Retail and Consumer Banking Operations - Stage-III
ISQ Examination (Summer-2007)


Q.1
Please write the alphabate of selected choice in the answer column: (20)
i

When a Banker collects cheques for his customer or make payment to insurance company on behalf of his customer, the relationship is called:

A) Bailor & Bailee                          B) Principal & Agent
C) Pawner & Pawnee                    D) Mortgager & Mortgagee                E) None of the above

ii

When the customer pledges goods & documents with the bank as security for an advance, the relationship is called:

A) Bailor & Bailee                         B) Principal & Agent                    C) Pawner & Pawnee
D) Mortgager & Mortgagee          E) None of the above

iii

When the advance is made against the security of immovable asset, the relationship is called:

A) Bailor & Bailee                    B) Principal & Agent
C) Pawner & Pawnee              D) Mortgager & Mortgagee               E) None of the above

iv

Which of the following is not subject to lien:

A)      Cheques & documents for collection
B)      Share certificates purchased by the bank for the customer
C)     Articles or deposit left for safe custody
D)     Securities left after adjustment of an advance
E)     None of the above

v

Which of the following is not a correct statement:

A)      Debit balance of a Trust account can be set-off against the credit balance of trustee’s private account           after trustee is found to be personally liable.
B)      Deposit account can be set off against an overdraft account
C)     Debit balance of a person can be set off with the credit balance of the partnership firm where the same          person is also a partner.
D)     With the accounts of the same person in two different branches of the same bank.
E)     None of the above

vi

Which of the following is not true: Housing Finance is provided for

A) Construction of house                B) Purchase of a constructed house              C) Purchase of plot
D) Purchase of commercial plot for Guest House                 E) None of the above

vii

Auto finance facility in consumer financing can be utilized for:

A) Purchase of car for personal use.                 B) Purchase of Taxi for renting
C) Purchase of Bus under Govt. licence           D) None of the above

viii

As per SBP-Regulations Maximum allowable Debt-Equity ratio for housing finance can be:

A) 85:15           B) 80:20              C) 90:10                D) 60:40               E) None of the above

ix

Total exposure under housing finance for a Bank should not exceed -----------------% of it’s the net advances

A) 20%          B) 10%           C) 30%            D) 40%                E) None of the above

x

Personal Loans mean :

A)      The loans to individuals for the payment of goods, services and expenses
B)      Running Finance facility to individuals
C)      Running Finance Facility to sole proprietorships
D)     A& B above                                                             E) None of the above

xi

The maximum tenure of the auto loan finance shall not exceed:

A) 7 years          B) 5 years             C) 10 Years            D) 3 years            E) None of the above

xii

The minimum down payment in Auto Loans is:

A) 10%               B) 15%               C) 20%                  D) 25%                  E) None of the above

xiii

The last date for submission of attested CNICs of the old Customers whose CNICs are not available with banks is /was :

A) June 30, 2007       B) December 2007       C) March 2007      D) Dec 2006       E) None of the above

xiv

Housing Finance is provided for

A) Construction of house only                        B) Purchase of a constructed house only
C) Purchase or construction of a house          D) None of the above

xv

Bankers obtain salary certificate from the applicant of a personal loan:

A) to verify his take-home salary                         B) to verify his existing debt burden
C) to verify his provident fund balance                D) None of the above

xvi

Consumer Finance scheme has:

A)        helped people to improve their standard of living
B)        increased profitability of banks
C)       encouraged people to live beyond means.
D)       None of the above

xvii

Before allowing any facility, the banks/DFIs may obtain credit report from:

A)      Consumer Credit Information Bureau of SBP
B)      The area police station where borrower lives
C)      The neighbours of the borrower
D)      None of the above

xviii

When a cheque is crossed generally:

A)       it can only be collected through a bank
B)       it can be encashed at the bank’s counters
C)       it can be purchased by a bank
D)       None of the above

xix

Basic purpose of an indorsement is:

A)      to confirm the identity of the payee
B)      to transfer the title of the beneficiary
C)      to stop encashment of a negotiable instrument
D)     None of the above

xx

Banks/DFIs shall not report overdue/default of those borrowers/lessees to Credit Information Bureau (CIB) of State Bank of Pakistan, whose vehicle financed/leased by them has been stolen or snatched, provided the respective Bank/DFI is fully secured to recover the entire outstanding amount from an insurance company under a valid insurance policy.

Comment.

 


Q.2 (A)
What are the instructions of SBP regarding Utilization of Clean Loans for Initial Public Offerings IPOs (05)
Q.2 (B)
What do you understand by liquid securities & easily realizable securities? (05)

Q.3 (A)
What do you understand by the “VeriSys” system of NADRA and how does SBP want it implementation? (03)
Q.3 (B)
What are SBP instructions regarding opening of an account of an illiterate person. (03)
Q.3 (C)
What are the documents required for opening the account of Clubs, Societies & Associations. (04)

Q.4
What is the procedure for issuance of a new cheque book & what precautions will you take before delivering it to the customer? (05)

Q.5 Mention the documents required for opening of the: (05)
  i)       Individual Account                                      ii) Partnership Account
iii)     Joint Stock Company Account

Q.6
What is the importance of consideration of Articles & Memorandum of Association in the execution of legal documentation of a private limited company. (05)

Q.7
Management Trustee of Welfare Trust wants to open trust’s account in your bank. He states that alongwith one more trustee he would operate the account jointly. Answer the following about this proposal: (10)
i
Enlist the documents you would need from the trustees to open his account.
ii
Do you require an introduction for this account? If yes, who should introduce?
iii
How would you confirm the genuineness of the trust?
iv
How would you confirm the address and other details mentioned by the trustees in the Account Opening Form?
v
What precautions you will take in the operation of the trust account?

Q.8
State Bank of Pakistan has issued a set of Prudential Regulations for Banks, DFIs, and other financial institutions in Pakistan: (08)
i
What is the basic issue covered under Prudential Regulations R1 to 13 for Banks and DFIs?
ii
What are the issues covered under Prudential Regulations M-1 to M-5 for Banks and DFIs?
iii
What is the main function of Board of Directors of a financial institution according to the concept of ‘Good Corporate Governance’ described in the Prudential Regulations?
iv
What is maximum amount of credit limit for the SMEs?

Q.9
You received the information that a Savings Account holder of your branch has died. His account shows a credit balance of Rs.900,000/- (Rupees Nine Hundred Thousand only) and his outstanding loan liability is Rs.200,000/-. The heirs of the deceased are claiming payment of the balance in the account to them. How you will handle this case? (05)

Q.10
You have provided the facility of Hire Purchase (lease) of a 1300 c.c. car to an executive of a corporate company. Answer the following questions in this connection: (05)
i
What is the maximum amount of this loan allowed under Prudential Regulations?
ii
What is the maximum time limit for repayment of principal and services charge/ markup etc.?
iii
What precautions you will take to protect your bank’s interest against default / sale of car to someone else by the borrowers / leasee?

Q.11
A valued customer of your bank wants to remit US$1500/- to an educational institution in Boston (USA) for the payment of dues for his son’s education there. The last date for payment is just a few days away. (05)
i
What mode of remittance you would adopt and why?
ii
What precautions you will take for safety and security of your transaction?

Q.12 Answer the following questions in ONE SIMPLE SENTENCE each: (04)
i
What is a Charge Card?
ii
Define a credit card
iii
What is a debit card?
iv
Which Regulations from State Bank of Pakistan are applicable to consumer finance?

Q.13
Banks and financial institutions are morally and legally bound to observe secrecy of their customers account. Answer the following question with reference to above:
i
List the situations in which they are not bound to observe secrecy. (04)
ii
Describe the circumstances under which a banker can disclose the secrecy of his customers account according to compulsion of law: (04)