STAFF COLLEGE, KOLKATA

MODEL PRACTICE PAPER 1. You are approached by the Managing Director of a newly incorporated public company XYZ Ltd., which proposes to raise money from the public by way of a public issue, along with Memorandum and Article of Association, Certificate of Incorporation and a resolution from the Board of Directors of the Company to open a current account. He shows his inability to produce the Certificate of Commencement of business since the company is yet to obtain the same. He also makes a request to you to suggest some acceptable person to give introduction for opening the account. How would you decide? 2. Your Branch is maintaining a joint current account of Sh Ravi and Ramesh with present balance of Rs. 54367/-. They have given authority to operate this account in favour of Sh Ravinder who normally operates the account. Today at 11.15a.m. you get a notice of death of Sh Ravi. At 1.0 p.m. a cheque of Rs. 18500/- is presented through clearing which is drawn in favour of Income Tax Officer and signed by Mr. Ravinder. What would you do in this circumstance? 3. An account in your branch is maintained by Mr. Tara and Mr. Dara with former and survivor operation clause. Mr. Tara has come to you with a request to change the operational instructions by changing the style to either or survivor. Mr. Dara is however, not aware about the proposed change. Your officer is of the opinion that since Mr. Tara is surrendering some of his right, bank should not have any objection to agree to Mr. Taras request. How would you decide? 4. M/s Shanti Metals are maintaining a current account with your branch with substantial balance. Today one of their employees comes to the branch and presents a cheque payable to yourself for Rs. 300/-. He requests that the bank may prepare a bank draft from the proceeds of the cheque payable to the Sales Tax department. What would you do with such request?

5. Your branch has opened a savings bank account in the name of Sh Shanti Prasad on March 20, 2003 after completion of all the formalities. On his request a cheque book was also issued. On March 25, 2003 you receive a cheque, in this case in clearing, drawn in favour of LIC of India on account of Premium, but the cheque is dated March 15, 2003. How would you deal with this cheque? 6. You receive a bearer cheque of Rs. 3 lac for payment from the current account of M/s Dharam Pal Ram Lal, for payment, drawn in favour of Narangi Lal, who has a tea-shop, just adjacent to your branch. The cheque is paid but on receipt of statement of account the firm claims that they have never issued a cheque of Rs. 3 lac in favour of Mr. Narangi Lal. It was instead a cheque of Rs. 3000/- on account of some payment due to Mr. Narangi Lal by the firm. On examination of the cheque, the alteration done in the amount is not visible and Narangi Lal is absconding. The firm insists on restoration of the excess amount paid by the bank. Discuss the position. 7. Your branch had sanctioned a loan of Rs.10 lac to M/s Shakti International, a partnership concern which has been guaranteed both by the partners of the firm in their individual capacity as well as one Sh. Sheetal Singh and his commercial show room worth Rs. 15 lac is mortgaged to secure the loan. Due to problem faced by the industry, the operations of the firm becomes unviable and the account goes bad. When bank asks for repayment, the party fails to pay and the bank issues a notice to the liable parties and shows the intentions to take possession of the show room under Securitisation Act 2002. On receipt of notice, the guarantor Sh. Sheetal Singh claims that the bank should first proceed against the firm and partners and if the loan is not recovered, he may be called upon to pay the loan. What will be the position of the bank as a creditor? 8. Your branch maintains a current account of M/s Budhiraja Enterprises and Sh. Rajinder Singh Budhiraja operates this account on behalf of this partnership firm. He signs the cheques on behalf of the firm in full, but one of the cheques he sign as R.S.Budhiraja. The Cheque is paid by

the bank and on receipt of statement of account, he claims that bank should not have paid the cheque, since his signatures do not tally with the one on records of the bank. He also states that he signed the cheque with the intention of not making the payment. He makes a request to the bank to reverse the entry. What is the position of the bank? 9. A partnership firm is maintaining a current account with your branch for the last 3 years and they have recently gone in for reconstitution of the firm by retirement of one of the partners with old age and induction of another partner, which is an HUF concern. Your officer approaches you and expresses his reservation whether bank should continue with this account as in his view, a partnership firm can have only individuals as partners and with an HUF partner it cannot be formed. What guidance you will provide to the officer? 10. A small scale industrial unit approaches you for enhancement of working capital limits from Rs. 18 lac to Rs.30 lac. Their turnover during the previous year was Rs. 90 lac and now they have projected a turnover of Rs. 120 lac. Your loan officer after appraisal of the proposal recommends sanction of working capital limits at Rs. 24 lac only since he is of the view that the bank has to sanction maximum 20% of the projected sale as working capital limits. Borrower however, is not agreeable to this sanction, as in his opinion his requirement is more. What will you do under the situation?