LEGAL ASPECTS OF BANKNG

01. A Blue Chip means

a) Excellent Nanagement Professional
b) Shares of good Companies
c) Reinforced Concrete
d) Blue Coloured Precious Stones
02. A Bridge finance is extended for overcoming
a) Delay in getting of the public issue
b) Delay in disbursement of term loan
c) Delay in disbursement of working capital for completing the
documentation
d) For A 8 B
e) A, B 8 C
03. As per SEB! guidelines , any entity fperson engaged in the marketing and selling
of mutual funds products is required to pass a certification test and obtain a
registration number from case of
a) SEB! (Securities and Exchange Board of !ndia)
b) ANF! (Association of Nutual Funds in !ndia )
c) NSE (National Stock Exchange)
d) A, B 8 C
0+. !nterest charged in advance accounts as per RB! directive can not be subject to
scrutiny by court. This is provided in
a) Section 35A of BR Act
b) Section 21(A) of BR Act
c) Of BR Act
d) Section 26 of RB! Act
05. A floating charge means
a) Charge at the time or before the company is floated
b) Charge on all floating assets of the company
c) An equitable charge on all assets of the company
d) Any of the above.
06. The charge by way of lien over goods belonging to a company must be
registered with Registrar of Companies within a period of
a) 30 days of creation of law
b) This charge need not be registered as this is not hypothecation, mortgage
etc
c) 30 days of default in repayment
d) A or C whichever is earlier
07. Hypothecation is defined in
a) Hypothecation Act
b) !ndian Contract Act
c) Transfer of Property Act
d) SARFAES! Act
08. The State Govt. wants to seize the goods pledged to bank as the borrower has
defaulted in payment of tax. !n this case,
a) Govt dues enjoys priority over bank dues
b) Bank dues enjoys priority over Government dues
c) Both enjoys equal priority
d) The Government cannot seize the goods.
09. The auctionable claim is assigned in favour of more than one assignee at
different points of time. The priority of charge is determined with reference to
date of
a) Execution of notice of assignment
b) Execution of the written instrument for assignment
c) Receipt of notice of assignment
d) NoA
10. A Nortgage cannot be enforced in the absence of
a) Delivery of the title deeds
b) Legal Opinion
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c) Narration in Title deeds register
d) Pecuniary obligation.
11. A simple mortgage need be registered when
a) The Loan amount exceed Rs.100f-
b) value of mortgaged property exceeds Rs.100f-
c) A or B whichever exceeds Rs.100f-
d) Both A 8 B
12. A Nortgage of the mortgaged property is called
a) Sub-mortgage
b) Second Nortgage
c) Re-mortgage
d) Fraudulent Nortgage
13. For determining the advance amount the shares will be valued on the basis of
a) Current market price
b) Average market price for the last 12 months
c) Face value
d) A or B whichever is lower.
1+. Assignment of L!C policy is done as per section.. of ... Act.
a) 132 of Transfer of Property Act
b) 38, !ndian !nsurance Act 1938
c) 138 of Contract Act
d) NOA
15. Government Promissory notes should be sent to public debt office to confirm
genuiness of
a) The Promissory note
b) Endorsement
c) Alternations, if any
d) All the above.
16. Gold Loans are given only to properly introduced persons because of
a) RB!'s directives
b) Bank will lose the right to sell the gold if the pledgee's title is defective
c) Sec.131 of Negotiable !nstrument Act
d) All the above.
17. Reserve created out of profit from business operation is known as
a) Capital Reserve b) Profit Reserve
c) Revenue Reserve d) Free Reserve
18. The following is a Term Liability
a) Debentures payable within a year from the date of Balance Sheet
b) Preference Shares payable within a period of one year from the date of
Balance Sheet
c) Term Loan instalments payable in a year
d) Deposit from public payable in 2 years time.
19. !nvestment in Shares of other companies can be classified as Current Asset
only when the
shares are
a) Quoted
b) Relate to trade investment
c) A 8B
d) Shares cannot be classified as Current Assets
20. The following is not usually classified as Other Non Current Assets
a) Advance given to Directors
b) Tender Deposit
c) Receivable outstanding beyond 12 months
d) Preliminary and Pre operative expenses
21. A unit is showing a net profit of Rs.+6,000f-. Dividend received Rs.8000f-.
Operating
expenses is Rs.96000f-. Find the gross profit
a) 13+000 b) 150000 c) 1+2000
22. A firm paid Rs.16 lacs for purchase of a business with machinery worth Rs.10
lacs and
other assets worth Rs.+ lacs. !n this case the difference of Rs.2 lacs is treated
as
a) P8L Loss on purchase of asset
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b) Goodwill !ntangible Asset
c) Fixed Asset by inflating the value of fixed asset
d) Current Asset by inflating the value of current asset
23. !f a sum of Rs10,000faccumulates to Rs16,000fafter 3 years at simple !nterest ,
what is the rate of !nterest.
a) 16
b) 25
c) 23
d) 20
2+. The Net Working Capital refers to
a) Liquid surplus
b) Borrowers Contributions from long term source to short term use
c) Excess Current Asset over Current Liability
d) All the above.
25. The duration of an operating cycle in 30 days. The operating cycle in this case
repeats... times a year
a) 30 times
b) 12 times
c) 10 times
d) 52 times
26. The following is not a chargeable current assets
a) Book debt
b) Spares
c) Work in process
d) Construction work in progress
27. As per RB! guidelines, a bank is required to assess the working capital on the
basis of the following method
a) Turnover Nethod
b) Cash Budget Nethod
c) NPBF of Tandon Nethod
d) Any Nethod as decided by the individual banks
28. As per the Second method of lending the borrowers contribution from long term
source
a) is minimum 25 of total current assets
b) is restricted to 25 of working capital gap
c) is 25 of other current liabilities
d) any amount which the unit can bring
29. Total Current Asset of a unit is Rs.300 lacs. Other Current Liabilities is Rs.200
lacs. The NPBF as per !st Nethod 8 2
nd
method can be
a) 75 and 25 lacs
b) 25 lacs and 75 lacs
c) Rs.100 lacs 8 Rs.150 lacs
d) Rs.20 lacs 8 Rs.80 lacs
30. A borrower need not bring any matching contribution from long term sources in
respect of
a) Export Receivables
b) Finished goods produced for a specific export order
c) Adhoc limits
d) A 8 B
31 A Company makes a single product with a sales price of Rs.10f- and a
marginal cost of
Rs.6f-. Fixed Cost are Rs.60000f- p.a. !n this case,
Number of units at break even
a) 15000
b) 10000
c) 6000
d) none of the above.
32. !n the above problem, Profit volume Ratio
a) 30
b) +0
c) 50
d) 60
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33. The long term use is 120 of long term source. This indicates the unit has
a) CR 1.2
b) Negative TNW
c) Low Capital
d) Negative NWC
3+. Tangible Networth is computed by
a) Total Tangible Asset less outside liabilities
b) Capital, free reserves 8 surplus less !ntangible Asset
c) Networth less !ntangible Asset
d) All the above.
35. A company has a networth of Rs.5 lacs. Term liability Rs.10 lacs, Fixed Asset of
Rs.16 lacs and Current Asset Rs.25 lacs. There is no intangible asset or ONCA. !t's
net working capital is
a) Rs. 10 lakhs
b) Rs. 1 lakh
c) Rs. 9 lakh
d) Rs. (-) 1 lakh
36. Financial leverage means
a) use leveraged lease to plan tax liability
b) High degree of solvency
c) Law bank finance
d) Use of more debt capital to increase profit.
37. Diversion means
a) Diversifying to activities not related to main business
b) Retrenching employees
c) Use of Current Assets for payment of Term Liability
d) Use of Current Liabilities for long term use
Examine the following balance sheet to answer the question thereafter:
Liability Asset
Less: Dep 200
-------
Preference Share Capital 100 Net Block 800
Term loan 600 !nventory 300
Bank Overdraft +00 !nvestment in Govt. security 50
Sundry Creditors 100 Preliminary expenses 100
------- Receivables
150
-------
1400 1400
38. Capital Gearing Ratio
a) 0.78
b) 1.20
c) 0.67
d) 0.87
39. Debt Equity Ratio is
a) 2:1
b) 3:1
c) +:1
d) 1:1
+0. Total Outside LiabilityfTNW
a) 3.67:1
b) 5.50:1
c) 12 : 1
d) 6 : 1
+1. Net working capital
a) 100
b) N!L
c) 200
d) Cannot be calculated
+2. Quick Ratio
a) 0.+:1
b) 2.1:1
c) 1.5:1
Equity Capital 200 Gross Block 1000
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d) 1:1
+3. Total Tangible Asset
a) 1+00
b) 1300
c) 1500
d) 1600
++. Opening stock of raw material is Rs.30 lacs, closing stock is Rs.50 lacs. Annual
purchase is Rs.500 lacs. What is the average period of holding of Raw
Naterials?
a) 2 N
b) 1.5 N
c) 1 N
d) NOA
+5. Holding period of Receivables is calculated with reference to
a) Cost of Sales
b) Cost of Production
c) Gross Sales
d) NOA.
+6. Creditors velocity expresses the
a) Naximum period for which credit is given
b) Average period of credit enjoyed
c) Ninimum period of credit given
d) Ninimum period for which credit enjoyed.
+7. The following is a Neans of Finance" for the cost of project
a) Leasing
b) Subsidy
c) Deferred Credit from Suppliers
d) All the above.
+8. For a large and medium units DSCR should be
a) Naximum 2:1 (b) Naximum 1.5:1
c) Ninimum 2:1 (d) Ninimum 1.5:1
+9. variable Cost and Sale Price remaining the same, a rise in fixed cost result in
a) High BEP ( High Break even point)
b) Low BEP
c) High Nargin of Safety
d) B8C
50. What is the formula for charging compound interest with Annual Compounding.
a) ! = Pnr
b) P!
c) A = P( 1r)n
d) Any of the 3
51. What is the minimum period to be allowed to drawee to decide on acceptance f
rejections of
a usance bill
a) 2 Days
b) +8 Hours
c) +8 Hrs including public holidays
d) +8 hrs excluding public holidays
52. Ramesh deposited Rs 10,000f for 3 years . The !nterest is compounded annually
at 10 . What will be the amount receivable by Ramesh at the end of 3 year
period.
a) 13,310
b) 13,000
c) 12,000
d) 13,300
53. While calculating the value of (1.10)3 (to the power of 3) the same can be
calculated
a) manually
b) using calculator
c) using NS Excel
d) all the above
5+. Annuities are
a) The annual interest payable or receivable in a debt or an investment.
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b) Lumpsum payment made any time during the course of a fixed period of
time.
c) The total amount payable annually in respect of a debt or investment
d) Series of payments (many number of cash flows) made at a specified
frequency over the course of a fixed period of time
55. An Annuity is an ordinary Annuity if,
a) Payments are required to be made at the beginning of each period.
b) Payments are required to be made at the middle of each period
c) Payments are required to be made at ordinary installments
d) Payments are required to be made at the end of each period.
56. The Narine !nsurance Policy should be expressed in
a) Rupees
b) US Dollars
c) Same Currency in which the LC is drawn
d) Any foreign currency.
57. The discount rate which equals the present value of promised flow to the
current market
price fpurchase price. This is known as
a) Yield to maturity
b) NPv
c) !RR
d) Treasury bills
58. The value which the bond holder gets on maturity is called
a) Naturity value
b) NAv
c) the redemption value
d) !RR
59. This is the amount by which an asset is expected to lose its value. What is this
a) Narket value
b) Wear and tear
c) Depreciation
d) NAP
60. EEFC can be opened in
a) Rupees
b) Any one of the four designated currencies
c) One of the permitted currencies
d) ANUS
61. A method of calculating depreciation of an asset , which assumes that the asset
will lose an equal amount of value each year is known as
a) Salvage value
b) Depreciation
c) Straight line Nethod of calculation
d) Accumulated Depreciation
62. A credit facility will be classified as NPA if... remains past due for one quarter
a) !nterest
b) !nstalment
c) A or B
d) A 8 B
63. As per Prudential Accounting Norms prescribed by RB!, assets are classified into
.. type
a) 3
b) 8
c) +
d) 5
6+. The home currency price of one unit of a foreign currency is quoted eg USD 1
= Rs+3.20
a) !ndirect quotation
b) Exchange rate
c) Rate of USD
d) Direct quotation
65. !f the rate of a currency A is known in terms of currency B and rate of Currency
B in terms of Currency C , we can derive the rate of currency A interms of Currency
C using the technique of cross currency.
a) Exchange rate
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b) Cross rate
c) Forward rate
d) None of the above
66. As per NABARD guidelines the minimum !nternal Rate of Return for Agricultural
Project is
a) 15
b) 25
c) 30
d) 18
67. !n case of Direct quotation if the forward rate is more than spot rate the base
currency is called as being at -----
a) Discount
b) Forward rate
c) Spot rate
d) Premium
68. An operation by which one can make risk free profits making use of the interest
differentials between two places is called.
a) Open market operation
b) Profitability
c) Free market
d) Arbitrage
69. !f the forward rate is less than the spot rate the base currency is said to be at
a) Discount
b) Premium
c) At par
d) None of the above.
70. The amount which the owner of the business has invested in the firm and can
claim from the firm is known as ------
a) Capital
b) Loan
c) Term Loan
d) Fixed Asset.
71. The amount which the firm owe to outsiders
a) Assets
b) Capital
c) Liabilities
d) !ntangible assets
72. A person who owes money to a firm , mostly on account of credit sales of goods
is called.
a) Creditor
b) Debtor
c) Borrower
d) lender
73. The balance sheet represents an expansion of the equation as Assets = Liabilities
Capital This statement is
a) Cannot be relied
b) false
c) Not acceptable
d) True
7+. Assets minus original capital = Liability
a) True b) False
c) can be accepted d) None of the above.
75. !f a firm borrows money its capital would be reduced
a) This statement is false
b) This statement is true
c) The same is acceptable
d) None of the above
76. ---------- is the value of an established business over and above the value
represented by it's tangible assets .
a) Assets
b) Liabilities
c) Goodwill
d) None of the above.
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77. !f the partnership does not mention any method of maintaining capital account
then ------- method of capital has to be used.
a) Fluctuating capital account
b) Partners Current account
c) Capital account
d) Fixed capital account
78. The joining of a new person into the existing partnership as a partner is called
a) Retirement of a partner
b) Resolution of a partnership
c) Good will
d) Admission of a partner
79. Under the -------- capital method two accounts are maintained for each partner
viz current account and capital account.
a) Fixed Capital Nethod
b) Fluctuating capital method
c) Equity capital Nethod
d) Preference share capital
80. As per new guidelines both SLR and non SLR securities are to be classified into
a) Held to maturity.
b) Available for sale
c) Held for trading
d) All the above .
81. Amount of !nvestment under Securities held to maturity should not exceed -------
-- of Bank's total investment
a) Twenty percentage of the Bank's total investment (20 of total
investment)
b) Twenty five percentage of the Bank's total investment (25 of total
investment)
c) forty nine percentage of the Bank's total investment (+9 of total
investment)
d) forty percentage of the Bank's total investment (+0 of total
investment)
82. The form of Balance sheet and Profit and loss account of a Banking Company is
prescribed in forms A and B of -------------- schedule of the Banking Regulation Act
19+9.
a) Second
b) Third
c) First
d) Fourth
83. The Companies Act prohibits issue of any preference share that is -----------
a) cumulative
b) redeemable
c) both a and b
d) !rredeemable
8+. The capital which is stated in the Nemorandum of Association is known as
a) Nemorandum Capital
b) Paid up capital
c) Authorised capital
d) !ssued capital
85. Authorised capital is also known as
a) Nominal or Registered Capital
b) Equity capital
c) Preference share capital
d) All the above
86. When shares are issued at higher than the face value of the shares they are said
to be issued at a
a) Discount - b) Par- c) Premium
e) None of the above
87. !ssue of shares at a discount should be authorized by the members by passing a
resolution
in the general meeting and resolution of members should specify the rate of
discount
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which should not exceed 10 of the face value of the shares Further this is
subject to
a) Obtention of sanction from Company Law Board
b) These shares must be issued with in 2 months
c) Both (a) and (b)
d) None of the above
88. According to section 79A inserted by Companies Amendment Act 1999 ---------
shares
means equity shares issued by the company to employees or directors at a
discount or
for consideration other than cash for providing know how or making available
right in the
intellectual property rights or value addition, by whatever name called.
a) Employees stock option
b) Equity shares
c) Sweat equity
d) None of the above.
89. A scheme under which the company grants option (A right but not an
obligation ) to an
employee to apply for shares of the company at a pre determined price is
known as
a) Employees Stock Option Scheme (ESOS)
b) Equity shares
c) Sweat Equity
d) None of the above.
90. The formation of a company is governed by the rules and regulations as
contained in
a) !ndian Companies Act
b) RB! act
c) BR Act
d) None of the above.
91. Profit and Loss Account is one of the Final Accounts prepared by a Company.
What is the
other one.
a) Schedules to P8L accounts
b) Balance sheet
c) Trading Account
d) None of the above.
92. Liabilities that will arise on the happening of certain event
a) Current liabilities
b) Term Liabilities
c) Contingent Liabilities
d) None of the above
93. Schedule v! of the Companies Act prescribes the form of
a) Balance sheet
b) Trading Account
c) Balance sheet
d) None of the above.
9+. A computer Accounting system runs based on a set of instructions called the
software
programmes developed by a person who is a computer software professional and
he is
called -------
a) Programmer
b) Software Engineer
c) !T man
d) None of the above.
95. Accounting software may be written in any one of the computer languages such
as
a) Windows, UN!X etc
b) JAvA C etc
c) COBOL, Foxpro etc
d) None of the above.
96. Computers are basically classified into
a) Analogue Computers and Digital computers
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b) Hardware and software
c) Wipro and !nfosysis
d) All the above
97. A Customer Service Neet should be organized at every Branch
a) Once in a Fortnight
b) Once in a Quarter
c) Once in a Nonth
d) Once in a Half-Year
98. Who cannot file a complaint under Consumer Protection Act?
a) Banks
b) State Government
c) Public !nterest Litigation Group
d) Persons receiving services free of charge
99. Banking Ombudsman is appointed by
a) Central Government f Ninistry of Finance
b) State Government
c) !DB!
d) RB!
100. DRT has jurisdiction relating to cases pertaining to Banks, Financial !nstitutions
with debt
amount of
a) Rs. 1 lakh and above
b) Rs. 5 lakh and above
c) Rs. 10 lakh and above
d) Rs. 20 lakh and above
$#$
1) b 2) d 3) b 4) b 5) c 6) b
7) d 8) b 9) b 10) d 11) a 12) a
13) d 14) b 15) d 16) b 17) c 18) d
19) c 20) d 21) a 22) b 23) d 24) d
25) b 26) d 27) d 28) a 29) a 30) a
31) a 32) b 33) d 34) d 35) d 36) d
37) d 38) a 39) b 40) b 41) b 42) a
43) b 44) c 45) c 46) b 47) d 48) c
49) a 50) c 51) d 52) a 53) b 54) d
55) d 56) c 57) a 58) c 59) c 60) c
61) c 62) c 63) c 64) d 65) b 66)
a
67) d 68) d 69) a 70) a 71) c 72) b
73) d 74) b 75) a 76) c 77) d 78) d
79) a 80) d 81) b 82) b 83) d 84) c
85) a 86) c 87) c 88) c 89) a 90) a
91) b 92) c 93) a 94) a 95) c 96) a
97) d 98) d 99) d 100) c
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