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BRBL MODULE - B
Top MCQs

What we will study?

*High priority MCQs of Module B?
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Case Study: (Q1-Q7)
M/s Ram Associates is a partnership firm manufacturing steel sheets and is
availing credit facilities with AB Bank for which they have offered mortgage
of their personal property as collateral. They approach you to know about
the different types of mortgages as per the Transfer of Property Act 1882.

Q1. Which one from the following is that type of mortgage where it would
not be required for M/s Ram Associates to transfer possession of the
property to the bank?
a) Mortgage by Conditional Sale. b) Usufructuary Mortgage.
c) Mortgage by deposit of Title Deeds. d) Simple Mortgage.

Answer: D
Refer page no: 189, Topic: 12.2.
Explanation: Simple mortgage:
According to Section 58(b) of the Transfer of Property Act, a simple
mortgage is a transaction whereby, 'without delivering possession of the
mortgaged property, the mortgagor binds himself personally to pay the
mortgage money and agrees, expressly or impliedly, that in the event of his
failing to pay according to his contract, the mortgagee shall have a right to
cause the mortgaged property to be sold by a decree of the Court in a suit
and the proceeds of the sale to be applied so far as may be necessary in
payment of the mortgage money.'
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Q2. In which type of mortgage would there, normally, be no need for
registration with the registrar/sub-registrar?
a) Mortgage by Conditional Sale.
b) Simple Mortgage.
c) Mortgage by deposit of Title Deeds.
d) Anomalous Mortgage.

Answer: C
Refer page no: 192, Topic: 12.2.
Explanation: Equitable mortgage or mortgage by deposit of title deeds:
Merits and Demerits of an Equitable Mortgage:
Merits:
(i) Normally the borrower saves the stamp duty on the mortgage deed and
the registration charges. It involves minimum formalities.
(ii) It involves less time and can be conveniently created.
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Q3. What is the meaning of foreclosure?

a) It means that the increase in the roles of the mortgagor for possession of
the movable property.

b) It means that the loss of the right possessed by the mortgagor to redeem
the mortgaged property.

c) The mortgagee cannot look to the other properties of the mortgagor in

case the mortgaged property proves insufficient.
d) The mortgagee cannot look to the other properties of the mortgagor in
case the mortgaged property proves insufficient.

Answer: B

Refer page no.: 189, Topic: 12.2

Explanation:

Essential features:
(i) The sale is ostensible and not real.
(ii) If the money is not repaid on the agreed date, the ostensible sale will
become absolute upon the mortgagee applying to the Court and getting a
decree in his favour.
The mortgagor in such a case loses his right to redeem his property.
(iii) The mortgagee can sue for foreclosure, but not for sale of the property.
Foreclosure means the loss of the right possessed by the mortgagor to
redeem the mortgaged property.
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(iv) There is no personal covenant for repayment of the debt and therefore
bankers do not prefer this type of mortgage.
The mortgagee cannot look to the other properties of the mortgagor in
case the mortgaged property proves insufficient.

Q4. Which of the following statements is not correct regarding a mortgage

by deposit of title deeds?
a) This type of mortgage is also known as Equitable Mortgage.
b) Such a mortgage can be affected only in the towns notified by the State
Government.
c) It is convenient and involves less time for creation.
d) It is convenient but involves high stamp duty on mortgage deed.

Answer: D
Refer page no: 191, Topic: 12.2.
Explanation: Equitable mortgage or mortgage by deposit of title deeds:
Essential features:
Such a mortgage can be affected only in the towns notified by the State
Government. However, the territorial restriction refers to the place where
the title deeds are delivered and not to the situation of the property
mortgaged.
Merits and Demerits of an Equitable Mortgage:
Merits:
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(i) Normally the borrower saves the stamp duty on the mortgage deed and
the registration charges. It involves minimum formalities.
(ii) It involves less time and can be conveniently created.
(ii) It can be done without much publicity and therefore, the customer's
position is not exposed to public gaze.

Q5. What is the limitation period for filing a suit for sale of mortgaged
property from the date on which the money becomes due?
a) 12 years. b) 30 years.
c) 15 years. d) 20 years.

Answer: A
Refer page no: 192, Topic: 12.2.
Explanation: Equitable mortgage or mortgage by deposit of title deeds:
Limitation Period in Mortgages: Article 62 of the Indian Limitation Act, 1963
provides limitation period for filing of suit for recovery of mortgaged debt
and sale of mortgaged property in the event of non-payment of the
mortgaged debt.
The limitation period for filing a suit for sale of mortgaged property is
TWELVE YEARS, from the date when the money sued for becomes due.
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Q6. The limitation period for instituting a suit for foreclosure from the date
the mortgage money becomes due is how many years?
a) 35 years. b) 12 years.
c) 30 years. d) 25 years.

Answer: C
Refer page no: 192, Topic: 12.2.
Explanation: Equitable mortgage or mortgage by deposit of title deeds:
Limitation Period in Mortgages: Article 62 of the Indian Limitation Act, 1963
provides limitation period for filing of suit for recovery of mortgaged debt
and sale of mortgaged property in the event of non-payment of the
mortgaged debt.
Article 63(a) of the said Act provides a limitation period, in case of
foreclosure of the mortgaged property.
The limitation period for filing a suit for sale of mortgaged property is
TWELVE YEARS, from the date when the money sued for becomes due.
The limitation period for filing suit for foreclosure is THIRTY YEARS from the
date the money secured by mortgage becomes due.
Suit for sale of mortgaged property: To recover the money owed by selling
the property.
Suit for Foreclosure: Foreclosure is a legal suit that seeks to permanently
and completely extinguish the mortgagor's "right to redeem" the property.
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This means the borrower loses all ownership claims, and the title is
transferred to the lender without a sale.

Q7. The banker’s right to recover an amount owed by a customer from the
deposits payable to that customer arises from what?
a) The banker's general lien.
b) The right of compensation.
c) The right of pledge.
d) The right to set-off.

Answer: D
Explanation: The right of set-off allows a bank to combine balances in a
customer’s various accounts (e.g., credit balance in a savings account
against a debit balance in a loan account or overdraft) to recover an
amount owed to the bank, provided there is a mutual relationship between
the bank and the customer. This right is implied by law, though it is often
also explicitly stated in the account opening agreement.

Q8. Every reporting entity shall maintain the records of all the transactions.
What is the amount recorded for all cross-border wire transfers?
a) Ten Lakh. b) Two Lakh.
c) Five Lakh. d) Twenty Lakh.
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Answer: C
Refer Page: 144, Topic: 8.7.
Explanation: RECORDS TO BE MAINTAINED:
In terms of Rule 3 of the abovementioned 'Rules' as amended last in 2013
pertaining to maintenance of records of transactions" "Every reporting
entity shall maintain the record of all transactions including, the record of:
1. All cash transactions of the value of more than ten lakh rupees or its
equivalent in foreign currency.
2. All series of cash transactions integrally connected to each other which
have been individually valued below rupees ten lakh or its equivalent in
foreign currency where such series of transactions have taken place within
a month and the monthly aggregate exceeds an amount of ten lakh rupees
or its equivalent in foreign currency:
3. All cross-border wire transfers of the value of more than five lakh rupees
or its equivalent in foreign currency where either the origin or destination
of fund is in India.
4. All purchase and sale by any person of immovable property valued at
Fifty lakh rupees or more that is registered by the reporting entity, as the
case may be.
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Q9. Under which section of the Act is a paying bank protected when it pays
an instrument with no apparent alteration?
a) Section 89 of the Negotiable Instrument Act.
b) Section 78 of the Negotiable Instrument Act.
c) Section 99 of the Negotiable Instrument Act.
d) Section 75 of the Negotiable Instrument Act.

Answer: A
Refer page no: 158, Topic: 9.6.
Explanation: WHERE ALTERATION IS NOT APPARENT:
The Law: Section 89 of the NI Act 1881 deals with cases where payment is
made by a bank on presentation of an instrument which is forged by
alterations which are not apparent.

Q10. Which of the following Act the term hypothecation defined?

a) Indian Contract Act 1872.
b) Negotiable Instrument Act 1881.
c) Transfer of Property Act 1882.
d) SARFAESI Act 2002.

Answer: D
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Refer page no: 206, Topic: 13.5.
Explanation: Hypothecation:
The term came to be defined in the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002.
As per Sec. 2 of the Act, 'Hypothecation' means a charge in or upon any
moveable property, existing or future, created by a borrower in favor of a
secured creditor, without delivery of possession of the moveable property
to such creditor, as a security for financial assistance and includes floating
charge and crystallization of such charge into fixed charge on moveable
property.

Q11. In which year was the Payment and Settlement Systems Act enacted
by the Indian Parliament? (Year should be written in YYYY Format.)

Answer: 2007
Refer page no: 178, Topic: 11.1.
Explanation:
The Payment and Settlement Systems Act, 2007 (PSS Act, 2007), came into
effect on August 12, 2008. It extends to the whole of India.
The PSS Act, 2007 (as amended from time to time) provides for the
regulation and supervision of payment systems in India and designates the
Reserve Bank of India (RBI) as the authority for that purpose and all related
matters.
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Q12. Which of the following statements are correct in regard to a floating
charge?
i) It is general and not specific.
ii) It generally floats over the present and future property of the company.
iii) It does not crystallize as a fixed charge on the happening of a
contingency.
a) (i), (ii) and (iii). b) (ii) only.
c) (i) and (iii) only. d) (i) and (ii) only.

Answer: D
Refer page no: 215, Topic: 14.2.
Explanation: Types of Charges: 'Charges' registered under the Companies
Act can be classified into two types.
1. Fixed charge.
2. Floating charge.
(i) Fixed charge: 'Fixed charge' is also called 'specific charge'.
(ii) Floating Charge: A 'floating charge' means a 'charge' that is general and
not specific. It can be said to be a charge:
(a) that floats over the present and future property of the company subject
thereto, which means it does not fasten on or attach to any particular or
specific property unless a specified event takes place which has the effect
of fastening the charge.
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(b) that does not restrict the company from assigning the property, subject
to charge to third persons, whether by way of sale or security;
(c) that on happening of an event or contingency, crystallizes as a fixed
charge.

Q13. Under the SARFAESI Act, a borrower aggrieved by any of the measures
referred to in sub-section (4) of Section 13 may apply under Section 17 to
the Debts Recovery Tribunal (DRT) within how many days from the date
such measures were taken?
a) 28 days. b) 45 days.
c) 50 days. d) 120 days.

Answer: B
Refer page no: 248, Topic: 17B.2
Explanation: PREAMBLE:
The preamble of a statute indicates the purpose of the statute.
The Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest (SARFAESI) Act as per its preamble is 'an Act to regulate
securitization and reconstruction of financial assets and the enforcement of
security interest and to provide for a Central database of security interests
created on property rights and for the matters connected therewith or
incidental thereto.
Any person, aggrieved by any of the measures referred to in sub-section (4)
of section 13 taken by the secured creditor may make an application under
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section 17 of the Act to the Debts Recovery Tribunal (DRT) having
jurisdiction within forty-five days from the date on which such measures
had been taken.

Q14. Under Section 77 of the Companies Act, 2013, within how many days
must a company register a charge with the registrar after its creation?
a) 55 Days. b) 80 Days.
c) 30 Days. d) 75 Days.

Answer: C
Refer Page: 216, Topic: 14.3.
Explanation: Under section 77 of the Companies Act, 2013, every company
creating a charge is required to register the particulars of charge in a
specific form, signed by the company and its charge - holder together with
the relevant instruments.
However, there is a time limit for registering the charge.
A charge created by a company is required to be registered with the
Registrar within thirty days of its creation in such form and on payment of
such fees as may be prescribed.
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Q15. An “English Mortgage” is a transaction in which?
a) Without delivering possession of the mortgaged property, the mortgagor
binds himself personally to pay the mortgage money and agrees, expressly
or impliedly, that in the event of his failing to pay according to his contract.
b) The mortgagor delivers possession expressly, or by implication and binds
himself to deliver possession of the mortgaged property to the mortgagee.
c) The mortgagor binds himself to repay the mortgage money on a certain
date and transfers the mortgaged property absolutely to the mortgagee.
d) A mortgage which is not a simple mortgage, a mortgage by conditional
sale and a usufructuary mortgage.

Answer: C
Refer Page: 190, Topic: 12.2.
Explanation: English Mortgage: According to Section 58(e) of the Transfer of
Property Act, an English Mortgage' is a transaction in which, the mortgagor
binds himself 'to repay the mortgage money on a certain date and transfers
the mortgaged property absolutely to the mortgagee, but subject to the
provision that he will retransfer it to the mortgagor upon payment of the
mortgage money as agreed'.
Simple Mortgage: According to section 58(b) of the Transfer of Property
Act, a Simple Mortgage is a transaction whereby, “without delivering
possession of the mortgaged property, the mortgagor binds himself
persona;;y to pay the mortgage money and agrees, expressly or impliedly,
that in the event of his failing to pay according to his contract, the
mortgagee shall have a right to cause the mortgaged property to be sold by
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a decree of the court in a suit and the proceeds of the sale to be applied so
far as may be necessary in payment of the mortgage money”.
Mortgage by Conditional Sale: As per section 58 (C) of the Transfer of
Property Act, a Mortgage by way of a Conditional sale of the Property is a
Transaction whereby the mortgagor ostensibly sells the mortgaged
property on the condition that:
1. On default of Payment of the mortgage money on a certain date, the sale
shall become absolute.
2. On such payment being made the sale shall become void.
3. On such payment being made, the buyer shall transfer the property to
the seller.
Usufructuary Mortgage: In terms of Section 58(d), of the Transfer of
Property Act, “a Usufructuary Mortgage” is a Transaction in which
1. The Mortgagor delivers Possession expressly, or by implication and binds
himself to deliver possession of the mortgaged property to the mortgagee.
2. Authorizes the mortgagee to retain such possession until payment of the
mortgage money and to receive the rents and profits accruing from the
property or any part of such rents and profits and to appropriate the same
in lieu of interest, or in payment of the mortgage money, or partly in lieu of
interest and partly in payment of the mortgage money.
Anomalous Mortgage: According to section 58(g) of the transfer of property
act, “a mortgage which is not a simple mortgage, a mortgage by conditional
sale and usufructuary mortgage and English mortgage or a mortgage by
deposit of title deeds within the meaning of this section, is called an
“Anomalous Mortgage”.
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Q16. “Legal entity identifier" means a unique identity code assigned to a
person by an issuer for the purpose of identifying that person in such
derivatives or financial transactions. It is a _______alphanumeric code that
uniquely identifies legal entities?
a) 20-character. b) 30-character.
c) 40-character. d) None of these.

Answer: A
Refer page no: 179, Topic: 11.2.
Explanation: “Legal entity identifier" means a unique identity code assigned
to a person by an issuer for the purpose of identifying that person in such
derivatives or financial transactions.
It isa 20-character alphanumeric code that uniquely identifies legal entities.

One liner:
1. Pledge is defined in Indian Contract Act 1872 under section 172.
2. Pledge can be done only in respect of movable goods like stocks.
3. The ARC whose registration is cancelled by RBI may prefer an appeal
against the cancellation with the Central Government within 30 days from
the date of communication of order.
4. The Bank whose registration is cancelled by RBI may prefer an appeal
against the cancellation with the Central Government within 30 days from
the date of communication of order.
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5. The Bank employee who has been removed by RBI may prefer an appeal
against the removal with the Central Government within 30 days from the
date of communication of order.

Q17. According to Section 21 of the DRT Act, a defendant appealing to the

Appellate Tribunal (DRAT) must deposit what percentage of the amount
determined by the Debt Recovery Tribunal, subject to possible reduction to
----- not less than 25%?
a) 55%. b) 65%.
c) 50%. d) 75%.

Answer: C
Refer page no: 323, Topic: 18D.4.
Explanation: DEPOSIT OF AMOUNT OF DEBT DUE FOR FILING APPEAL:
As per Section 21 of the Act, when the defendant against whom the Debt
Recovery Tribunal has passed recovery order wants to prefer appeal to the
Appellate Tribunal, he is required to deposit 50% of the amount
determined by the Tribunal.
Without such payment no appeal can be filed. However, the Tribunal has
right to reduce or waive such payment to not less than 25% of the amount
determined by the Tribunal for the reasons to be recorded in writing.
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Q18. In what ways is Lok Adalat different from other dispute resolution
forums?
i) The order cannot be enforced if defaulted by a party to it.
ii) The award cannot be challenged in any court of law.
iii) The award of Lok Adalat shall be deemed to be a decree of a civil court
only.
a) (i) only. b) (iii) only.
c) (ii) and (iii) only. d) (i), (ii) and (iii).

Answer: C
Refer page no: 359, Topic: 21.6.
Explanation: NATURE OF AWARD OF THE LOK ADALATS AND POWERS:
As per the provisions of Section 21 of the Act, the award of Lok Adalat shall
be deemed to be a decree of a civil court or an order of any other court.
In case of compromise or settlement arrived at by a Lok Adalat the court
fee paid in the case shall be refunded in the manner provided under the
Court fees Act, 1870.
Every award shall be binding on all the parties to the dispute. No appeal
shall lie in any court against the award.
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Q19. Which of the following statements is incorrect regarding a pledge?
a) Physical transfer of goods from the custody of the pledger to the pledged
is termed as constructive delivery.
b) Bailment of goods for the purpose of providing security for payment of
debt or performance of promise is equivalent to pledge.
c) Seller of the goods, who continues to be in possession of the goods even
after sale, can create a valid pledge.
d) Pawnee can continue to keep the goods pledged for non-payment of
interest and incidental expenses in addition to debt or non-performance of
the promise.

Answer: A
Refer page no: 200, Topic: 13.4.
Explanation: PLEDGE:
'Pledge means bailment of goods for purpose of providing security for
payment of debt or performance of promise' (as per the Section 172 of
Contract Act 1872).
As per the above definition to constitute a valid pledge, three requirements
are to be satisfied:
1. There must be bailment of goods (bailment means delivery of goods).
2. The bailment must be, by or on behalf of the debtor.
3. The bailment, must be for the purpose of providing security for the
payment of a debt or performance of promise.
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The person, whose goods are bailed is called the Pawnor, the person who
takes the goods as security is called the Pawnee.
1. Legal Implications of a Pledge: The following are the legal implications of
a pledge:
(a) One of the main and most essential requirements of a pledge is the
actual or constructive delivery of the goods to the pawnee.
By constructive delivery, it is meant that there need be no physical transfer
of goods from the custody of the pledger/pawnor to the pawnee.
3. Who can create a Pledge?
The following persons can make a valid pledge:
(a) Owner of the goods
(b) Seller of the goods, who continues to be in possession of the goods even
after sale, can create a valid pledge.
4. Rights of Pawnee
a. Right of retainer: As per Section 173 of the Contract Act, the pawnee can
keep the goods pledged not only for the non-payment of the debt or non-
performance of the promise, but also for the interest on the debt and for all
expenses properly and necessarily incurred for the preservation of the
goods pledged.
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Q20. Which activities are included in the enlarged definition of money
laundering under the Prevention of Money Laundering (Amendment) Act,
2012?
a) Consultation, attainment, perfection, and systematic work.
b) Concealment, acquisition progression and illegal activities.
c) Contraction, ascertain, preferences and logical frames in any manner
whatsoever.
d) Concealment, possession, acquisition, use and projecting as untainted
property.

Answer: D
Refer page no.: 141, Topic: 8.2
Explanation:
(i). A person shall be guilty of offence of money-laundering if such person is
found to have directly or indirectly attempted to indulge or knowingly
assisted or knowingly is a party or is actually involved in one or more of the
following processes or activities connected with proceeds of crime, namely;
(a) Concealment; or
(b) Possession; or
(c) Acquisition; or
(d) Use; or
(e) Projecting as untainted property; or
(f) Claiming as untainted property, in any manner whatsoever.
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(ii). The process or activity connected with proceeds of crime is a continuing
activity and continues till such time a person is directly or indirectly
enjoying the proceeds of crime by its concealment or possession or
acquisition or use or projecting it as untainted property or claiming it as
untainted property in any manner whatsoever:'"

Q21. Under the Prevention of Money Laundering Act, 2002, what is the
minimum and maximum term of rigorous imprisonment prescribed for the
offence of money laundering?
a) Minimum 1 year and Maximum 5 years.
b) Minimum 3 years and Maximum 7 years.
c) Minimum 3 years and Maximum 10 years.
d) Minimum 5 years and Maximum 14 years.

Answer: B
Refer page no.: 141, Topic: 8.3
Explanation:
PUNISHMENT FOR MONEY LAUNDERING
In terms of Section of the Act “Whoever commits the offence of money-
laundering shall be punishable with rigorous imprisonment for a term
which shall not be less than three years but which may extend to Seven
years and shall also be liable to fine. Provided that where the proceeds of
crime involved in money- laundering relates to any offence specie under
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paragraph 2 of Part A of the Schedule, the provisions of this section shall
have effect as if for the words "which may extend to seven years", the
words which may extend to ten years" had been substituted."

Q22. What documents are required for identity verification of company by

a Bank?
a) Certificate of incorporation and Memorandum of association and
articles of association.
b) Trust Deed and Registration certificate.
c) Resolution of the managing body.
d) Power of attorney granted to the person conducting the transaction.

Answer: A
Refer page no.: 145, Topic: 8.11

Explanation: VERIFICATION OF RECORDS OF THE IDENTITY OF

CLIENTS
The documents required to be taken for verification of the identity of
clients differ from the type of client.
Those are listed below:
Individual: -
• One certified copy of an officially valid document containing details of
his permanent address, current address including in respect of the
nature of business and financial status.
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Company: -
• Certificate of incorporation
• Memorandum and articles of association
• Board resolution or the power of attorney
• Officially valid document in respect of the person, operating the
account
Partnership firm: -
• Registration certificate;
• Partnership deed;
• Officially valid document in respect of the person acting in the
transaction.
Trust: -
• Registration certificate,
• Trust deed; and
• Officially valid document in respect of the person acting in the
transaction.
Unincorporated association: -
• Resolution of the managing body
• Power of attorney granted to the person conducting the transaction:
and
• Information as may be required by the banking company to establish
the legal existence of the association or body of individuals.
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Q23. According to Negotiable Instrument Act, 1881, what is the prescribed
time period for paying interim compensation?
a) 90 days. b) 60 days.
c) 120 days. d) 150 days.

Answer: B
Refer page no.: 150, Topic: 9.1
Explanation:
Effect of insertion of Section 143A: -
With the insertion of Section 143A, the new provision was introduced
wherein a competent Court while trying a cheque dishonor offence is
empowered to order the drawer of the cheque to pay interim
compensation not exceeding 20% of the cheque amount to the
complainant, where the drawer pleads not guilty to the accusation made in
the complaint and in any other case, upon framing of charge.
Further it also provides that this interim compensation has to be paid
within a prescribed time period of 60 days from the date of the passing of
the Order by the Court, or within the extended period of 30 days, if
allowed/ directed by the Court on justifying significant cause for the delay
in payment.
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Q24. Which statement better define bill of exchange?
a) It is an instrument in writing containing an unconditional order signed by
the maker.
b) It is an instrument in digital containing a conditional order not signed by
the maker.
c) It is an instrument in legal draft containing a conditional order signed by
the bearer.
d) It is an instrument in professional containing a unconditional order
signed by bearer.

Answer: A
Refer page no.:153, Topic: 9.2
Explanation:
Bill of Exchange: Section 5 describes a Bill of Exchange as follows
A "bill of exchange" is an instrument in writing containing an unconditional
order, signed by the maker, directing a certain person to pay a certain sum
of money only to, or to the order of, a certain person or to the bearer of the
instrument.
Promissory Note: According to Section 4 of the statute that defines a
promissory note "A "Promissory note" is an instrument in writing (not
being a bank-note or a currency-note) containing an unconditional
undertaking, signed by the maker, to pay a certain sum of money only to,
or to the order of, a certain person, or to the bearer of the instrument.
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Q25. How many parties are involved in Promissory note?
a) Two namely maker and payee.
b) One namely maker (drawer, pledger).
c) Three namely drawer drawee and payee.
d) May be drawn on person, firm etc.

Answer: A
Refer page no.: 154, Topic: 9.2
Explanation:
Difference between Promissory Note and Bill of Exchange
The differences between the two negotiable instruments are as follows
Promissory Note Bill of Exchange
Number of Parties - two namely Number of parties - three namely
maker and payee drawer drawee and payee
Cannot be made payable to the Any of the three parties may be
maker himself. common so that there are a
minimum of 2 parties involved.
Unconditional Undertaking Unconditional order
No prior acceptance before Acceptance may be required before
payment due date of payment.
Maker's responsibility is primary Drawer's liability is secondary and
and unconditional conditional
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No protest' required May be required to be protested in
certain cases
No notice of dishonor required Notice of dishonor required by
holder to drawer.

Q26. Which statement shows the correct definition of the drawee and
drawer?
a) The person who receives the money is called the drawer, and the person
who signs the instrument is called the drawee.
b) The person who accepts the bill is called the drawer, and the person who
issues it is called the drawee.
c) The maker of a bill of exchange or cheque is called the drawer; the
person thereby directed to pay is called the drawee.

d) The holder of the cheque is called the drawer, and the bank is always
called the drawee.

Answer: C

Refer page no.: 155, Topic: 9.3

Explanation:

DRAWER/ACCEPTOR ETC.
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Terms such as drawer, Acceptor, Drawee in case of need etc. have been
defined in Section 7 of the Negotiable Instruments Act 1881. Section 7
defines
"Drawer" - The maker of a bill of exchange or cheque is called the drawer;
the person thereby directed to pay is called the drawee.
"Drawee in case of need" - When in the Bill or in any indorsement thereon
the name of any person is given in addition to the drawee to be resorted to
in case of need such person is called a "drawee in case of need".
"Acceptor" - After the drawee of a bill has signed his assent upon the bill,
or, if there are more parts thereof than one, upon one of such parts, and
delivered the same, or given notice of such signing to the holder or to some
person on his behalf, he is called the "acceptor".
"Acceptor for honor" - When a bill of exchange has been noted or
protested for non-acceptance or for better security,] and any person
accepts it supra protest for honor of the drawer or of any one of the
indorses, such person is called an “acceptor for honor".
"Payee" -The person named in the instrument, to whom or to whose order
the money is by the instrument directed to be paid, is called the "payee".

One liner:

[Link] transferor is called a mortgagor. The transferee is called a mortgagee.

2. The term 'Assignment' means the process by which a person called the
assignor prefers to transfer nights or benefits to another person called the
assignee.
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Q27. When a Bank is paying a cheque presented for payment for debit from
the Savings Bank Account of the customer, what is the relationship
between banker and customer?

a) Principal and Agent. b) Lesser and Lessee.

c) Debtor and Creditor. d) Pledger and Pledgee.

Answer: C

Refer page no.: 155, Topic: 9.4

Explanation: PAYMENT OF CHEQUES - PROTECTION TO BANKERS'

/CUSTOMERS'

A Bank is bound to pay cheques drawn by a customer, subject to

compliance by the customer as well as the Bank of certain rules, which
have largely been spelt out in the Act and interpreted in a decisive manner
by courts. Thus, payment of cheques drawn by the customer (drawer) on a
Bank (drawee) is mandatory, subject to, as stated above, the following of
certain precautions and rules by both, since the relationship between a
banker and customer is that of a debtor-creditor in such cases.

Q28. Which one of the following is not an example of material alteration

necessitating for refusal of payment of a cheque?
a) When bearer cheque is made into an order cheque.
b) When date is overwritten.
c) When crossing is obliterated.
d) Alteration of an order cheque to a bearer cheque.
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Answer: A
Refer page no.: 158, Topic: 9.5-9.6
Explanation:
MATERIAL ALTERATION
The following instances of material alteration may be considered
important
• Alteration in the date of the instrument which might have the effect
of hastening or delaying the time of payment.
• Alteration of the name of the payee (beneficiary)
• Alteration of the amount which is the most common form of
fraudulent alteration.
• Alteration of an order cheque to a bearer cheque.
WHERE ALTERATION IS NOT APPARENT
Where a promissory note, bill of exchange or cheque has been materially
altered but does not appear to have been so altered, or where a cheque is
presented for payment which does not at the time of presentation appear
to be crossed or to have had a crossing which has been obliterated,
payment thereof by a person or banker liable to pay, and paying the same
according to the apparent tenor thereof at the time of payment and
otherwise in due course, shall discharge such person or banker from all
liability thereon; and such payment shall not be questioned by reason of
the instrument having been altered, or the cheque crossed".
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Q29. Which is not the criteria to be fulfilled for a person to be a ‘holder in
due course’ of a cheque?
a) The cheque should be crossed.
b) It should have been acquired for consideration.
c) It should have been acquired before its maturity.
d) There should be no cause to believe that any defect exists in the title of
the person from whom the person has acquired the instrument.

Answer: A
Refer page no.: 161, Topic: 9.7
Explanation:
Thus, a person to be a 'holder in due course' should satisfy the following
conditions.
i. Instrument to be acquired for a consideration.
ii. Instrument to be acquired before its maturity
iii. Should have no cause to believe that any defect exists in the title of the
person from whom the person has acquired the instrument.
iv. It is also essential that the instrument should be complete and regular
when the holder takes its possession for him/her to be treated as holder in
due course.
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Q30. According to FEMA, which of the following what does the person
mean?
i) An individual.
ii) A company.
iii) A firm and every artificial juridical person.
iv) A Hindu Undivided Family.
v) Any agency, office or branch owned or controlled by such government.
a) ii, iii, iv and v. b) i, ii, iii and iv.
c) i, iii, iv and v. d) All of the above.

Answer: B
Refer page no.: 171, Topic: 10.2
Explanation:
Under the FEMA, a 'person' is defined to include the following entities:
(i) An individual;
(ii) A Hindu Undivided Family;
(iii) A company;
(iv) A firm;
(v) An association of persons or a body of individuals, whether incorporated
or not;
(vi) Every artificial juridical person; and
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(vii) any agency, office or branch owned or controlled by such person.

Q31. If any person contravenes any rules and regulation of the FEMA. What
will be the punishable amount liable on a person where the amount is not
quantifiable?
a) 5 lakh Rupees. b) 4 lakh Rupees.
c) 2 lakh Rupees. d) 3 lakh Rupees.

Answer: C
Refer page no.: 173, Topic: 10.5
Explanation:
If any person contravenes any provision of this Act, or contravenes any rule,
regulation, notification, direction or order issued in exercise of the powers
under this Act, or contravenes any condition subject to which an
authorization is issued by the Reserve Bank, he shall, upon adjudication, be
liable to a penalty up to thrice the sum involved in such contravention
where such amount is quantifiable, or up to two lakh rupees where the
amount is not quantifiable, and where such contravention is a continuing
one, further penalty which may extend to five thousand rupees for every
day after the first day during which the contravention continues.
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Q32. What punishment is a person liable for under the Foreign Exchange
Management Act, 1999 if they acquire any foreign exchange, foreign
security, or immovable property in violation of the Act?
a) Imprisonment for four years without fine.
b) Imprisonment five years with fine.
c) Imprisonment nine years without fine.
d) Imprisonment ten Years with fine.

Answer: B
Refer page no.: -173, Topic: 10.5
Explanation: If any person is found to have acquired any foreign exchange,
foreign security or immovable property, situated outside India, of the
aggregate value exceeding the threshold prescribed under the proviso to
sub-section (1) of section 37A, he shall be, in addition to the penalty
imposed under sub-section (1A), punishable with imprisonment for a term
which may extend to five years and with fine.
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Q33. For RBI to consider authorizing a company or corporation to operate or
regulate the existing clearing houses or new clearing houses of banks, in
order to have a common retail clearing house system for the banks
throughout the country, what percent of the equity of such company should
be held by a "Public Sector Bank"?
a) Not less than Fifty one percent.
b) Not less than Sixty percent.
c) Not less than Eighty percent.
d) Not less than ten percent.

Answer: A
Refer page no.: 180, Topic: 11.3
Explanation: The Reserve Bank may, under sub-section (1) of this section,
authorize a company or corporation to operate or regulate the existing
clearing houses or new clearing houses of banks in order to have a common
retail clearing house system for the banks throughout the country: Provided,
however, that not less than fifty-one per cent of the equity of such company
or corporation shall be held by public sector banks.
For the purposes of this clause, "public sector banks" shall include a
"corresponding new bank", "State Bank of India" and "subsidiary bank" as
defined in section 5 of the Banking Regulation Act, 1949 (10 of 1949)."
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Q34. Prior approval is required from RBI before a system provider causes
any change to take place in the system, which would affect the structure or
the operation of the payment system. However how many days' notices
should be given to the system participants after the approval by the RBI?
a) 31 days. b) 28 days.
c) 20 days. d) 30 days.

Answer: D
Refer page no.: 181, Topic: 11.3
Explanation: Every application for authorization shall be processed by the
Reserve Bank as soon as possible and an endeavor shall be made to dispose
of such application within six months from the date of filing of such
application.
The authorization may be revoked at any time by RBI on the happening of
certain events detailed in Section 8 of the statute.
The aggrieved service provider may appeal to the Central Government
against the revocation of the authorization within thirty days from the date
on which the order is communicated to him. The Central Government will
endeavor to dispose of an appeal under within a period of three months.
The decision of the Central Government on the appeal shall be final.
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Q35. After how many years does the mortgagee become the owner of the
property if the mortgagor fails to file a suit for redemption under
Usufructuary mortgage?
a) 40 years. b) 20 years.
c) 30 years. d) 50 years.

Answer: C
Refer page no.: 190, Topic: 12.2
Explanation: Usufructuary mortgage:
There is no time limit specified and the mortgagee remains in possession of
the property until the debt is repaid.
The only remedy for the mortgagee is to remain in possession of the
mortgaged property and pay themselves out of the rents and or profits of
the mortgaged property.
If the mortgagor fails to sue for redemption within thirty years, the
mortgagee becomes the absolute owner of the property.
A suit for redemption is a legal remedy that allows a borrower (mortgagor)
to reclaim ownership, title documents, and physical possession of a
mortgaged immovable property.
This action is taken after paying off the entire outstanding loan amount
plus any applicable interest. It serves as the primary mechanism to enforce
the mortgagor’s legal right to redeem
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Q36. How many types of mortgages are mentioned in the Transfer of
Property Act, 1882?
a) 6. b) 8.
c) 7. d) 5.

Answer: A

Refer page no.: 189, Topic: 12.2

Explanation:
Mortgages are of six kinds, though as a banker you would be dealing in only
three of them.
The law, relating to mortgages is dealt with in the Transfer of Property Act,
1882, and more particularly in Sections 58 to 99 and 102 to 104.
Mortgage of Land Various Types: The Transfer of Property Act
contemplates six different kinds of mortgages. They are:
(i) Simple mortgage.
(ii) Mortgage by conditional sale.
(iii) Usufructuary mortgage.
(iv) English mortgage.
(v) Mortgage by deposit of title deeds (Equitable mortgage).
(vi) Anomalous mortgage.
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Case Study on Types of Mortgages: (Q37 – Q39)

Q37. Which statement refers to transaction of Usufructuary mortgage?

a) The mortgagor delivers possession expressly, or by implication and binds

himself to deliver possession of the mortgaged property to the mortgagee.
b) The mortgagee is authorized to retain possession of the property until
payment of the mortgage money.
c) The mortgagee is entitled to receive rents and profits accruing from the
property in lieu of interest, or in payment of the mortgage money, or both.
d) The mortgagor binds himself to repay the mortgage money on a certain
date.

Answer: A
Refer page no.: 189-190, Topic: 12.2
Explanation: Usufructuary mortgage:
According to Section 58(d) of the Transfer of Property Act, 'a Usufructuary
mortgage' is a transaction in which
(a) The mortgagor delivers possession expressly, or by implication and
binds himself to deliver possession of the mortgaged property to the
mortgagee; and
(b) Authorizes the mortgagee to retain such possession until payment of
the mortgage money and to receive the rents and profits accruing from the
property or any part of such rents and profits and to appropriate the same
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in lieu of interest, or in payment of the mortgage money, or partly in lieu of
interest and partly in payment of the mortgage money.

Q.38 Which of the following statements is correct regarding English

mortgage?
a) A transaction where the mortgagor binds himself to repay the mortgage
money on a certain date and absolutely transfers the property to the
mortgagee.
b) The mortgagor transfers possession of the property to the mortgagee,
who is entitled to enjoy rents and profits in lieu of interest.
c) The mortgagor ostensibly sells the property subject to a condition that the
sale shall become absolute on default.
d) The mortgagor delivers property as security without transferring
ownership, creating only a charge on the property.

Answer: A
Refer page no.: 190, Topic: 12.2
Explanation:
English Mortgage:
According to Section 58(e) of the Transfer of Property Act, an English
Mortgage' is a transaction in which, the mortgagor binds himself 'to repay
the mortgage money on a certain date and transfers the mortgaged
property absolutely to the mortgagee, but subject to the provision that he
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will retransfer it to the mortgagor upon payment of the mortgage money as
agreed'.

Q39. Which of the following is considered as the Mortgage by deposit of title

deeds?
a) Simple Mortgage. b) Equitable mortgage.
c) Usufructuary mortgage. d) English Mortgage.

Answer: B
Refer page no.: 190, Topic: 12.2
Explanation:
Equitable mortgage or mortgage by deposit of title deeds:
According to Section 58(f) of the Transfer of Property Act, 'Where a person
in any of the following towns namely, the towns of Kolkata, Chennai and
Mumbai and in any other town which the State Government concerned
may, by notification in the official gazette, specify in this behalf - delivers to
a creditor or his agent documents of title to immoveable property, with
intent to create a security thereon, the transaction is called a mortgage by
deposit of title deeds.
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Q40. What are the requirements that need to be satisfied for a valid pledge?
i) There must be bailment of goods (bailment means delivery of goods).
ii) The bailment must be, by or on behalf of the debtor.
iii) The bailment, must be for the purpose of providing security for the
payment of a debt or performance of promise.
iv) The bailment must be, by or on behalf of the creditor as well.
a) ii, iii, and iv. b) i, iii, and iii.
c) i, iii and iv. d) i, ii, iii and iv.

Answer: B
Refer page no.: 201, Topic: 13.4
Explanation:
PLEDGE
'Pledge means bailment of goods for purpose of providing security for
payment of debt or performance of promise' (as per the Section 172 of
Contract Act 1872).
As per the above definition to constitute a valid pledge, three requirements
are to be satisfied:
1. There must be bailment of goods (bailment means delivery of goods);
2. The bailment must be, by or on behalf of the debtor; and
3. The bailment, must be for the purpose of providing security for the
payment of a debt or performance of promise.
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The person, whose goods are bailed called the Pawnor, the who takes the
goods as security id called the Pawnee.

Q41. Which of the following cannot create pledge?

a) Owner of the goods.
b) Customer of the goods.
c) Seller/Buyer in Possession.
d) Person with Limited Interest.

Answer: B
Refer page no.: 202, Topic: 13.4
Explanation:
3. Who can create a Pledge?
The following persons can make a valid pledge:
(a) Owner of the goods.
(b) A mercantile agent, provided the following conditions are satisfied:
(i) He should be in possession of the goods, or the documents of title to
goods with the consent of the owner.
(ii) The goods must have been entrusted to him in his capacity as a
mercantile agent.
(iii) The mercantile agent should create the pledge in the ordinary course of
his business as such agent.
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(iv) The Pawnee acts in good faith and has no notice at the time of pledge
that the Pawnor has no authority to pledge (as per Section 178 of Contract
Act).
(c) Person with Limited Interest, Persons in possession of goods under a
voidable contract, provided the contract, has not been rescinded at the
time of pledge.
(d) Seller/Buyer in Possession, Seller of the goods, who continues to be in
possession of the goods even after sale, can create a valid pledge.

Q42. What steps could Pawnee take when pawnor makes default in
payment?
a) He may file a suit against the company and retain the goods pledged as
collateral security.
b) He may file a suit and sell the goods after giving reasonable notice, using
the proceeds to recover the debt.
c) He may retain the goods as collateral security until the debt is repaid.
d) He may sell the goods after giving the pawnor reasonable notice of the
sale.

Answer: D
Refer page no.: 203, Topic: 13.4
Explanation:
Pawnee's right where Pawnor makes default in payment: In case where the
Pawnor makes default, the Pawnee has three rights:
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i. He may sue the Pawnor upon the debt or promise;
ii. He may retain the pawned goods as collateral security; or
iii. He may sell it after giving the Pawnor reasonable notice of the sale.
The right to retain the pawn (pawned goods) and the right to sell it are
alternative and not concurrent rights.
While the Pawnor retains, he does not sell and when he sells, he does not
retain.
However, the Pawnee has the right to sue on the debt or the promise
concurrently with his right to retain the pawn or sell it.

Q43. Which of the following is called the hypothecation?

a) Charge on of the moveable property.
b) Usufructuary mortgage of the immoveable property.
c) Charge on movable property without transfer of possession.
d) Pledge of goods with transfer of possession.

Answer: C
Refer page no.: 206, Topic: 13.5
Explanation: HYPOTHECATION
The term came to be defined in the SARFAESI Act, 2002. As per Sec. 2 of the
Act, 'Hypothecation' means a charge in or upon any moveable property,
existing or future, created by a borrower in favor of a secured creditor,
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without delivery of possession of the moveable property to such creditor,
as a security for financial assistance and includes floating charge and
crystallization of such charge into fixed charge on moveable property.
The mortgage of moveable property is called 'Hypothecation'.
It may be described as 'a transaction whereby money is borrowed by the
debtor (owner of the goods) on the security of the moveable property
without transferring either the property or the possession to the creditor'.

Q44. What are the salient features of the Set-off?

i) Both debts must be for certain sums. A debt-accruing due cannot be set-
off against the debt already due.
ii) The banker cannot set-off the credit balance in the account of guarantor
till the liability of the guarantor is determined.
iii) The credit balance in the current account cannot be set-off against a
contingent liability of a bill discounted but not yet due.
iv) The parties must be mutually indebted in the same right.
a) i, ii, and iii. b) i, iii and iv.
c) ii, iii and iv. d) All of the above.

Answer: D
Refer page no.: 209, Topic: 13.7
Explanation: SET-OFF
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Set-off is the right of a debtor to take into account a debt owing to him by a
creditor, when claiming a debt due from him to the creditor.
Salient Features of Set-off
(a) Both debts must be for certain sums. A debt-accruing due cannot be set-
off against the debt already due.
(b) The banker cannot set-off the credit balance in the account of guarantor
till the liability of the guarantor is determined.
(c) The credit balance in the current account cannot be set-off against a
contingent liability of a bill discounted but not yet due. (d) A banker cannot
set-off a debt due to him upon a loan account repayable on demand or at a
specified date against a credit balance in the current account until the
demand is made or due date arrives.
(e) The parties must be mutually indebted in the same right.
(f) The credit balance in the partner's account can be set-off against the
debit balance of a partnership account since the liability of the partners is
joint and several.
(g) Right of set-off is exercisable between two firms, which have separate
names but are composed of same set-of partners.

Q45. In case of a default under the Companies Act, 2013 relating to

registration of charges, the company shall be liable to a penalty of
__________, and every officer in default shall be liable to __________?

a) 5 lakhs and 50,000. b) 10 lakhs and 90,000.

c) 15 lakhs and 80,000. d) 20 lakhs and 60, 000.

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Answer: A
Refer page no.: 219, Topic: 14.6
Explanation: PROVISIONS OF COMPANIES ACT 2013 RELATING TO
REGISTRATION OF CHARGES
Section 86: Section 86 provides that if any company is in default in
complying with any of the provisions of this Chapter, the company shall be
liable to a penalty of five lakh rupees and every officer of the company who
is in default shall be liable to a penalty of fifty thousand rupees and if any
person willfully furnishes any false or incorrect information or knowingly
suppresses any material information, required to be registered in
accordance with the provisions of section 77, he shall be liable for action
under section 447.

Q46. Which of the following is related to ‘Clayton Case’?

a) Pledge. b) Assignment.
c) Appropriation. d) Hypothecation.

Answer: C
Refer page no.: 198-199, Topic: 13.2
Explanation: APPROPRIATION
The Indian Contract Act, 1872 lays down the rules for appropriation which
is applicable to a creditor who receives payment from a debtor and is
equally applicable where a bank is a creditor. However, before delving into
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the principles enshrined in the statute, let us understand what
‘appropriation' means.
In law, where a debtor and creditor is involved, (such as in banking
business), appropriation is the application of a particular payment, received
from a debtor, for the purpose of repayment of a particular debt.
According to Section 61 that deals with a situation where neither party
appropriates
As per Section 61 "Where neither party makes any appropriation, the
payment shall be applied in discharge of the debts in order of time,
whether they are or are not barred by the law in force for the time being to
the limitations of suits.
If the debts are of equal standing, the payment shall be applied in discharge
of each proportionally".
These sections corroborate the principles defined in the 'Clayton Case’.
The "Rule in Clayton’s Case" (Devaynes v. Noble, 1816) is a landmark
common law principle used for the appropriation of payments in a running
account (such as a bank current account, cash credit, or overdraft).
It establishes the "First In, First Out" (FIFO) rule of financial accounting and
law. If a debtor owes multiple continuous debts to a creditor and makes a
payment without specifying which debt it is for, the law presumes that the
earliest credit entry discharges the earliest debit entry.
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Q47. Which statement is incorrect regarding ‘Repatriate to India’ under
FEMA regulations?
a) The selling of such foreign exchange to an authorized person in India in
exchange for rupees.
b) It includes use of the realized amount for discharge of a debt or liability
denominated in foreign exchange.
c) It means bringing the realized foreign exchange into India and retaining it
abroad indefinitely sans complying with prescribed regulations.
d) The holding of realized amount in an account with an authorized person
in India to the extent notified by the Reserve Bank.

Answer: C
Refer page no.: 198-199, Topic: 13.2
Explanation:
'Repatriate to India' means bringing into India the realized foreign exchange
and--
(i) The selling of such foreign exchange to an authorized person in India in
exchange for rupees, or
(ii) The holding of realized amount in an account with an authorized person
in India to the extent notified by the Reserve Bank, and includes use of the
realized amount for discharge of a debt or liability denominated in foreign
exchange and the expression repatriation shall be construed accordingly.
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Q48. The __________acts as the appellate authority if an applicant is
denied operational authorization or if an existing authorization is revoked.
a) Reserve Bank of India.
b) Central Government.
c) National Payments Corporation of India.
d) Ministry of Finance.

Answer: B
Refer page no.: 181, Topic: 11.3
Source:
[Link]
Explanation: The authorization may be revoked at any time by RBI on the
happening of certain events detailed in Section 8 of the statute.
The aggrieved service provider may appeal to the Central Government
against the revocation of the authorization within thirty days from the date
on which the order is communicated to him.
The Central Government will endeavor to dispose of an appeal under within
a period of three months.
The decision of the Central Government on the appeal shall be final.
Legal Analysis under the PSS Act, 2007
This question is framed directly from Section 9 of the Payment and
Settlement Systems Act, 2007 (PSS Act).
The statutory structure operates through the following mechanics:
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The Regulatory Authority: Under Section 4 of the Act, the Reserve Bank of
India (RBI) is designated as the primary authority empowered to grant,
refuse (Section 7), or revoke (Section 8) operational authorization to any
payment system provider in India.
The Appellate Power: If an applicant is aggrieved by an order of the RBI
refusing or revoking their authorization, they cannot appeal to the RBI
itself. Section 9(1) of the Act explicitly mandates that the aggrieved party
must appeal directly to the Central Government within 30 days from the
date the order is communicated.

Q49. Which one of the following is the additional step the bank should take
under Enhanced Due Diligence Rules?

a) Stop all transactions in the account.

b) Close the account.

c) Ask Companies to provide guarantees.

d) Examine the ownership and financial position, including sources of funds

of the client.

Answer: D

Refer page no.: 142, Topic: 8.5

Explanation: ENHANCED DUE DILIGENCE

The amendment in 2019 resulted in addition of Section 12AA which deals

with enhanced due diligence According to Section 12AA "(1) Every
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reporting entity shall, prior to the commencement of each specified
transaction,
(1) Verify the identity of the clients undertaking such specified transaction
by authentication under the Aadhaar (Targeted Delivery of Financial and
Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016) in such
manner and subject to such conditions, as may be prescribed:
(a) Provided that where verification requires authentication of a person
who is not entitled to obtain an Aadhaar number under the provisions of
the said Act, verification to authenticate the identity of the client
undertaking such specified transaction shall be carried out by such of her
process or mode, as may be prescribed;
(b) Take additional steps to examine the ownership and financial position,
including sources of funds of the client, in such manner as may be
prescribed;
(c) Take additional steps as may be prescribed to record the purpose
behind conducting the specified r transaction and the intended nature of
the relationship between the transaction parties.

Q50. The information obtained while applying the enhanced due diligence
measures for any company has to be maintained for a period of -- years
from the date of transaction between a client and the bank under extant
Money Laundering guidelines.

a) 6. b) 8.

c) 5. d) 4.
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Answer: C

Refer page no.: 142, Topic: 8.5

Explanation:

The information obtained while applying the enhanced due diligence

measures under sub-section (1) shall be maintained for a period of five
years from the date of transaction between a client and the reporting
entity.

Q51. Under Section 12AA of the Act as amended in 2019, which one of the
following would not be regarded as a specified transaction?
a) Any withdrawal or deposit in cash exceeding such amount.

b) Any inter corporate deposits.

c) Any transaction in foreign exchange, exceeding such amount.

d) Any transaction in any high value imports or remittances.

Answer: B

Refer page no.: 142, Topic: 8.5

Explanation: For the purposes of this section, “specified transaction" means

(a) Any withdrawal or deposit in cash, exceeding such amount;

(b) Any transaction in foreign exchange, exceeding such amount;
(c) Any transaction in any high value imports or remittances;
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(d) such other transaction or class of transactions, in the interest of revenue
or where there is a high risk or money-laundering or terrorist financing, as
may be prescribed."

Q52. Banking in India is primarily governed by -----?

(i) Negotiable Instruments Act, 1881.

(ii) Banking Regulation Act, 1949.

(iii) Reserve Bank of India Act, 1934.

(iv) Transfer of Properties Act, 1882.

a) (ii) and (iii) only. b) (iii) and (iv) only.

c) (i), (ii) and (iii) only. d) (i) and (ii) only.

Answer: A

Refer page no.: 4, Topic: 1.1

Explanation: Banking in India is mainly governed by the Banking Regulation

Act, 1949 and the Reserve Bank of India Act, 1934.

The Reserve Bank of India and the Government of India exercise control over
banks right from the opening of the banks to their winding up by virtue of
the powers conferred under these statutes.
All the regulatory provisions are not uniformly applicable to all banks.
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Q53. Which of the following statements are correct with regard to paid up
capital of most Co-operative banks?

(i) Minimum paid up capital & reserve is not less than Rs. 1 lakh.

(ii) For calculating value of paid-up capital & reserves, the nominal value to
be considered.

(iii) For calculating value of paid-up capital & reserves, the real and
exchangeable value to be considered.

(iv) In case of dispute regarding value of paid-up capital & reserves, RBI's
decision shall be final.

a) (i), (iii) and (iv) only. b) (i), (ii) and (iv) only.

c) (i) and (ii) only. d) (iii) and (iv) only.

Answer: A

Refer page no: 93, Topic: 5.7

Explanation: CO-OPERATIVE BANKS:
Paid-up Capital and Reserves: The minimum paid-up capital and reserves
required to commence or carry on banking business by a co-operative bank
is not less than Rs. 1 lakh under Section 11 (as applicable to co-operative
banks).
For calculating the value of paid-up capital and reserves, the real and
exchangeable value and not the nominal value would be considered.
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In the case of a dispute regarding the value of paid-up capital and reserves,
Reserve Bank's decision shall be final.

Q54. As per Sec 143A of NI Act, the court trying the offence may order the
Drawer of the cheque to pay interim compensation of amount not exceeding
----of the cheque?
a) 20%. b) 25%.

c) 40%. d) 50%.

Answer: A

Refer page no.: 150, Topic: 9.1

Explanation:

Effect of insertion of Section 143A: -

With the insertion of Section 143A, the new provision was introduced
wherein a competent Court while trying a cheque dishonor offence is
empowered to order the drawer of the cheque to pay interim
compensation not exceeding 20% of the cheque amount to the
complainant, where the drawer pleads not guilty to the accusation made in
the complaint and in any other case, upon framing of charge.
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Q55. What is the maximum punishment to the drawer for return of cheque
drawn by them for financial reasons under the Negotiable Instruments Act
1881?

a) Imprisonment for a term which may be extended to three years.

b) Imprisonment for a term which may be extended to five years.

c) Imprisonment for a term which may extended to twice the amount of

the cheque.

d) Imprisonment for a term which may be extended to two years and fine
which may extend to twice times the amount of the cheque.

Answer: D

Refer page no.: 163, Topic: 9.7

Explanation: Dishonor of cheque for insufficiency, etc, of funds in the

account:

Section 138 of NI Act provides for penal provisions in case of dishonor of

cheque for insufficiency, etc., of funds in the account:
Where any cheque drawn by a person on an account maintained by him
with a banker for payment of any amount of money to another person
from out of that account for the discharge, in whole or in part, of any debt
or other liability, is returned by the bank unpaid, either because of the
amount of money standing to the credit of that account is insufficient to
honor the cheque or that it exceeds the amount arranged to be paid from
that account by an agreement made with that bank, such person shall be
deemed to have committed an offence and shall, without prejudice to any
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other provision of this Act, be punished with imprisonment for a term
which may be extended to two years, or with fine which may extend to
twice the amount of the cheque.

Q56. While granting loans and advances to Companies, Bank may accept
assets of the Companies as security. As per section 77 of Companies Act
2013, charges thus created are to be registered with Registrar of Companies
normally within a period of.
a) 30 days from the date of creation of charge by the Company.

b) 300 days from the date of creation of charge by the Bank.

c) 300 days from the date of creation of charge by the Company.

d) 30 days from the date of creation of charge by the Bank.

Answer: A

Refer page no.: 216, Topic: 14.3

Explanation: PROCEDURE FOR REGISTRATION OF CHARGE

Primarily, under section 77 of the Companies Act, 2013, every company

creating a charge is required to register the particulars of charge in a
specific form, signed by the company and its charge - holder together with
the relevant instruments.
However, there is a time limit for registering the charge.
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A charge created by a company is required to be registered with the
Registrar within thirty days of its creation in such form and on payment of
such fees as may be prescribed.

Q57. Once a Whole Time Director (WTD) completes 15 years as director,

after a minimum gap of how many years will he be again eligible for re-
appointment?
a) Five. b) Three.

c) Two. d) Ten.

Answer: B

Refer page no.: 33, Topic: 2.12

Explanation: Tenure of MD&CEO and WTDs

RBI vide notification dated 26th April 2022 has further clarified that subject
to the statutory approvals required from time to time, the post of the
MD&CEO or WTD cannot be held by the same incumbent for more than 15
years.
Thereafter, the individual will be eligible for re-appointment as MD&CEO or
WTD in the same bank, if considered necessary and desirable by the board,
after a minimum gap of three years, subject to meeting other conditions.
During this three-year cooling period, the individual shall not be appointed
or associated with the bank or its group entities in any capacity, either
directly or indirectly.