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Topic covered are as follows:

I. Principles of lending, working capital assessment and credit monitoring

II. Opening accounts of various types of customers

III. Payment and collection of cheques and other negotiable instrument.

Multiple Choice Questions

1. Payment in due course means:

a) On due date

b) In accordance with apparent tenor

c) In accordance with apparent signature and specimen

d) Due to sufficient fund

2. Crossing in a cheque:

a) May be on the face or back of cheque

b) Must always be between two parallel transverse line

c) Must be on the face of chequed) Can be cancelled by drawer as per N.I. Act.

3. Promissory notes/bills of exchange and cheque are defined as:

a) Trust receipt

b) Judicial documents

c) Negotiable instruments

d) Documents of title to goods

4. Crossing is a direction to the_____bank to pay the cheque to the payee through a

bank.

a) Drawer

b) Payeec) Paying

d) Passing

e) Collecting

5. Where a customer, by a letter has advised the bank directing the banker not to

honour/pay a particular cheque such letter is called________

a) Letter of credit

b) Stop-payment letter

c) Mandate

d) Garnishee letter

e) Official letter6. When the holder of an order cheque signs on the bank of it, without specifying the

person to whom the amount is to be paid, it is called:

a) Full endorsement

b) Partial endorsement

c) Conditional endorsement

d) Restrictive endorsement

e) Blank endorsement

7. Delegation of power under trust is________

a) Possible

b) Not possible

c) Beneficiarys permission

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d) Charity commissioners permission

8. Two or more minors if desirous of opening a bank a/c in your bank, whether they can

open:

a) Either or survivor

b) Jointly

c) Only two can joind) Cannot open

9. A Hindu minor having a natural guardian attains majority on completion of

a) 18 years

b) 21 years

c) 13 years

d) 13 years provided he has power of understanding

10. Sanjay, a minor aged 11 years, desires to open a saving account. His mother is

illiterate and his father has become sanyasi. He has his grand parents. Who will be

his natural guardian?

a) Fatherb) Mother

c) Grand father

d) Guardian appointed by court

e) Sanjay himself can operate

11. In a limited Co. Certificate of incorporation was obtained though the memorandum

was signed by two persons for the seven signatories where the signatures were

forged. Will the bank accept memo as genuine for opening bank a/c?

a) Yes

b) No

c) Yes because incorporation is validd) No because forged documents cannot be accepted

e) Bank will ask its H.G.

12. There should be two persons to open a partnership account in a bank. Which of the

following is correct?

a) X aged 25 years Y aged 17 years

b) X aged 17 years and Y aged 16 years

c) Ku. Shubha aged 30 years and Ku. Rachna aged 16 years(Daughter of Ku.

Shubha).

d) X aged 26 years Y aged 21 years

13. HUF account is to be opened in a bank where there are three major persons

Shivkumar- Father; Mrs. Ramawati- Shivkumars mother, Sharat kumar- Son;l Who

can become karta of HUF?

a) Shiv kumar

b) Sharat kumar

c) Mrs. Ramawati

d) Both Shivkumar and Ramawati

e) Both shiv kumar and Sharat kumar

14. One of the director of a ltd. Co. Expired and cheques signed by him are presented for

payments should the bank pay those cheques?

a) Cannot pay

b) Company on other directors confirmation

c) Can pay as a routine

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d) Payments be stopped by a Co.

15. X a partner in the firm xyz Co. Wants to open a bank account in the firms name.

Does it require signatures of:

a) All partner

b) Anyone

c) Managing partner onlyd) Sleeping partner not required.

16. Cardinal principles of lending are:

a) Safety and liquidity

b) Profitability and diversification of risks

c) Purpose and security

d) Only (i) and (iii)

e) All of (i) to (iii)

17. What are the sources of working capital?

a) Trade credits+ unsecured loans+ deposits

b) Bank borrowings+ advance paymentsc) Net working capital

d) All the above

e) None

18. Credit decisions are affected by risks like:

a) Credit risk/market risk/operational risk

b) Liquidity/interest rate/foreign exchange rate

c) Commodity price/equity price risks

d) None of these

19. Is there any exposure ceiling for banks in providing advances/ loans to borrowers?

a) 15% of capital fund for single borrower and 40% in a borrowers group.b) 10% of capital fund for single borrower and 20% in a borrowers group

c) 25% of capital fund for single borrower and 50% in a borrowers group for

infrastructure projects.

d) No such ceiling.

20. Working capital needs are estimated by

a) Operating cash cycle

b) Projected turnover method

c) Cash budget method

d) Any of the above

e) None of the above.