STATE BANK LEARNING CENTRE, MASULIPATNAM

THE WINGS – TO SERIES

PREPARED BY - G VASUDEVA PRASAD
TRAINEE OFFICERS – EXAMINATION PATTERN

Particulars Exam Pattern

Duration of Paper No.Of Questions Marks
(minutes)
Paper-I (Objective)
Section-I
General Knowledge 90 75 25
(Awareness about Banking
Environment )
Section- II 40 20
General Banking
Paper II ( Descriptive)
Section-A 10 20
General Banking ( For &
Against)
Section –B 90
General Banking 10 20
(Rationale)
Section-C
General Banking 5 out of 8 15
Practical Problem
Total Duration 3 hours 100

FINAL SELECTION PROCESS

ALLOCATION OF MARKS
A Written Test ( normalized to 60) 60 marks
B Performance Appraisal 10 marks
C Additional Qualification viz., JAIIB/CAIIB, MBA, Dip in
Banking, Finance, HR, Business Management, Marketing, 10 marks
Treasury, Intermediate CA/ICWA
D Personal Interview 20 marks
Total Marks 100 marks

QUALIFYING MARKS
General Candidates SC/ST
Written Test 65% 60%
Interview 40% ( 8 marks) 35% ( 7 marks)
Zone Of Selection for Interview In the ratio of 2 candidates for every vacancy in the descending
– ZOS order of merit

Appeal to the Aspirants : Please answer the model paper under real time scenario following the time norms.
Please mail me for key after you answer for self – evaluation ( gorthi.vasudev@sbi.co.in). All the best.

1 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

Please choose correct answer for the following questions from the given alternatives

PAPER – I :: DURATION – 90 MINUTES

GENERAL KNOWLEDGE ( Q.NO:1 TO Q.NO:75) Each question carries 1/3 marks

1. Regulators and central Bankers, meeting in Switzerland to discuss a set of [ ]

global banking rules. The group of policy makers known as Basel
Committee. How many countries are members of this policy makers group
a) 24 b) 25
c) 27 d) 29
2. The Indian rupee will have its own symbol, a mix of the Devanagari ‘Ra’ and [ ]
Roman ‘R’ to become the fifth currency in the world to have a distinct
identity. Who has designed this new symbol `
a) Dr.Manmohan Singh b) D.Uday Kumar
c) Dr.D.Subba Rao d) D. Ram Kumar
3. Oil Price deregulation implemented on June 25,2010 based on the [ ]
recommendation of ------- committee
a) MM Parikh b) Kirit Parikh
c) Parik Mehta d) None of the above
4. A High level task force committee on MSMEs advised the banks to achieve -- [ ]
- % year on year growth in credit to micro & small enterprises
a) 20 b) 40
c) 55 d) 60
5. The deposit insurance scheme-1962 to protect the interest of depositors [ ]
was introduced with an amount of `
a) 1 lac per depositor b) 100
c) 1000 d) 1500
6. Sikkim Bank has been taken over by [ ]
a) Federal Bank Ltd b) Bank of Baroda
c) Punjab National Bank d) Union Bank of India
7. Who among the following RBI Dy.Governors is also a Director in SBI Board [ ]
a) Mrs.Usha Thorat b) Mr.Subir Gokarn
c) Mrs.Shyama Gopinath d) Dr.K.C.Chakrabarty
8. Who reported that the budgetary statistics based on which Greece joined [ ]
the EU had been massively under reported by the Greek Government
which lead to Greece Economic Crisis
a) IMF b) World Bank
c) Eurostat d) OECD

2 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

 9. The person who went to his bank too late to withdraw money invented ATM [ ]
has died at the age 84 recently. Who is that India-born scot personality?
a) John Shepherd Barron b) John Abraham
c) John F Marshal d) John Kenedy
10. 3G technology is used to enhance mobile phone standards and enables [ ]
simultaneous transfer both voice and non-voice data. The highlight of 3G is
video telephony. The centre plans to raise ` ---- crore through auction of
third generation mobile phone spectrum
a) 40,000 b) 45,000
c) 57,000 d) 67,000
11. The nick name of Canadian Dollar coin [ ]
a) Cable b) Loonie
c) Toss d) Bill
12. Government to contribute `----- per annum to each account holder under [ ]
the new pension scheme
a) 10 b) 100
c) 500 d) 1000
13. The fully air conditioned 5-coaches exhibition train launched on the eve of [ ]
150th Birth anniversary of Rabindranath Thakur to experience the rich
legacy of his creative work & philosophy in moving museum on wheels is
named as
a) Sanskriti Express b) Jibon smriti Express
c) Gitanjali Express d) Mukthodhara Express
14. Name the film selected as an Indian official entry to Oscar Awards this year [ ]
a) Angadi Theru b) Peepli Live
c) Three Idiots d) Paa
15. The word ‘Money’ has been derived from ‘Moneta’. Moneta belongs to [ ]
which language
a) Greek b) Latin
c) Spanish d) French
16. Who has been conferred with the prestigious Gyanpeet award for the year [ ]
2007
a) Ahlakkhan Shaharyar b) Sitakanth Mahapatra
c) ONV Kuroop d) Yarlagadda Lakshmi Prasad
17. The following sector has negative impact due to Union Budget 2010-11 [ ]
a) Infrastructure b) Real Estate
c) FMCG d) Information Technology

3 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

18. G-20 Summit was held on 28.06.2010 at ------ [ ]
a) Alaska b) Toronto
c) New York d) New Delhi
19. As per Global peace Index 2010, the following country has been rated most [ ]
favored
a) India b) Iceland
c) Japan d) Newzeland
20. An elephant named ------ is the official mascot of the 2010 Cricket World [ ]
cup
a) Bumpy b) Scurry
c) Stumpy d) Hempty
21. The government had initiated interest subvention scheme of 1 per cent [ ]
interest subvention in respect of individual housing loans up to `10 lakh &
with the cost of unit not being over ` ------ lacs as a measure to generate
additional demand for credit and improve affordability of housing to
eligible borrowers in middle and lower-income groups
a) 15 b) 20
c) 25 d) 50
22. Towards financial inclusion drive, GOI has asked the Public sector banks to [ ]
provide basic banking services to all unbanked villages with a population of
over 2000 by
a) March’2011 b) March’2012
c) December’2010 d) December,2011
23. The relationship between tax rates and the absolute revenue these rates [ ]
generates for the government is represented by
a) Sigma Curve b) Dorvin curve
c) Laffer Curve d) Diminshing curve
24. Name the new pension fund scheme launched for unorganized sector [ ]
a) Swavalamban b) Swayamlamban
c) Swayamkrushi d) None of the above
25. Overnight Index Swap (OIS) is a ------- instrument [ ]
a) Options b) Contracts
c) Futures d) Derivative
26. Foreign currency which has a tendency of quick migration is called [ ]
a) Scarce currency b) Soft currency
c) Cold currency d) Hot currency
27. Which of the following is a better measurement of Economic Development [ ]
a) GDP b) Disposable Income
c) NNP d) Per Capita Income

4 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

28. If the commodities manufactured in Surat are sold in Mumbai or Delhi then [ ]
it is
a) Territorial trade b) Internal trade
c) International trade d) Free Trade
29. Bank Rate refers to the interest rate at which [ ]
a) Commercial banks receive b) Central bank gives loans to
deposits from the public Commercial banks
c) Government loans are floated d) Commercial banks grant loans to
their customers
30. All the goods which are scare and limited in supply are called [ ]
a) Luxury goods b) Expensive goods
c) Capital goods d) Economic goods
31. In the budget figures of the Government of India the difference between [ ]
total expenditure and total receipt is called
a) Fiscal deficit b) Budget deficit
c) Revenue deficit d) Current deficit
32. "Slash and Burn agriculture" is the name given to [ ]
a) method of potato cultivation b) process of deforestation
c) mixed farming d) shifting cultivation
33. Repo, Reverse Repo and Bank Rate are ----, ---- & ---- % respectively [ ]
a) 6,5,6 b) 5.75,4.5,6
c) 4.5,5.75,6 d) 5,6,6
34. How many Indian companies find place in the Asia’s Best under one billion [ ]
-2010 list
a) 71 b) 82
c) 20 d) 39
35. On 25th Aug’10 RBI announced that a new district, Yadgir in Karanataka [ ]
and the lead bank responsibility designated to ---- Bank
a) SBM b) Syndicate Bank
c) SBI d) None of the above
36. Barmer is declared as Town of Excellence in respect of -------- [ ]
a) Textiles b) Leather Goods
c) Handicrafts d) Diamonds
37. Foreign Trade policy 2009-2014 does not pronounce the following [ ]
a) Zero duty EPCG Scheme b) DEPB scheme extended upto
extended by one year 30.06.2011
c) Additional benefit of 2% bonus d) All the above
for 135 products under focus
products scheme

5 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

38. Who releases the World investment report [ ]
a) UNICEF b) UNESCO
c) UNCTAD d) UNO
39. Which country stood next to US in respect of Global FDI inflows for the year [ ]
2009
a) Hongkong b) France
c) China d) UK
40. Rapid economic growth at home, high commodity prices, and FDI [ ]
liberalization in host countries have been feeding a boom in outward
investment from BRIC countries. BRIC countries are also called as
a) Big Seven b) Big Four
c) Big Three d) Big Five
41. CCIs permission is not required if the turn over of the smaller company is [ ]
less than ` --- crores or its net worth is under ` --- crores
a) 750,250 b) 1000,750
c) 750,500 d) 500,250
42. According to a 2010 Asia-Pacific Wealth Report released by Merrill Lynch [ ]
Global Wealth Management and Capgemini, the total number of HNIs in
India at the end of 2009 was -----
a) 1,56,700 b) 1,36,700
c) 1,46,700 d) 1,26,700
43. Public sector banks (PSBs) will introduce a common banking entrance test [ ]
was recommended by ---- committee
a) Prof. Nouriel Roubini b) A.K. Khandelwal
c) Gopalan d) Mukherjee
44. The third most powerful nation as per “Global Governance 2025” report [ ]
a) Brazil b) China
c) India d) Russia
45. One among the following are not the promoters of United Stock Exchange [ ]
a) BSE b) India Potash
c) MMTC d) SBI
46. The prepaid debit card by India Post would have a minimum value of [ ]
`1,000 and a maximum of `
a) 5,000 b) 10,000
c) 25,000 d) None of the above
47. An MVNO would offer wireless services under its own brand name by taking [ ]
on lease spectrum and infrastructure from a new telecom operator. Who is
the leading MVNO operator in the world
a) Virgin Mobile b) ESPN
c) Disney d) Airtel

6 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

48. The first licence by RBI to use the `semi-closed wallet for starting financial [ ]
services on mobile phones issued to
a) Idea b) Aircel
c) Bharti AirTel d) BSNL
49. After more than a year, the Forward Market Commission (FMC) will allow [ ]
sugar futures to start from ------ in view of expected bumper production of
the sweetener in 2011-12
a) November’2010 b) October’2010
c) December’2010 d) March’2011
50. The following have not shifted to Base Rate regime [ ]
a) SBI b) PNB
c) ICICI d) HFC
51. As on June 30, the capital adequacy ratio of the banking system stood at --- [ ]
%
a) 13.4 b) 12.28
c) 9.30 d) 8.12
52. The committee, headed by former Finance Minister Shri Yashwant Sinha, [ ]
has suggested that companies with a net worth of `500 cr or more, or
those that have an annual turnover of at least `1,000 cr, or companies
with a net profit of `25 cr or more to set aside --- % of their average net
profits during the preceding three years towards Corporate Social
responsibility spending
a) 1 b) 2
c) 3 d) 5
53. Maruti Suzuki India is having its plant at [ ]
a) New Delhi b) Manesar
c) Chennai d) None of the above
54. The Number of SEZs started operations are ----- [ ]
a) 577 b) 328
c) 114 d) 416
55. Who among the following are excluded from class-action suits under New [ ]
Companies bill,2009
a) Members b) Share holders
c) Creditors d) Banks
56. According to a report by Fitch Ratings, titled “----- , Indian lenders are able [ ]
to recover 30-50% of the loan amount taking recourse to recovery-driven
and business re-organization forums
a) SARFAESI, The New recovery b) DRT- A route for recovery
Mantra
c) Recovery Made easy d) India’s Insolvency Regime

7 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

57. After a deep synchronized recession, the global recovery is likely to be [ ]
multispeed, with much of the advanced world displaying a sluggish below
trend anemic pace of growth and the emerging world displaying closer to a
V-shaped recovery. So 2010 would be a ----------
a) Year of Recovery b) Deflationary spiral
c) Year of Anemic pace d) Year of Two Halves
58. The earliest date for making application by banks to RBI to address the [ ]
Credit risk under Internal Ratings Based Approach is ------
a) April 1,2010 b) March 31,2011
c) March 31,2014 d) April 1,2012
59. Oil seeds production during 2009-10 is ---- MTs [ ]
a) 23.9 b) 24.9
c) 14.6 d) 33.8
60. The new Wholesale Price Index series has ---- as the base year instead of [ ]
1993-94
a) 1999-2000 b) 2003-2004
c) 2004-2005 d) 2008-2009
61. The Direct Taxes Code (DTC) 2010 will come into effect from financial year [ ]
--
a) 2010-2011 b) 2011-2012
c) 2012-2013 d) 2013-2014
62. Customs duty on Gold as per budget 2010-2011 per KG is ` [ ]
a) 10,000 b) 20,000
c) 30,000 d) 50,000
63. Limit for turnover which accounts need to be audited in respect of business [ ]
is `
a) 40 lacs b) 15 lacs
c) 45 lacs d) 60 lacs
64. Unit cost under Indira Awas Yojana in hilly areas is ` [ ]
a) 25,000 b) 45,000
c) 48,500 d) 1,00,000
65. Which bank is merged with ICICI Bank [ ]
a) Bank of Rajasthan b) Bank of Maharastra
c) Kotak Mahindra d) None of the above
66. Who maintain DICGC [ ]
a) NABARD b) RBI
c) SIDBI d) SBI

8 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

67. Biometric-based data including fingerprints and an iris scan is being used [ ]
for the first time in the Project for creation of identity is called
a) Uphaar b) Adhar
c) Niradhar d) Freedom
68. Under Money transfer Service scheme the remitters & beneficiaries are ---- [ ]
& ---
a) Companies & Individuals b) Individuals & Individuals
c) Any body to any body d) All the above
69. Which of the following public sector banks reported highest fall in net profit [ ]
for the period ending March’2010
a) Indian Bank b) Bank of India
c) Syndicate Bank d) State Bank of India
70. Which country has the largest gold holdings in the world [ ]
a) India b) UK
c) China d) USA
71. Which is the first Indian company to be listed in NASDAQ [ ]
a) Reliance b) TCS
c) HCL d) Infosys
72. Which of the following is not a social development scheme [ ]
a) Indira Awas Yojana b) Mid Day Meal
c) Bharat Nirman Yojana d) Sarva Shiksha Abhiyan
73. The logo of Bank of Baroda is Known as [ ]
a) Sun Bank of Baroda b) Baroda Sun
c) Bank of Baroda Rays d) Sunlight of Bank of Baroda
74. Currency swap is an instrument to manage [ ]
a) Currency risk b) Interest rate risk
c) Currency & Interest Rate risk d) Cash flow in different countries
75. RBI’s open market operation transactions are carried out with a view to [ ]
regulate
a) Liquidity in the economy b) Inflation
c) Price of essential commodities d) All of the above

9 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

 GENERAL BANKING ( Q.NO:76 TO Q.NO:115) Each question carries ½ marks

76. Premature payment in respect of Annuity deposit is permitted [ ]

a) At the request of the depositor b) In case of death of depositor
c) On attaining majority by a d) None of the above
minor
77. For classifying a SB account as Inoperative the following transactions [ ]
should not be ignored
a) Service Charges Levied b) Interest Credited
c) Transactions induced at the d) All the above
instance of customers
78. The additional rate of interest for Senior Citizens under Capital Gains [ ]
a) 1% b) 0.75%
c) 0.25% d) No additional interest
79. Name the product developed using the generic fee collection functionality [ ]
a) Power Premium b) Power Privilege
c) Power Advantage d) Power Jyothi
80. Payment of principle and/or interest either fully or partly exceeding `.---- [ ]
/- other than by transfer to the depositor’s account requires discharge over
revenue stamp
a) 500 b) 1000
c) 2000 d) 5000
81. The penalty for delayed payment of installments in RD with a tenure of 66 [ ]
months
a) `.1.50 for every `.100/- per b) `.2.00 for every `.100/- per
month month
c) A service charge of `.10/- d) A service charge of `.10/- should
should be levied apart from(a) be levied apart from(b)
82. What is the maximum amount of loan amount under Xpress credit scheme [ ]
a) ` 5 lacs b) ` 10 lacs
c) ` 15 lacs d) ` 25 lacs
83. Risk categorization under KYC/AML of all accounts is reviewed at least once [ ]
in -----
a) 3 months b) 6 months
c) 9 months d) 12 months
84. Extension of moratorium period has been extended to ---- months in [ ]
genuine cases, after satisfying that the student did not get any
employment after completing studies due to global meltdown
a) 12 months b) 18 months
c) 24 months d) 36 months

10 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

85. The minimum security deposit for Individual Business Correspondent is ` [ ]
a) on average turnover of 2 days b) 0.50 lacs
with minimum 10 lacs
c) on average turnover of 2 days d) None of the above
with minimum Rs. 0.50 lacs
86. Hurdle rate under CRA for new connections is [ ]
a) SB-9 b) SB-10
c) SB-5 d) SB-6
87. The minimum limit amount prescribed under SBI Home Loan PAL is ` [ ]
a) 30 lacs b) 50 lacs
c) 25 lacs d) 10 lacs
88. The maximum amount of gratuity as per Payment of Gratuity Act,1972 is ` [ ]
a) 10 Lacs b) 3.50 Lacs
c) 7 Lacs d) None of the above
89. Operation Sampark relates to [ ]
a) SBI Life Cross Selling b) SBIMF Cross Selling
c) Sale of Gold coins d) Enhance Contactability
90. The interest rate of FRTD would be linked to our Bank’s Base Rate and [ ]
would be reset every time the Base Rate changes. Currently FRTD would
be offered in only three tenors. What is the rate of interest on 5 years
tenor
a) 50 points below base rate b) 25 points below base rate
c) Base rate d) 25 points above base rate
91. As per CTS-2010 standard "No changes/ corrections should be carried out [ ]
on the cheques” and fresh cheque forms should be used by customers.
Identify the correction permitted.
a) Payee’s Name b) Courtesy Amount
c) Legal Amount d) None of the above
92. No Margin/security is required in respect of agricultural loans upto `.---- in [ ]
respect of tenant farmers, share croppers and oral lessees
a) 25,000 b) 50,000
c) 1,00,000 d) 3,00,000
93. Under the Rent Plus scheme, the following lessee will not be eligible [ ]
a) MNC b) Large & Medium Sized
Corporates
c) Group Company d) Bank
94. What is the size of `20 note [ ]
a) 157x73 mm b) 167x73 mm
c) 137x63 mm d) 147x63 mm

11 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

 95. While issuing Viswa Yatra Foreign Travel card , to cover the cost of [ ]
operations of FTC and improve profitability, it has been further decided
with the approval of appropriate authority to apply ---- rate
a) TT selling b) TT Buying
c) Bill selling d) Bill Buying
96. The farmer has to own a minimum of ---- animals to be eligible for finance [ ]
under Bio-Gas Plants Family type scheme
a) 2 b) 4
c) 6 d) No stipulation
97. What is the remuneration payable to a Home Loan Counseller [ ]
a) Max `10,000/- per proposal b) Max `10,000/- per month
c) Max `25,000/- per proposal d) Max `25,000/- per month
98. The tenure of Term of Deposit in respect of Girl child is [ ]
a) 10 years b) 18 years
c) 18 years from the date of birth d) Till marriage
99. Name the product based on Application Supported by Blocked Amount [ ]
a) e-choupal b) e-credit
c) e-invest d) e-transfer
100. Streamlined Payout Procedure STP in WU Money transfer applied to ___ [ ]
USD or equivalent
a) Less than 1000 USD b) Equal or Less than 1000 USD
c) No maximum Limit d) None of the above
101. The Maximum tenure of Time Deposit is 120 months except for Girl Child [ ]
Deposit Scheme. The stipulation of cap is put by
a) RBI b) GOI
c) SBI d) IBA
102. QAB in respect of Power Premium & Power Lite accounts under SME Power [ ]
series is ` -- & ` --
a) 5 Lacs & 4 Lacs b) 4 Lacs & 3 Lacs
c) 3 Lacs & 2 Lacs d) 4 Lacs & 0.40 Lacs
103. The period of realization and repatriation to India of the amount [ ]
representing the full export value of goods or software exported is ----
months
a) 3 months b) 12 months
c) 9 months d) 6 months
104. Base rate is the composition of [ ]
a) Cost of Deposits/Funds b) Negative Carry over SLR/CRR
c) Unallocable Overhead Cost d) All the above

12 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

105. Under RTI act , requisite fees of `10/- collected by the branches will be [ ]
credited to
a) P& T charges Recovered b) Commission Account
account
c) Exchange Account d) Charges Account
106. Under SBI Tiny Card remittance services the facility of remittances was [ ]
made available for
a) Tiny Card account to Tiny Card b) Tiny Card account to CBS
Account Account
c) CBS Account to Tiny Card d) All the above
Account
107. In case of crop loans below `1,00,000/- financing can be made up to --------- [ ]
for the crop(s) raised by the applicant
a) Full extent of Cost of b) SOF of DLTC
cultivation
c) SOF of Bank d) None of the above
108. Annual Income criteria for an Individual to be classified as Affluent [ ]
category is ` --- Lacs
a) >2.4 -10 b) >10 - 50
c) >50 - 75 d) >75- 100
109. Risk weight on Home loan for loan amount above `30 Lacs with LTV ratio [ ]
upto75% is --- %
a) 50 b) 75
c) 90 d) 100
110. As per the provisions of section 108 of the Indian Evidence Act, [ ]
presumption of death can be raised only after a lapse of ----- years from
the date of his /her being reported missing
a) one b) three
c) five d) seven
111. While opening an account, the time taken by is 21 minutes. The [ ]
compensation payable by the bank is `
a) Nil b) 100
c) 250 d) 500
112. Savings Bank Account cannot be opened in respect of [ ]
a) KVIC b) Municipal Corporation
c) DWACRA d) PACS
113. SBI has opened Kohinoor Banjara Premium Banking Centre at ------ [ ]
a) Mumbai b) Hyderabad
c) Baroda d) Kohinoor

13 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

114. Gold Banking software has been introduced in all dealing branches for [ ]
efficient management of Gold Banking business and cover operations
names as
a) Kubera b) Dream Gold
c) Gold Grid d) Metagrid
115. Which of the performance indicator of SBI improved over the last year as [ ]
on 31.03.2010
a) Profit per Employee b) Return on Assets
c) Return on equity d) Earnings per share

14 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

 KEY

Sl. Key Sl. Key Sl. Key Sl. Key Sl. Key

1 c 26 d 51 a 76 b 101 d

2 b 27 d 52 b 77 c 102 d

3 b 28 b 53 b 78 d 103 b

4 a 29 b 54 c 79 d 104 d

5 d 30 d 55 d 80 d 105 a

6 d 31 a 56 d 81 c 106 d

7 c 32 a 57 d 82 c 107 a

8 c 33 a 58 d 83 b 108 b

9 a 34 d 59 a 84 c 109 b

10 d 35 c 60 c 85 c 110 d

11 b 36 c 61 c 86 b 111 c

12 d 37 d 62 c 87 a 112 b

13 a 38 c 63 d 88 b 113 b

14 b 39 c 64 c 89 d 114 d

15 b 40 b 65 a 90 c 115 d

16 c 41 a 66 b 91 d

17 d 42 d 67 b 92 c EVALUATION

18 b 43 b 68 b 93 c SECTION-I

19 d 44 c 69 b 94 d NO OF CORRECT ANSWERS :

20 c 45 d 70 d 95 c MARKS :

21 b 46 d 71 d 96 b SECTION-II

22 b 47 a 72 c 97 c NO OF CORRECT ANSWERS :

23 c 48 c 73 b 98 c
MARKS:
24 a 49 b 74 d 99 C

25 d 50 d 75 d 100 b Total Marks :

15 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

 PAPER –II

Duration : 90 minutes

SECTION- A :: GENERAL BANKING – FOR & AGAINST

Please answer all the questions. Each question carries 2 marks

1. Bankers say no to RBI on savings rate deregulation.

For :
 Banks benefit from low cost Savings Deposits
 Making Savings interest rate market driven create instability
 When there is a squeeze on liquidity, the savings interest rates could rise to
the level of fixed deposit rates, as savings bank interest rate acts as an
anchor for other rates
 Savings deposits are seen as a bank’s core deposits and help in asset-
liability management

Against :

 To free the savings deposit rate to smoothen monetary policy transmission,

which is hampered by the current fixed-rate regime.
 Deregulation can help bring more people into the formal banking system and
acts as a tool for financial inclusion.

2.Cultivation of Bt.Brinjal & Bt.Cotton should be encouraged in India

For:

 Introduction of technology in agriculture is required for food security as also

for nutrition security
 Technology infusion is one of the options to reduce crop losses from pests
 With land constraints and water shortage beginning to be felt, there is also
the dire need to expand agricultural production by raising crop yields from
the current low levels and by reducing crop losses caused by pest and
disease attacks

Against :

 After feeding Bt brinjals to animals the ill-effects are noticed

 A study from Philippines showed that people living next to Bt corn crop fields
had developed many mysterious symptoms, especially during pollination time
 Farmers from various parts of the country are reporting a decline in their soil
productivity after growing Bt cotton

16 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

3.Nuclear Energy is the need of the hour

For :

 The earth has limited supplies of coal and oil. Nuclear power plants could still
produce electricity after coal and oil become scarce.
 Nuclear power plants need less fuel than ones which burn fossil fuels. One
ton of uranium produces more energy than is produced by several million
tons of coal or several million barrels of oil.
 Coal and oil burning plants pollute the air. Well-operated nuclear power
plants do not release contaminants into the environment

Against :

 Nuclear explosions produce radiation. The nuclear radiation harms the cells of
the body which can make people sick or even kill them. Illness can strike
people years after their exposure to nuclear radiation

 One possible type of reactor disaster is known as a meltdown. In such an

accident, the fission reaction goes out of control leading to a nuclear
explosion and the emission of great amounts of radiation

 Nuclear reactors also have waste disposal problems. Reactors produce

nuclear waste products which emit dangerous radiation. Because they could
kill people who touch them, they cannot be thrown away like ordinary
garbage. Currently, many nuclear wastes are stored in special cooling pools
at the nuclear reactors

 Due to these trade bans and lack of indigenous uranium, India has uniquely
been developing a nuclear fuel cycle to exploit its reserves of thorium

4. Nutrient based fertilizer subsidy policy made effective

For :

 Better targeting of subsidies and ensure an improved fertilizer mix that would
stem the growing erosion of soil nutrients
 Under NBS, a wide variety of fertilizers customized to a farmer’s specific
needs will be available
 The new regime is expected to map the actual demand of fertilizers in the
country and promote realistic pricing of fertilizer products in the international
market
 The policy would encourage the use of secondary fertilizers and micro-
nutrients such as sulphur and zinc that are required to make soils in various
regions more balanced and conducive for enhancing Productivity
 The Government hopes the NBS scheme will see fertilizer firms become more
competitive as well and offer more economic rates as subsidy is capped
 The new fertiliser policy is expected to help attract investment. International
companies will now respond positively to this development

17 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

Against :

 The proposed NBS scheme could result in an increase in farm-gate prices of

fertilizers.
 Under NBS, subsidy is given directly to farmers. It may increase malpractices
and bureaucracy.
 Identification of farmers to give subsidy directly is a difficult task because
most of the farmers in India are tenants
 NBS would lead to increased fertilizer prices and hurt small and marginal
farmers. Currently, the Government subsidizes some fertilizers, but not
nutrients.
 NBS implementation during a sensitive period of high food inflation is
considered inappropriate.
 NBS benefits inefficient producers more than farmers and contributes to soil
degradation by encouraging the use of urea in place of a balanced mix

5. Floating Rate Term Deposit (FRTD) with Interest Rate linked to the Bank’s Base
Rate introduced
For :
 To hedge retail investors against interest rate risk Investing in floating-rate
products appears to be the only alternative to lower their asset-liability
mismatch
 Floating Rate Term Deposit will allow the investor to take advantage of any
interest rate changes even in the short term, as rates are reset periodically
and based on Economic conditions

Against :
 General public, who are uninformed may not take advantage of the product
 Senior Citizens, if invested in the product may face adversities in their fixed
monthly income
 Financial Illiteracy may lead to wrong investment decisions

6. Penalties to be imposed on customers visiting the branches for those transactions

which can be handled by themselves through alternate channels

For :

 Acts as disincentive and promotes penetration of Alternate Channels

 Foot fall in branches reduces drastically leading to more focused attention on
customers visiting the branch which leads to customer delight
 Facilitates reduction in cost of transaction which may lead to reduction in
service charges as a consequential benefit to customers
 Reduction of costs will lead to better profitability & reduced foot fall allows
the staff to concentrate on operational risk focused areas

Against :

 Due to the very high levels of cilliteracy and non-availability of technological

infrastructure ( Internet & fit mobiles) among customers , the idea may not
be practicable

18 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

  Customers may fly away from the Bank as they may not be willing to pay
penalties by visiting the branch as they may not be in a position to conclude
the transaction at Alternate channels which leads to fall in Business
 Migration of customers to Alternate channels may strain the relationship
management with customers
 Senior Citizens will be effected adversely and various customer forums will
raise serious objections

7. Statistics show that in many branches VVRs are not checked. Hence, VVR checking
to be dispensed

For :

 VVR exercise is a post-mortem and does not prevent frauds

 Checking of VVRs consumes lot of productive time of employees which
otherwise can be utilized on focused areas
 In the olden days of manual accounting system, writing, checking of day
books is a support tool for compiling final accounts of the branch. As this
aspect is taken care by the CBS/Finance1, VVR checking may be dispensed

Against :

 VVRs play major role in detection of fraudulent transactions and facilitates

preventive vigilance and avoids recurrence of fraudulent transactions in
future
 VVR checking leads to accounting Excellency
 VVR checking leads to data purity in the system
 In the net worked environment, VVR checking leads to better monitoring of
transactions and reduces the operational risk

8.All RBOs should be shifted to their area of operation and Administrative offices
should be vacated & AGM(Admin) would be located in the GMs ( Network) office in
LHO

For :

 To make role linkages more effective and ensure complete delayering of the
additional tier to achieve faster disposal of work
 Decision making will be faster due to better appreciation of ground realties
 Supervision & control over branches will be more effective and meaningful
 The overall quality of work will improve coupled with quick response to
querries and quick resolution of conflicts
 Administrative offices have continued in the premises of the erstwhile zonal
officers, often rented at high cost. De-hiring of rented premises will save upon
cost
 Alternate usage of buildings owned by the bank will lead to effective usage
of own premises
 Intervention of Associations/unions located at AU upon the various
functionaries will be drastically reduced leading to better IR relations and
smooth functioning

19 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

Against :

 Due to proximity to the area, customers & staff may have a tendency to visit
the on locale RBO, disturbing the smooth functioning of RBO
 Local pressures may affect decision making
 In the absence of modular structure & lack of proximity to immediate
controller, quality may suffer along with cropping up of indiscipline
 Associations/ unions may rise objections as it is an import subject matter of
restructuring which is reducing their proximity to the regional manager in
resolving their issues

9.Oil Price deregulation is a welcome measure

For :

 Improves margins for oil companies and make them competitive as under
recoveries burden will be reduced
 Private Oil Companies will look forward to a level playing field
 Reduction in Budgetary deficit due to reduction in subsidies and Budget
allocations towards the desired sectors can be made by the government
 Oil companies will determine the price based on international petroleum
market and improve their efficiencies leading to competition among the
various oil companies
 Government approach towards disinvest in IOC
 Better quality of oil & variety made available

Against :

 Full deregulation goes against the aam-admi in the wake of rising prices in
international market
 Cooking fuel does not form major chunk of subsidy and shall not lead to
material reduction in the overall subsidy burden of the sector
 In the short term inflation increases but will be off set in the long run due to
demand and supply dynamics

10. Bank recruited officers (Management Executives) in MMGS-II, with chances of

swift promotion to Scale-III under a unique experiment

For :

 Build a team of future leaders

 To meet the future requirements at Top Management in the years to Come as
Long term human resource planning
 To attract talented people and provide opportunities to grow and contribute
towards the growth of organization
 Will bring totally fresh perspective to business

Against :

 MEs joining directly from the B-Schools with qualifications do not posses
experience which may impact the quality of decisions and may not exhibit
maturity

20 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

  MEs acquire the skills and leave the organization by adding brand value to
their CV to wander towards other green pastures- Attrition rate will be more
 Due to attrition the cost of expenditure towards their training will go waste
along with the loss of reaping benefits from the groomed MEs
 Conflicts may arise due to cultural gaps between the existing generation and
the Gen-Y culture.
 MEs may be exhibit low levels of psychological contact and low levels of
loyalty towards SBI

SECTION- B :: GENERAL BANKING - RATONALES

Please answer all the questions. Each question carries 2 marks

1. Mercury-Fx has been introduced

 Solution for real-time Treasury-Branch interaction and conclusion of Forex

Deals
 Faster & easier reporting of forex transactions directly
 Access to dealing room online to obtain forex rates
 Leveraging our market share through better delivery to the customers, better
communication between the Branches and the Treasury and better MIS on
customers
2. Base Rate has been introduced by RBI

 Remove distortion in interest rates as part of financial sector reforms

 Transparency in pricing of Loans
 Better Assessment of transmission of monetary policy
 To promote healthy competition in the banking System

3. Good bye Basel II, hello Basel III

 To insulate banks from adverse shocks by increasing the amount of capital (

own funds) they hold on their books compared to deposits & other borrowings
 An improvement in the quantity and quality of capital over a period of time
that would allow growth and the financing of growth

4. SBI Home Loan PAL has been introduced

 Customer can confidently negotiate with the builder/seller.

 Builder/sellers who are apprehensive about our ability to deliver in time will
not find a need to influence the customer to go to other banks/HFCs.
 Database of Pre-approved loans will enable the Bank to negotiate with the
builders to offer better rates for SBI Home Loan borrowers

5. Producer Companies – Emerging Area in AGRI business

 Producer companies act as aggregators or intermediary institutions that can

pool produces in adequate quantity from various small farmers for further
processing who can sell at a better price
 Identification of Producer companies as an emerging area in AGRI business
opportunities and to take advantage of revolutions in Agro marketing

21 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

6. Maintenance of Drafts/IOI lost register at branches is dispensed

 Blank Draft Forms reported lost are entered in to the CBS by the branches
and advised to DRD to update at the whole Bank level data/reconciliation
systems subsequently
 Blank IOI forms reported lost are entered in to CBS by Central Stationary
department/ branch and data is generated and provided to DRD to update at
the whole Bank level data/reconciliation systems subsequently
 As the Draft Reconciliation Department is updating the whole Bank level data,
the maintenance of ‘Draft/IOI lost register’ at Branches is redundant and
hence is dispensed with

7. Universal Passbook is introduced

 Significant standardization method

 Format suitable for all type of accounts viz., SB,RD,ACC etc
 Issues such as non-alignment, overlapping of details will be avoided leading
to customer satisfaction
 No manual updation and will be a safe guard against frauds
 Increases comfort & efficiency of operating staff

8. Value Added nomination Facilities made available to customers

 To allow disclosure of the name of the nominee in Passbooks/TDR/STDR

Advices/Statement of accounts in cases where the customer is agreeable to
the same for the eventual guidance of the nominees
 In furtherance of Depositor(s)/Nominee(s)/legal heir(s) convenience
 In case of death of the account holder, the relatives can know from the Pass
book/TDR/STDR Advice/Statement of Account about nomination availed &
name of the nominee and to initiate suitable action
 Compliance of RBI instructions on disclosure of nominee name in
Passbook/TDR/STDR Advices/Statement of accounts

9. Obtention of revival letters and Balance confirmation letters in case of Term loan
accounts in Personal Segment which are repaid regularly and are standard assets
dispensed. Eventually a demand should not be made on the guarantor(s) unless it is
decided to call up the loan and file civil suit or initiate legal action.

 Limitation starts from the date of default in the payment of any installments.
No need to obtain revival letter/debit confirmation so long there is no default
in repayment of installments
 Demanding the loan amount from the guarantor triggers the limitation period
 The bank will be required to obtain a fresh guarantee from the guarantor, if
the borrower regularizes the loan
 Obtention of revival letters & debit confirmations are consuming huge
resources in view of increasing number of retail loans and with this decision
resources can be effectively utilized

22 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

10. Limited Liability Partnership Act – 2008 has been introduced

 An alternative corporate business vehicle that would give the benefits of

limited liability but would allow its members the flexibility of organizing their
internal structure as a partnership based on an agreement.
 No personal liability on a member for the Limited Liability Partnership’s debts
and contracts. No joint and several liability for the negligence of any member
 The Bill does not restrict the benefit of LLP structure to certain classes of
professionals only and would be available for use by any enterprise which
fulfills the requirements of the Act
 While the LLP will be a separate legal entity, liable to the full extent of its
assets, the liability of the partners would be limited to their agreed
contribution in the LLP.
 LLP shall be a body corporate and a legal entity separate from its partners. It
will have perpetual succession. Indian Partnership Act, 1932 shall not be
applicable to LLPs and there shall not be any upper limit on number of
partners in an LLP unlike an ordinary partnership firm where the maximum
number of partners can not exceed 20.
 Limited liability partnership has fewer compliance and disclosure
requirements than companies

SECTION-C :: PRACTICAL PROBLEMS

Please answer any 5 questions out of 8 questions given below . Each question carries
3 marks

1. Rajkumar Khurana kept two blank cheques in his office along with some stamp
papers. Those were said to have been stolen from his office. Information as regards
missing of the said cheques was also given to the bank. He lodged a First
Information Report with regard thereto, on 21-04-01 in Police Station, Digras. The
blank cheques were allegedly filled up on 24.06.2001. Those were presented before
the bank but were returned dishonoured with the remarks "said cheque reported
lost by the drawer"

The payee of the cheque issued notices in terms of Section 138 of the NI Act
requesting the Rajkumar Khurana to make payment of the above said cheque
amount and Rajkumar Khurana sent reply through his Advocate denying his liability
falsely taking the plea that the cheque in question was lost but was stolen by the
complainant. The payee filed a complaint petition in the Court of Chief Metropolitan
Magistrate under Sec-138.

Whether the petition filed by the payee of the cheque is sustainable in the court of
law?

Solution :

To attract prosecution under Section 138 of N.I. Act, the dishonour of cheque should
be because of the amount of money standing to the credit of drawer is insufficient
to honour the cheque, or it exceeds the amount arranged to be paid from that
account by an agreement made with that bank. A refusal on the part of the bank to

23 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

honour the cheque for the reasons that the cheque was reported lost by the drawer
would not bring the matter within the ambit of Section 138 of N.I. Act

Keeping in view the facts and circumstances of the case, the for the aforesaid
reasons that the complaint petition does not disclose an offence punishable under
Section 138 of the Act and the petition filed by the payee is not sustainable

2. An influential customer of your branch entrusted a sealed box with your branch
for safe custody. Due to heavy rush at the branch at that time, the branch official
kept the box in an Almairah outside the strong room that day. By chance, on the
same day, flood in a near by river inundated the branch premises. After two days,
while retrieving the branch property, it came to light that the sealed packet was
damaged. The customer did not accept the box back and preferred a damage of Rs.
3 Lacs. Is the customer claim sustainable?

Solution :

Section 151 of the Indian contract Act provides that in all cases of bailment, the
bailee is bound to take as much care of the goods bailed to him as a man of
ordinary prudence would, under similar circumstances, taken care of his own goods
of the same bulk, quality and value. In the instant case, the bailee i.e., the Bank,
did not take care of the goods as any banker would take. The bank officials should
have kept the safe deposit article inside the strong room at a proper place, which
they failed to do. Thus, the customer’s claim for damages is sustainable.

3.Mr.Perfect is a Savings Bank customer of your branch. On 13.09.2010, Monday he

has tried to withdraw `10,000/- from Bank of Baroda ATM situated in the same town.
ATM has not dispensed cash, but SB account of Mr.Perfect has been debited with
the amount. On 14.09.2010, he approached you and lodged a written complaint.
Immediately you have lodged a complaint in CMS. The complaint has not been
resolved despite your best follow-up as the Bank of Baroda did not respond
immediately due to technical problems in their ATM. On 29.09.2010, the amount
has been credited to the SB account of Mr.Perfect and you have cross checked the
status of complaint in CMS which shows the credit of amount on 29.09.2010.
Mr.Perfect approached you ON 29.09.2010, with a letter in threatening language
claiming compensation of `10,000/-. How will you respond? ( There are no public
holidays in between 14th and 29th except two Sundays on 19th & 26th)

Solution :

As per the uniform guidelines issued by RBI which are issued under section 18 of
Payment and Settlement Systems Act 2007 in respect of compensation to customer
for settlement of disputed transactions, for any failure to re-credit the customers
account within 12 working days from the date of receipt of the complaint, the bank
shall pay compensation of `100/- per day, to the aggrieved customer. This
compensation shall be credited to the customer’s account automatically without any
claim from the customer, on the same day when the bank affords the credit for the
failed ATM transaction.

Branch has to manually calculate the compensation payable to the customer @

`.100 per day from the 13th day of the date of receipt of complaint from the

24 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

customer till the date of actual credit to the customer’s account and accord credit
automatically along with the credit of the failed transaction. This has to be done
even without any claim from the customer.

In view of the RBI guidelines 12 working days were elapsed on 27.09.2010. The
credit was afforded on 29.09.2010 i.e., 14th working day. The bank is liable to pay
`100/- as one day delay on 28.09.2010. The claim of Mr.Perfect of `10,000/- need
not be entertained and to be advised accordingly.

As the reason for the delay is attributable to Bank of Baroda, we are entitled to
claim such compensation from paid to the customer from Bank of Baroda.

Record is to be maintained for putting up for verification by Controllers/Concurrent

Auditors

4. The annual sales of a unit is `24lacs. Fixed costs `10lacs. Variable costs `12lacs.
Selling price per unit is `25,000. Calculate BEP in terms of sales & in terms of units.
What is the margin of safety?

Solution:

BEP Sales = FC X S = FC X S = 10,00,000 X 24,00,000

Contribution Sales- VC 24,00,000 – 12,00,000

= `20,00,000

BEP Units = BEP Sales = 20,00,000 = 80 units

Sale Price per unit 25,000

Margin of Safety = Sales- BE sales X 100 = 24,00,000 – 20,00,000 X100

Sales 24,00,000

= 16.67%

5. Mr.Anand is working as a Single window operator. You are the Cash officer
handling the SWO as a case manager. Mr. Harish, employee of Indian Oil
Corporation out let deposits the cash every day in to their cash credit account. One
day Mr.Anand identified a counterfeit note in the cash tendered by Mr.Harish. Mr.
Harish is asking for return of note and tendering another note in lieu of counterfeit
note. Mr.Anand is intending to destroy the note and demanding Mr.Harish to tender
one more note. You being the Cash Officer, Please advise the correct procedure to
be followed?

25 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

Solution:

 Each banknote, which, on examination of various security features /

parameters, is determined as a counterfeit one, shall be branded with a
stamp "COUNTERFEIT BANKNOTE". For this purpose, a stamp with a uniform
size of 5 cm x 5 cm with the inscription COUNTERFEIT BANKNOTE
IMPOUNDED will be branded . Each such impounded note shall be recorded in
a separate register, under authentication.
 When a banknote tendered at the counter of a bank branch is found to be
counterfeit, an acknowledgement receipt in running serial number should be
issued to the tenderer, after stamping the note . Acknowledgement receipt
may be issued even in cases where the tenderer is unwilling to countersign
the receipt
 A Counterfeit Note detected in the cash received by the bank branch across
the counter shall be impounded in the presence of the tenderer and shall be
forwarded to the local police authorities for investigation by filing the FIR.
Particulars such as name, address of the tenderer and his / her statement as
to how the said note came into his / her possession shall also be forwarded to
the police authorities
 A copy of the FIR shall be sent to the Forged Note Vigilance Cell constituted
at the Head Office of the bank
 Acknowledgement of the police authorities concerned has to be obtained in
respect of note/s forwarded to them. If the Counterfeit Notes are sent to the
police by insured post, acknowledgement of receipt thereof by the police
should be invariably obtained and kept on record. A proper follow-up of
receipt of acknowledgement from the police authorities is necessary
 In no case, the Counterfeit Notes should be returned to the tenderer or
destroyed by the bank branches
 In addition, Counterfeit Currency Reports (CCRs) are required to be filed with
Financial Intelligence Unit-India (FIU-IND) in all cases of detection of
Counterfeit Currency Notes at the branches. Reporting of Counterfeit
Currency to FIUIND is in addition to usual reporting of Counterfeit Currency
detection to RBI, filing complaint/FIR with Police Authorities and National
Crime Records Bureau, New Delhi, which should also be ensured

In the instant case, the counterfeit note has to be impounded and branded with
stamp in the presence of Mr.Harish. A statement from Mr.Harish has to be obtained
and the statement & Counterfeit note to be forwarded to police for filing of FIR. A
record should be maintained at the branch in a register. A copy of FIR to be
forwarded to Forged notes vigilance cell. Mr. Anand’s idea of destroying the
counterfeit note is not correct .

6. Mr. Nangia is a pensioner maintaining SB account with your branch since long.
One day, after withdrawing the pension from his account requested the SWO
Mr.Naik to update his passbook. Mr.Naik thrown away the passbook on the face of
Mr.Nangia saying that the Passbook printer was not working. Mr.Nangia approached
you ( Branch Manager) and lodged a complaint in writing. However, you have got
the passbook updated in another counter & offered apologies to Mr.Nangia. In the
evening, you have discussed the matter with your Accountant and come to
understand that Mr.Naik is putting pins into the printer which is stopping
immediately and causing damage to printer head & belts. Accountant has also
shown several reports signed by the Technician of AMC company. The technician
from AMC firm has been contacted and the printer in the counter was repaired. This
26 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM
time also, the technician made the same comments. You have observed the CCTV
footage focusing on Naik counter and found that he is throwing pins in to the
printer next day which lead to non-functioning of the printer next day itself. How will
you deal with Mr.Naik?

Solution :

Mr.Naik act of damaging the printer comes under the expression gross misconduct
which reads as “ wilful damage or attempt to cause damage to the property of the
bank or any of its customers”. The act of Mr.Naik can also be categorized into wilful
slowing down in performance of work under gross misconduct.

The Act of throwing the passbook on the face of the customer is an expression
under minor misconduct which read as “failing to show proper consideration,
courtesy or attention towards officers, customers or other employees of the bank,
unseemly or unsatisfactory behaviour while on duty”.

An employee found guilty of gross misconduct may be dismissed from service

without notice, be removed/ compulsory retired/ discharged from service with
superannuation benefits, brought down to a lower stage to a maximum of two
stages, increments stopped with/without cumulative effect, special pay withdrawn,
censured/fined.
An employee found guilty of minor misconduct may be warned/censured/ adverse
remark entered against him/ increment stopped not longer than 6 months.

A workman found guilty of misconduct, whether gross or minor, shall not be given
more than one punishment in respect of any one charge.

Mr.Naik has committed two acts one under gross misconduct & another under minor
misconduct and to be awarded with two separate punishments as appropriate.

7. Mr.Jagan Mohan has been opened Savings Bank Account with a nominal amount.
Large number of deposits at various centres, typically of identical, round amounts
are made. The amount so accumulated are withdrawn using ATM cards. The credits
received are withdrawn on the day of deposit itself and there is very small residual
balance left in the account. Although, debit and credit summations in the accounts
are in the range of Rs. 75 – 80 lacs, interest received in the account is less than Rs.
100.00. Discuss the situation in the wake of KYC/AML measures?

Solution :

Under KYC policy Monitoring of Cash transactions is a paramount responsibility

casted upon the banker. All cash withdrawals and deposits for Rs. 10 lacs and above
including individual cash transaction of less than Rs. 10 lacs but aggregating to Rs.
10 lacs in a calender month are to be reported by way of Cash Transaction Report
(CTR) to Financial Intelligence Unit – India (FIU-IND) on prescribed format. Thresh
hold limit is one such measure to monitor transactions. Thresh hold limit should be
25% of the annual income in case of individuals and one month turnover in case of
business enterprises subject to a maximum of Rs.10 Lacs. Value just under the
reporting threshold amount in an apparent attempt to avoid reporting. Value
inconsistent with the client’s apparent financial standing.

27 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

As per Section 2G of PMLA Act,2002, Suspicious transaction means a transaction
whether or not made in cash which, to a person acting in good faith

 gives rise to a reasonable ground of suspicion that it may involve the

proceeds of crime; or

 appears to be made in circumstances of unusual or unjustified

complexity; or

 appears to have no economic rationale or bonafide purpose.

This appears to be case of ‘Ponzi Scheme’ which is likely to result with heavy losses
to large number of innocent individuals. There are enough reasons to suspect the
activities. STR has to be filed. If not reported attracts penalties & imprisonment as
per Section 13 of PMLA Act,2002

8. Lamrin Branch has reported the following figures in the Performance Report for
the month of August’2010. All figures in thousands.

Interest & Discount on Advances 17469

Other Income 1655
Interest Paid on Deposits 8741
Salary & Allowances 2162
Overheads 1414
Central Office Interest receivable on Deposits 13255
Other Central Office Interest Receivable 1430
Central Office Interest Payable on advances 11753
Other Central Office Interest Payable 0
Average Monthly Deposits 372928
Average Monthly Advances 383893
Total No of employees including Part Time staff 14
Part Time Staff 3
Government commission accrued but not booked 38
Depreciation Accrued but not charged 225
Aggregate Deposits at the end of Aug’2010 362368
Aggregate Advances at the end of Aug’2010 397948

Calculate the following efficiency parameters:-

1.Average Business per employee 2. Net Profit per employee 3.GRR % 4. Expense
Ratio 5. Average Interest spread 6. Transaction cost

Solution :

1.Average Business per employee = Average Total Business / Total no of all

categories of employees excluding part time employees

= 372928+383893/14-3 = 756821/11 = 68802

28 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM

2. Net Profit per employee = Net result/Total no of employees excluding part time
employees

Total Income = 17469 + 1655 + 38 = 19162

Total Expenditure = 8741+2162+1414+225 = 12542
Net Central Office Interest = 13255+1430-11753 = 2932
Operating Profit = 19162-12542 = 6620
Net profit = 19162-12542+2932 = 9552

Net profit per employee = 9552 X 12 = 2084

11 5
( 12/5 indicates Annualized – 12 months in a year and 5 months from April to
August)

3. GRR % = Net Result X 100 X 12

Average total business 5

= 9552/756821 X100 X 12/5 = 3.03%

4.Expense Ratio = Total Non- interest Expenses/ (Net Interest Income + other
Income)

Total Non-Interest Expenses = Staff Expenses + Overheads = 2162+1414+225 =

3801

Net Interest Income = (Interest Received on Advances + Interest received on Funds

lent to CO) – ( Interest paid on deposits + Interest paid on funds borrowed from CO)

= (17469 + (13255+ 1430) ) –( 8741+11753) = 11660

ER = 3801/ ( 11660+ (1655+38) ) = 3801/13353 = 28.47%

5.Average Interest Spread = Average Yield on Advances – Average cost of Deposits

Average Yield on Advances = Interest & discount on Adv X 12 X 100

Average Monthly Advances 5

= 17469/383893 x 12/5 X 100 = 10.92%

Average Cost of Deposits = Interest paid on Deposits X 12 X 100

Average Monthly Deposits 5

= 8741/372928 X 12/5 X 100 = 5.63%

29 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM
Average Interest Spread = 10.92 - 5.63 = 5.29%

6. Transaction cost = Operating cost X 100

Total Business ( Deposits + Advances)

Total Business = Aggregate business as at the end of the month

Operating cost to be annualized

Operating cost = 2162+1414+225 = 3801

Annualized operating cost = 3801 X 12/5 = 9122

Transaction cost = {9122 / ( 362368+397948)}x 100 = (9122/763016) X 100

= 1.20%

( In examination simple figures will be given & all the Efficiency parameters may not
be asked)

30 G.VASUDEVA PRASAD, CHIEF MANAGER – TRAINING , SBLC, MASULIPATNAM