INDIAN INSTITUTE OF BANKING

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INDIAN INSTITUTE OF BANKING
FINANCEJAIIBMODULE (C D) LEGAL ASPECTS OF
BANKING OPERATIONSFriday, 07 April, 06T M C
VASUDEVAN vasu1611_at_yahoo.co.in
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01.. Identify which one is correct.

• A.. A contract of indemnity has two persons
• B.. A contract of guarantee also has two
  persons.
• C.. A minor cannot be given loan in his name
• D.. A pledge in respect of company advance has to
  be registered with ROC.

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02..The award of a Banking Ombudsman will be
reviewed by

• A.. The Executive Director of RBI
• B.. The Deputy Governor in charge of Rural
  Planning and Credit Department of RBI.
• C.. The CMD of State Bank of India
• D.. The Banking Ombudsman himself

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03..Which is not correct (Banking Ombudsman)

• A.. The maximum amount the Banking Ombudsman can
  award as compensation is Rs.10 lacs.
• B.. Limitation period for filing of the review
  application is one month.
• C.. Failure to honour guarantee comes under its
  purview .
• D.. None of the above

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04..Which one is incorrect(Consumer Protection
Council)

• A.. The Collector of the District to be the
  Chairman of the District Council
• B.. State Consumer Protection Council to meet at
  least 3 meetings every year..
• C..For Central Consumer Protection Council the
  Chairman will be the Minister in charge of the
  consumer affairs in the Central Government.
• D.. The highest council is the Central Council
  who has the jurisdiction for the entire country.

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05..For filing any complaint before a District
Forum, State Commission or the National
Commission the limitation period is from the date
of cause of action.

• A.. 1 year
• B.. 2 years
• C.. 3 years
• D.. None of the above

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06.. If the compensation claimed is above Rs.25
lacs but does not exceed Rs1 Crore then the
appeals against the orders of any District Forum
to be preferred before

• A.. The High Court
• B.. The State Commission
• C.. The Central Council
• D.. The Supreme Court

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07.. For inspection of books by order of Court or
Judge to be served on the bank at least , before
the same is to be obeyed.

• A.. 10 days
• B.. 14 days
• C.. 30 days
• D.. None of these

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08..Based on the mere entries (as per provisions
of the Bankers Book Evidence Act,1891

• A.. A person can be made liable
• B.. A person cannot be made liable
• C.. Further evidence necessary
• D.. Further evidence not necessary

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09..Bankers books (identify the odd one)

• A.. Daybooks
• B.. Magnetic Tape
• C.. Records kept at Disaster recovery site
• D.. None of these

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10..The SECURITISATION AND RECONSTRUCTION OF
FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY
INTEREST, 2002 (SARFAESI ACT)

• A.. Is effective wef 21 June 2002.
• B.. Not applicable in the State of Jammu
  Kashmir
• C.. Applicable to housing finance companies as
  notified by the Central Government
• D.. Applies for cases where security interests
  are established for due repayment.

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11..In Mardia Chemicals vs Union of India
Supreme Court as declared that

• A.. SARFAESI Act is Constitutionally valid
• B.. Except a part of Section 17(2)
• C.. To Deposit 75 for appeal, the Apex court
  was not in favour
• D.. All the above

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12.. The Government of India has

• A.. issued an order
• B.. issued a notification amending the Sec17(2)
  of SARFAESI Act.
• C.. Instead of 75, the borrower filing an appeal
  has to deposit 50
• D.. Both B C are appropriate

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13..For classification of any account as NPA it
is important that the classification is done as
per

• A.. Directives of Head Office of the Bank
  concerned
• B.. Guidelines of R B I
• C.. Guidelines of the Concerned Banks Corporate
  Office
• D.. Directives of R B I

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14..The Originator is

• A.. The Financial Institution
• B.. The Debtor
• C.. The Guarantor
• D.. None of them

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15.. Who cannot be a Qualified Institutional
Buyer.

• A.. Bank
• B.. Insurance Company
• C.. Foreign institutional investor
• D.. A High Net individual Customer of a Bank

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16..A reconstruction company

• A.. is engaged as property developer
• B.. is formed for the purpose of asset
  reconstruction
• C.. is registered with SEBI
• D.. None of these

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17..Acqusition of financial asset by
Securitisation or reconstruction company from the
Originator is called

• A.. Take Over
• B.. Purchase
• C.. Contract
• D.. None of these

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18.. SEBI is the regulatory authority for
securitisation or reconstruction company.

• A.. The statement is not incorrect
• B.. The statement is not false
• C.. It is not SEBI but the Central Government
• D.. None of these

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19..The Securitisation Company not only to be
registered under the Companies Act but also needs
registration from RBI as per

• A.. RBI Act
• B.. Companies Act
• C.. SARFAESI Act
• D.. SEBI Act

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20..Security interest does not include

• A.. Mortgage
• B.. Hypothecation
• C.. Assignment
• D.. None of these

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21- A person who is holding 12 of the paid up
equity capital of the reconstruction company is
known as

• A.. Sponsor
• B.. Obligor
• C.. Originator
• D.. Institutional investor

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22- A security receipt is

• A.. Similar to Banks Fixed Deposit receipt
• B.. Issued by Securitisation Company
• C.. Issued by the Bank
• D.. Both B C

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23..Which is incorrect

• A.. A Reconstruction company to obtain
  registration certificate from RBI.
• B.. It has to have owned funds not less than Rs.2
  crores
• C.. It cannot formulate separate schemes for
  acquisition of financial asset.
• D.. It has to disclose the risk factors to the
  investors.

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24.. The Securitisation company can acquire
financial asset without execution of any deed of
assignment or transfer in its favour by the
original creditor.

• A.. True
• B.. False
• C.. Without agreement how it can be legally valid
• D.. Deed of Assignment is a must.

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25.. Debenture

• A.. Appears on the left hand side of the balance
  sheet
• B.. It is shown as liability representing
  commitment
• C.. It is for payment of consideration to be
  paid to the bank for acquisition of financial
  asset from it
• D.. It represents the money borrowed.

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26.. Security Receipt

• A.. is a document
• B.. is issued by the bank
• C.. is issued in favour of the investors
• D.. All the above

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27.. The Security receipt issued to the holder
does not attract registration as per the
Registration Act,1908.

• A.. True
• B.. False
• C.. Registration compulsory for such receipts.
• D.. None of the above

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28. If there is a dispute among the
bank,securitisation company and the qualified
institutional buyer, then the same to be settled
by conciliation or arbitration as provided in the

• A.. Reserve Bank of India Act
• B.. SARFAESI Act
• C.. SEBI Act
• D.. None of these

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29..The power given to the secured creditor, as
creditor has overriding effect over the
provisions related to mortgage in

• A.. The Registration Act
• B.. The Transfer of Property Act
• C.. The Contract Act
• D.. The SARFAESI Act

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30..As per Sec 13(2) of the SARFAESI Act the
first notice to be given asking for clearance of
full liability within

• A.. 30 days
• B.. 60 days
• C.. 60 days from the date of notice
• D.. 60 days from the receipt of notice

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31.. A borrower has been asked to repay as per
provisions of SARFAESI Act. He has sent a reply.
The bank responded to the notice and made their
position clear. Based on that reply, the borrower

• A.. can file an appeal
• B.. in the DRT
• C.. cannot file an appeal
• D.. can seek appropriate courts intervention

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32.. For a Public Sector bank an Authorized
Officer

• A.. Officer of the bank
• B.. At least a Chief Manager
• C.. Branch Manager
• D.. Minimum AGM level

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33..If the offer of sale of property is accepted
by the purchaser and the secured creditor
confirms then the purchaser has to deposit

• A.. 100
• B.. 75
• C.. 50
• D.. 25

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34..Against the DRTs order, appeal can be filed
to the appellate Tribunal within 30 days.

• A.. Subject to remitting 50
• B.. The Tribunal may reduce to 25
• C.. The Tribunal to record the reasons
• D.. All are correct

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35.. Registration is not required on certain
things and charges. Identify the Act.

• A.. Merchant Shipping Act,1958
• B.. Patents Act,1970
• C.. Designs Act 2000
• D.. None

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36.. A bank has sold the security under the Act.
After that they wish to proceed in the civil
court as the liability outstanding is Rs.7.00 lacs

• A.. Not possible
• B.. Possible
• C.. Impossible
• D..Other legal recourse not available

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37..The Banking Ombudsman from his office could
be removed in the public interest by

• A.. Parliament
• B.. RBI
• C.. Central Government
• D.. Finance Ministry

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38.. The Arbitral Award is deemed to be made on

• A.. When the Arbitrator delivers his order
• B.. When the Banking Ombudsman signs the same
• C.. Both A B are correct
• D.. Only A is correct

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39..The Debt Recovery Tribunal Act is applicable
to

• A.. Private Banks
• B.. Nationalised Banks
• C.. Co-operative Banks
• D.. All the above

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40..Recovery -Officer (DRT related) is

• A.. Recovery Officer of the creditor bank
• B.. Appointed by the Central Government
• C.. Appointed by the Head Office of a Bank
• D.. Appointed by RBI

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41..DRT (Tribunal) to dispose off the application
within

• A.. 3 months
• B.. 6 months
• C.. 180 days
• D.. None of these

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42..The Correction any clerical or arithmetical
mistake in the Recovery Certificate has to be
done by

• A.. Concerned Clerk himself
• B.. The Presiding Officer of the Tribunal
• C.. The Recovery Officer
• D.. Any one of them

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43..The Recovery officer while carrying out his
job, a third party is affected. Then he can file
an appeal

• A.. Within 30 days
• B.. To the Tribunal
• C.. Both A B are correct
• D.. Both A B are wrong

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44..Who is not the public servant as per the
Sect21 of the Indian Penal Code.

• A.. The Chairperson of an Appellate Tribunal
• B.. A Director of a Public Limited Company
• C.. The Recovery Officer
• D.. The Presiding Officer of a tribunal

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45..There is an existing Decree (yet to be
enforced) and the DRT

• A.. can issue recovery certificate thereon
• B.. cannot issue
• C.. has to obtain concurrence of the earlier
  court
• D.. can act individually

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46.. Bank has given a loan to his borrower on
the personal surety of his brother in law. The
borrower has defaulted. When the bank approached
the guarantor he has advised the bank to exhaust
all the remedies against the borrower. The bank
relied on their agreement

• A.. The bank will succeed
• B.. The bank will loose
• C.. The guarantor is correct
• D.. The guarantor is not correct

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47..The bailee is responsible in case there is a
loss to the goods bailed.

• A.. True
• B.. If he is not taking adequate care
• C.. It is bailor and not bailee responsible
• D.. Both are responsible

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48..Under Pledge, the possession is with the

• A.. Borrower
• B.. Creditor
• C.. Owner
• D.. None

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49.. No consideration is necessary in respect of

• A.. An agency
• B.. Safe Deposit Locker
• C.. Mortgage
• D.. Demand Promissory Note

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50.. The right of re-sale is available to

• A.. An unpaid seller
• B.. The user
• C.. The Debtor
• D.. All

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51.. A company can have maximum number of
directors

• A.. 7
• B.. 12
• C.. 15
• D.. 20

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52.. To receive rents and profits arising from
the property

• A.. Simple Mortgage
• B.. Usufructuary Mortgage
• C.. English Mortgage
• D.. Mortgage By way of Conditional Sale

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Thank you
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