LEGAL ASPECTS OF BANKING OPERATIONS

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• LEGAL ASPECTS OF BANKING OPERATIONS
• JAIIB
• MODULE C D

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• 01.Any person aggrieved by the order passed by
  Debt Recovery Tribunal can file an appeal to the
• A. High Court B. Supreme Court
• C. Ombudsman D. Appellate Tribunal

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• 02.An act to regulate securitisation and
  reconstruction of financial assets and
  enforcement of security interest and for matters
  connected therewith or incidental thereto-
  Identify.
• A. Securitisation and Reconstruction of Financial
  Assets and Enforcement of Security Interest,
  2002(SARFAESI ACT)
• B. Securitisation and Reconstructing of Financial
  Assets and Enforcement of Security Interest,
  2002(SARFEASI Act)
• C. Securitising and Reconstruction of Financial
  Assets and Enforcement of Security Interest,2000
  (SARFAESI ACT)
• D. Securitisation and Reconstruction of Financial
  Assets and Enforcement of Security Interest, 2002
  (SARFEASI ACT)

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• 03. Based on the observation of Supreme Court in
  the Mardia Chemicals vs Union of India, the
  deposit for appeal under DRT decision has since
  been changed. Identify who has changed and how
  much it is now?
• A. Changed to 75 by the Supreme court
• B. Reduced to 25 by the Central Govt
• C. Increased to 50 by the Company Law Board
• D. None of these

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• 04.As per SARFAESI Act 2002,the term Board means
• A. Reserve Bank of India
• B. Debt Recovery Tribunal
• C. Securitisation and Reconstruction Company
• D. None of these

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• 05.Which Statement is not correct (SARFAESI ACT
  2002)
• A. The Act is not applicable to RRBs
• B. The Act is not applicable to the State of
  Jammu Kashmir
• C. The Act has retrospective application
• D. A reference is made about Hypothecation in
  this act only

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• 06.The transactions of asset securitisation,
  reconstruction as well as transactions of
  security interests will have to be registered
  with
• A. Registrar of Companies
• B. Central Registry
• C. SEBI RBI
• D. All the above

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• 07.When bank or financial institution lends money
  against security they are the
• A. Obligor B. Originator
• C. Lender D. Un Secured Creditor

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• 08.Obligor is
• A. Borrower/ Debtor
• B. Sponsor Bank
• C. Creditor Bank
• D. None of the above

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• 09.Which one cannot be a Qualified Institutional
  Buyer.
• A. Commercial Bank
• B. An Insurance company
• C. A partnership firm with vast exposure in
  finance field D. A Foreign Institutional Investor

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• 10.Which statement is correct.
• A. An asset reconstruction company need not be
  registered under Companies Act
• B. A foreign institutional investor need not
  register with RBI but need to register with SEBI.
• C. A Securitisation company need not register
  with RBI
• D. For classification of any account as NPA, the
  respective Banks can follow their own norms

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• 11.The Securitisation company or reconstruction
  company can acquire financial asset of any bank
  or financial institution by issuing
• A. Bond
• B. Debenture
• C. Any other Security
• D. Any one of the above

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• 12. Securitisation companies can set up separate
  trusts scheme wise and act a trustee for such
  schemes. The beneficiaries of such trusts are
• A. Banks B. Debtors
• C. Trustees D. None of them

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• 13. Identify which evidences the purchasers
  undivided right, title and interest in the
  security.
• A. Ownership right B. Possession right
• C. Security Receipt D. Transfer Right

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• 14.The Securitisation company or the
  reconstruction company can acquire financial
  asset of any bank or financial institution.
• A. True B. False
• C. Incorrect D. Not True

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• 15. The person holding not less than 10 of the
  paid up equity capital of securitisation company
  or reconstruction company is known as
• A. Originator B. Obligor
• C. Investor D. None of these

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• 16.Debenture which one is incorrect
• A. A debenture for payment of consideration to be
  paid to the bank for acquisition of financial
  asset from it.
• B. The rate of interest on debenture cannot be
  less than 1.5 above the Bank Rate as on the date
  of issue of Debentures
• C. Redemption period not beyond 6 years
• D. None of the above

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• 17.Security Receipts (identify the incorrect one)
• A. They are in favour of the investors
• B. They are issued to the Public
• C. Qualified Institutional buyers can buy.
• D. The Reconstruction company can raise funds by
  issuing these receipts

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• 18. A securitisation company or reconstruction
  company can raise funds by way of deposits.
• A. Not in correct
• B. Not applicable to Securitisation company but
  to Reconstruction company
• C. Not correct
• D. Not applicable to Reconstruction company but
  to Securitisation company

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• 19.Identify the incorrect one (Securitisation)
• A. Non- Performing Asset is linked to overdue
  period which is 180 days now.
• B. If the asset is acquired for reconstruction
  limit is 5 year for such reconstruction
• C. Maintaining of Capital Adequacy of 15 of
  total assets acquired or capital of Rs.100 crore,
  whichever is less
• D. Detailed disclosure to be made by the
  Securitisation or reconstruction company

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• 20.The date agreed upon by the secured creditor
  representing not less than three-fourth in value
  of the amount outstanding on such date
• A. Agreed Date B. Record Date
• C. Due Date D. Agreement Date

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• 21. Which one is not coming under Securitisation
• A. Assignment of Book Debts
• B. Pledge of Goods
• C. Mortgage of Flat
• D. Hypothecation of Goods

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• 22.Enforcement of Security interest(Sec 13(2)
  Notice)
• A. Borrower is required to clear the liabilities
  within 60 days from the date of the notice
• B. The Act contemplates giving only two details
  like details of amount payable and securities
• C. The Act does contemplate a reply from the
  borrower to the notice
• D. An internal mechanism to be particularly
  evolved to consider the reply of borrower.

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• 23.The authorised official is required to publish
  the possession notice in
• A. atleast one leading newspaper
• B. two leading news papers
• C. One of which should be in vernacular language
• D. Both b c

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• 24. If the price for secured asset is coming less
  that the reserve price, the authroised officer
• A. Can sell the asset at a lower price
• B. with the consent of the secured creditor
• C. Consent of the borrower is also a must
• D. All of these

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• 25.An authorised officer has finalised the sale
  of property for Rs.7 lacs. Then the proposed
  purchaser to remit
• A. Entire money at once
• B. Within a week
• C. 25 of the offer price
• D. no amount at once.

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• 26. In case of sale of immovable property, the
  borrower to be intimated by way of notice about
  the intended sale before
• A. 15 days B. 30 days
• C. 45 days D. 60 days

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• 27.The authorised officer can (Securitisation
  Act)
• A. Accept the offer
• B. Confirm the sale
• C. Issue Sale Certificate
• D. Carry out all the above

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• 28. The Authorized officer (Securitisation act)
  is authorized to issue sale certificate.
• A. Such certificate is conveyance of immovable
  property.
• B. It requires stamping
• C. Such stamping to be as per the relevant State
  laws
• D. All the above are appropriate

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• 29.Provisions of SARFAESI Act not applicable in
  respect of
• A. Hire purchase or lease in which no security
  interest has been created
• B. A pledge of movable asset
• C. Any security interest created in agricultural
  land
• D. All the above

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• 30. A bank had advanced Rs.22 lacs. The present
  liability is Rs.29 lacs. They have decided to
  invoke the provisions of SARFAESI Act. However,
  they expect to realise around Rs.16 lacs. For the
  balance they
• A. Can refer the matter to Banking Ombudsman
• B. Cannot move any court of law
• C. Can approach DRT
• D. Can move civil court

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• 31. A bank could realise part of the liability by
  using Securitisation procedure. The balance
  outstanding is Rs.3 lacs without any tangible
  security.
• A. Bank will have to forego
• B. Bank can approach DRT
• C. Bank may have to approach civil court
• D. Bank will have to write off

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• 32. After recovery through Securitisation process
  for recovery of balance outstanding, the bank
  can approach competent legal authority, provided
• A. Debt is time barred
• B. Limitation period is not expired
• C. Limitation period has not been extended
• D. Borrower gives his consent in writing

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• 33.The Banking Ombudsman shall be provided with a
  Secretariat drawn from banks or RBI . The cost
  of the Secretariat will be borne by
• A. Banks
• B. RBI respective State Governments
• C. Ombudsman
• D. Government

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• .34. Review Authority for Banking Ombudsman is
• A. Banking Ombudsman himself
• B. Awarding Official
• C. RBI Executive Director
• D. None

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• 35.Banking Ombudsman identify odd one
• A. Non observance of RBI directives on interest
  rates
• B. Failure to pay LC amount
• C. Adherence of prescribed working hours by bank
  branches
• D. Refuse to issue Demand Drafts to customers

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• 36. Banking Ombudsman as an Arbitrator to follow
  the scheme as well as the provisions of
• A. Banking Regulation Act
• B. Arbitration Act
• C. Contract Act
• D. None of these

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• 37.Which one will not come under the purview of
  DRT provision ( Outstanding liability Rs.16 lacs)
• A. Overdrawal of money from a bank account
  without any overdraft facility
• B. Liability inclusive of interest but not fully
  secured
• C. Liability inclusive of interest, secured
• D. None of these

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• 38. As per provisions of DRT act, a Recovery
  Officer is one who is
• A. Appointed by the Chief Justice of India
• B. Appointed in consultation with RBI
• C. Appointed by the Central Government
• D. Transferred from another Court

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• 39.DRT (identify the odd one)
• A. The Limitation Act provisions applicable for
  DRT cases
• B. An application for execution of the decree of
  foreign court can be entertained by Debt Recovery
  Tribunal
• C. Other Bank cannot join the application
• D. Tribunal will not deal with cases less than
  Rs.10 lacs

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• 40.Which statement is incorrect (DRT)
• A. The Presiding Officer of the Tribunal to issue
  a certificate under his signature to the Recovery
  Officer for recovery of the amount of debt
  specified in the certificate
• B. The Tribunal is required to send copy of every
  order passed by it to the applicant and the
  defendant
• C. The Tribunal can grant liberal adjournments
• D. If evidence is taken by way of an affidavit,
  it is not mandatory for the Tribunal to require
  production of witness for cross-examination.

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• 41. Find out the correct mode of recovery of
  debts (DRT)
• A. Sale of immovable property
• B. Attachment and sale of movable assets
• C. Arrest of the defendant and his retention in
  prison
• D. Any of the above

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• 42.Any person aggrieved by the order passed by
  DRT may prefer an appeal to an Appellate tribunal
  within
• A. 15 days of such order
• B. 30 days from the date on which copy of the
  order is received
• C. 45 days from the date on which copy of the
  order is received
• D. 60 days of such order

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• 43. Any person aggrieved by the order of Recovery
  Officer may appeal to the Tribunal within
• A. 15 days of such order
• B. 30 days from the date on which copy of the
  order is received
• C. 45 days of such order
• D. 60 days from the date on which copy of the
  order is received.

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• 44. The recover certificate issued (DRT) can be
  withdrawn by
• A. Recovery Officer
• B. Competent Judge
• C. Presiding Officer
• D. Authorised Officer

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• 45.Who has the powers to frame rules under the
  Act (DRT) to carry out the provisions of the Act.
• A. Parliament
• B. Central Government
• C. RBI
• D. All the above

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• 46.The Bankers Book Evidence Act (identify the
  correct one)
• A. The Act extends to the whole of India
  including the State of Jammu Kashmir
• B. Records in Electronic Data not included
• C. Judge means Judge of the Supreme Court
• D. The Act extends to the Whole of India except
  the State of Jammu Kashmir

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• 47.A certified copy of any entry in a bankers
  book shall in all legal proceedings be received
  as conclusive proof of the existence of such
  entry.
• A. The above is not incorrect
• B. The above is incorrect
• C. It is not to be treated as conclusive proof
  but as prima facie evidence
• D. It is to be treated as final proof and no need
  to insist on original records for verification

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• 48. A dispute where the person against whom
  complaint has been made, denies or dispute the
  allegations contained in the complaint refers to
• A. Consumer Dissatisfaction
• B. Consumer Dispute
• C. Deficiency in Customer Service
• D. Customer Complaint

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• 49.As per the Consumer Protection Act, the term
  goods do not include
• A. Stocks and Shares
• B. Growing crops
• C. Grass attached to the land
• D. All the above

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• 50.Goods and services which are claimed to be
  genuine but they are actually not so.
• A. Bogus goods and services
• B. Not Genuine goods and services
• C. Spurious goods and services
• D. Inferior goods and services

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• 51.Which one is not correct
• A. The District Consumer Protection Council to
  meet atleast two times in a year.
• B. The Central Consumer Protection Council to
  meet atleast once in a year.
• C. The State Consumer Protection Council to meet
  atleast once in a year.
• D. The Central Consumer Protection Council is
  also called as Central Council

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• 52. Against the order of District Forum appeal to
  State Commission has to be filed within
• A. 30 days B. 45 days
• C. 60 days D. 90 days

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• 53. State Commission has jurisdiction to
• A. entertain complaints where the value of the
  goods or services and compensation, if any,
  claimed exceeds Rs 50 lacs but does not exceed
  Rs1 crore
• B. consider appeals against the orders of any
  District Forum within the State
• C. call for records and pass appropriate orders
• D. Implement all the above

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• 54. All notices required to be served on the
  opposite party are deemed to be sufficiently
  served
• A. If handed over to him in person
• B. If addressed to the place where business or
  profession is carried by him
• C. If addressed to the last known address.
• D. If addressed to the address available on record

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• 55. An agreement entered into by a minor is
• A. void
• B. invalid
• C. not valid since inception
• D. All of these

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• 56. Identify the correct group
• A .Indemnity - Contract Act
• B. Pledge - Transfer of Property Act
• C. Mortgage - Contract Act
• D. Assignment - Contract Act

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• 57. Bank x has given a loan to R on the personal
  guarantee of U. R defaults and when Bank x
  requested U to make the payment, he refuses and
  ask the bank to approach only R who has actually
  taken the money.
• A. Bank x has to exhaust all their remedies
  against R before
• approaching U.
• B. Bank x can straight away approach U
• C. Bank x has to approach R and then U
• D. Bank x can approach both simultaneously

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• 58.It is the delivery of goods by one person to
  another for some purpose. When the purpose is
  accomplished, the goods are to be returned or
  otherwise disposed of according to the direction
  of the person delivering them.
• A. Hypothecation B. Bailment
• C. Assignment D. None of these

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• 59. The bailment of goods as security for payment
  of a debt or performance of a promise is known as
• A. Hypothecation B. Special Bailment
• C. Transfer D. Pledge

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• 60.Which one is correct ( Contract of Agency)
• A. No consideration is necessary to create
  agency.
• B. The authority of an agency may not be
  expressed or implied
• C. Agency will not be terminated when the
  Principal is declared as an insolvent
• D. The principal is not liable to indemnify the
  agent against the consequences of acts done by
  him in good faith

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• 61. Sale of Goods Act will cover
• A. Future goods B. Actionable Claims
• C. Land D. None of these

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• 62. Which one does not pertain to Sale.
• A. The Seller can only sue for damages
• B. The risk in goods is with the buyer
• C. It is a contract in which the parties have
  already performed their part
• D. The ownership of goods have already passed
  irrespective of whether the goods are delivered
  or not.

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• 63. Which one is not part of an Agreement to
  Sell
• A. The parties yet to perform their mutual
  promises
• B. The seller can file a suit and demand the
  price
• C. The risk of goods is still with the seller and
  passes to the buyer only after the agreement to
  sell becomes a sale.
• D. The ownership is yet to pass from the seller
  to the buyer

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• 64.Caveat emptor a warning and caution to
• A. Buyer B. Seller
• C. Both a b D. None of these

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• 65.There is an implied condition on the part of
  the seller that
• A. He has a right to sell the goods (in the case
  of an agreement to sell)
• B. He will have a right to sell the goods at the
  time when the ownership is to pass on to the
  buyer (in the case of a sale)
• C. He has a right to sell the goods ( in the case
  of a sale)
• D. None of these

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• 66. Implied Warranty
• A. There is an implied warranty that the buyer
  shall have and enjoy quiet possession of the
  goods
• B. There is an implied warranty that the goods
  shall be free from any charge or encumbrance in
  favor of any third party not disclosed or known
  to the buyer before or at the time when the
  contract is made.
• C. Generally there is an implied warranty as to
  the quality or fitness of goods for any
  particular purpose.
• D. For sale by description there is an implied
  condition that the goods shall correspond with
  the description.

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• 67.Unpaid Seller (which statement is not correct)
• A. A right of resale
• B. Right of stoppage in transit
• C. Lien on the unpaid goods
• D. Right not to withhold delivery of goods

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• 68.Where no provision is made by contract between
  the partners for the duration of their
  partnership or for the determination (i.e., the
  termination or end) of the partnership, then such
  a partnership is known as
• A. Particular Partnership
• B. Specific Partnership
• C. Special Partnership
• D. None of these

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• 69.The implied authority of a partner does not
  empower him to
• A. Submit a dispute relating to the business of
  the firm to arbitration.
• B. Admit (accept) any liability in a suit against
  the firm
• C. Withdraw a suit filed on behalf of the firm
• D. All of these

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• 70. R was admitted into a partnership to receive
  the benefits on 12.03.06 when he was a minor. On
  01.04.07, R has become the major and decided to
  become a partner. Then R
• A. will be personally liable to all the actions
  of the firm wef 01.04.07
• B. will not be personally liable to all the
  actions of the firm wef 01.04.07
• C. becomes personally liable to third parties for
  all acts of the firm done since he was admitted
  to the benefits of the firm i.e., wef 12.03.06
• D. will not be liable for past action (as stated
  in C) since at that time he was only a minor.

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• 71.M/s.KRL co, a partnership firm has opened a
  current account with a bank. Among other
  documents they have also submitted their
  partnership deed. The said deed has specifically
  indicated that the partnership need not come to
  an end on account of retirement, resignation or
  death of any one of the partners. Partner R
  resigned. The Banker
• A. Need not allow further operations in the a/c
• B. Can allow further operations
• C. Provisions of Law will prevail
• D. Contents of Partnership deed will be valid and
  effective

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• 72.A Pvt Ltd Company has borrowed money from the
  bank and executed necessary documents. However
  the Common Seal was not affixed. The company
  relied on the contents of their Articles of
  Association.
• A. The documents are not valid
• B. The documents are valid
• C. If the articles does not specify affixing of
  Common Seal on loan documents then it is not
  compulsory
• D. Affixing Common Seal on loan documents is
  part of company documentation.

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• 73. This states that every outsider is assumed to
  have read the Memorandum of Association and
  Articles of Association.
• A. Doctrine of Indoor Management
• B. Doctrine of Constructive Notice
• C. Doctrine of Ultra vires
• D. Doctrine of Holding out

75

• 74. Which one is not the Statutory Right
  (Companies)
• A. To participate in the distribution of assets
  in case of liquidation of the company
• B. Receive copy of annual accounts of the company
• C. To apply to the Company Law Board to call
  Annual General Meeting if the board of directors
  fail to call such a meeting.
• D. Transfer shares

76

• 75.A transaction by which there may be a change
  (either an increase or decrease) in the assets or
  liabilities outside India of persons resident in
  India or assets or liabilities in India of
  persons resident outside India. (under FEMA)
• A. Capital Account Transaction
• B. Domestic Account Transaction
• C. Foreign Account Transaction
• D. Current Account Transaction

77

• 76.The mortgagor does not deliver possession of
  the mortgaged property to the mortgage, but binds
  himself personally to pay the mortgage money. In
  the event of his failing to pay, he agrees, that
  the mortgagee shall have a right to get the
  mortgaged property sold and recover his dues.
• A. English Mortgage B. Usufructuary Mortgage
• C. Conditional Sale D. None of these

78

• 77.For which type of Security, assignment is
  applicable
• A. Collateral security of book debts while main
  security is stock (under Cash Credit )
• B. Supply Bills facility
• C. Pledge of Life Policy
• D. All the above

79

• 78. Notified Area is applicable to
• A . Pledge
• B . Immovable property taken as Main security
• C. Usufructuary Mortgage
• D. None of these

80

• 79.Which one is not appropriate (Mortgage)
• A. Private Sale possible under Conditional Sale
  type Mortgage
• B. Personal liability attached to Simple Mortgage
• C. Equitable Mortgage does not attract stamp duty
• D. Rent receivable will liquidate the outstanding
  under Usufructuary Mortgage.

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• 80.It is a document by a company solicits funds
  from the public for its capital either by way of
  shares , debentures or deposits.
• A. Share Application
• B. Prospectus
• C. Document in lieu of Prospectus
• D. None of these

82

• 81.As per the Companies Act,1956 which one does
  not require registration?
• A. Any share in a ship
• B. Assignment of Book Debts
• C. Pledge of Fixed Deposit of the Company
• D. Hypothecation of Work in progress inventory

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