Sunday, February 26, 2012



Expand UTR
The moment the RTGS message reaches the PI Server,  the system generates a  UTR  (Unique Transaction Reference No.)  akin to the IBR Tr. Sl. No. UTR is a 16 digit  Alpha-Numeric code, the first 4 digits contains the Bank Code in alphabets, 5th one meant  for the message code, 6th & 7th mentions the year, 8-10th mentions Julian Date (No. of  days in the calendar year are reckoned as the basis to arrive at the date of remittance) and  the last 6 digits mentions day’s serial no. of the message.  
Repo rate in India
When banks have any shortage of funds, they can borrow it from Reserve Bank of India or from other banks. The rate at which the RBI lends money to commercial banks is called repo rate, a short term for repurchase agreement. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases borrowing from RBI becomes more expensive.[1]. the repo rate in India is currently 8 % as of July 2011


The Securities and Exchange Board of India (SEBI), the regulatory authority for Indian securities market, was established in 1992 to protect investors and improve the microstructure of capital markets. In the same year, Controller of Capital Issues (CCI) was abolished, removing its administrative controls over the pricing of new equity issues. In less than a decade later, the Indian financial markets acknowledged the use of technology (National Stock Exchange started online trading in 2000), increasing the trading volumes by many folds and leading to the emergence of new financial instruments. With this, market activity experienced a sharp surge and rapid progress was made in further strengthening and streamlining risk management, market regulation, and supervision.

The securities market is divided into two interdependent segments:
  • The primary market provides the channel for creation of funds through issuance of new securities by companies, governments, or public institutions. In the case of new stock issue, the sale is known as Initial Public Offering (IPO).
  • The secondary market is the financial market where previously issued securities and financial instruments such as stocks, bonds, options, and futures are traded.
Domestic Exchanges
Indian equities are traded on two major exchanges: Bombay Stock Exchange Limited (BSE) and National Stock Exchange of India Limited (NSE).

Bombay Stock Exchange (BSE) 

BSE is the oldest stock exchange in Asia. The extensiveness of the indigenous equity broking industry in India led to the formation of the Native Share Brokers Association in 1875, which later became Bombay Stock Exchange Limited (BSE).
BSE is widely recognized due to its pivotal and pre-eminent role in the development of the Indian capital market.
  • In 1995, the trading system transformed from open outcry system to an online screen-based order-driven trading system.
  • The exchange opened up for foreign ownership (foreign institutional investment).
  • Allowed Indian companies to raise capital from abroad through ADRs and GDRs.
  • Expanded the product range (equities/derivatives/debt).
  • Introduced the book building process and brought in transparency in IPO issuance.
  • T+2 settlement cycle (payments and settlements).
  • Depositories for share custody (dematerialization of shares).
  • Internet trading (e-broking).
  • Governance of the stock exchanges (demutualization and corporatization of stock exchanges) and internet trading (e-broking).
BSE has a nation-wide reach with a presence in more than 450 cities and towns of India. BSE has always been at par with the international standards. It is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. It is also the first exchange in the country and second in the world to receive Information Security Management System Standard BS 7799-2-2002 certification for its BSE Online Trading System (BOLT).
Benchmark Indices futures: BSE 30 SENSEX, BSE 100, BSE TECK, BSE Oil and Gas, BSE Metal, BSE FMCG

National Stock Exchange (NSE)

NSE was recognised as a stock exchange in April 1993 under the Securities Contracts (Regulation) Act. It commenced its operations in Wholesale Debt Market in June 1994. The capital market segment commenced its operations in November 1994, whereas the derivative segment started in 2000. NSE introduced a fully automated trading system called NEAT (National Exchange for Automated Trading) that operated on a strict price/time priority. This system enabled efficient trade and the ease with which trade was done. NEAT had lent considerable depth in the market by enabling large number of members all over the country to trade simultaneously, narrowing the spreads significantly.
The derivatives trading on NSE commenced with S&P CNX Nifty Index futures on June 12, 2000. The futures contract on NSE is based on S&P CNX Nifty Index. The Futures and Options trading system of NSE, called NEAT-F&O trading system, provides a fully automated screen based trading for S&P CNX Nifty futures on a nationwide basis and an online monitoring and surveillance mechanism. It supports an order-driven market and provides complete transparency of trading operations.

Benchmark Indices futures: Nifty Midcap 50 futures, S&P CNX Nifty futures, CNX Nifty Junior, CNX IT futures, CNX 100 futures, Bank Nifty futures
What are the names of stock exchanges operating in Foreign Countries.
1)     NASDAQ (National Association of Securities Dealers Automated Quotations
2)     LSE (London Stock Exchange)
3)     Frankfurt Stock Exchange


In India, the responsibility of regulating the securities market is shared by DCA (the Department of Company Affairs), DEA (the Department of Economic Affairs), RBI (the Reserve bank of India), and SEBI (the Securities and Exchange Board of India).

Legislations Governing Securities Market

There are four main legislations governing the securities market:
a.     The SEBI Act, 1992 establishes SEBI to protect investors and develop and regulate the securities market.
b.     The Companies Act, 1956 sets out the code of conduct for the corporate sector in relation to issue, allotment, and transfer of securities, and disclosures to be made in public issues.
c.     The Securities Contracts (Regulation) Act, 1956 provides for regulation of transactions in securities through control over stock exchanges.
d.     The Depositories Act, 1996 provides for electronic maintenance and transfer of ownership of demat securities.

MODEL QUESTIONS --- JAIIB principles of banking important questions

                  1) An account holder draws a cheque on a :
a)Banker of the Payee
b)Banker of the Drawee
c)Banker of the Drawer
d)Banker of the Endorsee                                              (c)
      2)Obligation of a Banker to maintain secrecy is applicable to
           a) Existing deposit accounts
                     b) Existing safe deposit accounts
                    c) Closed deposit accounts
                    d) a,b and c  (existing/closed)                               (d)  

                 3)A holder for value is :
                    a) A bank allows one of its clients to withdraw against
                       clearing of a cheque.
                    b) A bank which maintains  high net worth customers accounts
                    b) A bank which collects cheques for non customers
                    c) A bank which handles high value clearing cheques  (a)
                 4)State which of  the following is/are incorrect:
                   i) A Certificate of Deposit (CD) is issued by a banker
                  ii) In a garnishee order the banker on whom the order is issued
                      is judgement debtor’s debtor
                 iii) A book debt advance is secured by a mortgage
                  iv) CAMEL model is used by RBI inspectors
                  a) i and ii
                  b) ii
                  c) ii and iv
                  d) iii                                                                                                   (d)

                 5) RTGS stands for :
                    a)Real Time Settlement System
                    b)Real Time Gross Settlement System
                    c)Real Gross Settlement System
                    d)Real Gross Time Settlement System                (b)
      6) Your bank receives a cheque in inward clearing which  has
                     not been signed by the account holder. Which one of the
                     following reasons you will select to return the cheque?
                 a) Cheque is not signed by the payee
                 b) Refer to the drawer
                 c) Cheque is not signed by the drawee
                 d) Cheque is not signed by the endorsee                                           (b)

                  7) A purchaser of  a demand draft for Rs.500,000.00, lost the DD
                    To obtain a duplicate draft he needs to furnish          
                    a)A Power of  Attorney
                    b)A letter
                    c)An Indemnity
                    d)Amandate                                                                         (c ) 

                8) Which of the following is a material alteration?
                    a) An open cheque is crossed with two lines across the cheque
                    b) The purchaser of  a DD changes the word “order” to “bearer”
                    c) In a bearer cheque the holder of the cheque changes the
                        word “bearer” to “order” by striking “bearer” with a line
                   d) A blank endorsement on a cheque is converted into a full
                       endorsement                                                                              (b)

         9)  At a Big shopping mall,Hari withdraws cash from ATM of
                  Central Bank of India. Central Bank of  India is a:

                a) Paying Banker
      b) Collecting Banker
      c)Advising Banker
      d) Correspondent Banker                                                                 (a)
               10) )An order cheque is endorsed as “without recourse to me “ by
                      the endorser. This endorsement is known as
                a)Blank endorsement
                b)Restrictive endorsement
               c)Endorsement in full                                                                          (d)
              d)Sans recourse endorsement

                   11)  Match the following:
                    i)IRDA                                           A)  Insurance
                   ii)Garnishee Order               B)  Judgement debtor
                  iii)ATMs                                       C) Assignment
                 iv)Book debt                                  D) E- Banking

                 a) i-D,ii-C,iii-A,iv-B
                 b) i-A,ii-B,iii-D iv-C
                 c) i-B,ii-A,iii-D,iv-C
                 d)i-D,ii-C,iii-B,iv-A                                                         (b)                                       
                  12) Match the following:
             i)Classification of  Assets                     A) Narasimham
            ii)Allonge                                            B) Endorsement
           iii)Funds Transfer                                C) EFT
           iv)Crossed cheques                              D) Collecting banker

              a) i-A,ii-B,iii-C,iv-D
              b) i-D,ii-C,iii-A,iv-B
              c) i-A,ii-D,iii-B,iv-C
             d) i-B,ii-A,iii-C,iv-D                                                                    (a)
              13) Which one of  the following is secured by a mortgage?
                a) A cash credit against inventory
                b) An overdraft against book debts
                c) A term loan against land and building
                d) An educational loan                                                 (c )

              14) In case of a Non Resident Indian which of the following
                   is permitted?
                a)A SB account in joint names in Candian dollars
                b)A Fixed deposit account in Australian dollars
                c)A NRNR account in Indian rupees
                d)An EEFC account in Indian rupees                         (b)

              15)Once a Bearer is always a bearer is applicable in respect of
               a) A bill of  exchange payable after 90 days
               b) A cheque
               c) A demand promissory note
               d) A certificate of deposit                                           (b)

             16) State which of  the following statement/s is/are correct?
               i) KYC norms is applicable only to deposit accounts
              ii) Either or survivor is applicable to all joint accounts
             iii) A cash credit facility is a fund based limit
              iv) An incomplete negotiable instrument is called as an
                  inchoate instrument 
              a) i and ii
              b)ii and iii
              c)iii and iv
              d)iv                                                                             (c)

            17) A stop payment instruction of  a cheque can be issued by:
             a) The payee
             b) The endorsee
             c) The drawer
             d) The drawee                                                             (c)

           18) A customer has the flexibility to select the number of
                 instalments and also vary his monthly instalment amounts
                subject to certain conditions. Identify the account
            a) An EEFC account
            b) A variable recurring deposit account
           c)  A flexi deposit account
           d) A roaming current account                                      (b)



1)    Reserve Bank of India’s functions are classified into:
a)    Supervisory & Regulatory
b)    Promotional & Developmental
c)    Refinance Activities
d)   All of the above                                                                                (d)

2)    Minimum Bank Rate is:
a) 3%
b) 4%
c) 5%
d) None                                                                                                    (d)

3)    Sec ---- of  RBI Act,1934 gives sole power to RBI to issue currency notes
a) 10
b) 18
c) 22
d) 26                                                                                                         ( c )

4)    KYC means
a)    Know Your Customer very well
b)    Know Your  existing Customer very well
c)    Know Your  prospective Customer very well
d)   Satisfy yourselves about the customer’s identity and activities. (d)

5)    In a Garnishee Order, the banker on whom garnishee order served is:
a) Judgement   Debtor’s    Creditor
b) Judgement   Creditor’s  Creditor
c) Judgement   Creditor’s  Debtor
d) Judgement   Debtor’s    Debtor                                                       (d)

6)    Sec 131 of NI Act,1881 extends protection to the
a) Paying Banker
b) Collecting Banker
c) Advising Banker
d) Issuing Banker                                                                                  (b)

7)    Hypothecation is applicable in the case of
a) Movable goods
b) Immovable property
c) Book debts
d) Corporate guarantee                                                                                    (a)

8)    A cheque is dated 12/05/05.the due date is:
a) 12/08/05
b) 14/09/05
c) 12/11/05
d) None                                                                                                    (d)

9)    Charge created on LIC Policy is:
a) Hypothecation
b) Pledge
c) Assignment
d) Mortgage                                                                                             ( c )

10)  Your bank grants a working capital finance to ABC & Co, a partnership firm, against hypothecation of  inventory. The charge is to be registered with Registrar of Companies within
a) 30 days from the date of  advance
b) 30 days from the date of  hypothecation agreement
c) 30 days from the date of  sanction of  loan
d) None                                                                                                    (d)

11) Which one of the following is not barred by law of limitation?
      a) Pledge
      b) Hypothecation
      c) Banker’s lien
      d) Guarantee                                                                           ( c )

12) The term “Credit Management” covers
     a) Capital adequacy norms
     b) Risk management including Asset/Liability management
     c) Credit appraisal – decision and review of  loans & advances
     d) All of  the above                                                                (d)

13) Bank’s Assets are classified in to standard assets, substandard assets doubtful assets and loss assets, based on the recommendations of -------------------- Committee
    a) Rangarajan
    b) Narasimham
    c) Ghosh
    d) Tandon                                                                                (b)

14) The time taken to convert cash into raw materials, semi finished goods, finished goods and into cash , is known as
a)      Trade cycle
b)      Cash cycle
c)      Operating cycle
d)     Revolving cycle                                                                    ( c )

15) A company which pools money from investors and invests in stocks,
bonds, shares is called
a) A bank
b) An insurance company
c) Bancassurance
d) Mutual Fund                                                                          (d)
16) Bancassurance is
a)   An insurance scheme to insure bank deposits
b)   An insurance scheme to insure  bank advances
c)    A composite  financial service offering both bank and insurance products
d)   A bank deposit scheme exclusively for employees of  insurance companies                                                                                 ( c )

17) John & James are friends aged 14 & 15 respectively. They want to open a joint account in your bank. You will
a)      Allow them to open a joint account to be operated jointly
b)      Allow them to open a joint account with operating instructions Either or Survivor
c)      Allow them to open a joint account with operating instructions Former or Survivor
d)  Allow them to open a joint account with operating instructions Any one or
     Survivor                                                                                  (a)

18) Mr.Atmaram as director of a Ltd company expired. Bank received a cheque signed by  Mr.Atmaram as director of  the Ltd company. The bank
a)      Can honour the cheque only after obtaining confirmation from other directors
b)      Can honour the cheque
c)      Cannot hounour the cheque
d)     The company should issue a stop payment instructions to the bank 
19) Tele banking service is based on
a)      Virtual Banking
b)      Online Banking
c)      Voice processing
d)     Core Banking                                                                       ( c )

20) In a securitisation deal, the role of  a Special Purpose Vehicle (SPV) is
a)    To acquire large Non Performing Loans (NPA)
b)    To acquire such loans from a bank or financial institution
c)    To acquire such loans for a transfer price, with or without recourse
d)   To manage the acquired loans  for the purpose of  realization or holds them as investment till maturity                                              (d)

     21)Securitisation is a process of acquiring the loans classified as
a) Bookdebts
b) Performing debts
c) Bad debts
d) Non performing debts                                                          (d)

22)The minimum percentage of  Priority Sector advances to be
       maintained by foreign banks in India
a) 40%
b) 18%
c) 32%
d) 60%                                                                                          ( c )

23) Loan for fish rearing is covered under Prirority Sector as ----------- advances
a)   Direct Agriculture
b)   Indirect Agriculture
c)   Self Employment Scheme
d)   Allied to indirect Agriculture                                               (a)

24) Cash Budget is a statement of
a)   Cash-Non cash funds
b)   Cash receipt and Cash payments
c)   Another name for cash flow
d)   None                                                                                      (b)

25) In bank’s parlance credit risk in lending is
a)   Default of the banker to maintain CRR
b)   Default of the banker to maintain SLR
c)   Default of the banker to release credit to the customer
d)   Default of the  customer to repay the loan                      (d)

26) The apex institution which handles refinance for agriculture and rural development is called:
a)   RBI
b)   SIDBI
d)   SEBI                                                                                       ( c )

27) Long Form Audit Report (LFAR) is prepared and submitted by
a)   RBI inspectors
b)   Internal inspectors
c)   Statutory auditors                                                                 ( c )
d)   Concurrent auditors

     28) As per FIMMDA’s guidelines, the Mid-Office is responsible for:
a)  Dealing activities
b)  Risk Management
c)  Reconciliation
d) Confirmation of  deals                                                          (b)

29) Interest is calculated on actual/365 days basis in respect of the
       following products, except one :
a)    Call Money
b)    Notice Money
c)    Term Money
d)   GOI dated securities                                                                        (d)

30) Which was the first Mutual Fund started in India:
a) SBI Mutual Fund
b) Kotak Pioneer Mutual Fund
c) Indian Bank Mutual Fund
d) None of  the above                                                                           (d)

31) The regulator for Mutual Funds in India is:
c) RBI
d) SEBI                                                                                                    (d)

32) FIMMDA’s general principles and procedures are applicable to:
a) Fixed Income Markets
b) Money Markets
c) Derivatives Markets
d) All of the above                                                                                  (d)

33) Your bank’s customer  XYZ Ltd, enjoys a CC limit of Rs.1,00,000.00
      The CC account shows a credit balance of Rs,10,205.00.
      The relationship between your bank and XYZ Ltd is:
a)    Debtor/Creditor
b)    Creditor/Debtor
c)    Bailor/Bailee
d)   Bailee/Bailor                                                                                     (a)

34) The right of set-off is:
a) Customer’s Right
b) Customer’s Obligation
c) Banker’s Right
d) Banker’s Discretion                                                                          (d)

35)Which of  the following forms of business are permissible under  BR Act:
a) Borrowing
b) Issuance of  Letters of  Credit
c) Buying and selling of  bullion
d) All of  the  above                                                                                (d)

36) A Co-Operative Bank operating in different States are regulated by:
a) State Co-Operative Societies Act
b) Banking Regulation Act
c) Multi Unit Co-Operative Societies Act
d) Banking Laws (applicable to Co-Operative Societies)               ( c )

37) In respect of  Regional Rural Banks, the share holding pattern is:
a) Central Government 50%,State Government 35%,Sponsoring Bank 15%
b) Central Government 50%,State Government 15%,Sponsoring Bank 35%
b) Central Government 15%,State Government 35%,Sponsoring Bank 50%
b) Central Government 35%,State Government 50%,Sponsoring Bank 15%
38) Law of limitation is not applicable in respect of :
a) Advance against pledge of  shares
b) CC granted against hypothecation of inventory
c) Term loan secured by mortgage of  Plant & Machinery
d) Bank Term Deposit                                                                           (d)

39) A bank in India, wants to undertake capital market activities, it should:
a) Obtain special license from AMFI
b) Obtain special license from FIMMDA
     c)  Both a and b
     d)  Register with SEBI                                                                            (d)

    40) FIMMDA stands for:
    a) Foreign Exchange Markets and Derivative Markets
    b) Fixed Income Markets Money Markets and Derivatives Markets
    c) Fixed Income Markets and Derivatives Markets
    d) None of  the above                                                                             (b)

  41) The Capital Adequacy Ratio is :
  a)  6%
  b)  8%
  c)  9%
  d) 10%                                                                                                          ( c )

42) Except one of  the following others are known as Non Fund based facilities:
a) Letters of  Credit
b) Bank Guarantees
c) Co-acceptance of  Bills
d) Trust Receipt                                                                                            (d)

43) FIMMDA’s guidelines cover the following products, except one:
a) Call Money
b) Cross Currency Interest Rate swaps
c) Commercial Paper
d) Certificate of  Deposit                                                                             (b)

44) Except one of  the following others are part of Public Sector Banks:
a) State Bank of  Hyderabad
b) Central Bank of  India
c) Regional Rural Bank, sponsored by a nationalized bank
d) HDFC Bank                                                                                              (d)

45) A banker is expected to honour the cheques within the specified banking hours as per Section  of  NI Act,1881
a)    22
b)    25
c)    31
d)   65                                                                                                        (d)