legal-3-part-4

LEGAL-3-PART-4

RBI, Organizational Control

1. B.R Act specifies?

a) Minimum capital and reserve for Banks

b) CRR

c) SLR

d) None of these

Answer: A

2. One of these Banks cannot expand beyond specific regions for which they are licensed?

a) RRB

b) LAB

c) Small Payment Bank

d) Multi State Co – op Banks

Answer: B

Explanation: Local Area Banks only. All other Banks including **RRBs can expand all over India with permission of RBI.

3. The License of ABC Bank Ltd was cancelled by RBI. ABC Bank had only option to ________ within 30 days?

a) Suit file in a Civil Court

b) File a writ in High Court for a stay

c) File a writ in Supreme Court for a stay

d) Appeal to Central Government

Answer: D

4. RBI need not be approached for licensing except for?

a) Change of a branch to another place within a city

b) Opening a branch in Exhibition temporarily

c) Opening a temporary branch in village

d) Opening an ATM

Answer: D

Explanation: Once is a year, Banks should give a list of new branches, administrative offices, ATMs etc. to RBI for permission.

5. Foreign Banks have to keep a reserve in RBI for ‘every opening of branch’ in Mumbai and Kolkata?

a) 5 lakhs

b) 10 lakhs

c) 15 lakhs

d) 20 lakhs

Answer: D

6. Shareholders of Banking Company have voting rights not more than _________ percent of their holding in share capital of the Banking Company.

a) 5                             b) 10              c) 49               d) 51

Answer: B

Explanation: No voting rights more than 10% of their Share.

7. Fill in the blanks.

A Bank can be allowed to pay dividend only if it has ______ of Net NPA and______ of CRAR and maximum payout ratio is _______ for dividend.

a) 7%             b) 9%             c) 20%                       d) 40%

Choose the right group:

A.    b a d

B.     a b c

Answer: B    

A Bank can be allowed to pay dividend only if it has 7 of Net NPA and 9 of CRAR and maximum payout ratio is 20% for dividend.

8. A Bank can have exposure in the shareholding of any company not more than 30% of its own capital or the company’s capital. Shareholding includes?

a) Shares of the same company under pledge with the bank

b) Shares of the same company under Mortgage with the bank

c) Shares of the same company under bank’s purchase in its investment portfolio

d) C only

e) A, B, C

Answer: E

Explanation: When a Bank lends, it cannot give loan or hold shares under pledge / Mortgage / Assignment / own purchase more than 30% of its own capital and Reserve or 30% of the concerned company’s capital and reserve.

9. Banks should have 51% directors having special knowledge in agriculture, Accountancy, economics, Industries etc. in their board. True / false?

Answer:  True

10. Directors can have interest / partnership or promotional shares in other companies. True / False?

Answer: False

11. A CMD of a Bank has a term of service for?

a) 2 years

b) 3 years

c) 5 years

d) 7 years

Answer: C

12. Managing Directors are to be ‘Fit and Proper person’ for the post. Only one of these characteristics is true in ‘Fit Person’ definition?

a) Insolvent

b) Holder of share more than 10% in a company

c) Criminal

d) Expert in Finance

Answer: D

13. ‘Fit and Proper’ criteria are recommended by an/many advisory group/s led by?

a) A S Ganguly

b) R H Patil

c) M S Verma

d) Rangarajan

e) a, b, c

f) b, c, d, a.

Answer:  e

14. A Banking company can give dividend after writing off?

a) NPA

b) Preliminary Expenses

c) Fixed Assets

d) Expenses

Answer: B

Explanation: A Bank necessarily has to write off preliminary expenses related to isse of share capital before declaring dividend.

But dividend can be paid without writing off bad debts and depreciation.

15. RBI has powers to issue directions to?

a) Public

b) Central Government

c) Customers of Banks

d) Banks

Answer: D.

Explanation: RBI cannot issue directions to public or customers of banks or Central Government.

16. In a Joint Account held by A & B?

a) One person can be nominated

b) A minor can also be nominated

c) Two people can be nominated

d) A firm can be nominated

e) A or B

f) C or D

Answer: E

Explanation:  Account holders can appoint one person only; A minor can also be appointed along with a person (not necessarily guardian) to receive the money on maturity.

17. RBI can give directions on loans & Advances with regard to?

a) Margin

b) Limit

c) Purpose

d) Interest

e) All of these

Answer: E

18. Selective credit Control is a tool employed by RBI for controlling the prices of sensitive goods. Presently it is used only on?

a) Rice

b) Wheat

c) Edible Oils

d) Levy sugar

Answer: D

Explanation: Policy of ‘Selective credit control’ guides/controls banks from financing hoarders of sensitive commodities.

19. Currently RBI issues policy rates for loans to?

a) Weaker Section

b) Exports

c) Small loans

d) DRI Loans

e) All of these

Answer: E

20. Usurious Act 1918 cannot be used against?

a) Private lenders
b) Pawnees

c) Banks

d) NBFCs

Answer: C

Explanation: Usurious Act 1918 gives protection on interest rates for weaker section people and Agriculturists from private money lenders. Courts never interfere with rates charged by Banks while they act against private money lenders..

21. RTGS, NEFT etc. come under?

a) RBI Act

b) PSS Act

c) IT Act

d) None of these

Answer: B

Explanation: *The payment and settlement Act 2007. RBI is authorized to manage these systems through Board for Regulation and Supervision of payment and settlement systems – BPSS.

22. Banking ombudsman’s final resolution of disputes between Bank and customers is called?

a) Judgment

b) Decree

c) Deed

d) Award

Answer: D

23. A complaint can be received by ombudsman after the date of reply from bank to complainant within _______ if customer-complainant is not still satisfied.

a) One year

b) One month

c) One month and one year

d) None of these

Answer: A

Explanation: 1. A complaint can be made to Bank first; the complainant can wait for one month for reply.

2. After 30 days within next one year he can make the appeal/complaint to Banking ombudsman.

24. Ombudsman’s Award becomes void when ________ ?

a) A party files a suit in a Court during the process.

b) Complainant does not accept the award

c) Bank does not accept the award

d) All of these

Answer: D

25. D.E.A.F formed out of?

a) Profits of Banks

b) Government Budget allocation

c) RBI is own funding

d) Unclaimed deposits in banks

Answer: D

26. One of these is not true?

a) DRT has judicial powers

b) Civil Courts have jurisdiction over 10 lakhs suits unrelated to banks’ loans.

c) Ombudsman is not a creation of RBI’s scheme

d) The decree of Ombudsman is called award

Answer: C

Explanation: *‘Not true’ means ‘false’. The information in C is false because Ombudsman is created under a scheme of RBI under BR Act section 35. It is not a creation of Law.

27. Banks have to keep ______ of profit under reserve as per RBI directions?

a) 10%                       b) 5%             c) 25%                       d) 20%

Answer: D

28. Foreign Banks have to keep the reserve of 20% with _______?

a) SBI

b) RBI

c) EXIM BANK

d) GOI

Answer: B

29. To become a scheduled Bank, a minimum of Rs.________ capital is a prerequisite for the Banks?

a) 5 lacs

b) 10 lacs

c) 50 lacs

d) 100 cores

Answer: A

30. All Banks have to maintain __________ with ________at the rate   _________ . For CRR calculations, borrowals from RBI, NHB, NABARD, EXIM Bank and IDBI are _____ from DTL.

Fill in the blanks.

a) Prescribed by RBI every quarter

b) RBI

c) Excluded

d) CRR

e) NABARD

Choose the combo in correct sequence:

A.    d b a c

B.     d e a c

Answer: A

explanation: NDTL is Net Demand Term liabilities: Demand Term Liabilities = CA, SB & Term Deposits maturing within 12 months.

31. Interest on CRR is?

a) 4%             b) 6.25%                   c) 5.25%                   d) None of these

Answer: D

32. Returns have to be submitted to RBI on Alternate _____ every month. If that day happens be a holiday, banks have to submit the report on _________ working day.

Fill in the blanks.

a) Succeeding

b) Thursday

c) Preceding

d) Fridays

e) d c

f) c d

Answer: e

33. RBI penalizes Banks for not maintaining CRR at the rate of?

a) 1% above Bank Rate

b) 3 % above Repo Rate

c) 1 % above Repo Rate

d) 3 % above Bank Rate

Answer: D

34. Maximum of SLR to be maintained with RBI?

a) 4%             b) 40%                       c) 25%                       d) 20.25%

Answer: b.

35. Not maintaining SLR and CRR at required rates attracts penal interest over Bank rate?

a) 3% of Bank Rate

b) 5% of Bank Rate for continuing in to next fortnight

c) a and b

d) None of these

Answer: C

Explanation: RBI penalizes at the above rate: First fortnight on Friday 3% of Bank rate. If continued in second fortnight 5% of Bank rate.

36. Quarterly reports on Assets maintained should include?

a) Gold

b) Approved bonds

c) Cash

d) All of these

Answer: D

37. One of the following does not form Demand Term Liabilities?

a) Current Account

b) Capital

c) Savings Bank account

d) T.D maturing within next 12 months

Answer: B

38. Unaudited Quarterly results of the ____ banks should be published in news papers?

a) Public Sector

b) PVT. Sector

c) Listed

d) Foreign Bank

Answer: C

Explanation: All banks *listed in stock Exchange have to publish unaudited balance sheets in newspapers as per SEBI guidelines.

39. Annual reports like Balance sheets are to be signed by ________?

a) All directions

b) CMD and 3 directors

c) CMD and 5 directors

d) CMD 2 independent directions, one government nominated director and workmen director.

Answer: B

40. Formats of Balance sheets and all schedules of Banks should be as per _______?

a) RBI Act

b) Companies Act

c) Finance and Audit Act

d) Banking Regulation Act

Answer: D

41. Banks balance sheets have to be published in ______ newspapers of which one should be ___________?

a) 3, National

b) 1, Local

c) 2, National

d) 2, Local

Answer: D

Explanation: 2 Newspapers and one should be *a local newspaper. *Newspapers should be related to finance, commerce trade and it can be a *weekly journal too.

42. Audit reports of listed banks like ICICI bank should be reported to _______ within 3 months of year ending.

b) SEBI

c) Stock Exchange

d) RBI

e) all

Answer: E

Explanation:  1. Audit reports of Banks created out of company Laws have to be reported to SEBI, RBI and Stock Exchanges.

2. SBI associates to report to all of the above plus SBI and GOI. Public sector Banks if listed have to report to SEBI, RBI, STOCK EXCHANGE plus GOI.

All means: RBI, SEBI, Stock Exchange, ROC. .

43. Auditors of ‘Bank-B’ audited the Bank and certified that they completed the audit and signed the audit report as per the books submitted to them. But the Bank failed next month; in these circumstances auditors are to be blamed.

 True  or False

Answer:  true

Explanation: They are not reasons for failure; so, not liable; But negligence of duty is there. So, they are also blamed for failure of reporting.

44. Match the following:

a.	Audited Report to RBI	-	A. Annually within 30 days of year ending
b.	Monthly Returns to RBI	-	B. Section 42 DTL for CRR
c.	Fortnightly Returns  To RBI	-	C. Annual
d	Return on unclaimed Deposits to RBI	-	D. Assets& Liabilities

Choose right matches:

A.    a-a; b-d; c-b; d-c

B.     a-c; b-d; c-b; d-a

Answer:  B

Explanation:

Balance sheet Annual;

Monthly returns on liquid assets and Liabilities under sec 24 of B.R Act;

 Fortnightly returns on DTL for calculating of CRR under section 42of RBI Act;

Return on unclaimed deposits within 30 days year ending.

45. Which of the Acts gives power to RBI for ‘preservation of Records’ in Banks and period of preservation?

a) RBI Act 1934

b) Banking Regulation Act

c) PML Act

d) Ombudsman Scheme

Select Answers from below:

a) B & C                                                         b) A & D

c) A Only                                                       d) B Only

Answer: A

Explanation:

B. R Act & PML Act. PML Act clearly specifies that generally records from opening to last transaction have to be kept safely for 5 years.

In case of ‘identified suspicious transactions’ it is 10 years.

46. Powers of Inspection of all Banks are rested with?

A. RBI                                                             B.NABARD

C.CAG                                                                       D.GOI

E. Chief Vigilance Commission

a) E & D                                                         b) C

c) A & D                                                         d) E Only

Answer: c

47. Which are True or False about BFS?

a) Board of Financial Supervision takes care of all NBFC’s.

b) A Deputy Governor usually chairs BFS.

c) Governor, Dy. Governor & 4 directors are members.

d) Meeting once in a month

Select which are correct set of answers:

A.    a & b are false; c & d are true.

B.     a & b are true; c & d are false.

Answer: A

Explanation:  RBI Governor is the chairman of the Board of Financial Supervision.

48. When a Bank is acquired forcefully in public interest, shareholders have a right to?

a) Stop Acquisition
b) Elect CMD

c) Compensation

d) None of these

Answer: C

Note: Shareholders can have compensation and have a right to appeal to GOI for Intervention in the action of RBI.

49. When a scheme of amalgamation occurs workmen are protected with?

a) Same Benefits of previous amalgamated bank

b) For 3 years

c) After 3 years, Transferee Banks benefits have to be passed on to taken over company’s employees.

d) All of these

Answer: D

50. Final authority on Amalgamation, winding up and merger of banks lies with?

a)  CMDs of merging entities

b) Boards

c) Shareholders

d) RBI

e) GOI

Answer: E

51. Winding up procedure needs __________ .

a) RBI’s Recommendation

b) GOI’s final order

c) High Court’s Order

d) None of these

Answer: C

Explanation: However it is RBI which recommends in public interest for winding up; GOI gives consent; High Court fixes its stamp of approval in final order after appointing official Liquidator.

52. Match the following from ‘a to e’ with ‘f to g’:

a) SBI

b) Nationalized Banks

c) RRB’s

d) Co – op Banks

e) SBI Subsidiaries

f) Central co-op societies Act and State co-op societies Act

g) Bank Nationalization Act (Acquisition and Transfer of undertakings Act)

h) RRB Act 1976

i) SBI Act 1955

j) Separate Acts for subsidiaries

select correct matches:

A.    a-g; b-j; c-h; d-f; e-i

B.     a-i; b-g; c-h; d-f; e-j

Answer: B

53. Which is false about SBI in the following?

a) LHOs at Mumbai, Chennai, Kolkata and Delhi

b) SBI can have 4 MDs maximum

c) Agent to RBI

d) Banker to Government

Answer: D

Explanation: *RBI is the only Banker to Central Government. **RBI delegates the job to SBI. RBI can also ask other banks to conduct Government Business.

54. Which one is not true about RRBs?

a) A Sponsor Bank is a must

b) Do all Banking business under B.R. Act

c) CMD and Board are selected by sponsor Bank with NABARD’S Advice

d) Operates within a region.

Answer: D

Explanation: RRB’s can operate beyond a specified area too. Only Local Area Banks must operate within regions.

55. The Board of directors for Nationalized Banks are nominated by?

a) RBI

b) GOI

c) BBB (Bank Boards Bureau)

d) IBA

Answer: B

Explanation: Banks Board Bureau selects directors but **GOI has the powers to appoint / reject them.

56. The face value of shares of SBI?

a) Rs. 1                                                          b) Rs. 5

c) Rs. 10                                                        d) Rs. 100

Answer: A

57. License to open a co-op Bank is to be obtained from ___________?

a) State Government

b) Registrar of co-op Societies

c) RBI

d) NABARD

Answer: C

Explanation: Branch opening permissions are to be routed through NABARD.

58. Balance Sheets of co-banks are to be submitted to?

a) RBI

b) NABARD

C) Registrar of Co – op Societies

d) All of these

Answer: D

59. In addition to Registration with Co-op Registrar, Co-op Banks have to be registered with _________ to get all its deposits insured?

a) LIC                                                              b) G.I.C

c) IRDA                                                          d) DICGC

e) ECGC

Answer: D

60. _________ has powers to recommend to RBI for winding up of a co-op Bank registered with them.

a) CAG                                                           b) Registrar of Co – op Societies

c) CBI                                                             d) DICGC

Answer: D