MODEL QUESTIONS JAIIB - PRINCIPLES OF BANKING – MODULE A & B

MODEL QUESTIONS JAIIB
PRINCIPLES OF BANKING – MODULE A & B

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

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

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

4)    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. (d)

5)    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                                                       (d)

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

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

8)    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                                                                                                    (d)

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

10)  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                                                                                                    (d)

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

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

13) 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                                                                                (b)

14) 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)      Operating cycle
d)     Revolving cycle                                                                    ( c )

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

17) 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                                                                                  (a)

18) 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 
 (b)
19) Tele banking service is based on
a)      Virtual Banking
b)      Online Banking
c)      Voice processing
d)     Core Banking                                                                       ( c )



20) 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                                              (d)


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

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

23) 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                                               (a)



24) 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                                                                                      (b)

25) 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                      (d)

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

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

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



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

30) 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                                                                           (d)

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

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

33) 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                                                                                     (a)

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

35)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                                                                                (d)

36) 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)               ( c )

37) 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%
                                                                                                                  (b)
38) 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                                                                           (d)




39) 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                                                                            (d)

    40) 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                                                                             (b)

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

42) 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                                                                                            (d)

43) 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                                                                             (b)

44) 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                                                                                              (d)

45) 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                                                                                                        (d)

Basic Savings Bank Deposit Account (BSBDA)

What is the definition of Basic Savings Bank Deposit Account (BSBDA)? 

BSBDA allows you to bank with a zero minimum balance requirement. All the existing ‘No-frills’ accounts opened by the banks are now converted into BSBDA in compliance with the guidelines issued on August 22, 2012 by the Reserve Bank of India (RBI).

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2. Limits in BSBDA (Accounts with introduction/ Small Accounts): 

• Aggregate of all credits in a financial year does not exceed Rs.1.00 lac

• The aggregate of all withdrawals and transfers in a month does not exceed Rs.10,000/-

• Balance at any point of time does not exceed Rs.50,000/-.

• The aim of introducing BSBDA is part of the efforts of RBI for furthering financial inclusion objectives.

3. Can an Individual have any number of 'Basic Savings Bank Deposit Account' in one bank?

No. An individual is eligible to have only one 'Basic Savings Bank Deposit Account' in one bank.

4. Whether a 'Basic Savings Bank Deposit Account' holder can have any other savings bank account in that bank ?

Holders of 'Basic Savings Bank Deposit Account' will not be eligible for opening any other savings bank account in that bank. If a customer has any other existing savings bank account in that bank, he / she will be required to close it within 30 days from the date of opening a 'Basic Savings Bank Deposit Account'.

5. Can an individual have other deposit accounts where one holds 'Basic Savings Bank Deposit Account’?

Yes. One can have Term/Fixed Deposit, Recurring Deposit etc., accounts in the bank where one holds 'Basic Savings Bank Deposit Account'.

6. Whether the ‘Basic Savings Bank Deposit Account’ can be opened by only certain types of individuals like poor and weaker sections of the population?

No. The 'Basic Savings Bank Deposit Account' should be considered as a normal banking service available to all customers, through branches.

7. Whether there are any restrictions like age, income, amount etc criteria for opening BSBDA by banks for individuals?

No. Banks are advised not to impose restrictions like age and income criteria of the individual for opening BSBDA.

8. Is the 'Basic Savings Bank Deposit Account' a part of furthering the Financial Inclusion objectives of banks?

The aim of introducing 'Basic Savings Bank Deposit Account' is very much part of the efforts of RBI for furthering Financial Inclusion objectives. All the accounts opened earlier as 'no-frills' account should be renamed as BSBDA 

9. What are KYC norms applicable to BSBDA accounts? Are there any relaxations in KYC norms for BSBDAs?

The 'Basic Savings Bank Deposit Account' would be subject to provisions of PML Act and Rules and RBI instructions on Know Your Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to time. BSBDA can also be opened with simplified KYC norms. However, if BSBDA is opened on the basis of Simplified KYC, the accounts would additionally be treated as “BSBDA-Small  Account” 

10. Can I have a ‘Small Account’ in ABC Bank . Can I have additionally a 'Basic Savings Bank Deposit Account’?

No, the BSBDA customer cannot have any other savings bank account in the same bank. If 'Basic Savings Bank Deposit Account’ is opened on the basis of simplified KYC norms, the account would additionally be treated as a 'Small Account' and would be subject to conditions stipulated on 'KYC norms / AML Measures/ Combating of Financing of Terrorism (CFT) / Obligation of banks under PMLA, 2002'.

11. What are the conditions stipulated for accounts which are additionally to be treated as ‘BSBDA-Small Account’?

As notified  in Govt of India notification dated December 16, 2010, BSBDA-Small Accounts would be subject to the following conditions:

1. Total credits in such accounts should not exceed one lakh rupees in a year.
2. Maximum balance in the account should not exceed fifty thousand rupees at any time
3. The total of debits by way of cash withdrawals and transfers will not exceed ten thousand rupees in a month
4. Remittances from abroad can not be credited to Small Accounts without completing normal KYC formalities
5. Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person provides proof of having applied for an Officially Valid Document.
6. Small Accounts can only be opened at CBS linked branches of banks or at such branches where it is possible to manually monitor the fulfilment of the conditions.

12. What kinds of services are available free in the 'Basic Savings Bank Deposit Account’?

The services available free in the 'Basic Savings Bank Deposit Account’ will include deposit and withdrawal of cash; receipt / credit of money through electronic payment channels or by means of deposit / collection of cheques at bank branches as well as ATMs.

13. of any initial minimum deposit Is there requirement while opening a BSBDA as per the circular dated August 17, 2012?

There is no requirement for any initial deposit for opening a BSBDA.

14. Whether banks are free to offer more facilities than those prescribed for ‘Basic Savings Bank Deposit Account’?

Yes. However, the decision to allow services beyond the minimum prescribed has been left to the discretion of the banks who can either offer additional services free of charge or evolve requirements including pricing structure for additional value-added services on a reasonable and transparent basis, to be applied in a non-discriminatory manner with prior intimation to the customers. Banks are required to put in place a reasonable pricing structure for value added services or prescribe minimum balance requirements which should be displayed prominently and also informed to the customers at the time of account opening. Offering such additional facilities should be non - discretionary, non-discriminatory and transparent to all ‘Basic Savings Bank Deposit Account’ customers. However, such accounts enjoying additional facilities will not be treated as BSBDAs.

15. If BSBDA customers have more than 4 withdrawals and request for cheque book at additional cost, will it cease to be a BSBDA?

Yes. Please refer to response to the Query No. 14. However, if the bank does not levy any additional charges and offers more facilities free than those prescribed under BDBDA a/cs without minimum balance then such a/cs can be classified as BSBDA.

16. Whether the existing facility available in a normal saving bank account of five free withdrawals in a month in other banks ATMs as per IBA (DPSS) instructions will hold good for BSBDA?

No. In BSBDA, banks are required to provide free of charge minimum four withdrawals, through ATMs and other mode including RTGS/NEFT/Clearing/Branch cash withdrawal/transfer/internet debits/standing instructions/EMI etc It is left to the banks to either offer free or charge for additional withdrawal/s. However, in case the banks decide to charge for the additional withdrawal, the pricing structure may be put in place by banks on a reasonable, non-discriminatory and transparent manner.

17. Are the banks free to levy Annual ATM Debit Card charges?

Banks should offer the ATM Debit Cards free of charge and no Annual fee should be levied on such Cards.

18. Whether Balance enquiry in ATMs also should be counted within the four withdrawals permitted under BSBDA?

Balance enquiry through ATMs should not be counted in the four withdrawals allowed free of charge at ATMs.

19. If a customer of BSBDA opts not to have ATM Debit card, should the bank compel the customer to accept the ATM debit card ?

ATM debit cards may be offered at the time of opening BSBDA and issued if the customer requests for the same in writing. Banks need not  insist that  a customer accepts ATM debit card.

20. What about customers who are illiterate or old who may not be in a position to safe keep and use the ATM debit card and PIN associated with it?

Banks while opening the BSBDA should educate such a customers about the ATM Debit Card, ATM PIN and risk associated with it. However, if a customer chooses not to have an  ATM Debit Card,  banks need not compel such customer to accept ATM Debit Card. If, however, customer opts to have an ATM Debit card, banks should provide the same to BSBDA holders through safe delivery channels by adopting the same procedure which they have been adopting for delivery of ATM Debit card and PIN to their other customers.

21. Whether Passbooks are also to be offered free to BSBDA holders?

Yes. BSBDA holders should be offered passbook facility free of charge 

22. If a customer opens a BSBDA but does not close his existing Savings Bank Account within 30 days, are banks then free to close such savings bank accounts?

While opening the BSBDA customers’ consent in writing be obtained that his existing non-BSBDA Savings Banks accounts will be closed after 30 days of opening BSBDA and banks are free to close such accounts after 30 days.

23. In certain accounts to which disbursements under MGNREGA are made weekly, the number of withdrawals may be more than four in a month of five weeks. In such cases, can banks permit five withdrawals?

In BSBDA, banks are required to provide free of charge minimum four withdrawals, including through ATM and other mode. Beyond four withdrawals, it is left to discretion of the banks to either offer free or charge for additional withdrawal/s. However pricing structure may be put in place by banks on a reasonable, non-discretionary, non-discriminatory and transparent manner.

25. In  terms of RBI circular   if “payable at par” / “multi-city” cheques are issued to BSBDA customers based on their request, can banks prescribe minimum balance requirements?

BSBDA does not envisage cheque book facility in the minimum facilities that should be provided  to BSBDA customers. They are free to extend any additional facility including cheque book facility free of charge (in which case the account remains BSBDA) or charge for the additional facilities (in which case the account is not BSBDA).

26. What is the time frame available to banks for converting “No-Frills” Account as Basic Savings Bank Deposit Account? What is the time frame available to banks for issuing ATM Cards to all the existing Basic Savings Bank Deposit Account holders?

All the existing “No-Frill” accounts may be treated as BSBDA accounts from the date of the circular i.e., August 17, 2012 and banks may offer the prescribed facilities as per the circular such as issuing ATM card etc., to the existing ‘No-Frill’ account holders as and when the customer approaches the bank. However, customers opening new accounts after the issue of our circular should be provided prescribed facilities immediately on opening of the account.

27. Whether the normal saving bank account can be converted into BSBDA at the request of customer?

Yes. Such customers should give their consent in writing and they should be informed of the features and extent of services available in BSBDAs.

Under the Basic Savings Bank Deposit Account (BSBDA) scheme of Reserve Bank of India:

• The Basic Savings Bank Deposit Account should be considered as a normal banking service available to all customers (Any individual, including poor or those from weaker section of the society), through branches.

• BSBDA guidelines are applicable to “all scheduled commercial banks in India, including foreign banks having branches in India”.

• The services available in the account will include deposit and withdrawal of cash at bank branch as well as Free ATMs-cum-Debit Card; receipt/credit of money through electronic payment channels or by means of deposit/collection of cheques drawn by Central/State Government agencies and departments.

• There will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals.

• No charge will be levied for non-operation/activation of in-operative ‘Basic Savings Bank Deposit Account’.

• Holders of ‘Basic Savings Bank Deposit Account’ will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a ‘Basic Savings Bank Deposit Account’.

• One can have Term/Fixed Deposit, Recurring Deposit etc., accounts in the bank where one holds ‘Basic Savings Bank Deposit Account’.

• The ‘Basic Savings Bank Deposit Account’ would be subject to RBI instructions on Know Your Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to time. If such account is opened on the basis of simplified KYC norms, the account would additionally be treated as a ‘Small Account’.

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How many attempts are provided to complete the JAIIB/CAIIB examinations?

Each candidate is required to pass each examination of three papers (JAIIB/CAIIB) within four consecutive attempts. For this purpose each examination of the Institute, after the candidate has paid the fee for the first block is reckoned as an attempt whether or not the candidate appears for the examination. For example if a candidate had applied for the first examination in May/June 2011 the four attempts will come to close by Nov/Dec 2012, whether or not the candidate has appeared for the four attempts. This is important for the purpose of credit transfers in the case of papers in which the candidate has scored the pass marks. The credit for pass in one or more papers in one or more previous examinations/attempts will be considered only within the four attempts/four consecutive examinations. After the end of the second block (after four examinations beginning the application date) the candidate will be treated as a fresh candidate.

In case candidate has completed the three papers in the first block of two attempts (two consecutive examinations) there is no need to pay for the second block. However, in case the candidate is not able to complete the examination in the first two attempts he/she will have to appear for the next two examinations immediately following the first two attempts by paying the examination fee for further two attempts (block 2). In such cases, if the candidate has passed one or more papers in the first two attempts the credit for the same is given in the next two attempts and the candidate need to appear for only the remaining papers. The second block runs immediately after the first two attempts (first block).

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Continuing the above example if a candidate has applied for the June 2011 examination the second block starts in June 2012. If the candidate does not apply for the second block in June 2012 but applies in Dec 2012 the candidate will have only one attempt left in the 2nd Block. If the candidate did not apply/appear for the 2nd block till the end of Dec 2012 the candidate will have to apply fresh for May/June 2013 in which case he/she will not get the benefit of pass if any in the examinations held in 2011 and 2012.
If the candidate, after the 1st Block misses both the subsequent attempts he/she will have to re appear for all the papers as a fresh candidate. In such cases also the credit transfer for any of the papers passed in the previous two attempts is lapsed.
Candidates can carry over the credit of the subjects passed till the fourth attempt. If the candidate discontinues after the first block, or if the candidate does not complete all the papers in the four consecutive examinations the candidate cannot carry forward the credit in respect of the papers where in he/she has scored pass marks.
The fee for the four attempts is collected in blocks of two attempts. Initially they have to pay the examination fee for the first two attempts (block 1).

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