1. JOSEPH’S COLLEGE OF COMMERCE (AUTONOMOUS)

END SEMESTER EXAMINATION –MARCH / APRIL 2014

B.COM – IV SEMESTER

THEORY AND PRACTICES OF BANKING

Duration: 3 hours                                                                                        Max Marks: 100

SECTION – A

1. Answer ALL the questions. Each carries 2 marks.                                 (10 x 2 = 20)

                

1. What do you mean by Universal Banking?
2. How will you assess damages in the case of a wrongful dishonour of a cheque?
3. Can a money lender be called a banker? Why? / Why not?
4. Can a banker disclose the account of his customer to the following persons when they demand for such a disclosure:
   1. Payee of a cheque,
   2. An Income Tax Officer
5. The document drawn by a debtor on the creditor agreeing to pay a certain sum is called _______. Mention any two features of that instrument.
6. What do you mean by an inchoate instrument?
7. What is assignment? Which are the two types?
8. What do you mean by countermanding action? Who has the right to countermand?
9. When will a banker act as a collecting banker? Mention any two duties of a collecting banker?
10. Why is RBI called as ‘Lender of last resort’?

 

SECTION – B

 

1. Answer any FOUR Each carries 5 marks.                            (4 x 5 = 20)

 

11. Arjun has to get Rs. 3000 from his customer named Mr. Mathew. For this Mr.Arjun prepares a document as follows, “Three months after date I promise to receive Rs.3000 from Mathew for value received”. The above document is properly dated, stamped and signed by both of them. Is this document a Negotiable Instrument? Why? /why not? If the answer is no suggest possible alterations in the words or sentence to make this a negotiable instrument.

 

12. Discuss the legal stand that would be taken by a banker when the following cheques are presented to him for encashment:
13. a) PRE-DATED CHEQUE
14. b) POST DATED CHEQUE
15. c) STALE CHEQUE
16. d) UNDATED CHEQUE

 

13. Banking is essentially a business dealing with money and credit and they run the risk of default in repayment. Therefore banks have to follow a cautious policy in the matter of lending. Discuss.
14. Banks have Earning Assets which is the main source of their income. Also they may have Non- Performing Assets. Explain the various Earning Assets and when they will be considered Non-performing.

 

15. Discuss in detail the statutory protection granted to a Collecting Banker in India.

 

16. Even though the banker is conferred with the right of lien, he does not have the right on certain properties of the customer. Explain Banker’s general lien and exemptions.

 

SECTION – C

 

• Answer any THREE q Each carries 15 marks.                      (3 x15 = 45)

  

17. Samson has two hectares of Land and 100 grams of Gold with him. He wishes to raise as much money as possible against the security of the above assets for starting a business for which he approaches a Bank. Discuss in detail the modes of ‘charge’ that can be created on his property. Discuss how the banker would deal with this situation.

 

18. Suppose the Reserve Bank of India is of the opinion that the inflation rate is high in India, what are the ways by which it can try to bring down the inflation rate.

 

19. Define the term ‘banker’ and ‘customer’ and bring out the relationship that exists between them.

 

20. Discuss in detail the classification of Banks.

 

21. Enumerate the points which a current account ledger keeper must scrutinise before passing a cheque for payment.

Mr. Abdul Syed writes a cheque of Indian Bank and hand over the same to Mr.Sreenivaasan. He crosses it to Bank of Baroda where he has the account and submits it. Who is the drawer, drawee, paying banker and collecting banker in this case. Mention the type of crossing done here.

 

SECTION – D

1. Compulsory question.                                                                                                (15 marks)

 

22) Answer the following stating the reasons:

 

1. i) Is the banker justified in :
   1. Returning and not collecting a cheque crossed to two banks.
   2. Paying a cheque to B which is drawn in favour of A and marked ‘Not Negotiable’
   3. Paying a cheque drawn on the customer’s current account when there is insufficient balance in it by making a lien on the shares held in the same customer’s safe custody.                                              (1+2+2=5 )

 

1. ii) SIB branch receives a garnishee order attaching all sums owing from the bank to its customer Mr. X.  He has following accounts at the branch:
   1. A current account in the name of X with a balance of Rs.3500
   2. A joint current account in the name of X and Y with a balance of Rs. 1000.
   3. A clean unsecured loan account in the name of X wherein the balance due to the bank is 1000.

As a banking student, explain to Mr. X about freezing of his accounts.

(5 MARKS)

 

• iii) What do you mean by endorsement? Discuss the various types of conditional endorsements.                                     (5 MARKS)

 

 

 

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