JAIIB question papers on Accounting and Finance previous year question papers

so here is the information of the same for you:

1) The apex institution which handles refinance for agriculture and rural
development is called:

a) RBI
b) SIDBI
c) NABARD
d) SEBI

Ans:- (c)

2) Long Form Audit Report (LFAR) is prepared and submitted by

a) RBI inspectors
b) Internal inspectors
c) Statutory auditors
d) Concurrent auditors

Ans:- (c)

3) As per FIMMDAs guidelines, the Mid-Office is responsible for:

a) Dealing activities
b) Risk Management
c) Reconciliation
d) Confirmation of deals

Ans:- (b)

4) 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

Ans:- (d)

5) 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

Ans:- (d)

6) The regulator for Mutual Funds in India is:

a) FIMMDA
b) AMFI
c) RBI
d) SEBI

Ans:- (d)

7) FIMMDAs general principles and procedures are applicable to:

a) Fixed Income Markets

b) Money Markets
c) Derivatives Markets
d) All of the above

Ans:- (d)

8) Your banks 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

Ans:- (a)

9) The right of set-off is:

a) Customers Right
b) Customers Obligation
c) Bankers Right
d) Bankers Discretion
Ans:- (d)

10) 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

Ans:- (d)

11) Reserve Bank of Indias functions are classified into:

a) Supervisory & Regulatory

b) Promotional & Developmental
c) Refinance Activities
d) All of the above

Ans:- (d)

12) Minimum Bank Rate is:

a) 3%
b) 4%
c) 5%
d) None

Ans:- (d)

13) Sec ---- of RBI Act,1934 gives sole power to RBI to issue currency notes

a) 10
b) 18
c) 22
d) 26

Ans:- (c)

14) 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 customers identity and activities.

Ans:- (d)

15) In a Garnishee Order, the banker on whom garnishee order served is:

a) Judgement Debtors Creditor

b) Judgement Creditors Creditor
c) Judgement Creditors Debtor
d) Judgement Debtors Debtor

Ans:- (d)

1. Choose the wrong pair from the following. The information given in the pair is
pertaining to banking companies

(a) Demand Deposits - Compulsory deposits under excise rules

(b) rebate on bills discounted - unexpired discount

(c) Operating Expenses Schedule 14

(d) Other Income - Profit on sale of investments less loss on sale of investments

2. The name of the accounts with the coverage of various items in building that
account is given below. One of the items covered in on of the accounts is wrong.
Select this account

(a) Closing balance of provisions held towards NPA - Opening Balance plus
provisions made during the year less write off of bad debts/write back of excess
provisions

(b) Interest Earned - interest on advances plus income on investments plus

interest on deposit with RBI plus income earned by way of dividends from
subsidiaries plus discount on bills less unexpired discount

(c) Reserves & surplus - Opening balance plus additions during the year less
deductions during the year

(d) Term deposits - from banks and from Others

3. Identify a pair which is mismatch from the following pairs in respect of Company
Accounts

(a) Miscellaneous Expenditure Preliminary Expenses

(b) Contingent Liabilities footnote to balance sheet

(c) Debentures Unsecured Loans

(d) Outstanding Expenses Current Liabilities

4. Identify a pair which is mismatch from the following pairs in respect of Company
Accounts

(a) Discount on issue of shares Profit and Loss Account

(b) Bill discounted contingent liabilities

(c) Interest accrued and due on debentures Secured Loans

(d) Mortgage Loan Secured Loans

5. Companies are required to transfer certain percentage of their profit after tax to
reserves, to declare dividend. The various rates of transfer based on the rates of
dividend are given below in pair. Select the wrong pair.

(a) Rate of dividend exceeds 10% but not 12.50- Transfer to reserve @ Nil%

(b) Rate of dividend exceeds 12.50% but not 15%- Transfer to reserve @ 5%

(c) Rate of dividend exceeds 15% but not 20%- Transfer to reserve @ 7.50%

(d) Rate of dividend exceeds 20% - Transfer to reserve @ 10%

6. While preparing the final accounts of the company, the adjustments [(i) to (iv)]
are to be made by passing necessary entries. One of the entries passed is wrong
entry. Select the wrong entry.(i) Depreciate plant ,WDV of which is Rs.3,30,000 at
15% (ii) Write off Rs.5,000 from Preliminary Expenses (iii) Half years debenture
interest due (12% debentures of Rs. 3,00,000) (iv) a claim of Rs. 25,000 for
workmens compensation is disputed by the company.

(a) Debit Depreciation on plant by Rs.49,500 credit plant by 49,500 AND Debit
Profit & Loss Account by 49,500 and Credit Depreciation on plant by 49,500
(b) Debit Profit and Loss Account by Rs.5,000 and Credit Preliminary Expenses

(c) Debit Debenture Interest by Rs.18,000 & Outstanding Liability for Deb. Interest
by 18,000 AND Debit Profit and Loss Account by Rs.18,000 and Credit Debenture
Interest by Rs.18000

(d) Debit Wages by Rs.25,000 & Credit Outstanding Liability for Workers
compensation AND Debit Profit and Loss Account by Rs.25,000 and Credit Wages
by Rs.25,000

7. While preparing the final accounts of the company, the adjustments [(i) to (iv)]
are to be made by passing necessary entries. One of the entries passed is wrong
entry. Select the wrong entry.(i) Provide dividend 5% of paid up share capital
(Share capital of Rs. 5,00,000 consisting of shares of Rs. 10 each fully paid) (ii)
Insurance for unexpired period is Rs.2000 (iii) A provision of Rs. 25,000 is to be
made for income tax (iv) a provision of Rs. 5000 is to be made for doubtful debts

(a) Debit Dividend by Rs.25000 & Credit Bank by Rs.25000

(b) Prepaid Insurance by Rs.2000 & Insurance by Rs.2000

(c) Debit Profit & Loss Account by Rs.25,000 & Credit Provision for Tax by
Rs.25,000

(d) Debit Profit & Loss by Rs.5,000 & Credit Provision for doubtful debts by
Rs.5,000

8. In respect of asset side of the balance sheet one of the items is presented in a
proper order, rests are disorderly. Select the orderly presented item from the
following.

(a) Investments, Fixed Assets, Current Assets & Loan Advances, Profit & Loss
Account(Dr. balance), Miscellaneous Expenditure

(b) Fixed Assets, Investments, Current Assets & Loan Advances, Profit & Loss
Account(Dr. balance) , Miscellaneous Expenditure

(c) Fixed Assets, Investments, Current Assets & Loan Advances, Miscellaneous
Expenditure, Profit & Loss Account(Dr. balance)

(d) Fixed Assets, Current Assets & Loan Advances, Profit & Loss Account(Dr.
balance), Miscellaneous Expenditure
9. One of the statements in respect of Profit & Loss Adjustment account is
incorrect, rest are correct. Mark the incorrect sentence.

(a) The account is credited with closing balance of profit and loss account of last
year

(b) The account is credited with current years net profit

(c) The account is debited with provision for taxes

(d) The account is debited with provision for dividend

10. The two portion of each pair relating to partnership accounts has got some
relationship. However one of the pairs is a mismatch and has no relationship.
Select this pair from the following

(a) Management of business - business may be run by one or some or all partner

(b) Treatment of losses - insolvency of a partner

(c) Loan from partners - No interest as partners are owners

(d) Goodwill - super profit method

11. The two portion of each pair relating to admission of a partner has got some
relationship. However one of the pairs is mismatch and has no relationship. Select
this pair from the following

(a) Admission of a partner - gain ratio

(b) Reserves & surplus - Old partners

(c) Goodwill - new partner

(d) Revaluation of assets & liabilities - Profit & Loss adjustment account

12. The two portion of each pair relating to retirement of a partner has got some
relationship. However one of the pair is mismatch and has no relationship. Select
this pair from the following

(a) Retirement - voluntary action

(b) Gain - retiring partner

(c) Share of goodwill - borne by continuing partners

(d) Reserve & surplus - belong to all partners

13. If the partners capital accounts are fixed, where will you record (either debit
side or credit side of which account ) the following transactions (i) Salary payable
to partner (ii) Fresh capital introduced by a partner (iii) Drawing made by a partner
(iv) Share of profit earned by a partner. The effect to one of the journal entries is
wrongly given. Identify that account from the following.

(a) Debit side of partners current account

(b) Credit side of partners capital account

(c) Debit side of partners current account

(d) Credit side of partners current account

14. L,K and P are partners. The following differences as listed at (i) to (iv) have
arisen due to misunderstanding. The answer to each point is given at (a) to (d).
One of the solutions is incorrect. Identify the wrong solution. (i) L used Rs.25,000
belonging to the firm and made a profit of Rs.4,000. K wants the amount to be
given to the firm (ii) P used Rs.10,000 belonging to the firm and suffered a loss of
Rs. 3000. He wants the firm to bear the loss (iii) L & K wishes to appoint S as new
partner. P does not agree (iv) L has given loan of Rs. 50,000 to the firm, he wants
interest at 6% ( there is no partnership deed)

(a) K is right .L must pay Rs.29,000 to the firm

(b) P is right . Firm should bear profit as well as losses.

(c) P is right. No new partner can be admitted without the consent of all.

(d) L is right. He is entitled for interest at 6% in the absence of partnership

agreement.

15. Below are some statements about partnership. One of them is correct, identify
that statement.

(a) Partnership arises from reputation

(b) A partnership is formed only for a legal business

(c) The liability of partners is limited

(d) The business of the firm is conducted by two partners

16. O and P are two partners sharing profits in the ratio of 7:3. They admit Q into
partnership as a partner from 1st April 2006 on 3/7th share in the profit. What is
the new profit sharing ratio

(a) 14: 6 : 15

(b) 7: 3: 3

(c) 2: 2: 3

(d) None of the above

17. A firm earns Rs.10,000 as its normal profits. The rate of normal return being
10%. The assets of the firm amount to Rs.72,000 and liabilities to Rs.24,000. Find
out the value of goodwill.

(a) Rs.52,000

(b) Rs.1,00,000

(c) Rs.28,000

(d) Nil

18. When a new partner gives cash for goodwill, the amount is credited to-----

(a) Goodwill account

(b) Capital account of new partner

(c) Cash account

(d) None of the above

19. If the goodwill account is raised for Rs.50,000, the amount is debited to-----

(a) The capital accounts of partners

(b) Goodwill account

(c) Cash account

(d) None of the above

20. A and B sharing profits and losses in the ratio of 2:1. C is admitted as partner
giving him share. The new profit sharing ratio will be-----

(a) 2:1:1

(b) 4: 4:3

(c) 3: 3: 2

(d) None of the above

21. If the adjustment in the values of assets at the time of the admission of a
partner shows a profit, it should be credited to the capital accounts of-----

(a) The old partners in their new profit-sharing ratio

(b) All partners in their new profit sharing ratio

(c) The old partners in their old profit sharing ratio

(d) None of the above

22. A, B and C are three partner sharing profits in the ratio of 3:1:1. C retires and
his share is purchased by B. the new profit sharing ratio shall be-----

(a) 3:1

(b) 7:3

(c) 3:2

(d) None of the above

23. On the retirement of the partner, the profits on revaluation of assets should be
credited to the accounts of-----

(a) All the partners in their profit sharing ratio

(b) The remaining partners in their new profit sharing ratio

(c) The remaining partners in their old profit sharing ratio

(d) None of the above

24. A, B and C share profits as 3:2:1. C retires. Calculate the gain ratio of A and B

(a) 3:2

(b) 1:1

(c) 2:1

(d) None of the above

25. Choose the incorrect statement in case of dissolution of partnership from the
following statements

(a) On the dissolution of the firm , first creditors like wages outstanding etc. will
have to be paid

(b) Goodwill will be raised in the books when a firm is dissolved

(c) The loan from the spouse of a partner is treated just like a loan from outside
parties

(d) After the books are closed, no account will show any balance.

26. Choose the incorrect statement from the following statement which are
pertaining to company accounts

(a) The company is an artificial person

(b) A member of a company may bind the company by its actions.

(c) The shareholders are not liable for the acts of the company

(d) The premium received on shares may be distributed among shareholders.

27. A new company cannot issue shares-----

(a) at par

(b) at discount

(c) at premium

(d) none of the above

28. A company wishes to pay dividend on shares. State which of the following may
be used for the purpose.

(a) Premium of shares

(b) Profit on re-issue of forfeited shares

(c) General Reserve

(d) None of the above

29. If Rs.10 share has been issued at a premium of Rs.5, on which entire amount
has been called up, has been forfeited for non payment of Rs. 4, the Share Capital
Account will be debited by-----

(a) Rs.15

(b) Rs.10

(c) Rs.4

(d) Rs.6

30. Money received in advance from shareholder before it is actually called up by

the company is -----

(a) Debited to Calls in arrears Account

(b) Debited to Calls in Advance Account

(c) Credited to Calls in Advance Account

(d) Credited to Share Capital Account

31. If a share of Rs.10 issued at a premium of Rs.1 on which Rs.9 ( including

premium) have been called and Rs.7( including premium) paid is forfeited, the
capital account should be debited by-----

(a) Rs.8

(b) Rs.10

(c) Rs.9

(d) Rs.7

32. Dividend are usually paid on

(a) Called up capital

(b) Paid up capital

(c) Authorised capital

(d) None of the above

33. Preliminary Expenses is-----

(a) Fictitious Asset

(b) Current liability

(c) Current asset

(d) None of the above

34. A and B are partners sharing profits in the ratio of 3:2. C is admitted as a
partner. The new profit sharing ratio among A, B and C is 4:3:2. Find out the
sacrificing ratio

(a) 7:3

(b) 4:3

(c) 1:1

(d) None of the above

__________________

Posts: n/a

jaiib caiib exams

JAIIB Principles and Practices of Banking

1. According to you what are the most important functions of

Reserve Bank of India?

Ans:

a. RBI is the Central Bank of the Country

b. Acts as a Note Issuing Authority

c. Acts as a Banker's Bank

d. Acts as Banker to Government

e. Supervise and Control Banks and financial Institute

f. RBI is controlling inflation through Monetary and Credit Policy

g. Regulates transactions in foreign exchange

2. As per the Section 20 and Sec 21 of RBI Act RBI is obliged to

transact banking business and mange the Public Debt of Central
Government Can you elaborate the Role of RBI in the Public Debt
Ans: Public Debt can be by way of long term bonds and or by way of Treasury
Bills

a. At present Treasury Bills are issued for periods of 91 days and 364 days.

b. The Treasury Bills are issued for meeting the Short Term requirements
where as the Long Term Bonds are issued for various periods for meeting long
term investments.

3. What do you know by the Term Ways and Means Advances?

Ans: As per Section 17 (5) of RBI Act, Bank can give the Central and State
Government Advances which are repayable within 3 months. This is thus a
short term finance and bridge the interval between expenditure of the
Government and the flow of revenue planned in the budget.

4. Y.V.Reddy Committee has come out with a new concept of

Monetary Aggregates and also Liquidity Aggregates. What are they?

Ans: M0, M1, M2, M3 are called Monetary Aggregage

and L 1, L2, L3 are called Liquidity Aggregates.

5. What is Broad Money?

Ans: M3 is known as Broad Money.

M1 - is known as Narrow Money and is

M1 = Currency is circulation + Bankers Deposit with RBI + other deposits
with RBI.

M3 =M1 + Certificate of Deposit issued by Banks + Term Deposit (excluding

FCNR (B) with maturity upto one year + Term Deposti excluding FCNR (B) of
more than one year + call borrowing by Banks from Non Depository Financial
Corporate.

6. What is L1, L2, L3 Liquidity Aggregates.

L1 = M3 + all deposits (Excluding NSEs)

L2 = L1 + Term Deposits/Term Borrowing/Certificate pf Deposits Issued by

Term Lending Institution/Refinancing Institute.

L3 = L2 + Public Deposit of NBFCs.

7. What is meant by Open Market Operation of RBI.

Ans: The Buying and Selling of securities or other Assets like Foreign
Exchange Gold by the Central Bank to alter the liquidity of the Banks is known
as open Market Operation. When RBI buys Government Securities from Banks
the liquidity portion of the Banks increases. Alternatively, when the Reserve
Bank sells the securities to be Banks, the banks liquidity position is reduced.

8).What are the Quantitative Credit Control measures exercised by

RBI.

Ans:

a. Bank Rate
b. Reserve Requirement

c. Open Market Operation

d. Interest Rate Policy

9). What is the Qualitative Control measures used by RBI.

Selective Credit Control is used by RBI to regulate cost and quantum of credit
to select sectors.

10. As per Section 45 ( c ) RBI has powers to direct Banks to

submit details of credit extended by them - Elaborate.

Ans:

RBI collects information on all the borrowers enjoying Secured Credit Limit of
Rs.10 lacs and above and unsecured Credit Limit of Rs.5 lacs and above.

RBI also collects the details of all doubts loss of suit filed account with
aggregate outstanding of RS.1 Crores and above and circulate the details to
all Banks.

11. What information is provided through BSR - I Return.

Ans: BSR - I Part ( A ). Branches are required to resort particulars of all

borrowal accounts enjoying credit limit above of Rs.2 lacs.

BSR - I part B, details of limits of RS.2,00,000 and less are to be furnished.

12. What are the components of NDTL.

Ans:

The Time, Savings and Current Depends, Sundry Creditors, Interest Accrual,
Interest Accrued and Payable, Net of Liability to Banking System.

However, the same exclude the inside liability like, claim received from ECGC,
amount received pending final adjustment towards the dues etc.,

13. CRR is to be maintained as per RBI Act ------ Elaborate on this.

Ans:

a. Cash Reserve Ratio as per Sec 42 of RBI Act.

b. As per the latest Monetary Policy CRR is to be maintained @ 6% of NDTL

for Scheduled Commercial Banks

c. The Required Amount under CRR is to be kept with RBI in their Current
Account in the case of Schedulesd Banks

14. What is the mode of maintaining CRR

a. CRR is to be maintained in the form of balance with CA of RBI.

15. What are the major recommendations of Narasimhan Committee.

Ans:

a. Introduction of Prudential Norms viz., Asset Classification, Income

Recognition, Provisioning and Capital Adequacy norms

b. Reduction of SLR to 25% and CRR to a low level.

c. Privatisation of Public Sector Banks. Government Capital to be reduced

to 51% in the first stage and then to 33% in the second stage.

d. Introduction of new legal set up. Set up DRT.

e. Entry for Foreign Banks and also setting up of New Private Sector Banks.

f. Recommended for setting up. Board for Financial Supervision.

16. What are the functions of Board for Financial Supervision

a. Integrated Supervision over Commercial Banks, Financial Institution,

Non Banking Financial Intermediaries. etc.,

b. The Supervision will be both "on site" and "off site Supervision".

c. For Off Site supervision RBI has introduced DSB Returns

17. How many DSB Returns are introduced by RBI and which all areas
they cover.

Ans: There are seven types of DSB Returns. Cover, Details of Assets and
Liability of Banks, Capital Adequacy, NPA Assets, and Quality of Assets,
Position of Unreconciled entries etc., etc.,

18. What are the circumstances where disclosure of customers

account is permitted
Ans: Disclosure can be allowed as per order of court

a. Order of Court

b. As per sec 4S of Bankers Books Evidence Act 1891

c. As per Income Tax ACt 1961 Sec 131 and Sec 133.

d. As per Criminal Procedure Code

e. As per Directions from Police Department, CBI etc.,

f. FEMA and Money Laundering Act

g. As per Companies Act 1956 as per Sec 251

h. As per Sec 45 ( C ) of RBI Act, where credit information has to be

disclosed

i. Disclosure to another bank

j. Disclosure in Public Interest

19. What is the procedure to be followed when Garnishee Order Is

received. Also explain what is Garnishee Order

a. Order from Court called order Nishi.

b. The order Nishi would instruct Bank to recover and Remit balance in the
account of its creditors to court.

c. Branch has to block the Account if it is not encumbered and then report
to RO for further instruction.

d. Branch has to intimate the customer also on the same.

e. Branch has to then advise the details of Balance etc., to court.

f. On receipt of final order from Court which is known as Order Absolute,

branch has to remit the amount to court.

20. What is the Speciality of Income Tax attachment order compared

to Garnishee Order.

Ans:

a. Garnishee order can be applied in the same capacity account

b. Garnishee order does not attach account of Insolvent and Deceased

customers account

c. Only balance in account at the time of receipt attached. Income tax

attachment order on the other hand attaches,

d. Deceased and also insolvent customers

e. Inrespect of Joint account the order attaches 50% of the due

f. Attach the available and also pipe line credits.

21. What are the difference between Mandate and Power of Attorney.

Ans: a. Mandate is a simple letter of authority given by an Account

Holder to another person to operate his account on his behalf. To make, draw
etc., of Bills or Negotiable Instruments.

b. Power of Attorney is a general document used to convey powers for many

other purposes besides the operation in the account.

a. Mandate is given in Plain Paper

b. Power of Attorney is given on a stamp paper

c. Power of Attorney has to be executed in presence of a Notary Public.

d. Power of Attorney can be Registered or Unregistered.

22. What are the salient features of Capital Gains Tax Account 1988.

Ans:

a. For persons, firms and others, who have capital gain and wish to invest
the same in house property etc., within a period of 3 years the mount of gain
can be kept in an account known as Capital Tax Account.

b. The Account can be either SB or Term Deposit.

c. Nomination facility is available.

23. What is a Probate.

"A copy of will certified under the seal of court of competent jurisdiction
confirming that the will has been duly executed and is the valid one".

24. What is the difference between Letter of Administration and

Probate.

Ans: Letter of Administration is issued where the party has not created a
Will.

Probate is the certified approved will and is issued when the party has left a
will.

25. What is the present procedure for settlement of claim of

deceased constituent.

Ans:
1. Where ever Banks hold nominations in respect of deposit account
holders, settlement should be done as per nominations.

2. Where the settlement is sought as per Legal representation the same

can be settled as per Court decisions.

3. In other cases where Bank wish to settle without legal representations,

Bank can call for

a. Death Certificate

b. Consent Letter

c. Affidavit

d. Enquiry forms

e. Legal Heir Certificate

f. Stamped Receipt

g. Indemnity

26. What are the important section of Negotiable Instrument which

has relevance to day to day banking transactions.

Ans:

a. Section 4,5,6 which define Promissory Note, Bill of Exchange and

Cheque.

b. Section 10 which defines payment in due course

c. Section 31. Obligation of a banker to meet customers mandate

d. Section 85, 85 D - Protection to a paying banker paying an order

instrument

e. Section 89 - giving protection to a banker paying instruments with

material alterations which are not apparent.
f. Sec 128, which gives protection to a banker paying a crossed cheque.

g. Sec 131 gives protection to a banker collection a crossed cheque for a

customer.

h. Sec 138 - 142 Dishonour of cheque for want of Funds.

27. What are the new guidelines on the NI Act relating to Sec 138 -
142.

Ans:

a. The Amendment includes, imprisonment for 2 years and penalty twice

amount of cheque.

b. Time for initiating criminal action 30 days from the date of intimation of
dishonour of cheque by the payee.

28. What are the salient features of latest decided cases in respect
of Dishonour of cheques under Section 138 - 142 of NI Act.

Ans:

The section is applicable to return of cheques

a) By repeated presentations at the request of drawer

b) In case of closure of account

29. Which are committees constituted for improving Customer
Services in Banks

a. Talwar Committee

b. Goiporia Committee

c. Tarapore Committee

30. What do you know of COPRA - 1986.

Ans:

1. Consumer Protection Act 1986, provide the Consumer, a simple speedy

and inexpensive way of redressal of grievance in case of any
deficiency/defect in goods and services bought/used by him for a
consideration.

2. There are 3 types of agencies

a. District Level Consumer Disputes redressal forum which can handle

disputes upto Rs.20 lacs.

b. State Consumer Disputes redressal commission which can handle

disputes greater than20 lacs to Rs.100 lacs

c. National Consumer Disputes Redressal Commission which can handle

disputes exceeding RS.1 Crores

d. The complaint has to be lodged within 2 years from the date of cause of
action.

e. No stamp duty is payable

31. What is meant by credit clearing under Electronic Clearing

Service (ECS)

Ans:
a. This clearing service is introduced as per Saraf Committee
Recommendations for handling repetitive or low value transactions like
Interest dividend, pension etc., etc., For example - Dividend by UTI, its US 64
monthly interest on UTI schemes etc.,

32. What is meant by ESC Debit clearing?

Ans:

This is for debit transactions like payment of electricity bills, telephone bills
etc.,

33. What is the importance of electronic funds transfer

Ans:

a. Saraf Committee recommended for the Introduction of EFT.

b. Under EFT, funds can be transferred between branches of a bank and

also between banks (via) electronic media

c. RBI has recently developed a new EFT Special Electronic Funds transfer
for transfer of Large Value Transaction.

34. Elaborate on the back-stop facility declared in the Monetary

Policy 2003-04.

Ans:

a. Back stop interest rate will be at the reverse repo cut off rate at which
funds were injected earlier.

b. Where no reverse repo bid is accepted as per repo auction, the back
stop interest will be 2% points over rep cut off rate of Pre-day under LAF.
c. On days when no bids for repo or reverse repo auctions are
received/accepted the back stop interest rate will be decidd by RBI on an ad-
hoc basis.

35. What is the purpose of the Information Technology Bill 2000

Ans:

a. The Bill provide the legal frame work necessary for electronic
commerce.

b. Facilitate electronic filing of documents with Government agencies and

c. Amend the Indian Penal Code, The Evidence Act, The Banker's Book of
Evidence Act and The Reserve Bank of India Act.

36. What all areas are covered by Information Technology Bill 2000

a. Recognises, Authentication of Electronic records by the use of

Asymmetric Cryptosystem and hash functions.

b. It allows for information to be submitted to Government Department in

electronic form.

c. The Act recognises an electronic record which has been signed with a
digital signature.

d. It lays down the broad authority structure for implementing Public Key
Infrastructure.

37. What is RBS?

Ans:
a. Risk based Supervision, which is developed as per Basle Committee
Recommendations to strengthen the Banking System.

b. What are the three Pillars of Basle II Accord.

Pillar I - Capital Adequacy Requirements

Pillar II - Supervisory Review

Pillar III - Market Discipline

38. What is the quantum of Economic Capital that is stipulated by

RBI.

Ans: 12% of the Regulatory Capital

39. Under Standadised approach what is the risk weight that is to be

allowed for various Asset

Ans:

a. Sovereign Asset 0% to 150%

b. Banks 20% to 150%

c. Others (Corporates) 20% to 150%

depending on the rating of the Asset

40. Under Internal Rating Based approach of rating the risk of

various Assets, what are the types of credit risk considered.
a. Corporates

b. Banks

c. Sovereign

d. Retail

e. Project Finance

f. Equity

41. What is the Fiscal Deficit

Fiscal Deficit = Revenue Deficit + Capital Expenditure -

Disinvestment receipts and loan Recoveries

42. What is meant by Primary Fiscal Deficit

Ans: Gross Fiscal Deficit - Interest Payment

43. What do you know about CDR.

CDR is also known as Corporate Debt Restructuring

1. It is a non statutory voluntary mechanism

2. It is set up by Bank and Financial Institutional under advice to RBI

3. It is to provide timely support to viable entities facing financial problems

4. There is legal binding in this through debtor - creditor aggrements.

44. What are the categories of accounts covered under CDR.

Ans:

a. Accounts covered are those under Multiple Banking

/Syndication/Consortium.

c. Accounts with outstandings of Rs.10 Crores and above to Banks and

Financial Institutions.

d. The outstanding exposure may be fund based and non fund based

e. Provides Restructuring to Standard and Substandard category and also

for Doubtful category accounts including suitfiled and BIFR accounts

f. Wilful defaulters not covered

g. Atleast 75% of the lenders by value should agree for CDR package

45. What are the structural Tiers of CDR

a. CDR Standing Forum

This consist of CMD of IDBI, Chairman of SBI, ICICI Bank IBA and CMD's of all
participating Banks/Financial Institutions

46. What are the most important categories of risks for Bankers

Ans:
1. Credit Risk

2. Market Risk

3. Operational Risk

47. What are the important factors of Credit Risk

Ans:

Credit Risk is a combination of Portfolio Risk + Transaction Risk

48. What is Migration Risk ( a form of Credit Risk)

Ans:

The Risk associated with Migration of an Asset from Standard to Substandard.

49. What are the tools available for Mitigating Credit Risk

Ans:

a. Prudential Exposure Norms viz., Single Borrower exposure @ 15% etc.,

b. Delegation of Power

c. Multilayer Sanction

d. Portfolio Selection

e. Sector Allocation of Credit

50. What are the major market Risk for a banker

Ans:

a. Liquidity Risk

b. Interest Rate Risk

c. Exchange Rate Risk

51. What are the hedging tools that are available for hedging
Interest Rate Risk

Ans:

a. Forward Rate Agreement

b. Interest Rate Swap

52. What are the hedging tools that are available for hedging
exchange rate

Ans:

a. Swaps

b. Option

c. Forward Rate Contract

d. Futures

53. What is the Periodicity of Inspection of "A" rated Branch

Ans:

a. 18 months duration is allowed. For B Rated or C Rated Branches it will

be 12 months.

54. What is the Prudential exposure limit for a single borrower and
group borrower.

Ans:

a. Single Borrower 15%

b. Group Borrower 40%

c. Single Borrower Infrastructure 20%

d. Group Infrastructure 50%

of the Tier I and Tier II Capital of the Bank.

55. What is the cut off limit for conducting Stock Audit

Ans:

a) For NPA accounts with outstanding of Rs 5 crores and above once in a

year in Dec.

b) For new borrowal accounts of funds based working capital for 5 crores to
10 crores once in a year in Dec .

c) For new borrowal accounts with working capital facilities of rs 10 crores

and above two times a year in June and December .

d) For existing borrowal accounts enjoing facilities of Rs 5 crores and

above for a period exeeding Two yearsonce in a year in Dec

56. What is the credit limit for SSI units which no collateral security
should be insisted

Ans:

For facilities under SSI upto Rs.5 lacs no Security to be insisted.

For advances for SSI upto Rs.25 lacs. We need not insisted provided the party
has got a good track record.

Advance to MSE sector up to Rs1.00 Crore covered under CGTMSE

List out few credit derivatives

Ans:

a. Credit Default Swap

b. Credit Default Linked Notes

c. Credit Forward Contract

d. Credit Default Option

57. What do you know by Corporate Governance

Ans:

These are meant for

a. Ensuring compliance with regulatory requirement and also for becoming

responsive to the expectation of stake holders.

b. Transparency of the system

c. Audit and control of transaction in the organisation

58. Into how many Liquidity buckets Assets and Liability

are classified

Ans: Into 8 liquidity buckets with additional grouping of the first bucket into
1 day bucket, 2-7 days bucket and 8- 14 days bucket.

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Re: JAIIB exam previous year question papers free download

As you want to get the JAIIB exam previous year question papers so here is the
information of the same for you:

1) Reserve Bank of Indias functions are classified into:

a) Supervisory & Regulatory

b) Promotional & Developmental
c) Refinance Activities
d) All of the above

Ans:- (d)

2) Minimum Bank Rate is:

a) 3%
b) 4%
c) 5%
d) None
Ans:- (d)

3) Sec ---- of RBI Act,1934 gives sole power to RBI to issue currency notes

a) 10
b) 18
c) 22
d) 26

Ans:- ( 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 customers identity and activities.

Ans:- (d)

5) In a Garnishee Order, the banker on whom garnishee order served is:

a) Judgement Debtors Creditor
b) Judgement Creditors Creditor
c) Judgement Creditors Debtor
d) Judgement Debtors Debtor

Ans:- (d)

6) Sec 131 of NI Act,1881 extends protection to the

a) Paying Banker
b) Collecting Banker
c) Advising Banker
d) Issuing Banker

Ans:- (b)

7) Hypothecation is applicable in the case of

a) Movable goods
b) Immovable property
c) Book debts
d) Corporate guarantee

Ans:- (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

Ans:- (d)

9) Charge created on LIC Policy is:

a) Hypothecation
b) Pledge
c) Assignment
d) Mortgage

Ans:- ( 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

Ans:- (d)

11) Which one of the following is not barred by law of limitation?

a) Pledge
b) Hypothecation
c) Bankers lien
d) Guarantee

Ans:- ( 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

Ans:- (d)

13) Banks 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

Ans:- (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

Ans:- ( 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

Ans:- (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

Ans:- ( 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

Ans:- (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

Ans:- (b)

19) Tele banking service is based on

a) Virtual Banking
b) Online Banking
c) Voice processing
d) Core Banking

Ans:- ( 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

Ans:- (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%

Ans:- ( 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

Ans:- (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

Ans:- (b)

25) In banks 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

Ans:- (d)

26) The apex institution which handles refinance for agriculture and rural
development is called:

a) RBI
b) SIDBI
c) NABARD
d) SEBI

Ans:- ( c )

27) Long Form Audit Report (LFAR) is prepared and submitted by

a) RBI inspectors
b) Internal inspectors
c) Statutory auditors
d) Concurrent auditors

Ans:- ( c )

28) As per FIMMDAs guidelines, the Mid-Office is responsible for:

a) Dealing activities
b) Risk Management
c) Reconciliation
d) Confirmation of deals

Ans:- (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

Ans:- (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

Ans:- (d)

31) The regulator for Mutual Funds in India is:

a) FIMMDA
b) AMFI
c) RBI
d) SEBI

Ans:- (d)

32) FIMMDAs general principles and procedures are applicable to:

a) Fixed Income Markets
b) Money Markets
c) Derivatives Markets
d) All of the above

Ans:- (d)

33) Your banks 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

Ans:- (a)

34) The right of set-off is:

a) Customers Right
b) Customers Obligation
c) Bankers Right
d) Bankers Discretion
Ans:- (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

Ans:- (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)

Ans:- ( 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%

Ans:- (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

Ans:- (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
Ans:- (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

Ans:- (b)

41) The Capital Adequacy Ratio is :

a) 6%
b) 8%
c) 9%
d) 10%

Ans:- ( 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

Ans:- (d)

43) FIMMDAs guidelines cover the following products, except one:

a) Call Money
b) Cross Currency Interest Rate swaps
c) Commercial Paper
d) Certificate of Deposit

Ans:- (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

Ans:- (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

Ans:- (d)