Multiple Choice Model Questions: 90

1. Which of the following statements are correct?

(a) The term “Banking” has been defined under Banking
Regulation Act
(b) Scheduled Banks are those banks which has been listed in 2nd
scheduled of RBI Act 1934
(c) The banks where Government shareholding is 51% or more are
called Public Sector Banks
(d) Banks which have been incorporated in India and have opened
its branches outside India are called Foreign Bank.
(a)(i), (ii) and (iv)
(b)(i), (ii) and (iii)
(c) (ii), (iii) and (iv)
(d)(i) and (iii)
2. Which of the following statements is not correct?
(a) A bank is a financial institution which does not act as an
intermediary between savers and users of funds
(b) Banking is defined as accepting of deposits for the purpose of
lending or investments
(c) As per Section 7 of Banking Regulation Act-1949 every
company carrying on the business of banking in India to use as
part of its name at least one of the words-bank, banking,
Banking Company
a) Statement (i) and (iii)
b) Statement (i), (ii) and (iii)
c) Statement (i)
d) Statement (ii) and (iii)
3. Which of the following statement is true with respect of Small
Finance Bans?
(i) These banks can accept Demand Deposits and Term Deposit both
(ii) 75% of their loans should be to Priority sector only
(iii) At least 50 % of their loans must be below 25 lakhs per borrower
(iv) These banks have to serve local areas to meet credit and
remittance needs of small businesses, unorganized sector, low-
income households, farmers and migrant labors etc.
a) (i), (ii) (iii)
b) (ii) and (iii)
c) (i) and (iii)
d) All are true
4. Which of the following statements are not true about Fixed
Deposit Receipts?
(i) The minimum period for which a FDR can be issued is 15 days
(ii) FDR can be transferred to Third Party
(iii) In case of exigencies, the Payment of FDR can be taken before
maturity
(iv) No loan can be granted against FDR in case of need
(a) (i) , (ii), (iii),(iv)
(b) (i) , (iii), (iv)
(c) (i), (ii), (iv)
(d) (ii), (iii), (iv)
5. Which of the following statements are correct about protection to
collecting banker under Section 131 of NI Act 1881?
(i) Cheque should not be crossed
(ii) Cheque should be collected for customer only
(iii) Payment must be received in good faith and without negligence
(iv) Cheque should be crossed
(a)(i) and (ii)
(b)(ii), (iii) & (IV)
(c) (i), (ii), (iii)
(d)(ii) only
6. Which is true about Drawing Power in case of Cash Credit / Overdraft
limit?
(a) Drawing power can be more than the limit sanctioned
(b) Drawing power can be less than OR equal to the limit
sanctioned (iii)Limit can be sanctioned for a period of more
than 12 months also
(a)(i), (ii), (iii)
(b)(ii) and (iii)
(c) Only (ii)
(d)(i) and (iii)

7. Collection timing should be synchronized to:

(a) Cash flow pattern of the debtors
(b) At bank convenience
(c) Nearly yearly closing
(d) None of the above
8. Which of the following statements are not true about Banking
Ombudsman?
(i) The nature of complaints should be related to deficiency in Banking
services
(ii) The complaints are generally settled through conciliation and
mediation between the bank and the complainant.
(iii) The complaint can be filed by the customer himself and through
his representative who can be an Advocate also.
a. (i), (ii), (iii)
b. (ii) and (iii)
c. (iii)
d. (i) And (iii)

9. Which of the following is/are Loan documents?

(a) Demand Promissory Note.
(b) Loan Agreement
(c) Forms
(d) Any one or all the above.

[Link] case of Home loan bank is charging floating rate of interest, which
means?
(a) Interest is charged at a fixed rate during the entire period of
loan
(b) Interest is charged at a flat rate
(c) Interest charged is changing with the market situation and
reset in the loan account periodically as per sanction term.
(d) None of the above.
[Link] per model policy on collection of dues, borrowers request to
avoid calls- at a particular time and place would be:
a) Rejected outright
b) Rejected politely
c) Ignored and not responded
d) Honoured as far as possible

12. A loan or advance of a bank is defined Doubtful when it has

remained in Sub-Standard category for a period of at least:
(a) 6 months
(b) 12 months
(c) 3 months
(d) 18 months

13. Persuasive skill is built-on

a) Communication skill
b) Listening skill
c) Inter-personal Skill
d) Negotiation skill

14. What is the process of educating the borrowers about how to

avoid incurring debts that cannot be repaid as also how to manage the
debt burden and repayment commitments in respect of a number of
debts?
a) Credit counseling
b) Communication Process
c) Recovery Process
d) None of the above

15. Which of the following are disadvantages of Debt Collecting /

recovery agency?
a) Debt Collection Agencies cost money
b) These can be harmful for the bank if they do not deal with
customers in a courteous manner
c) Both of the above
d) None of the above
16. The generic duties of an Agent contained in the relevant (Indian
Contract) act, include: -
a) Duty to follow instructions
b) Duty to follow trade customs
c) Duty to exercise care and skill
d) All of the above

17. Recovery agent’s threat for legal action and arrest of customer is:
(a) Permissible in India and also USA
(b) Prohibited in India and also USA
(c) Prohibited. in USA, but permissible in India
(d) Permissible in India, USA and UK

18. The debt recovery agent is legally entitled to collect specified

receivables from the debtors on behalf of the principal, in terms of:
(a) Loan agreement between the debtor and the creditor.
(b) Authorization letter by the creditor to the Agent.
(c) Both (a) and (b)
(d) None of the above.

19. Before making a telephone call to a customer, a recovery agent

should ensure that:
(a) He/she has been authorized by the Bank to collect the due debt
from the Customer
(b) The Customer has been notified by the Bank of the details
(name, telephone number etc.) of the Recovery Agent for collection of
the due debt
(c) Both the above requirements are followed
(d) None of the above is necessary

20. In a home loan recovery case, the particulars of property

(security) mortgaged for the loan can be found from
a. Loan Agreement between Bank and Customer
b. Loan application
c. Both of above
d. None of above
21. The generic provision of rights and duties of the agents are contained
in?
a. Indian Contract Act
b. [Link]-1881
c. RBI Act 1934
d. Banking Regulation Act 1949

22. Use of abusive language in recovery process by recovery agents is

(a) Permissible in India and also USA
(b) Prohibited in India and also USA
(c) Prohibited. in USA, but permissible in India
(d) Permissible in India, USA and UK

23. Those who ‘can pay’ but ‘will not pay’ are called as:
a. Normal debtors
b. Doubtful Debtors
c. Difficult Debtors
d. None of the above

24. Loans and advances of bank appear in their balance sheet on the
side of:
a. Liability
b. Asset
c. Income
d. Expenditure
25. The term “Debtor” means:
a. A person who owes some debt
b. A person to whom some debt is owed
c. Lender
d. None of the above

26. Use of abusive language in recovery process by recovery agents is

(a) Permissible in India and also USA
(b)Prohibited in India and also USA
©Prohibited. in USA, but permissible in India
(d)Permissible in India, USA and UK
27. The laws and regulations which govern Debt Recovery of the
Bank's dues apply to:

a. Bank Employee only

b. Bank Recovery Agents Only
c. Bank employees and their Recovery Agents both
d. None of the above
28. When a bank grants overdraft to a customer what type of
relationship is created between customer and the bank?
a. Debtor and Creditor
b. Creditor and Debtor
c. Bailor and bailee
d. Trustee and beneficiary
29. Every communication is a
a. One side traffic
b. Two way traffic
c. Three way traffic
d. None of the above

30. Member Cards are --------------

a. Mostly used by members of a club
b. Also used by member of a chain of hotels
c. Both of the above
d. None of the above

31. Afarmer is given a loan the repayment of which has been fixed for 5
to 10 years against the mortgage of land, the nature of facility / loan
given will be
a. Land Development
b. Crop Loan
c. Minor Irrigation
d. Agriculture Term Loan
32. The ownership of an auto taken by a borrower under a hire-
purchase agreement lies with:
(a) the borrower right from day one of the loan.
(b) the finance company till last installment is paid.
(c) the borrower after the first installment is paid.
(d) Both (b) and (c) above.
33.

33. “Communication plus” skill is also called as

(a)Persuasive skill
(b) Listening skill
(c) Inter-personal skill
(d) Negotiation skill

34. Full form of CIBIL is:

(a) Credit Investigation Bureau India Ltd
(b) Credit Information Bureau India Ltd
(c) Central Investigation Bureau India Ltd
(d) None of the above
35. Prakash is a LIC Agent. Post office has received a parcel for
Prakash and advises Prakash to come and collect the Parcel.
Prakash requests his friend Arvind, a teacher, to visit the post office
by auto and to collect the parcel on his behalf. Arvind agrees to the
proposal. In the above arrangement between Prakash and Arvind,
for collecting parcel from post office, Prakash is:
a. The Agent
b. The principal
c. Courier
d. None of the above

36. While collecting a cheque / bill etc. for a Customer, the Bank acts as
a:
a. Principal of Customer
b. Agent of customer
c. Both of above
d. None of above
37. What refers to communication plus skill that enhances the
relationship and understanding between two or more persons and
thus includes communication and listening skills plus ‘something
more?’
a. Persuasive skill
b. Listening skill
c. Inter-personal skill
d. Negotiation skill
38. Loan against minor's term deposit:
(a) can be granted if the documents are signed if
the minor has completed the age of 14 years
(b) cannot be granted under any circumstances as the minor
does not have the contractual capacity
(c) Can be granted to the guardian of the minor, if it is
for the necessities of the minor
(d) Can be granted only with the permission of the Court

39. Specimen signatures of the customer are obtained on the account

opening form for:
a. Customer identification for opening the account
b. Customer recognitions at the time of payment of cheque /
voucher
c. None of the above
d. Both of the above
40. Banks provide banking services to poor people at affordable
cost. This is known as:
a. Narrow Banking
b. Para Banking
c. Financial Inclusion
d. Universal Banking

41. In which of the following cases multiple nominations are allowed?

a. Deposit accounts operated jointly
b. Locker operated singly
c. Locker operated jointly
d. Deposit of HUF accounts
e. Nowhere obtained
42. Which of the following is a part of liability for banks?
a. Fixed Asset
b. Deposit
c. Advances
d. None of the above

43. The scale of finance for crop loan is decided by?

a. BLBC
b. DCC
c. DLTC (District Level Technical Committee)
d. DLBC
44. Which of the following is not coming under NPA category?
a. Sub standard
b. Doubtful
c. SMA (Special Mention Account)
d. Loss

45. The features of a small account are: (i) The aggregate of all credits in
a financial year does not exceed rupees one lakh (ii) The aggregate
of all withdrawals and transfers in a month does not exceed rupees
ten thousand
(iii) Maximum 4 withdrawals are permitted in a month (iv) The balance
at any point of time does not exceed rupees fifty thousand
a) All correct
b) Only (i), (ii) and (iii) are correct
c) Only (i), (ii) and (iv) are correct
d) Only (ii), (iii) and (iv) are correct
46. Periodical up-dation of KYC shall be carried out at least
once in every years in respect of High-Risk customers.
a. 2
b. 5
c. 8
d. 10
47. Which of the following is correct about illiterate customers?
a. ATM card can be issued
b. Cheque book can be issued for making cash payment
c. He /she can’t nominate
d. None of the above
48. Specimen signatures are obtained on account opening form by
bank at the time of opening of account:
a. It is taken in lieu of officially valid documents as prescribed under
KYC
b. The customer is recognized mainly by his signatures on the
cheques
/ vouchers
c. Both of the above
d. None of the above
49. One of my friends has got an arrear of Rs. 100000/- on account of
wage revision. He does not need this money for at least 6 months.
He went to bank and requested the concerned clerk to suggest the
type of account where he can invest the money and earn maximum
interest thereon. Which of the following is a proper account to meet
his requirement?
a. Savings Bank
b. Fixed Deposit
c. Recurring Deposit
d. Current Account
50. Ram who has Fixed Deposit of Rs.100000/- in the bank whose
maturity period is not over. He is in need of funds to meet some
urgent requirement. Which of the following statements is not true in
this case?
a. The payment of FDR can be made before due date at bank’s
discretion for urgent needs.
The rate of interest payable in case of premature payment will
a. be 1% to 2% less than the rate applicable to the period for
which the deposit remains with the bank
b. In urgent need of customer, Bank may grant overdraft /
Demand loan against the security of FDR, the interest in this
case will be 1% to 2% higher than the interest rate offered
c. All the above statements are true
51. In the above situation, after 3 months my friend is in urgent need of
money to meet the hospital expenses for the ailment of his mother.
He is immediately needed of funds. He requests bank for loan
against that FDR to be repayable in easy instalments. What type of
loan he will be given?
a. Overdraft
b. Demand Loan
c. Cash Credit
d. Term Loan
52. Ram who has a FDR of Rs. 100000/- in the bank is in need of
Rs.80000/- for use in case of need and requests for a loan of
Rs.80000/- against the security of his above FDR. What type of
facility he will be given?
a. Overdraft
b. Demand Loan
c. Cash Credit
d. Term Loan
53. What is the maximum insurance coverage for deposit under DICGC
scheme per person per bank?
a) 10000
b) 100000
c) 500000
d) 1000000

54. The arrangement on stamp paper given by a customer to his

bank, authorizing his agent named therein to operate the
account is called:
a. Mandate
b. Power of Attorney
c. Letter
d. None of above

55. The Bank should obtain photographs of depositors in respect of

accounts opened by them for:
a. savings bank accounts only
b. Current Accounts only
 c. Fixed Deposit /Recurring Deposit Accounts only
d. All types of accounts

56. The maximum amount of loan of Rs. can be given under

PMMY scheme:
a. One Lakh
b. Five Lakh
c. Ten Lakh
d. None of the above
57. What type of relationship is created between bank and customer in
respect of goods left negligently in banks by the customer:
a. Debtor and Creditor
b. Bailer and Bailee
c. Trustee and beneficiary
d. None of the above

58. In case of Agriculture borrowers, the collection time should be

synchronized with:
a. Growing of crops
b. Harvesting of crops
c. Soon after crops are sold
d. After the cash inflows are spent away

59. Recovery from salaried employees should be timed:

a. When salary is received by the employee
b. After the cash inflows are spent away
c. Any day of the month
d. None of the above

60. In case of SME borrowers, the efforts for recovery should coincide
with:
a. Cash flow on account of sales
b. Start of production by the unit
c. Work in progress in the unit
d. None of the above
61. Collection process should be compliant to:
a. Bank specific recovery norms
b. Regulatory guidelines
c. Both of the above
d. None of the above
62. Those who can pay the reduced amount as negotiated with them are
known as:
a. Normal Debtors
b. Difficult Debtors
c. Doubtful Debtors
d. Willful debtors

63. Who can pay but will not pay are called as :
a. Normal Debtors
b. Difficult Debtors
c. Doubtful Debtors
d. None of the above
64. Who can pay and will pay if reminded or persuaded to pay are known
as:
a. Normal Debtors
b. Difficult Debtors
c. Doubtful Debtors
d. None of the above
65. Which of the following is not a common point to be followed in all
kind of recovery strategies?
a. Recovery effort should start with the establishing of good
rapport with the debtor.
b. Communication, listening and persuasive skills are applied in
building good interpersonal relations.
c. The DRA should not go through the copy of loan agreement
provided by the bank and should not note down the financial
position, cash flow pattern and asset charged to the bank
d. All the statement are true

66. Copy of loan agreement and other papers like KYC of the debtor
furnished by the bank is helpful to DRA to know:
 a. The Financial position of the debtor
b. Cash flow pattern
c. Assets charged to the bank
d. All of the above
67. Which of the following documents furnished by bank, the DRA
should carry with him during recovery process?
a. Letter of authority issued to Recovery Agent
b. Copy of loan agreement executed by borrower
c. Both of the above
d. None of the above
68. Record in notebook the recovery efforts in chronological order
for each debtor,helps DRA as:
a. An evidence in court in cases where a suit has been filed later
b. In sending periodic reports to the Principal
c. Both of the above
d. None of the above

69. The process of educating the borrowers about how to avoid incurring
debts that can’t be repaid as also how to manage the debt burden in
respect of a number of debts is known as:
a. Communication
b. Listening
c. Credit counselling
d. Persuasion
70. Telephone collection calls are a great opportunity to remind the
customer / debtor of the need to pay in time, if these are:
a. Handled badly
b. Handled effectively
c. Both of above
d. None of the above

71. Having positive attitude during calling customers and reminding

them of their unpaid bills is:
a. Helpful in getting satisfactory results
b. Not at all helpful
c. May irritate the customer
d. None of the above
72. The funds required to meet day to day expenses or requirement
of the business are known as:
a. Loan
b. Working Capital
c. Both of above
d. None of above

73. Loan for purchase of a Car or for construction of House is classified as:
a. Fund based
b. Non-fund based
c. Both of the above
d. None of the above
74. Credit facilities which involve outflow of funds meaning thereby the
money of the banker is lent to customer is known as:
a. Fund based
b. Non-fund based
c. Both of the above
d. None of the above
75. Working capital finance is given in the form of:
a. Term Loan
b. Cash Credit
c. Over draft
d. Both (b) & (c) above
76. Under which type of loan / finance, a limit is specified by bank?
a. Cash Credit
b. Term Loan
c. Demand Loan
d. None of the above

77. For purchase of Plant and Machinery for manufacturing unit will
be given under: -
a. Cash Credit
b. Term Loan
c. Overdraft
d. None of the above
78. The advances sanctioned under Cash Credit system are repayable:
a. On Demand
b. In instalments
c. Within the time period fixed
d. None of the above
79. Under which type of loan / finance, a limit is specified by bank?
a. Cash Credit
b. Overdraft
c. Term Loan
d. Both (a) and (b) above
80. Which of the following statements is not correct with regard to Term
Loan?
a. Credit is given for a definite purpose
b. Credit is given for a predetermined period
c. These Loans are repayable on demand
d. Funds are required for single non-repetitive transactions

81. Term Loans are utilized for .............. ?

a. For establishing, expanding or modernizing of
enterprise by acquisition of fixed assets
b. For purchase of current assets such as stocks, crop cultivation
c. For meeting day to day requirement of the unit
d. None of the above

82. Which of the following statements is not correct?

a. Term loans are secured by mortgage of Immovable property
b. Term loans are secured by Hypothecation of Plant and
Machinery
c. Term Loans are secured by Hypothecation of Stocks
d. None of the above

83. Which are the two types of communication?

a. Verbal Communication
b. Written communication
c. Non-verbal communication
d. Both (a) and (c) above
84. A post-dated cheque is:
a. The payment date is yet to come
 b. The payment date has already come
c. Stale cheque
d. None of the above.

85. All written and verbal communication with the borrowers should be:
a. In English only
b. In Hindi only
c. In simple business language understood by the customer
d. None of the above
86. Personal visits to the borrower at inappropriate
occasion such as--bereavement in the family or such
other calamitous occasions:
a. Is very helpful in recovery
b. Should be avoided
c. Should not be avoided
d. None of the above
87. Which of the following is a Non-fund based loan?
(a) Term loan for the purchase of car
(b) Cash credit loan for working capital
(c) Bank Guarantee
(d) None of the above
88. In case of Home loan sometimes bank allows lower instalment at the
initial stage and higher instalment at the later stage, which is known as?
(a) Flexible repayment.
(b) Step-up repayment
(c) Step-down repayment
(d) None of the above.
89. What is the standard size of Plastic Card, either Debit or Credit card?
(a) Size is 8.00 cm X 5.00 cm
(b) Size is 8.5 cm X 5 cm
(c) Size is 8.5 cm X 5.5 cm
(d) None of the above
90. In case of Standard Asset, if the principal and or instalment is overdue
for a period of 31 days to 60 days, the account is termed as
(a) Sub-standard asset
(b) SMA-0: ( 1-30)
© SMA-1 :(31-60)
(d). SMA-2 :(61-90