. Increase in assets(land, building, machinery, noncurrent assets, intangible assets, fictitious
assets, cash balance, bank balance, sundry debtors, stock, advance paid to suppliers etc)
are uses of funds
46. Decrease in assets(land, building, machinery, noncurrent assets, intangible assets, fictitious
assets, cash balance, bank balance, sundry debtors, stock, advance paid to suppliers etc)
are sources of funds
47. Rent paid in advance is called as current asset
48. Prapaid insurance is called as current asset
49. Provisions kept for payment towards taxes and any other liabilities are called as current
liabilities
50. A low current ratio will indicate the shortage of working capital
51. Stock turnover ratio denotes operational efficiency
52. Current ratio denotes the liquidity position of the firm
53. Breakeven point means the point where the unit meets the total cost by total sales
revenues
54. Contribution in break even analysis is surplus available in sales revenue after
meeting all variable costs
55. Holding level of raw materials is related to consumption of raw materials
56. Holding level of stock in process is calculated in relation to cost of production
57. Level of finished goods is in relation to cost of goods sold
58. Level of sundry debtors is in direct relation - to gross sales
59. In funds flow analysis, any increase in sundry creditors for goods is treated as sources of
short term funds
60. Increase in gross block of fixed assets is uses of long term funds
61. In funds flow analysis, diversion of fund means long term deficit funded by short
term surplus
62. In the case of availability of subordination of unsecured loans, then such unsecured loans
shall be treated as long term funds
63. Chargeable current assets are inventories and receivables
64. The ratio of long term loans to networth of the company is called debt equity ratio
65. Term loans are considered as long term liabilities whereas instalments in term loan which
are payable within a period of twelve months are called current liabilities
66. The liquidity of the bank is determined by converting its assets to cash quickly and
at good costs
67. A banks own premises, investments in subsidiaries represent- fixed assets
68. Price of liquidity is determined by nature of convertible assets on hand
69. Advance payment to suppliers should be treated as current assets
70. Claims against the bank not acknowledged as debts called the contingent liabilities are off
balance sheet items
71. Authorised capital, issued capital and subscribed capital - will not appear in a balance
sheet
72. Preference share capital is the contribution of - preference shareholders
73. Dividends to shareholders are payable from general reserve and not from capital
reserve
74. Shareholders of equity capital are having voting rights whereas the shareholders of
preference shareholders are not having any voting rights
75. Reserves are classified into - general reserve and revenue reserve
76. Capital reserves are classified into - fixed assets revaluation reserve and share
premium reserve
77. Revenue reserves are the accumulated earnings from the profits of normal
business operations
78. Funds are made available for distribution of profits amongst the shareholders from
revenue reserve

79. Borrowings made by the company by creating a specific charge on assets of the company
are called as secured loans
80. Borrowings made by the company for which no specific security is offered are called as
unsecured loans
81. In the case of a company, fixed deposits(by the public), inter corporate deposits(by other
companies) and loans availed from the promoters and directors are unsecured loans
82. In the balance sheet of a partnership firm, original cost of fixed asset less depreciation is
called as net block
83. The working capital cycle of any manufacturing organization consists of five stages
of conversion called raw materials to work-in-progress; work-in-progress to
finished goods; finished goods to bills; bills to cash and cash to raw materials
84. The quantum of working capital requirements depends on two factors as level of activity
and delay in the working cycle
85. The components of working capital requirements are raw materials and consumables;
work-in-progress; finished goods; bills receivables and expenses
86. Cost of production consists of consumption of raw materials(including stores) and
spares; power and fuel; direct labour; repair and maintenance; other
manufacturing expenses plus opening balance of stock-in-process and minus
closing balance of stock-in-process
87. Cost of sales consists of cost of production plus opening stock of finished goods
minus closing stock of finished goods
88. Net profit minus dividend paid/declared is called as retained profit
89. Break-even-point is the point in terms of rupees, at which total costs equal total
revenue, and profit equals zero
90. Contribution margin is total revenue less total variable costs
91. Contribution margin per unit or unit contribution is selling price per unit minus
variable cost per unit
92. Contribution margin ratio is contribution margin per unit as a percentage of the
selling price
93. Costs which are not directly associated with production and remain constant for a relevant
range of productive activity is called as fixed cost
94. The maximum percentage by which expected sales can decline and a profit can still be
realized is called as margin of safety
95. Costs that are fixed up to a certain level of output but will vary within certain ranges of
output is called as mixed cost
96. The range of output over which the amount of total fixed costs and unit variable costs
remains constant is called as relevant range
97. Costs which are directly associated with producing a product and which vary with this level
of output is called as variable cost
98. Average business per employee in a branch is calculated by the ratio- (average deposits
+average advances) divided by number of staff in a branch
99. Number of accounts per employee in a branch is calculated by the formula: (Total deposit
accounts + total borrowal accounts) divided by the number of staff in the branch
100.The notional price at which inter-departmental exchange of goods/services takes
place within the company is called as transfer price

Who is responsible for filing the particulars for getting a charge

registered with Registrar of Companies?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 09

01. Under Section 125 of the Companies Act, the filing of particulars for getting a charge
registered with Registrar of Companies for certain transactions is the responsibility of
borrowing company
02. Excellent Bank receives a cheque with account payee crossing and special crossing in favour
of Superior Bank. The cashier of the Superior Bank presents this cheque for cash payment
to the Excellent Bank Even though the cheque bears account payee crossing, since
it is presented by a bank, it can be paid in cash
03. Your bank sanctioned a loan of Rs. 2.00 lakhs against the security of national savings
certificates in favour of a person called Raman, who has expired recently in a road
accident The payment of National Savings Certificates will be obtained by the
bank
04. For financing a pumpset, which of the following standards will be taken into account ?
Bureau of Indian Standards
05. Excellent Bank issued a fixed deposit in the name of Mr X and his wife Mrs. Y. Mrs Y comes
to the bank and requests for premature payment to meet the expenses on treatment of Mr
X who is admitted in a hospital and cannot sign, because of a fracture in his hands
payment can be made after verifying the facts and after obtaining the thumb
impression of Mr. X presently in the hospital duly witnessed by the attending
doctor
06. Mr X and Mr Y are having a joint account in which they have nominated Mr A. On the death
of Mr. X, Mr A approaches the bank for payment being nominee, payment would be
made to A and to Y and legal heirs of X
07. Popular Bank has issued a term deposit receipt in the name of Mr A and Mr B to be operated
as former or survivor. A approaches the bank for addition of name of Mr Y, his son and also
nominated Mr Z, his brother in law. He claims that the money belongs to him without the
consent of Mr B, addition or nomination cannot be accepted
08. Which of the following cannot enter into a valid contract ? a minor (In the case of
illiterate or blind, if major, they can)
09. Preservation of bank records is mandatory under which act ? Banking Regulation act1949
10. Banks are required to submit to RBI a statement of unclaimed deposits. What is the time
period for considering a deposit as unclaimed deposit ? the deposit which is not
operated for ten years
11. As per Central Vigilance Commission guidelines, CVC has jurisdiction over which category of
the following ? Senior Management Grade V and above
12. Which of the following is true with regard to creation of equitable mortgage ? It can be
created at centres notified by the State Government only.
13. Who had launched RIDF scheme ? Government of India
14. Tarapore Committee recommendations are associated with which of the following ?
Capital Account Convertibility
15. What is the maximum amount up to which the award can be given by the Banking
Ombudsman ? Rs. 10.00 lakhs
16. The capacity in which the Banking Ombudsman functions in respect of dispute among two
banks is known as that of Arbitrator
17. A person not having a PAN and not liable to pay income tax is required to make a
declaration on which of the following Form No: 60
18. Lending for a public company is restricted as per Section 293(d) (i) Paid up capital and
free reserves

19. Upto what extent no collateral security is required to be obtained by the banks, for sanction
of education loan Rs. 7.50 lakhs
20. What is the full form of the term O B U ? Off-shore Banking Units
21. Ghosh Committee is associated with which of the following aspects of banking ? Bank
frauds, Concurrent audit system and Photograph in deposit accounts
22. What is the minimum maturity period for which commercial paper can be issued ? 7 days
23. Section 31 of RBI act covers which of the following aspect of financial sector ? Restricts
issue of bills of exchange payable on demand to the bearer by any person other
than RBI and Central Government
24. Negotiated Dealing System relates to which of the following aspect of financial sectors ?
Submission of bids for participation in government securities
25. Real Time Gross Settlement is connected with which of the following ? Centralised
payment system being run by RBI
26. What is the full form of CIBIL ? Credit Information Bureau of India Limited.
27. By an exporter, which of the following kinds of letters of credit are given preferences ?
Irrevocable without recourse confirmed.
28. The term FEDAI stands for which of the following ? Foreign Exchange Dealers
Association of India
29. XYZ Limited, a joint stock company has been under voluntary liquidation on the basis of
resolution passed by the shareholders of the company Its assets would be in
possession of the Official Liquidator
30. Mrs Lakshmi, running a chemist shop is maintaining a current account as proprietor in the
name of M/s Lakshmi Medicos for the last five years. She wants to nominate her minor son
aged six years to this account If the name of the person who would obtain payment
on behalf of the minor is also indicated, the nomination can be accepted
31. Mr Z has been availing a housing loan of Rs. 10.00 lakhs from your branch which has been
showing some irregularity due to irregular payment being made by the borrower. You have
come to know that he is having a current account in the name of his proprietorship firm at
another branch of the bank in another town bank can exercise right of set off since it
is a proprietorship account
32. A private limited company namely: ABC Private Limited wants to open a current account
with your branch. Which of the following are not required to be obtained from the
company ? Introduction by any other accountholder
33. FCNR (B) Foreign Currency Non Resident (Bank) accounts
34. SARFAESI Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002
35. A power of attorney holder of a locker holder approaches for surrender of the locker As
per the power of attorney, he has the powers to operate the locker only and not
to terminate the contract
36. Cheque signed by the agent, who has expired, is presented for payment Payment would
be made
37. Willful loan defaulter Report to be sent to CIBIL for the loan accounts of Rs. 25.00
lakhs and above
38. Willful loan defaulter Report to be sent to RBI for loan accounts of Rs. 25.00 lakhs
and above
39. Vehicle financed to partnership firm. How registration would be done ? In the name of
the firm with the name of the bank as hypothecatee
40. Protection in the case of material alteration available to the bank Under section 89 of
Negotiable Instruments act
41. Which act defines mortgage ? Transfer of property act-1882
42. Right of set-off is available to the bank due to Contractual binding
43. When a cheque is endorsed in blank effect is that it becomes payable to the bearer

44. In a joint account of A and B, if B expires, payment to be made to A and legal heirs
of B, if survivorship clause is not there
45. A cheque crossed not negotiable It can be transferred but no one can become
holder in due course for such cheque
46. Executor of a will or administrator would sign the bank account opening form as X, the
executor/administrator for the deceased A
47. Protection to collecting bank for a cheque is available Under section 131 of Negotiable
Instruments Act
48. Illiterate wants to give mandate to someone to operate the account It can be permitted
with properly witnessed mandate
49. In a HUF, whether Karta can appoint agent ? Yes, he has the absolute authority for
conducting the affairs of the HUF business
50. Stop payment instruction received from a Coparcener for a cheque issued by the Karta
Bank will not accept
51. Cheques received in clearing for payment from an account Garnishee order will be
applicable on the amount of cheque, if returning time is still available
52. Usance bill of exchange Time available to drawee for acceptance 48 hours after
presentment
53. Overseas Banking Unit branch for the limited purpose is treated as a foreign branch of
the bank
54. RIDF is operationalised by NABARD
55. Committee associated with computerization and mechanization Rangarajan committee
56. Maximum Limit for General Credit Card basic limit of Rs. 25000.00
57. Credit Guarantee Fund Maximum cover amount Rs. 18.75 lakhs
58. Special Crossing Payment can be made to the bank in whose favour the crossing is if
the endorsements are in favour of two banks, payment to the bank functioning as
agent
59. FAS stands for Free Alongside Ship (an Inco Term)
60. Crystalisation of liability of importer within 10 days
61. Sale and purchase of securities on behalf of a customer Relationship bank agent
62. Priority of charge in the case of a company, when registered on the same date The bank
whose documents have been signed first
63. Stop payment instruction given by the latter (2 nd named) in the case of former/survivor
account bank would not accept
64. Power of attorney or mandate in favour of a minor for locker operation will be permitted
65. Admission of new partner in a partnership firm consent of all partners required
66. Guarantee has been defined in Indian Contract Act-1872
67. Nomination provisions have been provided in Banking Regulation act 1949
68. Committee on Monetary Aggregates Y B Reddy
69. Minor aged 15 years presents a cheque for payment Payment can be allowed by obtaining
signatures on the backside of the instrument No endorsement is needed
70. Nostro Account An account of a branch of a bank established in India with the
branch of a foreign bank established outside India
71. Priority Sector advances target for foreign banks 32% of Net bank credit
72. Statutory liquidity ratio should not be more than 40% as per Banking Regulation act
73. Who fixes the agriculture produce support price ? Recommended by Bureau of
Agriculture costs and prices
74. Poverty line is based on nutritional requirement
75. In the case of nomination, no person other than the nominee to be entertained as per
Section 45ZB of Banking Regulation act 1949, unless there is a court order
76. RBI rating is based on CAMELS rating system under banking supervison
77. Fixed deposit prepared to give security for the bank guarantee Not available as
security for any other loan

78. Tier I and Tier II are parts of Capital Fund under capital adequacy guidelines. Tier II
cannot be more than Tier I
79. In the case of company accounts, company is a legal person, whose bonafides are
already certified by ROC, while issuing certificate of incorporation
80. Companys incorporation is legally complete, with issue of Certificate of Incorporation. But
public limited company cannot commence business in the absence of certificate of
commencement of business
81. System of SDF (Sugar Development Fund) is controlled by the Ministry of Agriculture
82. Bank gets no protection for a forged cheque but for forged endorsement, paying
bank is liable
83. Where endorsements are irregular, bank does not get any protection
84. Period allowed for opening of an account 15 to 20 minutes
85. What is a garnishee order? an attachment order of a competent court on judgment
debtors debtor (in the case of bank deposits, the bank)
86. Cheque issued by a company/firm as yourself. Received with an endorsement to issue a
bank draft bank draft will be issued if endorsement is signed by the authorized
person
87. Current account in the name of a minor can be opened but precautions will have to be
taken Section 85 (2) of Negotiable Instruments Act provides protection to the
paying banker in the case of endorsement on a bearer cheque
88. Amount of Fixed deposit where maturity proceeds can be paid in cash not to exceed Rs.
20000.00
89. DICGC insurance cover for deposit Rs. 1.00 lakhs per depositor of the bank
90. Is nomination in a HUF account is permitted ? No
91. Is nomination in a Proprietorship firms account permitted ? Yes
92. PAN quoting mandatory for preparation of draft by deposit of cash for Rs. 50000.00 and
above
93. Cheque issued in favour of a company has been endorsed by the company in favour of a
director of the company Not to be collected by the bank for the personal account of
the director
94. In a trust account on the death of anyone of the trustees new authority required
95. Sans recourse endorsement where endorser reduces his liability by express words
96. Special Crossing favouring two banks Cheque can be paid only if one of them is an
agent and payment to be made to the agent bank
97. MICR is called Magnetic Ink Character Recognition
98. Order Nisi 1st stage in garnishee order- provisional attachment of account
99. Protection to collecting bank for draft Section 131 A of Negotiable Instruments Act
100. Bill of Exchange has been defined in Section 5 of Negotiable Instruments Act

When sub standard assets can be considered as standard assets?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 08

01.

Substandard restructured accounts will become standard - after 12 months of

regular repayment of instalments
02. Short duration crop loan will become NPA - after two crop seasons
03.
Interest on NPA account will be recognized as income after it becomes due and
received

04.

A is having a savings bank account and also one overdraft account with debit
balance with the bank. The bank can adjust the credit balance in savings bank
account with the debit balance in overdraft account using right of set off
05.
X is having a loan account duly guaranteed by Mr and Mrs Y. They are having a fixed
deposit for Rs. 40000.00 with maturity value of Rs. 57010/- X defaulted in repayment of the
loan and bank on maturity adjusted the loan account of X with the maturity value of fixed
deposit and credited the balance to savings bank account of Mr. Y and Mrs. Y. Mr Y and Mrs
Y objected to this adjustment since the loan is time barred bank has the right of set off
which it has correctly used (presuming that notice had been given for doing so)
06.
XYZ and ABC are two firms having the same partners in both partnership firms.
One firm is having a debit balance and other firm is having a credit balance - partners
being the same, right of set off can be applied by the bank
07.
A solicitor is having two accounts with the bank. One is in personal name and the
other is in clients name. One cheque is presented in clearing in clients account. In the
meantime, garnishee order is served on the solicitors account. Whether bank will pay this
cheque presented in the clearing ? Cheque will be paid since it relates to client
account, which the solicitor has opened in the fiduciary capacity.
08.
Mr D is having one overdraft account with us. He is also having three other accounts
with us, (namely) his personal savings bank account, joint account with his wife and one
guardianship account with his son. Bank can use right of set off in which of these accounts?
Right of set off is available in personal savings bank account only
09.
Mr. Seth is having current account with us. He has appointed his son aged 16
years as his agent. Can the minor operate this account after this ? Since the minor is
agent, he can operate it
10.
Mr. Sharma has given irrevocable power of attorney to Mr Verma to operate his
current account as an agent for one year. After three months, he has decided and gives
notice to the bank that Mr. Vermas authority stands withdrawn. On the contrary, Mr.Vermas
plea is that since he has been appointed as agent for one year, he has every right to operate
the account. What will be the position of the bank now to deal with it? The bank has to
stop the authority of Mr. Verma from being used.
11.
A minor aged 16 years is having a fixed deposit for Rs. 10000.00 with the bank. He
requested before maturity payment of the deposit. Can the bank allow before maturity
payment ? the bank can accept the request of the minor
12.
In case a minor is appointed as a nominee for a term deposit and when death of the
depositor takes place payment can be obtained by the guardian of the minor on his
behalf
13.
After the death of locker holder his daughter comes to the bank with the key to
operate the account. What is the course of action that will be suggested by the bank ? get
a letter of administration
14. A company is having immovable property in Bangalore, its registered office is in Chennai
and the company is willing to avail bank limits in Mumbai. Where the EMT can be created ?
any one of the above cities presuming that all are notified centres
15. Where a company is failing in filing particulars of charge on its assets with Registrar of
Companies, who has got the right to file particulars of the charge with the registrar of
companies ? Creditors of the company
16. In the case of non-registration of charge on assets, in case of a company, the charge will
become void before the liquidator
17. A trust is maintaining an account with the bank operated by three trustees. One of them
issued a cheque for credit to his savings bank account. What precautions bank will take ?
Cheque cannot be paid unless proper enquiry is made and the bank is satisfied
18. What is the ceiling of subsidy under SGSY scheme for self help group ? Rs. 1.25 lakhs
19.
In the case of KCC, what will be the quantum of insurance in the case of death of
the borrower(farmer) ? Rs. 50000.00

20.

Vehicle loan financed by banks are registered with Road Transport Authority with the
sole objective of getting the charge in favour of the bank so that the borrower can
not sell the vehicle without the permission of the bank
21.
Under Credit Guarantee Fund scheme, the maximum amount of claim for non fund
based limits is none
22.
For group exposure purpose, the non fund based limit sanctioned to a borrower are
to be reckoned at which of the following 100%
23.
A company is having stock of Rs. 20 lakhs stored at its godown. It is insured for Rs.
10 lakhs. The company has sent stocks for Rs. 4 lakhs for processing at some distant place
where it gets destroyed at the place of processing by fire. What amount of claim will be
adminissible ? Nil
24. Contribution in break even point is equal to selling price less variable cost
25.
Which of the following is the objective of introduction of KYC ? Check
undesirable customers and stop money laundering
26.
XYZ Limited, a company, has paid capital and free reserves of Rs. 100 crores and it
has already borrowed a sum of Rs. 150 crore on long term basis. It wants to raise
debentures of seven years. What statutory compliance, the company will need to make ?
The companys shareholders will be required to pass a resolution in the general
body meeting authorizing the board of directors for the proposed borrowing
27.
Digital signature means a coded confirmation in electronic form attached to
an electronic record
28.
Pari passu charge in the case of a consortium advance by banks to a big borrower
means which of the following ? Each bank will have a pro-rata charge on the
security in the ratio of their outstanding within the limits approved by the
consortium.
29.
Which of the following net working systems will be used by an organization having
office in one building ? Local Area Net Work
30.
An original draft is reported as lost. Its duplicate is issued and is presented in
clearing. It is subsequently found that the original draft is already paid in banks records
Duplicate will be returned unpaid
31.
A endorsed a cheque in favour of B and B endorsed it to C who just signs the
cheque. The cheque is stolen by D, who endorsed the cheque in favour of Ashok (an old
creditor of D) for valid consideration. Ashok took the payment of the cheque. In this case
Ashok is liable to whom ? He is not liable to anyone since he is a holder in due
course
32.
A cheque dated: 12.10.2009 is presented for payment on October 27,2009. It is
however observed that the cheque book from which the cheque was issued had been
issued to the customer on 22.10.2009. What would the bank to do with the cheque ? The
cheque would be paid, if it is otherwise in order
33. Your branch receives a cheque written in three different inks and three handwritings the
cheque will be paid
34.
What do you mean by Swap ? simultaneous purchase of forward and sale of
spot currency
35.
What is overbought position in the case of Foreign Exchange ? Foreign exchange
purchased is more than foreign exchange sold
36.
In the case of cash credit account, the first credit will be adjusted against which of
the following? It will be set-off against the first debit
37.
When a party is allowed post-shipment credit, what is the maximum normal time
period, during which it is expected to get the foreign exchange realized ? six months
38.
Which of the following meets the feature of a deferred payment guarantee? A
guarantee where payments to be made in instalments are guaranteed

39. A firm receives raw material from abroad for processing thereof and subsequently to be re
exported after processing. What kind of guarantee shall be issued for this ? Performance
guarantee.
40. You are approached by an SSI unit that is engaged in an industry, where raw material is
available in a particular season of two months only. The assessment of working capital for
this would be made by the bank as per cash budget method
41.
The risk that arises to a bank due to failure of internal process is called
as operational risk
42. A partnership firm brings additional funds in the business, but it creates fixed assets out of
these funds, which of the following ratio would be affected ? Debt Equity Ratio
43. Compared to the previous years, there has been an increase in the fixed assets of a firm to
the extent of Rs. 5.00 lakhs but its long term liability and net worth increased by Rs. 4.00
lakhs. It would effect current ratio
44.
The comparison of the balance sheet of a firm reveals that its long term uses are
lower at 75% of its long term sources. Which of the following must be true ? Change in
Current Ratio
45.
A firm had a current ratio of 2:1 and its current liabilities at Rs. 15.00 lakhs. What
will be the amount of net working capital of the firm ? Rs. 15.00 lakhs
46.
Working capital term loan to SSI related committee Tandon committee
47. Education cess is to be used towards Primary Education
48.
Limit for Lok Adalat Rs. 20 lakhs
49. Which banks have banking operations in Russia ? State Bank of India and Canara Bank
subsidiary called as Commercial Bank of India
50.
Can a joint stock company become a partner in a partnership firm ? Yes
51.
How many working directors are there in a nationalized bank ? Two
52. If a financial director of a company expires, what will be done with the cheque signed by
him? Bank can make the payment
53. Counter guarantee for a bank guarantee is an indemnity
54.
Letter of Credit - where the packing credit can be allowed to exporter ? Red
Clause letter of credit
55.
How many times a transferable letter of credit can be transferred ? Once only
56. Where on the strength of one letter of credit another letter of credit can be established ?
it is called back to back letter of credit
57. Where within the letter of credit already issued more than one drawings are permitted on
roll over basis ? Revolving Letter of Credit
58. If the depositor obtains a loan against a fixed deposit, name of another person can be
added in the deposit On repayment of loan only
59.
Prepaid insurance is classified as Current Asset
60.
Net Working Capital Current assets minus Current liabilities or Long term
sources less Long term uses
61. Working capital limit of Rs. 20 crores can be sanctioned under which method ?
Conventional method or Tandon Committee
62.
Under Nayak Committee, the level of sales is 5 times the minimum working
capital limit or 4 times the minimum level of working capital
63.
Advance allowed to a State Sponsored Corporation for on lending to weaker
sections in rural areas Indirect finance to agriculture
64. Amount ceiling for reporting under K Y C Rs. 10 lakh summation
65.
Credit Guarantee Fund scheme benefit to bank lower capital adequacy and
lower provision in case of account becoming NPA
66.
NPA can remain for first 90 days as standard assets and beyond that it will be
treated assubstandard assets
67. RBI committee on procedures and audit Headed by S.S Tarapore
68. Deduction from salary for union subscription Check off facility

69.

Statement of unclaimed deposits to Reserve Bank of India Under section 26 of

Banking Regulation act-1949
70.
Definition of hypothecation described in Sarfaesi act - 2002
71.
Cheque written in different scripts say Tamil and English valid and it can be
paid
72. Debtor turnover ratio indicates efficiency of collection of book debts
73.
In the case of former and survivor deposit addition of name or closure of
account is possible with signature of all accountholders
74.
On payment of loan by the guarantors, what kind of right is vested with him ?
Right of subrogation
75.
What is the objective of SGSY scheme ? To bring people below poverty line to
above poverty line
76. Non negotiable crossing a warning to endorsee
77.
What kind of charge is possible on receivables ? assignment
78.
In hypothecation, with whom is the possession or ownership ? borrower
79. Locker on either or survivor operation basis One reports loss of key and the other comes
to operate with the key locker is allowed only by joint operation in this situation.
80 Bailee and bailor jdefined in Indian Contract Act
81.
Dishonour of cheques by mistake Payee claims damages from bank bank is
liable to drawer only
82. Account of foreign bank with a branch of a bank in India Vostro
83.
If forged Rs. 500 currency note is received at the counter a statement received
from the tenderer and the currency note have to be handed over to the police
authorities
84. Booting is called starting a computer
85.
Input data fed into a computer
86. Selling of foreign exchange delivery of forex to the customer in lieu of Indian
rupees
87.
Law charges to be debited to Profit and Loss account
88.
Memorandum of association of a company a document guiding relationship
with third parties or outsiders
89. Under-insurance of security loss can occur due to application of average clause
90.
For acknowledgment of debt, the Central Government has prescribed the payment
of stamp-duty at which of the following rates different in each State as prescribed by
the State Government
91.
When a bank grants a loan to a borrower on the basis of hypothecation of the
assets, with whom does the possession and ownership remain ? borrower
92.
What is the amount of limit in respect of priority sector advances in general, where
the banks do not charge inspection and service charges ? Rs. 25000.00
93. The term - mulberry relates to Sericulture
94.
What is the maximum amount of a transaction, that can be carried under electronic
funds transfer (E F T) facility being operated by RBI no ceiling
95. Which of the following committees, introduced the term working capital term loan
representing excess borrowing by a borrowing unit ? Tandon Committee
96. Tax deducted at source while making payment to a contractor should be deposited with the
Government within a period of seven days from the date of deduction
97. Which of the following is the formulae for working out current ratio in respect of a trading
concern ? Current assets/Current liabilities
98. While sanctioning a term loan to a company, which of the following ratios is most relevant
and taken into account by the financing bank ? Debt Service Coverage Ratio
99.
Which of the following is not reflected by the study of funds flow statement of a
borrowing unit ? How the profits have been earned ?

100.The registration of which of the transactions on payment of stamp duty is mandatory in

India ? Simple Mortgage

Whether foreign currency loans outside India is available against the

security of funds held in FCNR accounts?

BANK EXAMINATIONS GENERAL ASPECTS- PART: 07

01.

Foreign currency loans outside India is available against security of funds held in the
accounts of FCNR(Foreign Currenty Non Resident and Non Resident External)
02.
RBI has introduced Comprehensive Single Return (CSR) for collection of data on
Non Resident deposits
03.
Section 13 of the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2001, provides for a 60 days notice to a borrower
to discharge in full his liabilities before such action is initiated
04.
Inflow and outflow of Foreign Exchange is controlled by the government of India
under the provisions of FEMA 1999
05.
The validity of import license refers to the date on or before which the goods
should be shipped by the overseas supplier
06.
A letter of credit opened in lieu of guarantee in countries like Japan is called as
stand by letter of credit
07.
The last date/expiry date of the letter of credit is the last date for submission of
documents to negotiating bank
08.
Deferred Payment Guarantee is a financial guarantee
09. Which committee has recommended to provide 40% to SSI sector upto Rs. 5 lakh; 20% to
SSI units more than Rs. 5 lakhs & upto Rs. 25 lakhs and balance to SSI units above Rs. 25
lakhs ? Kapoor Committee
10.
IBAs GRACE has been replaced by IBAs banking practices guidelines
11.
Total working capital requirement of SSI units under the turnover method of
working capital assessment would be equivalent to requirement of minimum 3 months of
the annual output value
12.
The export declaration form used for software in non-physical form is softex
13.
BSFC would take up complaints of frauds involving Rs. 5 crores and above
14.
After receipt of attachment order from the Income tax authorities the banker
can exercise right of set-off in respect of existing claim against the customers
15.
The bill is drawn in London and is acceptable/payable in Mumbai and the drawee is
in Chennai.The bill is a foreign bill
16.
The committee constituted by RBI for studying the functioning of Self Help Groups
and non-Government organizations was headed by Shri S.K. Kalia
17. A time of 48 hours (excluding holidays) is allowed to the drawees of which of the following ?
all usance bills
18.
Every banking company is required to prepare its final accounts i.e. Profit and Loss
account and Balance Sheet as on 31 st March every year in the prescribed forms as per
Banking Regulation Act, 1949

19.

In the case of time barred debt the right of set off - can be exercised by the
bank provided the debts are due in the same right
20.
A sum of Rs. 20000.00 is due from X. The loan is secured by the guarantee of Y. Ys
account with the bank has a credit balance of Rs. 30000.00. Can the bank exercise right of
set off against the balance in Ys account ? - The bank can exercise right of set off only
when the borrower fails and a demand is made on the guarantor
21.
A a farmer owning land, was granted a tractor loan with B as co-borrower. The
tractor was registered only in the name of A. When bank filed suit for recovery against A
and B , B denied having received any consideration. What are the rights of the bank ?
bank has rights against A and B both
22.
Where the cheque bears crossing with the name of a banker, such a crossing will be
called Special crossing
23.
In the case of discrepancy between the amount expressed in words and figures, of a
cheque, what will you do ? The amount in words should be paid
24. Under pledge, the physical possession of the goods will be with the bank
25.
You have been approached by the secretary of a reputed public trust, which has four
trustees for opening a savings bank account of the trust. While inspecting the trust deed
you observe that the deed does not contain any provision about the operation of the bank
account. In such a situation, what will you do ? Insist on operation by all the trustees
jointly
26.
When original draft and the duplicate is presented through clearing on the same
day, what will you do ? Pay the duplicate and return the original
27.
A minor not competent to receive a cheque is called as drawee
28.
Sans recourse endorsement is one which should not be paid until the
following business day
29.
Section 131 of the Negotiable Instruments Act 1881 gives protection to the
collecting banker against the risk of conversion. The benefits of the section will be
available to the banker when he collects- a crossed cheque for a customer in good
faith and without negligence
30. In the case of bill of exchange crossing has no meaning
31. A Negotiable Instrument cannot be enforced against a minor when he signs it as acceptor
of a bill;maker of a promissory note; drawer of a cheque
32.
A cheque is payable to A or order. A endorses it in favour of B. B loses the cheque. C
finds it and after forging the endorsement of B delivers it to D. D for valuable consideration
further endorses it to E. The cheque is dishonoured. What are the rights of E on the cheques
? E can recover money only from D.
33.
Protection is available to the paying banker in respect of cheques drawn
payable to order purports to be endorsed by or on behalf of payee; payment in due
course of crossed cheques and cheques on which alteration is not apparent
34.
Even after receiving the notice of minor about his attaining the majority, if the bank
does not respond to inform his option He will be held responsible for all the acts of
the firm not only after his attaining the majority but also with retrospective effect
35.
If the account is in debit and the partner is retiring stop operation immediately
and rule off the account, obtain an acknowledgment of liability not only from the
retiring partners but also from the continuing partner and serve notice on the
retiring partner that bank continues to hold him liable for the outstanding as from
the date the bank is put on notice of the retirement
36.
Mr. Ignorance, an illiterate, having a savings bank account is going abroad for a
short period, requests the bank to allow Mr. Literate to operate his account. Which
document you will propose in order to solve his problem ? Power of attorney registered
with the magistrate
37.
A company is said to be registered when it gets Certificate of incorporation
from the Registrar of Companies

38.

There is a current account in the name of M/s Kapil Dev and Sons, a Hindu
Undivided Family which consists of Mr. Kapil Dev, his wife Suman Lata and two sons
Dara Singh aged eight years and Tinku aged ten years respectively. Account is operated by
Mr. Kapil Dev as Karta of the family. The bank is informed of the death of Mr. Kapil Dev in
this case the account will be operated by Suman Lata as a guardian of the eldest
male member of the family(Dara Singh aged eight years old)
39.
Under execution of a Civil Decree the following can be attached right to future
maintenance; salary to the extent of the first 1000 rupees and two-third of the
remainder; tools of artisans and government securities
40.
The limitation period for filing a complaint before Ombudsman One year from
the date on which the bank has rejected the presentation and sent final reply
41.
Sharma and Praveen have a joint account. Income tax department served an
attachment order on the bank in the account of Praveen can attach 50% of the balance
in the joint account
42. X has been sanctioned a loan of Rs. 5000.00 guaranteed by Y. After sometime, Xs request
for another loan of Rs. 5000.00 was accepted without the knowledge of Y. The guarantee
of Y is available to the extent of Rs.5000/- only
43.
If a usance bill is returned unpaid, a suit should be filed within three years from
the due date
44.
An equitable mortgage can be created by depositing the title deeds at
notified centres with the intention to create the security of the loan
45.
A document executed for loan to a company must be executed with the
companys common seal; must be executed on behalf of the company and must be
executed by the authorized officials
46.
The effect of a document being time barred by limitation is no legal remedy will
be available
47.
The rate at which RBI rediscounts bill of exchange is called as Bank rate
48.
In relation to a company, the term ULTRA VIRES means an action outside
the Memorandum of Association
49.
A has savings bank account and wants to make nomination in favour of his minor
son Nomination in favour of a minor can be allowed only when a person is also
appointed/nominated who can receive the payment on behalf of the minor if the
accountholder dies during his minority
50.
If the female employed makes a complaint to the employer for sexual harassment
at work place, how this situation can be handled ? Bank is bound to inform the
appropriate outside investigating authority about the complaint as the offence
relates to moral turptitude.
51.
What is called as Working Knowledge in Hindi ? Hindi as a subject at
Matriculation
52.
The new category of account i.e. Special Mention Asset category or Special
Watch Category introduced by RBI is for internal monitoring by banks
53.
The sale price of a pen is Rs. 40.00 per piece. Variable cost is Rs. 22.00 per piece.
Overhead cost of unit is Rs. 2160000.00. At what sales volume, will the unit break
even ? 120000
54.
The guarantor of a customer has the right to be informed only about the
extent of his liability
55.
Loans/overdrafts to farmers against fixed deposits/Indira Vikas Patras etc. are to be
classified as indirect finance to agriculture
56.
New private sector banks are required to have 25% of the branches in
rural/semi urban areas
57.
Custody of bill of lading is when bill is submitted in the custody of the bank

58.

A NRI wants premature encashment of FCNR before one year. The interest rate will
be paid as follows: - no interest is to be paid if the deposit has not run for minimum
prescribed period i.e. one year
59.
Overseas Banking Units are proposed to be exempted from CRR; SLR and
Priority Sector
60.
Under INCOTERMS, the term FOB indicates Free on board
61.
The statutory authority who control Trade Control is DGFT(Director General of
Foreign Trade)
62.
Non- Resident Ordinary (NRO) accounts may be opened by means of direct
inward remittance from abroad in an approved manner; by encashment of foreign
currency notes/coins and foreign travelers cheques and by conversion of the
existing resident accounts
63.
For the visit to the following countries, a traveler is not eligible for any basic travel
quota Nepal and Bhutan
64.
What do you understand by the word SION ? Standard input/output norms
65.
If the expiry date of a LC falls on a holiday the documents are to be submitted to
the negotiating bank on the preceding working day
66.
If the letter of credit is silent about partial shipment or transshipment both are
permitted
67.
Delayed renewal or review of a borrowal account from the due date would render
the account as NPA if the delay is 180 days or more
68.
Section 19(2) of Banking Regulations Act 1949 provides that the bank cannot
possess shares of any company as pledge, mortgagee or absolute owner, if both the
above limits are applicable, but whichever is less
69.
Which section of the respective act covers the SLR ? Section 24 (2A) of
Banking Regulation Act 1949
70.
Abhinav endorses a cheque in favour of Bhawana and writes the words notice of
dishonour waived it is a restrictive endorsement
71.
The bill is drawn in Mumbai and is acceptable/payable in Chennai, but the drawee is
at New York. The bill is an inland bill
72.
As per section 45 (ZA) of Banking Regulation Act, 1949 nomination facility has
been granted for bank deposits
73.
As per section 20, 21 and 21A of Reserve Bank of India act 1934, Reserve Bank of
India regulates flow of credit to economy by variations in SLR and CRR
74. SEMFEX-I pertains to setting up of SSI units
75.
Rajarani a Hindu lady after death of her husband marries Raj Kumar. Thereafter
Rajrani approaches you as a natural guardian of her son from earlier husband. Who will be
the guardian? mother
76.
Under section 26 of Negotiable Instruments Act a minor can draw, accept
endorse and negotiate bills of exchange, promissory notes or cheques binding on
all parties except himself
77.
Persons who are not allotted PAN are to make declarations using Form No: 60
78.
A balance sheet shows fixed assets, non-current assets and current assets as Rs. 30
lakhs. If there are no intangible assets and the long-term sources are Rs. 16 lakhs. What is
the net working capital ? Rs. 2.00 lakhs
79.
On perusal of a balance sheet it reveals that the current ratio is 2:1. The net
working capital is Rs. 100000.00. Arrive current liabilities:. - The current liabilities will
amount to: - Rs. 100000.00
80.
In a balance sheet, amount of total assets is Rs. 10 lakhs, current liabilities Rs. 5
lakhs and capital and reserves Rs. 2 lakhs. What is the debit equity ratio ? 1.5:1
81.
Total of liability side of a balance sheet is Rs. 16 lakhs, debt equity ratio 2:1 and
long-term liabilities of Rs. 8 lakhs. If current assets are Rs. 4.75, the net working capital
will be Rs. 75000.00

82.

lakhs

Profit to sales is 2% and amount of profits is Rs. 5 lakhs Sales will be Rs. 250

83.
84.

Contingent liabilities are those which may arise or may not arise
In assessment of working capital requirements, the operating cycle of the
business/industrial activity consists of which of the following period and processes ?
acquisition and storage of raw materials after deducting the period of credit
allowed by the creditors; storage of finished goods before releasing them for sale
and credit period allowed to debtors
85.
On perusal of a balance sheet it is revealed that the current ratio is 3:1 and the net
working capital is Rs. 80000.00. The current assets will amount to Rs. 120000.00
86.
Credit limit for marketing of crops (pledge financing) for farmers has been
raised from 6 months to 12 months
87.
Committee on Camels Rating was headed by S. Padmanaban
88.
The committee on rationalization of interest rates on small savings was headed by
Y V Reddy
89.
What is Right of redemption ? on the repayment of the debt, the
mortgagor has the right to get back the mortgaged property
90.
The current ratio of a company remained constant for two consecutive years but
Quick Ratio decreased from 1.6:1 to 1:1. In the next year, which one of the following
conclusions is certainly true based only on this data ? Companys stocks on a
percentage of current assets have increased in the second year
91.
Your branch has sanctioned a loan of Rs. 25000/- to Amit, who it was noticed later,
was a minor. Shri Bhaman had guaranteed the loan. Since Amit, being a minor, he is
not liable and as such guarantor is also not liable as his liability is co-existence
with the principal debtor
92. ABC and Co have been sanctioned cash credit limit of Rs. 10 lakhs against paid stocks
(margin-30%) and book debts upto 90 days (margin 50% with a submit of Rs. 2 lakhs. The
company had stocks worth Rs. 20 lakhs. Sundry Creditors for goods Rs. 10 lakhs and book
debts upto 90 days Rs. 15 lakhs. How much amount can they draw against this security ?
Rs. 9.00 lakhs
93.
In assessment of working capital requirements, the operating cycle of the
business/industrial activity consists of which of the following periods and processing ?
Acquisition and storage of raw materials after deducting the period of credit
allowed by the creditors and storage of finished goods before releasing them for
sale
94.
While analyzing the balance sheet of M/s Amar and co, you notice that long term
uses are 120% of long term sources. Such a position would generally indicate
deterioration in current assets
95.
The charge that the bank gets in respect of supply bills is assignment
96.
Right of set off cannot be exercised by the bank in respect of a contingent debt
like guarantees and letter of credits
97.
Special crossing means any banks name with or without two parallel
transverse lines
98.
When a bill payable to Shri Yadav or order is endorsed by him adding words, Notice
of dishonour not required such an endorsement is called facultative endorsement
99.
The holder of a negotiable instrument is holder in due course if he receives the
instrument in good faith and without negligence; he receives the instrument
before its maturity and he receives the instrument for lawful consideration
100.The correct endorsement on a cheque by Dr. Narayan Dutt is Narayan Dutt(Doctor)

When the remission on stamp duty of a bill is available ?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 06

01. When the remission on stamp duty of a bill is available ? When a bill represents
genuine trade transaction and when the usance period of the bill is not more than
three months and when the bill is routed through banking channel
02. Endorsement is a signature of the maker or holder for the purpose of negotiation
03. A Government promissory note is a negotiable instrument as per custom and usages
04. A cheque is drawn for Rs. 50000.00 and the payee endorses Rs. 5000.00 in favour of
Madhumita. Madhumita can claim from the bank - no amount because parallel
endorsement is invalid
05. An undated cheque is not considered invalid or considered valid
06. The function of Central Processing Unit CPU is to read, interpret and process the
information and instructions
07. On which one of the following securities, banker has a right of general lien securities
remaining in his possession after the loan was adjusted
08. Certificate of incorporation provides conclusive proof that all the formalities
regarding the formation has been fulfilled by the promoters
09. The following factors are to be examined while reviewing the Cash Credit Accounts
whether the borrower is passing the entire business to the bank; whether
prescribed margins are being maintained and whether there is an active turnover
both in the account as well as in the stock offered as security
10. The following statements are true in respect of Allied agricultural advances Interest is to
be charged on compounded half yearly basis in September/March each year and
no penal interest should be charged for loans upto Rs. 25000.00
11. Higher debtor turnover ratio means problems in collection of debts
12. Cash loss means net loss before charging depreciation
13. Nomination facility is available on deposit accounts opened by individuals
14. Crossing of cheque denotes that it should be paid to the banker only
15. Negotiable instruments act had permitted the following electronic cheques; truncated
cheques; digital signatures and application of Information Technology Act
16. M/s Problem and company are maintaining a current account with your branch. A cheque
for Rs. 25000.00 drawn by them is presented through clearing which is duly passed and
debited to their account. Subsequently, payment of the cheque is countermanded by the
drawer the same day before the time of return of clearing cheques. What decision will you
take in this situation ? The drawer can stop payment before the expiry of time for
returning unpaid cheques as per clearing house rules
17. If a minor is admitted in a firm for the benefits of a partnership, the bank will open the
current account
18. On retirement of a partner, if the account is in credit balance the firm continues and
the branch must ensure that notices of retirement is obtained not only from the
continuing partners but also from the retiring partners and then delete the retiring
partners name
19. While opening the account in the name of the Public Limited Company, the bank should
obtain along with account opening form the memorandum and articles of association;
the board resolution authorizing to open the account with the bank and the
certificate of incorporation
20. A Hindu undivided family consists of all persons -lineally descended from a common
ancestor

21. When court issues garnishee order, the bank is known as garnishee
22. Raman and Joseph go to a shop. Raman says to the shop keeper Let Joseph have the
goods, and if he does not pay, I will pay Raman is liable only if Joseph fails to pay
23. Purchase of plant and machinery uses of funds
24. Banking Ombudsman is appointed by RBI under Banking Regulation Act 1949
25. The currency chest maintained by a nationalized bank is in the capacity of principal and
agent
26. A and B maintain a fixed deposit account and also a locker and want to make nomination
for both the accounts nomination can be made in both accounts
27. Out of Sen award, Desai award, Shastri award and bipartite settlements, Sen award is not
applicable to award staff
28. According to Rule 5 of Official Language Rules reply of letters received in Hindi should
be given in Hindi only
29. As per limitation act, the period of limitation for repayment of deposits by the bank is
three years from demand
30. Back to back letter of credit means issue of letter of credit in domestic currency on
the strength of foreign letter of credit
31. Which document will you call for in permitting removal of the contents of the locker in case
of death of the locker hirer who has not nominated anyone letter of administration
32. A term deposit receipt was originally issued in the name Amit and Bhawana. Subsequently,
Amits name was deleted and Cumars name was added. Now, Bhawana has requested to
delete his name and include Divyas name. What would you do ? Not to accept as RBI
directives prohibit such a change
33. Which account is not attachable by service of garnishee order?- balance representing
cheque sent in clearing, not yet cleared
34. The Credit Guarantee Fund scheme of SIDBI covers all fund based credit facilities
35. Country risk(s) is/are political, economic, social and cultural
36. Straight bill of lading is where goods specified in the bill of lading are consigned to a
named person
37. Dunkel draft was associated with Uruguay round
38. In our country, Exchange Control is under the purview of Ministry of Finance
39. TT buying rate is applied for inward remittance when our Nostro account has already
been credited
40. Import licence indicates Cost, insurance and freight (CIF) value of imports
41. Under FAS(free alongside sales) terms seller delivers the goods alongside the ship,
buyer to nominate carrier, pay the freight and provide export clearance
42. If the letter of credit is silent about the revocability, the letter of credit is considered as
irrevocable
43. In a balance sheet, the value of fixed assets Rs 1 lakhs, value of non current assets Rs.
1 lakhs and value of total liabilities Rs 4 lakhs. What is the value of current assets ? Rs.
2 lakhs
44. If current ratio of an organization is very high but acid test ratio is low, it indicates that the
firm has very high stock level
45. Contingent liabilities are shown as footnote to the balance sheet
46. If a company issues bonus shares, the net worth of the company will not undergo any
change
47. If a company issues rights shares, the debt equity ratio will have a change by
improvement
48. Cyper law relates to law relating to electronic media and telecommunications
49. Nayak committee refers to advances made to small scale industry
50. The term loan instalments payable within twelve months is shown in the balance sheet as
current liabilities

51. Raman purchased a draft favouring Krishnan, but has misplaced the draft in his office.
Krishnan approached you for issue of a duplicate demand draft furnishing good sureties.
What would you do ? Duplicate draft will be issued only to Raman (the purchaser)
and not to Krishnan
52. What will you do in case any damaged/tampered parcel is received ? open delivery of
the parcel will be asked for
53. In the case of Hindu Undivided family, the following is not true In the case of joint
family business every member born in the family becomes a coparcener in the
family business
54. In the case of hindu undivided family, the following are considered true Joint Hindu
family is not dissolved by the death of coparcener; in the joint family business only
the manager or Karta has authority to incur debts; the karta alone can operate the
current account of Joint Hindu Family and any representative appointed by the
karta may also be permitted to operate the H U F account
55. Revenue stamp of what value is to be affixed in respect of receipt for Rs. 500.00 ? Nil
56. Who can stop payment of a cheque ? the drawer
57. A cheque is drawn Pay Ramkumar without the words or order or bearer. Such an
instrument is transferable and negotiable by the payee
58. The reforms process in the financial sector in India was on the basis of Narasimhan
Committee recommendations
59. Which of the following are eligible for refinance from SIDBI ? All term loans and all
working capital advances under single window scheme
60. An attestation is required in respect of which of the following documents ? Mortgage
deed
61. Net working capital means current assets minus current liabilities
62. Securitisation is related to recycling of funds
63. For making payment of a fixed deposit of Rs. 5000.00 customers discharge should be
obtained on a revenue stamp of Rs.1.00
64. When can claim in respect of a fixed deposit receipt become time barred ? - the claim
becomes time barred three years after the date of presentation for payment by
that depositor
65. The following are not negotiable instruments a postal order; life insurance policy; a
share certificate; money order
66. Restrictive endorsement is one in which endorser restricts the negotiability in future
67. A cheque may be ante-dated; post-dated and undated
68. Protection is available to the collecting banker under section 131 of the Negotiable
Instruments Act, 1881 in respect of crossed cheques
69. When a cheque is crossed specially to more than one banker, the drawee bank can pay the
amount of the cheque to the bank who is acting as agent for collection
70. Section 31 of RBI act 1934 specifically prohibits issue of promissory notes, bills of exchange
and demand drafts (other than cheques on a banker) payable to bearer on demand because
these instruments issued payable to bearer on demand will virtually amount to
currency notes and in India issue of currency is confined to RBI the central
banker
71. Section 85(1) of the Negotiable Instruments Act, 1881 provides protection to the paying
banker in respect of forged endorsement
72. To open an account of a partnership firm, the firm need not be registered
73. On admission of a new partner in the firm with a credit balance, a new partnership letter
has to be obtained and operation to be allowed in the account as per the new
mandate
74. A company is said to be registered when it gets certificate of incorporation from the
registrar of companies
75. A Co-parcenor is a minor male in the Hindu Family

76. When a Garnishee Nisi is served, the banker should stop operations in the judgment
debtors accountupto amount mentioned in the garnishee order and allow the
operations for the balance amount
77. A loan sanctioned to a minor has been guaranteed by Zeeba. Minor fails to pay should
forego the loan as minor is not competent to contract and the contract entered
into with a minor is void
78. Registration of mortgage is compulsory- except mortgage by deposit by title deeds if loan
amount is Rs. 100.00 and more
79. A mortgage deed being executed is required to be attested by two persons
80. For execution of a decree, the following cannot be attached Personal ornaments, which
as per religious usage cannot be parted with by any women; books of accounts;
the wages of labourer and domestic servants and all monies payable under the
policy of insurance on the life of judgment debtor
81. Banking Ombudsman scheme is applicable to the business of all scheduled commercial
banks including Regional Rural Banks
82. The provisions available in the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest act, 2002 to form the Securitisation Co. No Securitisation
Reconstruction Co shall commence business without taking registration from Reserve Bank
of India; Must have the owned funds of not less than two crore rupees; directors of
Securitisation Co have adequate professional experience in matters related to finance,
securitisation and reconstruction and that any of its directors has not been convicted
of any offence involving moral turpitude
83. The reason for taking a letter of continuity in a cash credit or overdraft account is to provide
continuity to demand promissory note within the overall limitation period of three years and
to make the document valid, irrespective of the account fluctuating between debit
and credit balances
84. A document executed for loan to a company must be executed with the companys
common seal; on behalf of the company and by the authorized official
85. The stamp duty payable on an instrument will be at the rate prevailing at the place
where the document is executed
86. The bank sanctioned a loan for Rs. 30 lakhs and for that mortgage deed was registered with
the Registrar of assurances. The stamp duty on the mortgage deed is for fixed
amount and advalorum
87. A foreign bank is one which has been incorporated outside India
88. A bank maintains a trust account with Zutsi , a trustee and Yuman as beneficiary. Zutsi
wants to make nomination in the account it cannot be allowed because it is not
individuals account
89. After the death of the accountholder bank is bound to inform the nominee if for six
months nominee does not turn-up in deposit account and if for three months
nominee does not turn-up in case of locker account
90. Under which rule/act parliamentary committee on official language has been constituted
Section 4 (1) of Official Language Act
91. A person informs you about loss of his fixed deposit receipt and requests you to issue a
duplicate fixed deposit receipt. How will you handle the request ? The bank will issue
duplicate fixed deposit receipt on the customers executing the banks standard
stamped letter of indemnity. A letter intimating loss of the original deposit receipt
and request for issuing duplicate receipt is obtained. One or two acceptable
sureties are also accepted, each good for the amount
92. How is a foreign spouse of NRI treated for the purpose of opening an NRI account ? as a
person of Indian origin
93. What are the strengths of a Self Help Group organization ? promotion of thrift and
savings; practitioner of mutual help; propagation of voluntarism and purveyor of
development of credit

94. What are the weaknesses of a Self Help Organisation ? Super Profit orientation
95. Which rate will be applied while negotiating bills under letter of credit ? Bills buying
96. RBI has prohibited stapling of currency notes by a directive issued under Section 35A of
Banking Regulation act
97. Short Bill of lading - which does not contain printed memorandum on reverse of
detaining the terms and conditions of the contract of carriage
98. A person resident in India means a person who resided in India for a period of 182
days during the previous financial year
99. Overseas Banking Units can be established in Special Economic Zones
100.A NRI wants premature encashment of FCNR before one year. No interest is to be
paid if the deposit has not run for minimum prescribed period i.e. one year

What is the risk weight of a non performing asset purchased by one

bank from another bank?

BANK EXAMINATIONS GENERAL ASPECTS = PART:: 05

01. A non performing asset has been purchased by a bank from another bank. What will be the
risk weight for the purchasing bank for this account 100%
02. For making reference under CDR II, consent of banks or financial institutions is required.
What is the rule in this regard ? Consent of 75% of lenders by value and 60% by
number is required
03. Hypothecation which creates equitable charge has been defined in Sarfaesi Act
04. Real Time Gross Settlement - RTGS takes care of which types of risks: Systemic and
settlement risks
05. A bank can sell its NPA account to another bank only after keeping the same as NPA in the
books of the selling bank for atleast 24 months
06. When only the image of the cheque is sent to the paying bank while sending the cheque for
collection instead of sending the physical cheque, the process is called Cheque
truncation
07. What is the maximum amount of loan, other than Housing loan to SC/ST that can be
granted to Differential Rate of Interest - DRI beneficiary: Rs. 15000.00
08. A cheque partly written in English and partly in Regional language is presented for
payment. What should the bank do ? If the language is regional language of the area
and if cheque is otherwise in order, it can be paid
09. Money deposited after receiving order may be attached in the case of Attachment order
10. Original and duplicate draft presented simultaneously for payment duplicate should be
paid and original should be returned
11. Maximum time within which reply must be given under Right to Information Act: 30 days
12. A cheque signed by the agent is presented for payment after his death. .What should the
bank do ? The cheque will be paid if it is otherwise in order
13. Photographs in accounts are to be taken as per recommendations of which
committee: Ghosh committee
14. What is the target for SC/ST under DRI 40%
15. Selling rate of currency is higher than traveller cheque because Holding cost of
currency is high

16. A minor was given a loan. On attaining majority, he acknowledges having taken loan and
promises to pay. Whether the loan can be recovered? He cannot ratify the contract.
Hence recovery is not possible.
17. Reserve Bank of India issues fresh notes in place of defective notes in bundle and they are
called as Star Series Notes
18. Directors powers are mentioned in Articles of association
19. A loan was sanctioned against a vacant land. Subsequently a house was constructed at the
site. What security is available now? Both
20. A and B jointly are liable for debt. When the limitation period is approaching, A
acknowledges the debt while B was away from India. Limitation expires before B comes to
India and after the arrival of B to India, he denies acknowledging the debt. On whom the
bank can proceed for recovery of the loan as per limitation act Both
21. On repayment of debt of a company, satisfaction of charge should be filed with the Registrar
of Companies within which period 30 days
22. A person returned from foreign trip has to surrender the foreign currency within 180
days
23. A loan was given on hypothecation of stock to Mr X. What has to be done ? The dues
will be adjusted
24. Club account Cheque was signed by the secretary and he died. Whether it is payable ?
it will be paid if it is not dated subsequent to date of death
25. Company is in liquidation. Funds are at the hands of Liquidator
26. Sub Prime Crisis means Problem created by lending to borrowers not meeting the
credit rating criteria
27. The bill is dated: 15.03.2005 and the date of acceptance is 20.03.2005. The bill was
returned unpaid on 25.03.2005. The limitation period will be available upto 25.03.
2008
28. Under hypothecation, the possession and ownership remains with both with the
borrower
29. A lady has taken a demand loan against FD and comes to the branch and wants to add the
name of her minor son as joint accountholder. What has to be done ? After closure of
loan only we can add the name
30. Discontinuation of service area approach is as per recommendations of Vyas committee
31. Revival of limitation for recovery of a time barred loan is possible by Obtaining fresh
promise to pay under provisions of Indian Contract Act
32. Other than a bill of exchange or promissory note, the document received from abroad is
required to be stamped within three months
33. Administrator is appointed in the case of where the deceased has left assets for legal
heirs and there is no will
34. A company has registered office at Mumbai, loan granted at Bangalore, property situated at
Delhi. EMT can be created at Mumbai, Bangalore or Delhi if these are notified
centers by respective State Governments
35. A having savings bank account with you deposited Rs. 25000.00. A public prosecutor sent
notice to the bank informing that Mr A is involved in forgery and requested not to permit
withdrawal in the account. In between, one cheque for Rs. 20000.00 is presented for
payment. What will you do ? Pay the cheque as Public Prosecutor is not authorized
to freeze the account
36. There is a savings bank account in the name of A and B. They have given power of attorney
to C for operation in the account. The cheque signed by C is presented in the bank after the
death of B Cheque will not be paid
37. An appeal (under Sarfaesi) against an order of DRT can be preferred by the debtor by
depositing 50% of the amount which can be reduced to 25% by DRAT
38. Through Reverse Repo RBI squeezes liquidity in the system by sale of Government
Securities

39. Factoring refers to Purchase and management of receivables

40. A facility was granted to B on guarantee of A. At the time of giving guarantee, account was
overdrawn, which was not known to the guarantor. Later on the account turned out to be
bad.Guarantor is liable
41. Reservation for women under SGSY 40%
42. No writings on currency notes directions were issued by RBI under Section 35A of
BR act
43. Garnishee order is not applicable on Unused cash credit or overdraft limit
44. A cheque is written in different hand writings and in different inks. It will be paid
45. Appeal against the award of Ombudsman can be made by the bank within 30 days of
receipt of acceptance from the customer
46. In the case of dishonour of a cheque due to insufficient funds, for enforcing rights under
section 138 of the Negotiable Instruments Act, the holder should send a notice to the
drawer within 30 days from the date of receipt of notice regarding dishonour of
the instrument
47. The police seeks information regarding conduct of an account being maintained in your
branch in connection with some investigation. Can the bank pass on the information ?
Yes. If the information is asked by an official of the bank in charge of Police
Station or above and in writing
48. Who can not be a partner in a partnership firm ? A Hindu undivided family
49. The limitation period will start from the last date i.e. when the document was executed
by the last partner
50. Who is the appellate authority for making appeal against the decision of a Banking
Ombudsman in India ? Deputy Governor, Reserve Bank of India.
51. A and B have a locker with the bank which can be operated by either or survivor. A reported
loss of key. Next day B comes to operate the locker. Whether operation will be allowed ?
No
52. What is the status of the nominee ? Trustee of legal heirs
53. Star series notes relates to replacement of defective notes which were wrongly
printed
54. If a cheque written in different inks is presented for payment, what should the bank do ?
- The cheque can be paid if it is otherwise in order
55. A cheque in which the word Hyderabad written between two parallel lines is presented
for payment in clearing in Delhi. Can this cheque be paid in Delhi ? Yes. Since this is
general crossing and place mentioned in parallel lines makes no sense
56. The complainant can make appeal against the award of Ombudsman within 30 days of
the receipt of the copy of award
57. A crossed cheque has been presented by the collecting banker on the counter for cash
payment. Whether cash payment is permitted ? Yes. Bank can pay the cheque as the
requirement is that the crossed cheque should be paid through a bank
58. In case of wrongful dishonour of the cheque, the bank will be liable to the drawer of the
cheque
59. A cheque for Rs. 6000/- was presented for payment. The balance in the account was Rs.
5000/- . After enquiry from the counter clerk, the presenter deposited Rs. 1000/- in the
account and the cheque was paid. The customer claims the amount from the bank. What
will be the banks position ? The bank is liable for disclosing secrecy of a customers
account
60. RTGS has been started to minimize settlement and systemic risks
61. Cash Reserve Ratio has been defined in Section 42(1) of the RBI act
62. In the context of collection of cheques, conversion means crediting the amount of the
cheque to the account of the person who is not entitled to it
63. Who can stop payment of the draft ? None

64. Banks cannot issue demand drafts payable to bearer, under which act ? No impact as
provisions relating to crossing are not applicable to bill of exchange
65. If a borrower is not satisfied with the reply of the bank to the representation regarding
action taken by the bank under SARFAESI act, he can make a representation to DRT without
depositing any amount.However, if he wants to appear against the decision of DRT,
he is required to deposit minimum 50%
66. What is the relationship between the banker and judgment debtor against whose accounts
garnishee order is received ? Debtor-creditor
67. When a LIC policy will acquire surrender value ? after three years from the date of
commencement of the policy provided premium has been regularly paid
68. When a borrower claims his mortgaged property after repayment of loan, the right is called
Right of redemption
69. A wants his account operated by B but only after his death. The account to be operated in
the form of former or survivor
70. What percentage of profit is transferred to statutory reserves by banks before declaring
dividend and bonus- 25%
71. The period for which notice is to be issued to the borrower under SARFAESI act 60 days
72. The effect of increasing CRR by RBI is controlling liquidity
73. On what rate, the RBI rediscounts the bills discounted by banks ? Bank Rate
74. RBI has recently permitted Door Step Banking Services under which act? Banking
regulation act 1949
75. Islamic banking means accepting the deposits without payment of interest and
lending without collecting any interest
76. Forged draft received for payment. Which bank will inform the police ?- Paying banker
77. Trustee came to the bank for loan against fixed deposit to meet the urgent needs of the
trust. But the trust deed is slient about loan against FD. Can we give loan ? No
78. Frauds of above Rs. 1 crore is to be reported to (where there is no staff involvement)
CBI Economic offence wing
79. Customer is not ready to sign on the backside of the cheque. How to proceed ? Obtain
stamped receipt
80. Drawer arrested Public prosecutor requests for stop payment. Will you oblige. No. We
will pay the cheque
81. Revenue stamp on receipt is to be affixed for cash payment. More than Rs. 5000.00
82. Guarantor pays the dues of the borrower. He is entitled to the rights of creditor. This right is
called Right of subrogation
83. Under section 138 of Negotiable Instruments Act, what is the maximum
punishment ?. Double the amount of cheque or imprisonment for two years or both
84. Under Right to Information act, the information has to be furnished within 30 days
85. The difference between interest earned by a bank and interest paid by the bank is called
Net Interest margin
86. The consequence of non registration of partnership is it cannot sue others for
recovery of its dues
87. An account was opened on 01.12.2007 and the cheque book was issued on 10.12.2007.
Two cheques dated: 07.12.2007 and 18.11.2007 were presented for payment on
15.12.2007. What should the bank do ? Both cheques will be paid if thery are
otherwise in order
88. There is an account in the name of A. A post dated cheque was paid in clearing by mistake
and as a result another cheque was dishonoured due to insufficient funds. What is the
liability of the bank ?.Bank cannot debit the post dated cheque before the date of the
cheque and would be liable to the drawer and (not payee) for wronglful dishonour
of the cheque
89. A executed a power of attorney in favour of B. The bank has received information about the
death of A the principal. A cheque signed by Mr. B which is dated prior to the death of A

has been presented for payment. What should the bank do ? The bank will not pay the
cheque as the authority comes to an end with the death of principal
90. In an account a cheque with forged signatures was passed because the forgery was done in
such a way that the same could not be detected despite best efforts. Thereafter, the bank
had sent the statement of the account to the customer who did not object the debit. Later
on he contests the debit. Under the circumstances, what is the liability of the bank ? The
bank shall be liable as a cheque with forged signatures is nullity in law
91. What is the responsibility of legal heirs for the debts ? - They are liable to the extent of
assets inherited by them
92. If a depositor other than senior citizen desires that TDS should not be deducted from
interest payable on term deposit, he will be required to submit a declaration vide Form
15G
93. A minor can be granted loan for necessities of life as per his status
94. A bill of lading is treated as stale if it is not presented to the negotiating bank within 21
days from the date of its issue
95. Inspection of banks by RBI is done under Section 35 of Banking Regulation act 1949
96. In the call money market, lending and borrowing is done for overnight
97. In which type of accounts nomination facility is not permitted ? Safe custody accounts
in the name of more than one person
98. The limitation for TOD is three years from the date of loan
99. Hypothecation has been defined in Section 2 of SARFAESI act 2002
100.As per KYC guidelines of RBI - ration card is not treated as proof of identify of an
accountholder

How the prepaid expenses in the shape of share premium are

classified in a balance sheet?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 04

01. Prepaid expenses in the shape of insurance premium are classified in the balance sheet as
current assets
02. The borrowing powers of the board of directors of the Public Limited Company should not
exceed: Paid up capital and free reserves
03. State sponsored corporation granted loan for on-lending to weaker section is covered by the
bank under Indirect advance to agriculture
04. Hypothecation has been defined in Section 2(n) of Sarfaesi Act
05. In a cheque drawn by the drawer, the name of payee is written in English and the other
parts in vernacular language. The cheque will be paid if it is otherwise in order
06. Right of subrogation is guarantor stepping into the shoes of the creditor or
discharging the liability of the principal borrower
07. The objective of Government Sponsored Swarna Jayanthi Gram Swarojgar Yojana SGSY is
to raise individuals/groups of rural poor above the poverty line over a period of
time
08. Account payee crossing is not defined in any act including Negotiable Instruments
Act 1881
09. In computers, booting refers to Powering the computer and loading in operating
system

10. On receipt of a forged Rs. 500 note the note and the statement from the applicant
would be sent to the Police
11. In the case of wrongful dishonour of a cheque by the bank, the bank is only liable to the
drawer as the privity of contract is between the bank and the drawer who is the
accountholder
12. Under Section 148 of Indian Contract Act, bailment refers to delivery of goods from
one person to another person for some purpose and when the purpose is over,
goods will be returned or disposed off as per the directions of the delivery - ie
bailor
13. Global Trust Bank merged with Oriental Bank of Commerce
14. The objective of Know Your Customer guidelines are to prevent banks from being
used unwittingly by criminal elements for transfer of illegal funds/money
laundering activities
15. IRDA refers to Insurance Regulatory and Development Authority , for regulating the
insurance sector
16. Preferential payment to depositors in respect of winding up of a banking company is
provided underSection 43 A of Banking Regulation Act, 1949
17. National Housing Bank is an apex Institution dealing with the housing finance
exclusively
18. For declaration of dividend by a bank, without reference to RBI the capital adequacy
ratio should be at least 11% for preceding two completed years and the
accounting year for which the bank proposes to declare dividend
19. Interest in cash reserve ratio is payable on monthly basis at 3.5% eligible balances
20. The keyboard, mouse, touch pad are input devices in a computer
21. The cooperative bank which has changed its name to a private bank is Development
Credit Bank
22. Exchange Control Department is now called as Foreign Exchange Department
23. World elders day is celebrated on 1st October each year
24. Current Ratio of 0.85 implies negative net working capital
25. Committee on legal aspects of bank fraud is headed by Dr. N L Mitra
26. The maximum extent of foreign direct investment in public sector bank is 26%
27. A depositor who has opened his recurring deposit account on 10th day of a month - can
deposit his monthly installments on any day during a month
28. The risk weight for housing loan been increased to 75%
29. Repo transaction refers to: Inspection of the liquidity by RBI under liquidity adjustment
policy
30. A 65 year old depositor requests you not to deduct TDS at source. He has to submit the
request in Form: 15H
31. NABCONS means NABARD Consultancy Services
32. Negative lien is a declaration given by the company that the assets given for creating
charge is owned by it and there is no change of any bank on it
33. The formula for calculating breakeven point in terms of units is Fixed
Costs/Contribution
34. Risk arising out of mismatch in maturity payment in assets and liquidity is known as
_ Liquidity Risk
35. S.K. Tudeja Committee is associated with: Sugar Industry
36. The ceiling for referring cases for recovery of Lok Adalat - Rs. 20 lakhs
37. Cheque Truncation refers to A process in which a cheque is truncated during the
course of a clearing either by the clearing house or by the bank whether paying or
receiving payment immediately on generation of electronic image for transmission
substituting the cheque for further movement in writing
38. CDR mechanism is applicable in the case of borrowers having multiple banking
exposure of Rs. 20 crore and above.

39. Matured but not paid term deposits are treated as demand liability
40. While opening a current deposit account of a partnership firm, banks generally insist for
declaration of partnership in the prescribed form
41. The relationship between banker and customer in the case of safe deposit vault transaction
is that of Lessor/Lessee
42. One of the trustees of a trust maintaining an account with your bank is adjudged as
insolvent. A cheque signed by him was presented through clearing after you received the
notice of insolvency of the trustee. What will you do ? The cheque can be paid safely
43. Loss before charging depreciation is known as cash loss
44. In a foreign exchange transaction, a right but not the obligation to buy or sell is called
option
45. For technological upgradation in banking system, which of the following committee has
been set up ? -Safar Committee
46. A usance bill is accepted by the attorney of the drawee. Subsequently, the drawee revokes
the power of attorney before the bill is due. What will you do in this case ? It is deemed
to be accepted by the drawee and he is liable
47. As per RBI guidelines, there should be how many working directors in a public sector
bank ? Two: Chairman and Managing Director and Executive Director
48. On receiving a notice of death of Karta, the credit balance of hindu undivided family(HUF)
current account will be operated by the senior most coparcener called as karta
49. Not negotiable crossing is a caution to endorsee
50. M/s Impex Private Limited, an exporter having a satisfactory current account approaches
you and seeks your guidance about an export order which he has received from USA for
export of garments. On scrutiny of the export order, you observe that there is a clause that
Letter of Credit will follow in due course. He enquires from you as to which type of LC is
safest from the point of view of exporter. Irrevocable letter of credit.
51. Mr Taj Pratab Singh, a sole proprietor of M/s Impex Private Limited an exporter having a
satisfactory current account approaches you and seeks your guidance about an export order,
which he is negotiating with an importer from USA. He seeks guidance as to which type of
LC he should insist which will assure him that some preshipment advance is made available
at the instance of importer Red Clause Letter of credit
52. Deposit accounts which have not been operated for more than 10 years are called
Unclaimed accounts
53. Return of unclaimed deposits is required to be submitted to RBI under which act Section
26 of Banking Regulation Act 1949.
54. On scrutiny of a balance sheet of M/s Techno Inc, you observe that the long term uses of
funds are more than long term sources. The position of the balance sheet indicates
Negative net working capital
55. On scrutiny of a balance sheet of M/s Thomas Inc. you observe that the short term uses of
funds are more than short term sources. The position of the balance sheet indicates
positive net working capital
56. Committee on Procedures and Performances Audit and Public Services CPPAPS is headed
by S. B. TARAPORE
57. Mrs. Raja Rani, aged 80 years having a fixed deposit for Rs. 2 lakhs approaches you with
the request to add the name of his son so that he does not face any problem after her
death. You observe that she has raised a loan against the said FDR. How will you handle the
request of the lady? The lady will be advised that the request can be accepted on
closure of loan only
58. Your branch has disbursed a term loan documents executed by Master Bobby to meet his
education expenses, which was guaranteed by his father. The loan account became irregular
and despite repeated reminders, Bobby or his father did not regularize the term loan
account. The loan officer approaches you for guidance regarding the course of action, which

the bank can undertake. Loan cannot be recovered from the borrower or the
guarantor, as the contract with the minor is void.
59. Master Vinay aged 16 years has a term deposit of Rs. 10000.00 with your branch which is
to mature after three years. He approaches you with a request to either allow loan against
the deposit or make the pre-mature payment of term deposit. How will you handle the
request of Master Vinay ? Loan will not be allowed to the Master Vinay since he is a
minor; however, premature cancellation can be permitted.
60. Mr. Somnath maintaining a satisfactory current account with you issues a cheque for Rs.
10000.00 in favour of the supplier - Mr. Samsung. He endorses it in favour of Mr. Lever
and he deposits the cheque in his bank for collection. The cheque is presented in clearing at
your branch but due to oversight, the cheque is wrongfully dishonoured . Your branch
receives a notice from Mr Lever for wrongful dishonour and demands payment and also
claims damages. How will you handle the notice? In the case of wrongful dishonour of
a cheque, the drawee banker is liable for damages to the drawer only. As such
Mr. Lever has no legal ground to serve the notice to the bank and demand the
payment.
61. The Narasimhan Committee Recommendations include Permitting Regional Rural
Banks for all types of banking business; rationalization of foreign operations of all
banks, giving authority to public sector banks for recruitment of officers and
setting up of asset reconstruction fund to take over bad and doubtful debts of the
banks
62. Regional Rural Banks are managed by State Government
63. Banks are required to prepare balance sheet in the prescribed format as per Section 29
of Banking Regulation act 1949
64. A minor not domicile in India will attain majority on completion of the age as per the
law of the place of the domicile
65. As per Section 105 of Negotiable Instruments Act, reasonable time is to be determined for
presentment for acceptance or payment of Negotiable Instruments while determining such
period Public holidays and Sundays will be excluded
66. Bill of exchange will be treated as dishonoured, when the drawee makes defaults in
acceptance;where one of the drawees out of several drawees does not accept the
bill; where the drawee is incompetent to contract and when the acceptance is
qualified
67. Negotiable Instrument payable on demand must be presented within a reasonable time
68. The starting point of limitation period on a bill of exchange payable on demand is the
date of the bill
69. Bank obtained the agreement of hypothecation on 1.1.2005 and upto what time, the bank
can file a suit ? 01.01.2008
70. Sarfaesi Act, 2002 is not applicable in the following cases any security interest not
exceeding Rs. 1.00 lakh; any security interest in agriculture land; pledge of
movable as per Section 172 of Contract Act and Rights of unpaid seller under
Section- 47 of Sale goods act
71. The members of debt recovery tribunals are known as public servants
72. Validity Period of equitable mortgage is 12 years
73. Accumulated losses are to be classified as fictuary assets
74. The repayment capacity of a borrower for a term loan is calculated by debt service
coverage ratio
75. Silviculture is known as cultivation of trees
76. The gilt edged securities are known as government securities
77. One basis point implies 0.1%
78. Export bill if not paid on due date will be crystalised on 30th day after notional due date
79. RAM stands for Random Access Memory
80. Demat stands for dematerialization and remat stands for rematerialisation

81. The following are hedging instruments Futures; Interest Rate futures; Currency
future; Stock index futures
82. At whose request, letter of credit is opened by the bank ? Buyer or importer
83. In which type of letter of credit, apart from provision for allowing pre-shipment credit,
issuing bank has also to arrange for storage/farmhouse facility prior to shipment on board
Green Clause letter of credit
84. Under the concept of Offshore Banking Units, minimum capital for starting the operation
provided by the payment bank would be: US dollars 10 million
85. What is the target under priority sector for Foreign Banks for SSI within the overall target of
32% ? -10% of net bank credit
86. Priority sector target for Regional Rural Banks has been fixed at 60%
87. First annual general body meeting must be called within a period of 18 months after
the date of incorporation of the company
88. If annual general body meeting is not called for by the company within the prescribed
period, each officer of the company shall be punishable with a fine of Rs. 50000.00
89. Networth of the company is the sum total of paid up capital and free reserves. Free
Reserves means all reserves created out of profits and write back of depreciation
provisions
90. Holding Company means the company which holds shares of another company of
value of more than half value of equity share capital
91. If a company wants to change its name the procedure to be followed conduct a special
meeting of the general body and arrive a resolution and get approval of Central
Government
92. Certificate for registration of charge is issued by the Registrar of companies under
Section 132 of the companies act
93. SARFAESI act 2002 contains the provisions for filing the appeal before DRAT by the
borrower for which he will have to deposit 50% of the claim amount
94. The drawee of the cheque always is the paying banker
95. In terms of autonomy, stronger banks mean banks that have made profits for last
three consecutive years; having capital adequacy ratio of 9% or more; having net
NPAs of less than 4% and having a minimum owned funds of Rs. 300 crore
96. Under autonomy package, banks would be allowed to prescribe standards for categorization
of branches; they will have the power to lay down the educational standards for
recruitments and promotions; it aims to remove the fears among banks officials on
their being haunted by the investigating agencies on commercial decision taken in
good faith and senior bank officials are permitted to undertake foreign tours for
business promotion
97. A contract about Foreign Trade Policy means It is for a period of five years; along
with the main annual policy supplement announced every year and board of trade
is headed by an eminent business person
98. Current accounts are permitted to be opened by executors, administrators, liquidators
and trustees also
99. Current account can be opened by any person or institution
100.Ration card should not be insisted by the bank for identification of the depositor as
per KYC guidelines

With whom an appeal against the decision of DRT has to be made?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 03

01. Appeal against the decision of Debt Recovery Tribunal can be made before the
Chairperson of DRAT within a period of 45 days
02. If a document duly stamped in Delhi travels to Jammu and Kashmir state, additional
stamps equivalent to full stamp duty of Jammu and Kashmir state are required to
be affixed
03. In case a borrower signs in a vernacular language, a banker must obtain a duly witnessed
certificate that the contents have been read out and explained to the borrower in
vernacular language and the borrower had understood the same
04. One rupee notes are issued by Government of India
05. Borrowing powers of a company are mentioned in the articles of association
06. A certificate of deposit is issued by a bank at a discount to face value
07. FIMMDAI means Fixed Income Money Market and Derivative Association of India
08. Chairman and Managing Directors of nationalized banks are appointed by Central
Government
09. Hardware refers to any part of computer that is physically visible
10. Special Purpose Vehicle mechanism is suggested for divestment of Governments
stake in Public Sector Unit
11. Debt Service Coverage Ratio shows the number of times the companys surplus
generation covers the payment of interest and repayment of principal of long debt
12. The high level committee set up by the finance ministry to review the system of
administered interest rates in the country Y V Reddy Committee
13. Under the Corporate Debt Restructuring called as CDR, the floor limit of aggregate
exposure is Rs. 20 crore
14. In the case of securitization, the number of loans are put together and then
distributed among small investors
15. A NRE depositor has issued a power of attorney in favour of his wife a resident. She can
withdraw cash, issue cheques-crossed for local payments and deposit into the account a
foreign DD favouring the deposit, however, she cannot deposit foreign currency
notes/foreign traveler cheques
16. The maximum period allowed for FCNR deposits is- three years
17. Foreign citizen of Indian origin is a Non Resident Indian NRI
18. Tier II capital should not exceed 100% of Tier I capital
19. A letter of credit in which the terms and conditions cannot be amended without the
agreement of opening bank, applicant and the beneficiary is called Irrevocable letter of
credit
20. Bill of lading is a document signed by the captain of the ship- acknowledging of receipt
of goods on boarding the vessel for shipment
21. Trade Related Intellectual Property Rights (TRIPS) and Trade Related Investment
Measures (TRIMPS) are associated with Dunkal Proposal
22. The import licences are issued by DGFT called as Director General of Foreign Trade
23. Montreal Protocol relates to Protection of ozone layer
24. The term holder refers to the person who is in possession of the instrument
legally and entitled to possess the instrument in his own name and recover the
amount thereunder
25. An executor of a will has expressed his inability to accept the responsibility. On reference to
the Court, a person is appointed to look after the affairs and the person is called
Administrator
26. Recovery certificate issued by the president of Debt Recovery Tribunal is routed through
Recovery Officer
27. If the bank fails to register the hypothecation charge on the Current assets of a company
within 60 days of creation of the charge, the matter has to be referred to Company
Law Board

28. A guarantee was issued on behalf of Rohit by exercising a lien on the Fixed Deposit Receipt
of Rohit. Bank is informed about the death of Rohit. A garnishee order is received attaching
the deposit of Rohit. The bank will attach subject to banks right of set off against
any debts owed by Rohit
29. A loan has been granted to Rahul against the security of his Fixed Deposit Receipt FDR,
with the branch. Subsequently, a Court attachment order is received on the deposit. The
branch after adjusting the dues/outstanding towards the bank has to pay the
balance amount to the court
30. Registration of charge is not necessary when the company has been granted loan
facility against the security of fixed deposit
31. The bank receives garnishee order. The relationship between the banker and the
customer in this case is debtor /creditor
32. The bank due to oversight pays a forged cheque and the bank is liable to the drawer
of the cheque
33. The bank while disbursing the loan did not stamp the promissory note for the appropriate
value. The options for the bank is that unstamped/understamped promissory note
cannot be rectified
34. A minor aged 15 years comes to your branch for payment of a cheque for Rs. 27000/-. The
signature of the drawer tallies with your record. As a desk officer, can you make the
payment ? Yes, the minor cannot be denied taking payment
35. As per the amendment of the Negotiable Amendment Act in December, 2002, the time
period available to the holder of a cheque to give notice of dishonour to the
drawer is 30 days
36. As per the Negotiable Instruments Act, the notice period by the holder to the drawer
under Section 138 is 15 days
37. Kelkar Committee has suggested that tax incentives for housing loans be withdrawn as part
of the overall revamp of tax policy
38. In the case of a garnishee order, where the partner of a firm is a judgment debtor, only his
personal account can be attached and not the firms account.
39. The following statements are true in connection with the right of set-off with regard to bank
It is the banks discretion to exercise right to set-off and the whole bank
constitutes one entity and it is applicable when the banker- customer relationship
is that of debtor-creditor
40. When a bill is drawn in a set of three and the third is presented for payment it can be
paid
41. The provision requirement for substandard assets 10% of net book value
42. Claused bill of lading is one which narrates the effective condition of the merchandise
or packing or both
43. Non resident Indian can maintain Non Resident External Account, Non Resident
Ordinary deposit account, FCNR account and Non Resident fixed deposit account
44. Composite cash credit system with liquidity for agriculture has been introduced on the
recommendations of R V Gupta Committee
45. Rohit Mehta (apparent age-14) presents a cheque drawn by his father Amit Mehta for
payment it can be paid as the minor is not made liable in this transaction
46. Certificate of noting issued by Notary Public is known as Protest
47. Break-even-Point is a point where the total costs equal to total revenues
48. A police inspector informs you that Thomas is facing a charge of cheating and is involved in
illegal export of persons abroad. He produces a letter signed by the station-in-charge
demanding that details of the account of Thomas facing charge of cheating be disclosed.
How will you handle the situation ? As the inspector has produced an authorization
letter we will allow him to inspect the books
49. If debt service coverage ratio is 2, it means loan repayment can be easily made by
the borrower

50. A minor attains majority on completion of 18 years

51. Bank does not recognize trusts it means that in the absence of any specific
information, deposit accounts will be presumed to be the property of the
accountholder
52. Financial assistance for the activity, which is not considered indirect finance to agriculture is
Agro clinics
53. Executor is a person named in the Will to manage the properties of the deceased
54. Holder does not get protection, if endorsement is forged
55. If on any cheque, bearer or order has not been written then it will be treated as an order
cheque
56. Mumtaz endorsed a cheque in favour of Dara Singh with the condition Pay to after death
of Rohan Kapur, but received the payment without fulfilling the condition. In this case from
whom can Mumtaz recover the amount From Dara Singh
57. Abhinav is the holder of a cheque who endorses sans recourse to Thomas and Thomas to
Raman and Raman to Divya who endorses it to Selvi. The cheque is dishonoured Selvi
can claim the amount from Thomas, Raman and Divya
58. Account Payee crossing is addressed to the collecting banker
59. Minor wants to overdraw in his account and you will not grant it because the contract
with a minor is void abinitio (the contract is not valid)
60. The maximum number of members in a Private Limited Company, should not exceed 50
as per Indian Companies Act 1956
61. A Hindu Undivided Family is managed by the karta
62. Garnishee order attaches balances available at the time of serving the order to
bank
63. Consideration for a contract of guarantee shall be Consideration received by the debtor
64. A company has been sanctioned overdraft limit of Rs. 150000.00 against pledge of shares
and in this case, registration of charge is not necessary
65. Simple mortgage is one which undertakes a personal obligation to pay the mortgage debt
and passing the right of sale of the said property through court
66. In an ongoing situation, the right of set-off can be exercised by a banker by serving a
reasonable notice on the customer
67. Ombudsman scheme is framed under Section 35 A of banking regulation act
68. In case a borrower signs the documents with the left hand a separate note stating that
the documents signed with left hand is kept with the documents
69. Joint and several demand promissory note should not be obtained in the case of
advance to a limited company
70. In the case of bank documents the following category of stamps are affixed non judicial
71. An export bill for US $ 10000 drawn under letter of credit is negotiated by your bank and is
submitted to the LC issuing bank for reimbursement and you are informed that the
documents negotiated by your branch are forged. Negotiating bank is not liable as the
bank is not liable for genuineness of the documents
72. Original demand draft is reported lost by the payee and in the meanwhile the draft is
presented in the clearing draft will be returned with the reason Reported lost by
payee and drawers instructions awaited
73. Official Language (OL) rules 1976 is not applicable to the state of Tamilnadu
74. If a person dies intestate, the court will issue the following documents letter of
administration
75. Import licenses are issued for CIF value
76. Documents requiring stamping in terms of Indian Stamp act should be stamped before
execution or at the time of execution
77. Kisan Credit card system has been introduced with effect from August 19, 1999 to take care
of credit needs of the agriculture on the recommendations of R V Gupta Committee

78. The domestic inquiry relating to misconduct of an employee is governed by Industrial

Disputes Act
79. Meaning of term liquid surplus in relation to the interpretation of the balance sheet it
represents excess of current assets over current liability
80. For disposing of the balances of the deceased customer dying without will or nomination
- letter of administration is required
81. Guarantees, confirmation of letter of credits issued by foreign banks, performance bonds,
bid bonds, warranties are non fund exposures
82. Clean bill of lading - which bears no super imposed clause or notation which
expressly declares the defective condition of the goods and or packaging
83. Free carrier allowance means seller fulfils his obligation to deliver the goods when
he has handed over the goods meant for export into the charge of the carrier
named by the buyer
84. Foreign Currency, which has a tendency of quick migration is called as hot currency
85. Current Ratio denotes the liquidity of the firm
86. RBI has allowed authorized dealer the authority of opening of temporary foreign currency
accounts for organizers of international seminars, conferences, conventions etc, who have
already obtained the prior approval of the concerned administrative machinery of
the government
87. The exchange rate to be applied for effecting remittance of an import bill is bill selling
rate or forward sale contract if already booked
88. The negotiating bank has negotiated the documents under letter of credit and made
payment to the beneficiary. The issuing bank refuses reimbursement to the negotiating bank
saying that the documents are forged in this case negotiating bank is not liable,
since the bank has acted in good faith and the documents are apparently in order
89. In India, trade Control comes under the direct control of Ministry of Commerce
90. In INCOTERMS, the term FAS represents Free alongside the ship
91. UCDPC is prescribed by ICC, Paris
92. The first committee on mechanization and computerization in banking was headed by Dr. C.
Rengarajan
93. The committee on Institutional Credit to SSI Sector and related aspects (Annual Projected
Turnover Method) was headed by P R Nayak
94. The bill is drawn in Mumbai and is acceptable/payable in New York and the drawee is at
New York and the bill is inland bill
95. In Camels rating C stands for Credit worthiness
96. Asset Reconstruction Company has been set up by the Government to recover the non
performing assets NPAs of weak banks
97. Under Narrow Banking concept, the financial institutions invest only in Government
securities and not undertake loans and advances
98. Margin of safety means excess of total sales over break-even point in terms of
sales
99. Advance for pisciculture is granted under agriculture segment.
100.
Noting and protesting is not applicable to foreign bill noting and protesting is
applicable to promissory notes, bills of exchanges and cheques

Who is responsible for compliance of Official Language Policy of

Government of India?

BANK EXAMINATIONS GENERAL ASPECTS - PART:: 02

01. The administrative heads of the departments are responsible for compliance of Official
Language Policy of Government of India
02. MS word is an application software
03. The locker holder is sick and as such he gives an authority in favor of the minor son to
operate the locker and in this case, the bank can allow the minor to operate the
locker
04. A is a minor and he endorses a cheque in favour of B. In the case of dishonour, A - cannot
be held liable as when a minor endorses a cheque all parties are liable except the
minor
05. You come across a cheque on which neither the words bearer nor order are written. You
will make the payment of this cheque by treating it as an order cheque
06. Debt Service Coverage Ratio denotes solvency position of the firm
07. Shroff committee had recommended that companies entering into merger and acquisition
transactions, making preferential allotment of shares to related parties and proposing
buyback of shares must appoint registered valuer for independent valuation of
shares and assets
08. Debt equity ratio denotes the solvency position of the firm
09. The accountholder is the drawer of the cheque and in the case of draft, the issuing
branch is the drawer
10. Not negotiable crossing means that the holder in due course will not get the better
title
11. Account opening form is a very important document because it forms the basis of contract
between the bank and the customer and it contains the offer of the customer to enter
into a contract with the bank
12. The following are not abound on a negotiable instrument as drawer, acceptor or endorser a
lunatic, an alien enemy and an insolvent
13. An order cheque is transferable only by endorsement and delivery
14. The term allonge refers to a plain sheet appended to a negotiable instrument for the
purpose of making endorsement thereon
15. The following endorsements are invalid endorsement after maturity of the
instrument, partial endorsement, endorsement on a discharged instrument and
endorsement in the case of negotiation
16. Account Payee crossing is not mentioned in the Negotiable Instruments Act 1881
17. The protest is the formal notarial certificate attesting the dishonour of the bill and based
upon the noting.
18. Service Area Approach is a result of recommendation of committees headed by P D Ojha
19. A person who owns unirrigated land of 3 acres will be classified as a marginal
farmer
20. A foreign traveller encashes travelers cheques for $1000 at Rs. 47.25. It is a purchase
transaction
21. A restricted letter of credit is one in which the negotiation is restricted to a specific
bank
22. Red Clause letter of credit is one which authorizes release of preshipment finance to
the beneficiary
23. Limited company means limited liability clause in memorandum of association.
24. Garnishee Order is issued under Rule 46 of Order XXI of the schedule to the code of
Civil Procedure - 1908

25. A contract of guarantee is defined as a contract to perform or discharge the liability

of the principal debtor in the case of his default
26. To be a valid acceptance, the drawee shall affix his signature with or without the
words Accepted
27. A Government Company means 51% of the paid up share capital is held by State
Government and/or Central Government
28. If the registrar of DRT refuses to file the suit due to discrepancies in copybook, the bank
can file the appeal before presiding officer of DRT within 15 days
29. Lok adalats are constituted under Legal Services Authorities act
30. Stamp duty earned by the government on demand promissory note goes to the state
government
31. When the bill becomes due for payment it is the starting point of limitation on a bill
of exchange payable at a fixed time after date
32. Cash Reserve Ratio is maintained by the banks by keeping cash balance with Reserve
Bank of India
33. Nomination facility can be allowed in the following cases deposit accounts of
individuals, articles kept in safe custody and safe deposit lockers
34. A certificate of deposit is an usance promissory note
35. Subordinated debt is an element of tier II capital
36. Accumulated loss will be deducted from tier I capital
37. Vaghul Committee had recommended the introduction of Certificate of Deposits
38. The basic nature of a commercial Paper is it is usance promissory note
39. A pass through certificate called as PTC can be of the following nature in
securitization transactions with recourse and without recourse
40. Global depository receipt is listed on Stock Exchange outside USA
41. Current Ratio denotes liquidity
42. Simultaneous sale and purchase of a share to take advantage of the variation in prices in
two different markets is called as Arbitrage
43. Current Ratio denotes liquidity
44. Debt Recovery Tribunals have been created by the Government as a result of the
recommendations of Narasimhan Committee
45. When a bill matures on a public holiday, the maturity date of the bill falls on the next
preceding business day
46. A negotiable instrument can always be negotiated until it has been paid up or
satisfied
47. In the case of dishonour of a foreign bill, the protest is compulsory when it is required
by the law of the place where it is drawn
48. An engineer is financed for the purchase of a car and the same can be classified as Non
priority sector
49. Under drip irrigation system water is used very economically and supplied drop by drop
to the roof zone of crop
50. Yellow Revolution is in connection with growing of fruits especially banana
51. The economic life of a tractor is - 10 years
52. The natural guardian of a married minor girl is her husband
53. The minimum number of share holders in a Private Limited Company two members
54. To open an Administrator account the bank requires letter of administration
55. Karta has the absolute authority to appoint any person as an agent and the agent need
not to be a family member
56. Garnishee Order is the court order obtained by the judgment creditor attaching funds
with Bank of judgment debtor
57. Indemnity means to make good the loss to the promise/indemnity holder
58. A bearer who takes a bearer cheque bonafide and for value will be a holder in due
course

59. Mortgage is defined in Section 58 of transfer of property act 1882

60. A banker can exercise the right of set-off only in respect of debts due and determined
61. Banks are restricted to advance against its own shares as per Banking Regulation Act
1949
62. The recovery of dues after issuance of recovery certificate by Presiding Officer of DRT can
be made through Recovery Officer of DRT
63. The roles of Lok Adalat to arrive at compromise or settlement; issue final judgment
and to give the consented decree
64. The remedy under Section 138 of Negotiable Instruments Act is available when the
cheque is presented to paying banker within a period of three months or within
the period of its validity whichever is earlier
65. In case a document travels from higher stamp area to lower stamp area, additional
stamps are not required to be affixed
66. The purpose of maintaining a documents execution register is that it is a prima facie
evidence of execution of documents
67. One rupee note bears the signature of the Secretary, Ministry of Finance
68. Nomination facility is not allowed in the case of joint safe custody accounts
69. Free capital is a part of tier I capital
70. Kumar Mangalam Birla is the architect of SEBIs Corporate Governance Code
71. Malhotra Committee had suggested to establish an Insurance Regulatory Authority
72. The minimum denomination for a Commercial Paper is Rs.5.00 lakhs
73. The maximum period for which a certificate of deposit can be issued not more than 12
months
74. Capitalisation of reserves leads to issue of bonus shares
75. 1,2,3,4,5,6,7,8,9 numerals are called as - International form of Indian numerical
76. Key-board is an input device
77. MS - DOS is a system software
78. Dear money policy is meant to control inflation
79. An illiterate borrower cannot sign acknowledgment of debt but affixes his thumb impression
on it. The limitation period will be extended by this action
80. Section 45 Z of Banking Regulation Act 1949 relates to handing over of original paid
cheques to the corporate customer
81. As per the Prompt Corrective Action scheme, RBI can initiate certain structured actions in
respect of the banks which have hit the trigger points in terms of CRAR, Non
performing advances and Return on advances
82. Under Know Your Customer guidelines, the identification and reporting of suspicious
transactions are to be done on quarterly basis to Audit Committee of the board of
directors
83. To prevent slippage of accounts to NPA category, RBI has designed broad framework
detailing preventive and corrective measures. One of the measures is the introduction of
new asset category between standard and sub standard. This new category is called
special mention accounts
84. While opening accounts of Executors and Trustees to the estate of a deceased person, bank
should scrutinize the trust deed, order of charity commissioner and probate
85. Stamp duty on which of the following documents does not vary from state to state
mortgage agreements, hypothecation agreements, guarantee agreements and
bills of exchange.
86. If no time for payment is specified in a promissory note or bill of exchange, such an
instrument is considered as instrument payable on demand
87. Acceptance is not required in the case of promissory note and demand bill of
exchange
88. To open an executor account the bank should insist on probate

89. The following do not fall within the implied powers of a partner under section 19(2) of the
Partnership act, 1932 opening a banking account on behalf of the firm in his own
name, compromising or relinquishing any claim or portion of a claim by the firm
and withdrawing suit or proceedings filed on behalf of the firm
90. In a balance sheet, profit is shown under liabilities side
91. The term preshipment advances is used to describe advances granted to exporters
for the purpose of manufacturing, processing, packaging etc. or simply procuring
goods meant for export
92. In an account of a minor operated by the guardian, after the death of the guardian, the
balance cannot be paid to the minor even though he has completed the age of 10
years
93. On the death of a partner, the firm having credit balance stands dissolved and to wind up
the affairs of the firm the surviving partners are allowed to jointly operate the account and if
it decides to continue after registering the Municipal Death certificate recording fresh
mandate for operation, the existing account can be continued and operation allowed
94. Opening a banking account on behalf of the firm in his own name, compromising or
relinquishing any claim or portion of the claim by the firm, withdrawing suit or processing
filed on behalf of the firm do not fall within the implied powers of a partner under Section
19(2) of the Partnership act 1932.
95. Garnishee order attaches debts due or accruing due. This means deposits payable on
demand and payable at a future date
96. Parties to a guarantee are principal debtor, surety and creditor
97. A cheque may be crossed by drawer or holder
98. The purpose of mortgage is to possess the ownership of others property
99. A banker can set-off the amount held in the time deposit account of a customer against the
debit balance of the same customer in overdraft account only after maturity of the fixed
deposit
100.
Civil Procedure code provides the provision exemption for arrest in execution of a
decree for money under Section 56

Whether identity is necessary in the case of a bearer cheque?

BANK EXAMINATIONS GENERAL ASPECTS - PART: 01

01. In the case of a bearer cheque, the identity is not necessary

02. When an order cheque is endorsed in blank, it becomes payable to bearer and
transferable by mere delivery
03. A cheque crossed Not Negotiable, is still transferable
04. As per section 138 of Negotiable Instruments Act, there is a provision of penalty when the
cheque issued in discharge of a liability is dishonoured due to insufficient funds in the
account and if the cheque has been presented to the bank within a period of three
months and is not honoured due to insufficient funds
05. A fixed deposit receipt cannot be endorsed
06. A cheque is presented in an account but there is no sufficient balance to meet the
same. The cheque will be returned with the remarks insufficient funds
07. The cheque on behalf of a partnership firm can be stopped for payment by any
partner whether authorized to operate the account or not

08. The marginal farmer is one who possesses agriculture land upto 1.25 acres of
irrigated land or 2.5 acres of non-irrigated land
09. Registration of charge is not required in the case of pledge, lien, set-ff and
appropriation
10. Loans for construction of godown for own use of farmers is not part of indirect finance
to agriculture
11. Olericulture is cultivation of vegetables
12. Agriculture labourer is a labourer whose income from agriculture is more than 50%
13. Nostro account is an account of a bank established in India with a Foreign Bank in
another country and the account is maintained in foreign currency
14. Resident Foreign Currency (RFC) account scheme is available for home returned Non
resident Indians
15. Under packing credit limit, the extent of finance is computed on the basis of Freight
on Board basis
16. Forfaiting refers to discounting of export bill without recourse to the seller
17. In an overdraft account, when the death notice of partner is received the bank should
stop the operations to avoid application of Claytons case
18. A company is not dissolved by lunacy of a director or bankruptcy of a director or
death of a director
19. In the case of insolvency, the bankers obligation to honour customer cheques
comes to an end when the customer is adjudged insolvent
20. A lien is the right to retain goods or securities belonging to a debtor until he has
discharged a debt due to the retainer thereof
21. The shareholders of a Private Limited Co cannot transfer the shares to any other
individual other than the shareholders of the company
22. The rule in Claytons case applies in the case of running accounts having debit
balances in respect of partnership accounts
23. The term banking has been defined by Banking Regulation act 1949
24. Bills drawn in respect of goods delivered by parties to various Government/Semi
Government departments are known as supply bills
25. Goiporia committee has made the recommendations Commencement of employee
working hours should be 15 minutes before commencement of business hours
26. Banking companies are registered under Banking Regulation act - 1949
27. Bipartite settlements are registered under Industrial Disputes Act
28. Financial products, whose prices are derived from the price of the underlying currency,
interest rate, stocks etc are called as securitization
29. Revaluation reserves is a part of subsidiary capital/tier II capital
30. The committee headed by Y V Reddy revised the concept of liquidity and monetary
aggregates
31. Verma Committee was appointed to examine the restructuring of weak banks
32. The process through which any member-owned organization becomes a shareholder-owned
company is called demutualization
33. Official Language deals with the following articles of constitution 343 to 351
34. Hindi was declared as the official language of the union on 14-09-1949
35. The system of electronic funds transfer was suggested by the committee headed by B D
Shah
36. INFINET is RBIs VSAT based communication system
37. The negotiable instruments act is applicable in the entire part of the country
38. If the cheque is drawn in favour of Mother God or order, the cheque is to be returned
with the reasons since drawn on fictitious name
39. A cheque payable to Rohit is endorsed as follows Pay to Kabil on his marriage. This
endorsement is conditional endorsement

40. The cheque crossed account payee drawn in favour of Mr Brij Nand is presented by
Raman in his account and in this case the bank should not make the payment
41. The following are not negotiable instruments airway bill, a currency note, a letter of
credit and lorry receipt
42. Under section 25 of Negotiable Instruments Act, public holidays are declared by the
respective state governments by notifications in the official gazettes
43. Conversion means not crediting the amount in the account of true owner
44. By General Crossing, we mean two transverse parallel lines on top left hand
corner of a cheque
45. Forward exchange contract is an agreement where the foreign exchange is delivered
at predetermined future date at a contracted date
46. Unless otherwise specified in the letter of credit, the insurance amount should be
expressed in the currency of the letter of credit
47. On the death of the partner, bank opens a new account to rule-of the existing
account to avoid application of Claytons case
48. Executor in banking means a person named by the deceased in his will and for
which probate is obtained
49. The partnership firm doing the banking business cannot have more than 10 partners and
for other business not more than 20 partners; otherwise it will become illegal association.
It is provided in Companies act
50. Prospectus is an invitation to the public to subscribe shares or debentures or deposits
51. According to the rule in Claytons case, the money paid in by a customer are to be applied
towards adjustment in overdraft account in order of time in which the debits were
incurred
52. Banking company is prohibited for undertaking business like trading of goods etc under
Banking Regulation act 1949
53. For availing remedy under section 138 of Negotiable Instruments act, the holder will
have to give notice to the drawer within 30 days of return of the cheque
54. When a firm has branches at different places and wishes to avail the loan at all
stations, the documents will be executed at its Head Office and sub limits will be
allocated to branches at different places
55. In the case of any doubt about stamp duty, clarification can be sought from State
Stamp Authority and Controller of stamp duty
56. Banks were nationalized under Banking Companies (Acquisition and transfer of
undertaking) act-1970
57. When an account shows debit balance, the banker is a creditor and when the account
shows credit balance, the banker is the debtor
58. Partnership firms cannot do the business of banking and it is provided under the
banking regulation act 1949
59. The concept of authorized deduction and illegal deduction is mentioned in the act
Payment of wages act
60. The process of replacing paper securities into electronic holding of shares is known as
dematerialization
61. Official Language policy came into force from 16.01.1950
62. The Central Processing Unit CPU- consists of control unit and arithmetic logic unit
63. When the price of dollar is raised from Rs. 48 to Rs. 55 the exporter will be benefited
in terms of rupee
64. A cheque is the mandate of the accountholder
65. When a cheque without a date is presented for payment, the banker should return the
cheque
66. In a cheque the name of the banker had been written with or without the words Not
negotiable In this case, it is called as a special crossing
67. For negotiating a negotiable instrument there are no limits

68. A bearer cheque is transferable only by delivery

69. A bill drawn in Paris and drawn in favour of a trader in Mumbai and payable in Chennai is
called a foreign bill
70. The Negotiable Instruments Act provides protection to the collecting banker in respect
of Conversion
71. Crossing of a cheque denotes that it should be paid to a banker only
72. By noting, it is meant that the fact of dishonour has been recorded by the notary
public on a dishonoured bill or/and on a plain paper attached to the bill
73. Sericulture is classified under direct agriculture advance
74. Mahima relates to refinance by NABARD to banks for onlending to agencies for
marketing of non farm products of rural women
75. Foreign exchange transactions are viewed always from the angle of the bank
76. The responsibility of managing the foreign exchange resources lies with Reserve Bank
of India
77. Exim policy is announced by the Ministry of Commerce
78. In a Free on Board contract, freight and insurance will be borne by the importer
79. If a letter of credit is slient about the revocability, then the letter of credit is irrevocable
80. Crystalisation of sight export bills purchased/negotiated will be done on the expiry of
transit period plus 30 days
81. A transferable letter of credit can be transferred only once
82. Natural guardian under Hindu Minority and guardianship act, 1956 will be his father
and after him the mother
83. For banking transactions, an administrator is one who is appointed by the court if the
deceased has died intestate
84. Bankers lien is an implied pledge
85. A contract of insurance is a contract of indemnity
86. Acceptance of a usance bill will be made on the face of the bill
87. The right of set-off can be exercised by the banker only when the relationship between
the customer and the banker is that of debtor and creditor
88. Bank must create reserve fund and 25% of the profits should be transferred to this fund
before any dividend is declared and this is as per Banking Regulation act 1949
89. Limitation period for availing the remedy under Section 138 of Negotiable Instruments Act
is one month from the date of cause of action
90. In case the amount of loan to a company is decreased or increased, the memorandum of
modification or charge should be submitted to the Registrar of companies
91. The rate of revenue stamp is the same throughout India except in Jammu and
Kashmir
92. When articles are kept in safe custody, the relationship between banker and customer is
that of bailee and bailor
93. In the case of minors joint account with the guardian and when the minor attains
majority, the guardian should not be allowed to operate the account
94. Wages of employees are settled under Minimum wages act
95. CB Bhave committee has looked into ways to reduce cost of demat operations and the
said companies should bear a substantial part of dematerialization costs
96. Basle committee relates to Capital Adequacy
97. In Camels rating E stands for earnings
98. The revised definition of a sick SSI unit has been given by Kohli committee
99. Greenshoe option is retaining the full/part of equity subscribed by investing public
over and above that issued
100.Hindi is accepted as an official language of the union under Devanagiri script