LEGAL ASPECTS OF BANKING
01. A Blue Chip
means
a) Excellent
Management Professional
b) Shares of
good Companies
c) Reinforced
Concrete
d) Blue Coloured
Precious Stones
02. A Bridge
finance is extended for overcoming
a) Delay in
getting of the public issue
b) Delay in
disbursement of term loan
c) Delay in
disbursement of working capital for completing the documentation
d) For A & B
e) A, B & C
03. As per SEBI
guidelines , any entity /person engaged in the marketing and selling of mutual
funds products is required to pass a certification test and obtain a
registration number from case of
a) SEBI
(Securities and Exchange Board of India)
b) AMFI
(Association of Mutual Funds in India )
c) NSE (National
Stock Exchange)
d) A, B & C
04. Interest
charged in advance accounts as per RBI directive can not be subject to scrutiny
by court. This is provided in
a) Section 35A
of BR Act
b) Section 21(A)
of BR Act
c) Of BR Act
d) Section 26 of
RBI Act
05. A floating
charge means
a) Charge at the
time or before the company is floated
b) Charge on all
floating assets of the company
c) An equitable
charge on all assets of the company
d) Any of the
above.
06. The charge by
way of lien over goods belonging to a company must be registered with Registrar
of Companies within a period of
a) 30 days of
creation of law
b) This charge
need not be registered as this is not hypothecation, mortgage etc
c) 30 days of
default in repayment
d) A or C
whichever is earlier
07. Hypothecation
is defined in
a) Hypothecation
Act
b) Indian
Contract Act
c) Transfer of
Property Act
d) SARFAESI Act
08. The State
Govt. wants to seize the goods pledged to bank as the borrower has defaulted in
payment of tax. In this case,
a) Govt dues
enjoys priority over bank dues
b) Bank dues
enjoys priority over Government dues
c) Both enjoys
equal priority
d) The
Government cannot seize the goods.
09. The
auctionable claim is assigned in favour of more than one assignee at different
points of time. The priority of charge is determined with reference to date of
a) Execution of
notice of assignment
b) Execution of
the written instrument for assignment
c) Receipt of
notice of assignment
d) NoA
10. A Mortgage
cannot be enforced in the absence of
a) Delivery of
the title deeds
b) Legal Opinion
c) Narration in
Title deeds register
d) Pecuniary
obligation.
11. A simple
mortgage need be registered when
a) The Loan
amount exceed Rs.100/-
b) Value of
mortgaged property exceeds Rs.100/-
c) A or B
whichever exceeds Rs.100/-
d) Both A &
B
12. A Mortgage of
the mortgaged property is called
a) Sub-mortgage
b) Second
Mortgage
c) Re-mortgage
d) Fraudulent
Mortgage
13. For
determining the advance amount the shares will be valued on the basis of
a) Current
market price
b) Average
market price for the last 12 months
c) Face Value
d) A or B
whichever is lower.
14. Assignment of
LIC policy is done as per section…… of ……. Act.
a) 132 of
Transfer of Property Act
b) 38, Indian
Insurance Act 1938
c) 138 of
Contract Act
d) NOA
15. Government
Promissory notes should be sent to public debt office to confirm genuiness of
a) The
Promissory note
b) Endorsement
c) Alternations,
if any
d) All the
above.
16. Gold Loans
are given only to properly introduced persons because of
a) RBI’s
directives
b) Bank will
lose the right to sell the gold if the pledgee’s title is defective
c) Sec.131 of
Negotiable Instrument Act
d) All the
above.
17. Reserve
created out of profit from business operation is known as
a) Capital
Reserve b) Profit Reserve
c) Revenue
Reserve d) Free Reserve
18. The following
is a Term Liability
a) Debentures
payable within a year from the date of Balance Sheet
b) Preference
Shares payable within a period of one year from the date of Balance Sheet
c) Term Loan
instalments payable in a year
d) Deposit from
public payable in 2 years time.
19. Investment in
Shares of other companies can be classified as Current Asset only when the
shares are
a) Quoted
b) Relate to
trade investment
c) A &B
d) Shares cannot
be classified as Current Assets
20. The following
is not usually classified as Other Non Current Assets
a) Advance given
to Directors
b) Tender
Deposit
c) Receivable
outstanding beyond 12 months
d) Preliminary
and Pre operative expenses
21. A unit is
showing a net profit of Rs.46,000/-. Dividend received Rs.8000/-. Operating
expenses is
Rs.96000/-. Find the gross profit
a) 134000 b)
150000 c) 142000
22. A firm paid
Rs.16 lacs for purchase of a business with machinery worth Rs.10 lacs and
other assets worth
Rs.4 lacs. In this case the difference of Rs.2 lacs is treated as
a) P&L Loss
on purchase of asset
b) Goodwill
Intangible Asset
c) Fixed Asset
by inflating the value of fixed asset
d) Current Asset
by inflating the value of current asset
23. If a sum of
Rs10,000/accumulates to Rs16,000/after 3 years at simple Interest , what is the
rate of Interest.
a) 16%
b) 25%
c) 23%
d) 20%
24. The Net
Working Capital refers to
a) Liquid
surplus
b) Borrowers
Contributions from long term source to short term use
c) Excess
Current Asset over Current Liability
d) All the
above.
25. The duration
of an operating cycle in 30 days. The operating cycle in this case repeats…….
times a year
a) 30 times
b) 12 times
c) 10 times
d) 52 times
26. The following
is not a chargeable current assets
a) Book debt
b) Spares
c) Work in
process
d) Construction
work in progress
27. As per RBI
guidelines, a bank is required to assess the working capital on the basis of
the following method
a) Turnover
Method
b) Cash Budget
Method
c) MPBF of
Tandon Method
d) Any Method as
decided by the individual banks
28. As per the
Second method of lending the borrowers contribution from long term source
a) is minimum
25% of total current assets
b) is restricted
to 25% of working capital gap
c) is 25% of
other current liabilities
d) any amount
which the unit can bring
29. Total Current
Asset of a unit is Rs.300 lacs. Other Current Liabilities is Rs.200 lacs. The
MPBF as per Ist Method & 2nd method can be
a) 75 and 25
lacs
b) 25 lacs and
75 lacs
c) Rs.100 lacs
& Rs.150 lacs
d) Rs.20 lacs
& Rs.80 lacs
30. A borrower
need not bring any matching contribution from long term sources in respect of
a) Export
Receivables
b) Finished
goods produced for a specific export order
c) Adhoc limits
d) A & B
31 A Company makes a
single product with a sales price of Rs.10/- and a marginal cost of Rs.6/-.
Fixed Cost are Rs.60000/- p.a. In this case,
Number of units at
break even
a) 15000
b) 10000
c) 6000
d) none of the
above.
32.In the above
problem, Profit Volume Ratio
a) 30%
b) 40%
c) 50%
d) 60%
33. The long term
use is 120% of long term source. This indicates the unit has
a) CR 1.2
b) Negative TNW
c) Low Capital
d) Negative NWC
34. Tangible
Networth is computed by
a) Total
Tangible Asset less outside liabilities
b) Capital, free
reserves & surplus less Intangible Asset
c) Networth less
Intangible Asset
d) All the
above.
35. A company has
a networth of Rs.5 lacs. Term liability Rs.10 lacs, Fixed Asset of Rs.16 lacs
and Current Asset Rs.25 lacs. There is no intangible asset or ONCA. It's net
working capital is
a) Rs. 10 lakhs
b) Rs. 1 lakh
c) Rs. 9 lakh
d) Rs. (-) 1
lakh
36. Financial
leverage means
a) use leveraged
lease to plan tax liability
b) High degree
of solvency
c) Law bank
finance
d) Use of more
debt capital to increase profit.
37. Diversion
means
a) Diversifying
to activities not related to main business
b) Retrenching
employees
c) Use of
Current Assets for payment of Term Liability
d) Use of
Current Liabilities for long term use
Examine the following balance sheet to
answer the question thereafter:
Liability Asset
Equity Capital 200 Gross Block 1000
Less:
Dep 200
-------
Preference Share
Capital 100 Net Block 800
Term loan 600 Inventory 300
Bank Overdraft 400 Investment in Govt. security 50
Sundry Creditors 100 Preliminary expenses 100
------- Receivables 150
-------
1400
1400
38. Capital Gearing Ratio
a) 0.78
b) 1.20
c) 0.67
d) 0.87
39. Debt Equity Ratio is
a) 2:1
b) 3:1
c) 4:1
d) 1:1
40. Total Outside Liability/TNW
a) 3.67:1
b) 5.50:1
c) 12 : 1
d) 6 : 1
41. Net working capital
a) 100
b) NIL
c) 200
d) Cannot be
calculated
42. Quick Ratio
a) 0.4:1
b) 2.1:1
c) 1.5:1
d) 1:1
43. Total Tangible Asset
a) 1400
b) 1300
c) 1500
d) 1600
44. Opening stock
of raw material is Rs.30 lacs, closing stock is Rs.50 lacs. Annual purchase is
Rs.500 lacs. What is the average period of holding of Raw Materials?
a) 2 M
b) 1.5 M
c) 1 M
d) NOA
45. Holding
period of Receivables is calculated with reference to
a) Cost of Sales
b) Cost of
Production
c) Gross Sales
d) NOA.
46. Creditors
Velocity expresses the
a) Maximum
period for which credit is given
b) Average
period of credit enjoyed
c) Minimum
period of credit given
d) Minimum
period for which credit enjoyed.
47. The following
is a “Means of Finance” for the cost of project
a) Leasing
b) Subsidy
c) Deferred
Credit from Suppliers
d) All the
above.
48. For a large
and medium units DSCR should be
a) Maximum 2:1 (b) Maximum 1.5:1
c) Minimum 2:1 (d) Minimum
1.5:1
49. Variable Cost
and Sale Price remaining the same, a rise in fixed cost result in
a) High BEP (
High Break even point)
b) Low BEP
c) High Margin
of Safety
d) B&C
50. What is the
formula for charging compound interest with Annual Compounding.
a) I = Pnr
b) P+I
c) A = P( 1+r)n
d) Any of the 3
51. What is the
minimum period to be allowed to drawee to decide on acceptance / rejections of
a usance bill
a) 2 Days
b) 48 Hours
c) 48 Hrs
including public holidays
d) 48 hrs
excluding public holidays
52. Ramesh
deposited Rs 10,000/ for 3 years . The Interest is compounded annually at 10% .
What will be the amount receivable by Ramesh at the end of 3 year period.
a) 13,310
b) 13,000
c) 12,000
d) 13,300
53. While
calculating the value of (1+.10)3 (to the power of 3) the same can be
calculated
a) manually
b) using
calculator
c) using MS
Excel
d) all the above
54. Annuities are
a) The annual
interest payable or receivable in a debt or an investment.
b) Lumpsum
payment made any time during the course of a fixed period of time.
c) The total
amount payable annually in respect of a debt or investment
d) Series of
payments (many number of cash flows) made at a specified frequency over the
course of a fixed period of time
55. An Annuity is
an ordinary Annuity if,
a) Payments are
required to be made at the beginning of each period.
b) Payments are
required to be made at the middle of each period
c) Payments are
required to be made at ordinary installments
d) Payments are
required to be made at the end of each period.
56. The Marine
Insurance Policy should be expressed in
a) Rupees
b) US Dollars
c) Same Currency
in which the LC is drawn
d) Any foreign
currency.
57. The discount
rate which equals the present value of promised flow to the current market
price /purchase
price. This is known as
a) Yield to
maturity
b) NPV
c) IRR
d) Treasury
bills
58. The value
which the bond holder gets on maturity is called
a) Maturity
value
b) NAV
c) the
redemption value
d) IRR
59. This is the
amount by which an asset is expected to lose its value. What is this
a) Market value
b) Wear and tear
c) Depreciation
d) NAP
60. EEFC can be
opened in
a) Rupees
b) Any one of
the four designated currencies
c) One of the
permitted currencies
d) AMUS
61. A method of
calculating depreciation of an asset , which assumes that the asset will lose
an equal amount of value each year is known as
a) Salvage value
b) Depreciation
c) Straight line
Method of calculation
d) Accumulated
Depreciation
62. A credit
facility will be classified as NPA if……… remains past due for one quarter
a) Interest
b) Instalment
c) A or B
d) A & B
63. As per
Prudential Accounting Norms prescribed by RBI, assets are classified into ……
type
a) 3
b) 8
c) 4
d) 5
64. The home
currency price of one unit of a foreign currency is quoted eg USD 1 = Rs43.20
a) Indirect
quotation
b) Exchange rate
c) Rate of USD
d) Direct
quotation
65. If the rate
of a currency A is known in terms of currency B and rate of Currency B in terms
of Currency C , we can derive the rate of currency A interms of Currency C
using the technique of cross currency.
a) Exchange rate
b) Cross rate
c) Forward rate
d) None of the
above
66. As per NABARD
guidelines the minimum Internal Rate of Return for Agricultural Project is
a) 15%
b) 25%
c) 30%
d) 18%
67. In case of
Direct quotation if the forward rate is more than spot rate the base currency
is called as being at -----
a) Discount
b) Forward rate
c) Spot rate
d) Premium
68. An operation
by which one can make risk free profits making use of the interest
differentials between two places is called.
a) Open market
operation
b) Profitability
c) Free market
d) Arbitrage
69. If the
forward rate is less than the spot rate the base currency is said to be at
a) Discount
b) Premium
c) At par
d) None of the
above.
70. The amount
which the owner of the business has invested in the firm and can claim from the
firm is known as ------
a) Capital
b) Loan
c) Term Loan
d) Fixed Asset.
71. The amount
which the firm owe to outsiders
a) Assets
b) Capital
c) Liabilities
d) Intangible
assets
72. A person who
owes money to a firm , mostly on account of credit sales of goods is called.
a) Creditor
b) Debtor
c) Borrower
d) lender
73. The balance
sheet represents an expansion of the equation as Assets = Liabilities +Capital
This statement is
a) Cannot be
relied
b) false
c) Not
acceptable
d) True
74. Assets minus
original capital = Liability
a) True b) False
c)can be accepted d) None of the above.
75. If a firm
borrows money its capital would be reduced
a) This
statement is false
b) This
statement is true
c) The same is
acceptable
d) None of the
above
76. ---------- is
the value of an established business over and above the value represented by
it’s tangible assets .
a) Assets
b) Liabilities
c) Goodwill
d) None of the
above.
77. If the
partnership does not mention any method of maintaining capital account then
------- method of capital has to be used.
a) Fluctuating
capital account
b) Partners
Current account
c) Capital
account
d) Fixed capital
account
78. The joining
of a new person into the existing partnership as a partner is called
a) Retirement of a partner
b) Resolution of a partnership
c) Good will
d) Admission of a partner
79. Under the
-------- capital method two accounts are maintained for each partner viz
current account and capital account.
a) Fixed Capital
Method
b) Fluctuating
capital method
c) Equity
capital Method
d) Preference
share capital
80. As per new
guidelines both SLR and non SLR securities are to be classified into
a) Held to
maturity.
b) Available for
sale
c) Held for
trading
d) All the above
.
81. Amount of
Investment under Securities held to maturity should not exceed --------- of
Bank’s total investment
a) Twenty
percentage of the Bank’s total investment (20% of total investment)
b) Twenty five
percentage of the Bank’s total investment (25% of total investment)
c) forty nine
percentage of the Bank’s total investment (49% of total investment)
d) forty
percentage of the Bank’s total investment (40 % of total investment)
82. The form of
Balance sheet and Profit and loss account of a Banking Company is prescribed in
forms A and B of -------------- schedule of the Banking Regulation Act 1949.
a) Second
b) Third
c) First
d) Fourth
83. The Companies
Act prohibits issue of any preference share that is -----------
a) cumulative
b) redeemable
c) both a and b
d) Irredeemable
84. The capital
which is stated in the Memorandum of Association is known as
a) Memorandum
Capital
b) Paid up
capital
c) Authorised
capital
d) Issued
capital
85. Authorised
capital is also known as
a) Nominal or
Registered Capital
b) Equity
capital
c) Preference
share capital
d) All the above
86. When shares
are issued at higher than the face value of the shares they are said to be
issued at a
a) Discount - b) Par- c) Premium
e) None of the
above
87. Issue of
shares at a discount should be authorized by the members by passing a
resolution
in the general
meeting and resolution of members should specify the rate of discount
which should not
exceed 10% of the face value of the shares Further this is subject to
a) Obtention of
sanction from Company Law Board
b) These shares
must be issued with in 2 months
c) Both (a) and
(b)
d) None of the
above
88. According to
section 79A inserted by Companies Amendment Act 1999 --------- shares
means equity shares
issued by the company to employees or directors at a discount or
for consideration
other than cash for providing know how or making available right in the
intellectual
property rights or value addition, by whatever name called.
a) Employees
stock option
b) Equity shares
c) Sweat equity
d) None of the
above.
89. A scheme
under which the company grants option (A right but not an obligation ) to an
employee to apply
for shares of the company at a pre determined price is known as
a) Employees
Stock Option Scheme (ESOS)
b) Equity shares
c) Sweat Equity
d) None of the
above.
90. The formation
of a company is governed by the rules and regulations as contained in
a) Indian
Companies Act
b) RBI act
c) BR Act
d) None of the
above.
91. Profit and
Loss Account is one of the Final Accounts prepared by a Company. What is the
other one.
a) Schedules to
P&L accounts
b) Balance sheet
c) Trading
Account
d) None of the
above.
92. Liabilities
that will arise on the happening of certain event
a) Current
liabilities
b) Term
Liabilities
c) Contingent
Liabilities
d) None of the
above
93. Schedule VI
of the Companies Act prescribes the form of
a) Balance sheet
b) Trading
Account
c) Balance sheet
d) None of the
above.
94. A computer
Accounting system runs based on a set of instructions called the software
programmes developed
by a person who is a computer software professional and he is
called -------
a) Programmer
b) Software
Engineer
c) IT man
d) None of the
above.
95. Accounting
software may be written in any one of the computer languages such as
a) Windows, UNIX
etc
b) JAVA C+ etc
c) COBOL, Foxpro
etc
d) None of the
above.
96. Computers are
basically classified into
a) Analogue
Computers and Digital computers
b) Hardware and
software
c) Wipro and
Infosysis
d) All the above
97. A Customer
Service Meet should be organized at every Branch
a) Once in a
Fortnight
b) Once in a
Quarter
c) Once in a
Month
d) Once in a
Half-Year
98. Who cannot
file a complaint under Consumer Protection Act?
a) Banks
b) State
Government
c) Public
Interest Litigation Group
d) Persons
receiving services free of charge
99. Banking
Ombudsman is appointed by
a) Central
Government / Ministry of Finance
b) State
Government
c) IDBI
d) RBI
100. DRT has
jurisdiction relating to cases pertaining to Banks, Financial Institutions with
debt
amount of
a) Rs. 1 lakh
and above
b) Rs. 5 lakh
and above
c) Rs. 10 lakh
and above
d) Rs. 20 lakh
and above
ANSWERS
1)
b 2) d 3) b
4) b 5) c 6) b
7)
d 8) b 9) b 10)
d 11) a 12) a
13)
d 14) b 15) d 16) b 17) c 18)
d
19)
c 20) d 21) a 22) b 23) d 24)
d
25)
b 26) d 27) d 28) a 29) a 30)
a
31)
a 32) b 33) d 34) d 35) d 36)
d
37)
d 38) a 39) b 40) b 41) b 42)
a
43)
b 44) c 45) c 46) b 47) d 48)
c
49)
a 50) c 51) d 52) a 53) b 54)
d
55)
d 56) c 57) a 58) c 59) c 60)
c
61)
c 62) c 63) c 64) d 65) b 66)
a
67)
d 68) d 69) a 70) a 71) c 72)
b
73)
d 74) b 75) a 76) c 77) d 78)
d
79)
a 80) d 81) b 82) b 83) d 84)
c
85)
a 86) c 87) c 88) c 89) a 90)
a
91)
b 92) c 93) a 94) a 95) c 96)
a
97)
d 98) d 99) d 100) c