14. Loan against Book Debts is characterized
by.
a) Pledge
b) Appropriation
c) Assignment
d) Hypothecation
Answer: C
All book debts are assigned by borrower in
favour of bank. Bank has to register assignment with borrower’s debtors.
Mortgage
1. Mortgage does not need to have one of the
following for lending with regard to property?
a) Physical possession
b) Transfer of interest
c) Purpose to secure money
d) Intervention for sale
Answer: A
2. One of the Mortgages below need not require
intervention of court?
a) Deposit of Title Deeds
b) English mortgage
c) Mortgage by conditional sale
d) Usufructuary mortgage
Answer: B
Creditor/bank can take action directly in
English mortgage.
3. Foreclosure means.
a) Right to sell
b) Loss of Right to Mortgagor to redeem the
property
c) Right to take possession
d) Loss of Right to Mortgagee to sell
Answer: B
4. Mortgage by conditional Sale gives a right
to Mortgagor?
a) To own the property
b) To possess the property
b) To possess the property
c) To get the property retransferred to
mortgagor on repayment of loan
d) To enjoy rent out of property
Answer: C
5. Usufructuary Mortgage has one of the
properties related to it?
a) To receive rental income towards adjustment
of loan
b) To go to court in case of failure repayment
c) To seek foreclosure
d) To receive rents for mortgagee’s personal
expenses
Answer: A
6. The characteristics of E.M?
a) Deposit of title deeds in a notified town
b) Oral contract
c) Less expensive
d) A & C
e) A, B, C
Answer: E
7. A mix of different Mortgages listed in
transfer of Property Act is called __________?
a) Mortgage by conditional sale
b) English Mortgage
c) Usufructuary Mortgage
d) Anomalous Mortgage
Answer: D
8. A Mortgagor enjoyed 3 facilities in
different NBFC’s and additionally from an individual. First mentioned three
were registered mortgages; second mentioned one was by deposit of title deeds
but, MOD was done one year later. Which one has the priority?
a) Mortgage deed No.1. Date 15.10.2015
b) Mortgage deed No.2. Date 24.11.2015
c) Deposit of Title deeds 25.9.2015 & MOD
25.9.2016
d) Mortgage Deed no.3 Date 26.9.2016
Answer: C
Explanation: Remember Date of execution has
the priority even if MOD is done later; 25.9.2015 is the earliest so C is the
answer.
9. ‘A’ availed a CC facility in Bank B in Mumbai.
But the property was situated in Thane District
in Taluk/tehsil– E, Which has a Civil Court. E.M was made at Thane. If
loan becomes NPA, the bank is to file a suit at ________?
a) Mumbai first class chief Metropolitan
Court.
b) Taluk -E
c) Thane
d) High Court Mumbai
Answer: B
Explanation: Jurisdiction for filing a suit is where the property is situated. Taluk-E has a civil court which has the jurisdiction over this property related cases in this taluk.
Explanation: Jurisdiction for filing a suit is where the property is situated. Taluk-E has a civil court which has the jurisdiction over this property related cases in this taluk.
10. When a Bank or Creditor files a suit for recovery
of money under Mortgage, Initially the Court issues ___________. This gives
time for_____ to Debtor. Finally if Debtor fails, to pay, Court issues _______.
Limitation period for filing a suit for any agreement is ________ years. While
for foreclosure it is ______ years.
a) 12
b) Final Decree
c) Repayment
d) 30
e) Preliminary Decree
Pick up
the correct combination of answer:
A) E,
C, B, D, A.
B) E,
C, B, A, D.
C) B,
C, E, D, A.
Answer: B
Laws
Relating to Securities – II
1. In a pledge, _____ passes on to __________?
a) Ownership
b) Possession only
c) Ownership and Possession
d) pawnor
e) Pawnee
f) b & e
g) none
Answer: f
Explanation:
Try to remember our gold loans; borrower hands
over his jewels to banker as security. Here, possession only goes to banker and
not the ownership.
2. Bank -B received the document of title to
goods – a warehouse receipt as security for a loan of 10 lakhs. The warehouse
receipt was for wheat worth 14 lakhs. This security is called _________?
a) Hypothecation
b) Pledge
c) Lien
d) Constructive Pledge
Answer: D
Explanation: In a constructive Pledge, actual
goods are not handed over to Pawnee. There is no physical pledge. But as a
symbolic transfer of goods, only the key of the Godown or title to goods is
handed over to Banker. If LR/RR/Warehouse receipt/ bill of lading is produced
by the holder (in this case bank) and he gets the right of possession and
ownership if endorsed by consignee/the receiver.
Consignor: who sends goods;
Consignee: in whose name goods are sent/the
receiver
‘A’ sends goods with BOE and LR to ‘B’. B
endorses the LR to bank. Bank becomes holder with right of possession.
Pledge of title to goods like warehouse
receipt:
Pledge of this type of receipt is called
*ATTORNMENT. By *attornment, a valid **constructive pledge can be created.
Constructive pledge is symbolic transfer through papers like RR/LR or key of
the godown.
3. One of these cannot create pledge?
a) Pawnor
b) Owner
c) Lessee
d) Mercantile Agent
Answer: C
Explanation: A Pawnee/banker/creditor can
*re-pledge the goods already pledged to him. Even the mercantile agents who
receive goods on behalf of principal can pledge goods.
4. Fill in the blanks:
A Pawnee has to give _______ for a reasonable
period and then only resort to ________. Without issuing notice Pawnee cannot
______. It he sells, it will be treated as _______.
a) Conversion
b) Sale
c) Sell
d) Notice
Choose the correct combination:
A. a, d, b, c.
B. d, b, c, a.
Answer: B.
Explanation: Again remember what our banks do.
They compulsorily give notice to borrower for repayment; then for auction. So,
this is the procedure.
Don’t go for sale directly; give notice; then
only go for sale.
What is conversion?
Conversion, in simple terms, means change from
one to another. Pawnee gets possession
rights only; or a bailee’s rights. If pawnee prefers to sell the goods
bailed/pledged to him without information to pawnor, he is completely wrong.
**He converts ‘bailee’s possession right in to ownership’s right. This is
called in legal parlance ‘CONVERSION’.
Just think, can a lessee sell a house because
he has not got the advance rentals back?
5. True-t or False-f?
a) Government can take over the pledged goods
from Pawnee for tax dues.
Answer: f
b) A Government Bond was pledged. Interest is
directly received by the bond holder/pawnee.
Answer: t
Explanation:
a. Nobody has a right to take over pledged goods
from bank/creditor/bailee/pledge.
b. Owner/bailor is always has the right to
receive income from the pledged goods/bonds.
6. Hypothecation cannot be done on?
a) Work in progress
b) Stock
c) Book Debts
d) Unpaid goods
e) Machineries fixed to ground
f) Vehicles
Answer: D.
Explanation: If a bank finances on the
security of unpaid goods, bank loses its right to sale of goods who has first
rights over unpaid goods. Unpaid seller has lien over them.
Banks never give loan for unpaid goods. They
look for fully paid goods only.
7. Lien is?
a) Right to possess
b) Right to pledge
c) Right to bail
d) Right to hypothecate
Answer: A
Explanation: Lien can be done only on the
goods under possession of creditor / Banker like Deposits, pledged goods etc.
Bank has 50000 deposit. Banker gives a loan of
30000. Bank need not take pledge because deposit is already with banker only.
So, they just mark a ‘lien’ on deposits.
8. Set off can be done on?
a) Deposit of a customer of our Bank
b) Loan of a customer of our Bank
c) When deposit and loan are available for the
same customer in the same Bank
d) None of these
Answer: C
Explanation: Deposit can be adjusted against a
loan after becoming due in the same Bank for the same customer.
Charges
1. Meaning of Charge is?
a) Security for a loan
b) Surety for a loan
c) Accusation of a Crime
d) Fees on a service
Answer: A
2. Fill in the blanks.
1. A
charge is of ________ types.
2.
If charge is created on a well defined specific property, it is called ________
charge.
3. A general / unspecific charge, which covers
present and future accrual of property or reduction in property, is called _____
charge.
4. A property under general charge when taken
over by Bank becomes ________ and FIXED.
a) Floating
b) Fixed
c) Two
d) Crystallized
Select from the combo:
A. 1-C, 2-A, 3-B, 4-D.
B. 1-C, 2-b, 3-A, 4-D
Answer:B
Explanation:
A charge is ‘a right over security if need arises’. The right is
affected when failure of repayment occurs.
Fixed charge:
When a
house is kept under security, its value remains fixed at least for 3 years till
next valuation is done.
Floating charge:
Goods are hypothecated. But daily goods come
in and go out on sale. There cannot be a permanent value fixed to it. It
changes everyday with sale and purchase. So, it is called ‘Floating’ like our
floating rates for home loans.
When banks exercise the right of taking over
the goods, it becomes crystallized because no more changes allowed in the value
of goods. Banks, then, sell goods to secure the loan.
3. A floating charge cannot be created on?
a) Stocks
b) Work – in – process
c) Machinery
d) None of these
Answer: C
Explanation: Because they specific and fixed.
4. Registration of security by a company
should be done.
a) With ROC
b) Within 45 days
c) Within 30 days
d) Within 30+300 days of extension on the
whole on approval by ROC.
Which one is not true?
Answer: B
5. Company-C deferred/delayed registration of
a charge worth 40 crores.
Meanwhile it became NPA and Bank started
taking action? The effect is ____
a) Bank has no hold
b) Receiver has priority over Bank
c) Unsecured creditors have priority
d) None of these
Answer: B
Explanation: If a charge is not registered
with ROC, generally Bank / Creditor can exercise the option of securing it.
But, if a court receiver’s claims, Bank loses
its claim over the Non – registered security.
6. If a company omitted to register the charge
in ROC, Banker /Creditor give _____ to company and within ______ days of the
notice; they have to register it with ROC. _______ has powers to extend this
period. Contravention of any rules in creating / Canceling charge may lead to a
fine of Rs ____ and imprisonment up to ______ months.
a) 100000
b) Notice
c) Central Government
d) 6
e) 14
Choose right combo:
A.1-b, 2-d, 3-c, 4-a; 5-e.
B.1-b, 2-e, 3–c, 4–a, 5-d
Answer: B
Explanation: If a company has omitted to
register the charge in ROC, banker / Creditor should give a NOTICE to company
and within 14 days of the notice banker
has to register charge with ROC. CENTRAL GOVERNMENT has powers to extend this
period. Contravention of any rules in creating / Canceling charge may lead to a
fine of Rs.100000 and imprisonment up to 6 months.
Module
– I
1. Which of the following Acts have control
over Banking System?
a) RBI Act
b) Banking Regulation Act
c) Finance Bill Act
d) A & B
Answer: D
2. A is a known person in the village. He
comes to your branch without any ID proofand asks for opening of an account.
Opening of account is rejected by your manager as per?
a) FEMA rule
b) KYC norms
c) Banking Regulation Act
d) RBI Act
Answer: B
3. In a Bank one of these is essential as per
NI Act and necessary to withdraw money from his deposit?
a) Term Deposit by Customer
b) Loan to Customer
c) Demand by Customer
d) Within office hours
Answer: C
4. Four applications for ‘opening of Banks’
are received from the following. which one of these rejected?
a) ABC & Sons - a firm
b) X – an Individual
c) PQR & Co – Public Ltd
d) KLM Co – Public Ltd
Answer: b
Explanation: Individual cannot apply for Bank.
5. NBFCs have been allowed to receive term
deposits from public by?
a) NBFC Act
b) Banking Regulation Act
c) RBI Act
d) Finance and Nidhi’s Act
Answer: C
Answer: C
6. Banks are not permitted to do?
a) Taking Deposits
b) Leasing of Lockers
c) Trading activities
d) Dealing in Bullion
Answer: C
7. The ‘word’ Bank should not be used by these
entities except ________?
a) Pawnees
b) Private Lenders
c) Finance Companies
c) Finance Companies
d) Primary co – op Societies
Answer: D
8. __________ is not established by a special
and specific statute passed by Indian Parliament?
a) SBI
b) RBI
c) The Karnataka bank Ltd
d) NABARD
Answer: C
Explanation: SBI – SBI Act 1955 Special
Statute
RBI – RBI Act
Karnataka Bank Ltd –Not special statute / Act.
NABARD_ NABARD Act
ICICI – Companies Act
9. ICICI Bank Ltd is controlled by ________?
a) Companies Act 2013
b) RBI Act 1934
c) Banking Regulation Act
d) B & C
e) C
f) A, B, C
Answer: f
Explanation: ICICI is formed as a company
under Companies Act.
10. Match the following.
|
1.
|
Multi State co-op Bank
|
A
|
State co-op societies Act
|
|
2.
|
State Co-op Bank
|
B
|
RRB Act 1976
|
|
3.
|
Co – op Bank
|
C
|
Central co-op societies Act
|
|
4.
|
RRBs
|
D
|
Co – op society
|
Select correct combo:
A. 1-C; 2-A; 3-D; 4-B
B. 1-D; 2-A; 3-B; 4-C
Answer: A
Explanation: Co- op Bank is also a co-op
Society.
11. Section 42 of RBI Act 1934 relates to?
a) CRR
b) Discounting of Bills
c) SLR
d) Bank Rate
Answer: A
Explanation:
Cash Reserve Ratio is defined in sec 42 of RBI Act.
12. Banking Regulation Act does not cover?
a) Primary Agriculture Society
b) Urban Co-op Bank
c) State Central Co-op Bank
d) Co-op Land Mortgage Bank
e) A & B
f) B & C
g) A & D
Answer: G
Explanation:** Primary Agriculture Society and
Co-op Land Mortgage Bank do not come under Banking Regulation Act while all
other Banks including RRBs and other Co-op Banks are covered under Banking
Regulation Act.
13. Banking Regulation Act does not deal with?
a) Regulation of Banking Business
b) Control over management
c) Winding up Banking Business
d) Foreign Exchange management in Banks
Answer: D
Explanation: FEMA deals with foreign exchange
management.
14. ‘Depositor Education and Awareness
Fund’-DEAF is formed under?
a) RBI Act 1934
a) RBI Act 1934
b) Banking Regulation Act
c) Banking codes of services Board of India
d) IBA Guidelines
Answer: B
15. Fill in the blanks.
When an account remains __________ and
in-operative for ________ years, it is transferred to _________ within
_________ months.
a) D.E.A.F
b) 10
c) 3
d) Unclaimed
Select correct combo:
A. 1-D; 2-B; 3-A; 4-C
B. 1-A; 2-B; 3-D; 4-C.
Answer: A
When
an In-operative A/C remains unclaimed for 10 years. It is transferred to DEAF
within 3 months.
16. RBI has responsibility over?
a) Issue of currency notes
b) CRR
c) Monetary Stability
d) Credit Expansion / Contraction
e) All of these
Answer: E
17. RBI does not have?
a) A Governor
b) 4 Deputy Governors
c) Directors
d) 5 Local Boards
Answer: D
Explanation: Only four *zonal boards. Mumbai,
Chennai, Kolkata, New Delhi.
18. RBI can issue notes from Rs.________ to
Rs._________?
a) 1, 10000
b) 2, 100000
c) 1, 100000
d) 2, 10,000
Answer: D
Explanation: Rs.2 to Rs10000 notes (not coins)
19. Fill in:
RBI is ________ to Central Government under
section 20 of *RBI Act. RBI, whenever required, provides ________ advances
which are _________ in nature to fill in the gap between income and expenditure
of _______ and _____ Governments.
a) Central
b) Temporary
c) Banker
d) Ways and Means
e) State
f) financier
Select the correct combo:
A. c d b e a
B. f b d e a
Answer:
A.
Explanation:
RBI is banker to Central Government under
section 20 of RBI Act. RBI, whenever required, provides WAYS and MEANS advances
which are TEMPORARY in nature to fill in the gap between income and expenditure
of STATE and CENTRAL Governments
20. RBI has the power to remove directors or
CMD or entire Board of Directors of Banks in the interest of public. However
these people can make appeal to?
a) High Court
b) Governor of RBI
c) Central Government
d) Supreme Court
Answer: C
21. Other than RBI and Central Government,
which of the entities have a control over Banks for specific purposes?
a) Labour Authorities
b) SEBI
c) IRDA
d) B & C Only
e) A, B, C
Answer: E
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