Banking Law and Practice MCQ Questions and Answers pdf

Banking Law and Practice MCQ Questions and Answers pdf

Are you looking for Banking Law and Practice MCQ Questions and Answers pdf? If so, this article is here to help. Banking Law and Practice MCQ Questions and Answers pdf can be used to supplement study materials and provide a review of key topics in the field.

This resource can also be used as a tool for preparing for exams or assessments that are related to banking law and practice.

Banking Related Laws

What is Banking Related Laws?

Banking related laws are a set of rules and regulations that govern the operations of banks and financial institutions. These laws aim to ensure that financial institutions operate in a fair, transparent, and responsible manner.

The purpose of these laws is to protect consumers from fraudulent or unethical practices by financial institutions.

One of the most important banking related laws is the Banking Regulation Act which was enacted in 1949. This law provides for the regulation and supervision of banks in India.

It also outlines the powers and functions of various regulatory bodies such as RBI, SEBI, IRDA etc. Another key law is The Negotiable Instruments Act which governs all negotiable instruments including cheques, promissory notes etc.

This act provides legal protection to individuals who use these instruments for transactions.

The introduction of banking related laws has played a vital role in protecting consumer interests while promoting economic growth at the same time.

What is Banking Law and Practice

Banking law and practice refer to the legal framework that governs banking activities. It covers a wide range of topics such as regulations, compliance, and risk management. The primary objective of banking law is to ensure the safety and soundness of the financial system while protecting the interests of customers.

In most countries, banking law is governed by a central authority such as a central bank or regulatory agency. These institutions are responsible for enforcing regulations related to capital adequacy, liquidity requirements, consumer protection, and anti-money laundering measures. Banking practices also include various procedures carried out by banks in providing services such as loans and deposits.

Banking practices are constantly evolving due to changes in technology and market conditions. With advancements in digital technology, online banking has become increasingly popular over traditional brick-and-mortar banking.

50 Banking Related Laws With Answer

1. Reserve Bank of India Act is enacted in the year ___
A. 1949
B. 1935
C. 1934
D. 1956
Ans. c

2. The maximum period for which a term deposit can be accepted is ___.
A. two years
B. ten years
C. five years
D. seven years
Ans. c

3. ___ takes place when the instrument is delivered to the agent, clerk or servant of the endorsee on his behalf or when the endorser, after endorsement, holds the instrument as an agent of the endorsee
A. Constructive delivery
B. Actual delivery
C. Special delivery
D. Transfer by agreement
Ans. a

4. The word indemnity means ___
A. avoid risk
B. protection of consumers
C. to save from loss
D. secure investment
Ans. c

5. FERA stands for ___ was found to insufficient to handle external trade and payment in an orderly manner. FERA was replaced to FEMA Act, on ___
A. Foreign Exchange Right Act, 1979
B. Foreign Exchange Regulation Act, 1999
C. Foreign Exchange Recover Act, 1998
D. Foreign Exchange Reserve Act, 1969
Ans. b

6. The mortgagor binds himself to repay the mortgage-money on a certain date, and transfers the mortgage property absolutely to the mortgagee is ___
A. English mortgage
B. Simple mortgage
C. Mortgage by conditional sale
D. Usufructuary mortgage
Ans. a

7. The Zonal offices are headed by ___
A. Chairperson
B. Deputy Directors
C. CEO
D. Arbitrator
Ans. b

8. In ___, the banker does not get the right to retain any assets of the borrower
A. Particular lien
B. Negative lien
C. General lien
D. Banker’s lien
Ans. b

9. The securitisation or reconstruction company whose registration is cancelled can prefer an appeal within ___ from the date of communication of the orders to the Central Government.
A. thirty days
B. ninety days
C. forty-five days
D. sixty days
Ans. a

10. The person occupying the office of the Appellate Tribunal is called as the ___.
A. President
B. Arbitrator
C. Recovery Officer
D. Chairperson
Ans. d

11. In a ___ the bank guarantees payment of installments spread over a period of time.
A. deferred payment guarantee
B. Performance guarantee
C. Financial guarantee
D. Statutory guarantee
Ans. a

12. The District Council shall meet as and when necessary but at least ___ meetings every year
A. two
B. one
C. three
D. four
Ans. a

13. Principle of Co-operative is ___
A. self-help as well as mutual help
B. Reduce risk
C. raise capital from external sources
D. interaction with local customers
Ans. a

14. Capital of RBI is owned by ___
A. Government of India
B. Jointly by Government of India and State Governments
C. GOI and World Bank jointly
D. World Bank
Ans. a

15. Co-operative banks are prohibited from holding ___, except such as is required for its own use
A. immovable property
B. movable property
C. current assets
D. marketable securities
Ans. a

16. Securities and Exchange Board of India Act is enacted in the year___
A. 1895
B. 1995
C. 1992
D. 1898
Ans. c

17. The concept of ___ has replaced the bank prime lending rate (BPLR) system with effect from July 1, 2010.
A. Specified Rate
B. Base Rate
C. Usurious rate
D. CRR
Ans. b

18. An endorser of a negotiable instrument may, by express words in the endorsement, exclude his own liability thereon. It is refers to ___
A. Facultative endorsement
B. Endorsement in blank
C. Conditional endorsement
D. Endorsement sans recourse
Ans. d

19. Banks in order to protect its interest in cases of invocation of guarantee should obtain ___executed by the customer in favour of the bank.
A. statutory guarantee
B. amount guarantee
C. counter guarantee
D. period guarantee
Ans. c

20. According to Sec 107 of the Transfer of Property Act 1882, a lease of immovable property from year to year or for a term exceeding ___or reserving a year rent can be made only by a registered document.
A. one year
B. Two years
C. 6 Months
D. Three Years
Ans. a

21. If the donee dies before acceptance, the gift is ___.
A. valid
B. voidable
C. void
D. transferrable
Ans. c

22. If any person fails to make full payment of the penalty imposed on him by the adjudicating authority within a period of ___from the date on which the notice for payment of such penalty is served on him, he shall be liable to civil imprisonment.
A. thirty days
B. 120 days
C. sixty days
D. ninety days
Ans. d

23. Section 59 to 61 of the ___ Act contains provisions regarding the right of appropriation of payments in such cases
A. Indian Contract
B. DRT
C. Banking Regulation
D. Companies Act
Ans. a

24. When the secured creditor is required to take possession or control of the secured asset, they can take help of the ___
A. RBI
B. District Magistrate
C. Ombudsman
D. State Government
Ans. b

25. The enforcement directorate has its headquarters at New Delhi with ___ Zonal offices across the country.
A. Seven
B. Six
C. Five
D. Four
Ans. a

26. 1. The Banker’s Book of Evidence Act, ___ was enacted to provide legal sanctity and evidentiary value to the extracts and copies produced by banks.
a) 1891
b) 1881
c) 1871
d) 1836
Ans. a

27. Any company as defined in section 3 of the Companies Act, ___ and includes a foreign company within the meaning of section 591 of that Act.
a) 1965
b) 1956
c) 1995
d) 1986
Ans. b

28. The term banking is defined under ___.
(a) RBI Act,
(b) BR Act,
(c) Companies Act
(d) SEBI
Ans. b

29. RBI Governor is appointed by ___.
(a) Banks and FIs,
(b) Chief Justice of India,
(c) Central Government
(d) President
Ans. c

30. Repayment of term deposit above ___ cannot be done in cash.
A. Rs. 30000/-
B. Rs. 15000/-
C. Rs. 10000/-
D. Rs. 20000/-
Ans. d

31. Government’s powers to issue directions to RBI are found in ___
A. DRT Act
B. Companies Act
C. BR Act
D. RBI Act
Ans. c

32. ___ does not include in Public sector banks in India
A. IDBI Bank
B. Syndicate Bank
C. ICICI Bank
D. Canara Bank
Ans. c

33. An ___, is empowered to sign on behalf of a principal
A. non-authorised person
B. banker
C. third party
D. agent
Ans. d

34. At least ___ of the Directors should have the qualifications prescribed under section
10A (2) of the BR Act
(a) 50%,
(b) 75%,
(c) 51%
(d) 60%
Ans. c

35. A foreign bank is expected to deposit ___% of its profit from Indian operations with
RBI every year
(a) 10 %,
(b) 20 %,
(c) 25%
(d) 15%
Ans. b

36. Commission, brokerage paid on the sale of shares of a banking company should not exceed ___% of the paid-up value of the shares.
(a) 1%,
(b) 2.5%,
(c) 5%
(d) 10%
Ans. b

37. Banks follow a simple procedure of stopping the operations in such accounts, where the ___ is applicable.
A. Clayton’s rule
B. RBI direction
C. Code of Criminal Procedure
D. Appropriation
Ans. a

38. The transferor is called a ___
A. maker
B. mortgage
C. mortgagee
D. mortgagor
Ans. d

39. The DRT has to dispose of the application as early as possible but within ___.
A. fifteen days
B. sixty days
C. ninety days
D. thirty days
Ans. b

40. Government’s powers to issue directions to RBI are found in ___.
(a) BR Act,
(b) RBI Act,
(c) Companies Act
(D) SEBI axt
Ans. b

41. RBI’s powers to issue directions to banks are not found in one of these sections:
( a) Section 21
(b) Section 35A,
(c) Section 22
d) Section 45ZA
Ans.

42. RBI can prohibit a particular transaction of a bank under ___ BR Act
(a) Section 11,
(b) Section 36,
(c) Section 45ZA
(d) Section 21
Ans. b

43. ___ is a special kind of bailment.
a) pledge
b) lien
c) cheque
d) Promissory note
Ans. a

44. Banking Ombudsman scheme applies to
a) central India
b) south India
c) whole of India
d) North India
Ans. c

45. Reserve Bank of India declares ___ in terms of such authority under the Banking Regulation Act to the Co-operative Bank
A. Periodic Review
B. Contractual agreement
C. Customer Policy
D. Banking Policy
Ans. c

46. Before ___ of sale of the immovable property, the borrower should be given notice about the sale.
A. 30 days
B. 25 days
C. 45 days
D. 60 days
Ans. a

47. Not negotiable crossing and account payee crossing are called ___
A. specific crossing
B. General crossing
C. open cheque
D. restrictive crossing
Ans. d

48. Agreements of lunatics, idiots and drunken persons are ___ similar to the case of minors.
A. valid
B. void
C. voidable
D. available for a specific period
Ans. b

49. The security receipts are not issued to the ___
A. central government
B. official gazette
C. banking company
D. public
Ans. d

50. The right of set-off is also known as the right of ___
A. combination of accounts
B. comparative statement
C. appropriation of payments
D. book-keeping
Ans. a

FAQs about Banking Law and Practice

Q1: What is Banking Law and Practice?

Ans: Banking Law and Practice encompasses the legal and regulatory framework that governs the banking industry. It includes laws, regulations, and practices related to banks, financial institutions, and their operations.

Q2: What are the key regulations governing banks and financial institutions?

Ans: Key regulations often include the Banking Regulation Act, Reserve Bank of India (RBI) guidelines, and various other financial and banking laws and acts depending on the country.

Q3: What is the role of the Reserve Bank of India (RBI) in Banking Law and Practice?

Ans: RBI is the central bank of India and plays a pivotal role in regulating and supervising banks and financial institutions. It formulates and implements monetary policies, issues currency, and ensures the stability of the financial system.

Q4: What are the different types of banking practices?

Ans: Banking practices encompass various activities such as deposit-taking, lending, foreign exchange transactions, electronic banking, and risk management.

Q5: What is the significance of Anti-Money Laundering (AML) and Know Your Customer (KYC) in banking law and practice?

Ans: AML and KYC regulations are crucial to prevent money laundering and terrorist financing. Banks must verify the identity of their customers and report suspicious transactions to regulatory authorities.

Q6: What are the rights and responsibilities of bank customers?

Ans: Bank customers have the right to privacy, fair treatment, and access to financial services. They are responsible for providing accurate information and adhering to the terms and conditions of their accounts.

Q7: What is the role of the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India?

Ans: DICGC provides insurance on bank deposits up to a certain limit, safeguarding the interests of depositors in case of bank failure.

Q8: How are disputes between banks and customers resolved?

Ans: Disputes can be resolved through negotiation, mediation, or by seeking legal remedies through the appropriate court system.

Q9: What are the recent developments or changes in Banking Law and Practice?

Ans: This may vary by country and region. It’s essential to stay updated with the latest amendments and developments in banking laws and practices.

Q10: How can I pursue a career in Banking Law and Practice?

Ans: Pursuing a career in this field often requires a legal or financial background. You can consider studying banking and finance law, gaining practical experience through internships, and staying informed about industry trends.

Conclusion:

Banking related laws are an important part of the financial sector. They protect customers from abuse, ensure transparency in the marketplace, and facilitate growth in the economy.

These laws are often complex, involving multiple regulations and agencies. It is imperative for consumers to research the latest banking related laws and stay informed about their rights and responsibilities when working with banks.

Financial advisors can also be consulted for advice on these important matters.

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