JAIIB PAPER -3

BANKING LAWS - NI,BR & RBI ACT

1. As per section 26 of the Negotiable Instruments Act, a Minor can draw,

endorse, accept a
negotiable instrument but he can not : bind himself
2. A has granted Irrevocable Power of Attorney in favour of B for one year. After 3
months, A
revokes the Power of Attorney. A cheque signed by B is presented for payment_
What will you do?
The cheque will not be paid because POA can be withdrawn before maturity and
once it is
revoked, no cheque signed by agent can be debited to account of Principal
3. What is the Doctrine of Ultra Vires in the context of a limited company?: Any
act by the directors
beyond the object of the company is considered ultra vires the company and
company is not bound by
such act.
4. A minor who was admitted to the benefits of partnership has become major.
Within how much
period, he has to decide to remain partner in the firm or not?: within 6 months of
attaining majority or 6
months of knowing that he is the partner in the firm whichever is later.
5. If on a cheque words "Account Payee" is written between two parallel lines or
with the name of a
bank, then: the cheque can not be endorsed.
6. Which type of crossing is required to be done if the drawer wants that in case
of endorsement, the
title of transferee of the cheque should not be better than the title of the
transferor: Not Negotiable Crossing
7. In the case of dishonour of a cheque due to insufficient funds, for enforcing
rights under section 138
of the Negotiable Instruments Act 1881, the holder should send a notice to the
drawer within: 30 days from
the date of receipt of notice regarding dishonour of the instrument.
8. The Limitation period for filing case in case of dishonour of cheque due to
insufficient funds is: 1
month from the date of cause of action.
9. Objectives forwhich a company has been formed are given in:Memorandumof
Association
10. Full formof BCBS is Basel Committee on Banking Supervision.
11. Direct Impact of increase in CRR is : Controlling Liquidity
12. Banks can not issue Demand Draft payable to Bearer as per provisions of :
Section 31 of the RBI Act
13. Grace Period is allowed in the case of : Usance Bills and Usance Promissory
Notes
14. Indian Banks are required tomaintainminimumCapital AdequacyRatio of : 9%
15. In the case of individuals and HUF, tax will be deducted at source if the
interest on term deposit in
a financial year is : more than Rs 10,000
16. If Power of Attorney is executed outside India it should be stamped within:90
days of its first arrival in
India
17. For its implementation, the complainant should accept the award given by
Ombudsman within: 30
days of the receipt of the copy of the award.
18. When proceeds of cheque are given before clearance of the cheque the
banker will be called:
Holder for Value
19. In the case ofWrongful dishonour of cheque, towhomthe bank is
liable?:Drawer
20. If date on a cheque is prior to the date of its presentation, it is called: Ante
Dated cheque
21. What isminor's liability in HUF Account:Minor is not liable
22. When does the right of nominee starts in respect of a deposit account?: After
death of all depositors
23. For injectingmoney in themarket which type of transaction is undertaken?: (a)
Repo (b) ReverseRepo
24. RBI controlsmoney supply through: change in CRR
25. Loan given to a director can be waived: after permission of RBI.
26. Under theOmbudsmen scheme, theBank has to reply to the objection of the
complainantwithin: onemonth
27. A post dated cheque is passed in the account of a customer. But another
cheque whichwas in orderwas
dishonoured due to insufficient funds.What is the liability of the Banker?: Bank is
liable to the drawer for paying
post dated cheque as bank is not justified in paying post dated cheque. The bank
will be liable to drawer for
damages on account ofwrongful dishonour of cheque.
28. Which type of preferential shares are treated as part of Tier I capital of the
Bank?: Perpetual Non
Cumulative Preference Shares.
29. As per RBI guidelines, all banks are required classify business in various
business segments with effect from
31-03-2008. The segments are: (a) Treasury (b)Corporate /WholesaleBanking,
(c)Retail Banking, (d)Other
Banking Business. The geographical segments are 'domestic' and 'international'.
30. Customer of your bank asks for cash payment of crossedDD.What would you
do? Generally payment only
through bank account.However, bank can pay after duly satisfying the
genuineness of the draft and payee but bankwill
continue to be liable to true owner if recipient is not true owner.
31. A cheque is presented for payment in which the amount in words and figures
is different. Bank
should pay which amount?: amount written in words will be paid.
32. Whether aPrivateLimited companycan be a partnerwith PublicLimited
companyto formaPartnership?Yes

33. In the context of Nomination, which is correct statement?:Signatures of

nominee not required
on nomination form. Nominee's name should be mentioned on FDR if agreed by
the customer.
34. A bearer cheque of Rs.7,000/- was presented. The cashier informed that the
cheque can not be passed as
the balance is less byRs.700/-. The tenderer credited the amount of shortfall and
the chequewas paid. Customer
disputed the transaction.Whether bank is liable?: Yes. For disclosing balance to
third party, bank is liable to
account holder.
35. When an order passed by Banking Ombudsman is accepted by the
complainant, the same
should be complied within: 1 month from the date of receipt of acceptance from
the complainant.
36. Penalty for delay is per day if information is not furnishedwithin prescribed
time under Right to
Information Act: Rs. 250 per daywithmaximumbeing Rs. 25,000/
37. A crossed DD was paid by cash. What risk is there for the Bank: Bank will be
liable to true
owner of the DD if payment made to a person other than true owner (Section 129
of N I Act).
38. A cheque is written in English and Regional Language. Whether it can be
paid?: Yes. A cheque
written in different language can be paid if otherwise in order.
39. Who cannot become a partner in a firm as per supreme court judgmentHUF
40. Introducers liability / responsibility in case of an account holder defrauding
Bank is : To assist
the Bank in locating the a/c holder - does not have legal liability
41. Nomination -Minor can be a nominee.
42. Inoperative accounts: 2 Years&above not operated.
43. RTI Act - party seeking information need not disclose the reasons for which
the information
sought for.
44. Counterfeit notes returned after police verification, the same has to be
preserved for 3 years
subject to half yearly verification.
45. Validity period of cheque reduced to 3months from1.4.12 as per : RBI
Guidelines under sec 35A of B R
Act
46. Crossed cheque payment across the counter to the authorized Officer of
collecting Bank - can be
made and there are no violation as per NI Act. 255.
47. The consequence of non registration of Partnership - firm cannot sue others
for its dues.
48. Banks are required to implement the award of Ombudsman unless a decision
is taken to appeal
against the same within one month from the date of receipt of acceptance of the
award by the
complainant.
49. Account holder A & B want to substitute their name with the name of their
sons C & D in the
account. What should the bank do?: Substitution of all names is not allowed. At
least one of the
original account holder should be retained in the account.
50. When only image of cheque is sent to the paying bank while sending cheque
for collection
instead of sending the physical cheque, the process is called: Cheque Truncation
51. A Cheque partlywritten in English &partly in regional language is
presented for-paymentWhat
should the bank do?:May be paid, if otherwise in order and the
language other
than.English is the regional language of the area where the cheque is
presented.
52. An authority has been granted in an account You have received
information about the death of the
Principal. Today, you receive a cheque signed by the agent which is
dated prior to the death of the Principal.What
should the bank do? : Cheque can not be paid as authority of agent
comes to end with the death of the
Principal.
53. You aremaintaining current account in the name of the Trust.You
receive notice of death of one of the
trustees. After this notice, a cheque signed by the deceased trustee is
presented for payment.What should the bank
do?: Chequemay be paid, if otherwise in order.
54. As per Consumer Protection Act, the period for filing appeal to State
Commission against
decision of the District Forum is: maximum 30 days
55. Who can not be full fledged partner:Minor
56. Can Karta of HUF appoint Agent or delegate the powers to other co-
parcener: Yes, he can do so.
57. Money deposited after receiving order may be attached in the case
of: attachment order
58. Original & duplicate draft presented simultaneously for payment:
Duplicate should be paid &
original should be returned.
59. Company has registered office at Delhi, factory at Kolkata & loan
taken at Mumbai. For creating
equitable mortgage title deeds can be deposited at: any notified city.
60. Reasons for avoiding advance to Un-Registered Partnership Firm:
Firm can not sue against
anyone for recovery of its debts but anyone can sue against the firm.
61. What is the effect of 'Not Negotiable Crossing'?: Transferee does
not get better title than the transferor.
62. Payment of cheque can be stopped by: only Drawer of the cheque
63. Account payee crossing defined in:-Not defined anywhere
64. What is the current rate of interest paid on CRR?:NIL
65. How can be the transferability of Bill of exchange can be restricted?
Bymaking restrictive endorsement
66. If on a Bill-of Exchange, two parallel lines are drawn and not
negotiable is written between the lines,
what kind of the crossing will be there: Provisions relating to crossing
are not applicable to Bill of Exchange.
67. Within priority sector,what is the allocation toweaker section?: 25%
68. Maximumtimewithinwhich replymust be given under Right to
information act? 30 days
69. What is the status of Nominee? Trustee of Legal heirs

70. Safe deposit vault is governed by provisions of: Transfer of Property

act
71. A cheque signed by agent has been presented after his death for
payment.What should the bank do?: The
chequewill be paid if otherwise in order.
72. Purpose of star series notes: To replace defectively printed notes
73. Customer-bank relationship in locker account: Lessee-Lessor
74. Uptowhat amount District forumcan be approached under
Consumer ProtectionAct?: Rs.20 Lacs
75. Appeal against the award of Ombudsman can be made by the bank
within: 30 days of receiving
the acceptance from the complainant.
76. Cheque issued by director of a company and presented after his
death will be: Passed if in order
77. What would be the action of central bank in recession?: create
liquidity by decreasing CRR and
lower the repo rate.
78. Ante dated cheque like cheque dated 15.12.07 is presented for
payment on 1.1.08whereas_ the account was
opened on 20.12.07 : Cheque should be passed
79. If amount in words and figures differ on a cheque and amount
written in words is higher than the
amount written in figures, then as per sec.18 of NI Act, which amount
should be paid?: amount written in
words
80. Nomination facility is not available in the case of : Trust A/c.
81. customer service Committee meeting held on :Monthly basis
82. A person wants to open a joint account with his wife in such a way
that the account can be operated
by him only during his lifetime and she should be able to operate the
account only after his death. The
account has to be opened with the instructions: 'Former or survivor'.
83. For wrongful dishonour of the cheque the bank is liable to: the
drawer of the cheque
84. Banks print cheque books having similar particulars. The format of
cheque is prescribed by which
Act : Not defined in any Act. It is as per practice. CTS 2010 advised by
RBI
85. Which crossing takes away the feature of assumption of defective
free title available to the
transferee : Not negotiable crossing
86. Who is appointed to tackle public complaints against the public
authorities : Ombudsman
87. The facility of nomination is not available to Trust account because
it is account : Non-individual
(facility of nomination is available only in the case of individual(s).
88. The true owner of a cheque has been deprived of his right by
collection of the cheque for a
different person. This is called Conversion
89. As per recent RBI/Govt. guidelines, pensioners can open account
jointly with: spouse, to be
operated as either or survivor or former or survivor.
90. While paying a bearer cheque, signatures are obtained on the back
side of the cheque. Why ? : As
evidence of payment
91. Whether Minor can nominate ? no. On his behalf nomination will be
done by a person legally
competent to act on his behalf.
92. Cheque is dated before date of its presentation is called: Antedated
cheque
93. An endorsement inwhich endorser excludes his liability is called :
sans recourse
94. When a company is financed against the security of hypothecation
ormortgage of itsmovable property, the
company is required to file particulars of chargewith: Registrar
ofCompanies
95. Who is called as Holder as per N I Act?: Who is entitled to
possession of the instrument in his
own name (actual possession is not necessary).
96. If a cheque is dishonoured due to insufficient funds, then as per
section 138 of N I Act, court may
award imprisonment up to: 2years
97. On the face of a cheque, the name of a bank is writtenwithout two
parallel lines. Thiswill amount to : special
crossing
98. A/c payee crossing is defined in : it is not defined in any Act. It is as
per practice
99. Nomination facility for deposit accounts is available under:
45ZA&45 ZB of the BR act
100. Maximum amount of deposit which a bank may ask while allowing
locker facility to a customer:
Advance rent for 3 years and locker breaking charges
101. Asolicitor has account in his name and in the name of his
client.Garnishee order is received in the name of
the solicitor.Whether the samewill be applicable in the name of client
also: No because two accounts are not in the
same right and same capacity.
102. Which of the following is not amaterial alteration? Changing
bearer to order
103. A bill issued without consideration is called: Accomodation Bill
104. There is a joint account in the name ofA&B.Acheque is drawn
byAbut the alteration in the amount is
authenticated byB.Whether bank can pay the cheque: Yes provided the
operation is either or survivor.
105. The term used for conversion or transfer of property derived from
a criminal offense for the
purpose of concealing, or disguising, the illicit origin of the property is
called: Money laundering
106. In which of the following situations bank will not be a holder in
due course?: When bank credits
the account of the customer after receipt of funds on account of
cheque sent for collection
107. The rate at which RBI rediscounts the usance bills of banks is
called: Bank Rate
108. In the case of IPO, the company is required to allot shares ormake
refundwithin: 30 days of the closure of
the issue in case of fixed price public issues; 15 days in case of book
built issues and 15 days in case of right issues
112.
Bankcanchargecollectionchargesofnotmorethanfor_outstationcheques
ofRs10000toRs1lacinsavingbank:Rs.100
113. Which of the following cheques can not be paid by the bank? :
Acheque onwhich signatures of drawer
have been forged irrespective of the cleverness in forgery and though
these appear to be same as that of the drawer.
114. FIU stands for : Financial Intelligence Unit (India)
115. Two cheques have been presented to you as paying banker.One is
dated prior to opening the account and
other is dated prior to issue of cheque book.What will you do as paying
banker?: Both chequeswill be paid.
116. KYC and FIU in India are associated with: preventing money
laundering
117. Articles of Association mentions: directors' powers
118. Garnishee order is not applicable on: (a)cash received after two
hours of receipt of Garnishee order
(b) amount received for safe custody (c) undrawn balances in cash
credit accounts
119. A person having locker has expired. The nominee comes. A sealed
cover is found. What will you
do ? : It will be delivered to him as part of locker contents without
opening the packet.
120. A bill was presented on 10.5.2005 and accepted on 12.5.2005. The
bill was due for payment on
29.07.2005 and was returned. The last date for filing suit in this case is :
29.07.2008
121. A listed bank has to prepare and publish balance sheet on
quarterly basis as per: SEBI guidelines
122. There are certain instruments defined as negotiable instruments
under lawand certain instruments used as
negotiable instruments as per practice.Which of the following is not a
negotiable instrument as perNIAct: Dividend
warrant
123. On repayment of_debt of a company, satisfaction of charge shbuld
be filedwith ROCwithin: 30 days
124. A Trust Deed is silent about loans by the trust. The trustee
approaches for a loan. Under these
circumstances what should the bank do?: No loan can be raised
125. Which of the following un/under-stamped document can not be
revalidated by paying penalty: None of
these as all documents can be revalidated. (However, as per question
Demand Promisory note cannot be
revalidated).
126. A person of 65 years of age can not nominate which of the
following persons: Trust
127. The aggregate limit for capital market exposure of a Bank is: 40
0/0 of net worth at the end of previous
year
128. A minor approaches for a loan. Which type of loan can be given to
him: loan can not be sanctioned
other than for necessities.
129. Which of the following does not match in banker/customer
relation : Locker facility - Bailee/Bailor
130. Committee on Procedures and Performance Audit of Public
Services (CPPAPS) was headed by:
S.S. Tarapore
131. Customer service code has been mentioned in : Banking Codes and
Standards Board of India.
132. Cheque received in clearing signed by whom will not be passed out
of the following: signed by a
person who has ' been declared insolvent.
133. Whether a customer can approach Ombudsman without first
approaching the Bank : Approaching
the bank first is a pre-condition.
134. In case a forged note is detected in the cash tendered at bank
counter, what should the bank do?:
The Note should be impounded and not returned to the tenderer.
135. If a guardian is appointed by court, minor will become major at the
age of: 18years
136. A Cheque with forged signatures is presented for payment and is
paid. Bank will be liable to:
Customer (Drawer of the cheque)
137. Protection is available to the collecting banker in case of : Crossed
cheques
138. Which is not a General Crossing: Name of a bank written between
two parallel lines
139. If time is not mentioned on a Bill of Exchange, it will be payable: on
demand
140. In an account of Club with you, cheque has been been presented
for payment signed by the
secretary who has died. What should the bank do?: It will be paid if it
not dated subsequent to date of death.
141. Garnishee order is applicable for: credit balance in OD and not for
cheque sent for collection.
142. Bank Guarantees are issued as per provisions of : Indian Contract
Act
143. cheque truncation means: converting physical cheque to
electronic image and stopping physical
flow of a paper cheque. 660_ Foreign currency paid to taxi driver, shop
keeper, can be accepted by:
Authorised persons.
144. A bank cannot acquire either as owner or as pledgee shares in a
company more than:. 10 % of paid
capital of the company or 10% of the•paid up capital and reserves of
the bank, whichever is lower.
145. For formation of a company, Registrar of Companies will issue :
certificate of incorporation
146. Co is in liquidation, funds are at the disposal of : Liquidator
147. Guardian appointed by will of the father is called: testamentary
guardian
148. Which of the following documents does not constitute document
of title to goods:Airway bill
149. DD can be revalidated within: any time (practice may differ In
different banks)
150. Which crossing is a Special Crossing : Name of Bank is written in
the cheque with or without parallel
lines
151. Supervision of banks is done by RBI under which act: RBI Act / BR
Act / Jilani Committee Report
/ NI Act: Banking RegulationAct
152. A minor is aged 15 years, who is illiterate. Which type of self
operated a/c can be opened -SB/ RD /
FD none
153. Which of the following can open SB a/c? State Electricity Board/
Indian Bank Association/
Municipal corporation: Indian Bank Association.
154. In a Flying club, the Secretary&Treasurer are authorized to
sign.ACheque is presented for payment across

the counter. In between it has been informed that Secretary has

died,what youwill do? :Will be paid, if otherwise in
order
155. Revival of limitation for recovery of a time barred loan is possible
by: obtaining fresh promise to
pay under provisions of Indian Contract Act.
As per Supreme court decision,HUF cannot be a partner because:HUF is
not a natural or legal person
156. As per Prevention of Money laundering Act, preservation of
records relating to closed accounts
upto: 5 yr from date of closure of account.
157. Banks can provide information about the customer to another
Bank: General in nature, without any
responsibility
158. Board of Directors want to borrow money in excess of paid up
capital and reserves of the company:
can be done through a resolution passed by shareholders in the general
meeting
159. Other than aBill of exchange or promissory note, the
documentwhichwas executed abroad is required to bestamped
on its arrival in India within: 3 months of its arrival
160. Administrator is appointed in case of: to realize assets and pay off
liabilities of a person who has
died without writing a will.
161. Under Ombudsman scheme, which type of case not entertained?:
advocate representing the customer
162. Which of the following is not a valid cheque for payment by the
bank-l)different ink & handwriting
2) cheque with prior date 3) cheque with impossible date 4) Mutilated
cheque: Mutilated cheque
163. The liability of the drawer of bills of exchange is prime till it is not
accepted by the drawee after
that prime liability becomes of Drawee.
164. Whether Pvt Ltd. Co. can be partnerwith Partnership Firm: Yes
165. Counterfeit note received at the counterwhat to be done?:
Impound the currency note.
166. No noting on currency note, directions issued byRBI under section
35Aof BR Act.
167. Cross cheque can be paid at counter if presented by other bank.
168. Payments of a forged draft.Who will lodge FIR paying or collecting
bank: Paying Bank.
169. Borrowing powers of board of directors are contained in: Articles
of Association
170. Locker can be broken open after notice to the hirer if the same is
not operated for:more than three years for
mediur-n risk category or one year for a higher risk category, and the
locker-hirer does not respond nor operates the
locker.
171. If a complainant is not satisfied with the award or his complaint is
rejected by the Banking ombudsmen, he
can prefer an appeal to DeputyGovernor, RBIwithin: 30 days of the of
the date of receipt of communication
regarding award or rejection of the complaint.
172. In case ofwrongful dishonour of cheque, bank is liable to: account
holder only
173. Who can seek information under.Right to InformationAct:Any
citizen of India can ask for information
174. The Garnishee Order is applicable on the account of a customer
when the relationship between
banker customer is: Debtor & Creditor.
175. Aprivate limited companywith Registered office at Bangalore has
raised loan froma branch located at
Mumbai. For creating equitablemortgage, title deeds can be deposited
at:Mumbai,Kolkatta, Chennal or any other
notified place.
176. Acheque is presented for payment inwhich amount in figures
ismentioned asRs 10,000whereas the amount
inwords ismentioned as Rs Ten lakh only. In terms of section 18 of
theNIAct,what should the bank do?: The amount
written inwords should be paid.
177. When a letter is signed by the borrower and based on that letter
bank delivers the document of title
to goods to the borrower, such letter is called as: Trust Receipt
178. How much charges are charged in addition to normal collection
charges and out of pocket expenses
for providing instant credit facility for outstation cheques:Nil
179. A limited company has registered office at Chennai whereas loan
has been raised from bank branch
at Mumbai. The charge will be registered with the ROC at: Chennai
180. A partnership firm conducting business other than the banking
business has more than 20 members
as partners. Whether this is allowed?: Such association is called illegal
association as per Companies Act
181. Under Prevention of Money Laundering Act, banks are required to
send cash transaction report in
respect of cash deposit or withdrawal of more than Rs 10 lakh in a
month from one account within: 15 days
from the close of the month.
182. Who is primarily liable on Bill of exchange which has been
accepted?: Acceptor (Drawee) of the
Bill.
183. A cheque crossed specially to a bank is presented by the same
bank to paying bank for cash
payment. What should the paying bank do? Bank can make cash
payment.
184. Who can make nomination in the deposit account of a minor?:
Guardian on behalf of the
minor.
185. Who can be a nominee?: Only an individual
186. If a depositor dies, payment to nominee or legal heirs should be
made within: 15 days of
completion of formalities.
187. What is the relationship between bank and customer if he has left
certain goods with the bank by
mistake: Bank is trustee and Customer is beneficiary
188. Appeal against the award of the Banking Ombudsman can be
made to Deputy Governor, RBI
within days of the receipt of copy of award from the Ombudsman: 30
days
189. A cheque was dishonoured despite sufficient balance in the
account. The bank will be liable to:

Drawer of the cheque and not to the payee.

190. Maximum amount of fine under section 138 of N I Act for
dishonour of cheque due to insufficient
funds is: twice the amount of cheque.
191. Bearer uncrossed cheque can be paid towhom: To the bearer
192. On, other than a negotiable instrument, what is the time period
for payment of stamp duty, if the
document is executed outside India : 3 months
193. May I help you counter is to be provided by bank branches other
than : Small branches
194. In case of a jointly operated joint account, the nominee can obtain
payment,when : none of the account holder
is alive
195. A bank branch receives a counterfeit note of Rs.1000, which
customer wants back. What the bank
should do : Impound the currency note but credit full amount to
customer. Receipt not to be issued to
depositor.
196. When rate of interest is expressed by adjusting the impact of
inflation, this is called : Real rate of
Interest
197. Banks can ask for deposit of advance rent on hiring a locker for a
period up to : 3 years
198. The crossing on a cheque is required to be cancelled.Who can do
so:Drawer