JAIIB/Diploma in Banking

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JAIIB/Diploma in Banking

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Title: JAIIB/Diploma in Banking

1
JAIIB/Diploma in Banking FinanceLEGAL
REGULATORY ASPECTS OF BANKING

MODULES C D

2
01.. Identify which one is correct.

a.. A contract of guarantee has two persons
b.. A contract of indemnity has two persons.
c.. A minor can take an education loan as a
borrower
d.. A pledge in respect of company advance has to
be registered with ROC.

3
02..The award of a Banking Ombudsman will be
reviewed by

a.. The Executive Director of RBI
b.. The Deputy Governor in charge of Rural
Planning and Credit Department of RBI.
c.. The Finance Secretary
d.. The Banking Ombudsman himself

4
03..Which is not correct (Banking Ombudsman)

a.. The maximum amount the Banking
Ombudsman can award as compensation is Rs.10
lacs.
b.. Limitation period for filing of the review
application is one month.
c.. Failure to honor guarantee does not come
under its purview .
d.. None of the above

04..Means an agreement reached by the parties
either by conciliation or mediation under the
scheme (Banking Ombudsman)
a.. Mutual agreement
b.. Mutual Consent
c.. Reconciliation
d.. None of the above

05..Which one is appropriate (Banking Ombudsman)
a.. A complaint can be lodged by a bank on
another bank
b.. Complaint can neither be given in writing
(manually) nor electronic means
c.. RRB is not within the purview of this scheme
d.. Central Government is the authority to
appoint a Banking Ombudsman

06.. A complaint alleging deficiency in banking
service may be filed with the Banking Ombudsman
having the jurisdiction
a.. Issue of drafts to customers and others
b.. Inordinate delay in collection of bills
c.. Both a b
d.. Only b

07..No complaint to the Banking Ombudsman shall
lie unless the complainant had before making a
complaint to the Banking Ombudsman made a written
representation to the bank and either the bank
had rejected the complaint or the complainant had
not received any reply within a period of one
month after the bank concerned received his
representation or the complainant is not
satisfied with the reply given to him by the
bank.

08.. The complaint is made not later than one
year after the cause of action has arisen.
..The complaint is not in respect of the subject
matter, which was settled through the office of
the Banking Ombudsman in any previous proceedings

09.. If a complaint is not settled by agreement
within a period of one month from the date of
receipt of the complaint or such further period
as considered by Banking Ombudsman, he can pass
an award.
.. He shall be guided by the evidence placed
before him, the principles of law and practice,
directions, instructions and guidelines issued by
RBI from time to time to pass the necessary
award.

10..A person has applied for a loan . The bank
has not sanctioned the loan since the bank felt
the person was not eligible. The person
a.. Can approach the bank once again
b.. Cannot take up the matter with the bank
c.. Can refer the matter to Banking Ombudsman
d.. Can request Banking Ombudsman to instruct the
bank to sanction the loan

11.. A bank not agreeing to accept the Award
passed under the Banking Ombudsman scheme may
file a review application before the Review
Authority within one month from the date of
receiving copy of the Award. Banks application
to be approved by the banks Chairman or in his
absence by the Managing Director or any other
officer of equal rank.

12..Reserve Bank of India appoint one or more
persons as Banking Ombudsman for a period not
a.. Exceeding 4 years at a time
b.. Exceeding 3 years at a time
c.. Exceeding 2 years at a time
d.. Exceeding 1 year at a time

13.. Banking Ombudsman ( identify the odd one)
a.. Non-acceptance of applications for loans
without furnishing valid reasons to the
applicant
b.. Refusal to accept taxes, as required by the
Government
c.. Acceptance of small denomination coins
tendered for any purpose
d.. Non-adherence to the fair practices code as
adopted by the bank

14..With regard to complaints relating to credit
card operations, the banking ombudsman shall
take into consideration
a.. The loss of complainants time
b.. Expenses incurred
c.. Financial loss, harassment and mental anguish
suffered
d.. All of these

15.. A copy of the award need not be sent to the
complainant under the Banking Ombudsman Scheme.
a.. True
b.. False
c.. It has to be sent not only to the complainant
but also to the bank named in the complaint
d.. It is the discretion of the Banking
Ombudsman and not mandatory to send the copies of
the award

16.. The banks covered by the Scheme of Banking
Ombudsman has to appoint specified officer at
their Regional / Zonal Offices.
a.. Not required
b.. Not essential
c.. Not specified officer
d.. None

17.. A complaint has been filed against a Bank
(Banking Ombudsman Scheme). The Banking ombudsman
directed the bank concerned to furnish necessary
information. Then it is to be carried out by
a.. Designated officer of the bank for this
purpose
b.. Nodal Officer of the bank
c.. Chief Manager or the person equivalent to his
position in the Regional / Zonal Office of the
bank concerned
d.. None of them

18.. Ashis Kumar is an Advocate. He is not
satisfied with the service of the bank which has
delayed his collection of cheque. He has taken up
the matter with the bank concerned. Since he has
not got a proper response, he has decided to
approach Banking Ombudsman.
a.. He will not be entitled as per the scheme
b.. He can very well take up the matter
c.. There is bar for the advocate to involve
themselves in approaching Banking Ombudsman
d.. Asish Kumar has the option to request his
friend Advocate to represent him

19.. It has been observed by a customer while
going though the entries in the account (pass
book), that the bank has debited wrongly his
account. On account of that the customer has to
suffer.
He wish to refer the matter to Banking
Ombudsman.
a.. He can, provided he takes up the matter first
with the bank concerned in writing
b.. Considering the seriousness of the matter
there is no need to refer the matter to the bank
concerned that too in writing
c.. Straight away take up the matter with Banking
Ombudsman and intimate the Bank concerned
d.. Straight away take up the matter with Banking
Ombudsman and there is no need to intimate the
bank, since Banking Ombudsman is part of RBI
which is always considered superior.

20.. Limitation period for filing of the review
application against the award of the Banking
Ombudsman is
a.. 90 days
b.. Not 90 days
c.. Not available since review is beyond the
purview of the scheme
d.. None

21..The Banking Ombudsman
a.. May reject a complaint, at any stage
b.. Can reject a complaint not before 45 days
of receipt of such complaint
c.. Can not reject a complaint
d.. Has to pass an order in respect of any
complaint made to him and does not have the
powers to reject

22..Thorat is the agent of a bank who has assured
that the bank would extend certain specific
services and succeeded in giving a credit card to
one Thomas. Later on the bank has not provided
the services assured. Thomas can refer the matter
a.. Only to the bank concerned
b.. To the Banking Ombudsman after following the
steps required in the scheme
c.. Thomas cannot refer the matter to Banking
Ombudsman.
d.. Such complaints are beyond the purview of the
scheme

23..Banking Ombudsman - A bank wish to file an
appeal before the Appellate Authority. The same
should be with the previous sanction of the
a.. Board of Directors of the Bank
b.. Nodal Officer
c.. Designated Official
d.. None of these

24..A compensation claimed is around Rs.16 lacs
in a complaint filed against the bank. Then the
matter
a.. Can also be brought under the Banking
Ombudsman Scheme
b.. Can be brought under the Banking Ombudsman
Scheme for compensation up to Rs.10 lacs and for
the balance to be taken up with the competent
court
c.. Can not be brought under the Banking
Ombudsman scheme
d.. Can be brought under the Banking Ombudsman
Scheme as a special case based on merits

25..SARFAESI Act 2002, extends to whole of India
including the State of Jammu Kashmir. Also
applicable to housing finance companies.
.. The act is effective from 21.06.2002. It also
covers the earlier loans which were outstanding.

26.. SARFAESI Act has
a.. Prospective effect
b.. Retrospective application
c.. Effect from 21st June 2002 only
d.. Effect from 21st June 2002 cases taken up on
that day and there after only

27..Based on the observation of the Supreme
Court in the Mardia Chemicals vs Union of India
case, the Government of India issued notification
amending the provisions of the SARFAESI Act.
The amendment stipulates payment of 50 amount
instead of 75 as originally enacted. (When
appealed)

28..Bank Z had advanced on the collateral
security of the third party deposit receipt of
N, to L. The bank has also obtained a personal
guarantee of D to secure the loan. For recovery,
Z can use the provisions of SARFAESI Act.
a.. Allowed
b.. Not allowed
c.. Since pledge and only personal securities the
provisions of the Act not applicable
d.. There may not be any need since the Fixed
deposit can be adjusted for the loan outstanding.
Additionally personal guarantee is also available
for the bank

29.. The provisions of the SARFAESI Act will
protect the interest of the secured creditor
(lending banker) irrespective of
a.. Defective Documents and any type of charge
on the security
b.. Non availability of Limitation on the
documents
c.. Both a b
d.. None of the above

30.. For a mortgaged property to sell the same
permission of the competent court essential. As
per provisions of SARFAESI Act
a.. The same continues
b.. The same is not continuing
c.. Since there is no intervention of court
contemplated under this Act, even for mortgaged
property, the secured creditor can sell the
property without courts permission
d.. Under the Act, the mortgaged property cannot
be considered at all.

31.. ABF Bank has advanced to a partnership firm.
The security include Pledge of Gold ornaments of
one of the partners, Hypothecation of vehicle and
stock and Pledge of Fixed deposit of the firm.
The borrowing has not become NPA though there is
a default.
a.. Provisions of SARFAESI Act not applicable
b.. Provisions of SARFAESI Act applicable
c.. Provisions of SARFAESI Act not applicable for
vehicle and stock
d.. Provisions of SARFAESI Act applicable for
vehicle and stock but not for pledge of gold
ornaments / Fixed deposit

32.. Which one is not associated with SARFAESI
Act.
a.. Obligor
b.. Hypothecation
c.. Security Receipt
d.. None of the above

33..Which one is not coming under the purview of
SARFAESI Act.
a.. Moveable property under the possession of the
secured creditor
b.. Moveable assets under the possession of
the debtor who has offered the security to the
secured creditor
c.. Immoveable assets not under the possession
of the secured creditor
d.. Immoveable assets with the mortgagor

34..Identify the odd one (Securitization matter)
a.. Hypothecation of stock
b.. Mortgage of Machinery
c.. Personal guarantee of the Managing Director
d.. Goods in transit offered as security

35..Appellate Tribunal is constituted by
a.. Central Government
b.. As per the provisions of the appropriate Act
c.. As per the provisions of the Recovery of
Debts due to Bank and Financial Institutions
Act.1993
d.. Both a c

36..Take over of loans or advances from the Bank
or Financial Institution for the purpose of
recovery is known as Asset reconstruction.
. The word Board is used in the Act refers to
the Securities and Exchange Board of India (SEBI)

37.. The SARFAESI Act is applicable to
a.. Regional Rural Banks
b.. Nationalized Banks Co-operative banks
c.. State Bank of India and their Associate banks
d.. Both b c and not to a

38..Acquisition of any right or interest, of any
bank or financial institution, in any financial
assistance, by any securitization company or
reconstruction company, for the purpose of
realization of such financial assistance is
known as
a.. Asset Reconstruction
b.. Securitization
c.. Both a and b
d.. Reconstruction

39.. As per the provisions of the SARFAESI Act, a
borrower is one
a.. Who has obtained finance from a banker
b.. Who has given the guarantee for the person
(a)
c.. Who has created any mortgage in favor of the
bank for obtaining finance
d.. All of these

40.. SARFAESI Act applicable in respect of
a.. Temporary Over draft in a current account
b.. Overdraft on the security of shares
c.. Both a b
d.. Work in progress taken as security

41..Default should have been committed by the
debtor.
. The borrowers account should have been
classified as NPA as per the guidelines of RBI.
. The Act is applicable only to a Secured
creditor and not to an unsecured creditor

42.. Bank U has lent to A a sum of Rs.5 lacs on
the hypothecation of a van. Identify the
Originator as per the provisions of the SARFAESI
Act.
a.. Borrower A
b.. Bank U
c.. Neither A nor U
d.. Debtor A

43.. He is the owner of a financial asset that is
acquired by a securitization or reconstruction
company for the purpose of securitization or
asset reconstruction.
a.. Originator
b.. Lending Bank
c.. Lending Financial Institution
d.. All the three

44.. Obligor is a person liable to pay to the
lender (originator).
As per the contract terms and conditions or
otherwise.
He has to discharge any obligation in respect
of a financial asset whether existing, future,
conditional or contingent or and includes a
borrower.

45.. Identify the Obligor in respect of a loan
given to one N by bank J. The security offered by
N include his gold ornaments, two wheeler and
collateral security of his flat.
a.. N
b.. J
c.. N J
d.. None

46.. Under the provisions of the Act (SARFAESI)
which one is not considered as Property
a.. Future Receivables
b.. Know how
c.. Land
d.. None of these

47.. Qualified Institutional Buyer (odd one)
a.. Bank
b.. Insurance company
c.. A CEO of a leading MNC
d.. An Asset Management Company

48..Which one is not pertaining to Hypothecation.
a.. A charge in or upon any movable property
b.. Right in favour of the creditor
c.. Possession also with the lender
d.. Retaining the ownership with the owner of the
property

49.. The securitization company or reconstruction
Company to raise funds from qualified
institutional buyers by formulating schemes.
.Separate scheme wise accounts to be
Maintained.
.The Scheme invites subscription to security
receipts proposed to be issued by such company
under the scheme.

50.. Bank R is the secured creditor and W is
the borrower who happens to be the defaulter
.The branch head is C. W has given his land as
security which is under his possession. The
outstanding liability is shown under NPA.
Identify the Obligor Originator.
a.. R and C respectively
b.. W and R respectively
c.. W and C respectively
d.. R and W respectively

51.. Who will receive the Security receipt from
whom.? (SARFAESI Act)
a.. Secured Creditor from Principal Debtor
b.. Institutional Investor from Securitization
company.
c.. Securitization company from Institutional
investor
d.. Secured Creditor from Reconstruction company

52..Identify the regulatory authority for all
securitization and reconstruction companies.
a.. SEBI
b.. RBI
c.. Company Law Board
d.. IRDA

53..GNMV, the secured creditor. After completing
the formalities / procedures (as per SARFAESI
ACT) the assets mortgaged by RJJH were purchased
by a Securitization and Reconstruction company
called JFI for Rs.30 lacs. Then
a.. JFI will issue a security receipt to GNMV
b.. GNMV will receive debentures from RJJH
c.. RJJH will issue security receipts to JFI.
d.. GNMV will get debentures from JFI

54..In Mardia Chemicals vs Union of India
Supreme Court as declared that
A.. SARFAESI Act is Constitutionally valid
B.. Except a part of Section 17(2)
C.. To Deposit 75 for appeal, the Apex court
was not in favor
D.. All the above

55.. A reconstruction company
a.. is engaged as property developer
b.. is formed for the purpose of asset
reconstruction
c.. is registered with SEBI
d.. is not registered under the Companies Act

56..The Government of India has
a.. issued an order
b.. issued a notification amending the Sec17(2)
of SARFAESI Act.
c.. Instead of 75, the borrower filing an appeal
has to deposit 50
d.. Both B C are appropriate

57..A Mutual fund, an Asset Management
Company and a Foreign Institutional Investor
would like to invest in Securitization and
Reconstruction company as as qualified
institutional buyers. Then they will have to
a.. Register with SEBI
b.. Register with SEBI is not a must
c.. Register with SEBI is a must
d.. Register with SEBI when directed only

58..J F D a Securitization and reconstruction
company acquired financial asset from PNM, a
secured creditor. In view of the same, JFD would
become
a.. Purchaser
b.. Seller
c.. Owner
d.. None of these

59..The Securitization Company not only to be
registered under the Companies Act but also needs
registration from RBI as per
A.. RBI Act
B.. Companies Act
C.. SARFAESI Act
D.. SEBI Act

60.. A person who is holding 15 of the paid up
equity capital of the reconstruction company is
known as
a.. Sponsor
b.. Obligor
c.. Originator
d.. Institutional investor

61.. Identify the beneficiaries of the trusts
formed by Securitization company. ICE is the
Securitization company. GZH is the Secured
creditor. BDE is the Institutional investor.
a.. GZY
b.. BDE
c.. ICE
d.. None of them

62.. A security receipt is
A.. Similar to Banks Term Deposit receipt
B.. Issued to Securitization Company
C.. Issued by Securitization Company
D.. Issued to a Secured Creditor and also to an
Institutional Investor

63... The Securitization company can acquire
financial asset without execution of any deed of
assignment or transfer in its favor by the
original creditor.
a.. True
b.. False
c.. Without agreement it cannot be legally valid
d.. Deed of Assignment is a must.

64.. Debenture as per the provision of SARFAESI
a.. Appears on the left hand side of the balance
sheet
b.. It is shown as liability representing
commitment
c.. It is for payment of consideration to be
paid to the bank for acquisition of financial
asset from it
d.. It represents the money borrowed.

65..SARFAESI Act
a.. Security Receipt issued by Securitization
Company
b.. Security Receipt is not issued to a Secured
Creditor
c.. Security Receipt is issued to Institutional
Investors who are also called Qualified
Institutional Buyers
d.. All the above

66.. Identify the incorrect one (Reconstruction
Company)
a.. It has to obtain registration certificate
from RBI.
b.. It has to have minimum capital of Rs.100
crores at the time of registration
c.. It can formulate separate schemes for
acquisition of financial assets
d.. It has to disclose the risk factors to the
investors.

67.. The Security receipt (not having any
interest or right and so on in immovable
property) issued to the holder by the
Securitization company attract registration as
per the Registration Act,1908.
a.. True
b.. False
c.. Registration compulsory for such receipts.
d.. None of the above

68..As per the provisions of the SARFAESI Act,
the charge against property to be registered with
a.. Registrar of Companies
b.. SEBI
c.. RBI
d.. None

69.. A Limited Company has been sanctioned a
Bills limit and the outstanding liability has
been classified as NPA. Then the provisions of
SARFAESI Act includes
a.. Book debts
b.. Assignment of Book debts
c.. Hypothecation of Book debts
d.. None

70..Bank G E H has advanced to SSS a sum of
Rs.2.75 lacs. It has been classified as NPA. OPQ
a Securitization company has shown interest to
take over the assets offered by SSS as security
to Bank G E H. Identify the Secured Creditor, Who
will issue Debenture to whom and the Debtor.
a.. G E H , OPQ to G E H and SSS
b.. G E H , OPQ to SSS and G E H
c.. G E H , G E H to OPQ and SSS
d.. G E H , SSS to OPQ and G E H

71.. Whenever any lender takes any security from
the borrower, the lender gets interest in that
security. As per the SARFAESI Act this is known
as
a.. Secured interest
b.. Charged interest
c.. Secured creditors interest
d.. None of these

72..ABC and co has not paid the debt. Declared
NPA. Securitization process held. The secured
creditor JIT has handed over the security to the
securitization company STB. Then ABC paid some
amount.
a.. JIT can use the funds so got
b.. JIT has to hand over the same to ABC
c.. JIT has to hand over to STB
d.. None

73..This evidences the purchasers undivided
right, title and interest in the security.
a.. Deposit Receipt
b.. Security Receipt
c.. Both a b
d.. Only a

74.. A securitization company is contemplating to
change its name.
a.. They can do so by informing the appropriate
authority
b.. Seek approval from SEBI after the change
c.. Needs prior approval from the Company Law
Board
d.. None

75..Securitization or reconstruction companies
a.. Do invest their own funds to acquire assets
b.. Do not invest their own funds to acquire
assets
c.. Use the money invested on risk assessment and
act on careful considerations for asset
acquisition decision.
d.. Excepting a other two are appropriate

76..Cancellation of Certificate of Registration
for a Securitization company possible (odd one)
a.. The company ceases to receive or hold any
investment from a qualified institutional buyer.
b.. The company continues to receive or hold any
investment from a qualified institutional buyer.
c.. The company fails to comply with any of the
directions issued by the Reserve Bank
d.. The company fails to obtain prior approval
of Reserve Bank of India for change in management

77..The securitization or reconstruction company
whose registration is cancelled can prefer an
appeal within 45 days from the date of
communication of order, to Reserve Bank of India
Governor . The company is required to be given a
hearing before rejecting the appeal.
a.. Appropriate
b.. Not 45 days but 30 days and Not RBI but
Central Government
c.. Only change is 30 days instead of 45 days
d.. Not RBI but Central Government

78..The securitization transaction involves
a.. Acquisition of financial assets and undivided
interest therein
b.. Issue of security receipts in favor of the
investors for the purpose of raising money from
investors.
c.. Both a and b
d.. None

79..This, for the payment of consideration, is to
be paid to the bank or the financial institution
for the acquisition of financial asset from it.
a.. Debenture
b.. Security Receipt
c.. Security Deposit
d.. Security Interest

80..Under the Securitization process, debenture
issued period not to exceed
a.. 5 years
b.. 6 years
c.. 7 years
d.. 9 years

81.. Under the Securitization process the
debenture
a.. To carry interest which cannot be less than
one and half percent above the Bank Rate as on
the date of issue of the debentures
b.. To carry interest which cannot be more than
one and half percent above the Bank Rate as on
the date of issue of the debentures
c.. To carry interest which should be equal to
the Bank Rate as on the date of issue of the
debentures
d.. Not to carry any interest

82.. XZY bank has decided to dispose off the
security to a Securitization company BDG for
consideration. The debtor being a Limited company
(RTU(P) Ltd.,). XZY has decided to give a notice
to the debtor.
a.. XZY to give notice to ROC as well
b.. XZY need not give any notice to ROC
c.. Giving notice is not compulsory
d.. Giving notice is optional and hence there is
no need for XZY to give a notice to ROC

83..If there is a dispute among the bank,
securitization company and the qualified
institutional buyer, then the same to be settled
by conciliation or arbitration as provided in
the
a.. Reserve Bank of India Act
b.. SARFAESI Act
c.. Arbitration and Conciliation Act
d.. Both a c

84..An institutional investor MNG wish to
transfer the security receipt (Which has an
undivided interest in the financial asset) to
MVN.
a.. Registration under the Registration Act
required.
b.. Registration optional
c.. Registration need not be insisted.
d.. Registration of Security receipts does not
arise.

85..If the cause of default in a unit is any
mismanagement or lack of expertise on the part of
the existing management, the securitization or
reconstruction company has the powers to take
over the management or change the management.
This power can be exercised even when there is
no default

86.. The power given to the secured creditor,
as creditor has overriding effect over the
provisions related to mortgage in
a.. The Registration Act
b.. The Contract Act
c.. The SARFAESI Act
d.. The Transfer of Property Act

87..The Securitization company can set up
separate trusts scheme wise and act trustees for
such schemes as provided in the Securitization
Companies and Reconstruction Companies (Reserve
Bank) Guidelines and Directions,2003. The
beneficiaries of such trusts are
a.. Debenture holders
b.. Lending bankers
c.. Debtors
d.. None of them

88...Acquisition of financial asset from the
originator, by Securitization or reconstruction
company is known as
a.. Reconstruction
b.. Securitization
c.. Transfer of Assets
d.. Purchasing

89.. Securitization company is a company
registered under the Companies Act,1956 for the
purpose of securitization. It also needs
registration from RBI under the provisions of
SARFAESI Act.
.. Security agreement includes an agreement,
instrument or any other document or arrangement
under which security interest is created in
favor of secured creditor

90.. The minimum capital requirement for
securitization or reconstruction company, at the
time of registration is
a.. Rs. 30 Crore
b.. Rs. 75 Crore
c.. Rs.100 Crore
d.. None of the above

91..TT has created a mortgage by way of deposit
of title deeds with the secured creditor bank
JJ. This represents
a.. Security Receipt
b.. Secured Debenture
c.. Security Agreement
d.. Secured Debt

92..Secured debt means a debt which is secured by
any security interest.
..Secured Asset means the property on which
security interest is created.
.. The powers given by SARFAESI Act for
enforcement of securities are against secured
assets only

93..Security Receipt is issued
a.. To Debtor by the Secured Creditor
b.. To Qualified Institutional buyer by the
Reconstruction Company
c.. To Securitization Company by the Secured
Creditor
d...To Securitization company by the
Reconstruction company

94. .Which one is appropriate. (SARFAESI)
a.. RJS is the institutional investor and will
receive Bonds in lieu of Debentures
b.. TRK is the Securitization company will issue
Security receipt as well as Debentures
c.. GU is the Secured creditor and will receive
security receipt from the secured debtor
d.. JNS a borrower of the bank will handover
Debenture in lieu of payment towards outstanding

95.. Depending on the nature of security asset
RBI has the powers to specify different amounts
of owned funds for different companies.
..The company can formulate separate schemes for
acquisition of financial asset.
.. The securitization or reconstruction company
can act as trustees for such trusts and manage
the assets held in trust.

96..STV a Securitization and Reconstruction
company wish to have funds by way of deposits.
a.. They can approach public for the same.
b.. Cannot raise funds by way of deposits
c.. If need arises with the permission of RBI
d.. They can raise funds by way of Deposits on
Private placement basis only.

97..The Securitization or reconstruction company
can acquire financial asset without execution of
any deed of assignment or transfer in its favor
by the concerned bank or the financial
institution.
.. Assignment is complete on the acquiring
company issuing debenture or bond and
incorporating therein the terms and conditions of
acquisition.

98.. As per RBI guidelines,
a.. an acquisition of funded assets should not
include take over of outstanding
commitments,
if any, of any bank or financial institution
to lend
further.
b.. terms of acquisition of security interest in
non-
fund based transactions should provide for
the
relative commitments to continue with bank
or
financial institute till demand for further
funding
arises

100

99..Which one is correct (Securitization matter)
a.. Security receipt is not in favor of investor
b.. Security receipt is issued with permission
from
Company Law Board
c.. Security receipt can be transferred by the
secured creditor
d.. Security receipt is issued in favor of the
institutional investor

101

100..Bank F decides that the financial asset now
be acquired by the securitization company VR. The
Asset was given as security by L , an individual.
In such an event, a notice of such development
to be given to
a.. L and such notice is not compulsory.
b.. Such notice is not optional
c.. The Obligor, which is compulsory as per the
Act
d.. VR

102

101.. If the obligor is a company there is no
need for modification of charge, when the notice
regarding acquisition of financial asset by a
securitization company, is not given to the
debtor company.
However, if such notice is given to the
obligor company, then notice to the Registrar of
companies becomes essential.

103

102.. Bank J had advanced to U who had
defaulted leading to a securitization company
acquiring the financial asset. In fact no notice
has been issued to U. After some time, U remits
some amount towards his dues to J from where he
had availed the financial facility.
a.. J to retain the funds
b.. J has an obligation to remit to the
securitization company
c.. J first of all should not accept such payment
since his contract with U is over on account of
securitization transaction.
d.. J has to find out the reason why U had not
paid earlier when the liability was outstanding
with them.

104

103..The securitization or reconstruction company
raises funds for acquisition of asset by issue of
security receipts. Public/individual investors
are barred from investing in a securitization or
reconstruction company by the Act.
.. Realization of the asset is held and applied
towards redemption. i.e., repayment of
investments as assured while issuing the security
receipt.

105

104.. In case there is no realization and
repayment by the securitization or reconstruction
company, then the qualified institutional buyers
are entitled to call a meeting of all qualified
institutional buyers making investments in that
scheme and the resolution passed in the meeting.
a.. The first institutional buyer has the right
to call for such meeting
b.. The qualified institutional buyers holding
not less than 75
of the total value of security receipts has
the right
c.. Any one of the Institutional investor who
takes the lead gets the priority
d.. The Institutional Investor identified and
nominated by RBI for this purpose has the right

106

105..NPN has got a security receipt from a
securitization company called BCB. NPN wish to
retain the security receipt. Then
a.. Such security receipt need not be registered
b.. Such security receipt has to be registered
c.. Such security receipt cannot be transferred
d.. Such security receipt has to be retained by
NPN who is the original institutional investor
and hence there is no question of registration /
non registration.

107

106..Asset reconstruction means acquisition of
any right or interest of any bank or financial
institution in any financial asset for the
purpose of realization. Powers to take measures
for asset reconstruction are given without any
prejudice to the provisions contained in any
other law

108

107.. The SARFAESI Act is silent about the
grounds or reasons on the basis of which action
of acquisition can be taken. Therefore, loan
agreements between bank/financial institution and
the borrower are required to be taken into
account as provisions of this do not have
overriding effect on existing contracts and laws.

109

108.. When the asset is acquired for
reconstruction there is limit of six years for
such reconstruction.
a.. Correct
b.. Incorrect
c.. Not 6 years but 5 years
d.. It is 7 years and not 6 years

110

109..RTM a Securitization company is taking over
the financial asset from the secured creditor
BB. Then BB will get
a.. Debenture
b.. Security Receipt
c.. Commitment
d.. None of these

111

110..Which one is incorrect
a At the time of enforcing securities as per the
provisions of SARFAESI Act, the Securitization
company may itself acquire secured assets for use
or resale, if such resale is through a public
auction.
b.. The Securitization company is permitted to
set up trusts who can issue security receipts.
c.. While issuing security receipts detailed
disclosures are not required to be made by the
Securitization company
d.. While issuing security receipts detailed
disclosures are required to be made by the
reconstruction company.

112

111..A Securitization company can act as a
receiver
If appointed by any Court
If appointed by any Tribunal
If appointed by the Central Government
Either a or b

113

112..Which one is correct (Securitization aspect)
a.. During the planning period (which is 12
months) an asset can be classified as Standard
Asset
b.. Non performing Asset is linked to the
securitys strength or weakness and not to over
due period
c.. Maintaining capital adequacy optional
d.. Raising funds by way of deposits not
prohibited

114

113..Provisions of mandatory arbitration and
conciliation not applicable to the dispute by or
against
a.. Secured Creditor
b.. Obligor
c.. Qualified Institutional Investor
d.. Securitization or Reconstruction Company

115

114..Who has the powers to issue guidelines under
the SARFAESI Act
a.. SEBI
b.. RBI
c.. Central Government
d.. Law Ministry

116

115 ..Under the SARFAESI act a secured creditor
can enforce the security interest created in his
favor without the
INTERVENTION
of the Court or Tribunal.
..The act deals with how the notice to be given
by the secured creditor asking for repayment of
the out standings.

117

116..The secured creditor bank to give a notice
asking the debtor to clear the liability in full
within 60 days from the date of notice.
.. The above is applicable to such debtors who
have defaulted and classified as NPA.
.. There is no bar for the creditor to seek the
other legal remedies such as resorting to filing
of suit in a competent court

118

117..Identify which one is not incorrect.
(SARFAESI Act)
a.. Notice as per the provisions of the act to
be given to the Creditor.
b.. Notice as per the provisions of the act is a
statutory notice.
c.. The Act does contemplate a reply form the
borrower to the notice.
d.. When the offer of sale of property is
accepted by the purchaser and the secured
creditor accepting the offer confirms the sale,
the purchaser need not deposit any token
deposit of the offer price.

119

118.. Bank DT has decided to invoke the relevant
provisions of the SARFAESI Act, by giving the
first notice calling for clearance of the dues.
Then as per Sec 13(2) of the SARFAESI Act the
first notice to be given asking for clearance of
full liability within
a.. 30 days
b.. 60 days
c.. 60 days from the date of notice
d.. 60 days from the receipt of notice

120

119.. Debtor DD has been asked to repay
outstanding liability of Rs.25.73 lacs (as per
provisions of SARFAESI Act) by his Secured
Creditor banker KK. DD has sent a reply in
writing giving his sides version. The bank
responded to the notice and made their position
clear. Based on that reply, DD wish to file an
appeal
a.. in the high court
b.. in the DRT
c.. Not possible / nor permissible
d.. In the appropriate court for their
intervention

121

120.. For a Public Sector bank an Authorized
Officer
a.. General Manager
b.. At least a Chief Manager
c.. Senior Branch Manager
d.. As identified and nominated by the Board of
Directors.

122

121..The secured creditor in an anxiety to
recover his funds would like to publish a
possession notice without issuing the first
notice as per the relevant provisions of the
SARFAESI Act.
a.. Not Permissible
b.. Permissible
c.. Not necessary to issue any notice before
releasing the possession notice in a leading
newspaper
d.. It is left to the Authorized Officer to take
appropriate action like issuing of possession
notice to safe guard the interest of the lending
banker.

123

122..For classification of any account as NPA it
is important that the classification is done as
per
A.. Directives of Head Office of the Bank
concerned
B.. Viewpoints of R B I
C.. Guidelines of the Concerned Banks Corporate
Office
D.. None of these

124

123..An authorized officer issues the second
notice as per the provisions of the SARFAESI Act
known as
a.. Recalling
b.. Possession
c.. Take Over
d.. Auction

125

124..If the offer of sale of property is accepted
by the purchaser and the secured creditor
confirms then the purchaser has to deposit
a.. 25
b.. 75
c.. 50
d.. No such pre condition

126

125..Which one is correct,
a.. The authorized officer has to publish
possession notice in two leading newspapers.
b.. Both papers should be in vernacular language
c.. Before 60 days of sale of immovable property
the borrower should be given notice about the
sale
d.. If the price of secured asset is coming less
than the reserve price, the authorized officer
to sell the asset at a lower price with the
consent of creditor only and not that of the
debtor

127

126..The authorized officer is authorized to
issue sale certificate. Such certificate is
conveyance of immovable property and requires
stamping as per the provisions of Stamp Act.
a.. True
b.. False
c.. Relevant State Laws
d.. Central Laws

128

127.. As the powers of enforcing securities need
to be exercised prudently, fairly and with due
care and caution the Rules framed under SARFAESI
Act provide that Authorized Officer should be of
the level equivalent to Chief Manager of a public
sector bank or equivalent or any other authorized
person exercising powers of superintendence,
direction and control of the business or affairs
of the creditors, as the case may be

129

128..For taking possession and then sale of
immovable property, the secured creditor is
required to serve a possession notice on the
borrower and by affixing the possession notice on
the outer door or at the conspicuous place at the
property.
..The authorized officer is required to publish
the possession notice in two leading newspapers,
one of which should be in vernacular language.

130

129..Kamath is the Authorized officer of a bank.
The price for secured asset (Flat) is coming less
than the reserve price, then Kamath decides to
sell the asset at a lower price to the highest
bidder. Under the circumstances
a.. The decision of the Authorized Officer cannot
be questioned and his decision will be final
b.. He can take independent decision
c.. With the consent of the borrower and the
secured creditor, he has to take his decision
d.. Without consulting any one he can take his
own decision

131

130..When the secured creditor is required to
take possession or control of the secured asset
or to sell such secured asset, he can take the
help of the Chief Metropolitan Magistrate or
District Magistrate.
..For seeking their help a request in writing is
required.
..To approach the authority within whose
jurisdiction the secured asset or documents
related to it are situated.

132

131..When the secured creditor takes over the
management of business of a borrower, he may
publish a notice in a newspaper published in
English language and in a newspaper published in
Indian language in circulation in the place where
the principal office of the borrower is situated,
for appointment of
a.. If the borrower is a company as defined in
the Companies Act, 1956 to be the directors of
such company, or
b.. In any other case, to be the administrator of
the business of borrower.

133

132.Any person, including borrower, aggrieved by
any of the measures taken by the secured creditor
or his authorized officer for taking possession
of the security may make an application along
with the prescribed fees to the Debt Recovery
Tribunal having jurisdiction within 45 days from
the date on which such measures are taken.

134

133..As per the provisions of the SARFAESI Act,
the DRT has to dispose off the application
preferred seeking justice, within a period of
a.. 30 days
b.. 45 days
c.. 60 days
d.. 90 days

135

134..As per the provisions of the SARFAESI act,
against the DRTs order, appeal can be filed to
the appellate Tribunal within 30 days from the
date of receipt of the order of Debt Recovery
Tribunal. The Tribunal has the powers not to
entertain such an appeal unless the borrower
deposits 75 of the debt claimed by the secured
creditor. (Now stands reduced to 50)
a.. True
b.. False
c.. Neither 75 nor 50 but 25
d.. Continues to be not less than 50

136

135..A secured creditor is seeking justice under
the provisions of the SARFAESI Act. Stage is set
for preferring an appeal before the DRT. The
amount in dispute is Rs.7.87 lacs
a.. DRT does not have the power to entertain such
appeal
b.. Since jurisdiction of DRT is Rs.10 lacs and
above what is stated in (a) is appropriate
c.. Since it is SARFAESI matter, DRT will have to
take up the appeal
d.. Such appeals to go to Civil Court and not to
DRT in view of the claim amount (which is less
than Rs.10 lacs)

137

136.. SARFAESI Act is not applicable to
a.. Urban Co operative Bank
b.. Nationalized Bank
c.. State Bank of India Associate Bank
d.. None of these

138

137.. The security asset has been sold then the
proceeds to be appropriate at first
a.. Towards payment of cost, charges and expenses
for the preservation and protection of securities
including payment of appropriate insurance
charges and so on
b.. Towards legal charges incurred by secured
creditor
c.. Towards the satisfaction of dues of the
secured banker
d.. Towards payment of fees to the Authorized
Officer and his team of officials and support
staff

139

138..B has given his personal guarantee to a loan
taken by a debtor D. The loan was provided by
Bank G. As security D gave his asset
(hypothecation). Since the loan became NPA, G
took up Securitization measures.
a.. B can object that SARFAESI Act provisions not
applicable to him
b.. B cannot object since the SARFAESI Act
provides that the Creditor can also call for
payment due to the borrower from the third party
c.. B can object that SARFAESI Act not
applicable to him and hence the secured creditor
cannot seek remedy under the Act when a guarantor
is involved
d.. B cannot object to the action of the secured
creditor since the measures taken are mainly
against D

140

139.. Registration with Central Registry (Under
SARFESI) is not required on certain things and
charges. Identify the Act.
a.. Merchant Shipping Act,1958
b.. Patents Act,1970
c.. Designs Act 2000
d.. None of the above

141

140..Identify which one is incorrect (Central
Registry)
a.. Maintaining the records of the Registry on
computers in permissible under SARFAESI Act.
b.. Registration under the Act is in
substitution of the other registrations under
different laws
c.. Registration under different laws will have
priority of charge depending on the provisions of
respective registration laws
d.. Creation of security interest to be
registered under the provisions of the Act.

142

141.. A security interest has been created on
14th of this month. Then it is to be filed with
the Central Registrar within
a.. 30 days after the date of transaction
b.. 45 days after the date of transaction
c.. Any time before the next step is taken to
dispose off the security
d.. 60 days after the date of transaction

143

142.. The particulars required to be filed by
the securitization or reconstruction company or
the secured creditor, as the case may be. The
delay in filing the required particulars can be
condoned by the Central Registrar for a period of
next 30 days after the first thirty days
prescribed, on payment of fees not more than 10
times of the prescribed fees

144

143.. A security interest is registered with the
central registrar with delay. However the delay
was duly condoned and after remitting the fees
along with penalty the work was got done. Now it
requires to be modified. Then it is not the duty
of
a.. Secured Creditor
b.. Reconstruction Company
c.. Secured Debtor
d.. Securitization Company

145

144.. The borrower Keshav sons repaid in full
the debt. (Securitization process since taken)
Then the secured creditor DD bank has to file
a.. Registration of Security Interest
b.. Modification of Security Interest
c.. Satisfaction of Security Interest
d.. All the above in the same order

146

145..A record to be maintained at the Head Office
of the Central Registrar to record transactions
relating to
a.. Securitization of financial assets
b.. Reconstruction of financial assets
c.. Creation of security interests
d.. All the three

147

146..The Central Registrar has received the
satisfaction of charge (security interest) from
the secured creditor within the prescribed
period, then
a.. He can proceed to satisfy the charge
b.. He can call for show cause not exceeding 14
days before proceeding further
c.. He can call for show cause not exceeding 30
days before proceeding further
d.. He has to issue satisfaction certificate
within 7 days

148

147.. Having cleared the dues with secured
creditor (securitization measures since initiated
under the Act) the borrower has to file the
satisfaction with the Central Registrar within 30
days.
a.. True
b.. False
c.. It is the duty of the Secured creditor
d.. It is not the duty of the Debtor

149

148.. RKK a Reconstruction company failed to
comply with some of the directions issued by RBI.
Then RKK is punishable by RBI with fine not
exceeding Rupees Five lacs for the default. For
further continuation of the offence an additional
fine is up to Rs.2000/ per day of default can be
imposed.
a.. Partially Correct
b.. True
c.. Rs.5 lacs and Rs.10000/- per day respectively
d.. Rs.7 lacs and Rs 5000/- per day respectively

150

149..The provisions of SARFAESI Act not
applicable in respect of
a.. A pledge of movable within the meaning of the
Indian Contract Act,1872(sec172)
b.. Any right of an unpaid seller as per Sale of
Goods Act,1930 (sec 47)
c.. Any security interest created in an
agricultural land
d.. All the above

151

150..Which one is incorrect (Provisions of
SARFAESI Act not applicable )
a.. Creation of security interest in any vessel
as defined within the meaning of the Merchant
Shipping Act,1958.
b.. Any case in which the amount due is less
than twenty five percent of the principal amount
and interest there under.
c.. Any security interest created on an
hypothecation of asset worth rs.6.5 lacs
d.. Creation of any security in any aircraft as
defined in sec 2 of Aircraft Act 1934

152

151.. PNC bank has sold the security after
invoking the provisions of SARFAESI Act. After
that they wish to proceed in the civil court as
the liability outstanding is Rs.6.88 lacs plus
accumulated interest of Rs.2.42 lacs
a.. Not possible
b.. Possible
c.. Impossible
d.. Doubtful

153

152..Bank C has exhausted the measures of
recovery through SARFAESI Act provisions. Still
there is a liability of Rs.7.38 lacs to be
recovered from GH . The original documents has
life.
a.. C can still proceed in the Civil Court by
filing a suit against GH.
b.. Since C has opted for Securitization process,
has to satisfy with whatever they could get by
disposing of the security
c.. Once the SARFAESI Act provisions invoked by
the secured creditor and the proceedings over,
automatically the creditor looses his further
rights against the debtor.
d.. Only C has to worry. Whereas GH need not
worry for the balance amount, since the security
stands disposed off. Further by opting for
Securitization measures C has sealed the other
options to recover legally from GH

154

153..Bank DOM had lent Rs.9 lacs to one KU, a
borrower and obtained security in the possession
of the debtor by way of hypothecation. DOM had to
use the provisions of the SARFAESI Act which
resulted in a recovery of Rs. 7.32 lacs only.
Still the outstanding dues works out to Rs. 3.87
lacs. Then DOM
a.. Cannot proceed against KU under Civil Law
b.. Since the bank had availed the support of
SARFAESI Act has to forego the balance
outstanding
c.. DOM should have applied their mind before
invoking Securitization Act
d.. The bank can proceed against the borrower
under Civil Law subject to the provisions of
Limitation Act as well.

155

154..Bank KA has used the Securitization Act
provisions and could recover only Rs. 16 lacs .
Still they will have to recover Rs.11 lacs plus
interest from SR. Fortunately for KA the
limitation period on the loan documents is
intact.
a.. KA has to seek legal remedy through the
Civil Court.
b.. Bank has to seek legal remedy through DRT
c.. KA has to forego since they have already
availed the legal avenue
d.. KA may have to approach the borrower straight
away and request him to settle the balance
amount.

156

155. .Secured Creditor Bank Q has succeeded
partially recovering the debt. After completion
they are left with only personal security of the
borrower L. However the loan documents have
become time barred . The balance outstanding
being Rs.10.83 lacs interest and other charges.
a.. Q will fail on legal grounds
b.. Q will succeed on legal grounds
c.. Q to move DRT
d.. Q to take up the matter with Banking
Ombudsman

157

156..Whenever the Government makes a rule under
the SARFAESI Act, the rule is so required to be
kept before each House of Parliament, while in
session for a total period of thirty days. Both
the Houses should agree to the rules as framed
and they can make modifications therein or decide
not to make the rules.

158

157..A borrower knows that the bank (secured
creditor) is contemplating to seek remedies under
the provisions of the SARFAESI act. He decides to
approach the court preventing the creditor to
proceed accordingly
a.. The borrower would not succeed in his
attempt
b.. The borrower would succeed
c.. The court will entertain the borrowers
application
d.. The Secured Creditor can not proceed under
the circumstances

159

158.. Bank UT has advanced on the security of
book debts. Since the payment not forthcoming
they would like to proceed against the borrower
WX using the appropriate provisions of SARFAESI
Act.
a.. Assignment beyond the purview of the Act
b.. Assignment within the purview of the Act
c.. Bank UT can proceed based on (b)
d.. Bank UT can not proceed based on (a)

160

159.. Bank B a secured creditor has transferred
the security of the debtor LM to the
securitization company AY for an agreed sum and
obtained debentures. Since B has not got the
money, B can
a.. Ask LM to pay
b.. Not ask LM to pay
c.. Not ask LM to pay since in lieu of money they
have got the debentures
d.. Ask LM to pay in spite of getting debenture

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