LEGAL ASPECTS OF BANKING

OPERATIONS
JAIIB
MODULE C & D

 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

 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)

 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

 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

 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

 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

 07.When bank or financial institution lends

money against security they are the
A. Obligor
C. Lender

B. Originator
D. Un Secured Creditor

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

 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

 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

 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

 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

 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

 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

 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

 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

 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

 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

 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

 20.The date agreed upon by the secured

creditor representing not less than threefourth in value of the amount outstanding
on such date
A. Agreed Date B. Record Date
C. Due Date
D. Agreement Date

 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

 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.

 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

 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

 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.

 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

 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

 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

 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

 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

 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

 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

 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

.34. Review Authority for Banking

Ombudsman is
A. Banking Ombudsman himself
B. Awarding Official
C. RBI Executive Director
D. None

 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

 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

 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

 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

 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

 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.

 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

 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

 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.

 44. The recover certificate issued (DRT)

can be withdrawn by
A. Recovery Officer
B. Competent Judge
C. Presiding Officer
D. Authorised Officer

 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

 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

 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

 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

 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

 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

 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

 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

 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

 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

55. An agreement entered into by a minor is

A. void
B. invalid
C. not valid since inception
D. All of these

56. Identify the correct group

A .Indemnity
- Contract Act
B. Pledge
- Transfer of Property Act
C. Mortgage
- Contract Act
D. Assignment - Contract Act

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

 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

 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

 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

 61. Sale of Goods Act will cover

A. Future goods B. Actionable Claims
C. Land
D. None of these

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.

 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

 64.Caveat emptor a warning and caution to

A. Buyer
C. Both a & b

B. Seller
D. None of these

 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

 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.

 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

 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

 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

 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.

 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

 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.

 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

 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

 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

 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

 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

 78. Notified Area is applicable to

A . Pledge
B . Immovable property taken as Main
security
C. Usufructuary Mortgage
D. None of these

 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.

 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

 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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T.M.C.VASUDEVAN
M 9819500380
P - 022- 27606208
vasu1611@yahoo.co.in