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JAIIBPrinciplesandPracticesofBanking Home
MODELQUESTIONSJAIIBprinciples
LEGALASPECTSOFBANKING
1. AccordingtoyouwhatarethemostimportantfunctionsofReserve ACCOUNTINGANDFINANCEFOR
BankofIndia? BANKERSJAIIBCONCEPTS2012
CAIIBBASELIICONCEPTSANDOTHER
Ans: ASPECTS
Someoftheimportantaspectsrelatingto
a.RBIistheCentralBankoftheCountry CRRandSLR.
importanttips
b.ActsasaNoteIssuingAuthority
JAIIBPrinciplesandPracticesof
c.ActsasaBanker'sBank Banking
d.ActsasBankertoGovernment
wasituseful
e.SuperviseandControlBanksandfinancialInstitute
f.RBIiscontrollinginflationthroughMonetaryandCreditPolicy
g.Regulatestransactionsinforeignexchange
2.AspertheSection20andSec21ofRBIActRBIisobligedtotransact
banking business and mange the Public Debt of Central
GovernmentCanyouelaboratetheRoleofRBIinthePublicDebt
PopularPosts
Ans:PublicDebtcanbebywayoflongtermbondsandorbywayofTreasury JAIIBQUESTIONSANDMODEL
Bills QUESTIONPAPER
1)Ifnumberofpartnersinafirmis22in
respectoftradingactivitythefirmis1)
a.AtpresentTreasuryBillsareissuedforperiodsof91daysand364days. Limitedcompany2)Largepartnership3)
b. TheTreasuryBills are issued for meeting the Short Term requirements Illegal...
whereastheLongTermBondsareissuedforvariousperiodsformeeting MODELQUESTIONSJAIIBprinciplesof
longterminvestments. bankingimportantquestions
1)Anaccountholderdrawsa
chequeona:a)BankerofthePayee
b)BankeroftheDraweec)Bankerofthe
3.WhatdoyouknowbytheTermWaysandMeansAdvances? Drawerd)Bankero...
JAIIBEXAMINATION'SSUBJECTSAND
Ans:AsperSection17(5)ofRBIAct,BankcangivetheCentralandState SYLLABUS,WORKBOOKAND
Government Advances which are repayable within 3 months. This is thus a AVALIBLITYOFBOOKS
JAIIB/CAIIBEXAMINATIONIIBFMembers
short term finance and bridge the interval between expenditure of the arethoseindividualswhoareLife
Governmentandtheflowofrevenueplannedinthebudget. membersoftheInstituteandare
employeesofabankingestablishme...
MODELQUESTIONS
4.Y.V.ReddyCommitteehascomeoutwithanewconceptofMonetary JAIIB+PRINCIPLESOFBANKING
MODULEA&B
AggregatesandalsoLiquidityAggregates.Whatarethey? MODELQUESTIONSJAIIB1)
ReserveBankofIndiasfunctionsare
classifiedinto:a)Supervisory&
Ans:M0,M1,M2,M3arecalledMonetaryAggregage Regulatoryb)Prom...
andL1,L2,L3arecalledLiquidityAggregates. AccountingConceptsANDIMPORTANT
QUESTONS
Thefollowingarethegenerallyaccepted
AccountingAssumptions.1)Concepts
5.WhatisBroadMoney? attherecordingstage.Theseareconcepts
tobeobserve...
Ans:M3isknownasBroadMoney. IndianFinancialSystemjaiibimportant
questionsandanswers
SlNoQuestionAnswer1Thestructurethat
M1isknownasNarrowMoneyandis isavailableinaneconomytomobilizethe
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M1=Currencyiscirculation+BankersDepositwithRBI+otherdepositswith capitalfromvarioussurplussectorsofthe
economy...
RBI.
TESTPAPEROFJAIIBLEGALASPECTS
M3 =M1 + Certificate of Deposit issued by Banks + Term Deposit (excluding
AccountingConceptsANDIMPORTANT
FCNR (B) with maturity upto one year + Term Deposti excluding FCNR (B) of QUESTONS
more than one year + call borrowing by Banks from Non Depository Financial Thefollowingarethegenerallyaccepted
AccountingAssumptions.1)Concepts
Corporate. attherecordingstage.Theseareconcepts
tobeobserve...
6.WhatisL1,L2,L3LiquidityAggregates.
NEWBANKINGUPDATESODJAIIB/CAIIB
ExpandUTRThemomenttheRTGS
messagereachesthePIServer,the
L1=M3+alldeposits(ExcludingNSEs) systemgeneratesaUTR(Unique
TransactionReferenceNo.)akinto...
L2=L1+TermDeposits/TermBorrowing/CertificatepfDepositsIssuedbyTerm
LendingInstitution/RefinancingInstitute. BlogArchive
2012(9)
L3=L2+PublicDepositofNBFCs. February(9)
TESTPAPEROFJAIIBLEGAL
ASPECTS
7.WhatismeantbyOpenMarketOperationofRBI. NEWBANKINGUPDATESOD
JAIIB/CAIIB
Ans: The Buying and Selling of securities or other Assets like Foreign MODELQUESTIONSJAIIBprinciples
ofbanking...
ExchangeGoldbytheCentralBanktoaltertheliquidityoftheBanksisknown
asopenMarketOperation.WhenRBIbuysGovernmentSecuritiesfromBanks MODELQUESTIONS
JAIIB+PRINCIPLESOFBANKING...
the liquidity portion of the Banks increases. Alternatively, when the Reserve
IndianFinancialSystemjaiibimportant
BanksellsthesecuritiestobeBanks,thebanksliquiditypositionisreduced. questions...
JAIIBQUESTIONSANDMODEL
8).WhataretheQuantitativeCreditControlmeasuresexercisedbyRBI. QUESTIONPAPER
AccountingConceptsANDIMPORTANT
Ans: QUESTONS
AccountingConceptsANDIMPORTANT
QUESTONS
a.BankRate
JAIIBEXAMINATION'SSUBJECTSAND
b.ReserveRequirement SYLLABUS,WORKBOO...
c.OpenMarketOperation
d.InterestRatePolicy
Therewasanerror Followers
inthisgadget
9).WhatistheQualitativeControlmeasuresusedbyRBI.
SelectiveCreditControlisusedbyRBItoregulatecostandquantumofcreditto
selectsectors.
10.AsperSection45(c)RBIhaspowerstodirectBankstosubmit
FollowbyEmail
detailsofcreditextendedbythemElaborate.
Emailaddress... Submit
Ans:
RBI collects information on all the borrowers enjoying Secured Credit Limit of
Rs.10lacsandaboveandunsecuredCreditLimitofRs.5lacsandabove.
RBI also collects the details of all doubts loss of suit filed account with
aggregateoutstandingofRS.1Croresandaboveandcirculatethedetailstoall
Banks.
11.WhatinformationisprovidedthroughBSRIReturn.
BSRIpartB,detailsoflimitsofRS.2,00,000andlessaretobefurnished.
12.WhatarethecomponentsofNDTL.
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Ans:
The Time, Savings and Current Depends, Sundry Creditors, Interest Accrual,
InterestAccruedandPayable,NetofLiabilitytoBankingSystem.
However,thesameexcludetheinsideliabilitylike,claimreceivedfromECGC,
amountreceivedpendingfinaladjustmenttowardstheduesetc.,
13.CRRistobemaintainedasperRBIActElaborateonthis.
Ans:
a.CashReserveRatioasperSec42ofRBIAct.
b.AsperthelatestMonetaryPolicyCRRistobemaintained@6%ofNDTL
forScheduledCommercialBanks
c. TheRequiredAmountunderCRRistobekeptwithRBIintheirCurrent
AccountinthecaseofSchedulesdBanks
14.WhatisthemodeofmaintainingCRR
a.CRRistobemaintainedintheformofbalancewithCAofRBI.
15.WhatarethemajorrecommendationsofNarasimhanCommittee.
Ans:
16.WhatarethefunctionsofBoardforFinancialSupervision
a.IntegratedSupervisionoverCommercialBanks,FinancialInstitution,Non
BankingFinancialIntermediaries.etc.,
b.TheSupervisionwillbeboth"onsite"and"offsiteSupervision".
c.ForOffSitesupervisionRBIhasintroducedDSBReturns
17.HowmanyDSBReturnsareintroducedbyRBIandwhichallareasthey
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,
PositionofUnreconciledentriesetc.,etc.,
18.Whatarethecircumstanceswheredisclosureofcustomersaccountis
permitted
Ans:Disclosurecanbeallowedasperorderofcourt
a.OrderofCourt
b.Aspersec4SofBankersBooksEvidenceAct1891
c.AsperIncomeTaxACt1961Sec131andSec133.
d.AsperCriminalProcedureCode
e.AsperDirectionsfromPoliceDepartment,CBIetc.,
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f.FEMAandMoneyLaunderingAct
g.AsperCompaniesAct1956asperSec251
h. As per Sec 45 ( C ) of RBI Act, where credit information has to be
disclosed
i.Disclosuretoanotherbank
j.DisclosureinPublicInterest
a.OrderfromCourtcalledorderNishi.
b. TheorderNishiwouldinstructBanktorecoverandRemitbalanceinthe
accountofitscreditorstocourt.
c.BranchhastoblocktheAccountifitisnotencumberedandthenreportto
ROforfurtherinstruction.
d.Branchhastointimatethecustomeralsoonthesame.
e.BranchhastothenadvisethedetailsofBalanceetc.,tocourt.
f. OnreceiptoffinalorderfromCourtwhichisknownasOrderAbsolute,
branchhastoremittheamounttocourt.
Ans:
a.Garnisheeordercanbeappliedinthesamecapacityaccount
d.Deceasedandalsoinsolventcustomers
e.InrespectofJointaccounttheorderattaches50%ofthedue
f.Attachtheavailableandalsopipelinecredits.
21.WhatarethedifferencebetweenMandateandPowerofAttorney.
Ans:a.MandateisasimpleletterofauthoritygivenbyanAccountHolder
toanotherpersontooperatehisaccountonhisbehalf.Tomake,drawetc.,of
BillsorNegotiableInstruments.
b.PowerofAttorneyisageneraldocumentusedtoconveypowersfor
manyotherpurposesbesidestheoperationintheaccount.
a.MandateisgiveninPlainPaper
b.PowerofAttorneyisgivenonastamppaper
c. Power of Attorney has to be executed in presence of a Notary
Public.
d.PowerofAttorneycanbeRegisteredorUnregistered.
22.WhatarethesalientfeaturesofCapitalGainsTaxAccount1988.
Ans:
a.Forpersons,firmsandothers,whohavecapitalgainandwishtoinvestthe
sameinhousepropertyetc.,withinaperiodof3yearsthemountofgain
canbekeptinanaccountknownasCapitalTaxAccount.
b.TheAccountcanbeeitherSBorTermDeposit.
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c.Nominationfacilityisavailable.
23.WhatisaProbate.
"A copy of will certified under the seal of court of competent jurisdiction
confirmingthatthewillhasbeendulyexecutedandisthevalidone".
24.WhatisthedifferencebetweenLetterofAdministrationandProbate.
Ans:LetterofAdministrationisissuedwherethepartyhasnotcreatedaWill.
Probateisthecertifiedapprovedwillandisissuedwhenthepartyhasleftawill.
Ans:
1.WhereeverBanksholdnominationsinrespectofdepositaccountholders,
settlementshouldbedoneaspernominations.
2.WherethesettlementissoughtasperLegalrepresentationthesamecan
besettledasperCourtdecisions.
3. InothercaseswhereBankwishtosettlewithoutlegalrepresentations,
Bankcancallfor
a.DeathCertificate
b.ConsentLetter
c.Affidavit
d.Enquiryforms
e.LegalHeirCertificate
f.StampedReceipt
g.Indemnity
26. What are the important section of Negotiable Instrument which has
relevancetodaytodaybankingtransactions.
Ans:
a.Section4,5,6whichdefinePromissoryNote,BillofExchangeandCheque.
b.Section10whichdefinespaymentinduecourse
c.Section31.Obligationofabankertomeetcustomersmandate
e.Section89givingprotectiontoabankerpayinginstrumentswithmaterial
alterationswhicharenotapparent.
f.Sec128,whichgivesprotectiontoabankerpayingacrossedcheque.
g. Sec131givesprotectiontoabankercollectionacrossedchequefora
customer.
h.Sec138142DishonourofchequeforwantofFunds.
27.WhatarethenewguidelinesontheNIActrelatingtoSec138142.
Ans:
b. Timeforinitiatingcriminalaction30daysfromthedateofintimationof
dishonourofchequebythepayee.
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28. What are the salient features of latest decided cases in respect of
DishonourofchequesunderSection138142ofNIAct.
Ans:
Thesectionisapplicabletoreturnofcheques
a)Byrepeatedpresentationsattherequestofdrawer
b)Incaseofclosureofaccount
29.WhicharecommitteesconstitutedforimprovingCustomerServicesin
Banks
a.TalwarCommittee
b.GoiporiaCommittee
c.TaraporeCommittee
30.WhatdoyouknowofCOPRA1986.
Ans:
1. ConsumerProtectionAct1986,providetheConsumer,asimplespeedy
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.Thereare3typesofagencies
Ans:
Thisisfordebittransactionslikepaymentofelectricitybills,telephonebillsetc.,
33.Whatistheimportanceofelectronicfundstransfer
Ans:
a.SarafCommitteerecommendedfortheIntroductionofEFT.
b.UnderEFT,fundscanbetransferredbetweenbranchesofabankandalso
betweenbanks(via)electronicmedia
c.RBIhasrecentlydevelopedanewEFTSpecialElectronicFundstransfer
fortransferofLargeValueTransaction.
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Ans:
a. Back stop interest rate will be at the reverse repo cut off rate at which
fundswereinjectedearlier.
b.Wherenoreverserepobidisacceptedasperrepoauction,thebackstop
interestwillbe2%pointsoverrepcutoffrateofPredayunderLAF.
c. On days when no bids for repo or reverse repo auctions are
received/acceptedthebackstopinterestratewillbedeciddbyRBIonan
adhocbasis.
35.WhatisthepurposeoftheInformationTechnologyBill2000
Ans:
a.TheBillprovidethelegalframeworknecessaryforelectroniccommerce.
b.FacilitateelectronicfilingofdocumentswithGovernmentagenciesand
c. AmendtheIndianPenalCode,TheEvidenceAct,TheBanker'sBookof
EvidenceActandTheReserveBankofIndiaAct.
36.WhatallareasarecoveredbyInformationTechnologyBill2000
a.Recognises,AuthenticationofElectronicrecordsbytheuseofAsymmetric
Cryptosystemandhashfunctions.
c. The Act recognises an electronic record which has been signed with a
digitalsignature.
d. It lays down the broad authority structure for implementing Public Key
Infrastructure.
37.WhatisRBS?
Ans:
b.WhatarethethreePillarsofBasleIIAccord.
PillarICapitalAdequacyRequirements
PillarIISupervisoryReview
PillarIIIMarketDiscipline
38.WhatisthequantumofEconomicCapitalthatisstipulatedbyRBI.
Ans:12%oftheRegulatoryCapital
Ans:
a.SovereignAsset0%to150%
b.Banks20%to150%
c.Others(Corporates)20%to150%
dependingontheratingoftheAsset
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40. Under Internal Rating Based approach of rating the risk of various
Assets,whatarethetypesofcreditriskconsidered.
a.Corporates
b.Banks
c.Sovereign
d.Retail
e.ProjectFinance
f.Equity
41.WhatistheFiscalDeficit
FiscalDeficit=RevenueDeficit+CapitalExpenditure
DisinvestmentreceiptsandloanRecoveries
42.WhatismeantbyPrimaryFiscalDeficit
Ans:GrossFiscalDeficitInterestPayment
43.WhatdoyouknowaboutCDR.
CDRisalsoknownasCorporateDebtRestructuring
1.Itisanonstatutoryvoluntarymechanism
2.ItissetupbyBankandFinancialInstitutionalunderadvicetoRBI
3.Itistoprovidetimelysupporttoviableentitiesfacingfinancialproblems
4.Thereislegalbindinginthisthroughdebtorcreditoraggrements.
44.WhatarethecategoriesofaccountscoveredunderCDR.
Ans:
d.Theoutstandingexposuremaybefundbasedandnonfundbased
e.ProvidesRestructuringtoStandardandSubstandardcategoryandalsofor
DoubtfulcategoryaccountsincludingsuitfiledandBIFRaccounts
f.Wilfuldefaultersnotcovered
g.Atleast75%ofthelendersbyvalueshouldagreeforCDRpackage
45.WhatarethestructuralTiersofCDR
a.CDRStandingForum
ThisconsistofCMDofIDBI,ChairmanofSBI,ICICIBankIBAandCMD'sofall
participatingBanks/FinancialInstitutions
46.WhatarethemostimportantcategoriesofrisksforBankers
Ans:
1.CreditRisk
2.MarketRisk
3.OperationalRisk
47.WhataretheimportantfactorsofCreditRisk
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Ans:
CreditRiskisacombinationofPortfolioRisk+TransactionRisk
48.WhatisMigrationRisk(aformofCreditRisk)
Ans:
TheRiskassociatedwithMigrationofanAssetfromStandardtoSubstandard.
49.WhatarethetoolsavailableforMitigatingCreditRisk
Ans:
a.PrudentialExposureNormsviz.,SingleBorrowerexposure@15%etc.,
b.DelegationofPower
c.MultilayerSanction
d.PortfolioSelection
e.SectorAllocationofCredit
50.WhatarethemajormarketRiskforabanker
Ans:
a.LiquidityRisk
b.InterestRateRisk
c.ExchangeRateRisk
51.WhatarethehedgingtoolsthatareavailableforhedgingInterestRate
Risk
Ans:
a.ForwardRateAgreement
b.InterestRateSwap
52. What are the hedging tools that are available for hedging exchange
rate
Ans:
a.Swaps
b.Option
c.ForwardRateContract
d.Futures
53.WhatisthePeriodicityofInspectionof"A"ratedBranch
Ans:
a.18monthsdurationisallowed.ForBRatedorCRatedBranchesitwillbe
12months.
54. WhatisthePrudentialexposurelimitforasingleborrowerandgroup
borrower.
Ans:
a.SingleBorrower15%
b.GroupBorrower40%
c.SingleBorrowerInfrastructure20%
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d.GroupInfrastructure50%
oftheTierIandTierIICapitaloftheBank.
55.WhatisthecutofflimitforconductingStockAudit
Ans:
a)ForNPAaccountswithoutstandingofRs5croresandaboveonceinayear
inDec.
b)Fornewborrowalaccountsoffundsbasedworkingcapitalfor5croresto10
croresonceinayearinDec.
c)Fornewborrowalaccountswithworkingcapitalfacilitiesofrs10croresand
abovetwotimesayearinJuneandDecember.
d)ForexistingborrowalaccountsenjoingfacilitiesofRs5croresandabovefor
aperiodexeedingTwoyearsonceinayearinDec
56.WhatisthecreditlimitforSSIunitswhichnocollateralsecurityshould
beinsisted
Ans:
ForfacilitiesunderSSIuptoRs.5lacsnoSecuritytobeinsisted.
ForadvancesforSSIuptoRs.25lacs.Weneednotinsistedprovidedtheparty
hasgotagoodtrackrecord.
AdvancetoMSEsectoruptoRs1.00CrorecoveredunderCGTMSE
Listoutfewcreditderivatives
Ans:
a.CreditDefaultSwap
b.CreditDefaultLinkedNotes
c.CreditForwardContract
d.CreditDefaultOption
57.WhatdoyouknowbyCorporateGovernance
Ans:
Thesearemeantfor
a. Ensuringcompliancewithregulatoryrequirementandalsoforbecoming
responsivetotheexpectationofstakeholders.
b.Transparencyofthesystem
c.Auditandcontroloftransactionintheorganisation
58.IntohowmanyLiquiditybucketsAssetsandLiabilityareclassified
Ans:Into8liquiditybucketswithadditionalgroupingofthefirstbucketinto1
daybucket,27daysbucketand814daysbucket.
59.Intowhichliquiditybucketthedoubtfulassetsaregrouped
Ans:
Inthegreater5yearAssetBucket
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