MODEL PAPER - 4

1. Which of the following meets the description of a capital account transaction ? a) Import of capital goods by an importer in India. b) a transaction that results in change in our asset or liability position outside India c) a transaction that results in change in our asset or liability position within India d) export of machinery by an exporter. 2) Debt service coverage ratio is calculated by the bank for which of the following purposes : a) to sanction working capital limits b) to sanction term loan and fix installment of term loan c) to sanction non-fund based limits d) for all the above purposes 3) As per RBI guidelines, if the ATM has not dispensed the cash but account has been debited, the dispute regarding such transaction is to be resolved by the banks within : a) one week b) 10 days c) 12 days d) 45 days 4) What is the cut off amount for which report about non suit filed willful defaulter accounts is to be sent to RBI : a) Rs.5 lac and above b) Rs.10 lac and above c) Rs.25 lac and above d) Rs.50 lac and above 5) Under the Ombudsman Scheme of RBI, the bank is required to implement the award of Ombudsman within : a) 30 days of date of Award b) 30 days of receipt of acceptance from the customer c) 30 days from date of award d) 45 days from date of award 6) Under gold card scheme for exporters, the concessional interest rate is allowed for : a) pre-shipment credit - 270 days b) post-shipment credit in the form of bills - 180 days c) pre-shipment credit and post shipment credit - 270 days d) pre-shipment credit and post-shipment credit - 365 days 7) X wants some information from the bank under RTI Act but he does not stake the purpose for which the information is required : a) it is desirable that purpose should be stated so that bank provides relevant information b) the purpose is not required to be stated by the applicant c) the purpose must be stated without which information cannot be provided d) the purpose is mandatory to decide whether the information should be given to the applicant or not. 8) Legal risk is a fact of which of the following risk : a) operational risk b) credit risk c) market risk d) none of the above. It is a separate category in itself.

9) The bank sanctioned a personal loan to Mr.X on his personal assurance to pay. The account is overdue for 4-5 months and is showing a balance of Rs.2 lac. What will be the extent of provision on this account. a) Rs.2 lacs b)Rs.20,000 c) Rs.40,000 d) Rs.800 10) Bank allowed an advance under KVI sector. This will be classified as : a) micro enterprise irrespective of the amount of original investment in plant and machinery b) micro enterprise if the investment in plant and machinery is within the ceiling for micro enterprises c) small enterprise d) such advances are not priority sector advance. 11) Which of the following is correct regarding income criteria for DRI advance eligibility in a semi urban centre : a) maximum annual family income Rs.15000 b) maximum annual family income Rs.18000 c) maximum annual income of beneficiary Rs.15000 d) maximum annual family income Rs.24000 12) The term intestate is used with reference to a) settlement of claim in case of a deceased customer b) payment to the nominee in case of a deceased customer c) a person died without leaving a 'will' d) a person died after leaving a 'will' 13) The risk of loss on account of change in the value of on balance sheet items or off balance sheet items as a result of change in market rates is called : a) market risk b) settlement risk c) operational risk d) trading risk 14) An amount of Rs.30000 was payable in a term loan on account of interest and principal latest by Jan 22, 2009. The borrower paid Rs.24500 on April, 20 2009, the account becomes NPA wef : a) Apr 23,2009 b) Apr 22, 200 9 c) since part amount has been paid account does not become NPA d) Since major part amount has been paid account does not become NPA 15) In a standard account, the balance is Rs.10 lac and security value after security damage is Rs.4.50 lac. As on Mar 31, 2009 the account will be classified as : a) sub standard secured b) sub standard unsecured c) doubtful upto one year (DF 1) d) doubtful above one year and upto 3 years (DF 2) 16) The balance in DF1 account is Rs.10 lac. It is fully secured. As on Mar 31, 2009 the provision will be a) Rs.2 lac at the rate of 20% b) Rs.3 lac at the rate of 30% c) Rs.5 lac at the rate of 50% d) Rs.10 lac at the rate of 100%

17) When the application is filed with DRT by the bank under provisions of RDDB Act, DRT sends notice to the defendant (borrower) within ______as to why the relief should not be granted to the bank : a) 7 days b) 15 days (c) 30 days d) 45 days 18) Net working capital required to be contributed by the firm, as per second method of lending suggested by Tandon Committee should be : a) 25% of current assets b) 20% of current assets c) 5% of projected sales d) 25% of the amount of Working Capital limit sanctioned by the bank. 19) Which types of LC cannot be opened by banks as per directives of RBI : a) Standby LC b) Without recourse LC c) Confirmed LC d) revolving LC 20) Resident individuals can book foreign exchange forward contracts for their exposures on account of actual/anticipated remittances without production of underlying documents upto : a) 10000 US $ b) 25000 US $ c) 50000 US $ d) 100000 US $ 21) A depositor of FCNR(B) account has decided to return to India for permanent stay in India (which one is correct) : a) FCNR (B) account will continue till maturity b) it will be treated a resident account from date of return c) premature withdrawal of such deposit will be with penalty d) all the above 22) The payment against imports must be completed within : a) 3 months from receipt of documents b) 6 months from receipt of documents c) 6 months from date of shipment d) 6 months from date of entry of good in India 23) For imports into India, the banks are required to obtain the exchange control copy of bill of entry form. But exemption is available if the value is up to : a) $ 100000 b) $ 300000 c) $ 500000 d) $ 1000000 24) Banks are required to put in place a system of "Online alerts" to the credit or debit cardholder for all "card not present" transactions of the value of Rs.______and above. a) Rs.5000 b) Rs.7500 c) Rs.10000 d) Rs.25000 25) As per draft time schedule of RBI, under Basel II, the banks can make an application to RBI for moving to Internal Rating Based approach for credit risk, by a) April 01, 2013 b) April 01, 2012 c) April 01, 2011 d) April 01, 2010 26) Which of the following approaches under Basel II, has not been implemented in India a) Standard approach for credit risk b) Basic Indicator Approach for operational risk c) Internal Model Approach for market risk d) none of the above

27) Where a bank fails to reimburse to the customers, the amount wrongfully debited in an ATM within the prescribed period, RBI can impose penalty on the bank concerned as per the provisions of : a) Payment and Settlement System Act, 2007 b) RBI Act 134 c) Banking Regulation Act 1949 d) Information Technology Act 2000 28) A foreign exchange dealer forgets to square the over bought position in a foreign currency. It is a : a) foreign exchange risk b) settlement risk c) liquidity risk d) operational risk 29) In PM Employment Generation Program, the maximum project cost in case of manufacturing units is restricted to : a) Rs.5 lac b) Rs.10 lac c) Rs.25 lac d)Rs.50 lac 30) What is the time limit for which records are to be preserved under Right to information act : a) there is no such time period b) 10 years c) 5 to 8 years d) 20 years 31) What is the special feature of a not negotiable crossing of a cheque ? a) further transfer is possible b) further transfer is not possible c) further transfer is allowed with defect free title d) further transfer not available but defect free title is available 32) A bank has certain financial securities given by a customer and lying in safe custody account and certain articles lying in locker in addition to a saving bank account in the name of the customer. The bank has an overdraft in the name of the same customer, who is not paying the loan. a) bank can use lien on the financial securities only b) bank can use lien on the financial securities as well as on articles in locker c) bank cannot use lien on the financial securities but it is possible on locker and saving bank account d) bank can exercise its right of set off in case of saving bank account only 33) When a guarantor makes payment of bank loan, all securities are required to be transferred by bank to the guarantor, under which of the following : a) right of redemption b) right of foreclosure c) right of subrogation d) right of appropriation 34) In public sector banks, the banks normally insist on first deposit as cash, in a newly opened account, because it is requirement of a) KYC guidelines b) Banking Regulation Act c) only a practice d) RBI Act 35) A foreign bank opens an account with SBI in Mumbai a) It is a NOSTRO Account for SBI b) It is NOSTRO Account for foreign bank c) It is NOSTRO Account for both banks d) It is VOSTRO Account for both banks

36) How many above poverty line members can be there in a self help group in SGSY in normal circumstances ? a) 10% b) 20% c) 30% d) group meant for below poverty line only 37) To absorb excess liquidity in banking system RBI undertakes which of the following: a) Reverse Repo b) decrease in CRR c) decrease in SLR d) Repo 38) In which of the following the interest rate is not fixed by the banks themselves as is regulated by RBI a) fixed deposit rates b) certificate of deposit rate c) rate of interest on consumer credit d) ceiling rate on agriculture advances upto Rs.2 lacs 39) The loan is recovered from income of the property in which of the following mortgages. a) usufructuary mortgage b) English mortgage c)equitable mortgage d) simple mortgage 40) Interest income in respect of restructured accounts classified as standard assets will be recognised on_______basis and that in respect of the accounts classified as non performing assets will be recognised on _________ a) accrual, accrual b) cash, cash c) cash, accrual d) accrual, cash

Descriptive Questions :
1) Eraz-ex ink is not used in correcting documents 2) Joint account cannot be opened for a pension A/c 3) Right of general lien cannot be exercised on securities handed over to the Bank for safe custody. 4) The branch should maintain minimum cash balance. 5) Bank is focusing on P segment 6) Payment against withdrawal slips in SB a/c will be permitted in the account holder only against the production of pass book. 7) Passwords on the computer should be kept secret 8) Depreciation is added to net profit to arrive at cash accruals. 9) Banker attaches greater importance to the current ratio of a borrowal unit. 10) Debt recovery tribunals have been established. 11) The balance in INCA is written off when the loan amount is written off

12) Government of India had framed the Agricultural debt relief scheme. 13) DIR facility is not sanctioned under IRDP 14) The bank has entered into insurance sector. 15) Importance is given to relationship banking. 16) Goods are preferably insured for the full market value 17) Kisan credit card has been encouraged by banks. 18) The Bank favours financing of SHGs 19) Safe deposit articles are not delivered against succession certificate. 20) A Demand draft payable to bearer cannot be issued by the Bank. 21) Core Banking Solutions is a enabler of BPR initatives? 22) banks are introducing CASH BACK SCHEMS. 23) LTV Ratio has been stipulated for home loans. 24) Banks are focusing on CASA Deposits. 25) Financial inclusion - a national priority. SITUATIONAL QUESTIONS: 1. Discuss a banker's right of set-off in the following cases:

a) There is a credit balance in the account of A. The banker wishes to set this off against an overdraft in the names of A and B. b) D is a guarantor for a loan granted by the Bank to S. The loan has become sticky. There is a credit balance in D's account. The Banker wishes to set it off against D's liability as a guarantor. c) There is a surplus of insurance policy amount available with the Bank after adjustment of the balance in the deceased borrower R's loan account secured by the policy. The banker wishes to set off this surplus against a debt balance in R's clean overdraft account.

2. From the given Balance Sheet Calculate the following ratios and comment whether they are maintained at satisfactory levels? 1. Current Ratio (2) TOL/TNW (3) D/E (Rs. in thousands) LIABILITIES AMOUNT ASSETS AMOUNT 1 Capital 200 1 Fixed Assets 335 2 Reserves 50 2 Stocks 50 3 Loans from 50 3 Sundry Debtors 40 Friends & Relatives 4 CC with Bank 50 4 Cash on hand 5 5 TL with Bank 110* 5 Investments in 20 associates 6 Sundry 40 6 Goodwill 15 Creditors 7 Patents 10 8 Preliminary exp 25 TOTAL 500 TOTAL 500 *includes current year installment of Rs.10,000/3. On 19th May, 1977 your branch receives a garnishee order attaching all sums owing by the bank to your customer X. At the time of the receipt of the order, X has got the following accounts: a) A FDR for Rs.5,000 deposited on 25th May, 1976 for one year in the name of X and maturing for payment on 25th May, 1977. b) A joint current account in the names of X and Y with a balance of Rs.7,500. c) An overdue unsecured loan account in the name of X wherein he owes the bank Rs.1,000/4. A firm having A, B, C as partners enjoys an overdraft limit of Rs.1 lakh with the bank. A communication is received by the bank that A died on 20th April, 1979. On 21st April, 1979 two cheques signed by deceased partner on 18th April, 1979 are presented for payment. As a branch manager how will you deal with this case? 5. Smt. Radhaben, an old lady of about 60 years of age from a village, has deposited a sum of Rs.1,00,000/- in 5 years' deposit at your branch. At her request, branch had allowed the name of her eldest son to be added to the deposit, making it payable to "Either or Survivor". She now requests you to delete the name of her eldest son and add the name of another son. Please state whether you would accede to her request? 6. A customer who has taken a loan on clean basis for Rs.20,000/- approaches you in response to your notice to pay off the loan on due date with a request to make payment of a fixed deposit receipt for Rs.25,000/- standing in the name of his minor son jointly with him and appropriate towards the loan. As branch manager how would you deal?