Free JAIIB Online Mock Test


Principles and practices of banking

1. Penal interest is levied @ 3% per annum in case of non-maintenance of CRR on _______ basis:
1
Daily
2
Average
3
Quarterly
4
None of the above

Explanation: In case of default in maintenance of CRR requirement on daily basis, which is presently 70% of the total CRR requirement, penal interest will be recovered at the rate of 3% per annum above the bank rate on the amount by which the amount actually maintained falls short of the prescribed minimum on that day.

2. Which of the following statements is/are correct; (1) P-notes are issued by registered foreign institutional investors to overseas investors, (2) P-notes are not used within the country:
1
Only 1
2
Only 2
3
Neither 1 nor 2
4
Both 1 & 2

Explanation: Participatory Notes are instruments issued by registered foreign institutional investors (FII) to overseas investors, who wish to invest in the Indian stock markets without registering themselves with the market regulator, the Securities and Exchange Board of India - SEBI. They are used outside India for making investments in shares listed in the Indian stock market. That is why they are also called offshore derivative instruments.

3. What is the range of maturity period of dated securities?
1
91 days to 364 days
2
7 days to one year
3
One year to 10 years
4
One year to 30 years

Explanation: Dated Government securities are long term securities and carry a fixed or floating coupon (interest rate) which is paid on the face value, payable at fixed time periods (usually half-yearly). The tenor of dated securities can be up to 30 years.

4. Multi Commodity Exchange of India Ltd (MCX) deals with which of the following:
1
Sale and purchase of commodities
2
Commodity futures transactions
3
Commodity options
4
Commodity forwards

Explanation: Multi Commodity Exchange of India Ltd (MCX) is an independent commodity exchange based in India. MCX offers futures trading in bullion, non-ferrous metals, energy, and a number of agricultural commodities (mentha oil, cardamom, crude palm oil, cotton and others).

5. Which of the following insurance covers transit by water, air, registered post parcel etc:
1
Property insurance
2
Burglary insurancr
3
Marine cargo insurance
4
Travel insurance

Explanation: The Marine Insurance policy covers the loss or damage to property caused due to natural disasters like cyclone, earthquake, lightning, and man-made disasters like theft, violence etc.

6. NAV of Gold Exchange Traded Fund is calculated up to ______ decimal point:
1
Four
2
Two
3
Three
4
None

Explanation: The calculation of Net Asset Value(NAV) is done daily at the end of the day for each and every fund. This number is calculated up to 4 decimal places and rounded off as per regulations prescribed by Securities and Exchange Board of India (SEBI). So, option(1) is correct.

7. On how many pillars is the Basel II Framework based?
1
4
2
3.
3
2
4
1

Explanation: Basel II uses a "three pillars" concept

8. As per BCBS, the Basel accord norms are _________ in nature:
1
Voluntary
2
Mandatory
3
Both 1 & 2
4
None of the above

Explanation: The Basel Committee formulates broad supervisory standards and guidelines and recommends statements of best practice in banking supervision, which are currently known as Basel III Accord. The Basel Accord norms are voluntary in nature.

9. The bankers fair practice code was brought in 2004 by:
1
Reserve Bank of India
2
Indian Banks' Association
3
Banking Codes and Standards Board of India
4
Govt. of India

Explanation: The Indian Banks' Association (IBA) had brought out its 'Bankers' Fair practice' code in June 2004 & all.

10. Section 131 of N.I. Act gives protection for collection of______:
1
Bills of Exchange
2
Promissory Note
3
Hundis
4
Cheque

Explanation: Section 131 of the Negotiable Instruments Act provides protection to a collecting banker who receives payment of a crossed cheque or draft on behalf of his customers.

11. In which of the following circumstances the relationship between the bank and customer is not correctly stated:
1
Shares given for sale - agent & principal
2
Garnishee order - debtor & creditor
3
Payee of draft - trustee & beneficiary
4
Articles left by mistake - agent & principal

Explanation: Bank cannot exercise right of lien on goods received for safe custody, goods held in capacity as a trustee, or as an agent of the customer, SDV, or left in bank by mistake.

12. As per Prevention of Money Laundering Act the banks are required to maintain record of transactions for period of_______ from date of cessation of the transaction:
1
2 years
2
5 years
3
10 years
4
20 years

Explanation: As per Prevention of Money Laundering Act the banks are required to maintain records of all transactions referred to in Rule 3 contained in Notification No.9/2005 dated 1/7/2005 are required to be maintained by reporting entity for a period of five years from the date of cessation of the transactions with their clients.

13. In which of the following section, the banker is given an absolute right of general lien on all goods and securities received by the banker:
1
Section 171 of Indian Contract Act
2
Section 170 of Negotiable Instruments Act
3
Section 170 of Sale of Goods Act
4
Section 172 of Indian Contract Act

Explanation: Section 171 in The Indian Contract Act, 1872: General lien of bankers, factors, wharfingers, attorneys and policy-brokers.

14. A bank has right called_______to club two accounts (one of which has debit balance and another has credit balance) in the same capacity of customer:
1
Right of set off
2
Right of adjustment
3
Right of lien
4
Right of appropriation

Explanation: Set-off is the right of a debtor to take into account a debt owing to him by a creditor, when claiming a debt due from him to the creditor. In the case of a banker, the right of set-off enables him to adjust a debit balance in the customer's account, with any balance outstanding to his credit in the books of the bank.

15. Clayton's rule applies to following type of loan accounts:
1
Demand loans
2
Cash Credit account
3
Overdraft accounts
4
Only 2 and 3

Explanation: The Rule of Claytons Law is applicable where the parties have a current account. In such case appropriation impliedly takes place in the order in which receipts and payments take place and are carried into the account.

16. Garnishee order is issued by a_____.
1
Police officer
2
Revenue officer
3
CID
4
Courts of law

Explanation: The Garnishee order is an order issued by the Court to garnishee (Bank) whereas the IT attachment is the attachment on assessee’s credit balance in the bank by Income tax department.

17. Under Consumer Protection Act, District Forum has powers to deal with cases up to Rs.______ :
1
20 lakh
2
Upto 50 lakh
3
Upto 1 crore
4
Above 1 crore

Explanation: District Consumer Disputes Redressal Forum (DCDRF), established by the State Government in each district of the State, it deals with cases valuing of the goods or services paid as consideration does not exceed one crore.

18. Section 131 of N.I. Act extends protection to the ______:
1
Collecting bank
2
Paying bank
3
Drawee bank
4
Negotiating bank

Explanation: Section 131 of the negotiable instruments act protects the banker, provided he has received payment in good faith and without negligence of a cheque crossed generally or specially. This act extends protection to the collecting bank.

19. A cheque has been presented through clearing house and bears special crossing of two banks:
1
Drawee bank will pay to the bank in whose favor special crossing appears first
2
Pay to either of the banks and payment shall be in due course
3
Return the cheque with the remarks that crossed to two banks
4
A and B

Explanation: If a cheque specially crossed to a bank is presented by another bank, not in the capacity of its agent, the paying banker is justified in returning the cheque.

20. Under section 26 of Negotiable Instruments Act:
1
A minor cannot draw promissory note or a cheque
2
A minor who has been admitted to a partnership firm can draw a cheque
3
A minor can draw, accept, endorse and negotiate bills of exchange, promissory note or cheque binding all parties except himself
4
A minor can be held liable for the bill of exchange he has accepted

Explanation: Under section 26 of Negotiable Instruments Act, Capacity to make, etc., promissory notes, etc, Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsement, delivery and negotiation of a promissory note, bill of exchange or cheque. Since a minor may draw, endorse, deliver and negotiate such instruments so as to bind all parties except himself.