INDIAN INSTITUTE OF BANKING & FINANCE

JAIIB

MODULE (C & D)

LEGAL ASPECTS OF BANKING OPERATIONS

Friday, 07 April, 06T M C VASUDEVAN

vasu1611@yahoo.co.in

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.

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

A.. The Executive Director of RBIB.. The Deputy Governor in charge of Rural

Planning and Credit Department of RBI.C.. The CMD of State Bank of IndiaD.. The Banking Ombudsman himself

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

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.

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 yearB.. 2 years C.. 3 yearsD.. None of the above

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

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

08..Based on the mere entries (as per provisions of the Banker’s 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

09..Bankers books (identify the odd one)

A.. DaybooksB.. Magnetic TapeC.. Records kept at Disaster recovery siteD.. None of these

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.

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

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

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 Bank’s Corporate Office

D.. Directives of R B I

14..The Originator is

A.. The Financial Institution

B.. The Debtor

C.. The Guarantor

D.. None of them

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

16..A reconstruction company

A.. is engaged as property developerB.. is formed for the purpose of asset

reconstructionC.. is registered with SEBID.. None of these

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

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

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

20..Security interest does not include

A.. Mortgage

B.. Hypothecation

C.. Assignment

D.. None of these

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

22- A security receipt is

A.. Similar to Bank’s Fixed Deposit receipt

B.. Issued by Securitisation Company

C.. Issued by the Bank

D.. Both B & C

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.

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.

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.

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

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

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

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

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

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 court’s intervention

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

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%

34..Against the DRT’s 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

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

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

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

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

A.. When the Arbitrator delivers his orderB.. When the Banking Ombudsman signs the

sameC.. Both A & B are correct

D.. Only A is correct

39..The Debt Recovery Tribunal Act is applicable to

A.. Private Banks

B.. Nationalised Banks

C.. Co-operative Banks

D.. All the above

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

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

A.. 3 months

B.. 6 months

C.. 180 days

D.. None of these

42..The Correction any clerical or arithmetical mistake in the Recovery Certificate has to be done byA.. Concerned Clerk himself

B.. The Presiding Officer of the Tribunal

C.. The Recovery Officer

D.. Any one of them

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

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

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

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

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

48..Under Pledge, the possession is with the

A.. Borrower

B.. Creditor

C.. Owner

D.. None

49.. No consideration is necessary in respect of

A.. An agency

B.. Safe Deposit Locker

C.. Mortgage

D.. Demand Promissory Note

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

A.. An unpaid seller

B.. The user

C.. The Debtor

D.. All

51.. A company can have maximum number of directors

A.. 7

B.. 12

C.. 15

D.. 20

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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