Retail Liabilities

1. What is the primary purpose of the Consumer Protection Act, 2019?

A) To regulate banking services

B) To establish a three-tier dispute resolution system for consumer complaints

C) To increase the value of goods and services

D) To replace the Banking Ombudsman Scheme

Answer: B) To establish a three-tier dispeeute resolution system for consumer complaints

2. Under the Banking Ombudsman Scheme, what is the maximum compensation amount
for loss due to deficiency in service?

A) ₹50 lakh

B) ₹1 lakh

C) ₹10 lakh

D) ₹20 lakh

Answer: D) ₹20 lakh

3. What is the time limit for filing a complaint with the Banking Ombudsman after the issue
arises?

A) 1 year

B) 6 months

C) 2 years

D) 30 days

Answer: A) 1 year

4. Which of the following is NOT an eligible complaint under the Banking Ombudsman
Scheme?

A) Disputes over insurance claims

B) Unauthorized transactions

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C) Non-payment of deposit accounts after maturity

D) Deficiency in banking services

Answer: A) Disputes over insurance claims

5. How long does the District Consumer Disputes Redressal Commission have to resolve a
complaint if no lab testing is required?

A) 5 months

B) 1 month

C) 3 months

D) 6 months

Answer: C) 3 months

6. What is the role of the Consumer Protection Department of the RBI in the Banking
Ombudsman Scheme?

A) To appoint the Banking Ombudsman

B) To supervise the implementation of the scheme

C) To serve as the final authority for appeals

D) To handle all customer complaints directly

Answer: B) To supervise the implementation of the scheme

7. What is the minimum cash transaction amount that requires a Cash Transaction Report
(CTR) to be filed?

A) ₹15 lakh

B) ₹10 lakh

C) ₹20 lakh

D) ₹5 lakh

Answer: B) ₹10 lakh

8. Which authority can impose a penalty of up to ₹1 crore for each failure to report
transactions under the PMLA obligations?

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A) RBI

B) IRDAI

C) SEBI

D) FIU-IND

Answer: D) FIU-IND

9. Under the Financial Action Task Force (FATF) compliance, what must banks do
regarding Politically Exposed Persons (PEPs)?

A) Ignore them in transaction monitoring

B) Automatically approve their transactions

C) Identify and monitor them as high-risk customers

D) Freeze their accounts without reason

Answer: C) Identify and monitor them as high-risk customers

10. What is the threshold for reporting transactions under the Cross Border Wire Transfer
Report (CBWTR)?

A) ₹10 lakh

B) ₹1 lakh

C) ₹2 lakh

D) ₹5 lakh

Answer: D) ₹5 lakh

11. Which document is NOT required for Customer Identification Procedures (CIP) for
individuals?

A) Business License

B) PAN

C) Aadhaar

D) Voter ID

Answer: A) Business License

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12. What is the maximum balance allowed in accounts for individuals using OTP-based e-
KYC?

A) ₹5,00,000

B) ₹2,00,000

C) ₹50,000

D) ₹1,00,000

Answer: D) ₹1,00,000

13. Which of the following is a requirement for Customer Due Diligence (CDD) for
companies?

A) Partnership Deed

B) Certificate of Incorporation

C) Utility Bill

D) Trust Deed

Answer: B) Certificate of Incorporation

14. What is the maximum compensation amount for financial loss due to deficiency in
banking service as per the guidelines?

A) ₹10 lakh

B) ₹20 lakh

C) ₹25 lakh

D) ₹15 lakh

Answer: B) ₹20 lakh

15. What is the first stage of money laundering?

A) Placement

B) Fund Movement

C) Layering

D) Integration

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Answer: A) Placement

16. Who is responsible for filing an appeal if a complainant is not satisfied with the
Ombudsman’s decision?

A) The Financial Intelligence Unit

B) The Principal Officer

C) The Deputy Governor of RBI

D) The Ombudsman

Answer: C) The Deputy Governor of RBI

17. Under the Prevention of Money Laundering Act (PMLA), what is the punishment for
money laundering?

A) Imprisonment for 5-10 years + Fine

B) Imprisonment for 3-7 years + Fine

C) Imprisonment for 1-3 years

D) Imprisonment for 10-15 years

Answer: B) Imprisonment for 3-7 years + Fine

18. What is the role of the Financial Intelligence Unit (FIU-IND)?

A) To analyze suspicious transaction reports

B) To issue banking licenses

C) To conduct customer due diligence

D) To oversee the Ombudsman’s decisions

Answer: A) To analyze suspicious transaction reports

19. How long do banks need to maintain transaction records after account closure?

A) 10 years

B) 3 years

C) 5 years

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D) 7 years

Answer: C) 5 years

20. What is the threshold for filing a Cash Transaction Report (CTR)?

A) Cash transactions ≥ ₹10 lakh

B) Cash transactions ≥ ₹20 lakh

C) Cash transactions ≥ ₹5 lakh

D) Cash transactions ≥ ₹15 lakh

Answer: A) Cash transactions ≥ ₹10 lakh

21. What is the primary purpose of the Video-Based Customer Identification Process (V-
CIP)?

A) To assess customer creditworthiness

B) To conduct in-person interviews with customers

C) To verify customer identities in real-time with geo-tagging

D) To collect customer feedback on services

Answer: C) To verify customer identities in real-time with geo-tagging

22. What is the threshold for identifying Beneficial Owners (BOs) in a company?

A) Person owning >10% shares

B) Person owning >15% shares

C) Person owning >25% shares

D) Person owning >50% shares

Answer: C) Person owning >25% shares

23. Which of the following is NOT an alternate mode of Customer Due Diligence (CDD)
procedures mentioned?

A) In-person verification at bank branches

B) Digital KYC through mobile applications

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C) Central KYC Registry (CKYCR) to avoid duplication

D) E-KYC using Aadhaar authentication

Answer: A) In-person verification at bank branches

24. What is a key feature of the Central KYC (CKYC) Registry?

A) It requires customers to submit KYC documents multiple times

B) It is only applicable to banks and not to other financial institutions

C) It does not allow for updates to customer information

D) It assigns a unique 14-digit KYC number to each customer

Answer: D) It assigns a unique 14-digit KYC number to each customer

25. Which of the following documents is NOT considered an Officially Valid Document
(OVD) for KYC as per RBI guidelines?

A) Utility Bill older than two months

B) Passport

C) Voter’s Identity Card

D) Driving Licence

Answer: A) Utility Bill older than two months

26. What is the maximum balance limit for a Small Account under Simplified CDD?

A) ₹1,00,000

B) ₹50,000

C) ₹75,000

D) ₹25,000

Answer: B) ₹50,000

27. What advantage does the CKYC provide in terms of customer verification?

A) It increases the time taken for customer onboarding

B) It requires customers to visit multiple banks for verification

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C) It limits the types of documents that can be submitted

D) It reduces duplication of KYC submissions across financial entities

Answer: D) It reduces duplication of KYC submissions across financial entities

28. What document is required for a name change under the Special KYC Rules?

A) Employment Letter

B) Birth Certificate

C) Tax Return

D) Marriage Certificate

Answer: D) Marriage Certificate

29. According to the RBI Master Direction, what is the maximum amount for accounts
opened using OTP-based Aadhaar authentication?

A) ₹50,000

B) ₹1,00,000

C) ₹2,00,000

D) No limit

Answer: B) ₹1,00,000

30. What must banks do with the Aadhaar number according to the general rules for using
it in KYC?

A) Store the full Aadhaar number in electronic records

B) Print the Aadhaar number on customer documents

C) Retain only the last four digits for record-keeping

D) Share the Aadhaar number with third parties

Answer: C) Retain only the last four digits for record-keeping

31. What is the penalty for banks that do not comply with Aadhaar storage and
authentication rules?

A) No penalty

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B) Increased interest rates on loans

C) Monetary penalties imposed by FIU-IND

D) Mandatory training for employees

Answer: C) Monetary penalties imposed by FIU-IND

32. Which of the following methods allows for a full KYC process without a monetary limit?

A) OTP-Based Aadhaar

B) Small Account (Simplified CDD)

C) Video-Based Customer Identification Process (V-CIP)

D) Aadhaar XML/QR Code

Answer: C) Video-Based Customer Identification Process (V-CIP)

33. For which type of accounts is Customer Due Diligence (CDD) of all members required?

A) Term Loan Borrowers

B) NRO accounts for foreign students

C) Savings Bank Accounts of Self-Help Groups (SHGs)

D) Credit Linking of Self-Help Groups (SHGs)

Answer: D) Credit Linking of Self-Help Groups (SHGs)

34. What is the maximum balance allowed for a Small Account without full KYC?

A) ₹50,000

B) ₹25,000

C) ₹1,00,000

D) ₹2,00,000

Answer: A) ₹50,000

35. What is one of the required documents for opening an account for students in India?

A) Employment contract

B) Letter offering admission from the educational institution

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C) Birth certificate

D) Utility bill

Answer: B) Letter offering admission from the educational institution

36. What is the maximum amount of foreign remittances that can be credited to an account
during the initial period for students?

A) USD 500

B) USD 2000

C) USD 1000

D) USD 3000

Answer: C) USD 1000

37. Which of the following is a requirement for Small Accounts opened for individuals
without Officially Valid Documents (OVDs)?

A) Must have a co-signer with valid identification

B) Must provide an OVD within 12 months

C) Must have a minimum balance of ₹10,000

D) Must provide a government-issued ID

Answer: B) Must provide an OVD within 12 months

38. What is the maximum aggregate of all credits allowed in a financial year for Small
Accounts?

A) ₹50,000

B) ₹75,000

C) ₹1 lakh

D) ₹2 lakh

Answer: C) ₹1 lakh

39. What must banks do if they suspect Money Laundering (ML) or Financing of Terrorism
(FT)?

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A) Complete the customer identification process as per prescribed procedures

B) Report the customer to the police

C) Freeze all transactions for 30 days

D) Immediately close the account

Answer: A) Complete the customer identification process as per prescribed procedures

40. How often must high-risk customers undergo periodic KYC updation?

A) Every 5 years

B) Every year

C) Every 2 years

D) Every 10 years

Answer: C) Every 2 years

41. What is the purpose of the Unique Customer Identification Code (UCIC)?

A) To identify customers and track facilities availed

B) To provide customers with a credit score

C) To limit the number of accounts a customer can open

D) To facilitate international transactions

Answer: A) To identify customers and track facilities availed

42. What is the required frequency for updating KYC information for high-risk customers?

A) Every 5 years

B) Every 10 years

C) Every 2 years

D) Every year

Answer: C) Every 2 years

43. In the case of a change in address for individual customers, what is the maximum time
allowed for verification?

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A) 3 months

B) 6 months

C) 2 months

D) 1 month

Answer: C) 2 months

44. What must be obtained from existing customers by the notified date to avoid
restrictions on their accounts?

A) Recent photographs

B) Proof of address

C) PAN/Form 60

D) Updated contact information

Answer: C) PAN/Form 60

45. Which of the following is NOT a requirement for the Video-based Customer
Identification Process (V-CIP)?

A) Video recordings must be stored on a cloud server

B) Technology must be hosted within bank premises

C) Customer consent should be recorded securely

D) Face liveness detection technology is mandatory

Answer: A) Video recordings must be stored on a cloud server

46. What is the primary responsibility of banks when relying on third-party Customer Due
Diligence (CDD)?

A) To ensure the third party is based in a high-risk jurisdiction

B) To conduct all CDD processes independently

C) To maintain their own CDD records

D) To ensure compliance with CDD and record retention standards

Answer: D) To ensure compliance with CDD and record retention standards

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47. For customers other than individuals, what document can be obtained to confirm no
change in KYC information?

A) Letter from an authorized official

B) Self-declaration from the customer

C) Tax return

D) Bank statement

Answer: A) Letter from an authorized official

48. What should be done if doubts arise about a customer's information?

A) Conduct a full audit of the customer's account

B) Update the information immediately

C) Notify the customer and take no further action

D) Wait for the next scheduled update

Answer: B) Update the information immediately

49. What is a key requirement for the V-CIP process in banks?

A) Customers can initiate the process without bank involvement.

B) It can be operated by any bank employee.

C) It must include dynamic questioning to prevent manipulation.

D) It allows for the use of any identification method.

Answer: C) It must include dynamic questioning to prevent manipulation.

50. Which of the following is NOT a method of identification in the V-CIP process?

A) OTP-based Aadhaar e-KYC authentication

B) KYC records from CKYCR

C) Social media verification

D) Offline Aadhaar verification

Answer: C) Social media verification

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51. What is the minimum transaction amount for domestic wire transfers that must include
originator details?

A) ₹1,00,000

B) ₹25,000

C) ₹10,000

D) ₹50,000

Answer: D) ₹50,000

52. What must the ordering bank do with originator information for wire transfers?

A) Discard it after one year

B) Only retain it if requested by the customer

C) Share it with the beneficiary bank immediately

D) Preserve it for at least five years

Answer: D) Preserve it for at least five years

53. What is the purpose of the Legal Entity Identifier (LEI)?

A) To uniquely identify entities in financial transactions globally

B) To identify individual customers in banking transactions

C) To facilitate domestic wire transfers

D) To track cash transactions under ₹50,000

Answer: A) To uniquely identify entities in financial transactions globally

54. Which of the following is a requirement for conducting Digital KYC?

A) The bank's application must be available at customer touchpoints.

B) The process can be done remotely without customer interaction.

C) Digital KYC does not require secure access.

D) Customers can use any identification method they prefer.

Answer: A) The bank's application must be available at customer touchpoints.

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55. What is a consequence of intentional structuring of domestic transfers below ₹50,000?

A) It is exempt from identity verification.

B) It is encouraged for faster transactions.

C) It requires no reporting to authorities.

D) It must be flagged for evasion of monitoring.

Answer: D) It must be flagged for evasion of monitoring.

56. What is the minimum exposure amount that requires corporate borrowers to obtain a
Legal Entity Identifier (LEI) and register it in CRILC?

A) ₹10 crore

B) ₹5 crore

C) ₹25 crore

D) ₹1 crore

Answer: B) ₹5 crore

57. By what date must non-individual borrowers with an exposure above ₹25 crore obtain
their LEI?

A) April 30, 2023

B) April 30, 2024

C) April 30, 2022

D) April 30, 2025

Answer: A) April 30, 2023

58. Which of the following entities is exempt from the requirement to obtain an LEI?

A) Private Limited Companies

B) Government Departments/Agencies

C) Non-Banking Financial Companies (NBFCs)

D) Scheduled Commercial Banks

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Answer: B) Government Departments/Agencies

59. For which type of transactions is an LEI required when the payment amount is ₹50
crore or more?

A) RTGS/NEFT transactions

B) Credit card transactions

C) Cash transactions

D) Cheque transactions

Answer: A) RTGS/NEFT transactions

60. In the context of escrow accounts, what is the primary role of the escrow agent?

A) To act as a mediator in disputes

B) To invest the funds in high-yield securities

C) To oversee the account and disburse funds according to agreed terms

D) To provide loans to the parties involved

Answer: C) To oversee the account and disburse funds according to agreed terms

61. Which of the following is NOT a typical use case for escrow accounts?

A) Personal Savings Accounts

B) Stock Market Trading

C) Loan Repayments

D) Real Estate Transactions

Answer: A) Personal Savings Accounts

62. What happens to the funds in an escrow account if a dispute arises between the parties
involved?

A) The funds remain in escrow until the dispute is resolved

B) The funds are returned to the escrow agent

C) The funds are donated to charity

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D) The funds are immediately released to the payer

Answer: A) The funds remain in escrow until the dispute is resolved

63. Which of the following entities is allowed to maintain savings accounts without specific
restrictions?

A) Companies licensed under Section 8 of the Companies Act, 2013

B) Trusts registered under the Public Trust Act, 1882

C) Khadi and Village Industries Boards

D) Primary Agricultural Credit Societies

Answer: C) Khadi and Village Industries Boards

64. What is a requirement for companies licensed under Section 8 of the Companies Act,
2013 to open a savings account?

A) They must be for-profit organizations.

B) They must be registered under the Societies Registration Act, 1860.

C) They must be engaged in social welfare, charity, or education.

D) They must have a minimum capital of one million.

Answer: C) They must be engaged in social welfare, charity, or education.

65. Which category of individuals faces restrictions when opening a current account due to
their inability to provide independent verification?

A) Pardanashin women

B) Minors

C) Blind persons

D) Illiterate persons

Answer: A) Pardanashin women

66. What action must a bank take upon receiving a Garnishee Order Nisi?

A) Inform the account holder to withdraw funds.

B) Immediately remit the specified amount to the court.

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C) Transfer the funds to a joint account.

D) Freeze the specified amount in the account.

Answer: D) Freeze the specified amount in the account.

67. If a bank receives a Garnishee Order and the available balance is insufficient, what
should the bank do?

A) Notify the court of the insufficient balance.

B) Reject the order due to insufficient funds.

C) Attach the entire account balance regardless of availability.

D) Attach only the available balance and report accordingly.

Answer: D) Attach only the available balance and report accordingly.

68. In the case of joint accounts, what must a bank assess before attaching funds under a
Garnishee Order?

A) The purpose of the account.

B) The total balance in the account.

C) The credit history of the account holders.

D) Whether the account is operated jointly or singly.

Answer: D) Whether the account is operated jointly or singly.

69. What is the primary purpose of the Indo-Nepal Remittance Facility (INRF) Scheme?

A) To facilitate trade payments between India and Nepal

B) To provide loans to Nepalese nationals

C) To facilitate cross-border remittance from India to Nepal for individual beneficiaries

D) To allow businesses to invest in Nepal

Answer: C) To facilitate cross-border remittance from India to Nepal for individual

70. Under what condition can a bank attach funds from a partnership account?

A) If the account has a balance exceeding ₹2 lakh

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B) If the account is held in a foreign bank

C) If the order is against an individual partner

D) If the order is against the firm

Answer: D) If the order is against the firm

71. What is the maximum remittance limit per transaction under the Indo-Nepal
Remittance guidelines?

A) No limit specified

B) ₹2 lakh

C) ₹5 lakh

D) ₹1 lakh

Answer: B) ₹2 lakh

72. Which of the following is NOT a requirement for remitters under the Indo-Nepal
Remittance guidelines?

A) Having a bank account in Nepal

B) PAN card details for higher amounts

C) Compliance with regulatory norms

D) Providing valid KYC documents

Answer: A) Having a bank account in Nepal

73. What is the main function of SWIFT in the context of international financial
transactions?

A) To provide a secure platform for sending standardized financial messages

B) To facilitate cash payments in foreign countries

C) To transfer funds between banks

D) To manage foreign exchange rates

Answer: A) To provide a secure platform for sending standardized financial messages

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74. Which of the following statements is true regarding the attachment of accounts held by
liquidators?

A) Accounts held by liquidators can always be attached without restrictions

B) Liquidators are personally liable for all account attachments

C) Accounts held by liquidators should not be attached unless specified in the order

D) Liquidators can only attach funds from foreign accounts

Answer: C) Accounts held by liquidators should not be attached unless specified in the
order

75. What is the primary purpose of holding government grants in escrow within public-
private partnerships (PPP)?

A) To allow unrestricted access to funds

B) To ensure funds are released based on project completion

C) To increase project costs

D) To eliminate the need for regulatory compliance

Answer: B) To ensure funds are released based on project completion

76. Which of the following is NOT a benefit of using escrow accounts?

A) Risk mitigation in large transactions

B) Increased project delays

C) Security against fraud

D) Transparency in fund release

Answer: B) Increased project delays

77. For borrowers with an aggregate exposure of ₹50 crore or more, what is required
regarding the escrow mechanism?

A) No escrow mechanism is needed

B) Borrowers can choose multiple banks to manage the escrow

C) An escrow mechanism must be established with one lending bank as the managing bank

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D) Any bank can manage the escrow account

Answer: C) An escrow mechanism must be established with one lending bank as the
managing bank

78. What is the role of the escrow bank in the context of large loans?

A) To open current accounts for all banks involved

B) To manage all inflows and outflows per agreed terms

C) To release funds without conditions

D) To provide additional loans to the borrower

Answer: B) To manage all inflows and outflows per agreed terms

79. Which type of account can non-lending banks open for borrowers with an aggregate
exposure of ₹5 crore or more?

A) Collection accounts

B) Savings accounts

C) Current accounts

D) Fixed deposit accounts

Answer: A) Collection accounts

80. According to the 10% criteria in current account guidelines, which banks are allowed to
open current accounts for borrowers with an aggregate exposure of ₹50 crore or more?

A) All banks regardless of exposure

B) Only the bank with the highest loan exposure

C) Only banks with at least 10% of the total aggregate exposure

D) Any bank involved in the loan

Answer: C) Only banks with at least 10% of the total aggregate exposure

81. Which organizations are permitted to open savings bank accounts as per the RBI
Master Direction?

A) Only large multinational companies

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B) Any private corporation

C) Primary Agricultural Credit Societies and Khadi and Village Industries Boards

D) Only government agencies

Answer: C) Primary Agricultural Credit Societies and Khadi and Village Industries Boards

82. What is the primary purpose of the RBI's cybersecurity and operational risk guidelines
for banks?

A) To increase the number of transactions processed

B) To enhance customer service

C) To prevent fraudulent activities and ensure secure transactions

D) To ensure compliance with international banking standards

Answer: C) To prevent fraudulent activities and ensure secure transactions

83. Which of the following is NOT a type of negotiable instrument as defined in the text?

A) Credit Card

B) Bill of Exchange

C) Cheque

D) Promissory Note

Answer: A) Credit Card

84. What is the function of a crossed cheque?

A) It allows for immediate cash withdrawal.

B) It is only valid for international transactions.

C) It restricts payment to a bank account and cannot be encashed directly.

D) It can be encashed directly at any bank.

Answer: C) It restricts payment to a bank account and cannot be encashed directly.

85. Which of the following is a requirement for a drawee bank to honor a cheque?

A) Sufficient funds must be available in the drawer’s account.

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B) The cheque must be signed by the payee.

C) The cheque must be post-dated.

D) The cheque must be presented by the endorser.

Answer: A) Sufficient funds must be available in the drawer’s account.

86. What does the term "Holder in Due Course" refer to in a cheque transaction?

A) The entity responsible for making the payment.

B) A person who receives the cheque in good faith for valuable consideration before
maturity.

C) The person who issues the cheque.

D) The bank that processes the cheque.

Answer: B) A person who receives the cheque in good faith for valuable consideration
before maturity.

87. What recent directive has the RBI mandated for banks following the PNB fraud case?

A) To increase the number of audits conducted annually.

B) To implement two-factor authentication and restrict direct access to SWIFT terminals.

C) To eliminate the use of SWIFT codes.

D) To allow unrestricted access to SWIFT transactions.

Answer: B) To implement two-factor authentication and restrict direct access to SWIFT

88. What is a stale cheque?

A) A cheque that has been altered

B) A cheque that has been dishonored

C) A cheque that has been lost

D) A cheque that is older than 3 months

Answer: D) A cheque that is older than 3 months

89. What is the first step in the process of cheque collection?

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A) The amount is credited to the payee’s account

B) The drawee bank verifies the cheque

C) The payee deposits the cheque in their bank

D) The collecting bank forwards the cheque to the clearinghouse

Answer: C) The payee deposits the cheque in their bank

90. Under what condition is a cheque considered dishonored?

A) When the cheque is presented in a different currency

B) When the drawee bank refuses payment for reasons like insufficient funds

C) When it is presented after the due date

D) When the payee has insufficient funds

Answer: B) When the drawee bank refuses payment for reasons like insufficient funds

91. What is the maximum penalty for dishonoring a cheque due to insufficient funds under
Section 138 of the Negotiable Instruments Act, 1881?

A) Imprisonment for 2 years

B) Imprisonment for 1 year

C) A fine of up to the cheque amount

D) Community service

Answer: A) Imprisonment for 2 years

92. What is one of the key features of the Cheque Truncation System (CTS)?

A) Scanned images of cheques are transmitted

B) It eliminates the need for banks

C) Physical movement of cheques

D) It increases the clearing time to 5 days

Answer: A) Scanned images of cheques are transmitted

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93. Which section of the Negotiable Instruments Act addresses the liability of companies
for cheque dishonor?

A) Section 143

B) Section 141

C) Section 148

D) Section 138

Answer: B) Section 141

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