JIB-201-PPB-MTP-E72 PP MODEL QUESTIONS - 01

PRINCIPALS AND PRACTICE OF BANKING   ::   PP MODEL QUESTIONS - 01

TEST No:JIB-201-PPB-MTP-E72- :: No of Questions:  72-   ::   Time Allowed : 58  Minutes
Directions: Please Tick Appropiate Option and Submit, Inform Serial Number of Questions where you need detailed Explanations to bhagirathprayash@gmail.com or Massage to 9462900411

Question 1:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Reserve Bank of India’s functions are classified into:
a) Supervisory & Regulatory 
b) Promotional & Developmental 
c) Refinance Activities 
d) All of the above 

Answer: d) All of the above

Question 2:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Minimum Bank Rate is:
a) 3% 
b) 4% 
c) 5% 
d) None 

Answer: d) None

Question 3:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Sec ---- of RBI Act,1934 gives sole power to RBI to issue currencynotes
a) 10 
b) 18 
c) 22 
d) 26 

Answer: c) 22

Question 4:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

KYC means
a) Know Your Customer very well 
b) Know Your existing Customer very well 
c) Know Your prospective Customer very well 
d) Satisfy yourselves about the customer’s identity and activities. 

Answer: d) Satisfy yourselves about the customer’s identity and activities.

Question 5:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

In a Garnishee Order, the banker on whom garnishee order served is:
a) Judgement Debtor’s Creditor 
b) Judgement Creditor’s Creditor 
c) Judgement Creditor’s Debtor 
d) Judgement Debtor’s Debtor 

Answer: d) Judgement Debtor’s Debtor

Question 6:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Sec 131 of NI Act,1881 extends protection to the
a) Paying Banker 
b) Collecting Banker 
c) Advising Banker 
d) Issuing Banker 

Answer: b) Collecting Banker

Question 7:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Hypothecation is applicable in the case of
a) Movable goods 
b) Immovable property 
c) Book debts 
d) Corporate guarantee 

Answer: a) Movable goods

Question 8:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A cheque is dated 12/05/05.the due date is:
a) 12/08/05 
b) 14/09/05 
c) 12/11/05 
d) None 

Answer: d) None

Question 9:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Charge created on LIC Policy is:
a) Hypothecation 
b) Pledge 
c) Assignment 
d) Mortgage 

Answer: c) Assignment

Question 10:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Your bank grants a working capital finance to ABC & Co, a partnership firm, against hypothecation of inventory. The charge is to be registered with Registrar of Companies within
a) 30 days from the date of advance 
b) 30 days from the date of hypothecation agreement 
c) 30 days from the date of sanction of loan 
d) None 

Answer: d) None

Question 11:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Which one of the following is not barred by law of limitation?
a) Pledge 
b)Hypothecation 
c)Banker’s lien 
d) Guarantee 

Answer: c) Banker’s lien

Question 12:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The term “Credit Management” covers
a) Capital adequacy norms 
b) Risk management including Asset/Liability managemen 
c) Credit appraisal – decision and review of loans & advances 
d) All of the above 

Answer: d) All of the above

Question 13:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Bank’s Assets are classified in to standard assets, substandard assets doubtful assets and loss assets, based on the recommendations of -------------------- Committee
a) Rangarajan 
b) Narasimham 
c) Ghosh 
d) Tandon 

Answer: b) Narasimham

Question 14:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The time taken to convert cash into raw materials, semi finished goods, finished goods and into cash , is known as
a) Trade cycle 
b) Cash cycle 
c)perating cycle 
d) Revolving cycle 

Answer: c) Operating cycle

Question 15:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A company which pools money from investors and invests in stocks, bonds, shares is called
a) A bank 
b) An insurance company 
c) Bankassurance  
d) Mutual Fund 

Answer: d) Mutual Fund

Question 16:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Bancassurance is
a) An insurance scheme to insure bank deposits 
b) An insurance scheme to insure bank advances 
c) A composite financial service offering both bank and insurance products 
d) A bank deposit scheme exclusively for employees of insurance companies 

Answer: c) A composite financial service offering both bank and insurance products

Question 17:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

John & James are friends aged 14 & 15 respectively. They want to open a joint account in your bank. You will
a) Allow them to open a joint account to be operated jointly 
b) Allow them to open a joint account with operating instructions Either or Survivor 
c) Allow them to open a joint account with operating instructions Former or Survivor 
d) Allow them to open a joint account with operating instructions Any one or Survivor 

Answer: a) Allow them to open a joint account to be operated jointly

Question 18:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Mr.Atmaram as director of a Ltd company expired. Bank received a cheque signed by Mr.Atmaram as director of the Ltd company. The bank
a) Can honour the cheque only after obtaining confirmation from other directors 
b) Can honour the cheque 
c) Cannot hounour the cheque 
d) The company should issue a stop payment instructions to the bank 

Answer: b) Can honour the cheque

Question 19:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Tele banking service is based on
a) Virtual Banking 
b) Online Banking 
c) Voice processing 
d) Core Banking 

Answer: c) Voice processing

Question 20:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

In a securitisation deal, the role of a Special Purpose Vehicle (SPV) is
a) To acquire large Non Performing Loans (NPA) 
b) To acquire such loans from a bank or financial institution 
c) To acquire such loans for a transfer price, with or without recourse 
d) To manage the acquired loans for the purpose of realization or holds them as investment till maturity 

Answer: d) To manage the acquired loans for the purpose of realization or holds them as investment till maturity

Question 21:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Securitisation is a process of acquiring the loans classified as
a) Bookdebts 
b) Performing debts 
c) Bad debts 
d) Non performing debts 

Answer: d) Non performing debts

Question 22:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The minimum percentage of Priority Sector advances to be maintained by foreign banks in India
a) 40% 
b) 18% 
c) 32% 
d) 60% 

Answer: c) 32%

Question 23:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Loan for fish rearing is covered under Prirority Sector as ----------- advances
a) Direct Agriculture 
b) Indirect Agriculture 
c) Self Employment Scheme 
d) Allied to indirect Agriculture 

Answer: a) Direct Agriculture

Question 24:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Cash Budget is a statement of
a) Cash-Non cash funds 
b) Cash receipt and Cash payments 
c) Another name for cash flow 
d) None 

Answer: b) Cash receipt and Cash payments

Question 25:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

In bank’s parlance credit risk in lending is
a) Default of the banker to maintain CRR 
b) Default of the banker to maintain SLR 
c) Default of the banker to release credit to the customer 
d) Default of the customer to repay the loan 

Answer: d) Default of the customer to repay the loan

Question 26:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The apex institution which handles refinance for agriculture and rural development is called:
a) RBI 
b) SIDBI 
c) NABARD 
d) SEBI 

Answer: c) NABARD

Question 27:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Long Form Audit Report (LFAR) is prepared and submitted by
a) RBI inspectors 
b) Internal inspectors 
c) Statutory auditors 
d) Concurrent auditors 

Answer: c) Statutory auditors

Question 28:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

As per FIMMDA’s guidelines, the Mid-Office is responsible for:
a) Dealing activities 
b) Risk Management 
c) Reconciliation 
d) Confirmation of deals 

Answer: b) Risk Management

Question 29:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Interest is calculated on actual/365 days basis in respect of the ollowing products, except one :
a) Call Money 
b) Notice Money 
c) Term Money 
d) GOI dated securities 

Answer: d) GOI dated securities

Question 30:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Which was the first Mutual Fund started in India:
a) SBI Mutual Fund 
b) Kotak Pioneer Mutual Fund 
c) Indian Bank Mutual Fund 
d) None of the above 

Answer: d) None of the above

Question 31:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The regulator for Mutual Funds in India is:
a) FIMMDA 
b) AMFI 
c) RBI 
d) SEBI 

Answer: d) SEBI

Question 32:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

FIMMDA’s general principles and procedures are applicable to:
a) Fixed Income Markets 
b) Money Markets 
c) Derivatives Markets 
d) All of the above 

Answer: d) All of the above

Question 33:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Your bank’s customer XYZ Ltd, enjoys a CC limit of Rs.1,00,000.00 The CC account shows a credit balance of Rs,10,205.00. The relationship between your bank and XYZ Ltd is:
a) Debtor/Creditor 
b) creditor/Debtor 
c) Bailor/Bailee 
d) Bailee/Bailor 

Answer: a) Debtor/Creditor

Question 34:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The right of set-off is:
a) Customer’s Right 
b) Customer’s Obligation 
c) Banker’s Right 
d) Banker’s Discretion 

Answer: d) Banker’s Discretion

Question 35:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Which of the following forms of business are permissible under BR Act:
a) Borrowing 
b) Issuance of Letters of Credit 
c) Buying and selling of bullion 
d) All of the above 

Answer: d) All of the above

Question 36:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A Co-Operative Bank operating in different States are regulated by:
a) State Co-Operative Societies Act 
b) Banking Regulation Act 
c) Multi Unit Co-Operative Societies Act 
d) Banking Laws (applicable to Co-Operative Societies) 

Answer: c) Multi Unit Co-Operative Societies Act

Question 37:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

In respect of Regional Rural Banks, the share holding pattern is:
a) Central Government 50%,State Government 35%,Sponsoring Bank 15% 
b) Central Government 50%,State Government 15%,Sponsoring Bank 35% 
b) Central Government 15%,State Government 35%,Sponsoring Bank 50% 
b) Central Government 35%,State Government 50%,Sponsoring Bank 15% 

Answer: b) Central Government 50%,State Government 15%,Sponsoring Bank 35%

Question 38:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Law of limitation is not applicable in respect of :
a) Advance against pledge of shares 
b) CC granted against hypothecation of inventory 
c) Term loan secured by mortgage of Plant & Machinery 
d) Bank Term Deposit 

Answer: d) Bank Term Deposit

Question 39:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A bank in India, wants to undertake capital market activities, it should:
a) Obtain special license from AMFI 
b) Obtain special license from FIMMDA 
c) Both a and b 
d) Register with SEBI 

Answer: d) Register with SEBI

Question 40:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

FIMMDA stands for:
a) Foreign Exchange Markets and Derivative Markets 
b) Fixed Income Markets Money Markets and Derivatives Markets 
c) Fixed Income Markets and Derivatives Markets 
d) None of the above 

Answer: b) Fixed Income Markets Money Markets and Derivatives Markets

Question 41:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The Capital Adequacy Ratio is :
a) 6% 
b) 8% 
c) 9% 
d) 10% 

Answer: c) 9%

Question 42:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Except one of the following others are known as Non Fund based facilities:
a) Letters of Credit 
b) Bank Guarantees 
c) Co-acceptance of Bills 
d) Trust Receipt 

Answer: d) Trust Receipt

Question 43:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

FIMMDA’s guidelines cover the following products, except one:
a) Call Money 
b) Cross Currency Interest Rate swaps 
c) Commercial Paper 
d) Certificate of Deposit 

Answer: b) Cross Currency Interest Rate swaps

Question 44:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Except one of the following others are part of Public Sector Banks:
a) State Bank of Hyderabad 
b) Central Bank of India 
c) Regional Rural Bank, sponsored by a nationalized bank 
d) HDFC Bank 

Answer: d) HDFC Bank

Question 45:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A banker is expected to honour the cheques within the specified banking hours as per Section of NI Act,1881
a) 22 
b) 25 
c) 31 
d) 65 

Answer: d) 65

Question 46:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

When a cheque is drawn on a bank, the bank is called the
a)Payee 
b)Drawee 
c)Drawer 
d)Endorsee 

Answer: b)Drawee

Question 47:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

One of the State Government avails of a temporary financial assistance from Reserve Bank of India. This type of finance is called :
a)Overdraft 
b)Temporary loan 
c)Short term finance 
d) Ways and Means advance 

Answer: d) Ways and Means advance

Question 48:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Maximum Bank Rate is:
a) 6% 
b) 20% 
c) 25% 
d) None 

Answer: d) None

Question 49:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Obligation of a Banker to maintain secrecy is applicable to
a) Only in case of existing deposit accounts 
b) Only in respect existing loan accounts 
c) Only in case of closed accounts 
d) All types of deposit/loan accounts (existing/closed) 

Answer: d) All types of deposit/loan accounts (existing/closed)

Question 50:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Bank A allows one of its clients to withdraw against clearing of a cheque. The banker is called as:
a) Collecting and Paying banker 
b) Holder in due course 
c) Holder for value 
d) Reimbursement banker 

Answer: c) Holder for value

Question 51:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

As per the provisions of NI Act,1881 a banker gets protection for payment of a cheque only if it is a :
a) Holder in due course 
b) Payment in due course 
c) Holder for value 
d) All of the above 

Answer: b) Payment in due course

Question 52:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

At a Railway station, you withdraw cash from ATM of State Bank of India. SBI is a :
a) Paying Banker 
b) Collecting Banker 
c) Advising Banker 
d) Issuing Banker 

Answer: a) Paying Banker

Question 53:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Management of a Bank vests with
a) Reserve Bank of India 
b) Asset Liability Committee (ALCO) 
c) Board of Directors 
d) None of the above 

Answer: c) Board of Directors

Question 54:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Hari issues a stop payment instructions to his banker to Stop payment of a cheque for Rs,20,000.00. This is
a) A request from Hari 
b) An intimation from Hari 
c) An advice from Hari 
d) A mandate from Hari 

Answer: d) A mandate from Hari

Question 55:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Except one of the following instruments others are issued at discount. Identify the exception:
a) A Certificate of Deposit (CD) 
b) A Treasury Bill (TBill) 
c) A Commercial Paper (CP) 
d) A Fixed Deposit (FD) 

Answer: d) A Fixed Deposit (FD)

Question 56:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Cash Reserve Ratio (CRR) is to be maintained on Net Demand and Time Liabailities (NDTL). SLR is to be maintained on:
a) Total Demand and Time Liabilities 
b) Net Demand and Time Liabilities 
c) Total Demand and Time Assets 
d) Net Demand and Time Assets 

Answer: b) Net Demand and Time Liabilities

Question 57:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Garnishee order is issued by:
a) Judgement Debtor 
b) Judgement Creditor 
c) Judgement Debtor’s Debtor 
d) None of the above 

Answer: d) None of the above

Question 58:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

CAMEL model is used by
a) Bankers to evaluated a credit proposal 
b) Bankers to manage their risks 
c) RBI inspectors to evaluate banks functions 
d) Merchant Bankers to evaluate portfolio investment 

Answer: c) RBI inspectors to evaluate banks functions

Question 59:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

One of your NRI customers wants to place FCNR deposits in Canadian $ with your bank. You will
a) Accept his request and open a FCNR a/c 
b) Will not accept his request to open FCNR a/c in Canadian $ 
c) Will inform the customer to place FCNR in any one of the currencies (US$/GBP/JPY/EUR) 
d) Both b and c 

Answer: a) Accept his request and open a FCNR a/c

Question 60:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Which one of the Non Resident Deposit schemes is not permitted.
a) FCNR a/cs 
b) NRNR a/cs 
c) NRE a/cs 
d) NRO a/cs 

Answer: b) NRNR a/cs

Question 61:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

At the time of receipt of a garnishee order your customer’s accounts showed : i)SB a/c uncleared balance Rs.2,000.35 (Cleared balance Rs 550.35) ii) An overdue fixed deposit for Rs.25,753.22 matured one week earlier iii)OD account showed a credit balance of Rs.8,728.96 iv)CC account showed a credit balance of Rs,2,247.18 Indicate the amount which can be attached by the garnishee order?
a) Rs.28,550.75 
b) Rs.10,228.96 
c) Rs.37,729.71 
d) Rs 4,247.53 

Answer: c) Rs.37,729.71

Question 62:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

You receive a cheque in an overdraft account for Rs.27,000.00. The debit balance in the account is Rs.30,000.00 and the OD limit is Rs 55,000.00.What reason you will state while returning
a) Refer to drawer 
b) Effects Not cleared 
c) Exceeds arrangement 
d) Endorsement not correct 

Answer: b) Effects Not cleared

Question 63:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Match the following: i) Payment in Due Course
a) i-D,ii-C,iii-A,iv-B 
b) i-A,ii-B,iii-C,iv-D 
c) i-B,ii-A,iii-D,iv-C 
d) i-D,ii-C,iii-B,iv-A 

Answer: a) i-D,ii-C,iii-A,iv-B

Question 64:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Match the following: Identify the Committees: i)Classification of Assets
a) i-B,ii-D,iii-C,iv-A 
b) i-D,ii-C,iii-A,iv-B 
c) i-B,ii-A,iii-C,iv-D 
d) i-C,ii-D,iii-A,iv-B 

Answer: d) i-C,ii-D,iii-A,iv-B

Question 65:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Match the following: i)Financial intermediaries A) Mutual funds ii)ATMs B) E- Banking iii)Certificate of Deposits C) Money Markets iv)Book debts
a) i-C,ii-D,iii-A,iv-B 
b) i-D,ii-C,iii-B,iv-A 
c) i-A,ii-B,iii-C,iv-D 
d) i-A,ii-C,iii-B,iv-D 

Answer: c) i-A,ii-B,iii-C,iv-D

Question 66:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

RTGS stands for :
a) Real Time Settlement System 
b) Real Time Gross Settlement System 
c) Real Gross Settlement System 
d) None of the above 

Answer: b) Real Time Gross Settlement System

Question 67:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

The banker acts as a Bailee and the customer as Bailor, this relationship is applicable:
a) when a bank lends funds to a corporate customer 
b) when a bank accepts US$ FCNR deposits form a NRI customer 
c) when a customer operates a safe deposit locker 
d) when a customer keeps articles in safe custody with a bank 

Answer: d) when a customer keeps articles in safe custody with a bank

Question 68:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

One of your customers lost the Fixed Deposit Receipt issued by the bank. To obtain a duplicate FD he needs to furnish
a)A Promissory note 
b)A Guarantee 
c) A Letter of Credit 
d)An Indemnity bond 

Answer: d)An Indemnity bond

Question 69:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

In a demand draft the word “order” is changed to “bearer” by the holder of the dd. It is called as:
a) Endorsement 
b) Material alteration 
c) Crossing 
d) None of the above 

Answer: b) Material alteration

Question 70:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

Capital adequacy is worked out based on:
a) Total demand and time liabilities 
b) Net demand and time assets 
c) Risk weighted assets 
d) Risk weighted liabilities 

Answer: c) Risk weighted assets

Question 71:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

One of your customers dies without leaving a will and The court appoints a person to handle the customer’s Property. Such a person is called as
a) An administrator 
b) An executor 
c) A liquidator 
d) A successor 

Answer: a) An administrator

Question 72:  http://nextgenjaiib.blogspot.in/-JIB-201-PP  

A negotiable instrument is endorsed as Pay to Raju only This is called as:
a)Blank endorsement 
b)Restrictive endorsement 
c)Sans recourse endorsement 
d) Endorsement in Full 

Answer: b)Restrictive endorsement

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