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As per extant guidelines, which statement is correct with reference to SARFAESI Act 2002?
Agriculture loans are not eligible
In 2004, the Act was amended based on Supreme Court decision in case of Transcore vs Union of India.
Loan with a balance of Rs. 1 lac is eligible
An officer in Scale IV or above or a person approved by bank’s Board of Directors can initiate action.

Bank-X has sent a notice for possession of a plot of land mortgaged to the bank for a loan, under SARFAESI Act. The borrower/mortgager objects. What is the time period during which the bank is to send reply to the objection:
3 days from date of receipt of objection
one week from date of receipt of objection
10 days from date of receipt of objection
two weeks from date of receipt of objection

What is amount of capital that an Asset Reconstruction Company (ARC) should have as per RBI directives:
Rs.100 cr
Rs.125 cr
Rs.150 cr
Rs.200 cr

Which of the following is not correct in case of an ARC ?
It acquires NPA accounts from banks at discount for realization of such accounts.
It should invest at least 5% in security receipts for each securitized transaction
Its networth should be equal to 10% of the value of NPA accounts outstanding with it.
It should commence business within 6 months of date of RBI registration.

If a borrower wants to approach DRT against possession notice received from bank, it can do so within:
60 days
45 days
30 days
15 days

In a consortium account, the banks have different opinion to take action under SARFAESI Act.
Action can be initiated only if majority of banks consent
Action cannot be taken even if one bank objects
Action can be taken if banks holding 75% share by value consent
Action can be taken if banks holding 75% share by value and 60% by no. give consent.

Under the provisions of SARFEASI Act 2002, where the defaulting borrower contests the seizure of the assets proposed for possession by the bank, whom can he approach:
Supreme Court
High Court having the jurisdiction
DRT having jurisdiction
DRAT

What kinds of advances out of the following are covered under the provisions SARFAESI Act 2002 ?
With sanctioned limit upto Rs. 1lac
With outstanding balance upto Rs.1lac.
With outstanding balance above Rs. 1lac.
With outstanding of Rs.1lac or above excluding recorded interest

What is the time period of the notice which is required to be given by a bank for sale of security after taking possession under SARFAESI Act 2002 ?
15 days
30 days
45 days
60 days

What is the time period of the notice to be given by a bank for taking possession of a security SARFAESI Act 2002 ?
15 days
30 days
45 days
60 days

Report on willful defaulters is to be sent to RBI (a) for all willful defaulters (b) on quarterly basis (c) for non-suit filed willful defaulters of Rs. 25 lac and above (d) on half yearly basis:
a&b
b&c
a&d
c&d

What is the amount of court fee for filing a case in a Lok Adalat?
Minimum Rs. 750.
Above the amount of Rs. 5 lac, Rs. 100 for each Rs. 1lac.
Max amount is Rs. 10000
No court fee is payable

Which among the following is not correct in connection with the institution of Lok Adalat ?
Its awards are deemed to be decrees of the civil courts.
Its awards are final and binding on all the parties.
Appeal can be made against the awards by deposit of 75% of the amount of award
Normal Lok Adalt can entertain cases upto Rs. 20 lac.

Lok Adalats are constituted under the provisions of which of the following:
Judicial Services Act
State Legal Services Act
Legal Services Authorities Act
Lok Adalats Act

What is the minimum amount which a Lok Adalat can entertain when conducted by DRT ?
Rs. 5 lac
Rs. 10 lac
Rs.10 lac and above
above Rs. 20 lac

The primary objective of securitization under the SARFAESI Act, 2002 is to sell the secured Non-Performing Assets (NPA) loans to investors through a special purpose vehicle called
Securitization Company
Qualified Institutional Buyers
Asset Reconstruction Company
Reserve Bank of India
Debt Recovery Tribunal.

Which of the following statements is false in respect of asset reconstruction involving securitization and enforcement of security interest under SARFAESI Act, 2002?
Rescheduling of payment of dues payable by the borrower
Enforcement of security interest in accordance with the provisions of the Act
Settlement of dues payable by the borrower
Taking possession of securities
Issue of security receipts to the borrower.

Spring Valley Constructions has borrowed an amount of Rs.15,00,000 from City Bank by mortgaging its open land. As the firm has continuously defaulted in the repayment of the loan, City Bank has classified the loan as non-performing asset in its books, in accordance with Reserve Bank of India (RBI) guidelines. Then City Bank issued a notice to Spring Valley Constructions demanding discharging of full liabilities within 60 days, failing which it intends to secure the open land. Which of the following statements is true in respect of these circumstances under the SARFAESI Act, 2002?
The bank can take over the open land and proceed to recover its dues directly without any intervention of any Court or Tribunal
The bank can take over the open land and proceed to recover its dues only with the prior approval of the RBI
The bank has to apply to the Court before taking over the open land and proceeding to recover its dues
As the bank was a secured creditor, it cannot invoke the provisions of the SARFAESI Act, 2002
The bank can take over the open land and proceed to recover its dues only with the prior approval of the Debt Recovery Tribunal (DRT).

Enforcement under the provisions of the SARFAESI Act, 2002 applies to
Secured loans classified as non-performing assets
Unsecured loans classified as non-performing assets
Secured loans not classified as non-performing assets
Unsecured loans not classified as non-performing assets
Unsecured loans whether classified or not classified as non-performing assets.

Which of the following acquires NPA (Non Performing Asset) loans from banks and financial institutions by issuing debentures, bonds or by entering into special arrangements under the SARFAESI Act, 2002?
Reserve Bank of India
Qualified Institutional Buyers
Debt Recovery Tribunal
Central Government
Asset Reconstruction Company.

Which of the following is allowed as an exemption from the enforcement under the provisions of the SARFAESI Act, 2002?
Copyright
Patent
Financial asset not exceeding Rs.1,00,000
Trademark
License.

Mohan TMT Ltd., had borrowed an amount of Rs.20 lakh from Urban Bank. As the company has continuously defaulted in the repayment of the loan, Urban Bank has classified the loan as nonperforming asset in its books, in accordance with Reserve Bank of India (RBI) guidelines and issued a notice to Mohan TMT Ltd., for discharging full liabilities, specifying the details of amount payable and secured assets to be enforced in the event of non-payment. After expiry of 60 days from the date of notice, Urban Bank took possession of the secured property and sold it to a third party. Which of thefollowing statements is true in respect of above circumstances under SARFAESI Act, 2002?
Urban Bank can only take possession of the secured property and appoint a person to manage it until the loan is repaid
Urban Bank can only transfer the secured property by way of lease to a third party
Urban Bank can only transfer the secured property by way of assignment to a third party
Urban Bank can transfer the secured property by sale/lease/assignment
Urban Bank can transfer the secured property only with the approval of the Debt Recovery Tribunal.

Under SARFAESI Act, 2002, a borrower aggrieved by the notice of a bank intimating the details of amount due and the security interest to be enforced in case dues are not recovered from 60 days from the date of notice, has a right to appeal to
Debt Recovery Tribunal (DRT)
Debt Recovery Appellate Tribunal (DRAT)
Chief Metropolitan Magistrate
District Magistrate
Reserve Bank of India.

Consequent upon amendments in SARFAESI Act, now any debtor can appeal before Debt Recovery Appellate Tribunal against an order of Debt Recovery Tribunal. For this, the debtor is required to deposit 50% o f the dccrced amount. The Debt Recovery Tribunal is empowered to lower this amount from 50% of decreed amount to not less than ..........of decreed amount.
40%
30%
25%
20%

Who among the following can act as authorised officer & sign the notice for possession under SARFAESI Act. on behalf of the bank?
Any officer of the Bank
Branch Manager of the Bank
Law Officer of the Bank
Any officer of the Bank in Scale IV or above

If a borrower wants to file an appeal with DRAT against the decision of DRT under SARFAESI Act, how much amount it will be required to deposit:
75% of the amount
50% of the amount
25% of the amount
10% of the amount

What is the time period under SARFAESI Act, for replying the borrower, in case he raises an objection for possession of the asset: a: b: 30 days c: 7 days d: 3 days e none of the above
60 days
30 days
15 days
7 days

As per the Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, which of the following classification is incorrect?
Standard assets
Substandard Assets
Dubious Assets
Loss Assets
None of these

An asset, including a leased asset, becomes non performing when it ceases to generate income for the bank. which of the following statements in respect of an non performing asset (NPA) is incorrect?
interest and/ or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan,
the account remains ‘out of order’ in respect of an Overdraft/Cash Credit (OD/CC),
the bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
the instalment of principal or interest thereon remains overdue for two crop seasons for long duration crops.

An account should be treated as '----(A)--------' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date ofBalance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as '-----(B)---------'.(A) & (B) respectively stand for
out of order, overdue
outof order. out of order
overdue, out of order
overdue, overdue

Which of the following accounts will be classified as NPA?
Loan against Life Insurance Policy (LIP) when the balance outstanding is more than the limit sanctioned for 6 months but within surrender value of LIP
Interest debited in the educational loan account during moratorium period has not been recovered simultaneously
Interest debited in a housing loan account for last 6 months has not been recovered from the date of sanction and repayment was to start after 12 months from sanction
Loan is guaranteed by State Govt. and is overdue for more than 90 days

Which of the following accounts will be classified as NPA?
Loan against gold ornaments where the interest/ instalments are in arrears for more than 90 days but the balance outstanding is within the value of security with requisite margin.
Interest debited in the educational loan account during moratorium period has not been recovered simultaneously
Interest debited in a housing loan account for last 6 months has not been recovered from the date of sanction and repayment was to start after 12 months from sanction
Loan is guaranteed by Central Govt. and is overdue for more than 90 days

With effect from March 31, 2005, a substandard asset would be one, which has remained NPA for a period less than or equal to ----------------- months. Such an asset will have well defined credit weaknesses that jeopardise the liquidation of the debt and are characterised by the distinct possibility that the banks will sustain some loss, if deficiencies are not corrected.
3
6
9
12

A loan classified as doubtful has all the weaknesses inherent in assets that were classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, – on the basis of currently known facts, conditions and values –highly questionable and improbable.An asset would be classified as doubtful if it has remained in the substandard category for a period of ----------- months.
6
12
18
24

The policy of income recognition has to be objective and based on the record of recovery. Internationally income from non-performing assets (NPA) is not recognised on accrual basis but is booked as income only when it is actually received.Which of the following statements in respect of income recognition is incorrect?
The banks should not charge and take to income account interest on any NPA.
Interest on advances against Term Deposits, National Savings Certificates (NSCs), Indira Vikas Patras (IVPs), Kisan Vikas Patras (KVPs) and Life policies may be taken to income account on the due date, provided adequate margin is available in the accounts.
If Central Government guaranteed advances become NPA, the interest on such advances should not be taken to income account unless the interest has been realised.
Interest on advances against government securities be taken to income account on the due date, provided adequate margin is available in the accounts.

Which of the following statements is correct regarding reversal of interest or fees in the case of NPA accounts?
Entire interest accrued and credited to income account in the past periods, should be reversed, if the same is not realised.
The interest should not be reversed in the case of Government guaranteed accounts.
Only interest should be reversed but commission/fees etc should not be reversed.
All of these
None of these

Which of the following accounts will be classified as NPA?
Cash credit limit which has not been renewed for 3 months from due date
Short duration crop which is overdue for 2 crop seasons only
Cash credit limit in which stock statement has not been received for last 3 months
Bill Discounted with usance period of which was discounted 3 months back
All of the above

In the case of sub standard assets which were unsecured ab initio, the provisioning is required to be made at the rate of--------------------of outstanding balance.
15%
20%
25%
30%

The primary responsibility for making adequate provisions for any diminution in the value of loan assets, investment or other assets is that of the bank managements and the statutory auditors.Provisioning is required to be made In which of the following category of accounts.
Standard
Sub standard
Doubtful
Only (2) & (3)
All of these

As per extent guidelines, the provision on an advance made to a farmer or to an entrepreneur in SME sector in the standard category will be ___ % of the outstanding balance.
0.25%
0.40%
1%
0.50%
None of these

An advance was granted to farmer for poultry. Account is standard and outstanding in the account is Rs 100,000 whereas realizable value of security is Rs 60,000 only. How much provision is to be made?
Rs2500
Rs 2000.
Rs 400
Rs 250.

An advance has been granted to a farmer for construction of house. The account is standard and outstanding in the account is Rs 100,000. How much provision is to be made on this account?
Rs 250.
Rs,400
Rs.750.
none of these.

In respect of Govt. guaranteed advances, which of the following is correct regarding application of NPA norms:
For State Govt guaranteed loans, NPA norms will be applicable as in other cases.
For Central Govt guaranteed loans income recognition norms will be applicable as in other cases.
For Central Govt guaranteed loans, provisioning will be made only if guarantee has been invoked and Central Govt repudiates the guarantee.
All of these
None of these

In which case the provisions of the SARFAESI ACT is applicable ?
Bank A has extended a c/c limit of the customer, and the acount is in credit as of 31st March,2013
Bank B has granted a clean overdraft to one of the clients and the operations in the acount as of 31st March,2013 are satisfactory
As of 31st March,2013 Bank M converted hypothecation charge to a pledge charge for an working capital line of credit
Bank Y has clasifed an aset as non- performing asset as of 31st March,2013

A "wilful default" would be deemed to have occurred if
The unit has defaulted in meeting its payment / repayment obligations to the lender even when it has the capacity to honour the said obligations.
The unit has defaulted in meeting its payment / repayment obligations to the lender and has not utilised the finance from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes.
The unit has defaulted in meeting its payment / repayment obligations to the lender and has also disposed off or removed the movable fixed assets or immovable property given by him or it for the purpose of securing a term loan without the knowledge of the bank/lender.
any of the above viz (1), (2) (3) has occured.

Banks/ Financial Institutions have to report to the RBI every quarter about the cases of wilful defaulters of Rs ___ lakhs or above.
25
50
75
100

Which of the following is true in respect of identification of NPAs.
An account where the regular/ ad hoc credit limits have not been reviewed/ renewed within 180 days from the due date/ date of adhoc sanction.
A working capital account in which DP is arrived at with a stock statement older than 3 months and the irregularity persists for a continuous period of 180 days
If realizable value of security is less than 50% of the value as per previous inspection, the account has to be classified as doubtful / loss asset as appropriate.
All of these.

An account became NPA on 16.7.11. Balance outstanding is Rs 4.00 lac. Realisable value of security is Rs 1.50 lac. Loan is guaranteed by ECGC and cover is 50%. How much provision will have to be made as on 31.3.14 ?
Rs.1.55 LAKHS.
Rs.1.70 LAKHS.
Rs.1.85 LAKHS.
Rs.1.62 LAKHS.

An account became NPA on 15.09.11. Balance outstanding is Rs 10 lac. Realisable value of security is Rs 1.50 lac. Loan is guaranteed by Credit Guarantee Trust and cover is 75%. How much provision will have to be made as on 31.3.14.
Rs. 2. 12 lakhs
Rs. 2.72 lakhs
Rs. 2.62 lakhs
Rs. 2.18 lakhs

Provisioning Coverage Ratio (PCR) is essentially the ratio of provisioning to gross non-performing assets and indicates the extent of funds a bank has kept aside to cover loan losses. which of the following statements is incorrect with reference to Provisioning Coverage Ratio?
The PCR of 70 percent may be with reference to the gross NPA position in banks as on 31st March 2011.
The surplus of the provision under PCR vis-a-vis as required as per prudential norms should be segregated into an account styled as “countercyclical provisioning buffer”.
This buffer will be allowed to be used by banks for making specific provisions for NPAs during periods of system wide downturn, with the prior approval of RBI.
The PCR of the bank should be disclosed in the Notes to Accounts to the Balance Sheet.

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