Question Bank - Multiple Choice Questions (MCQs)
Unit 1: Laws relating to Banking in India
1) Who has the power to give directions to other Banking Companies?
a) RBI
b) Government of India
c) Registrar
d) Auditor
Ans : a
2) Which section of Banking Regulation Act 1949 relates with the Power of Reserve Bank to issue
directions in respect of stressed assets?
a) Section 35AA
b) Section 35AB
c) Section 35B
d) Section 35 BB
Ans : b
3) Change of name by a banking company only happens with the approval of __________?
a) RBI
b) Government of India
c) Registrar
d) Auditor
Ans : a
4) Form of Balance sheet of banking Companies includes Reserve & Surplus in
a) Schedule 1
b) Schedule 2
c) Schedule 3
d) Schedule 4
Ans : b
5) Form of Balance sheet of banking Companies includes Fixed assets in
a) Schedule 8
b) Schedule 9
c) Schedule 10
d) Schedule 11.
Ans : c
6) Contigent Liabilities in case of banking Companies are included in_________.
a) Schedule 9
b) Schedule 10
c) Schedule 11
d) Schedule 12
Ans : d
7) Banking company means any company which transacts the business of ________.
a) Banking only
b) Banking & Insurance
c) Banking & Foreign Exchange
d) Banking & Manufacturing
Ans : a
8) In which year was the Banking Regulation Act passed?
a) 1949
b) 1955
c) 1959
d) 1969
Ans : a
9) On which rate bases, overnight money is needed by bank from RBI?
a) MSF
b) Repo rate
c) Reverse repo
d) Bank rate
Ans : a
10) ____________________are excluded from the Banking Regulation Act 1949.
a) Public and Private Sector Banks
b) Primary Agricultural Credit Society and cooperative land mortgage banks
c) SEBI
d) Regional Rural Banks
Ans : b
11) In which year, the Banking Regulation Act was amended to include cooperative banks under its
purview by adding the Section 56.
a) 1964
b) 1965
c) 1986
d) 1987
Ans : b
12) The Reserve Bank of India is given the responsibility of regulating and supervising the _________
under Reserve Bank of India Act, 1934.
a) Insurance Companies
b) Transport Companies
c) Banking Financial Companies
d) Non-Banking Financial Companies
Ans : d
13) In the case of a banking company incorporated outside India balance-sheet and profit and loss
account shall be signed by _________ of the company.
a) Director of the principal office
b) Owner agent of the principal office
c) Manager or agent of the principal office
d) Central Government
Ans : c
14) Copies of balance-sheets and accounts to be sent to____________.
a) RBI
b) Government of India
c) Registrar
d) Auditor
Ans : c
15) Managing agent includes
a) Secretaries and Treasurers
b) Where the managing agent is a company, and Director of such company, and any member thereof
who holds substantial interest in such company
c) Where the managing agent is a firm, any partner of such firm
d) All of the above
Ans : d
16) Regional rural bank means a regional rural bank established under section 3 of the Regional Rural
Banks Act, __________.
a) 1974
b) 1975
c) 1976
d) 1977
Ans : c
17) Reserve Bank means the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act,
_________.
a) 1934
b) 1935
c) 1945
d) 1946
Ans : a
18) In case of banking company incorporated outside India, aggregate value of its paid-up capital and
reserve shall not be less than Rs. __________.
a) 5 Lakhs
b) 12 Lakhs
c) 15 Lakhs
d) 18 Lakhs
Ans : c
19) According to Sec. ______, a banking company is not permitted to pay directly or indirectly by way of
commission, brokerage, discount or remuneration on issues of its shares in excess of 2½% of the
paid-up value of such shares.
a) 10
b) 11
c) 12
d) 13
Ans : d
20) FATCA stands for
a) Foreign Account Tax Compliance Act
b) Foreign Account Trade Company Act
c) Financial Account Tax Compliance Act
d) Fiscal Account Tax Compliance Act
Ans : a
21) In case of an Indian banking company, the sum of its paid-up capital and reserves if it has places of
business in more than one State shall not be less than
a) 5 Lakhs
b) 12 Lakhs
c) 15 Lakhs
d) 18 Lakhs
Ans : a
22) As per the provisions of which act all financial institutions have to maintain a record for all form of
transactions?
a) Companies Act, 1956
b) Credit Information (Companies Regulation Act, 2005)
c) Information Technology Act, 2000
d) PMLA Act, 2002
Ans : d
23) Which of the following Act refers to the acquisition and transfer of the undertakings of certain
banking companies?
a) Companies Act, 1956
b) Credit Information (Companies Regulation Act, 2005)
c) Banking Companies (acquisition and transfer of undertakings), 1970
d) Banking Regulation Act, 1949
Ans : c
24) Which of the following is the clearing agency for Government securities?
a) GOI
b) RBI
c) CCIL
d) SEBI
Ans : c
25) Banks are required to maintain SLR under which act?
a) Section 24 of the Banking Regulation Act
b) Section 35 of the Negotiable Instrument Act, 1881
c) Section 24 of RBI Act
d) Section 40 of Indian Contract Act, 1872
Ans : a
Unit 2: Negotiable Instrument Act 1881
1) It is a ----------------- obligation of a banker to honour the cheques of the customer drawn against
current
a) Mutual
b) Statutory
c) Unstatutory
d) All of the above
Ans : b
2) Which bank have given the instructions to the commercial banks regarding the immediate credit of
outstation cheques?
a) Reserve Bank of India
b) Central Bank
c) World Bank
d) All of the above
Ans : a
3) In India, the law regulating the Negotiable instruments are
a) Banking Regulation Act 1949
b) Reserve Bank of India Act 1934
c) Negotiable Instruments Act 1881
d) Companies Act 1956
Ans : c
4) In Negotiable Instruments Act 1881, which section defines promissory note?
a) Section 1
b) Section 2
c) Section 3
d) Section 4
Ans : d
5) A cheque dated subsequent to the date of its issue is
a) Post dated cheque
b) Blank cheque
c) Crossed cheque
d) Account payee cheque.
Ans : a
6) A drawer in the bill of exchange can also be a
a) Paymaster
b) Payee
c) Banker
d) Creditor
Ans : b
7) The rate at which RBI discounts approved bill of exchange is
a) Bank rate
b) Interest rate
c) Exchange rate
d) Discount rate
Ans : d
8) Who is primarily liable on a promissory note?
a) Holder
b) Maker
c) Drawee
d) Endorser
ans : b
9) How many parties are mainly involved in Promissory Note?
a) One
b) Five
c) Two
d) Three
Ans : c
10) In a bill of exchange, drawee is the person
a) who draws the bill
b) on whom the bill is drawn
c) to whom the payment of the bill is to be made
d) to whom the payment of the bill is not to be made
Ans : b
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