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Appendix: Objective-Type Questions on Commercial Banking - Manag...

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Tick YES or NO for the following statements.


1. Retail banking means managing of individual customers on both
assets and liabilities side.
Yes

No

2. Customer segmentation refers to classification of customers into


different groups for the purpose of identifying their financial
requirements.
Yes

No

3. The Basel II Accord deals in capital adequacy norms to be


fulfilled by the banks.
Yes

No

4. Bundling of products means availability of various options within


the main product/service.
Yes

No

5. The success of retail lending depends on assessment of future

requirements of customer needs and to prepare for the same now.


Yes

No

6. Housing loan can be sanctioned to a property situated in any


industrial area.
Yes

No

Yes

No

Yes

No

7. Housing loan can also be considered for the purchase of a plot.


8. The maximum moratorium under a housing loan is 30 months.
9. Stamp duty/registration charges do not form a part of the project
cost in housing loans.
Yes

No

10. Under the flip method, the installments are graduated with a rise
in the income level of the borrower.
Yes

No

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11. The maximum IRR (installment to recovery ratio) to be


considered is 25 per cent under housing loans.
Yes

No

Yes

No

12. A third party can join as co-applicant in the case of housing loans.
13. There is no restriction on the number of co-applicants in housing
loans.
Yes

No

14. The house/property proposed to be purchased/constructed on


banks finance need not be held jointly by all the applicants.
Yes

No

Yes

No

15. Cross guarantee under group housing scheme can be permitted.


16. Delay in payment or instalment attracts penal interest in the case
of housing loans.
Yes

No

17. Second charge on house/property for extending finance under

housing loan scheme can be permitted, subject to certain terms


and conditions.
Yes

No

18. Finance to state-owned corporations and involved housing

projects and statutory bodies like housing boards can be treated


as direct housing finance.
Yes

No

19. Finance to firms/companies under the vehicle loan scheme may


be permitted.
Yes

No

20. Consumer durable loans backed by hypothecation of assets can


be termed as secured personal loan.
Yes

No

Yes

No

21. Margin under clean personal loan is 25 per cent.


22. Loan against mortgage (LAP) can be permitted to meet any
purpose/requirement.
Yes

No

23. The minimum margin under loan against mortgage is 50 per


cent.
Yes

No

24. The maximum quantum of loan under the education loan scheme
is Rs. 15 lakh.
Yes

No

25. Loans above Rs. 4 lakh under education loan require tangible
security.
Yes

No

Yes

No

26. Minimum margin under education loan in 25 per cent.


27. The repayment period under education loan is study period plus
one year or study period plus 6 months after securing
employment, whichever is earlier.
Yes

No

28. The allowable expenses under education loans include the


amount paid towards development fund.
Yes

No

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Yes

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No

30. Loan against shares will be considered only if the shares are in
the demat form.
Yes

No

Yes

No

31. Loan can be granted against pledge of share of any company.


32. Maintaining pension account is not mandatory in case loan is to
be considered for a senior citizen.
Yes

No

33. Top-up loans are a kind of supplementary finance extended to


home loan borrowers.
Yes

No

34. Loan against rent receivables is granted against total rent


receivable for the unexpired lease period.
Yes

No

35. Recovery in loans against rent receivables is ensured by debiting


the customers account.
Yes

No

36. The security under loan against rent receivable, the collateral

security should necessarily be the same property from which the


lease rentals are derived.
Yes

No

37. The maximum repayment tenure allowed in the case of loan

against rent receivables is to the extent of unexpired period of


lease or 84 months, whichever is earlier.
Yes

No

38. Banks individual credit policy governs the internal policies and
control with regard to credit dispensation.
Yes

No

39. Finance can be extended even to those activities which are

declared as low priority in credit policy of individual banks.


Yes

No

40. Rating of the borrower is one of the risk mitigating tools and
therefore it is mandatory in respect of all credit proposals.
Yes

No

41. Verification of authenticity of various documents is a part of due


diligence exercise.
Yes

No

42. The EMI can be permitted up to 50 per cent of gross monthly


income.
Yes

No

43. Floating rate of interest varies as and when there is change in


interest rate without a change in the BPLR.
Yes

No

44. Credit monitoring function is to ensure constant vigil on conduct


and operations of loan account.
Yes

No

45. By crediting the loan amount to the account of the customer, end
use of funds can be ensured.
Yes

No

46. Management information system (MIS) can be used as one of the


credit monitoring tools.
Yes

No

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Yes

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No

48. Non-security documents, such as application forms and letters of


undertaking can be admitted as the main documents of evidence
in the court of law.
Yes

No

49. In the case of DP note executed by a partnership firm, the words


jointly and severally need to be inserted.
Yes

No

50. The liability of guarantor arises only in the event of failure of the
principal borrower.
Yes

No

51. The limitation period in the case of guarantee commences from


the date of execution of the guarantee itself.
Yes

No

52. Even if the principal borrower is absolved of his liability by virtue


of the DP noted getting time barred, the guarantor shall continue
to be liable for the debt.
Yes

No

53. Equitable mortgage does not attract any stamp duty, though, of

date, some of the state governments introduced stamp duty even


on equitable mortgage to increase revenue.
Yes

No

54. Search report and non-encumbrance certificate are not required


for creation of mortgage.
Yes

No

55. Security charged as prime security in the case of one loan account
can be extended as collateral security in the case of another loan.
Yes

No

56. Physical inspection of assets charged to the bank is necessary to


corroborate with the information furnished by the customer.
Yes

No

57. If two mortgages are created on the same propertyone is by way


of simple mortgage and another by way of equitable mortgage,
the second mortgage can enforce his right only after the debt
secured by the first mortgage is fully satisfied.
Yes

No

58. NEFT is an electronic fund transfer facility and came into force
with effect from 1 June, 2006.
Yes

No

Yes

No

Yes

No

Yes

No

Yes

No

59. Facility under NEFT is available only at select branches.


60. NEFT is distinct from RTGS.
61. Transaction under NEFT is on a gross settlement basis.
62. ECS facilitates bulk payment system easier.
63. Transactions under ECS are cleared through the National
Clearing House of the RBI.
Yes

No

64. RTGS is an electronic fund transfer system amongst different


bank's branches.
Yes

No

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Yes

No

Yes

No

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67. Each bank is allotted a code under RTGS called IFS code.
68. Service under RTGS is not available on three national holidays
namely 26 January, 15 August and 25 December.
Yes

No

69. The settlement under RTGS is carried through a settlement


account called the RTGS settlement account.
Yes

No

70. In the case of shortfall in the RTGS settlement account, the RBI
will not give any liquidity support.
Yes

No

Yes

No

71. The first ATM was installed in 1967 in the USA.


72. The present day ATMs in many of the places are only cash
dispensing machines.
Yes

No

73. Motorised card system is convenient from the customer's point of


view as it enables transaction in a row without requiring the card
to be inserted every time.
Yes

No

74. The transaction in the ATM is routed through the ATM switch of
the individual bank.
Yes

No

75. The transactions effected through service provider like

VISA/MasterCard/AMEX are settled on a monthly basis.


Yes

No

76. Alliance with other banks for sharing ATMs is a part of the
strategic management of banks.
Yes

No

77. Considering the ATM network in China and South-East Asian


countries like South Korea, the ATM network in India is
adequate.
Yes

No

78. All settlements of transactions through VISA are settled through


a settlement account opened for this purpose.
Yes

No

79. ATM-cum-debit card tagged to VISA/MasterCard can be used in


any ATM without any extra charge.
Yes

No

Yes

No

80. Credit card business is not a profitable venture.


81. The full form of CVV is credit value verification and being a secret

code, it should neither be disclosed nor made accessible to others.


Yes

No

82. The credit card contains 18 digits on the fact of it eight digits of

which are allotted by VISA/Master Card/AMEX and the rest by


the individual bank concerned.
Yes

No

83. Card limit will be fixed on the basis of the income level of the
customer.
Yes

No

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

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merchant establishments.
Yes

No

86. Commission earned through POS will be passed on to the card


issuing bank in full.
Yes

No

87. Details of customer name, card limit and cash withdrawal limit

are encrypted on the magnetic tape on the back side of the card.
Yes

No

Yes

No

Yes

No

88. Customers enjoy 2 months credit under credit cards.


89. Transaction cost and finance charges under credit card are low.
90. USP stands for Unique Selling Proposition, which refers to

distinct features of a product, which are not available in the

contemporary market with the competitors dealing in the same


product or service.
Yes

No

Correct answers for these objective-type questions are available


on Web site of the book.

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