Banking Regulation and Laws

SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Program: PGDBF
Subject: Banking Regulations and Laws
Sample Questions:
Section I: Subjective Questions
1. What is the role of Board of Financial Supervision (BFS)?
2. What are the main objectives of Banking Regulation Act?
3. Explain the position of Paying Banker in case of Material Alteration.
4. When bank is treated as holder for value?
5. What are the different forms of legal relationships between a bank and a customer?
6. Why is margin kept while financing against tangible security?
7. Write a short note on “Hypothecation Charge”.
8. Why is regular inspection monitoring of advances essential?
Section II: Objective Questions
Multiple Choice Single Response
1. The affairs and the business of the Reserve Bank of India is entrusted with
1] the Central Board
2] the Local Board
3] the Government of India
4] the President of India
2. The Law that governed and regulated the banking system in India in the pre-
independence period
1] Companies Act, 1956
2] Banking Regulation Act, 1949
3] Reserve Bank of India Act, 1934
4] Indian Companies Act, 1913
3. Negotiable Instrument is one always drawn

1] as acknowledgement of debt
2] as a financial instrument
3] without consideration
4] for consideration
Program: PGDBF
4. A charge is legal transaction

1] giving rights over all kinds of assets
2] giving rights over tangible assets of borrower
3] giving control over tangible assets of borrower
4] giving rights over intangible assets
5. The right of general lien is conferred on the banker is also referred to as

1] Banking Lien
2] Company Lien
3] Banker's Lien
4] Negative Lien
6. The Central Board of Reserve Bank of India is made up of the following members
1] 30
2] 10
3] 20
4] 12
7. A mode of creating a charge on movable goods without delivery is by way of

1] assignment
2] lien
3] pledge
4] hypothecation
8. The holder of the negotiable instrument is

1] not affected by the defects in the title of the transferor
2] affected by the defects in the title of the transferor
3] acquires only the property that rests in the instrument
4] acquires only the right that rests in the instrument
9. The purpose behind accepting of deposits is

1] lending and investment
2] investment only
3] investment in securities
4] lending for long term
10. There is a local board constituted for the four regional areas in the country because
1] for India is a large country
2] for advice on local matters
3] for convenience purposes
4] for easy management of affairs
Multiple Choice Multiple Response
11. The Local Boards of Reserve Bank of India are set up in the following places
1] Mumbai
2] Chennai
3] Kerala
Program: PGDBF
4] Pune
12. The objectives of the Banking Regulation Act are
1] encourage savings
2] prevent bank failures
3] development of banking system
4] safeguard interest of the depositor
13. An Inchoate Instrument is one

1] when a person signs and delivers to another an incomplete negotiable instrument
2] When the person signing such instrument is not liable
3] when the instrument is made on a stamp paper
4] when the holder of the instrument can make or complete the instrument
14. A Return submitted by commercial banks to the Reserve Bank of India contains the
following items
1] Amount of advance outside India
2] Demand and Time Liabilities
3] Balance with the RBI
4] Amount of advance in India
15. The various modes of creating charge are

1] pledge
2] delegation
3] hypothecation
4] mortgage
16. The parties to a negotiable instrument are

1] Minor
2] Partner
3] Thief
4] Finder of the Instrument
17. The following can be stated as business of the Reserve Bank of India
1] loans to the public
2] accept deposits of money from government
3] ways and means advances to government
4] accept deposits from the public
18. Banks are empowered to carry out which of the following activity
1] provision of safe deposit lockers
2] remittance of money
3] Trading
4] safe custody
Fill in the Blanks
19. A Schedule Bank is one that is included in the _____ of the Act.
1] Second
Program: PGDBF
2] Third
3] Fourth
4] Preamble
20. The acceptance of deposits is ________ to a banking company.

1] sine qua non
2] sine die
3] quid pro quo
4] pro quid quo
21. Consideration has to be proved by the _________.

1] Drawer
2] Plaintiff
3] Drawee
4] Payee
22. The mortgagor binds himself to pay the debt by a certain specified date in a
________.
1] english mortgage
2] simple mortgage
3] legal mortgage
4] equitable mortgage
23. The linkage with a SHG helps banks to ________.

1] reduce lending possibilities
2] supervise loans
3] reduce the assessment procedures
4] supervise the borrower
24. The mortgagee is entitled to retain the property until the payment of mortgage money
is made is known as ___________.
1] anomalous mortgage
2] equitable mortgage
3] simple mortgage
4] usufructuary mortgage
25. The Reserve Bank is authorized to provide advances to the Central and State
Government for a period not exceeding _______ months.
1] ten
2] three
3] six
4] four
26. The meaning of the word 'mort' means___________.

1] dead
2] static
3] immovable
4] dormant
Program: PGDBF
27. __________ does not have the right to recover the money due on the instrument.
1] Finder of the Instrument
2] Holder in due course
3] Agent
4] Partner
28. A banking company is empowered to engage in __________.

1] negotiating corporate business deals
2] trading activities
3] negotiating loans and advances
4] trading in the stock market
State True or False
29. The Reserve Bank of India Act, 1934 is not applicable to the Union Territories in
India.
30. The Banking Regulation Act is a comprehensive regulation that fulfills all
requirements of regulation, supervision and control over the banking sector.
31. A negotiable instrument is always drawn for consideration unless proved otherwise.
32. Local Boards are set up to advice the Central Board on the local matters relating to
the regions.
33. A pledge indicates that the goods are kept in possession of the banker.
34. A banking company is registered as a Company under Companies Act, 1956 since
1991.
35. The pledger does not have to pay for any difference arising out of sale of assets and
loan amount due to the pledgee.
36. The person who executes or makes a pronote is known as the drawer.
37. A banking company can act as an executor or an administrator of a trust.
38. The Reserve Bank of India has defined the word 'Banking' and does not accept the
same definition as per the Banking Regulation Act, 1949.
Match the Following
39. 1] Nationalization 1] 2010
2] Establishment 2] 1949
3] Diamond Jubilee 3] 1947
4] Golden Jubilee 4] 1935

Program: PGDBF
5] 1934
6] 1985
40. 1] Main function of bank 1] contracting public and private loans
2] Subsidiary function of bank 2] buying and selling of negotiable

instruments
3] Prohibited function of bank 3] contracting business contracts
4] Controlling function 4] buying and selling of goods
5] fixing of interest rates
6] fixing of purpose of advances
41. 1] Cash Reserves 1] 25%
2] Liquid Assets 2] 3%
3] Reserve Fund 3] 51%
4] Non-industry representation 4] 49%
5] 20%
6] 15%
42. 1] Commencement of operation of RBI 1] March 6th, 2010
2] Transfer of ownership of RBI 2] April 1st, 1935
3] Establishment of RBI 3] January 1st, 1949
4] 75 years of RBI 4] March 6th, 1949
5] March 6th, 1934
6] April 1st, 2010

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What is the role of the Board of Financial Supervision (BFS)?

What is the role of the Board of Financial Supervision (BFS)?

What are the main objectives of the Banking Regulation Act?

What are the main objectives of the Banking Regulation Act?

SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

1. What is the role of Board of Financial Supervision (BFS)?

2. What are the main objectives of Banking Regulation Act?

3. Explain the position of Paying Banker in case of Material Alteration.

4. When bank is treated as holder for value?

6. Why is margin kept while financing against tangible security?

7. Write a short note on “Hypothecation Charge”.

8. Why is regular inspection monitoring of advances essential?

Section II: Objective Questions

Multiple Choice Single Response

3. Negotiable Instrument is one always drawn

4. A charge is legal transaction

5. The right of general lien is conferred on the banker is also referred to as

7. A mode of creating a charge on movable goods without delivery is by way of

8. The holder of the negotiable instrument is

9. The purpose behind accepting of deposits is

Multiple Choice Multiple Response

13. An Inchoate Instrument is one

15. The various modes of creating charge are

16. The parties to a negotiable instrument are

Fill in the Blanks

20. The acceptance of deposits is ________ to a banking company.

21. Consideration has to be proved by the _________.

23. The linkage with a SHG helps banks to ________.

26. The meaning of the word 'mort' means___________.

28. A banking company is empowered to engage in __________.

State True or False

37. A banking company can act as an executor or an administrator of a trust.

Match the Following

39. 1] Nationalization 1] 2010

3] Diamond Jubilee 3] 1947

4] Golden Jubilee 4] 1935

40. 1] Main function of bank 1] contracting public and private loans

2] Subsidiary function of bank 2] buying and selling of negotiable

3] Prohibited function of bank 3] contracting business contracts

4] Controlling function 4] buying and selling of goods

5] fixing of interest rates

6] fixing of purpose of advances

41. 1] Cash Reserves 1] 25%

3] Reserve Fund 3] 51%

4] Non-industry representation 4] 49%

42. 1] Commencement of operation of RBI 1] March 6th, 2010

2] Transfer of ownership of RBI 2] April 1st, 1935

3] Establishment of RBI 3] January 1st, 1949

4] 75 years of RBI 4] March 6th, 1949

5] March 6th, 1934

6] April 1st, 2010

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