Chapter: Laws relating to Banking in India
1.

In which year was the Banking Regulation Act passed?

A. 1949
B. 1955
C. 1959
D. 1969
Answer» A. 1949
2.

On which rate bases, overnight money is needed by bank from RBI?

A. MSF
B. Repo rate
C. Reverse repo
D. Bank rate
Answer» A. MSF
3.

____________________are excluded from the Banking Regulation Act 1949.

A. Public and Private Sector Banks
B. Primary Agricultural Credit Society and cooperative land mortgage banks
C. SEBI
D. Regional Rural Banks
Answer» B. Primary Agricultural Credit Society and cooperative land mortgage banks
4.

In which year, the Banking Regulation Act was amended to include cooperative banks under its purview by adding the Section 56.

A. 1964
B. 1965
C. 1986
D. 1987
Answer» B. 1965
5.

The Reserve Bank of India is given the responsibility of regulating and supervising the _________ under Reserve Bank of India Act, 1934.

A. Insurance Companies
B. Transport Companies
C. Banking Financial Companies
D. Non-Banking Financial Companies
Answer» D. Non-Banking Financial Companies
6.

In the case of a banking company incorporated outside India balance-sheet and profit and loss account shall be signed by _________ of the company.

A. Director of the principal office
B. Owner agent of the principal office
C. Manager or agent of the principal office
D. Central Government
Answer» C. Manager or agent of the principal office
7.

Copies of balance-sheets and accounts to be sent to____________.

A. RBI
B. Government of India
C. Registrar
D. Auditor
Answer» C. Registrar
8.

Who has the power to give directions to other Banking Companies?

A. RBI
B. Government of India
C. Registrar
D. Auditor
Answer» A. RBI
9.

Which section of Banking Regulation Act 1949 relates with the Power of Reserve Bank to issue directions in respect of stressed assets?

A. Section 35AA
B. Section 35AB
C. Section 35B
D. Section 35 BB
Answer» B. Section 35AB
10.

Change of name by a banking company only happens with the approval of __________?

A. RBI
B. Government of India
C. Registrar
D. Auditor
Answer» A. RBI
11.

Form of Balance sheet of banking Companies includes Reserve & Surplus in

A. Schedule 1
B. Schedule 2
C. Schedule 3
D. Schedule 4
Answer» B. Schedule 2
12.

Form of Balance sheet of banking Companies includes Fixed assets in

A. Schedule 8
B. Schedule 9
C. Schedule 10
D. Schedule 11
Answer» C. Schedule 10
13.

Contigent Liabilities in case of banking Companies are included in_________.

A. Schedule 9
B. Schedule 10
C. Schedule 11
D. Schedule 12
Answer» D. Schedule 12
14.

Banking company means any company which transacts the business of ________.

A. Banking only
B. Banking & Insurance
C. Banking & Foreign Exchange
D. Banking & Manufacturing
Answer» A. Banking only
15.

Managing agent includes

A. Secretaries and Treasurers
B. Where the managing agent is a company, and Director of such company, and any member thereof who holds substantial interest in such company
C. Where the managing agent is a firm, any partner of such firm
D. All of the above
Answer» D. All of the above
16.

Regional rural bank means a regional rural bank established under section 3 of the Regional Rural Banks Act, __________.

A. 1974
B. 1975
C. 1976
D. 1977
Answer» C. 1976
17.

Reserve Bank means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, _________.

A. 1934
B. 1935
C. 1945
D. 1946
Answer» A. 1934
18.

In case of banking company incorporated outside India, aggregate value of its paid-up capital and reserve shall not be less than Rs. __________.

A. 5 Lakhs
B. 12 Lakhs
C. 15 Lakhs
D. 18 Lakhs
Answer» C. 15 Lakhs
19.

In case of an Indian banking company, the sum of its paid-up capital and reserves if it has places of business in more than one State shall not be less than

A. 5 Lakhs
B. 12 Lakhs
C. 15 Lakhs
D. 18 Lakhs
Answer» A. 5 Lakhs
20.

According to Sec. ______, a banking company is not permitted to pay directly or indirectly by way of commission, brokerage, discount or remuneration on issues of its shares in excess of 2½% of the paid-up value of such shares.

A. 10
B. 11
C. 12
D. 13
Answer» D. 13
21.

FATCA stands for

A. Foreign Account Tax Compliance Act
B. Foreign Account Trade Company Act
C. Financial Account Tax Compliance Act
D. Fiscal Account Tax Compliance Act
Answer» A. Foreign Account Tax Compliance Act
22.

As per the provisions of which act all financial institutions have to maintain a record for all form of transactions?

A. Companies Act, 1956
B. Credit Information (Companies Regulation Act, 2005)
C. Information Technology Act, 2000
D. PMLA Act, 2002
Answer» D. PMLA Act, 2002
23.

Which of the following Act refers to the acquisition and transfer of the undertakings of certain banking companies?

A. Companies Act, 1956
B. Credit Information (Companies Regulation Act, 2005)
C. Banking Companies (acquisition and transfer of undertakings), 1970
D. Banking Regulation Act, 1949
Answer» C. Banking Companies (acquisition and transfer of undertakings), 1970
24.

Which of the following is the clearing agency for Government securities?

A. GOI
B. RBI
C. CCIL
D. SEBI
Answer» C. CCIL
25.

Banks are required to maintain SLR under which act?

A. Section 24 of the Banking Regulation Act
B. Section 35 of the Negotiable Instrument Act, 1881
C. Section 24 of RBI Act
D. Section 40 of Indian Contract Act, 1872
Answer» A. Section 24 of the Banking Regulation Act
Chapter: Negotiable Instrument Act 1881
26.

It is a ----------------- obligation of a banker to honour the cheques of the customer drawn against current

A. Mutual
B. Statutory
C. Unstatutory
D. All of the above
Answer» B. Statutory
27.

In India, the law regulating the Negotiable instruments are

A. Banking Regulation Act 1949
B. Reserve Bank of India Act 1934
C. Negotiable Instruments Act 1881
D. Companies Act 1956
Answer» C. Negotiable Instruments Act 1881
28.

In Negotiable Instruments Act 1881, which section defines promissory note?

A. Section 1
B. Section 2
C. Section 3
D. Section 4
Answer» D. Section 4
29.

A drawer in the bill of exchange can also be a

A. Paymaster
B. Payee
C. Banker
D. Creditor
Answer» B. Payee
30.

The rate at which RBI discounts approved bill of exchange is

A. Bank rate
B. Interest rate
C. Exchange rate
D. Discount rate
Answer» D. Discount rate
31.

Who is primarily liable on a promissory note?

A. Holder
B. Maker
C. Drawee
D. Endorser
Answer» B. Maker
32.

How many parties are mainly involved in Promissory Note?

A. One
B. Five
C. Two
D. Three
Answer» C. Two
33.

In a bill of exchange, drawee is the person

A. who draws the bill
B. on whom the bill is drawn
C. to whom the payment of the bill is to be made
D. to whom the payment of the bill is not to be made
Answer» B. on whom the bill is drawn
34.

------------ is a dead cheque

A. Post dated cheque
B. Stale cheque
C. Ante dated cheque
D. Pre dated cheque
Answer» B. Stale cheque
35.

Name the person to whom the amount of the cheque is payable?

A. Drawer
B. Payee
C. Drawee
D. Acceptor
Answer» C. Drawee
36.

Discounting of bills of exchange is

A. Clean advance
B. Secured advance
C. Neither clean advance nor secured advance
D. Unsecured advance
Answer» C. Neither clean advance nor secured advance
37.

Expand NEFT

A. National Electronic Fund Transfer
B. Neutral Electronic Fund Transfer
C. Nominal Electronic Fund Transfer
D. Natural Electronic Fund Transfer
Answer» A. National Electronic Fund Transfer
38.

A negotiable instrument drawn or make in India is called_______ instrument.

A. Inland
B. Foreign
C. Time
D. Clean
Answer» A. Inland
39.

The following one is a negotiable instrument, negotiable by usage or custom

A. Bill of Exchange
B. Accommodation Bill
C. Promissory Note
D. Share warrant
Answer» D. Share warrant
40.

The most important feature of a negotiable instrument is

A. Free transfer
B. Transfer free from defects
C. Right to sue
D. Both A & B
Answer» D. Both A & B
41.

The following one is absolutely essential for a special crossing.

A. Two parallel transverse lines
B. Words "And company?
C. Words "Not negotiable"
D. Name of a banker
Answer» D. Name of a banker
42.

Cheque is payable on

A. Demand
B. Usage
C. Fixed future date
D. After sight
Answer» A. Demand
43.

The reasonable period allowed in India for the presentation of a cheque is

A. 1 year
B. 3 months
C. 9 months
D. depending upon custom
Answer» B. 3 months
44.

Section 6 of the Negotiable Instruments Act defines ___.

A. Cheque
B. Bill of Exchange
C. Promissory Notes
D. Dishonour by non-payment
Answer» A. Cheque
45.

If a Minor draw, indorse, deliver and negotiate Negotiable Instruments, it binds __

A. All the parties except minor
B. All the parties including minor
C. Minor Only
D. Minor and Only Drawer
Answer» A. All the parties except minor
46.

Dishonour of Negotiable Instrument by Non Payment is covered under section in Negotiable Instrument Act 1882…

A. Section 90
B. Section 91
C. Section 92
D. Section 93
Answer» C. Section 92
47.

Which of the following section in the Negotiable Instruments Act deals with the Bill of Exchange?

A. Section 5
B. Section 6
C. Section 4
D. Section 13
Answer» A. Section 5
48.

Which of the followings are not the Negotiable Instruments as defined by the Statute…

A. Banker’s Note
B. Promissory Note
C. Bill of Exchange
D. Cheques
Answer» A. Banker’s Note
49.

Which of the following is/are true about the Negotiable Instruments Act, the Promissory Note is … A) Definition of Promissory Note is given in section 8 of the Negotiable Instrument Act B) Containing an unconditional undertaking C) To pay a certain sum of money only to a specific person or the bearer D) The seller is bound to accept the promissory note E) A document was written and signed by the payer/maker

A. (A), (B) and (C)
B. (B), (C) and (E)
C. (B), (C), and
Answer» B. (B), (C) and (E)
50.

The Negotiable Instruments (Amendment) Bill, 2017 inserted a provision allowing a court trying an offence related to cheque bouncing, to direct the drawer (person who writes the cheque) to pay interim compensation to the complainant. The interim compensation will not exceed ___% of the cheque amount?

A. 15%
B. 25%
C. 30%
D. 20%
Answer» D. 20%
51.

Which of the following is/are true about bill of exchange? A) A bill of exchange requires in its inception two parties. B) A bill of exchange or “draft” is a written order by the drawer to the drawee to pay money to the payee. C) Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. D) Definition of ‘Bill of Exchange’ is mentioned in Section 6 of the Negotiable Instrument Act.

A. (A) and (D)
B. (A), (B) and (D)
C. (B) and (C)
D. (C) and (D)
Answer» C. (B) and (C)
52.

If the holder of a bill of exchange allows the drawee more than ___ hours, exclusive of public holidays, to consider whether he will accept the same, all previous parties not consenting to such allowance are thereby discharged from liability to such holder.

A. 24
B. 12
C. 36
D. 48
Answer» D. 48
53.

Which of the following is/are false about Dishonour of Cheque? A) Section 138 defines Dishonour of cheque for insufficiency, etc., of funds in the account. B) Such cheque has been presented to the bank within a period of twelve months from the date on which it is drawn or within the period of its validity, whichever is earlier C) Imprisonment for such offence may be extended for period of five year D) Section 138 apply unless – the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within fifteen days of the receipt of the said notice.

A. (A) and (D)
B. (B) and (C)
C. (B),(C) and
Answer» B. (B) and (C)
Chapter: Relationship between Banker and Customer
54.

Which bank have given the instructions to the commercial banks regarding the immediate credit of outstation cheques?

A. Reserve Bank of India
B. Central Bank
C. World Bank
D. All of the above
Answer» A. Reserve Bank of India
55.

A cheque dated subsequent to the date of its issue is

A. Post dated cheque
B. Blank cheque
C. Crossed cheque
D. Account payee cheque
Answer» A. Post dated cheque
56.

Dishonour of cheque by a banker without any justifiable reason is called

A. Valid dishonour of cheques
B. Unmindful dishonour of cheques
C. Negligence dishonour of cheques
D. Wrongful dishonour of cheques
Answer» D. Wrongful dishonour of cheques
57.

The relationship between a banker and customer is............

A. That of a debtor and creditor
B. That of a creditor and debtor
C. Primarily that of a debtor and a creditor
D. (a) and (b) together
Answer» C. Primarily that of a debtor and a creditor
58.

In executing the standing instructions, there exists a relationship of......

A. debtor and creditor
B. Trustee and Beneficiary
C. Bailee and Bailor
D. Agent and Principal
Answer» D. Agent and Principal
59.

To constitute a person as a customer.......

A. There must be frequency of transactions
B. There must be a dealing of a banking nature
C. There must be some sort of an account
D. There must be a single transactions of any nature
Answer» C. There must be some sort of an account
60.

The best procedure for opening an account in the name of a minor X and the guardian Y would be under the style.............

A. 'X' Account
B. 'b'-Account- Minor
C. 'y' in trust for X
D. 'y' account
Answer» C. 'y' in trust for X
61.

The most undesirable customer is.......

A. A minor
B. A married Woman
C. An unregistered firm
D. An undischarged bankrupt
Answer» D. An undischarged bankrupt
62.

The primary relationship between a banker and customer starts from the time.

A. when customer visits that bank
B. when customer opens account
C. when customer visits that bank to made queries
D. All of the above
Answer» B. when customer opens account
63.

The primary relationship between banker and customer is a ------------------ relationship.

A. Mutual
B. Contractual
C. Personal
D. None of the above
Answer» B. Contractual
64.

Which one of the following is the most important relationship between banker and customer.

A. Debtor and Creditor
B. Bailee and Bailor
C. Agency and Principal
D. Trustee and Beneficiary
Answer» A. Debtor and Creditor
65.

When customer's account overdrawn or when customer has taken loan from banker, then the customer.

A. Creditor
B. Agent
C. Debtor
D. Bailor
Answer» C. Debtor
66.

When banker received deposits from the customer, then the banker becomes -------------- of the customer.

A. Debtor
B. Creditor
C. Bailee
D. Trustee
Answer» C. Bailee
67.

It is a ----------------- obligation of a banker to honour the cheques of the customer drawn against current account.

A. Mutual
B. Statutory
C. Unstatutory
D. All of the above
Answer» B. Statutory
68.

Special damages refers to damages payable by a banker to his customer for the actual ------------- loss suffered by customer.

A. Financial
B. Special
C. Unpecuniary
D. Unfinancial
Answer» A. Financial
69.

---------- is the right of a person to retain the property of another person in his possession untill the debt from that owner of that property is repaid.

A. Lien
B. Retainment
C. Retrenchment
D. Libel
Answer» A. Lien
70.

The bank can consider ------------------ lien as their protection against loss on loan or overdraft which was given to its customers.

A. Special
B. Particular
C. General
D. Lending
Answer» A. Special
71.

The right of set-off customers account can be exercised only by a-----

A. Creditors
B. Debtors
C. Banker
D. Customer
Answer» C. Banker
72.

The rate of interest charged for the loan by the banker compared to overdraft and cash credit is generally.

A. High
B. Low
C. Same
D. Based on the amount
Answer» B. Low
73.

The services rendered by a banker as an agent of his customers are called

A. Principal services
B. Agency services
C. General utility services
D. Social services
Answer» B. Agency services
74.

The written instructions given by the customers to banker to perform the services like collection and payment of money is noted down in

A. Written Instructions Book
B. Standing Instructions Book
C. Banking Instructions Book
D. Services Instructions Book
Answer» B. Standing Instructions Book
75.

A -------------- is a person who is entrusted with some property by the settler or the author of the trust for the benefit of another person called beneficiary.

A. Attorney
B. Executor
C. Administrator
D. Trustee
Answer» D. Trustee
76.

Services rendered by a banker not only to his customers, but also to the general public are called as

A. Principal services
B. Agency services
C. General utility services
D. Social services
Answer» C. General utility services
Chapter: Paying Banker
77.

Name the person to whom the amount of the cheque is payable?

A. Drawer.
B. Payee.
C. Drawee.
D. Acceptor
Answer» C. Drawee.
78.

A banker should not refuse payment of a cheque if ________.

A. The cheque is a post dated cheque.
B. The cheque is drawn on another branch of the same bank.
C. The cheque contains an apparent material alteration which is not properly authenticated by the drawer.
D. the cheque bears more than two endorsements
Answer» D. the cheque bears more than two endorsements
79.

The paying banker can get protection for a materially altered cheque provided __.

A. The alteration is not apparent.
B. He makes payment in due course.
C. The alteration is immaterial.
D. Both A and B
Answer» D. Both A and B
80.

The written instructions given by the customers to banker to perform the services like collection and payment of money is noted down in

A. Written Instructions Book
B. Standing Instructions Book
C. Banking Instructions Book
D. Services Instructions Book
Answer» B. Standing Instructions Book
81.

The paying banker who makes cash payment of a cross cheque at the counter shall be liable for the loss of

A. Drawer of the cheque
B. True owner of the cheque
C. Collecting banker
D. the First endorser
Answer» B. True owner of the cheque
82.

The document which can be used only for making local payment is........

A. A cheque
B. A bill of exchange
C. A banker's cheque
D. A draft
Answer» C. A banker's cheque
83.

Not negotiable crossing is a warning to the...........

A. Paying banker
B. Collecting banker
C. Holder
D. (a) and (b) together
Answer» C. Holder
84.

To get statutory protection, paying banker must make:

A. Payment to a holder
B. Payment to a holder in due course
C. Payment in due course
D. Payment to a drawee in case of need
Answer» C. Payment in due course
85.

Which of the following Committee recommended to form a new category of Bank Called Payment Banks?

A. Gadgil Committee
B. M L Dhantwala Committee
C. Nachiket Mor Committee
D. P J Nayak Committee
Answer» C. Nachiket Mor Committee
86.

Which of the following permit cheque operation?

A. Savings bank accounts and fixed deposit accounts
B. Current accounts and fixed deposit accounts
C. Savings bank accounts and cash accounts
D. Savings bank accounts and current accounts
Answer» D. Savings bank accounts and current accounts
87.

What happens if a crossed cheque is presented for payment?

A. It can be paid only through a banker
B. It cannot be paid at all
C. It can be paid across the counter in another bank
D. None of the above
Answer» A. It can be paid only through a banker
88.

The paying banker is protected under following SECTION for payment of cheque with forged signature of the drawer.

A. Sec 89 of N.I act
B. sec 85[1] of N.I act
C. sec 131 of N.I act
D. no protection is available
Answer» D. no protection is available
89.

Which banker gets protection under section 85 of Negotiable Instrument Act, 1881?

A. Collecting banker.
B. Paying banker.
C. Issuing banker.
D. Both a and b.
Answer» B. Paying banker.
90.

Protection to the Paying Bank in case of alteration in a cheque is available under.

A. Sec 85 of NI act
B. Sec 89 of NI act
C. Sec 90 of NI act
D. Sec 98 of NI act
Answer» B. Sec 89 of NI act
91.

The paying banker is expected to pay the cheque to the genuine payee as per the direction of the drawer.

A. True
B. False
C. none
D. none
Answer» A. True
92.

The paying banker should pay the cheque when there is restriction imposed on the payment by the drawer or by the law.

A. True
B. False
C. none
D. none
Answer» B. False
93.

In case of sufficiency of funds in the account of the drawer which can be properly used to pay the cheque, the banker must pay the cheque when required to do so.

A. True
B. False
C. none
D. none
Answer» A. True
94.

The payment should be made when the cheques are presented for payment within a reasonable time after being drawn and during banking hours.

A. True
B. False
C. none
D. none
Answer» A. True
95.

Section 45 of the Negotiable instruments Act, has imposed upon the banker the obligation to honour customers cheques.

A. True
B. False
C. none
D. none
Answer» B. False
96.

How many Payment banks were approved by RBI in 2015?

A. 7
B. 11
C. 41
D. 9
Answer» B. 11
97.

How many branches of Payment banks must be in the unbanked rural area?

A. 25%
B. 50%
C. 35%
D. 75%
Answer» A. 25%
98.

Which of the following activities cannot be undertaken by a Payments Bank?

A. Accept deposits
B. Payment of Utility Bills
C. Lending Money
D. None of the above
Answer» C. Lending Money
99.

Under what section of the Banking Regulation Act, 1949 the payments banks are licensed?

A. 22
B. 2
C. 19
D. 11
Answer» A. 22
100.

Which is India's first Payment bank?

A. PayTM Payments Bank
B. JIO Payment Banks
C. Airtel Payments Banks
D. Fino Payments Bank
Answer» C. Airtel Payments Banks
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