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MULTIPLE CHOICE 01-05

1) Some important relationships based upon the nature of business conducted by the banks are
given below.Match the same:
Position
of Bank

Type of Transaction
1

Position of
Customer

Deposit. Accounts, (Credit Balance)

2 C/A TO.DL. CC Loan A/cs


3 Collection of Cheaues
4 Sale or Purchase of Securities
5 IssuinG / Purchase of Drafts
6 Payee of Drafts at paying branch
7 MTs, TIs
Complying with Standing
8
Instructions
Providing Various Services to non
9
Account Holders
Money I Cheques deposited
10 pending
Instructions for disDosal thereof
11 Safe Custody of Articles
12 Leasina of Locker
13 Mortaaae of Securities
14 Pledae of Securities
15 HVDothecation of Securities
16 General Lien
17 Garnishee Order
18 ADDrooriation
a) Agent - Principal
c) Hypothecatee- Hypothecator
e) Debtor - Creditor
g) Lessor. Lessee
I) Pledgee Pledgor
k) Mortgagor. Mortgagee
m) Beneficiary - Trustee
0) Pledgor - Pledgee

b) Mortgagee - Mortgagor
d) Bailee - Bailor
f) Creditor - Debtor
h) Trustee - Beneficiary
j) Principal - Agent
I) Bailor - Bailee
n) Lessee-Lessor
p) Hypothecator Hypothecatee

19) According to the World Trade Organisation (WTO). India has to allow foreign
banks to open branches every year.
a) 8
b) 10
c)12
d) 15
20) "Once a bearer is always a bearer" as per Section 85 (2) of the Negotiable
Instrument Act Is applicable to?
a) Cheque
b) Draft
c) Bill of exchange
d) Promissory Note
e) All of the above
21) Under which of the following documents the bank collects supply bills:
a) Mandate
b) Letter of Authority
c) Indemnity Bond
d) Power of Attorney
22) A Company's registered office Is In Chennai and its factory Is at Bangalore. The
company availed a bank loan In Mumbai. Equitable mortgage of company's Immovable
property Is to be created at.
a) Chennai
b) New Delhi
c) Mumbai
d) Any notified centre
23) What is the upper age limit for SC / ST Women under PMRY scheme?
a) 30 years
b) 40 years
c) 45 years
d) No limit
24) What is the period upto which packing credit is normally Initially granted?
a) 60 days
b) 90 days
c) 180 days
d) 360 days
25) What is the amount for issuing drafts when PAN / GIR Is required?
a) Rs. 10,000 and above
b) Rs. 25,000 and above
c) Rs. 50,000 and above
d) Rs. 1 lac and above
26) Which of the following reasons should be mentioned In case a cheque has been
returned for shortfall in balance in the account?
a) Refer to drawer
b) Insufficient funds
c) present again
d) effects not clear
27) Which of the following sectors Basel - II norms relates to?
a) Banking
b) Capital Market
c) Insurance
d) Foreign Investments

28) What are the penal charges levied In case of irregular repayment of loan
Instalments under PMRY loan accounts?
a) 1%
b) 2%
c) 3%
d) No penal charges
29) Which of the following is correct in relation to "Spot Rate"?
a) Delivery on the same day of transaction b)Delivery on next day of transaction
c) Deliver two days after transaction
d) Any future dates after two days
30) Under which of the following categories of assets, prepaid expenses are shown:
a) Current Assets
b) Miscellaneous assets
c) Fixed Assets
d) None of these
31) On the basis of Purchasing Power Parity (PPP), India is the third largest spender
on defence behind:
a) Russia and Saudi Arabia
b) Pakistan and Iran
c) US and China
d) Israel and North Korea
32) Press Note 18 is related to:
a) Investment
c) Revenue Deficit

b) Reservation in private sector


d) Fiscal Deficit

33) Which city has been declared the world's first "city of literature" by the UNESCO?
a) London
b) France
c) Edinburgh
d) Rome
34) Which is the largest sector of providing employment In India?
a) Textile
b) Railway
c) Defense
d) Steel
35) In India foreign banks can't hold more than - of the banking assets.
a) 5%
b) 10%
c) 15%
d) 20%
36) What Is the maximum amount per single transaction under Electronic Funds
Transfer (EFT)?
a) Rs. 50,000
b) Rs. 1 lac
c) Rs. 5 lac
d) No limit
37) A term deposit for Rs. 10,000/- in the name of A & B opened In the style of M/s
Goodwill & Co. A wants to delete the name of B and Include C.
a) Possible with mandate of both
b) Not possible
c) Open a new account
d) None of these
38) If 75% of the Net profit Is transferred to reserve it means:
a) Sizeable portion of the profit is retained in the business
b) The business is earning good profit
c) None of these
39) Which of the following documents is required for settlement of deposit account if
the account holder is died without writing a will?
a) Letter of Authority
b) Letter of Administration
c) Letter of Execution
d) None of the above
40) Which of the following authority Is appointed In the event of liquidation of a
company?
a) Administrator
b) Receiver
c) Liquidator
d) Executor
41) Which of the following Is Garnishee under a Garnishee Order? .
a) Judgement Creditor
b) Judgement Debtor
c) Bank
None

d)

42) What Is the minimum period of notice required under Securitisation and
Reconstruction of Financial Assets and Enforcement Security Interest Act before sale
of immovable assets?
a) 15 days,
b) 30 days
c) 45 days
d) 60 days.

ANSWERS
1
8
15
22
29
36

e
a
c
d
c
d

2
9
16
23
30
37

f
a
f
c
a
a

3
10
17
24
31
38

a
h
f'
c
c
b

4
11
18
25
32
39

a
d
f
c
a
b

5 e 6 h
12 9 13 b
19 c 20 a
26 b 27 a
33 c 34 a
40 c 41 c

7
14
21
28
35
42

a
i
d
d
c
b

1) 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. The person is
called:
a) Executor b) Administrator
c) Attorney
d) Agent
2) Recovery certificate issued by president of Debt Recovery Tribunal is routed
through:
a) Recovery Officer b) Administrator
c) Law Officer
d)
Arbitrator
3) The borrowing power of the director of the company is contained in:
a) Certificate of incorporation
b) Memorandum of Association
c) Board resolution
d) None of the above
4) Claused Bill of Lading is one which:
a) Contains clauses of terms & conditions of Shipping Co.
b) Contains clauses relating to the voyage of the ship.
c) Narrates the defective condition of the merchandise or one packing or both.
d) Contains restricted clause of UC.
5) A NRI can maintain:
a) NRE SB A/c
A/c s.

b) NRE FDR A/c

c) FCNR A/c

d) NRO A/c

e) All the above

6) Composite cash credit system with liquidity for agriculture has been introduced on
the recommendations of which of the following committees:
a) Kalia Committee
b) Narasimham Committee
c) R.V. Gupta Committee
d) S. L. Kapoor Committee
7) Debt equity ratio is 3:1, the amount of total assets Rs.3o lac, Current ratio is 1.5:1
and owned funds Rs. 5 lac. What is amount of Current assets:
a) 5 lac
b) 10 lac
c) 15 lac
d) None
8) A balance sheet shows total liabilities at Rs. 30 lac, Current liabilities at Rs. 10 lac
and long term debt at Rs. 10 lac and debit balance of profit and loss a/c at Rs.2Iac.
The net worth is :
a) RS.41ac
b) Rs.8 lac
c) Rs. 61ae
d) None of these
9) Total assets of a unit amount to Rs. 50 lac and the aggregate of Net worth and
Term liabilities is Rs.35 lac, what will be the amount of Current assets if Current
ratios 2:1.
a) RS.30 lac
b) Rs.25 lac
c) Rs.50 lac
d) None of these
10) 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:
a) A bearer cheque
b) An order cheque
c) Both the above
d) None of the above
11) A and B are having FDR of 3 years payable to either or survivor. Six months after
issue both of them request for replacement of their names by the names of their
sons.
a) Bank would not accept the request as this is tempering with original agreement.
One name must continue:
b) Bank will agree to the request. c) Bank will obtain court's opinion d) None of the above
12) There is credit balance in the account for Rs. 3000. Three cheques with amount of
Rs. 1200, 1100 and 1000 are presented simultaneously. You will pay the cheques with
amount of Rs.:
a) Rs. 1200 only
b) Rs. 1000 only
c) Rs.11000nly
d)
Rs.1200andRs.1100
13) On the death of FD holder his nominee claims the payment before maturity, but
the legal heirs
a) The bank will not pay
b) The bank will not pay because the legal heirs may also claim the amount on maturity
c) Bank may pay as now he has all rights of the depositor
d) None of the above
14) Which one of the following is not included in the assets of a firm:
a) Stock
b) Machinery
c) Goodwill
d) None.
15) If the company has to create an equitable mortgage in favour of the bank for
security of a loan, who will come to the bank to deposit the original title documents

of the property on behalf of the company:


a) Managing Director
b) Executive Director
c) Manager
d) An authorised official, as per resolution passed by the Board of the Company
16) Under which kind of banking the financial institutions can convert themselves
Into banks
a) Narrow banking
b) International banking
c) National Banking
d) Universal Banking
17) Total working capital requirement of SSI units under the. turnover method of
working capital assessment, would be equivalent to requirement of minimum - of the
annual output value:
a) 1 month
b) 2 months
c) 3 months
d) 4 months
18) An Illiterate borrower cannot sign acknowledgment of debt letter but affixes his
thumb Impression on it the:
a) Limitation period will be extended by this action
b) Acknowledgement must be under full signatures
c) A stamp of name can be affixed
d) None of the above
19) Which of the following cannot be considered as an agricultural activity for
financing purposes?
a) Enhance the supply of drinking water
b) Construction of godowns for food grain storage
c) Loans of coop societies for on lending to farmers
d) None of the above
20) Demand collection and balance (DC B) register is prepared to workout:
a) Recovery %age in loan accounts
b) To determine the eligibility for refinance
c) To assess the demand and recovery properly
d) All the above
21) By adding a confirmation, the confirming bank undertakes the liability similar to
the:
a) Negotiating bank
b) Advising bank
c) Issuing bank
d) None of the
above
22) As per RBI in case of delayed submission of stock statement by a borrower, the
account shall be considered out of order if the delay is:
a) One month older
b) Two months older c) Three months older
d)
Six
months
older
23) Under Uniform Practices for Documentary Credit, if quantity is not specified to be
exceeded
or reduced, it should not exceed the tolerance level of:
a) 1%
b) 10%
c) 3%
d) 5%
24) If the realisable value of security is less than __ % of the outstanding the
borrowal account shall be considered as loss asset:
a) 1%
b) 5%
c) 10%
d) 25%
25) Hari and Mohan are maintaining a joint saving bank account and bank receives
garnishee order in Hari's name. The balance in the account is Rs. 10000.
a) The order will be applicable to the share of Hari.
b) The order will be applicable to the whole of the amount.
c) The order will not be applicable at all, in joint account.
d) None of the above.
26) In respect of past dues, right of set off
a) A banker's right of set-off is not available.
b) After obtaining permission from court, the right can be exercised.
c) After obtaining consent letter, the right can be exercised
d) Right can be exercised if loan and deposit are in the same right/capacity.
27) While analysing balance sheet of M/s Amitabh & Co. you notice that short term
uses are 120% of short term sources. Such a position would generally indicate:
a) Deterioration in Current ratio
b) Improvement in Current ratio
c) Over utilisation of installed capacity
d) Very high debt service coverage ratio
e) Very low debt service coverage ratio
28) The Sale price is Rs. 10 per unit, the variable cost is Rs. 6 per unit and fixed cost
is Rs 60,000. What is Profit / Volume ratio?
a) 20%
b) 30%
c) 40%
d) 50%
29) What does cash loss mean?
a)Loss without charging depreciation
c) Loss arising after payment of dividend

b) Loss arising only after charging depreciation


d) Cash discounts given for realising debtors

e) None of these.
30) Which Committee had recommended the Negotiated Dealing system?
a) Vyas Committee
b) R.V. Gupta Committee
c) Dr. A.S. Ganguli Committee
d) R.H.Patii Committee

31) Who prescribes business hours for various types of forex business at each centre
to be observed by a bank (authorised dealer) for the branches undertaking forex
business?
a) Reserve Bank of India
b) Concerned bank itself
c) Lead Bank
d) State Bank of India.
32) RBI has increased the limit for remittance abroad by resident Indian for
miscellaneous purpose from US $ 500 to - where the resident Indian need not
comply with any documentation formalities:
a) US $ 1000
b) US $ 2000
c) US $ 3000
d) US $ 5000
33) Banks which qualify to declare dividends would be eligible to pay dividend
without obtaining the prior approval of RBI and the dividend payout ratio should not
exceed __ percent.
a) 20

b) 25

c) 30

d) 33.3

34) The amount of Laghu Udhami Card for SSI unit is proposed to be increased from
Rs. 2 lac to Rs. - w.e.f. March 01, 2004:
a) 4 lac
b) 5 lac
c) 7.5 lac
d) 10 lac
35) Repayment Period for PMRY loan:
a) 3 years
b) 3 to 7 years

c) 7 years

d) 10 year

36) In case of dishonour of cheque due to Insufficiency of fund the punishment under
Section 138 of N.I. Act:
a) Twice the amount of cheque.
b) One year imprisonment
c) Twice the amount of cheque or one year imprisonment.
d) Twice the amount of cheque or two years imprisonment or both.
37) For opening a/c of Public Ltd. Co. we do not ask Introduction. Why?
a) People know about Public Ltd. Co.
b) Only individual seeks introduction
c) Public Ltd. Co. has separate legal entity
d) None of the above
38) Where the registration of firm is to be done:
a) Registrar of Company
b) Registrar of Society
Assurance
d) Registrar of Trust
e) Registrar of Firm.

c)

Registrar

of

39) How much time is allowed to drawee for accepting Usance Bill (excluding holiday).
a) 72 hours
b) 3 days
c) 24 hours
d) 48 hours
40) For which type of Negotiable Instruments the grace period is available for
calculating due date.
a) Cheque
b) Demand Promissory Note c) Demand Bill of Exchange d) Usance bill of exchange
41) Bill of Lading is:
a) Not negotiable instrument
these

b) Not full fledged N.I.

c) Full fledged N.I.

42) A cheque dated Oct 2003 should be paid:


a) On 31-10-2003.
b) After 31-10-2003 c) In the month of November.
returned

d)

d) None of

Should

be

43) Sans Recourse endorsement is one in which:


a) Drawer excludes his responsibility
b) Drawee excludes his responsibility
c) Endorser excludes his responsibility
d) None of these
44) Which of the following is not a material alteration?
a) Change in Date
b) Change in Amount
c) Change in Name of Payee d) Crossing of an open cheque
e) None of the above
45) A minor endorses a cheque in favour of B. in case of dishonour:
a) A is liable
b) A is liable if endorsed for consideration
c) A cannot held liable as when a minor endorse cheque all parties are held liable except minor.
d) None of these
46) In a Current Account of minor, can we allow Over Draft?
a) Yes, if guaranteed by his guardian.
b) No, as Over Draft given to minor cannot
recovered
c) Yes, if covered by collateral security.
d) If the overdraft is required for meeting his
necessities.

47) A minor aged 15 year comes to your branch for payment of cheque for Rs.
27,000/-. The signature of drawer tally with your record. As a desk officer, can you
make the payment?
a) No, as the amount of cheque is high.
b) No., as the minor cannot give valid discharge.
c) Yes, minor cannot deny taking payment
d) Make the payment after seeking confirmation from the drawer
48) Your locker holder is sick as such he gives an authority in favour of his minor son
to operate the locker:
a) Operation of the locker will not be allowed
b) Operation in locker can be done by locker holder only
c) Allow operation as the minor has the authority.
d) Allow in presence of a bank officer only.
49) The maximum amount that can be deposited in Public Provident Fund accounts
for getting benefits u/s 80cc of Income Tax Act:
a) Rs.25000
b) Rs.35000
c) Rs.50000
d) Rs.70000
5O) The accidental coverage available In case of death in KCC:
a) 25,000
b) 50,000
c) 1 lac
d) None
51) Limit of Housing Loan for public for construction, renovation and reconstruction:
a) 10 lakh
b) 20 lakh c) 251akh d) None
52) Under PMRY Scheme reservation for SC/ST:
a) 25%
b) 22.5%
c) 27%

d) 40%

53) Which of the following is not true about PMRY scheme?


a) It is a scheme for unemployed youth
b) It is not applicable in J&K
c) Family income is Rs. 40,000.
d) The age criteria is 18 to 35 years
e) None of the above
54) Under Swama Jayanti Shahri Rozgar Yojana (SJSRY) the minimum qualification for
the beneficiary to be eligible is:
a) 8th pass
b) 9thpass
c) 10th pass
d) No minimum qualification
55) Under Swamajayanti Gram Swarozgar Yojana, collateral security guidelines are:
a) No collateral security is to be taken;
b) No collateral security is to be taken for individual loans upto Rs 50,000/- and group loan upto
Rs 3 lac;
c) No collateral security is to be taken for individual loans upto Rs 50,000/- and group loan upto Rs 5 lac;

d) No collateral security is to be taken for individual loans upto Rs 1 lac and group loan upto Rs 5
lac
56) Under Kisan Credit Card Scheme (KCC), the premium for insurance coverage is Rs.
__ per year, to be borne by the farmer in the ratio of ---:
a) 10 and 1:1
b) 15 and 1:1
c) 15 and 1:2
d) 25 and 1:2
57) The status of Tiny sector is to be given to SSI units whose investment in plant and
machinery Is Rs. _lac, irrespective of the location of the unit:
a) Ten lac
b) Fifteen lac
c) Twenty lac
d) Twenty five lac.
58) Minimum land holding for financing of tractors upto 35 hp has been reduced to __
acres of perennially irrigated land:
a) 5
b) 4
c)3
d) 2
59) RBI has prohibited stapling of currency notes by a directive issued under___.
a) Section 35 A of BR Act.
b) Section 35 A of RBI Act
c) Section 35 A of NI Act.
d) Section 35 A of Indian Currency Act.
60) For tractors above 35 hp, the minimum land holding requirement is __ acres of
perennially Irrigated land:
a) 6
b) 8
c) 10
d) 12
61) The firm has Current Assets of Rs.100 and Current Liabilities of Rs 50. The Quick
Ratio is 1.50:1. What Is the amount of Inventories?
a) 20
b) 25
c) 30
d) 35
62) An SSI unit has been sanctioned Working capital limit of Rs 60 lac. What is the
Annual Projected Turnover of the unit Rs.___ :
a) 1 crore
b) 2 crore
c) 3 crore
d) 5 crore
63) Debt Service Coverage Ratio (DSCR) denotes - position of the firm:
a) Profitability
b) Solvency
c) Liquidity
d) None of these

64) Total working capital requirement of 551 units under the turnover method of
working capital assessment, would be equivalent to requirement of minimum __ of
the annual output value:
a) 1 month
b) 2 months
c) 3 months
d) 4 months
65) What is the effect of Cash purchase of raw materials is regards Current Ratio?
a) No effect on current ratio
b) Decrease in current ratio
c) Increase in current ratio
d) Improve the Current ratio by the % material now purchased to the overall stock
e) Deteriorate the Current ratio by the % of material now purchased 10 the overall stock.
86) Full form of PCA:
a) Prompt Corrective Action
c) Potential Core Account

b) Potential Corrupt Account


d) Partial Correct Action

67) Time limit for disposal of loan application of SSI unit for credit facility more than
5 lacs:
a) Fortnight b) 5 weeks
c) 8-9 weeks d) 10 weeks e) None of these
68) Under Swarna Jayanti Shahri Rozgar Yojana (SJSRY), the agency which processes
the applications is :
a) RBI
b) DRDA
c) DIC
d) Urban Local Body / Municipal Corp.
69) Under KVIC scheme, the margin money is kept in the shape of fixed deposit
receipt for _:
a) 1/2 year
b) 1 year
c) 2 years
d) 3 years
70) Who control Import of goods?
a) DGFT
b) RBI
c) RBI & DGFT

d) None of these

71) When the price of dollar raised from Rs. 48 to Rs. 55 who will benefited?
a) Importer
b) Exporter
c) Exporter in terms of rupee
d) None
72) Which party is not in L/C?
a) Importer
d) Confirming bank

b) Exporter
e) Central Stamp Office

c) Issuing bank

73) A lady married to a foreign passport holder of Indian origin becomes:


a) NRI
b) PIO
c) Indian
d) None
74) For discounting export bill for adjusting packing credit advance, the rate is
applicable:
a) T.T. selling b) T.T. buying
c) Bills buying
d) Bill Selling
75) Ram, Shyam & Ganesh are three partners in a partnership a/c. The operational
mandate is Ram & Shyam can either operate a/c. Now Ganesh also want to operate
a/c
a) All the three have to sign request letter.
b) Ram and Shyam can authorise Ganesh to operate the account
c) Since Ram and Shyam can either operate the account as such either can authorise Ganesh
to operate the a/c.
d) None of the above
76) Vide RBI guidelines, in case of agriculture loans upto Rs. ___ margin / security
requirements have been waived:
a) 25,000
b) 50,000
c) 75,000
d) 1,00,000
77) As per the RBI's Annual Policy Statement for the year 2004-05, NPA norms
parameters in Agricultural Finance have been changed. Which of the following is
correct?
a) A loan granted for short duration will be treated as an NPA if the instalment of the principal
or interest thereon remains unpaid for two crop seasons beyond the due date.
b) A loan granted for long duration will be treated as an NPA if the instalment of the principal or
interest thereon remains unpaid for one crop season beyond the due date.
c) All the above prescriptions of crop loans would also be applicable to agricultural term loans.
d) a and b
e) All of the above
78) As per the latest RBI guidelines banks, for financing against shares /IPOs, would
now have to maintain - percentage margins:
a) 25
b) 35
c) 40
d) 45
e) 50
79) Which Committee has been appointed to undertake procedures and performance
audits on public services and regulatory clearance in RBI.
a) S.S. Tarapore Committee
b) R.V. Gupta Committee
c) Dr. A.S. Ganguli Committee
d) R.H. Patil Committee

80) 'Accounts Payee' crossing is recognized by:


a) Negotiable Instrument Act
b) Bills of Exchange Act.
c) Customs and practices only
d) Customs and practices
81) Restrictive endorsement means an endorsement which:
a) Restricts the amount to be paid.
b) Restricts validity period of the cheque.
c) Prohibits further negotiation.
d) None of the above
82) Pensioner is required to furnish life certificate every year in the month of:
a) January
b) November
c) Oct.
d) March
83) The bank receives stop payment instructions from a payee of a cheque stating it
is lost, when the cheque is presented the bank should:
a) Return the cheque with the reason 'remark to drawer
b) Pass the cheque, if otherwise in order.
c) Return the cheque with the remark 'Payment stopped'.
d) Return the cheque with the remark 'cheque reported lost, drawer's confirmation awaited'.
84) When a banker gives credit to a' customer's account as soon as the cheque is
deposited by the customer and the customer is allowed to withdraw the amount
before receipt of proceeds from the paying banker, the banker's legal position is :
a) Banker acting as an agent of the customer
b) Banker acting as a 'holder for
value'
c) Both the above
d) None of the above
85) Protection to collecting banker is available:
a) For crossed cheque only
b) When the collection is made for customer only.
c) Both 'a' and 'b'.
e) None of the above.
86) When would the bills of exchange dated 28 January 2004 payable after one month
after date will fall due on?
a) 28th of Feb. 2004 b) 181 of March 2004
c) 2nd of March 2004
d) 3rd of March
2004
87) The public holidays under section 25 of the Negotiable Instruments Act are
declared in advance because:
a) In calculating the reasonable time for presentment and servicing of notice of dishonour and
nothing, public holidays are excluded.
b) A bill or note maturing on a public holiday is deemed to be due on the next preceding
business day.
c) Both 'a' and 'b'
d) Neither 'a' nor 'b'.
88) In respect of retail trade in priority sector classification for essential commodities
through fair price shops, the maximum loan can be:
a) RS.51ac
b) Rs.10 lac
c) RS.25 lac
d) No ceiling
89) The crossing which does not confer a better title on the transferee than the
transferor himself is known' as:
a) Special crossing
b) Qualified crossing
c) A/c payee crossing
d) Not negotiable crossing
90) A cheque is presented for payment on account of Mr.Hari at counter. A token has
been issued and cheque passed for payment, but payment has not been made by the
cashier and during this period garnishee order is received:
a) Order will apply to the amount of cheque.
b) It will not apply since the cheque has been
passed.
c) Order would become ineffective.
d) None of the above.
91) The Planning Commission was set up in:
a) 1948
b) 1949
92) The Tenth Five Year plan period is:
a) 2000-2005
b) 2001-2006
c) 2002-2007
93) The full form of the OLTAS is:
a) On line trade accounting system
c) On line tax accrual system

c) 1950

d) 1951

d) 2003-2008

b) On line tax accounting system


d) On line tax structure.

94) Which of the following documents is issued by the Registrar of the Companies?
a) Memorandum of Association
b) Certificate of Incorporation
c) Articles of Association
d) None of the above

10

95) A Garnishee order is served on your branch at 10.30 a.m. on 1-1 January, 2004
attaching all sums owing and accruing to Mr. Trehan - a current account holder.
Which of the following transactions/accounts will be attached by the Garnishee
order?
a) A deposit account maintained by Mr. Deepak with London branch of the bank
b) At 10.15 a.m. a sum of Rs. 5000/- has been paid in by the party which was not posted in the
ledger by the time the Garnishee order was received by the bank.
e) At 12.45 p.m. the same day, at T.T. for Rs. 12000 for the credit of the party's account is
received.
d) None of the above
96) A Negotiable in!trument payable to bearer is negotiable by:
a) Delivery
b) Transfer deed
c) Endorsement
d) Endorsement and delivery
97) For demand bill of exchange, the limitation period begins from:
a) Three years from date of default
b) Three years from the date of document
c) Three years from date of sanction
d) None of the above
98) Vostre accounts mean:
a) Rupee accounts of foreign banks in India
b) Rupee accounts of Indian banks in foreign countries
c) Foreign currency accounts of Indian Banks abroad
d) None of the above
99) The Karta of HUF can do which of the following, in relation to business of the
family:
a) Can borrow money
b) Can sign documents
c) Can create charge on properties
d) All the above
100) In SSI financing the banks are to ensure minimum credit of _% of their total
credit to SSI, for units having investment In plant and machinery upto Rs.5 lac:
a) 40%
b) 25%
c) 15%
d) 10%

11

ANSWERS
1
5
9
13
17
21
25
29
33
37
41
45
49
53
57
61
65
69
73
77
81
85
89
93
97

B
E
A
C
C
C
C
A
D
C
C
C
D
B
D
B
A
C
B
E
C
C
D
B
B

2
6
10
14
18
22
26
30
34
38
42
46
50
54
58
62
66
70
74
78
82
86
90
94
98

A
C
B
D
A
C
D
D
D
E
D
B
B
D
B
C
A
A
C
C
B
D
A
B
A

3
7
11
15
19
23
27
31
35
39
43
47
51
55
59
63
67
71
75
79
83
87
91
95
99

D 4
C
8
A 12
D 16
A 20
D 24
B 28
B 32
B 36
D 40
C 44
C 48
A 52
C 56
A 60
B 64
C 68
C 72
A 76
A 80
D 84
B 88
C 92
B 96
D 100

C
B
D
D
D
C
C
D
D
D
D
C
B
C
A
C
D
E
B
D
B
D
C
A
A

12

MULTIPLE CHOICE 02
1) Ramsharan and Rajrani have a joint account with the mandate 'former or survivor'. Both of
them die in an accident simultaneously. There is no nominee in the account. The balance is
payable to :
a) Legal heirs of Ramsharan and Rajrani after taking joint discharge
b) Rajrani
c) Ramsharan & Rajrani on pro-rata basis
d) None of the above
2) Rohit and Mohit are two minors and want to open self operated joint account and both have
completed the age of 10 years and are literate:
a) Account will be opened with either or survivor instructions.
b) Account cannot be opened under any circumstances.
c) Account can be opened after taking under taking from the guardian.
d) Account can be opened with the permission of the court.
e) Account can be opened if they belong to same family and operating instructions are jointly operated
by both.
3) Nomination facility is provided under Banking Regulation Act. Who cannot be a nominee in any
deposit account?
a) Male Minor
b) Female Minor
c) Blind
d) All of these
e) None of the above.
4) Which of the following can endorse a negotiable instrument?
a) A Minor
b) Married woman
c) An illiterate person
d) Blind persons
e) All the above
5) Conducting the affairs of an organisation in a transparent manner which gives a fair deal to all
the shareholders I stakeholder is part of:
a) Corporate Governance
b) Corporate Restructuring
c) Securitization
d) Know Your Customer guidelines.
e) None of these
6) A Stale Bill of Lading is one:
a) Which is presented to the Bankers after 21 days from the date of shipment.
b) Which is presented to the bankers after 15 days from the date of shipment.
c) Which is presented to the Bankers after 20 days from the date of shipment.
d) Which is a stolen Bill.
7) Banker's lien:
a) A special type of mortgage
c) A hypothecation transaction

b) An implied Pledge
d) None of the above.

8) A contract of Insurance is a contract of:


a) Guarantee
b) Indemnity
c) Indemnity & Guarantee

d) None

9) A Public Ltd. Co. applied for cash credit limit from United Bank of India, Kolkata. A Director
of the company told the bank that the compa"y was having immovable property situated at
Mumbai am! its registered office was at Chennai. Where will the charge with ROC be got
registered?
a) Registration of mortgage charge should be with the Registrar of the Companies in whose
jurisdiction the properties are situated.
b) Registration of mortgage charge should be with the Registrar of the Companies where the head
office of the bank is located
c) Registration of mortgage charge should be with the Registrar of the Companies at the place of the
branch from where the limit is being sanctioned.
d) Registration of mortgage charge should be with the Registrar of the Companies at the place where
the company is having its registered office.

10) To open an account of an 'Administrator' the Bank will scrutinize which document:
a) Probate
b) Succession Certificate
c) Letter of Administration
d) Acceptance letter by Administrator

13

11) To prevent slippage of accounts in NPA category, RBI has designed broad framework
detailing preventive and corrective measures. One of the measures is introduction of new
asset category between 'standard' and 'substandard'. The new category is _:
a) Special Mention Assets category;
b) Special Mention Standard Assets category;
c) Special Mention Sub-Standard' Assets category
12) In an account of a Minor operated by guardian, after the death of guardian, the balance:
a) Cannot be paid to the Minor even though he has completed the age of 10 years.
b) Can be paid after obtaining Minor's signature.
c) Can be paid after a declaration from the guardian.
d) Can be paid if he is of 10 years of age as per RBI directives.
e) None of the above.
13) Noting and Protesting is not applicable to _:
a) Promissory Notes
b) Bills of Exchange
e) None of these
14) Import licence indicates:
a) Total amount upto which imports can be made.
c) Only FOB value of imports

c) Cheques

d) Foreign Bills

b) CIF value of imports


d) CIF value including customs duty.

15) After the death of account holder bank is bound to inform the nominee:
a) If for 6 months nominee does not turn up in deposit account.

b) If for 3 months nominee does not turn up in case of locker account.


c) It is not the duty of banker to inform the nominee.
d) If after reasonable time nominee has not claimed the payment bank will make the payment to legal
heirs.
e) a & b above
16) Syndicate Bank sanctioned a loan for Rs. 20 lakhs and for that mortgage deed was registered
with the Registrar of assurance. The stamp duty on the mortgage deed is for:
a) Fixed amount
b) Advalorum c) As per value of the property
d) As per percentage of loan amount
e) b & d above
17) A mandate may continue to be operative even in the case of:
a) Death of the agent
b) Lunacy of the agent
d) All the above

c) Insolvency of the agent

18) The basic difference in Pledge and Hypothecation relates to _:


a) Ownership of stocks
b) Valuation of stocks
d) Margin requirements
e) Insurance of stocks

c) Possession of stocks

19) A safe custody account in the name of minor can be opened only in respect of
a) Govt securities
b) A term deposit receipt
c) Company shares
d) All the above (a) to (c)
e) None of these.
20) What is 'Foreclosure'?
a) On default by the mortgagor to repay the debt, the mortgagee has a right to get a
decree from the court that the mortgagor be debarred forever to redeem the property.
b) To recover the loan from the borrower
c) To enforce the mortgage through court of law.
d) To stop the borrower to sell the mortgaged properly.
21) When is the remission on stamp duty of bill available?
a)
When the bill represents genuine trade transaction.
b)When the Usance period of bill is not more than three months.
c)When the bill is routed through banking channel.
d) All the (a) to (c) above
e) None of these.

14

22) While opening accounts of Executors and Trustees to the estate of deceased person, bank
should scrutinize _:
a) Trust deed
b) Orders of charity Commissioner
c) Probate
d) All of these
e) None of these
23) Stamp Duty on which of the following documents does not vary from state to state?
a) Mortgage agreements
b) Hypothecation Agreements
c) Guarantee agreements
d) Bills of Exchange
e) None of these
24) Which among the following is not found 'In the Memorandum of Association of a Company?
a) Objects of the company
b) Authorised capital
c) Borrowing powers of Directors
d) Registered Office
25) Your Bank comes to know that the security hypothecated for an advance granted to a
borrower is being under disposal I sold by the customer. What is the most effective action bank
should take?
a) Get a stay order from the court;
b) Report the matter to the police.
c) Convert hypothecation into pledge and take possession.
d) Report the matter to Head Office.
e) None of these
26) Stamp duty on a Usance Promissory Note depends on:
a) Tenor and the amount
b) Only the amount
c) Only the tenor
d) All of the above
e) None of these
27) Limitation period is case of pledged goods is:
a) 3 years from the date of pledge.
b) 3 years from the date of documents.
c) 5 years from the date of pledge.
d) 5 years from the date of documents.
e) None of these
28) A Public Ltd. Co. applied for cash credit limit from United Bank of India, Kolkata, and
offered the immovable property situated at Mumbai by way of English mortgage. A Director of the
company told the bank that the company was having its registered office at Chennai. At what
place will the mortgage be registered?
a) Registration of mortgage with registrar of assurances should be done at the place where the
Registered office of the company is located.
b) Registration of mortgage with registrar of assurances should be done at the place where the branch
of the bank is located Le., from where the limits are to be sanctioned.
c) Registration of mortgage with registrar of assurances should be done at the place where the
property is located.
d) It is the discretion of the bank sanctioning the credit facilities to get the mortgage registered at
the place is convenient.

29) Which of the following is abinitio void?


a) Mortgage Deed executed by a Minor
c) Mortgage of leasehold rights

b)Mortgage Deed in favour of a Minor


d) All of these

30) PNB has opened an Current account with Bank of America in New York in US $ for carrying
out its day to day operations. For Bank of America, this account is known as ?
a) Vostro Account
b) Lora Account
c) Nostro Account
d) Mirror account
e) Escrow Account
31) Documents of Title to goods are transferable by:
a) Endorsement and delivery
b) Delivery
d) None of these

c) Endorsement

15

32) Which of the following Business Group has taken over L&T's cement department Altra Tech
Samco Ltd.?
a) Aditya Birla Group
b) Tata Group
c) JK Group
d) BK Birla Group
e) None of these
33) India is the largest producing country of:
a) Soyabean
b) Milk

c) Green Vegetables

d) Fish

34) When companies release their public issues, the word 'underwriter' is mentioned. What does
the word 'underwriter' mean:
a) This is the name of the firm, which prepares draft for advertisements.
b) These are bankers of the companies, which sell application papers.
c) These are, the brokers/firms or Banks, which guarantee the selling of stocks.
d) These are the legal advisers of companies.
e) None of these
35) Which of the following foreign banks has been allowed to purchase UTI shares ?
a) Bank of America
b) BNP
c) Citibank
d) HSBC
e) Bank of Tokyo
36) The Union Cabinet approved the proposal to introduce a bill to establish in
independent, paving the way for the long-awaited pension reforms.
a) Pension Commission of India
b) Pension Fund of India
c)Pension Development Board
d)Pension Fund Regulatory and Development Authority
e) None of these
37) Last year, a bank was fined by RBI for certain violations. Out of the following which bank
was fined and for what type of violation?
a) ABN Amro, for F'EMA violation
b) ABN Amro, for KYC violation
c) Global Trust Bank for FEMA violation.
d) Giti Bank Group, for KYG violation
e) SBI, for violation at their USA branch concerning Money Laundering.
38) PNB has opened an current account with Bank of America in New York in US $ for carrying
out its day to day operations. For PNB, this account is known as?
a) Vostro Account
b) Loro Account
c) Nostro Account
d) Mirror account
e) Escrow Account
39) ISRO and Airport Authority of India are developing a new satellite-based navigation system,I
which will help enhance air safety while allowing more aircraft to operate in the Indian skies
simultaneously.
a) Varun
b) Gagan
c) Garud
d) Dolphin
e) None of these
40) Who among the following has been named as head of the three-member Investment
Commission, set up by the finance ministry to attract @ 150 billion of FDI?
a) Azim Premji
b) Mukesh Ambani
c) LN. Mittal
d) N. Narayanmurthy
b) Ratan Tata
41) Loss before charging depreciation is known as:
a) Cash Loss
b) Operating Loss
d) Accumulated Loss
e) None of these

c) Loss at Break-even point.

42) Transfer of an interest in specific immovable property for the purpose of securing repayment
of money advanced by way of loan is known as:
a) Pledge
b) Hypothecation
c) Lien
d) Set-off
e) None

16

43) An 80 years lady is having an FDR for Rs 40,000/- In her name against which she has raised
75 % loan. Due to her old age, she approaches you with a request to add the name of her
daughter. How will you handle the request of the lady?
a) Request of the lady will be accepted and the name of her daughter will be added.
b) Request of the lady will be accepted and the name of her daughter will be added, if her daughter is
not a minor.
c) Request of the lady cannot be accepted till the loan is outstanding
d) Request of the lady can be accepted if her daughter is ready to give the guarantee for repayment of
the loan.
44) Minimum number of members in an SHG under PMRY group is
a)5
b)10
c)15
d) None of these

17

ANSWERS
Q
1
5
9
13
17
21
25
29
33
37
41

A
A
A
D
C
D
D
C
A
B
D
A

Q
2
6
10
14
18
22
26
30
34
38
42

A
E
A
C
B
C
C
A
A
C
C
E

Q
3
7
11
15
19
23
27
31
35
39
43

A
E
B
A
E
8
D
E
A
D
B
C

Q
4
8
12
16
20
24
28
32
36
40
44

A
E
B
A
E
A
C
C
A
D
D
B

18

MULTIPLE CHOICE 03
1) Matured, but not paid, tenn depositsare treated as:
a) Demand Liability
b) Time Liability
d) Contingent liability
e) None of the above

c) No Liability

2) While opening a current deposit account of a Partnership finn, banks generally:


a) Insist for Partnership deed
b) Do not insist for Partnership deed
c) Insist for declaration of Partnership in the prescribed form
d) a and c above
e) None of these
3) A Fixed Deposit a/c for Rs. 25,000/- in the names of Mr. Rajesh and Mrs. Radharani with the
operational instruction "Either or Survivor" Is opened with your branch. The deposit has become
due. In the meantime Rajesh dies and Mrs. Radharani has approached you for the matured deposit
amount. But another lady approaches you stating that she is the real wife of Rajesh and
therefore, money should be given to her. What will you do?
a) Pay the money to Mrs. Radharani as per operational instructions
b) Pay the money to the other lady as she is the wife of Rajesh.
c) Pay the money equally to Mrs. Radharani and the other lady
d) Refer the matter to the head office for guidance
e) Pay to none for the time being. Keep the money with the Bank.
4)
a)
b)
c)
d)
e)

A banker is justified in disclosing his customer's affairs and accounts where:


The disclosure is made with the express or implied consent of the customer.
There is a duty to the public to disclose.
The interest of the Bank requires disclosure
a and b above
a, b and c above

5) The relationship between banker and customer in case of Safe Deposit Vault transaction is that
of:
a) Bailor Bailee
b) Agent Principal
c) Trustee - Beneficiary
d) lessor - lessee
e) Debtor Creditor
6) One of the Trustees of a Trust maintaining an account with our 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?
a) The cheque will be returned with the reason "trustee declared insolvent"
b) The cheque can be paid safely
c) The cheque would be returned with the reason "confirmation from the official assignee is available".
d) Cheque will be paid if the other solvent trustees give their consent
e) The matter will be referred to Head Office.
7) Loss before charging depreciation is known as:
a) Book Loss
b) Cash Loss
d) Accumulated Loss
e) None of these

c) Misc Loss on Machines

8) Transfer of an Interest In specific immovable property for the purpose of securing repayment
of money advanced by way of loan is known as:
a) Pledge
b) Hypothecation
c) Lien
d) Set off
e) None of these
9) In a foreign exchange transaction, a right but not the obligation to buy or sell is called:
a) Prerogative
b) Call
c) Kerb
d) Option
e) None of these
10) For technological upgradation in banking system, which of the following committee has been set
up?
a) Tarapore Committee
b) Saraf Committee
c) Kohli Committee
d) Narasimham Committee
e) None of these

19

11) 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 the case?
a) Drawee is justified in refusing payment of the bill.
b) It is deemed to be accepted by the drawee and he is liable
c) Recourse could be made only to the attorney
d) No action can be brought against the attorney and the drawee.
e) None of these
.
12) Which of the following credit exposure norm has been fixed to a single borrower (other than
infrastructure financing)?
a) 15 per cent of net worth of borrower
b) 15 per cent of net worth of the bank
c) 20 per cent of net worth of borrower
d) 20 per cent of net worth of the bank.
e) None of these
13) MIs Taxamati Rice Mill, Kamal, a partnership firm approaches your branch for sanction of CC
( Hyp) limit of Rs 60 lacs. The loan officer on scrutiny of the balance sheet observes that a
Joint Stock Co, is a partner in the firm. He approaches you seeking guidance in the matter as to
whether a limited Co can be a partner of a firm. You will guide him as follows:
a) The account can be opened as a limited company can be a partner of a partnership firm.
b) When a company is made a partner, it becomes association.
c) Account can be opened after having permission from Registrar of Companies.
d) Account should be opened after taking permission from Head Office.
e) None of the above.
14) As per RBI guidelines, there should be how many working directors in a public sector bank:
a) Four, Chairman, Managing Director and two Executive Director for large banks.
b) As per discretion of the bank
c) Bank has to refer to RBI and take prior approval.
d) Two, CMD and Executive Director
e) None of the above.
15) Mis Taxamati Rice Mill Pvt. Ltd., is having a satisfactory CC ( Hyp) limit for Rs 50 lacs from
your branch. You are informed by the company that one of the directors has died in an accident.
After two days, the counter clerk approaches you and seek your guidance as a cheque for Rs
50,000/- signed by the director about a month back has been received in the clearing. You
observe that the cheque is in favour of Income Tax Deptt. You will guide the counter clerk as
follows:
a) The cheque be passed only after obtaining the Board Resolution from the company.
b) Since the cheque is in favour of Income Tax authority, it is binding for the bank to pay the same.
C) The cheque can be paid, as the director signed it as an agent, before his death
d) The account of the company should De ruled-off, to avoid the application of Clayton case. As such
the cheque should be returned.
e) None of the above.
16) On receiving a notice of death of Karta, the credit balance of HUF current account will be:
a) The balance will be disposed of as a claim case under Hindu Succession Act.
b) The balance will be disposed off as per court order.
c) The senior-most co-parcener will be allowed to operate the account.
d) None of these.
17) M/s Rajwant Tubes, has been sanctioned a CC (Hyp) limit for Rs 50 lacs and Bank Guarantee
for Rs 10 lacs. The firm approaches you with the request to issue bank guarantee of Rs 10 lacs in
favour of Customs Ceptt., and submits the duly stamped application for opening of bank guarantee
and also counter guarantee signed by all the partners in individual capacity and also on behalf of
the firm. The counter guarantee is covered under which act:
a) Indemnity Bond under Stamp Act.
b) b) Indemnity Agreement as per State Stamp Act.
c) Undertaking to refund the money in case for making payment
d) Contract to refund the money in case bank has to make the payment.
e) None of the above.

20

18) M/s Impex Pvt Ltd, 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. You will guide him to ask for
a) Red-clause LC.
b) Transferable LC.
c) Irrevocable confirmed LC.
d) Revocable credit
e) Confirmed LC.
19) Mr Tej Pratap Singh, a sole- proprietor of M/s Impex Pvt. Ltd, 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 pre-shipment advance is made available at the instance of
Importer:
a) Red clause LC.
b) Green clause LC.
c) Irrevocable confirmed LC.
d) Revocable credit
e) Back to Back LC.
20) Not-Negotiable crossing is a caution to:
a) Drawer
b) Drawee
c) Payee

d) Endorser

e) Endorsee

21) M/s Tunic International an SSI unit engaged In manufacture of pesticides approaches you
with the request to sanction Working Capital limit of Rs 20 lac. The borrower submits financial
statements for last three years and projected profitability statement for next five years. 14 per
the guidelines, you examine the projected turnover and compare the same with past performance.
What should be the amount of turnover of the firm so that you can sanction CC limit of Rs 50
lacs:
a) Rs. 150 lac
b) Rs. 200 lac
c) Rs. 250 lac
d) Rs. 300 lac e) Rs. 350 lac
22) Deposit accounts which have not been operated for more than 10 year are called a/cs:
a) In-operative account
b) Unclaimed deposits
c) Dormant accounts.
d) Ineffective accounts
e) None of the above
23) Return of unclaimed deposits is required to be submitted to RBI under which act:
a) Sec 26 of Banking Regulation Act.
b) Sec 26 of RBI Act.
c) Sec 26 of Indian Contract Act.
d) KYC norms.
24) 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:
a) Negative Net Working
b) Positive Net Working Capital
c) Negative Working Capital Gap
d) Positive Working Capital Gap.
e) a and c.
26) On scrutiny of a balance sheet of M/s Telenix Inc, you observe that the short term uses
of funds are more than short term sources. The position of the balance sheet indicates:
a) Negative Net Working
b) Positive Net Working Capital
c) Negative Working Capital Gap
d) Positive Working Capital Gap.
e) a and c.
26) Committee on Procedures and Performance Audit on Public Services (CPPAPS) is headed by:
a) Y. V. Reddy
b) A.S. Gaungli
c) S.S.Tarapore
d) Saraf Committee
d) V S Vyas
27) Mrs. Raj Rani, aged 80 years having an FDR for Rs 2 lac 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?:
a) The request will be accepted since the FDR is in her name.
b) The request cannot be accepted since it will alter the contract.
c) The lady will be advised that the request can be accepted on the adjustment of loan.
d) None of the above

21

28) Your branch has disbursed a term loan to 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 course of action, which the bank can undertake. Which
of the following action you will propose to safeguard banks Interest?
a) Loan can be recovered from Master Bobby as it was provided for meeting necessities of life. As
such bank should proceed against Bobby.
b) Loan can be recovered from his father as well as the guarantor as per the option of the bank
c) Loan cannot be recovered from the borrower or the guarantor, as the contract with the minor is
void ab-initio.
d) The bank should wait till the minor becomes major and thereafter proceed for recovery of loan
amount.
29) Which of the following is true in respect of subsidy under SJSRY?
a) The subsidy available is back ended.
b) The lock in period for subsidy is for two years.
c) No interest is paid on the subsidy amount and no interest would be charged on the loan amount
equivalent to the amount of subsidy.
d) None of the above.
e) All of the above.
30) Master Vipin, aged 15 years, has a term deposit of Rs. 10000 in your branch, which is to
mature after 3 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
Vipln:
a) Loan can be allowed if it is needed for meeting necessities of life.
b) Pre-mature cancellation is allowed only on his becoming major.
c) The bank should allow loan as pre mature payment will reduce the deposit.
d) Loan will not be allowed as Master Vipin is a minor but premature cancellation
can be permitted.
e) Any of the above.
31)Mr. Somnath maintaining a satisfactory current account with you, Issues a cheque for
Rs. 10,000/- in favour of his supplier, Mr. Samsung, who endorses it in favour of Mr. Lever who
takes it for value. Mr. Lever 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?
a) The bank will entertain payee's claim as it is a gross mistake.
b) The bank will tactfully handle the case and get the notice withdrawn.
c) In 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.
d) The bank will reply to the notice through its lawyer and decline to accept the claim.

22

Q
1
5
9
13
17
21
25
29

A
A
D
D
A
B
C
B
E

Q
2
6
10
14
18
22
26
30

A
C
B
B
D
C
B
C
D

ANSWERS
Q A Q
3 A 4
7 B 8
11 B 12
15 C 16
19 A 20
23 A 24
27 C 28
31 C

A
E
E
g
C
E
A
C

23

MULTIPLE CHOICE 04
1) A Certificate of Deposit matures on 2nd October, which is a holiday. It will be paid on:
a) CD is demand promissory note and as such it should be paid on 3rd October i.e. a day
succeeding the holiday
b) CD is usance promissory note and as such it should be paid on 1 at October i.e. a preceding business
day.
c) CD is demand promissory note and as such it should be paid on 1 at Oct. i.e. a preceding business day.
d) a or b of the above
2)
a)
b)
c)
d)

A fixed deposit receipt is maturing on Sunday. The payment will be made on:
On Saturday with payment of interest upto Sunday.
On Monday with payment of interest upto Sunday.
On Saturday with payment of interest upto Monday.
None of the above

3) Channel Financing means financing of:


a) Laying of agricultural canals
b) Dealers of identified large corporates financed by the bank
c)NBFCs
d) None of these
4) An export bill has been 'Crystallized'. The bill was retired by the importer abroad later. The
rate to be applied for crediting exporter's a/c is:
a) Bill buying rate
b) Bill selling rate
c) TT buying rate
d) DO buying rate
5) An NRI approaches your branch to open Public Provident Fund Account (PPF). You will:
a) Open the account RBI permission. b) Open the account without RBI
permission.
c) PPF account cannot be opened in the
name of NRI.
d) The account can be opened by taking permission from Head Office.
6) The minimum amount of deposit in PPF account is - and the maximum Is - per annum in
maximum 12 instalment.
a) Rs. 500, Rs. 50,000
b) Rs. 500, Rs. 70,000
c) Rs. 1000, Rs.50,000
d) Rs.1000, Rs.70,000
7) Which of the following is not correct?
a) PPF account can be opened by individuals on their own behalf.
b) PPF account can be opened on behalf of each minor child as a natural / legal guardian.
c) PPF account can be opened on behalf of HUF (by Karta)
d) None of the above
8) The High Value Clearing facility is available for cheques of :
a) Not less than Rs. 1 lacs per instrument
b) Not less than Rs. 2 lacs per instrument
c) Not less than Rs. 2.5 lacs per instrument d) Not less than Rs. 5 lacs per instrument
e) None of the above
9) Demand draft, Telegraphic transfer and traveller cheques for Rs.______ will be issued only by
debit to the customer account or against cheques or other instruments tendered by the purchaser
and not against cash payment.
a) Rs. 50,000
b) Rs. 50,000 and above
c) Upto Rs. 1 lacs
d) Above Rs. 1 lacs
10) Which of the following entities can be a part of partnership firm?
a) HUF
b) Individual
c) Company
d) Partnership
e) None of the above
11) Balaji Trust is having his safe custody account. Bala Ram who is a trustee wants to nominate
his wife in the safe custody account as he is going abroad. You will:
a) Accept the nomination as it is
permitted.
b) Not accept the nomination as
nomination is not permitted in safe custody trust account
c) To accept if the trust deed does not contain any thing contrary to it.
c) None of the above

24

12) A Garnishee Order for Rs. 10,000 and income tax attachment order for Rs. 15,000 are
received simultaneously in the branch in the account of Mr. Rohit who is having a clean OD limit of
Rs.1 lac with debit balance of Rs. 15,000. Which one of them will have preference?
a) Income Tax Attachment order will have preference as it is for recovery of statutory dual
b) Garnishee order will have preference
since it has been issued by the Court.
c) Amount will be shared proportationatly between Garnishee Order and Attachment Order.
d) None of the above
13) Mr. Clever is having a clean overdraft account for Rs. 25,000 with a debit balance of Rs.
20,000. Inspite of repeated reminders he refused to adjust the overdraft account. He is having
a safe deposit account also safe custody account. On which of the following bank cannot exercise
general lien.
a) Articles in safe deposit locker
b) Contents of the safe custody
c) All of the above
14) A loan account is due and inspite of repeated reminder the principle debtor refused to pay.
The guarantor was also served the notice and to avoid litigation, he adjusts the loan in full and
final. The right of the guarantor to step in the shoes of creditor upon full payment of debt is
called the right of :
a) Forfeiting
b) Redemption
c Foreclosure
d) Subrogation
15) The responsibility for verification I scrutiny of the documents submitted by the exporter
under LC for discrepancy is of:
a) Opening Bank
b) Advising Bank
c) Negotiating Bank
d) All of the above
16) Syndication of advances is the recommendations of:
a) Kanan Committee b) Shetty Committee c) Kalyan Sundram Committee
d) Ghosh Committee
17) The limitation period of the term deposit which has already matured is ___.
a) 3 years from the date of expiry
b) 3 years from the date of demand
c) No limitation period
d) a or b whichever is earlier
18) Special Purpose Vehicle (SPV) mechanism is suggested in the budget for development of:
a) Infrastructure
b) Money Market
c) Govt. Security Market
d) Gold Market
19) Repo transaction refers to:
a) Absorption of liquidity by RBI
b) Sale of security which is Held To Maturity (HTM)
c) Injection of liquidity by RBId) Sale of security which is Available for Sale.
20) Reverse Repo transaction refers to:
a) Injection of liquidity by RBI
b) Absorption of liquidity by RBI
c) Sale of security which is Held To Maturity (HTM)
d) Sale of security which is Available for Sale.
21) A type of derivative where the customer has options to exercise his option at any time during
the period covered by the contract is:
a) American Options b) European Options c) Hybrid Options
d) Vanilla Options
22) Soiled notes of small denomination kept in hand balance for identifying culprits in case of
looting of bank cash is known as:
a) Trap money
b) Bait money
c) Money Laundering
d) None of the above
23) In loan cases where repayment of the major or large part of a loan is stipulated in a single
payment following payment of smaller instalment is referred as:
a) Equated payment schedule
b) Balloon payment schedule
c) Bullet payment schedule
d) None of the above

25

24) Borrowings in which there is no amortization or where repayment of the principle occurs only
at maturity is called:
a) Equated payment schedule
b) Bullet payment schedule
c) Balloon payment schedule
d) None of the above
25) The rate of interest payable on a security is known as:
a) Call option rate
b) Put option rate
d) None of the above

c) Coupon rate

26) Dear Money Policy refers to a situation:


a) Where fiscal deficit of the country is very high.
b) Where the money supply is in excess and RBI follows contractionary policy
c) Where money supply is scares
d) None of the above
27) Dividend yield refers to:
a) The ratio of dividend receive in the previous year to the anticipated market price of a share
b) The ratio of anticipated dividend to the current market price of a share
c) The ratio of current dividend to the current market price of a share
d) None of the above
28) Future is a type of derivative where:
a) There is an obligation to buy or sell on a stated exchange a stated quantity of foreign
exchange at a future date at agreed price.
b) There is an obligation to buy or sell on the stated exchange a stated quantity of foreign exchange at
a future date at market price.
c) There is an obligation to only buy on the stated exchange a stated quantity of foreign exchange at a
future date at agreed price
d) There is an obligation to only sell on the stated exchange a stated quantity of foreign exchange at
a future date at agreed price.
29) Green Shoe option refers to:
a) Option to the issuer of any financial instrument to sell a certain portion of over subscription in the
public issue.
b) Option to the issuer of any financial Instrument to retain a certain portion of over subscription in
the public issue.
c) Option to the under writer of any financial instrument to retain a certain portion of over
subscription in the public issue.
d) None of the above
30) In Treasury management hurdle rate refers to:
a) Investment decision making taking into account the maximum acceptable rate of return on a
project.
b) Investment decision making taking into account the minimum acceptable rate of discount on a
project
c) Investment decision making taking into account the minimum acceptable rate of return on a
project.
d) None of the above
31) Investment Fluctuation Reserve (IFR) refers to:
a) Building up of adequate reserves to guard against any possible reversal of interest rate
environment in future due to unexpected developments.
b) Building up of adequate reserves to guard against any asset liability mismatch in future due to
unexpected developments.
c) Building up of adequate reserves to guard against any possible fluctuation in exchange rate due to
unexpected developments in future.
d) None of the above

26

32) Novation is a process in which:


a) Process of gathering the evidence of dishonour of a cheque which signature and seal of a notary
public.
b) Govt. securities transaction is settled through Clearing Corporation India Ltd.
c) Process of gathering the evidence of crystallization of import bill
d) None of the above
33) Put option in a derivative contract refers to:
a) Where the customer has option to sell
b) Where the customer has option to buy
c) Where the customer has option to take delivery
d) None of the above
34) Which of the following is not true with regards to Sweat Equity:
a) Equity issued by the company to employees or directors at a discount
b) Equity issued by the company to employees for consideration other than cash for providing the
know-how or making available rights in the nature of intellectual property rights or value addition.
c) Equity issued by the company to retain the human talent as a part of talent management
d) All of the above
35) A financing under which the financial institution / bank financing Infrastructure will have an
arrangement with any financial institutions for transferring to the later the outstanding in respect
of such financing in their books on a pre-determined basis is known as:
a) Consortium Financing
b) Syndication Financing
c) Take-out Financing
d) Bullet Financing
36) A techniques used by banks to determine the cost of the funds to and from the head /
central office and arrive at a notional profit or loss of a branch before it is categorized as a
profit making or loss making branch is known as:
a) Swapation Price Mechanism
b) Transfer Price Mechanism
c) Competitive Price Mechanism
d) Transit Price Mechanism
37) Under Capitalization of a company Imply:
a) Owned funds of the company is much less as compared to its borrowed funds
b) The company has raised more funds by way of preference share capital
c) The own capital of the unit is gradually increasing due to plough back of profits
d) None
38) Value Date for a foreign exchange transaction refers to?
a) It is a value of discount on which cash flows are to take place
b) It is the date on which cash flows are to take place
c) It is a value of premium which cash flows are to take place.
d) None of the above
39) Zero base budgeting refers to:
a) Budgeting which has resulted into erosion of capital of the unit
b) Budgeting infusion of fresh capital by way of public issue
c) Budgeting in which figures are developed from scratch every year
d) None of the above
40) Zero coupon bonds refers to
a) Bond issued at deep discount calculated to provide investors within appropriate annual yield but only
at final maturity.
b) Bonds issued at premium calculated to provide investors within appropriate annual yield but only final
maturity.
b) Bonds issued at par calculated to provide Investors within appropriate annual yield with premature
payment clause.
d) None of the above

27

41) Yield to Maturity refers to annualized rate of return In percentage terms on a


fixed income instrument such as bond or debentures taking into account:
a) Coupon rate
b) Frequency of pay outs.
e) Capital gain or loss
d) All of the above
42) Banking services delivered to a customer by means of a computer control system that does not
directly involve usual banks branch is called:
a) Universal Banking
b)Virtual Banking
c) Narrow Banking
c) Brick & Mortar Banking
43) Value at Risk (VaR) refers to:
a) Measurement or an estimate of potential loss in a position of asset or portfolio of assets over a
given level or certainty.
b) Maximum probable market loss over a given period of time horizon expressed as a degree of
certainty
c) All of the above
d) None of the above
44) Which of the following is part of Tire II capital?
a) Undisclosed reserves and cumulative perpetual preference shares
b) Revaluation reserves
c) Investment fluctuation reserves
d) Hybrid debt capital instruments
e) Subordinated debts
f) All of the above
45) As per Basle II ( revised ) framework banks have to adopt Standardised Approach and Basle
indicator Approach for operational risk w.e.f_____ .
a) 31st March 2006
b) 30th December 2006
c) 31st March 2007
d)1st April 2007
46) As per Balse II, under which approach, categories of assets has been classified under
corporate, retail, sovereign and project finance.
a) Stadardises Approach
b) Basic Indicator Approach
c) Internal Rating Based Approach
d) Advanced Measurement Approach
47) The Basle II revised framework consists of three mutually reinforcing pillars. Out of the
following which is not the reinforcing pillar?
a) Minimum capital requirement
b) Supervisory review of the capital adequacy
c) Market discipline
d) None
48)The risk weight for capital adequacy puorposes on houding loan to individual which are fully
secured by mortgage of residential property and investment in mortgage backed securities has
been increased to _____ %.
a) 25
b) 50
c) 75
d) 100
49) In case foreign banks do not achieve priority sector targets, the amount of shortfall in their
priority sector obligations should be placed with ______ for a tenor of ____ years.
a) IDBI
3 YEARS
b) SIDBI
3 YEARS
c) RIDF
3 YEARS
d) SIDBI 5 YEARSe) NABARD 7 YEARS
50) As per the RBI guidelines, to provide relief to the Tsunami affected banks can provide
consumption loan to the affected persons upto Rs. _____ without any collateral security The limit
of consumption loan ma be enhanced to Rs. _____ at the discretion of branch manager depending
on the repaying capacity of the borrower.
a) 2500 ,5000
b) 3000 , 6000
c) 4000 ,8000
d) 5000 , 1000
51) Banks may allow opening of savings account to Tsunami affected with nominal balance of Rs.
_____ so that victims can deposit relief cheques in their account
a) 10
b) 50
c) 100
d) NIL
52) Contributions to the Tsunami relief are covered under Prime Minsters National Relief Fund
( PMNRF) and are eligible for ____% deduction from taxable income under Section 80 G of the
Income Tax Act.
a) 20
b) 40
c) 50
d) 100

28

ANSWERS

Q
1
5
9
13
17
21
25
29
33
37
41
45
49

A
B
C
B
C
B
A
C
B
A
A
D
C
B

Q
2
6
10
14
18
22
16
30
34
38
42
46
50

A
B
B
C
D
A
B
B
C
D
B
B
A
A

Q
3
7
11
15
19
23
27
31
35
39
43
47
51

A
B
D
B
C
C
B
C
A
C
C
B
D
A

Q
4
8
12
16
20
24
28
32
36
40
44
48
52

A
C
A
D
D
B
B
A
B
B
A
F
C
D

29

Multiple choice 06
1) When is the Annual Policy 2005-06 (Credit Policy) issued usually?
a) In January every year.
b) Along with the budget every year.
c) In the month of April every year.
d) In the month of September every year.
2) When would be the mid-term review of the Annual Policy 2005-06 (Credit Policy) undertaken?
a) July every year.
b) October every year.
c) January every year.
d) July, Oct. and January
3) Which one of the following is not the objective of framing Annual Policy 200506 (Credit Policy)?
a) Inflation management.
b) Providing adequate liquidity to the market.
c) Keeping prices and lending rates stable.
d) None of the above.
4) What are the GDP growth projections for 2005-06 in the Annual Policy 2005-06?
a) 7 %
b) 6.5 %
c) 7.5 %
d) 5.6 %
5) What changes have been made in the Reverse Repo Rates in the Annual Policy 2005-06 (Credit
Policy)?
a) Increased from 5 % to 6 %
b) Increased from 4.75 % to 5 %
c) Increased from 5 % to 5.5 %
d) No Change.
6) What changes have been made in the Post Harvest Produce loan scheme under Priority Sector?
a) Limit raised from Rs 5 lakh to Rs 10lakh
b) Limit raised from Rs 3 lakh to Rs 5 lakh
c) Limit raised from Rs 2 lakh to Rs 3 lakh
d) Limit raised from Rs 1 lakh to Rs 2 lakh.
7) What is the objective of setting up a new body' Banking Codes and Standards Board of India'?
a) Complaints against Banks by the Corporate Customers are addressed immediately.
b) Complaints against the Banks by the Small depositors are addressed immediately.
c) Complaints against the Banks by the pensioners are addressed immediately.
e) To ensure that the Banks follow the policies laid down for the customers in letter and spirit.
8) What changes regarding forward contracts have been announced in the policy?
a) Cancellation and rebooking of forward contracts irrespective of the tenor and period has been
permitted to exporters.
b) Cancellation and rebooking of forward contracts irrespective of tenor or amount has been permitted
to importers.
c) Cancellation and rebooking of forward contracts upto $ 1 million and for one year has been permitted
to exporters.
d) Cancellation and rebooking of forward contracts for one year and upto $ 1 million has been
permitted to importers.
9) What is the permissible fresh limit for overseas investments allowed to the companies?
a) 100 % of the Net worth.
b) 200 % of the Net worth.
c) 300 % of the Net worth.
d) Unlimited.

30

10) What is the minimum maturity period of CDs as announced in the Annual Policy 2005-06
(Credit Policy)?
a) One Day
b) Seven days
b) Fourteen Days
d) Thirty Days.
11) What major change has been proposed in the call money market operations in the Annual Policy
2005-06 (Credit Policy) announcement?
a) Call money market is to be a purely inter-bank market from August 6, 2005.
b) Participation in the call money operations by the corporates has been permitted.
c) Call money market has to be made exclusively for corporates.
e) Banks are to be phased out of the call money market by April 2006.
12) What important change in respect of commodity hedging has been announced in the policy?
a) Banks permitted to approve proposals for commodity hedging in the international exchanges from
their corporate customers.
b) Hedging in commodities over global exchanges restricted.
c) Hedging in Gold and Bullion over international exchanges has been permitted.
d) Banks to keep away from hedging activities.
13) What are the new timings for interbank forex operations as per Annual Policy 2005-06 (Credit
Policy)?
a) Upto 2.00 p.m
b) Upto 3.00 p.m
c) Upto 4.00 p.m
d) Upto 5.00 p.m
14) What prominent change has been announced in the Annual Policy 2005-06 (Credit Policy) in
relation to Repo market?
a) Listed Companies have been permitted to participate in Repo auctions.
b) Urban Co-operative Banks have been permitted to participate in Repo auctions.
c) Both of these have been permitted to participate in Repo auctions.
d) Both of these are to be phased out of the Repo market.
15) In order to bring about a transparency in the prices of securities, RBI has proposed
introduction of an Electronic Trading Platform. Which of the following deals are to be covered
under the proposal?
a) Only Repo deals
b) Only Reverse Repo deals.
c) Repo and Reverse Repo deals
d) Repo. Reverse Repo and all other deals.
16) As a measure to cope with the govt. borrowing programme after 2006, which of the following
proposals has been announced by RBI?
a) Structure of PO business will be expanded and certain eligible banks would be permitted to undertake
this business.
b) Ban'ks will be phased out of the PO business portfolio.
c) NBFC will be phased out of the PO business portfolio.
d) NBFC will be brought in the PO business.
17) In order to make call money market, a purely inter-bank market, what steps have been
proposed?
a) NBFCs will be phased out of call/notice money market from Aug 6, 2005.
b) NBFCs except POs, will be phased out of call/notice money market from Aug 6, 2005.
c) POs will be phased out of the call/notice money market.
d) NBFCs and POs both, will be phased out of the call/notice market from Aug 6, 2005.
18) In order to bring more transparency in the deals, which of the following steps has been
proposed?
a) From April 30, 2005, all NOS members are required to report their term money deals on NOS
platform.
b) From April 30, 2006, all NOS members are required to report their term money deals on NOS
platform.
c) From Aug 6, 2005, all NOS members are required to report their term money deals on NOS platform.
d) From April 30, 2005, Banks are required to report their term money deals on NOS platform.

31

19) What is the benchmark for fixing prudential limits on exposure to call/notice money market for
SCBs ?
a) Such limits are to be linked with Tier I capital.
b) Such limits are to be linked with Tier II capital.
c) Such limits are to be linked with Tier I and Tier II capital.
d) Such limits are to be de-linked from capital.
20) Which of the following is one of the requirements to be eligible for declaring dividend by the
banks?
a) Banks should comply with the prevailing RBI guidelines regarding creating adequate provisions for
impairment of assets.
b) Banks should comply with the prevailing RBI guidelines regarding staff retirement benefits.
c) Banks should comply with the prevailing RBI guidelines regarding transfer of profits to statutory
reserves.
d) All the above
21) What new system has been proposed for call/ notice and term money deals?
a) Screen based negotiated quote driven system.
b) Voice based negotiated quote driven system.
c)Voice and Screen, combined, quote driven system.
d) None of these.
22) What is the objective of raising Reverse Repo rates?
a) To absorb excess liquidity from the market.
b) To enable the banks earn more interest on their funds deployed with the RBI.
c) To enable the banks earn more income on their funds deployed in the inter-bank market.
d) To enable the banks, earn more income on their funds deployed in the open market
23) Which of the following is correct about Foreign Trade Policy?
a) It is for a period of 5 years.
b) Besides the main policy, annual supplement is announced every year.
c) Board of Trade is headed by an eminent business person.
d) All the above.
24) What is the export target fixed for the year 2005-06 ?
a) $ 50 billion
b) $ 72 billion
c) $ 92 billion

d) $ 110 billion

25) To ensure the competitiveness of agricultural exports, what decisions have been taken in the
annual supplement to FTP?
a) It has been proposed to abolish cess on all agricultural and plantation exports.
b) Benefits under Vishesh Krishi Upaj Yojana have been extended to Poultry and Dairy exports.
c) Duty credit of 5 per cent of f.o.b value has been allowed.
d) All the above.
26) Which of the following proposals have been made for benefit of manufacturing sector in
respect of export obligations?
a) Balance export obligations has been waived to those exporters who have completed 75% of the
export obligation in half of the tenure.
b) Export obligation has been reduced to 6 times of the duty saved.
d) Obligation period has been extended.
e) All the above.
27) Which of the following facilities has been proposed for EOUs?
a) Procedures of units de-bonding from EOUs have been simplified.
b) EOUs would be allowed to transfer Capital Goods imported under EPCG scheme to other group
companies.
c) EOUs could claim income tax exemption within 12 months.
d) All the above.

32

28) Which one is the focus area of annual supplement to FTP 2004-09?
a) Enhancing competitiveness of the manufacturing sector.
b) Creating export oriented employment opportunities.
c) Facilitating imports for export oriented purposes.
d) All the above.
29) What is the objective of setting up a Inter State Trade Council?
a) To meet the target of doubling the exports by 2009.
b) To increase the involvement of states in exports with greater responsibility.
c) To coordinate inter state efforts for boosting exports.
d) All the above.
30) What was the growth rate of exports in 2004-05?
a) 12%
b) 16 %
c) 24%
31) Under FTP, what is the generating export related employment opportunities 2009?
a) 1,00,000
b) 3,00,000
c) 5,00,000
d) 1,00,00,000
32) In 'order to make agricultural exports more effective and competitive, which of the following
products have been covered under the Vishesh Krishi Upaj Yojana ?
a) Dairy products
b) Poultry products
c) Fishery products
d) Dairy and poultry products.
33) What are new export obligation for imports under EPCG scheme?
a) 6 times of duty saved
b) 8 times of duty saved
c) 5 times of duty saved
d) 4 times of duty saved.
34) For which of the following export sectors, setting up of a separate Export Promotion Council
has been proposed?
a) Marine Products
b) Forestry
c) Services
d) Leather
35) What is the enhanced entitlement for import of samples under Gems and Jewellery export
sector?
a) Rs One lakh
b) Rs Two lakh
c) Rs Three lakh
d) Rs Ten Lakh
36) What is the time for EOUs to claim IT exemption?
a) 6 months
b) 12 months
c) 24 months

d) 36 months

37) Of which of the following sectors, exporters have been permitted imports of capital goods
under EPCG scheme?
a) Marine
b) Fisheries
c) Retail
d) Dairy and Poultry
38) Which of the following benefits have been allowed under 'Served from India Scheme'?
a) Goods imported can be transferred within the group companies.
b) Goods imported can be sold out with prior permission of RBI.
c) Duty free import of goods has been permitted.
d) Except wine any other product can be imported duty free.
39) For which of the following sectors, Bank Guarantee threshold has been reduced?
a) Units situated in Agri Export Zones.
b) A category of manufacturer exporters.
c) Established Service providers.
d) 30% target for additional by March
d) All the above.
40) Which of the following statements is correct about recent changes in policy of declaring
dividends by the Banks?
a) It has been decided to grant general permission to banks to declare dividends with a cap of 40%
payout ratio subject to fulfilment of eligibility criteria.
b) The Banks can not declare dividends over 33.33%
c) The banks require a prior permission from RBI before declaring dividends.
d) The banks require a prior permission from Union Govt before declaring dividends.

33

41) What is the CRAR requirement to be eligible for declaring dividend?


a) It should not be less than 9% for preceding three completed years.
b) It should be at least 9% for preceding two completed years and the accounting year for which
dividend is to be declared
c) It should be at least 7% for preceding three years.
d) It should not be less than 3% for preceding three years.
42) What is the Net NPA requirement to be eligible for declaring dividend?
a) These should be less than 7 %
b) These should be less than 9 %
c) These should be less than 11 %
d) These should be less thal'113%
43) In case the bank does not meet the CRAR requirements, what is the condition to be eligible
for declaring dividend?
a) CRAR of atleast 9% for the accounting year and Net NPA ratio less than 7%
b) CRAR of atleast 7% for the accounting year and Net NPA ratio less than 9%
c) CRAR of atleast 9% for last three completed years and Net NPA ratio less than 7%
d) CRAR of at least 9% for the accounting year for which it proposes to declare the dividend and Net
NPA ratio less than 5%
44) What was the growth rate of imports during 2004-05?
a) 34%
b) 25%
c) 18%
d) 16%

34

ANSWERS
1

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

35

36

Multiple choice 07
1) Bank determines benchmark PLR (BPLR) after taking into consideration certain
factors. Which of the following are considered while fixing BPLR?
a) Actual cost of funds
b) Operating expenses
c) Minimum margin to cover regulatory requirements of provisioning / capital charge.
d) Profit margin.
e) All of the above
2) In a Letter of Credit backed mechanism, the Advising bank's responsibility is to:
a) Inform issuing bank as to whom to issue the letter of credit
b) Advise the buyer the dispatch of documents by the seller
c) Inform the beneficiary / seller about the letter of credit
d) None of the above
3) An account showing outstanding amount of Rs. 25,000/- as on 31-3-2004 has been
classified as doubtful more than 3 years as on 31-3-2004. The realizable value of
security is Rs. 20,000. What will be the provision as on 31-32007?
a) 15,000
b) 17,000
c) 20,000
d) 25,000
4) A notice to acting partner relating to affairs of the firm is treated as the notice to
the firm except in the case of :
a) Fraud committed by that partner b) Fraud consented by that partner
c) Fraud committed by the third person
d) Fraud committed by debtors of the firm' e) a and b above both
5) Net Present Value (NPV) Method of a project refers to :
a) It refers to a method of choosing a project out of several projects whereby they are ranked in
order to the rate of earnings or rate of return.
b) Sum total of the present value of all the cash flows associated with the project by recognizing
time value of money
c) It refers to time required for recouping the total expenditure of the project i.e. the number of
year at which cumulative forecast cash flow equals the initial investments
d) That rate of discount at which the present value of cash inflows is equal to the present value
of cash out flows over the life period of project
6) Stand-By LC may be opened for import of gold on loan basis. The tenor of LC should
be in line with the tenor of the gold loan and the usance period should not exceeds
days:
a)60
b) 90
c) 180
d) 240
7) Depreciation is computed on fixed assets every year. Under which method the
depreciation amount decreases.
a) Straight line method
b) Written Down value method
c) Revaluation method
d) Insurance policy method
8) As per guidelines, RBI has imposed restrictions on exposure to Capital Market, by
way of advances (both fund based and non-fund based) with the overall ceiling of 5%
of the total outstanding advances. Which bank has been allowed higher exposure in
the capital market?
a) ICICI Bank
b) HDFC Bank
c) IDBI
d) State Bank of India
9) For assessing the working capital requirement for units engaged in sugar, tea,
service sector and film production which method is used?
a) Annual projected turnover method
b) Maximum permissible bank finance method
c) Cash budget method
d) All of the above

10) Your bank has sanctioned a loan to a non-farmer for construction of Godown for
storage for agriculture produce in the urban place. The advance will be classified as :
a) Indirect finance to agriculture
b) Direct finance to agriculture
c) Direct finance to SSI
d) Indirect finance to SSI
e) None of the above
11) Ram Lal and Sham Lal are two partners in two different partnership firms namely
M/s Ram Lal and Sham Lal and the other being M/s Sham Lal and Ram La!. The
account of Ram Lal and Sham Lal is showing debit balance and the account of Sham
Lal and Ram Lal is showing credit balance. Can the bank exercise the right of set-off
in the above two firms:
a) Since the partners are the same, the accounts are in the same order and same capacity and
bank can exercise the right of set-off.
b) Since the firms are different, the accounts are not in same order and same capacity and as
such the bank cannot exercise the right of set-off
c) Since partnership firms are dealing In different products the account are not In same order
and same capacity and as such the bank cannot exercise the right of set-off
d) None of the above

37

12) Digital signatures means:


a) Authentication of an electronic record by a subscriber by means of an electronic method or
procedure through asymmetric crypto system.
b) A hand written signature subsequently truncated
c) A digital signature as a personalized thumb prints subsequently truncated / through digital
equipment
d) A signature used for structured financial messaging system
13) IRDBT has been set up at Hyderabad by RBI. The full form of IDRBT is:
a) Institute for Development and Reorganization in Banking Technology.
b) Institute for Development and Research in Banking Technology
c) Institute for Designing and Research in Banking Transactions
d) None of the above
14) Section 17 (2) of the SARFAESI Act 2002, was struck down by Supreme Court in
Mardia Chemicals vs. Union Bank of India. The said section contained:
a) Any borrower aggrieved by the action of secured creditors (bank) can file the appeal but has
to deposit 50% of the amount claim with the DRT before the filing the appeal.
b) To takeover of the management of the business by the bank
c) Empowering the bank to take possession, sell or lease the secured assets
d) Any borrower aggrieved by the action of secured creditors (bank) can file the appeal but has
to deposit 75% of the amount claim with the DRT before filing the appeal.
15) In foreign exchange, the 'day light' position refers to:
a) Open position of the Vostro account
b) Open position during the day wherein sale and purchase transactions of foreign exchange
can be executed
c) Closed position at the end of the day due to sale ahd purchase of foreign exchange to be
carried till next day
d) Open position of the Nostro account
e) None of the above
16) Which is the first bank to return capital to the government?
a) OBC
b) Canara Bank
c) SBI
d) PNB
17) Six Sigma relates to:
a) Statistical analysis to measure and improve companies operational performance by
Identifying, and eliminating defects in processes
b) Total management philosophy designed to increase productivity and reduce costs
c) It is a rigorous methodology focused on eliminating the defects and facilitating data driven
decision making
d) All of the above
18) Internal Rate of Return (IRR) method is a modern technique of capital budgeting.
It refers to:
a) A method of choosing a project out of various projects, whereby the projects are ranked in
order to the rate of earnings or rate of return
b) It refers to time required for recouping the total expenditure of the project i.e. the number of
year at which cumulative forecast cash flow equals the initial investments
c) That rate of discount at which the present value of cash inflows is equal to the present value
of cash outflows over the life period of project.
d) All of the above
e) None of the above
19) An account is showing amount outstanding of Rs. 10,000 as on 31-32004 and has
been classified as doubtful for more than 3 years as on 1-4-2004. The realizable value
of security is 8,000. What will be the total provision as on 313-2006.
a) 4,400
b) 6,500
c) 8,000
d) 10,000
20) Cheque Truncation refers to:
a) A cheque being truncated during the course of clearing cycle either by the clearing house or
by the bank whether paying or receiving payment, immediately on generation of an electronic
image for transmission, substituting the further physical movement of the cheque in writing.
b) Scanning of the cheque and punching the same through MAPIN.
c) Movement of the cheque in electronic form as distinct from physical movement of the
cheque.
e) Truncation of the cheque with or without by biometrics signature and asymmetric crypto
system.
21) Fire Walls refers to:
a) A software which limits access to and from a network. It is designed to protect the intranet
from outside
intrusion.
b) It is an animation technique in which one image is gradually turned into another.
c) It is a software for converting data that is transmitted in one format by the sender into the
data format that can be accepted by the receiver.

38

d) It is a software to prevent communication link between two otherwise distinct units.


22) Morphing refers to :
a) A software which limits access to and from a network. It is designed to protect the intranet
from out side intrusion.
b) It is an animation technique in which one image is gradually turned into another.
c) It is a software for converting data that is transmitted in one format by the sender into the
data format that can be accepted by the receiver.
e) It is a software to prevent communication link between two otherwise distinct units.
23) An account is showing balance outstanding of Rs. 4 lac with CICGC cover of 50%
and the value of security (excluding worth of borrower / guarantor) Rs. 1.50 lacs.
The account has remained doubtful for more than 3 years as on 31-3-2004. What will
be the total provision as on 31-3-20067?
a) 2,00,000
b) 2,15,000
c) 2, 37,500
d) 2,50,000
24) If through the partnership deed minor is made full fledged partner what will be
the legal consequence of the same.
a) All will become partners except minor b) Firm will become illegal entity
c) Minor will not be liable for any losses
d) In case of insolvency minor will not be liable
f) The whole partnership deed will become invalid.
25) Synergy refers to:
a) Gains from combining two or more units.
b) Gain which is similar to 2 + 2 = 5
c) Enhanced earnings of the combined entity is expected to exceed the sum of the earnings of
the
combining entities.
d) All of the above
e) None of the above
26) For a project having higher fixed cost, the break-even point will be:
a) Higher or lower depending on the cash inflows and outflows.
b)Higher
d) Lower
d) None of the above
27) If domestic resource cost (DRC) of a project is substantially higher than the
exchange rate, it implies that:
a) The unit is financially viable
b) The unit is financially not viable
c) The unit is economically viable
d) The unit is economically not viable
28) A hire-purchase transaction implies ________:
a) Contract of bailment.
c) Contract of bailment followed by contract of sale

b)Contract of sale
d)None of the above

29) In a situation of anticipated deprecation of home currency vis-a-vis dollar, an


importer who has invoiced the consignment in dollar should:
a) Go in for forward contract
b) Not go in for forward contract
c) Should cancel forward contract taken earlier
d) None of the above
30) In an open-interest rate regime:
a) The rate on cash credit and loan should be the same
b) The cash credit should be costlier than the loan facility.
c) The loan facility should be costlier than the cash credit
b) None of the above is true.
31) In a bank with positive gap, i.e. where rate sensitive assets are more than rate
sensitive liabilities, increase in market interest rates will result in:
a) Increase in market value of equity
b)Decrease in market value of
equity
c) Increase in net-interest margin
d) Decrease in net interest margin
32) If the break 'even point of a unit in terms of capacity utilization is 60% during the
second year and the unit is expected to operate at a capacity of 54% during the same
year, the unit during the relevant year is likely to:
a) Incur loss
b) Earns Profit
c) Neither profit nor loss
d) It will depend on cash inflows and outflows.
33) The larger the difference between debtor-turnover ratio (collection period) and
creditor-turnover ratio (payment period) all other factors remaining constant:
a) Higher will be working capital requirement
b) Lower will be working capital
requirement
c) Same will be the working capital requirement
d) None of the above is true.

39

34) When in Letter of Credit the confirming bank confirms the credit, it:
a) Does not take any liability
b) Undertakes to make timely delivery of the documents and bills to the buyer or his bank
c) Undertakesto negotiates the documents subject to the condition that the documents are as
per the terms and conditions of the LC
d) None of the above
35) For a healthy balance sheet:
a) Long-term sources of funds should be more than long-term uses
b) Long-term sources of funds should be less than long-term uses
c) Short-term sources of funds should be more than short-term uses
d) Long -term sources of funds should be exactly more than long-term uses
36) The difference between total current assets and other current liabilities (current
liabilities other than bank borrowings) in the parlance of Tandon Committee terms is
known as:
a) Net working capital`
b) Working Capital Gap
c) Gross working capital
d) None of the above
37) The objective(s) or which a company has been formed, is / are found (in terms of
Indian Company in _:
a) Articles of Association
b) Certificate of Incorporation
c) Certificate to commence business
d) None of the above
38) In case current ratio and acid-test ratio (quick ratio) of a firm are 1.5:1 and 0.8:1
respectively, it implies:
a) The level of inventory in the firm is high
b) The firm has a high concentration of debtors
c) The firm is suffering a loss
d) None of the above
39) The law relating to payment of cheques and protection to a banker is contained in
the:
a) Indian Contract Act
b) Indian Companies Act
c) Banking Regulation Act
d) None of the above
40) An account showing outstanding amount of Rs. 25,000/- as on 31-3-2004 has been
classified as doubtful more than 3 years as on 31-3-2004. The realizable value of
security is Rs. 20,000. What will be the provision as on 31-32006?
a) 15,000
b) 17,000
c) 20,000
d) 25,000
41) When the Board of a banking company is ordered to be reconstituted, directors
will be retired for the purpose of reconstitution:
a)By rotation
b) By lots
c)By majority
d) None of these
42) The payment of penalty under Section 24 of the Banking Regulation Act can be
enforced on an application made before the:
a) Reserve Bank of India
b) Government of India
c) Principal Civil Court
d) High Court
43) Risk Focused Internal Audit (RFIA) covers borrowal accounts with an exposure of
less than Rs.__ crore.
a) 1
b) 2
c) 5
d) 7
e) 9
44) Nominated agencies / approved bank can import gold on loan basis for lending
to exporters of jewellery. EOUs and units in SEZ who are in the gems and jewellery
sector can import gold on loan basis for manufacturing and export of jewellery on
their own account only for a maximum tenor of gold loan being fixed at _days:
a) 90
b) 180
c) 240
d) 360
45) As per NPA guidelines an agriculture advance will be classified as NPA, when it is
satisfied certain criteria. Which of the following parameter are considered for
classifying an agriculture advance as NPA?
a) A loan granted for short duration crops will be treated as NPA, if the instalment of principal
or interest
thereon remains overdue for two crops seasons.
b) A loan granted for long duration crops will be treated as NPA if the instalment of principal or
interest
thereon remains overdue for one crop season.
c) Long duration crops would be crop season longer than one year and crops, which are not
long duration,
would be treated as short duration crops.
d) a and b above
e) All of the above
46) Societies, Trusts desiring to take donation from abroad have to take prior
permission from:

40

a) Ministry of Home Affairs


c) DGFT

b) Ministry of Finance
d) RBI

47) As per the Committee on recommendations of Procedures and Performance Audit


on Public Services,(CAPAPS) RBI has decided that power of attorney holder in NRE I
FCNR account are permitted to remit funds abroad. For which of the following
purpose remittance has been allowed:
a) For remittance funds by way of donation
b) For remittance funds by way of gifts
c) For remittance funds only to the account holders
d) For purchase of property abroad,
e) For opening and maintenance of deposit account abroad.
48) Under the roadmap for presence of foreign banks in India, the aggregate foreign
investment from all sources has been allowed upto a maximum of _% of the paid up
capital while the resident Indian holding of capital has to be at least _%:
a) 49, 51
b) 50, 50
c)60,40
d) 74, 26
49) RBI has advised that if the extent of re-issuable notes in the soiled remittance is
found to be more than _% the entire remittance is liable to the concerned currency
chest and the entire amount to be debited to the bank and the cost would be
recovered.
a) 2%
b) 5%
c) 8%
d) 10%
50) In foreign exchange the 'over night' position refers to:
a) Closed position at the end of the day which is left after squaring - off, to avoid exchange
fluctuation risk.
b) Open position during any period of the day due to sale and purchase of foreign exchange
c) Squared position at the end of the day to avoid exchange fluctuation risk
d) Details of derivatives and other hedging instruments.
e) None of the above
51) It is the duty of every partner to indemnify the firm for loss caused by:
a) Mistake
b)
c) Concealment of fact
d) None

Fraud

ANSWERS
1
5
9
13
17
21
25
29
33
37
41
45
49

E
B
C
B
C
A
D
A
A
D
B
E
D

2
6
10
14
18
22
26
30
34
38
42
46
50

C
B
A
D
C
B
B
B
C
A
C
A
A

3
7
11
15
19
3
27
31
35
39
43
47
51

D
B
A
B
D
C
D
C
A
D
C
C
B

4
8
12
16
20
24
28
32
36
40
44
48

E
B
A
D
A
E
C
A
B
C
C
D

41

For a permanent storage of data in the computer - Hard Disk.


Contract to perform the promise of the debtor is related to: Indian Contract Act
The benchmark current ratio is - 1.33:1 .
As per RBI guidelines on Income Recognition, Asset Classification and Provisioning accounts
are
classified under: Four heads.
Banks have to report the details of unclaimed deposit to RBI under:Section 26 of Banking
Regulation Act.
Interest rates on deposits has been deregulated except: Saving Bank Deposit.
Dr. A.S. Ganguly Committee on flow of credit to SSI sector has recommended the definition
for medium scale enterprises with investment in plant and machinery upto : Rs. 10
crore.
As per RBI guidelines on Income Recognition, Asset Classification and Provisioning, NPA
accounts are classified under: Three heads.
Banking Ombudsman can give award upto: Rs. 10 lacs.
The maximum value of Laghu Udhami Card is : Rs. 10 lacs.
Post harvest credit facility as direct finance to agriculture under priority
sector is : Rs. 10
lacs
European Bank headquarter is situated in : London
Plastic card embedded with computer chip or microprocessor is known as :Smart Card.
Paper Gold refers to: Special Drawing Rights.
As per CVC, the preventive vigilance committee has to be formed in branches with:
Staff strength of 20 and above.
NPA norms for consortium accounts:Each bank will classify the account on the basis of
its
record of recovery.

Deferred payment guarantee is a:Financial Guarantee.

The committee set up to study legal aspects of bank frauds: Dr. N.L. Mitra Committee.

Guarantee, which covers series of transaction, is known as: Continuing Guarantee.

Networking system required in an organisation having office in one building: Local Area
Networking (LAN)

Repayment period for education loan: 5 to 7 years


Pari-Passu charge implies: Charge on the security on pro-rata basis i.e. in the ratio of
their
outstanding.

Risk arising out of failure of internal process is called: Operational Risk.

Under Copra, district forum can entertain claims upto : Rs. 20 lacs.

Hybrid instruments are shown in : TierII Capital.

42