Banking related general awareness -Important
MODEL PAPER I--BANKING
1. Ref : Banking Regulation Act, 1949. Identify odd item:
a) Deposits b) Loans c) Investment d) Trading activity
2. “Account payee only” crossing is a direction to
a) paying banker only b) collecting banker only
c) both paying and collecting bankers d) payee only.
3. Individuals who are engaged in trading or manufacturing activity can accept deposits.
a) true; but they should report to RBI quarterly
b) partly true; they can accept deposit from friends
c) partly true; they can accept deposits from relatives
d) partly true: both b & c
4. No banker issues a bearer draft. The reason is
a) banking practice b) prohibited under BR Act c) prohibited under RBI Act
d) prohibited under NI Act
5. Paying banker gets protection in case of payment of a bearer cheque under Sec. of NI Act.
a) 25 b) 65 c) 85 d) 128
6. Ten rupee note issued by RBI is
a) currency note b) bank note c) bill of exchange d) all these
7. Under Section 131 of NI Act, the word conversion means
a) transfer of title to a holder in due course
b) transfer of title to a person who is not the true owner
c) paying the value for a foreign currency instrument in Indian rupees
d) changing the type of deposit
8. RBI can issue currency notes upto a maximum denomination of
a) 1000 b) 5000 c) 10000 d) 20000
9. Central Government has the power to issue directions to RBI in public interest as per provisions in the
a) Constitution b) RBI Act c) BR Act d) All the above
10. A pay order issued by a bank is construed to be a
a) promissory note b) bill of exchange c) IOU d) cheque
11. Identify the odd item (Ref: Sale of Goods Act)
a) Goods b) Movable Property c) Stocks & Shares d) Currency Notes
12. Debenture is a documents acknowledging
a) Company’s indebtedness b) Company’s ownership
c) Ownership of machinery d) None of the above
13. To commence or carrying on banking business in India, a company needs
a) Licence from the Registrar of Companies
b) Licence from the respective State Government
c) Licence from the Reserve Bank d) No need for any licence
14. Voting rights of shareholders is restricted to ___ % of total voting rights.
a) 10% b) 20% c) 40% d) unlimited
15. The Director of a banking company can hold office continuously of
a) 3 years b) 5 years c) 8 years d) for life.
16. The sole authority of Currency Note issue is
a) Reserve Bank b) State Bank c) Consortium of banks
d) Exim Bank
17. Banking Ombudsman is an authority for
a) Resolution and Settlement of complaints of the public against banks without going to court
b) Helping the banks for recovery of NPAs
c) Finding ways and means to improve customer service
d) Fixing rate of interest on deposit.
18. In respect of non – acceptance of small denomination notes complaint may be made to
a) Reserve Bank b) District Consumer Forum c) DRT
d) Banking Ombudsman
19. Scheduled Bank means
a) A Bank with more than 100 Branches
b) Bank with deposits beyond Rs.1000 Crores
c) Bank included in the Second Schedule of the RBI Act, 1934 d) None of these
20. Bank Rate means
a) Fixed Deposit Rate b) Loans Rate c) Savings Bank Rate
d) Standard Rate at which the Reserve Bank is prepared to buy eligible bills.
21. Under letter of Credit, Bill means
a) Bill of Entry b) Bill of Lading c) Bill of Exchange d) Invoice
22. Unclaimed Deposit means a deposit not operated for
a) 3 years b) 5 years c) 7 years d) 10 years
23. For return of paid instruments, a bank has to obtain permission from
a) Reserve Bank b) Registrar of Companies c) Central Government
d) None.
24. When the affairs of a bank are not satisfactory, a moratorium is imposed by
a) Reserve Bank b) Central Government c) Registrar of Companies d) Bank’s Board of Directors.
25. Bailment is the delivery of goods
a) as security b) for safe custody c) for using on rent d) for sale or return
26. Partnership at will means
a) No specific duration for the partnership b) No specific business
c) No specified number of partners
d) No understanding : Everybody acting at his will and pleasure.
27. The first and the foremost duty of the partner is
a) To carry on some business b) To carry on his personal business
c) To carry on the business of the firm d) None of the above.
28. All the partners can on y decide on which of the following issues.
a) to issue notice to dissolve the partnership
b) issue a cheque to the suppliers c) change of business
d) employee a clerk
29. Identify the odd item (Ref. Partnership)
a) Partnership deed b) Goodwill c) Dissolution d) Authorised capital
30. A company is a
a) Legal person created under Law b) Shareholders c) Directors
d) Employees
31. Legally a company is
a) one person b) many persons
c) number of persons equal to number of shares d) no such limit
32. A company has to be registered basically under
a) Companies Act 1956 b) Partnership Act, 1932
c) Banking Regulation Act, 1949 d) Reserve Bank of India Act, 1934.
33. Income earned by a shareholder on a company’s shareholding is called
a) Interest b) Discount c) Dividend d) None of these
34. Common Seal of a Company is
a) Substitute for signature b) Simply a seal
c) Identification mark of directors d) Logo of the company
35. Private Limited Company must have the following as a part its name:
a) Private Limited b) Private c) Company d) Only the name
36. FEMA is applicable to
a) all foreign exchange transaction in India
b) to branches / offices / agencies outside India owned and controlled by a person resident in India.
c) does not cover the transactions carried out by foreign citizens resident in India
d) a and b
37. A Bank authorized to deal in Foreign Exchange is officially called
a) Authorised Dealer b) Foreign Bank c) Dealer in Foreign Currency
d) Exchange Company
38. Under FEMA, Capital Account Transaction means a transaction resulting in crease or
decrease of
- Assets of a person resident in India but held abroad
- Assets in India of a person resident outside India c) Both a & b d) a only.
39. Clauses in the Articles of Association can be made with the approval of…
a) Registrar of Companies b) State Government
c) High Court d) None of these
40. With reference to FEMA identify the odd item:
a) Current Account b) Foreign Trade c) Interest on loans given abroad
d) Salary earned by a resident Indian in India
41. Repatriate to India means
a) Bringing to India foreign exchange
b) Retaining foreign exchange abroad as per provisions of FEMA
c) Selling to authorized person d) a & c
42. The Sub – Agent is responsible to
a) The Principal b) The Agent c) To both d) To none
43. Under the Sale of Goods Act a condition means
a) Simply a stipulation b) Stipulation essential to the main purpose
c) If violated confers a right for the cancellation of the contract d) b & c
44. The Role of Ombudsman as an Arbitrator in respect of disputes is restricted to an amount of
a) Rs.5 lakhs b) Rs.10 lakhs c) Rs.25 lakhs d) No such limit
45. Max. Cash Reserve Required to be maintained with the Reserve Bank under section 42(1) of the RBI Act, 1934 is
a) 2.1/2% on Demand liability b) 10% an Demand & Time Liability
c) 5% on Demand & Time Liability d) No ceiling at all
46. Memorandum & Articles of a company are
a) Public Documents b) Secret Documents c) Not documents
d) Meant only for the Company Directors.
47. Memorandum & Articles of any company are available for inspection in
a) The Printing Press where they are printed b) All Public Libraries
c) On the notice Board of Companies d) Office of the Registrar of Companies
48. A shareholder
a) can claim dividend as a matter of right
b) can receive only if the Board declares
c) can receive if approved in Annual General Body Meeting d) b & c
49. Act done by the Agent without the Principal’s knowledge
a) can be ratified by the Principal b) cannot be ratified
c) should always be ratified d) results in the termination of the Agency.
50. The seller of goods is deemed to be an unpaid seller when
a) The price is paid but delivery not taken
b) Price is only quoted c) Price not paid d) Price not settled
51. Regional Rural Banks were set up
a) to develop Rural Economy b) to act as bankers for the State Government
c) to act as bankers for the Central Government
d) work on behalf of the Reserve Bank in the rural areas.
52. To set up a RRB,
a) Reserve Bank has to sponsor b) Another bank has to sponsor
c) No bank need sponsor d) Anybody in the rural area can promote a RRB
53. A co – operative bank is registered under State Co-op. Societies Act
a) if the Members so desire b) if it is operating in the same State
c) if the depositors so desire d) if it is operating in more than one State
54. Identify the odd item: (Ref: Co-op. Bank)
a) Primary Co-op. Bank b) Central Co-op. Bank
c) State Co-op. Bank d) Primary Agricultural Co-op. Society
55. SARFAESI Act, 2002 is applicable to
a) whole of India b) whole of India except Jammu & Kashmir
c) major Cities of India d) Only in the notified towns under Transfer of Property Act
56. SARFAESI Act, 2002 is presupposes
a) Loan taken has to be repaid b) Security cannot be sold
c) If, not, security is liable for being sold d) a & c
57. After the Mardia Chemicals case, the Government brought about an amend – ment stipulating the deposit amount for making an appeal under SARFAESI Act, 2002. Accordingly the amount to be deposited generally is
a) 10% b) 25% c) 50% d) 75%
58. The main provision of the SARFAESI Act, 2002 is realization of securities
a) Through a Court of Law b) Without the intervention of the Court
c) Through the Registrar of Companies d) By Approaching the Police
59. Identify the odd item
a) Bank Guarantee b) Performance Guarantee
c) Deferred Payment Guarantee d) Credit Guarantee
60. Spurious Goods are defined under
a) Sale of Goods Act b) Contract Act c) Consumer Protection Act
d) Companies Act
61. Unfair Trade Practices mean
a) making use of a deceptive practice to promote sales
b) not participating in Trade Fairs c) Sale in an untidy shop
d) very high price and not a fair price
62. Consumer Protection Councils are constituted for the purpose of
a) running a grievance redressal machinery b) received consumers complaints
c) tendering advice to Government
d) creating awareness among the consumers of their rights and protecting them
63. Identify the odd item: (Re: Consumers Protection Council)
a) Taluka Level b) District Level c) State Level d) Central Level
64. BG (Bank Guarantee) issued favouring Courts, Customs, etc. guaranteeing payment by customers is called
a) financial guarantee b) performance guarantee c) DPG
d) statutory guarantee
65. In BG, the bank makes payment on
a) being convinced that the beneficiary has incurred loss
b) on being sued by beneficiary
c) on the guarantee being invoked and after seeking concurrence of debtor
d) merely on demand by the beneficiary
66. A revocable LC is one which can be amended or cancelled by … without prior notice.
a) any or all parties to LC b) the beneficiary c) the issuing bank
d) all these
67. Foreign Exchange Management Act, 1999 (FEMA) treats letter of credit as
a) foreign currency b) foreign exchange c) both a & b d) none
68. When documents are tendered under LC, the negotiating bank should
a) ensure that the documents are genuine. b) take sufficient care to scrutinize
c) take reasonable care to scrutinize d) should accept documents as tendered
69. If the LC prohibits transshipment, but BL (Bill of Lading) contains a clause for transshipment,
a) banks should refuse the documents b) banks will accept the documents
c) banks will accept the documents if LC is confirmed
d) banks will accept the documents under protest
70. “Corresponding new bank” is the term used for the banks constituted under
a) Banking Companies 1980 (Acquisition & Transfer of Undertakings) Act, 1970 & 1980
b) new generation banking companies registered under Companies Act
c) a new bank formed by amalgamation of two banking companies
d) Banking Regulation Act, 1949
71. In Agency agreement,
a) the Principal should be a major b) the Agent should be a major
c) anyone can be a minor d) both should be major
72. In Sale of Goods Act “quiet possession” means
a) Buyer will get protection b) Seller will not make noise
c) Buyer will remain quiet d) Buyer will possess and enjoy.
73. The income earned on a Debenture is
a) dividend b) interest c) discount d) incentive
74. The bank receives the following four cheques through clearing. Which one of them is deemed to be a Crossed Cheque?
a) On the top of the cheque the words, “Crossed Cheque” are written without any other marking.
b) Two parallel transverse lines are drawn on the face of the cheque.
c) On the back of the cheque two parallel transverse lines are drawn.
d) A big “X” mark is made on the top of the cheque without any other marks.
75. Crossing means,
a) Cheque is cancelled b) Cash has to be paid on identification
c) No cash can be paid across the counter d) No balance in the account.
76. ABC Co. Ltd. have a current account operated by any one of the three directors A,B and C of which “A” dies. A cheque for Rs.25,000 signed by “A” previously, is presented for payment.
The bank will
a) dishonour the cheque with the reason: “Signatory is dead.”
b) honour the cheque as the Company, the account holder has perpetual life.
c) seek the Company’s advice.
d) ask the Company to stop the payment and issue a new cheque.
77. Venu Sir is the Principle of Arunodaya College. He has received a cheque for Rs.1,00,000 in the name of the Principal, Arunodaya College crossed Account Payee and made to order. He wants to credit it to his personal account in the name of Venugopla Rao stating that he is the Principle. He approaches the bank manager to allow him to do it. State whether.
a) bank can accede to his request
b) cannot accede because the payee is the head of an educational institution and so it is meant for the principle of institution.
c) bank can accept only for the credit of the account of Arunodaya College.
d) left to the discretion of the Manager.
78. M/s. Venus & Co., a limited liability company approaches the bank to open a current account. They say theirs is not a private limited company and they produce the following documents for verification. Which one among them will give a conclusive proof of Public Limited company?
a) a resolution signed by all the directors that theirs is a Public Ltd. Co.
b) memorandum Association c) articles of Association
d) certificate of Incorporation & Certificate to Commence Business issued by the Registrar of Companies of the state.
State whether the following is True or False
79. An agency is terminated by the Principal by revoking his authority, given earlier to the Agent
80. Agency is terminated by the Agent by renouncing it
81. A sale involves two persons
82. An agreement to sale becomes a sale when the parties perform mutual promises
83. A gift could be a sale
84. Branch licensing for Regional Rural Banks should be though NABARD
85. Under a contract of Guarantee, the surety has no liability at all
86. Surety is liable only for the Principle amount of the debt
87. Continuing Guarantee continues even after the debt is cleared
88. As soon as the surety clears the liability he will occupy the place of creditor
89. Bailee has to take care of the goods as if they are his own
90. Bailee need not return the goods unless claimed on the expiry of period
91. Partnership is a business relationship for sharing profits
92. Partnership business cannot be carried on by one partner acting for all
93. A shareholding in a company is a movable property of a shareholder
94. In its name a public limited company should invariably have the phrase, “Public Limited Company”
95. All the joint stock companies must have the word “Limited “ in their name unless the liability of the members is unlimited.
96. Clauses of Memorandum of Association can be altered by special resolution and the sanction of company law board.
97. A Member has no right to approach the Company Law Board to order investigation into the affairs of the Company.
98. If a company commits an act of contravening the Memorandum it can be ratified by the shareholders at the general meetings of the Shareholders
99. Contravening the provision of the Articles of Association can be ratified at the Annual General Meeting of the shareholders
100. The property of the firm has to be held and used by the partners for the use of partnership
101. A partner is the Agent of the Firm
102. A statutory guarantee is given to a Court of Law
103 Letter of Credit is a negotiable Instrument
104. Some LCs enable the beneficiaries to avail loans
105. LC issuing bank undertakes to pay if the documents mentioned therein are tendered without any discrepancy.
106. A private limited company has a perpetual life.
107. In the case of a Joint Hindu Family, the Manager or the Karta, in the best interest of the family, can take a loan against the assets of the family without consulting the adult members
108. All Insurance Contracts are the contracts of Indemnity
109. The Agent is bound to conduct the business of the Principle
110. The Agency is terminated when the Principle is adjudicated as an insolvent
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MODEL I—BANKING ==ANSWERS
1.d 2.c 3.d 4.c 5.c 6.a 7.b 8.c 9.d 10.c
11.d 12.a 13.c 14.a 15.c 16.a 17.a 18.a 19.c 20.d
21.c 22.d 23.d 24.a 25.b 26.a 27.c 28.a 29.d 30.a
31.a 32.a 33.c 34.a 35.a 36.d 37.a 38.d 39.d 40.d
41a. 42.b 43.d 44.b 45.d 46.a 47.b 48.d 49.a 50.c
51.a 52.b 53.b 54.b 55.a 56.d 57.c 58.b 59.d 60.c
61.a 62.d 63.a 64.a 65.d 66.c 67.d 68.c 69.b 70.b
71.a 72.d 73.a 74.b 75.c 76.b 77.c 78.d 79.true 80.true
81.T 82.T 83.F 84.T 85.F 86.F 87.F 88.T 89.T 90.F
91.T 92.F 93.F 94.F 95.T 96.T 97.F 98.F 99.T 100.T
101.T 102.T 103.F 104.T 105.T 106.T 107.T 108.T 109.T 110.T
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