1. Which of the following is a key difference between NEFT and RTGS?
There is a minimum limit for NEFT but no minimum limit for RTGS.
NEFT works on a Deferred Net Settlement (DNS) basis; RTGS is Gross Settlement.
RTGS is only for cross-border transfers.
RTGS operates 24x7, NEFT does not.
Explanation:
NEFT transactions are settled in batches (DNS), whereas RTGS transactions are settled individually and continuously (Real-Time Gross). Now both operate 24x7.
2. Cash Management Services (CMS) offered by banks primarily aim to help corporates in:
Managing employee provident funds.
Printing currency notes.
Evading taxes legally.
Optimizing liquidity by speeding up receivables and managing payables.
Explanation:
CMS products focus on efficient inflow and outflow of funds (Collection and Payment services) to minimize idle cash and improve working capital management.
3. A Demand Draft (DD) cannot be countermanded (stopped) by the purchaser because:
It is a bill of exchange drawn by a bank on its own branch (commitment of the bank).
It is a prepaid instrument.
It is illegal to stop a DD.
The purchaser is not the drawer.
Explanation:
Once issued, a DD is a direct commitment of the bank to pay. The purchaser is not the drawer; the bank is. Therefore, the purchaser cannot simply stop payment like a personal cheque unless there is a court order or loss of instrument.
4. A locker is hired by A and B jointly with instructions "Either or Survivor". A dies. B wants to remove the contents. What should the bank do?
Freeze the locker and ask for succession certificate.
Allow B only to view but not remove contents.
Allow B to remove contents after taking an inventory in the presence of A's heirs.
Allow B to operate and remove contents freely.
Explanation:
In a locker with a survivorship clause ("Either or Survivor"), the bank is validly discharged by allowing the survivor to access and remove contents. The bank need not insist on the presence of legal heirs unless there is a court order restraining it.
5. As per the revised RBI guidelines on Safe Deposit Lockers (2021), banks must ensure that the locker agreement is stamped according to the Stamp Act of the respective state. Who bears the cost of the stamp paper and execution of the agreement?
The Bank.
Waived for existing customers.
Shared equally by Bank and Customer.
The Locker Hirer (Customer).
Explanation:
In a significant shift for consumer protection, the revised RBI guidelines mandate that the Bank shall bear the cost of stamp paper and other expenses related to the execution of the locker agreement for both new and existing locker hirers. This ensures standardization and removes the financial burden of documentation from the customer.
6. If a bank delays the issuance of a duplicate Demand Draft (in lieu of a lost one) beyond a fortnight (14 days) from the receipt of the request and necessary documents, what is the penalty?
A lump sum penalty of ?500.
Interest at Fixed Deposit rate for the delay period.
No penalty if the delay is due to verification.
Interest at Savings Bank rate for the delay period.
Explanation:
To protect customers, RBI mandates that a duplicate DD must be issued within 14 days. If there is a delay beyond this period, the bank must pay interest at the rate applicable for Fixed Deposits of corresponding maturity to the purchaser, to compensate for the loss of use of funds.
7. If an NEFT transaction cannot be credited to the beneficiary account (due to invalid account number, etc.), the destination bank must return the funds to the originating bank within:
T+1 day.
2 hours of receipt of the batch.
24 hours.
End of the day.
Explanation:
RBI guidelines mandate that if the beneficiary account cannot be credited for any reason, the destination bank must return the transaction to the originating bank within 2 hours of the completion of the batch in which the transaction was processed (B+2).
8. Which account allows Returning Indians (NRIs returning to India for permanent settlement) to hold their foreign earnings in foreign currency?
RFC (Resident Foreign Currency) Account
NRO Account
FCNR (B) Account
NRE Account
Explanation:
The Resident Foreign Currency (RFC) account is specifically designed for returning NRIs to park their foreign currency earnings (pension, savings abroad) without converting them to Rupees, protecting them from exchange rate risk. NRE/FCNR accounts must be closed/converted upon return.
9. How frequently are NEFT batches settled currently (as of 24x7 operation)?
Every 15 minutes.
Every 30 minutes.
Every 60 minutes.
Real-time (continuously).
Explanation:
Since December 2019, NEFT operates on a 24x7x365 basis with half-hourly batches. There are 48 half-hourly batches every day. (Note: RTGS is real-time, NEFT is batch-wise).
10. If a locker hirer defaults on rent payment for 3 consecutive years, what action can the bank take as per RBI guidelines?
Forfeit the contents to the government.
Sell the contents immediately.
Transfer the contents to the hirer's savings account.
Break open the locker after giving due notice to the hirer.
Explanation:
The bank has the discretion to break open the locker after following due procedure (giving notice, allowing reasonable time). The contents must be inventoried in the presence of independent witnesses and kept in safe custody.
11. If a Standing Instruction (SI) for payment of insurance premium fails due to insufficient funds in the account:
The bank must inform the customer immediately.
The bank must grant an overdraft.
The bank is not liable, as the customer failed to maintain funds.
The bank is liable to pay the premium to the insurance company.
Explanation:
An SI creates an agency relationship where the bank agrees to pay "subject to availability of funds." If funds are insufficient, the bank is not obligated to pay or create an overdraft, and thus is not liable for the lapsed policy.
12. Can a Safe Deposit Locker be hired by a minor?
Yes, jointly with a guardian (Natural/Legal).
No, not even with a guardian.
Yes, if the minor is above 14 years.
Yes, independently.
Explanation:
Banks typically do NOT allow lockers to be hired by minors (even with guardians) because a minor cannot be bound by the locker contract (lease agreement). Locker facility is for adults who can contract.
13. Can a bank charge a fee for executing Standing Instructions?
Yes, as per the bank's service charge policy.
No, RBI prohibits it.
No, it is a free service.
Yes, but only for corporate customers.
Explanation:
Executing SIs involves administrative effort and liability. Banks are permitted to levy reasonable service charges for setting up and executing SIs, provided these are transparently communicated.