Principles and Practices of Modern Banking MCQ Questions and Answers Part – 1
Principles and Practices of Modern Banking MCQ Questions and Answers Part – 2
Principles and Practices of Modern Banking MCQ Questions and Answers Part – 3
1. The primary relationship between a banker and customer starts from the time
A. when customer visits that bank
B. when customer opens account
C. when customer visits that bank to made queries
D. All of the above
ANSWER: B
2. A typical commercial banks provide ____________.
A. Long term loans
B. medium-term loans
C. short term loans
D. all the above
ANSWER: C
3. Which one of the following is the most important relationship between banker and customer?
A. Debtor and Creditor
B. Bailee and Bailor
C. Agency and Principal
D. Trustee and Beneficiary
ANSWER: A
4. When customer’s account overdrawn or when customer has taken loan from banker, then the customer
A. Creditor
B. Agent
C. Debtor
D. Bailor
ANSWER: C
5. When banker received deposits from the customer, then the banker becomes ————– of the customer
A. Debtor
B. Creditor
C. Bailee
D. Trustee
ANSWER: A
6. Which of the following systems of banking contributes to banking monopoly?
A. unit banking
B. chain banking
C. group banking
D. branch banking
ANSWER: D
7. It is a —————– obligation of a banker to honour the cheques of the customer drawn against current
account
A. Mutual
B. Statutory
C. Unstatutory
D. All of the above
ANSWER: B
8. Foreign exchange banks specialized in providing _________.
A. long term loans
B. short term loans
C. agricultural loans
D. foreign exchange
ANSWER: D
9. Dishonour of cheque by a banker without any justifiable reason is called ___________.
A. Valid dishonour of cheques
B. Unmindful dishonour of cheques
C. Negligence dishonour of cheques
D. Wrongful dishonour of cheques
ANSWER: D
10. Special damages refers to damages payable by a banker to his customer for the actual ————- loss
suffered by customer
A. Financial
B. Special
C. Unpecuniary
D. Unfinancial
ANSWER: A
11. ———- is the right of a person to retain the property of another person in his possession untill the debt
from that owner of that property is repaid
A. Lien
B. hypothecation
C. mortgage
D. assignment
ANSWER: A
12. The bank can consider —————— lien as their protection against loss on loan or overdraft which was
given to its customers
A. Special
B. Particular
C. General
D. Lending
ANSWER: A
13. The idea behind the bankers right to set-off is to enable the banker to reduce the ————– amount due
to him from a customer
A. Gross
B. Net
C. Partial
D. None of the above
ANSWER: B
14. Which one of the following is material alteration?
A. Alteration of the date of the date
B. Alteration of amount
C. Alteration of crossing
D. all the above
ANSWER: D
15. The right of set-off customers account can be exercised only by a
A. Creditors
B. Debtors
C. Banker
D. Customer
ANSWER: C
16. Usually incidental charges are levied on _________ type of account holders.
A. Savings account
B. Fixed deposit account
C. Current Account
D. Recurring deposit account
ANSWER: C
17. The ————– rule is followed in appropriation of accounts if neither debtor nor creditors does not
makes any specific appropriation
A. Pagets
B. Kinlay
C. Sheldon
D. Claytons
ANSWER: D
18. The word “Garnishee” is derived from a Latin word
A. Garnire
B. Garn
C. Garnish
D. Garni
ANSWER: A
19. The meaning of the word “Garnishee” means
A. to consult
B. . to warn
C. to punish
D. to convince
ANSWER: B
20. MICR stands for
A. Magnetic Ink Character Recognition
B. Magnetic Ink Company Recognition
C. Magnetic Ink Cross Recognition
D. Magnetic Ink Community Recognition
ANSWER: A
21. In India, the law regulating the Negotiable instruments are
A. Banking Regulation Act 1949
B. Reserve Bank of India Act 1934
C. Negotiable Instruments Act 1881
D. Companies Act 1956
ANSWER: C
22. Banks which accept deposits from the public and lend them mainly to commerce for short periods?
A. Commercial Bank
B. . Industrial Bank
C. Agricultural Bank
D. Central Bank
ANSWER: A
23. Which bank is otherwise called as Investment banks?
A. Exchange Bank
B. Reserve Bank of India
C. Industrial Bank
D. Agricultural Bank
ANSWER: C
24. A company who accepts demand deposit is called __________
A. Joint stock company
B. Banking company
C. Manufacturing company
D. IT company
ANSWER: B
25. Current Accounts are mainly opened by
A. Professionals
B. Agriculturalist
C. Salaried class people
D. Trading and industrial concern
ANSWER: D
26. Who controls credit in India?
A. Government of India
B. Reserve Bank of India
C. State Bank of India
D. Indian Bank
ANSWER: B
27. Fixed Deposits is otherwise called as
A. Accrued Deposits
B. Time deposits
C. Recurring Deposits
D. Demand Deposits
ANSWER: B
28. In the which type of deposit, the high rate of interest is provided by the Bank?
A. Current Account
B. Recurring Deposit Account
C. Fixed Deposit Account
D. Savings Account
ANSWER: C
29. RBI was set up in the year _____
A. 1934
B. 1935
C. 1936
D. 1937
ANSWER: B
30. The rate of interest charged for the loan by the banker compared to overdraft and cash credit is generally
A. High
B. Low
C. Same
D. Based on the amount
ANSWER: B
31. Which type of account holder has the permission to overdraw the amount from his/her account?
A. Savings account
B. Current account
C. Fixed deposit account
D. Recurring deposit account
ANSWER: B
32. Discounting of Bills of Exchange is an arrangement under which banks take a bill of exchange maturing
with a short period of
A. 20 days or 40 days
B. 50 days or 100 days
C. 60 days or 90 days
D. 35 days or 75 days
ANSWER: C
33. The main aim of a banker for performing the subsidiary services is to earn a ———— of the customers.
A. Money
B. Documents
C. Valuables
D. Goodwill
ANSWER: D
34. The services rendered by a banker as an agent of his customers are called
A. Principal services
B. Agency services
C. General utility services
D. Social services
ANSWER: B
35. The written instructions given by the customers to banker to perform the services like collection and
payment of money is noted down in
A. Written Instructions Book
B. Standing Instructions Book
C. Banking Instructions Book
D. Services Instructions Book
ANSWER: B
36. A ————– is a person who is entrusted with some property by the settler or the author of the trust for
the benefit of another person called beneficiary
A. Attorney
B. Executor
C. Administrator
D. Trustee
ANSWER: D
37. An ————– is a person appointed by a testator to execute his will
A. Executor
B. Attorney
C. Trustee
D. Administrator
ANSWER: A
38. Services rendered by a banker not only to his customers, but also to the general public are called as
A. Principal services
B. Agency services
C. General utility services
D. Social services
ANSWER: C
39. Which section of the negotiable instrument act 1881 defines promissory note?
A. Section 1
B. Section s
C. Section 3
D. Section 4
ANSWER: D
40. ———— is a system under which an individual bank carries on banking business with a network of
branches spread all over the country.
A. Mixed Banking
B. Branch Banking
C. Unit Banking
D. Corresponding Banking
ANSWER: B
41. A cheque dated subsequent to the date of its issue is
A. Post dated cheque
B. Blank cheque
C. Crossed cheque
D. Account payee cheque
ANSWER: A
42. A cheque date before the date of its issue is
A. Worth cheque
B. Full worth cheque
C. Preemptive cheque
D. Ante dated cheque
ANSWER: D
43. A drawer in the bill of exchange can also be a
A. lender
B. Payee
C. Banker
D. Creditor
ANSWER: B
44. The rate at which RBI discounts approved bills is _________.
A. Bank rate
B. Interest rate
C. Exchange rate
D. Discount rate
ANSWER: D
45. The lien is defined in
A. the Sale of Goods Act
B. the Transfer of property Act
C. the Indian Contract Act
D. the Companies Act
ANSWER: A
46. The apex institution in agricultural finance is
A. NABARD
B. EXIM Bank
C. Reserve Bank of India
D. IDBI
ANSWER: A
47. Who is primarily liable on a promissory note?
A. Holder
B. Maker
C. Drawee
D. . Endorser
ANSWER: B
48. How many parties are mainly involved in Promissory Note?
A. One
B. Five
C. Two
D. Three
ANSWER: C
49. In a bill of exchange, drawee is the person
A. who draws the bill
B. on whom the bill is drawn
C. to whom the payment of the bill is to be made
D. to whom the payment of the bill is not to be made
ANSWER: B
50. ———— is a dead cheque.
A. Post dated cheque
B. Stale cheque
C. Ante dated cheque
D. Pre dated cheque
ANSWER: B
