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WorksheetsBANKING LAW AND PRACTICES QUESTIONS
Total questions: 102
Worksheet time: 51mins
Name
Class
Date
1.
The Banking Regulation Act came into force w.e.f.
a)
1st April, 1934
b)
1st July 1956
c)
16th March 1949
d)
26th March 1950
2.
As per Section 17 of Banking Regulation Act, 1949, every banking company incorporated in India is required to create a reserve fund and to transfer to it at least.
a)
50% of profit after dividend
b)
20% of profit before dividend
c)
15% of total profits
d)
20% of total profits
3.
Under which section of Banking Regulation Act 1949 a banking company is prohibited to grant a loan or an advance against security of its own shares :
a)
17 (2)
b)
24
c)
19 (2)
d)
20 (1)
4.
Section 24 of Banking Regulation Act, 1949, belongs to.....
a)
Statutory liquidity Ratio
b)
Cash Reserve Ratio
c)
Licence
d)
Deposit
5.
As per Section 23 (1) of Banking Regulation Act 1949, a banking company is exempted from obtaining prior permission from RBI for :
a)
Change of premises within the same city, town or village
b)
Opening of an extension counter
c)
Providing temporary banking facilities in any institution
d)
Cash Reserve Ratio
6.
Holder in due course is defined u/s…..of NI Act
a)
10
b)
9
c)
18
d)
8
7.
The holder of a negotiable instrument is holder in due course if
(i) He receives the instrument in good faith and without negligence
(ii) He receives the instrument for lawful consideration
(iii) He receives the instrument before its maturity. Which of these is correct?
a)
(i) and (ii) only
b)
(ii) and (iii) only
c)
(i) and (iii) only
d)
(i), (ii) and (iii)all
8.
Which of the following is essential condition for constituting a person as holder of a negotiable instrument?
a)
A. He could not be payee of the instrument
b)
A. He could be an endorsee of the instrument
c)
A. He should have received the instrument not for consideration
d)
A. He has the right to get the possession of the instrument where the instrument is not in his possession
9.
Governor of RBI is appointed by :
a)
Board of RBI Directors
b)
Chairman & Managing Directors of Nationalised Banks
c)
World Bank
d)
NABARD
10.
Which of the following statements is incorrect?
a)
A bill of exchange is an instrument in writing
b)
A bill of exchange may be drawn conditionally
c)
A bill of exchange directs a certain person to pay certain amount of money
d)
A. A bill of exchange is payable to the order of a certain person or to the bearer of the instrument as per NI Act
11.
Which of the following statement matches its answer.
a)
Bearer cheque can be negotiated with endorsement and delivery only
b)
Order cheque can be negotiated with endorsement only
c)
After a blank endorsement on an order cheque, the cheque can be negotiated further with delivery only
d)
Endorsement on a bearer cheque makes it an order instrument
12.
Who among the following can endorse a negotiable instrument?
a)
a insolvent
b)
a lunatic
c)
an illiterate person
d)
Pensioner
13.
Validity Period of a cheque is of
a)
Three months
b)
Six months
c)
One months
d)
Twelve months
14.
Which section of Negotiable Instruments Act 1881, deals with penalties in case of dishonour of cheques
a)
Section 6
b)
Section 1
c)
Section 81
d)
Section 138
15.
Legal amount in a cheque stands for
a)
Amount in figures
b)
Amount in words
c)
Amount in words or figures, whichever is less
d)
Amount in words or figures, whichever is more
16.
Which of the following cannot be endorsed
a)
Fixed Deposit Receipt
b)
A bank draft
c)
A promissory note
d)
A Usance Bill of Exchange
17.
For ensuring protection under Section 85(1) of Negotiable Instruments Act, a banker is to ensure that the endorsement is
a)
Genuine
b)
Regular
c)
Genuine and regular
d)
Regular and legible
18.
Who among the following is not a competent to endorse a cheque
a)
A minor
b)
An insolvent person on behalf of the other competent person who has given him a mandate
c)
An illiterate person who cannot sign
d)
A pardanashin lady
19.
A crossing is a direction
a)
Of drawer to the payee
b)
Of endorser to endorsee
c)
Of drawer to drawee bank
d)
Of payee to drawer
20.
On which of the following, a collecting bank will get protection under section 131 of NI act
a)
Crossed draft
b)
Crossed Bill of Exchange
c)
Crossed Promissory Note
d)
Crossed cheque
21.
IRAC norms stand for
a)
Income realisation and asset classification
b)
Income recognition and asset classification
c)
Income recognition and asset consolidation
d)
Interest realisation and asset classification
e)
Interest realisation and asset consolidation
22.
BCSBI stands for
a)
Banking company and standards Board of India
b)
Banking codes and standards Board of India
c)
Banking codes and strategy Board of India
d)
Banking company and strategy Board of India
23.
A company must have a ………….seal distinct from its members
a)
Common
b)
Distinct
c)
Approved
d)
Rubber
24.
A company is a juristic person created by law, having a ……….. succession
a)
Regular
b)
Continuous
c)
Perpetual
d)
Pre-defined
25.
The Limited Liability …………. is viewed as an alternative corporate business vehicle that provides the benefits of limited liability
a)
Proprietorship
b)
Partnership
c)
Company
d)
Firm
26.
A scheduled commercial bank is one
a)
Which is included in the Second Schedule of the RBI Act 1934
b)
Which is included in the Banking Regulation Act, 1949
c)
Which is registered under NI Act 1981
d)
Can’t say
27.
Payment of forged instruments is not a valid discharge for the bank of its liability because
a)
The instrument is not a mandate of the drawer
b)
Forgery should be detected by the bank in any case
c)
Bank has signatures of the customer and it cannot deny his liability
d)
If forgery is allowed, no one will be accountable for the loss
28.
A payment to be treated as a ‘payment in due course’ must satisfy the following conditions (i) payment to the person in possession of the cheque (ii) payment as per apparent tenor (iii) payment in good faith without negligence
a)
(i) and (iii) only
b)
(i), (ii) and (iii)
c)
(ii) and (iii) only
d)
(i) and (ii) only
29.
In case of collection of cheques and bills, the relationship of the banker with the customer is that of...
a)
Bank as agent and customer trustee
b)
Bank as trustee and customer debtor
c)
Banker as debtor and customer creditor
d)
Bank as agent and customer principal
30.
In case of a collection of a bank draft the collecting banker is protected against conversion under section of Negotiable Instrument Act 1881
a)
131
b)
131A
c)
85
d)
128
31.
Mutual funds are regulated by
a)
Association of Mutual Funds of India (AMFI)
b)
Securities and Exchange Board of India (SEBI)
c)
Reserve Bank of India
d)
Competition Commission of India
32.
Insurance Business is regulated by
a)
Securities and Exchange Board of India (SEBI)
b)
Reserve Bank of India
c)
Competition Commission of India
d)
Insurance Regulatory and Development Authority
33.
A bank finances an agriculturist to buy a tractor. The loan is secured by
a)
Hypothecation of the tractor
b)
Mortgage of the tractor
c)
Pledge of the tractor
d)
Assignment of the tractor
34.
A bank finances for house purchase, The loan is secured by
a)
Hypothecation of the house
b)
Mortgage of the house
c)
Pledge of the house
d)
Assignment of the house
35.
An account holder draws a cheque on a
a)
banker of the payee
b)
banker of the drawee
c)
banker of the drawer
d)
banker of the endorsee
36.
The Reserve Bank of India Act,1934 does not deal with
a)
Financial supervision of banks/financial institutions
b)
Policy planning of Mutual Fund
c)
management of forex/ forex reserves
d)
capital management and business of banks
37.
Banking Regulation Act,1949 was enacted to regulate
a)
Bank of India
b)
banking companies
c)
cooperative land development banks
d)
primary agricultural credit societies
38.
-------------- pools money from investors and invests in stocks, bonds, shares etc.
a)
a bank
b)
a factor
c)
a mutual fund
d)
a company
39.
Which is not the function of RBI
a)
Regulates Banking activities in India
b)
Decides Bank rate, CRR and SLR from time to time
c)
Opens and maintains SB accounts
d)
Acts as a banker to the Government
40.
If in a company, government’s share holding is more than 51% , it is classified as
a)
Public Ltd
b)
Partnership
c)
Private Ltd
d)
Government company
e)
Semi government
41.
A current account customer of your branch deposits with you on September 30, 2020 a cheque dated June 22, 2020 issued by Government of India, Ministry of Rural Development for collection. The cheque can be collected as
a)
Its validity can be 12 months
b)
Its validity can be 9 months
c)
Cannot be collected as its validity is limited to 3 months
d)
It can be collected any time
42.
A customer of your branch Raju deposits a cheque which he steals from another person named Raju. Your branch collects this cheque (on which the customer is having a defective title) without being aware about the defect
a)
Collecting bank will get protection if it has complied with the requirement u/s 131
b)
Collecting bank is responsible for conversion
c)
Collecting bank is negligent but will get protection
d)
Collecting bank is negligent but will not get protection
43.
What is the relationship of the bank and RBI when bank is handling the currency chest at its branch?
a)
bailee and bailor
b)
bailor and bailee
c)
Agent and principal
d)
Beneficiary and trustee
44.
Sec 85 of NI Act,1881 extends protection to the
a)
Paying banker
b)
Collecting banker
c)
Advising banker
d)
Issuing banker
45.
Identify the document of title to goods
a)
Demand Draft
b)
Bill of lading
c)
Cheque
d)
Pay order
46.
Long Form Audit Report (LFAR) is prepared/ submitted by
a)
bank’s concurrent auditor/s
b)
statutory auditors
c)
Stock Auditor
d)
Forensic auditors
47.
Sec ---- of RBI Act,1934 gives sole power to RBI to issue currency notes
a)
10
b)
18
c)
22
d)
26
48.
Sec 131 of NI Act,1881 extends protection to the
a)
Paying Banker
b)
Collecting Banker
c)
Advising Banker
d)
Issuing Banker
49.
Charge created on LIC Policy is
a)
Hypothecation
b)
Pledge
c)
Assignment
d)
Lien
50.
The right of set-off is
a)
Customer’s Right
b)
Customer’s Obligation
c)
Banker’s Right
d)
Banker’s duty
51.
Except which one of the following, others are known as Non Fund based facilities
a)
Letters of Credit
b)
Bank Guarantees
c)
SBLC
d)
Cash Credit
52.
A payee of a cheque of Rs.25000 endorses the cheque for Rs.16000 in favour of his elder son and Rs.9000 in favour of his younger son. Endorsement of an instrument transferring amount to more than one endorsees separately shall be
a)
Valid
b)
it is a partial endorsement
c)
valid if not objected to by the bank
d)
Invalid
53.
Which of the following types of cheques can be endorsed
a)
Account payee cheques
b)
Bearer cheques
c)
Cheques payable to the order
d)
Cheque with restricted endorsement
54.
What is true with regard to blank endorsement on an order cheque?
a)
The payment can be obtained by anyone as it has been converted into a bearer cheque
b)
The payment can be obtained by drawer only
c)
The payment can be obtained by payee only
d)
The payment can be obtained by a person in whose hand it falls, in his own right
55.
Where amount in words and figures differ, the provision for making the payment of amount mentioned in words in a cheque is described u/s…. of NI Act
a)
18
b)
19
c)
20
d)
21
56.
Which one of the following is secured by a mortgage?
a)
A cash credit against inventory
b)
A term loan against land and building
c)
A Loan against bank’s own FDR
d)
A cash credit against inventory and book debts
57.
”Once a Bearer is always a bearer” is applicable in respect of
a)
A bill of lading
b)
A cheque
c)
A demand promissory note
d)
A Certificate of Deposit
58.
A stop payment instruction of a cheque can be issued by
a)
The payee
b)
The endorsee
c)
The drawer
d)
The drawee
59.
At a Railway station, you withdraw cash from ATM of HDFC. HDFC is a
a)
Paying Banker
b)
Collecting Banker
c)
Advising Banker
d)
Issuing Banker
60.
One of your customers lost the Fixed Deposit Receipt issued by the bank. To obtain a duplicate FD he needs to furnish
a)
A Promissory note
b)
A Guarantee
c)
A Letter of Credit
d)
An Indemnity bond
61.
KYC means
a)
Know Your existing Customer very well
b)
Know Your prospective Customer very well
c)
Satisfy yourselves about the customer’s identity and activities
d)
Know earlier generations of the customer
62.
Holder is defined u/s……. of NI Act
a)
10
b)
9
c)
8
d)
18
63.
The payment of interest on a promissory note on which the rate of interest is not mentioned, is regulated as per
a)
Section 80 of Contract Act
b)
Section 80 of Negotiable Instrument Act
c)
Section 21 of RBI Act
d)
Section 21 of Negotiable Instrument Act
64.
The apex institution which handles refinance for agriculture and rural development is called:
a)
RBI
b)
SIDBI
c)
NABARD
d)
RRB
65.
Protection is available to collecting banker for paying draft with endorsement u/s… of NI Act
a)
85
b)
85A
c)
131
d)
130
66.
Cheque has already been negotiated by A to B and by B to C. How many times more this instrument can be negotiated?
a)
Thrice
b)
Twice
c)
Once
d)
No limit
67.
Which of the following statements is not correct as per NI Act
a)
The holder can convert special crossing into general crossing or he can cancel any crossing under his signature
b)
The holder can cross a cheque
c)
If a cheque is simply crossed, he can add special crossing
d)
If cheque is simply or specially crossed he can add the words ‘not negotiable’ in it
68.
Bank notes issued by RBI are exempted from payment of stamp duty as per which of the following
a)
Section 12, Indian Stamp Act 1899
b)
Section 23, Banking Regulation Act
c)
Section 5, Negotiable Instrument Act
d)
Section 29, RBI Act
69.
The instruments such as
(a) Airway bill
(b) Bank note
(c) Letter of credit
(d) Demand draft
Is/are not treated as negotiable instrument. Which of these is correct?
a)
a, b, c
b)
a, c, d
c)
a, b, c, d
d)
a, b, d
70.
Mr. Ashish 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)
Mr. Ashish Kumar cannot avail the services of Banking Ombudsman, but he can approach the court of law
71.
Negotiable Instrument Act provides definition of
(a) Promissory note
(b) Bill of exchange
(c) cheque
(d) Demand draft.
Which of the following is correct?
a)
a, b, c only
b)
b, c, d only
c)
a, c, d only
d)
a, b, c, d all
72.
Under which section of Negotiable Instrument Act, the bank has obligation to make payment of cheque issued by a customer
a)
85
b)
131
c)
30
d)
31
73.
Under which section of Banking Regulation Act, 1949, every banking company has to submit annual statement of all those accounts which are lying under inoperative category for the last 10 years to RBI ?
a)
17
b)
25
c)
19(2)
d)
26
74.
Banks disclose the information about their borrowers to RBI under provisions of
a)
Directives of RBI
b)
Section 45-C, RBI Act
c)
Section 45 of Banking Regulation Act
d)
Directions of Finance Ministry
75.
Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy means
a)
Sale or purchase of short term and long term government securities
b)
Insurance of different types of bonds
c)
Auction of gold
d)
To make available direct finance to borrowers
76.
The bank rate means:
a)
Rate of interest charged by commercial banks from borrowers
b)
Rate of interest at which commercial banks discounted bills of their borrowers
c)
Rate of interest allowed by commercial banks on their deposits
d)
Rate at which RBI purchases or rediscounts bill of exchange of commercial banks to provide credit to commercial banks
77.
Mr. Harish Kumar fraudently induces Mr. Ramesh Chand to make a promissory note in his favour. He endorses it to Mr. Sachin Kumar who takes it for value and without any notice of the fraud. On presentation of the note for payment, it is dishonored. Mr. Sachin Kumar wants to recover this money. Whom he can sue for recovery?
a)
Since the note has been the result of a fraud, he cannot recover from any party
b)
Since Harish Kumar has notice of fraud he is the only person liable on the note
c)
Since Ramesh Chand is also the victim, he is not liable on the note
d)
Both Mr. Ramesh Chand and Harish Kumar are liable on the note
78.
Identify the odd one (Securitization matter SARFAESI Act)
a)
Hypothecation of stock
b)
Hypothecation of Machinery
c)
Agricultural Land
d)
Mortgage of Property
79.
Which one is not pertaining to Hypothecation?
a)
A charge in or upon any movable property
b)
Charge over immovable property only
c)
Possession also with the lender
d)
Retaining the ownership with the owner of the property
80.
Identify the regulatory authority for all securitization and reconstruction companies.
a)
SEBI
b)
RBI
c)
Company Law Board
d)
SIDBI
81.
Mr. X has created a mortgage by way of deposit of title deeds with the secured creditor bank Y. This represents
a)
Security Receipt
b)
Secured Debenture
c)
Security Agreement
d)
Secured Debt
82.
A complaint under the Banking Ombudsman scheme can’t be
a)
Given only by the affected person
b)
Given only by the complainant
c)
Given by the Authorized representative
d)
Given by Staff for salary
83.
District Consumer Protection Council to meet as and when necessary. There has to be at least two meetings every year.
a)
Correct
b)
Incorrect
c)
At least One meeting
d)
At least Three meetings
84.
Debtor X has executed a Demand Promissory Note and a Hypothecation agreement to Bank Y. Then the bank has made available the finance. It is a/an
a)
Valid contract
b)
Invalid contract
c)
Quasi contract
d)
No contract
85.
Identify which of the following is a part of valid contract
a)
Non-acceptance
b)
Consideration
c)
Forge document
d)
Agreement without consent
86.
Consideration is not required for
a)
An agency
b)
Hypothecation
c)
Mortgage
d)
Secured Loan
87.
A bank as a collecting banker has misplaced the cheque accepted for collection. The customer when he approached to know about the realization of the cheque, then only the bank could realize it has misplaced the Cheque. In this case,
a)
The bank is responsible
b)
Till the cheque is realized or returned, the bank is not responsible
c)
If the cheque had been purchased, then the bank would have been responsible and not for collection item
d)
The bank is not responsible
88.
D is having a Savings Bank account. He wishes to appoint another person V to operate the account in his absence. Then D can give
a)
Power of Attorney in favor of V
b)
A Letter of Authority in favor of V
c)
Either a) or b) above
d)
None of the above
e)
cannot give such authority
89.
Capital Clause in the Memorandum of Association to discuss about the
a)
Authorized Capital
b)
Name of the company
c)
Registered office of the company
d)
Liability of the member
90.
Regards to the Company, MOA stands for :-
a)
Memorandum of Association
b)
Memorandum of Articles
c)
Memorandum of Agriculture
d)
Meeting of Association
91.
Indian Contract Act belongs to which year?
a)
1881
b)
1880
c)
1956
d)
1872
92.
Promissory note has been defined under section -------- of N.I. Ac
a)
3
b)
4
c)
5
d)
6
93.
A Bill of Exchange has been defined under section -------- of N.I. Act
a)
10
b)
131
c)
5
d)
4
94.
For which of the following, the acceptance of the drawee of the instrument is required?
a)
D. P. Note
b)
Demand Bill of Exchange
c)
Usance Bill of Exchange
d)
Draft
95.
Your branch receives a cheque of Rs. 500/- written in figures and Rs. 5,00,000/- in words. Under section 18 of N. I. Act, the Bank
a)
Is to return, as the mandate is not clear
b)
Is to pay the amount written in words
c)
Is to pay the amount written in figures
d)
Is to pay the lower of the two amounts written in words and in figures
96.
The Reserve Bank, on April 23, 2015, directed scheduled commercial banks (excluding regional rural banks) to include ‘------------ in all their forms/applications:-
a)
Address of the bank
b)
IFSC CODE
c)
TAN
d)
Third gender
97.
Banks are being ranked under ____ for rendering based on customers service rendered by :-
a)
RBI
b)
IBA
c)
IIBF
d)
BCSBI
98.
What charge will you create for cash credit facility against stock and book debts?
a)
Pledge
b)
Hypothecation
c)
Mortgage
d)
Assignment
99.
The full form of LLP
a)
Limited Liability Partnership
b)
Limited Liability Pairing
c)
Learning Liability Partnership
d)
Limited Liability Proprietorship
100.
"CTS-2010 standard", is related to:-
a)
computer language
b)
security feature in bank note
c)
The benchmark prescriptions for standardization of cheque books
d)
accounting standards
101.
A and B are having a savings account with operational instructions either or survivor and C is the nominee. Now A has expired. The balance in the account is payable to
a)
C only
b)
B only
c)
legal heir of A and B
102.
Mortgage is defined under:-
a)
Indian Contract act
b)
Transfer of Property act
c)
Banking Regulation Act
d)
RBI Act
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