INDIAN INSTITUTE OF BANKING

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INDIAN INSTITUTE OF BANKING

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Title: INDIAN INSTITUTE OF BANKING

1
INDIAN INSTITUTE OF BANKING
FINANCEJAIIBMODULE (C D) LEGAL ASPECTS OF
BANKING OPERATIONSSaturday19,April, 08T M C
VASUDEVAN
2
01.. Identify which one is correct.

A.. A contract of indemnity has two persons
B.. A contract of guarantee also has two
persons.
C.. A minor can take a loan as a borrower
D.. A pledge in respect of company advance has to
be registered with ROC.

3
02..The award of a Banking Ombudsman will be
reviewed by

A.. The Executive Director of RBI
B.. The Deputy Governor in charge of Rural
Planning and Credit Department of RBI.
C.. The Finance Secretary
D.. The Banking Ombudsman himself

4
03..Which is not correct (Banking Ombudsman)

A.. The maximum amount the Banking
Ombudsman can award as compensation is Rs.10
lacs.
B.. Limitation period for filing of the review
application is one month.
C.. Failure to honor guarantee does not come
under its purview .
D.. None of the above

04..SARFAESI Act 2002, extends to whole of India
including the State of Jammu Kashmir. Also
applicable to housing finance companies.
.. The act is effective from 21.06.2002. It also
covers the earlier loans which were outstanding.

05..Based on the observation of the Supreme Court
in the Mardia Chemicals vs Union of India case,
the Government of India issued notification
amending the provisions of the SARFAESI Act. The
amendment stipulates payment of 50 amount
instead of 75 as originally enacted. (When
appealed)

06.. . Take over of loans or advances from the
Bank or Financial Institution for the purpose of
recovery is known as Asset reconstruction.
. The word Board is used in the Act refers to
the Securities and Exchange Board of India (SEBI)

07..Bank T has lent to S a sum of Rs.2 lacs on
the hypothecation of a van.. Who is the
Originator as per the provisions of the SARFAESI
Act.
a.. Borrower S b.. Creditor T
c.. Both are not Originators
d.. SEBI

08..Default should have been committed by the
debtor.
. The borrowers account should have been
classified as NPA as per the guidelines of RBI.
. The Act is applicable only to a Secured
creditor and not to an unsecured creditor

09.. Obligor is a person liable to pay to the
lender (originator).
As per the contract terms and conditions or
otherwise.
He has to discharge any obligation in respect
of a financial asset whether existing, future,
conditional or contingent or and includes a
borrower.

10.. Not considered as Qualified Institutional
Buyer
a.. Bank
b.. Insurance company
c.. Individual Investor
d.. An Asset Management Company

11...Which one is not pertaining to
Hypothecation.
a.. A charge in or upon any movable property
b.. Right in favour of the creditor
c.. Possession also with the lender
d.. Retaining the ownership with the owner of the
property

12.. The securitization company or reconstruction
Company to raise funds from qualified
institutional buyers by formulating schemes.
.Separate scheme wise accounts to be
Maintained.
.The Scheme invites subscription to security
receipts proposed to be issued by such company
under the scheme.

13.. Bank X is the secured creditor and U is the
borrower and defaulter The branch head is R. U
has given his land as security which is under his
possession. The outstanding liability is shown
under NPA. Identify the Obligor Originator.
a.. X and U respectively
b.. X and R respectively
c.. U and X respectively
d.. R and U respectively

14.. Who will receive the Security receipt from
whom.? (SARFAESI Act)
a.. Secured Creditor from Principal Debtor
b.. Institutional Investor from Securitisation
company.
c.. Securitization company from Institutional
investor
d.. Secured Creditor from Securitization company

15.. RGH, the secured creditor. After completing
the formalities / procedures (as per SARFAESI
ACT) the assets mortgaged by KWY were purchased
by a Securitisation and reconstruction company
called JFI for Rs.27 lacs. Then
a.. JFI will issue a security receipt RGH
b.. RGH will receive debentures from JFI
c.. KWY will issued security receipts to JFI.
d.. RGH will get debentures from KWY

16...In Mardia Chemicals vs Union of India
Supreme Court as declared that
A.. SARFAESI Act is Constitutionally valid
B.. Except a part of Section 17(2)
C.. To Deposit 75 for appeal, the Apex court
was not in favour
D.. All the above

17.. A reconstruction company
A.. is engaged as property developer
B.. is formed for the purpose of asset
reconstruction
C.. is registered with SEBI
D.. is not registered under the Companies Act

18..The Government of India has
A.. issued an order
B.. issued a notification amending the Sec17(2)
of SARFAESI Act.
C.. Instead of 75, the borrower filing an appeal
has to deposit 50
D.. Both B C are appropriate

19..A Life Insurance company, a Nationalised bank
and a foreign institutional investor have formed
a Company to invest in Securitisation company as
qualified institutional buyer. Then they will
have to
a.. Register with SEBI
B.. Register with SEBI is not a must
C.. Register with SEBI is a must
D.. Register with SEBI when directed only

20.. DEF a Securitisation and reconstruction
company acquired financial asset from MNO
secured creditor. On account of this transaction
DEF would become
A.. Purchaser
B.. Seller
C.. Owner
D.. None of these

21..The regulatory authority for Securitisation
and reconstruction company is
a.. Company Law Board
b.. Concerned Registrar of Companies
c.. SEBI
d.. None of these

22.. .The Securitisation Company not only to be
registered under the Companies Act but also needs
registration from RBI as per
A.. RBI Act
B.. Companies Act
C.. SARFAESI Act
D.. SEBI Act

23.. A person who is holding 12 of the paid up
equity capital of the reconstruction company is
known as
A.. Sponsor
B.. Obligor
C.. Originator
D.. Institutional investor

24.. Identify the beneficiaries of the trusts
formed by Securitisation compnay. ACE is the
Securitisation company. GHY is the Secured
creditor. BDF is the Institutional investor.
a.. GHY
b.. BDF
c.. ACE
d.. None of them

25.. A security receipt is
A.. Similar to Banks Fixed Deposit receipt
B.. Issued by Securitisation Company
C.. Issued to Securitisation Company
D.. Issued to a Secured Creditor

26... The Securitisation company can acquire
financial asset without execution of any deed of
assignment or transfer in its favour by the
original creditor.
A.. True
B.. False
C.. Without agreement it cannot be legally valid
D.. Deed of Assignment is a must.

27.. Debenture as per the provision of SARFAESI
A.. Appears on the left hand side of the balance
sheet
B.. It is shown as liability representing
commitment
C.. It is for payment of consideration to be
paid to the bank for acquisition of financial
asset from it
D.. It represents the money borrowed.

28.. Identify the incorrect one (Reconstruction
Company)
A.. It has to obtain registration certificate
from RBI.
B.. It has to have minimum capital of Rs.100
crores at the time of registration
C.. It can formulate separate schemes for
acquisition of financial assets
D.. It has to disclose the risk factors to the
investors.

29.. The Security receipt (not having any
interest or right and so on in immovable
property) issued to the holder by the
Securitisation company attract registration as
per the Registration Act,1908.
A.. True
B.. False
C.. Registration compulsory for such receipts.
D.. None of the above

30..If there is a dispute among the bank,
securitisation company and the qualified
institutional buyer, then the same to be settled
by conciliation or arbitration as provided in
the
A.. Reserve Bank of India Act
B.. SARFAESI Act
C.. Arbitration and Conciliation Act
D.. Both a c

31..An institutional investor NG wish to
transfer the security receipt (Which has an
undivided interest in the financial asset) to MV.
a.. Registration under the Registration Act
required.
b.. Registration optional
c.. Registration need not be insisted.
d.. Registration of Security receipts does not
arise.

32.. The power given to the secured creditor,
as creditor has overriding effect over the
provisions related to mortgage in
A.. The Registration Act
B.. The Contract Act
C.. The SARFAESI Act
D.. The Transfer of Property Act

33..The Securitisation company can set up
separate trusts scheme wise and act trustees for
such schemes as provided in the Securitisation
Companies and Reconstruction Companies (Reserve
Bank) Guidelines and Directions,2003. The
beneficiaries of such trusts are
a.. Debenture holders b.. Lending bankers c..
Debtors d.. None of them

34..Acquisition of financial asset from the
originator, by Securitisation or reconstruction
company is known as
a.. Reconstruction
b.. Securitisation
c.. Transfer of Assets
d.. Purchasing

35.. .. Securitisation company is a company
registered under the Companies Act,1956 for the
purpose of securitisation. It also needs
registration from RBI under the provisions of
SARFAESI Act.
.. Security agreement includes an agreement,
instrument or any other document or arrangement
under which security interest is created in
favor of secured creditor

36.. The minimum capital requirement for
securitisation or reconstruction company, at the
time of registration is
a.. Rs. 35 Crore
b.. Rs. 55 Crore
c.. Rs.105 Crore
d.. None of the above

37..E has created a mortgage by way of deposit
of title deeds with the secured creditor bank
J. This represents
a.. Security Receipt
b.. Secured Debenture
c.. Security Agreement
d.. Secured Debt

38..Secured debt means a debt which is secured by
any security interest.
..Secured Asset means the property on which
security interest is created.
.. The powers given by SARFAESI Act for
enforcement of securities are against secured
assets only

39..Security Receipt is issued
a.. To Borrower by the Bank
b.. To Qualified Institutional buyer by the
Reconstruction Company
c.. To Creditor by the Securitisation Company
d...To Reconstruction company by the
Securitisation Company

40..Which one is appropriate. (SARFAESI)
a..B D F is the institutional investor and will
receive Debentures
b.. KRT is the Securitisation company will issue
Security receipt as well as Debentures
c.. GU is the Secured creditor and will receive
security receipt
d.. MNP, a borrower of the bank will issue
Debenture in lieu of payment towards outstanding

41.. ..The security receipt evidences the
purchasers undivided right, title and interest
in the security.
..These receipts are transferable in the market.
.. Sponsor is a person holding not less than 10
of the paid up capital of securitisation or
reconstruction company.

42.. ..Depending on the nature of security asset
RBI has the powers to specify different amounts
of owned funds for different companies.
..The company can formulate separate schemes for
acquisition of financial asset.
..The securitisation or reconstruction company
can
act as trustees for such trusts and manage the
assets
held in trust.

43.. IBF a securitisation and recosnstruction
company wish to raise funds by way of deposits.
a.. They can approach public for the same.
b.. Cannot raise funds by way of deposits
c.. If need arises with the permission of RBI
d.. They can raise funds by way of Deposits on
Private placement basis only.

44.. ..The Securitisation or reconstruction
company can acquire financial asset without
execution of any deed of assignment or transfer
in its favor by the concerned bank or the
financial institution.
..Assignment is complete on the acquiring company
issuing debenture or bond and incorporating
therein the terms and conditions of acquisition.

45.. .. The securitisation involves two stages.
In the first stage it is acquisition of financial
assets and undivided interest therein.
Second stage is issue of security receipts in
favor of investors for the purpose of raising
money from investors

46..As per the provisions of SARFAESI Act the
document to be executed requires (identify which
one is not correct)
a.. Payment of stamp duty
b.. As per the provisions of the Indian Stamp Act
c.. State Stamp duty laws
d.. Central Stamp duty laws

47.. ..As per RBI guidelines,
a...an acquisition of funded assets should not
include take over of outstanding commitments, if
any, of any bank or financial institution to lend
further.
bterms of acquisition of security interest in
non-fund based transactions should provide for
the relative commitments to continue with bank or
financial institute till demand for further
funding arises

48..Which one is correct (Securitisation matter)
Security receipt is in favor of investor
Security receipt is issued with permission from
Company Law Board
Security receipt can be transferred by the
secured creditor
Security receipt is issued to the borrower who
has failed to repay

49..Bank D decides that the financial asset now
be acquired by the securitisation company RV.
Originally the Asset was given as security by QL
(a partnership firm) In such an event a notice
of such development to be given to
a.. QL and such notice is not compulsory.
b.. Such notice is not optional
c.. The Obligor, which is compulsory as per the
Act
d.. RV

50.. If the obligor is a company there is no need
for modification of charge, when the notice
regarding acquisition of financial asset by a
securitisation company, is not given to the
debtor company.
However, if such notice is given to the
obligor company, then notice to the Registrar of
companies becomes essential.

51.. Bank K had advanced to W who had
defaulted leading to a securitisation company
acquiring the financial asset. In fact no notice
has been issued to W. Later on the debtor remits
some amount towards his dues to the bank from
where he had availed the financial facility.
a.. K can retain the funds
b.. The bank has an obligation to remit to the
securitisation company
c.. K first of all should not accept such payment
since his contract with W is over on account of
securitisation transaction.
d.. The bank has to find out why the W had not
paid earlier when the liability was outstanding
with them.

52.. ..The securitisation or reconstruction
company raises funds for acquisition of asset by
issue of security receipts. Public/individual
investors are barred from investing in a
securitisation or reconstruction company by the
Act.
.. Realisation of the asset is held and applied
towards redemption. i.e., repayment of
investments as assured while issuing the security
receipt.

53.. In case there is no realization and
repayment by the securitisation or reconstruction
company, then the qualified institutional buyers
are entitled to call a meeting of all qualified
institutional buyers making investments in that
scheme and the resolution passed in the meeting.
a.. The first institutional buyer has the right
to call for such meeting
b.. The qualified institutional buyers holding
not less than 75
of the total value of security receipts has
the right
c.. Any one of the Institutional investor who
takes the lead gets the priority
d.. None of the above

54..GNP bank has got a security receipt from a
securitisation company called BBG. GNP wish to
transfer the security receipt. Then
a.. Such security receipt need not be registered
b.. Such security receipt has to be registered
c.. Such security receipt cannot be transferred
d.. Such security receipt has to be retained by
the bank who is the original institutional
investor and hence there is no question of
registration / non registration.

55.. ..Asset reconstruction means acquisition of
any right or interest of any bank or financial
institution in any financial asset for the
purpose of realisation. Powers to take measures
for asset reconstruction are given without any
prejudice to the provisions contained in any
other law

56.. ..If the cause of default in an unit is
mismanagement or lack of expertise on the part of
the existing management the securitisation or
reconstruction company has the powers to take
over the management or change the management.
This power can be exercised even when there is no
default.

57.. ..The SARFAESI Act is silent about the
grounds or reasons on the basis of which action
of acquisition can be taken. Therefore, loan
agreements between bank/financial institution and
the borrower are required to be taken into
account as provisions of this do not have
overriding effect on existing contracts and laws.

58.. When the asset is acquired for
reconstruction there is limit of six years for
such reconstruction.
a.. Correct
b.. Incorrect
c.. Not 6 years but 5 years
d.. It is 7 years and not 6 years

59..While QRS a securitisation company is taking
over the financial asset from the secured
creditor AA. Then AA will receive
a.. Debenture b.. Security Receipt
c.. Undertaking d.. None of these

60..Which one is incorrect
a At the time of enforcing securities as per the
provisions of SARFAESI Act, the securitisation
company may itself acquire secured assets for use
or resale, if such resale is through a public
auction.
b.. The Securitisation company is permitted to
set up trusts who can issue security receipts.
c.. While issuing security receipts detailed
disclosures are not required to be made by the
securitisation company
d.. While issuing security receipts detailed
disclosures are required to be made by the
reconstruction company.

61.. ..Under the SARFAESI act a secured creditor
can enforce the security interest created in his
favor without the INTERVENTION
of the Court or Tribunal.
..The act deals with how the notice to be given
by the secured creditor asking for repayment of
the out standings.

62.. ..The secured creditor bank to give a notice
asking the debtor to clear the liability in full
within 60 days from the date of notice.
.. The above is applicable to such debtors who
have defaulted and classified as NPA.
.. There is no bar for the creditor to seek the
other legal remedies such as resorting to filing
of suit in a competent court

63..Identify which one is not incorrect.
(SARFAESI Act)
a.. Notice as per the provisions of the act to
be given to the Creditor.
b.. Notice as per the provisions of the act is a
statutory notice.
c.. The Act does contemplate a reply form the
borrower to the notice.
d.. When the offer of sale of property is
accepted by the purchaser and the secured
creditor accepting the offer confirms the sale,
the purchaser has to deposit 50 of the offer
price.

64..As per Sec 13(2) of the SARFAESI Act the
first notice to be given asking for clearance of
full liability within
A.. 30 days
B.. 60 days
C.. 60 days from the date of notice
D.. 60 days from the receipt of notice

65.. Borrower C has been asked to repay
outstanding liability of Rs.15.56 lacs (as per
provisions of SARFAESI Act) by his Creditor
banker DB. He has sent a reply. The bank
responded to the notice and made their position
clear. Based on that reply, C can file an appeal
A.. in the high court
B.. in the DRT
C.. cannot file an appeal
D.. In the appropriate court for their
intervention

66.. For a Public Sector bank an Authorized
Officer
A.. Deputy General Manager
B.. At least a Chief Manager
C.. Senior Branch Manager
D.. Minimum AGM level

67..For classification of any account as NPA it
is important that the classification is done as
per
A.. Directives of Head Office of the Bank
concerned
B.. Viewpoints of R B I
C.. Guidelines of the Concerned Banks Corporate
Office
D.. None of these

68..An authorised officer issues the second
notice as per the provisions of the act known as
a.. Recalling
b.. Possession
c.. Take Over
d.. Auction

69..If the offer of sale of property is accepted
by the purchaser and the secured creditor
confirms then the purchaser has to deposit
A.. 25
B.. 75
C.. 50
D.. No such pre condition

70..Which one is correct,
a.. The authorised officer has to publish
possession notice in two leading newspapers.
b.. Both papers should be in vernacular language
c.. Before 60 days of sale of immovable property
the borrower should be given notice about the
sale
d.. If the price of secured asset is coming less
than the reserve price, the authorised officer
to sell the asset at a lower price with the
consent of creditor only and not that of the
debtor

71..The authorized officer is authorized to issue
sale certificate. Such certificate is conveyance
of immovable property and requires stamping as
per the provisions of Stamp Act.
a.. True b.. False
c.. Relevant State Laws
d.. Central Laws

72.. As the powers of enforcing securities need
to be exercised prudently, fairly and with due
care and caution the Rules framed under SARFAESI
Act provide that Authorized Officer should be of
the level equivalent to Chief Manager of a public
sector bank or equivalent or any other authorised
person exercising powers of superintendence,
direction and control of the business or affairs
of the creditors, as the case may be

73..If the price for secured asset is coming less
than the reserve price, the authorized officer
can sell the asset at a lower price
a.. Then his decision will be final
b.. With the consent of the secured creditor
c.. With the consent of the borrower and the
secured creditor
d.. Without consulting any one

74..For taking possession and then sale of
immovable property, the secured creditor is
required to serve a possession notice on the
borrower and by affixing the possession notice on
the outer door or at the conspicuous place at the
property.
..The authorised officer is required to publish
the possession notice in two leading newspapers,
one
of which should be in vernacular language.

75..When the secured creditor is required to take
possession or control of the secured asset or to
sell such secured asset, he can take the help of
the Chief Metropolitan Magistrate or District
Magistrate.
..For seeking their help a request in writing is
required.
..To approach the authority within whose
jurisdiction the secured asset or documents
related to it are situated.

76..When the secured creditor takes over the
management of business of a borrower, he may
publish a notice in a newspaper published in
English language and in a newspaper published in
Indian language in circulation in the place where
the principal office of the borrower is situated,
for appointment of
a.. If the borrower is a company as defined in
the Companies Act, 1956 to be the directors of
such company, or
b.. In any other case, to be the administrator of
the business of borrower.

77..Any person, including borrower, aggrieved by
any of the measures taken by the secured creditor
or his authorised officer for taking possession
of the security may make an application along
with the prescribed fees to the Debt Recovery
Tribunal having jurisdiction within 45 days from
the date on which such measures are taken.

78..The DRT has to dispose off the application
preferred seeking justice, within a period of
a.. 30 days b.. 45 days
c.. 60 days d.. 90 days

79..Against the DRTs order, appeal can be filed
to the appellate Tribunal within 30 days from the
date of receipt of the order of Debt Recovery
Tribunal. The Tribunal has the powers for reasons
to be recorded to reduce this amount to 33.33 of
the claim amount.
a.. True b.. False c.. Not 33.33 but 25
d.. Not 33.33 but 50

80. Registration with Central Registry (Under
SARFESI) is not required on certain things and
charges. Identify the Act.
A.. Merchant Shipping Act,1958
B.. Patents Act,1970
C.. Designs Act 2000
D.. None of the above

81..A record to be maintained at the Head Office
of the Central Registrar to record transactions
relating to
a.. Securitisation of financial assets
b.. Reconstruction of financial assets
c.. Creation of security interests
d.. All the three

82.. KRT a Reconstruction company failed to
comply with some of the directions issued by RBI,
then KRT is punishable by RBI with fine not
exceeding Rupees Three lacs for the default. For
further continuation of the offence an additional
fine is up to Rs.2000/ per day of default can be
imposed.
a.. True
b.. False
c.. Rs.5 lacs and Rs.10000/- per day respectively
d.. Rs.7 lacs and Rs 5000/- per day respectively

83.. The provisions of SARFAESI Act not
applicable in respect of
a.. A pledge of movable within the meaning of the
Indian Contract Act,1872(sec172)
b.. Any right of an unpaid seller as per Sale of
Goods Act,1930 (sec 47)
c.. Any security interest created in an
agricultural land
d.. All the above

84..Which one is incorrect (Provisions of
SARFAESI Act not applicable )
a.. Creation of seucrity interest in any vessel
as defined within the meaning of Sec 3955) of the
Merchnat Shipping Act,1958.
b.. Any case in which the amount due is less
than twenty five percent of the principal amount
and interest there under.
c.. Any security interest created in an
agricultural land
d.. Creation of any security in any aircraft as
defined in sec 2 of Aircraft Act 1934

85.. CBD bank has sold the security after
invoking the provisions of SARFAESI Act. After
that they wish to proceed in the civil court as
the liability outstanding is Rs.7.38 lacs plus
accumulated interest of Rs.1.32 lacs
A.. Not possible
B.. Possible
C.. Impossible
D.. Doubtful

86..Bank R has exhausted the measures of recovery
through SARFAESI Act provisions. Still there is a
liability of Rs.5.38 to be recovered from F . The
original documents has life.
a.. R can still proceed in the Civil Court by
filing a suit against F.
b.. R has to satisfy with whatever they could
get by disposing of the security
c.. Once the SARFAESI Act provisions invoked by
the secured creditor and the proceedings over,
automatically the creditor looses his further
rights against the debtor.
d.. F need not worry for the balance amount,
since the security stands disposed off.

87..Bank z had lent Rs.9 lacs to a borrower and
obtained security in the possession of the debtor
by way of hypothecation. Later on by using the
provisions of the SARFAESI Act, bank could
recover only Rs.6.50 lacs. The outstanding dues
works out to rs.6.05 lacs. Then the bank
a.. Cannot proceed against the borrower under
Civil Law
b.. Since the bank had availed the support of
SARFAESI Act has to forego the balance
outstanding
c.. The bank should have applied their mind
before invoking Securitisation Act
d.. The bank can proceed against the borrower
under Civil Law subject to the provisions of
Limitation Act as well.

88..Bank H has used the Securitisation Act
provisions and could recover only Rs. 18 lacs .
Still they will have to recover Rs.14 lacs plus
interest. Fortunately for the bank the limitation
period on the loan documents is intact.
a.. Bank has to seek legal remedy through the
Civil Court.
b.. Bank has to seek legal remedy through DRT
c.. Bank has to forego since they have already
availed the legal avenue
d.. Bank may have to approach the borrower
straight away and request him to settle the
balance amount.

89..Secured Creditor Bank O has taken measures to
invoke the provisions of SARFAESI Act. They
succeeded partially recovering the debt. After
completion they are left with only personal
security of the borrower L. However the loan
documents have become time barred . The balance
outstanding being Rs.12.32 lacs interest and
other charges.
a.. O will fail on legal grounds
b.. O will succeed on legal grounds
c.. O to file a civil suit
d.. Since the outstanding is beyond Rs10 lacs O
to move DRT.

90.. A complaint alleging deficiency in banking
service may be filed with the Banking Ombudsman
having the jurisdiction
a.. Issue of drafts to non customers
b.. Inordinate delay in collection of cheques
c.. Both a b
d.. None of the two

91..No complaint to the Banking Ombudsman shall
lie unless the complainant had before making a
complaint to the Banking Ombudsman made a written
representation to the bank and either the bank
had rejected the complaint or the complainant had
not received any reply within a period of one
month after the bank concerned received his
representation or the complainant is not
satisfied with the reply given to him by the
bank.

92..The complaint is made not later than one year
after the cause of action has arisen.
..The complaint is not in respect of the subject
matter, which was settled through the office of
the Banking Ombudsman in any previous proceedings

93.. If a complaint is not settled by agreement
within a period of one month from the date of
receipt of the complaint or such further period
as considered by Banking Ombudsman, he can pass
an award.
.. He shall be guided by the evidence placed
before him, the principles of law and practice,
directions, instructions and guidelines issued by
RBI from time to time to pass the necessary
award.

94..The Banking Ombudsman while passing an Award
in respect of a complaint may direct the
complainant to furnish a surety for refund of
amount received under the Award along with
interest if any.
a.. There is no such requirement
b.. It is not Surety but Indemnity
c.. It is not only Indemnity but also suitable
Surety
d.. None of the above

95..A bank not agreeing to accept the Award
passed under the Banking Ombudsman scheme may
file a review application before the Review
Authority within one month from the date of
receiving copy of the Award. Banks application
to be approved by the banks Chairman or in his
absence by the Managing Director or any other
officer of equal rank.

96..The Banking Ombudsman assuming the charge of
an arbitrator shall follow the procedure as laid
down under the scheme read wit the provisions of
a.. The Arbitration Act, 1996
b.. The Reconciliation Act 1996
c.. The Reserve Bank of India Act,1934
d.. The Arbitration and Conciliation Act 1996

97..

The Banking Ombudsman from his office could be
removed in the public interest by A..
Parliament B.. RBI Governor C.. Central
Government D.. Finance Minister
99

98..A Banking Ombudsman is appointed by Reserve
Bank of India on the recommendations of a
Selection Committee of four persons exclusive of
the Governor of RBI.
a.. True
b.. False
c.. Inclusive of the Governor of RBI four
persons.
d.. Governor is part of the Selection committee
but other than him four persons also select a
Banking Ombudsman

100

99..The Selection Committee for selecting the
Banking Ombudsman consists of
a.. Three Deputy Governors of RBI
b.. Three Executive Directors of RBI
c.. Additional Secretary, Finance, Department of
Economic Affairs as a Special invitee
d.. A C only

101

100. For a Debt Recovery Tribunal, the Presiding
Officer holds office for a term of 5 years from
the date on which he enters upon his office or
until he attains the age of 62 years, which ever
is less.
a.. Correct
b.. In correct
c.. Not 5 years and 62 years but 3 years and 65
years respectively
d.. Not 5 years but 7 years whereas 62 years of
age is correct .

102

101..As per the observation of the High Court,
the DRT has power to entertain the application
for execution of the decree of foreign court.
.. Every application to be filed before the DRT
shall be accompanied by appropriate fees.
.. The Tribunal may , on giving opportunity to
both the sides of being heard, pass interim or
final order for payment of amount including
interest thereon.

103

102..A Civil suit which is pending stands
transferred to the DRT. Then the fees payable
a.. Will be decided by the DRT
b.. Standard fees to be paid as applicable to a
new case referred to the DRT
c.. No fees required to be paid
d.. None of the above

104

103.. Presiding Officer of DRT is
a.. Appointed by the Committee of Bankers
b.. Appointed by the RBI
c.. Appointed by the RBI in consultation with
Central Government
d.. None of the above.

105

104.. Appeal before the Appellate Tribunal to be
disposed off finally from the date of receipt of
appeal within
A.. 3 months
B.. 6 months
C.. 180 days
D.. None of these

106

105.. The Correction any clerical or
arithmetical mistake in Recovery Certificate has
to be done by (Certificate issued by the
Presiding Officer)
A.. Concerned Clerk himself
B.. The Presiding Officer of the Tribunal
C.. The Recovery Officer
D.. Any one of them

107

106..The Recovery officer while carrying out
his job, a third party is affected. Then he can
file an appeal
A.. Within 30 days
B.. To the Tribunal
C.. Both A B are correct
D.. Both A B are wrong

108

107...Who is not the public servant as per the
Sect 21 of the Indian Penal Code.
A.. The Chairperson of an Appellate Tribunal
B.. A Director of a Public Limited Company
C.. The Recovery Officer
D.. The Presiding Officer of a tribunal

109

108.... The DRT issues Recovery Certificate to
the applicant. Recovery Officer has to proceed to
recover the amount specified in the Recovery
Certificate, by adopting
a.. Attachment and sale of movable and immovable
property of the defendants
b. Arrest of the defendant and his detention in
prison
c.. Appointment of a receiver for the management
of the movable and immovable properties of the
defendant.
d.. Any one of the above.

110

109..Any person aggrieved by the order passed by
the Tribunal or deemed to have been passed by the
Tribunal under DRT Act, may prefer an appeal to
the concerned Appellate Tribunal.
a.. Within 45 days form the date on which copy of
the order is received.
b.. If the order was made by the Tribunal with
the consent of the parties no appeal possible
c.. Both a b
d.. Within 60 days from the date on which copy of
the order is received.

111

110.. Bank V has moved the DRT for justice.
Before the final order is passed Bank C who have
also advanced to the same borrower has approached
the DRT for inclusion in the same proceedings.
a.. Permissible
b.. Not permissible
c.. Not permissible since both the contracts are
different
d.. DRT would not entertain and advise the bank
to file a separate case.

112

111..Identify which one is incorrect (DRT
matters)
a.. Recovery officer can ask the defendant to
furnish by affidavit particulars of his assets.
b.. The defendant can raise a plea before the
Recovery Officer about correctness of the
amount ordered to be paid.
c.. A counterclaim filed before DRT has the same
effect as a plaint in cross-suit.
d.. For the matters for which the Tribunals are
empowered the Civil Courts have no jurisdiction.

113

112..Under the Bankers Book Evidence Act, the
term Judge refers to
a.. Judge of a special Court
b.. Judge of a High Court
c.. Judge of a DRT
d.. Judge of Civil Court

114

113..The Bankers Book Evidence Act extends to
whole of India except the Sate of Jammu
Kashmir,.
..Bankers books include ledgers, daybooks,
cashbooks, account books and all other records
used in the ordinary course of business of a bank.

115

114..A certified copy of any entry in a Bankers
Book is received in legal proceedings as
conclusive evidence for existence of such entry.
a.. Correct
b.. In correct
c.. It is not Conclusive but prima facie evidence
d.. Support

116

115.. For making the order that bank officer
should either produce the books of account or
appear as witness (as per the Bankers Book
Evidence act) can be made by the Court or Judge
with out summoning the bank. Such order shall be
served on the bank at least 5 days before the
same is to be obeyed.
a.. True
b.. False
c.. Not 5 days but 3 days
d.. At least 3 clear working days

117

116..Consumer Protection Council( identify the
incorrect one)
A.. The Collector of the District to be the
Chairman of the District Council
B.. State Consumer Protection Council to meet at
least 3 meetings every year..
C.. For Central Consumer Protection Council the
Chairman will be the Minister in charge of the
consumer affairs in the Central Government.
D.. The highest council is the Central Council
who has the jurisdiction for the entire country.

118
117..For filing any complaint before a District
Forum, State Commission or the National
Commission the limitation period is from the date
of cause of action.

A.. 1 year
B.. 2 years
C.. 3 years
D.. None of the above

119
118.. If the compensation claimed is above Rs.20
lacs but does not exceed Rs1 Crore then the
appeals against the orders of any District Forum
to be preferred before

A.. The High Court
B.. The State Commission
C.. The Central Council
D.. The National Council

120

119.. ..The Consumer Protection Act is not
applicable in the State of Jammu and Kashmir.
..The Act is for better protection of the
interests of the consumers and for that purpose
to make provision for the establishment of
consumer councils and other authorities for the
settlement of consumers dispute.
..The Act is social welfare benefit oriented
legislation for the consumer providing
self-contained quasi-judicial machinery to
provide speedy and simple redressal to consumer
disputes.

121

120..A dispute where the person against whom
complaint has been made, denies or disputes the
allegations contained in the complaint.
a.. Complaint
b.. Consumer Dispute
c.. Dispute
d.. Allegation

122

121....District Consumer Protection Council to
meet as an when necessary. There has to be at
least two meetings every year.
a.. Correct
b.. Incorrect
c.. At least One meeting
d.. At least Three meetings

123

122..Which one is not correct (Consumer
Protection matters).
Once the complaint is admitted by the District
Forum it cannot be transferred to any other Court
or Tribunal or any authority set up under any
law.
Any person aggrieved by the order passed by the
District Forum may prefer an appeal to the State
Commission within a period of 30 days from the
date of the order.
A person who is a Judge of the Supreme Court, to
be nominated by the Law Ministry, who shall be
the Chairman of Selection Committee to the
National Commission
For filing any complaint before a District
Forums, State Commission or the National
Commission the limitation period is 2 years from
the date of cause of action.

124

123.. Debtor K has executed a Demand Promissory
Note and a Hypothecation agreement to Bank CBM.
Then the bank has made available the finance.
a.. Valid contract
b.. Invalid contract
c.. Quasi contract
d.. No contract

125

124..Borrower O had executed a demand promissory
note on 12.03.2006. Identify the correct
limitation date.
a.. 12.03.09
b.. 11.03.09
c.. 13.03.09
d.. None of the above

126

125..H J have taken a loan from bank K, by
executing a demand promissory note and other
documents jointly.
a.. H is the promisor
b.. J is the promisee
c.. K the promisor
d.. K is the promisee and both H J promisors

127

126.. D had executed an acknowledgment of debt on
22.07.07 for the Demand Promissory Note executed
on 27.07.05.Find out the exact limitation date.
a.. 27.07.08
b.. 22.07.10
c.. 27.07.10
d.. 22.07.08

128

127.. . Identify which is not a valid contract.
a.. Proposal and acceptance
b.. Consideration
c.. Free consent
d.. Agreement under force

129
128..The bailee is responsible in case there is a
loss to the goods bailed.

A.. Yes
B.. If he is not taking adequate care
C.. It is bailor and not bailee responsible
D.. False

130
129..Under Pledge, the possession is with the

A.. Borrower
B.. Creditor
C.. Owner
D.. Surety

131
130..Consideration not required for

A.. An agency
B.. Safe Custody Article
C.. Mortgage
D.. Safe Deposit locker

132
131..The right of re-sale is available to

A.. An unpaid seller
B.. The user
C.. The Debtor
D.. All

133
132.. To receive rents and profits arising from
the property

A.. Simple Mortgage
B.. Usufructuary Mortgage
C.. English Mortgage
D.. Mortgage By way of Conditional Sale

134

133...Bank Z has lent money to R on the personal
guarantee of L. The bank obtained a demand
promissory note from R and a guarantee agreement
from both L R. Among other contents, the
guarantee agreement protected the bank with
special clauses for which Guarantor L has given
his consent. When R failed to repay, Z asked L
to repay the loan. He promptly refused and
advised the bank to approach R who only has taken
the money. After trying only they can approach
him and not before that, that is what L told the
bank.
a.. The stand of L is incorrect
b.. The stand of Z is incorrect
c.. What L says has relevant substance
d.. Z will succeed if they proceed against L
even without
proceeding against R based on the guarantee
agreement

135

134.. ..Where there are co-sureties, a release by
the
creditor of one of them does not discharge the
others. Also, the surety released does not become
free from his responsibility to the other
sureties.
..A surety has the right of Subrogation.
..Any guarantee obtained by means of
misrepresentation made by the creditor is
invalid.
..Any guarantee which the creditor has obtained
by
means of keeping silence as to material
circumstance is also
invalid.

136

135..A has been appointed as his agent by D. In
turn A has appointed L (another person) to look
after the affairs of D for whom A has been
appointed. Then L is
a.. Not a Principal
b.. Sub Agent
c.. Substituted Agent
d.. Manager

137

136.. .. No consideration is necessary to create
an agency.
.. In an emergency, an agent has authority to do
all acts to protect his principal form loss as
would be done by a person in his own case.
.. An agent can detain money received by him on
account of goods sold, even if all the goods
consigned to him for sale are not sold.

138

137.. A bank as a collecting banker has
misplaced the cheque accepted for collection.
The customer when he approached to know
about the realisation of the cheque, then only
the bank could realise it has misplaced the
Cheque.
a.. The bank is responsible
b.. Till the cheque is realized or returned, the
bank is not responsible.
c.. If the cheque had been purchased then the
bank would have been responsible and not for
collection item.
d.. The bank is not responsible

139

138.. ..Whether a stipulation in a contract of
sale is condition or warranty depends on the
types of contract. Even if the parties have
agreed that a stipulation is a warranty, in fact,
it may be a condition if it is the basis of the
contract.
.. If the sale of goods is by description, there
is an implied condition that the goods shall
correspond with the description.

140

139... A B C co a partnership firm has a
current account with bank J. The account is
operated by any one of the partners. A cheque
(open cheque) received signed by one of the
partners B, representing the firm and in favour
of B. Another cheque signed by C representing the
firm favouring Self.
a.. The bank is in order in paying both the
cheques
b.. The bank is not in order in paying both the
cheques
c.. The bank is in order in paying the cheque
signed by B and not by C
d.. The bank is in order in paying the cheque
signed by C and not by B

141

140.. . Bank F has got the documents executed by
a Limited Company. However they have overlooked
to get the Common Seal affixed on these
documents. A reference to the Articles of
Association has revealed that affixing the Common
Seal for the documents has not been mentioned. In
other words, the Articles of Association is
silent with regard to the same.
Bank will get protection
Bank cannot recover the dues based on the
documents
Affixing of Common Seal is compulsory in such
cases.
Affixing of Common Seal is not compulsory unless
it is specifically stated in the Articles of
Association

142

141.. ..When a company exercise its powers to
promote and/or realise any of its objects stated
in the Memorandum of Association, it is known as
Intra vires ( i.e., within the powers of ) the
company.
.. Any other act of the company which is outside
the scope of the objects clause of the Memorandum
of Association is called Ultra vires(i.e., beyond
the powers of ) the company

143

142.. .. Doctrine of Constructive notice states
that every outsider is assumed to have read the
Memorandum of Association and Articles of
Association.
Doctrine of Indoor Management lays down that the
outsiders are not required to see the compliance
of internal regulations of the company.

144

143..The provisions of FEMA extend to all over
India and also apply to all branches, offices and
agencies outside India owned or controlled by a
person resident in India and also to any
contravention committed outside India by any such
person to whom this Act applies.

145

144..(1)The mortgagor apparently sells the
mortgaged property to the mortgagee (2) The
mortgagor delivers possession of the mortgaged
property to the mortgagee
a.. Simple Equitable
b...Conditional Sale Usufructuary
c.. Simple Usufructuary
d.. English Conditional Sale

146
Thank you
ALL THE BEST

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