TYPES OF
CHARGES, SECURITIES & DOCUMENTATION is an important topic from internal
Bank promotion exams point of view. Every year 1 to 5 questions are there in
the internal bank promotion exams question paper depending on the cadre. You
may expect same number of questions this year also. We have prepared some very
important questions from the mentioned topic for your guidance and studies.
Questions are also followed by the answers so that you develop an excellent
understanding of the topic before entering the examination hall.

 

31.  Which of the following statements is/are
correct in case of pledge?

Option A.  Ownership remains with borrower but
possession is with bank.

Option B.  Both ownership and possession remain with
borrower.

Option C.  Both ownership and possession are transferred
to banker.

Option D.  Possession is with borrower but ownership is
transferred to the bank.

 

The correct answer is Option A.
Ownership remains with borrower but possession is with bank.

 

 

32.  In case of advance against pledge of stocks,
the delivery of goods should be.

Option A.  actual.

Option B.  constructive.

Option C.  symbolic.

Option D.  any one of these.

 

The correct answer is Option D.
any one of these.

 

 

33.  Which of the following statements is/are
correct about hypothecation?

Option A.  Ownership remains with borrower but
possession is with bank.

Option B.  Both ownership and possession remain with
borrower.

Option C.  Both ownership and possession are transferred
to banker.

Option D.  Possession is with borrower but ownership is
transferred to the bank.

 

The correct answer is Option B.
Both ownership and possession remain with borrower.

 

 

34.  The difference between pledge and
hypothecation is on account of.

Option A. Valuation.

Option B. ownership.

Option C. possession.

Option D.  both Option B. & Option C..

 

The correct answer is Option C.
possession.

 

 

35.  Who of the following can create a valid
pledge?

Option A.  Actual owner of goods.

Option B.  Pledgee of goods for subsequent pledge.

Option C.  Seller in possession of goods after sale
without notice of the banker.

Option D.  all of these.

 

The correct answer is Option D.
all of these.

 

 

36.  In case of cash credit limit against goods,
drawing power is calculated by.

Option A.  deducting margin from marker value of stock.

Option B.  deducting margin from cost price.

Option C.  deducting margin from market value or cost
price whichever is higher.

Option D.  deducting margin from market value or cost
price whichever is lower.

 

The correct answer is Option D.
deducting margin from market value or cost price whichever is lower.

 

 

37.  In case of overdraft limit against shares,
drawing power is calculated by…………. 
Minus margin.

Option A.  face value.

Option B.  market value.

Option C.  face value or market value, whichever is
lower.

Option D. face value or market value,
whichever is higher.

 

The correct answer is Option B.
market value.

 

 

38.  Advance was given to a borrower against
pledge of stocks. The loan has gone bad and bank wants to sell the stock.  on a scrutiny of documents, it is observed
that borrower has given authority to bank to sell stocks without notice to
borrower.  How shall bank deal with the
situation?

Option A.  Bank can sell the goods only with the
permission of the court.

Option B.  Bank can sell the goods without intervention
of the court but after serving notice to the borrower.

Option C. Bank can sell the goods
without intervention of court and without any notice to the borrower.

Option D.  Bank can sell the goods without serving
notice to the borrower but only after obtaining permission of the court.

 

The correct answer is Option B.
Bank can sell the goods without intervention of the court but after serving notice
to borrower.

 

 

39.  Finance Bank of India auctioned the goods
pledged to it after notice to borrower when the outstanding amount was Rs 4
lakh.  The amount realised was Rs5
lakh.  What course of action should be taken
by the bank?

Option A.  Bank can retain balance of Rs.  1 lakh and treat it as income.

Option B.  Bank should keep the amount in sundries and
await instructions from controlling authority.

Option C.  Bank should adjust the outstanding and return
the balance to the borrower.

Option D.  either Option B. or Option C. above.

 

The correct answer is Option C.
Bank should adjust the outstanding and return the balance to the borrower.

 

 

40.  Bank has sanctioned a limit of Rs.  5.50 lakh at 25% margin to a party who is
normally maintaining stocks of Rs.  8
lakh.  The stocks should be insured up to.

Option A.  balance outstanding in the account as on the
date of getting insurance cover.

Option B.  full value.

Option C. limit sanctioned.

Option D.  25% more than the value of stock.

 

The correct answer is Option B.
full value.

 

 

41.  Mortgage is defined in section………. of the
Transfer of Property Act of 1882.

Option A.  170.

Option B.  130.

Option C.  58.

Option D. 131.

 

The correct answer is Option C.
58.

 

 

42.  In case of mortgage, the person creating the
mortgage is called………  And the
person ln whose

favour mortgage is created is
called.

Option A.  Mortgagee, mortgagor.

Option B.  Assignor, Assignee.

Option C.  Mortgagor, Mortgagee.

Option D.  Assignee, Assigner.

 

The correct answer is Option C.
Mortgagor, Mortgagee.

 

 

43.  Which of the following statements is/are
incorrect about mortgage?

Option A.  Mortgage can be of land, Building, machinery
embedded/fixed to earth.

Option B. Mortgage can be done
for an existing debt or a future debt.

Option C. Mortgage involves
transfer of interest in specific immovable property.

Option D.  none of these.

 

The correct answer is Option D.
none of these.

 

 

44.  In which of the following mortgages
possession is usually transferred to mortgagee?

Option A.  Simple mortgage.

Option B.  Equitable Mortgage.

Option C.  Mortgage by conditional sale.

Option D.  Usufructuary mortgage.

 

The correct answer is Option D.
Usufructuary mortgage.

 

 

45.  Which of the following mortgage is created by
deposit of title deeds?

Option A.  simple mortgage.

Option B.  Equitable Mortgage.

Option C.  Mortgage by conditional sale.

Option D. Usufructuary mortgage.

 

The correct answer is Option B.
Equitable Mortgage.

 

 

46.  which of the following mortgage does not
require registration with Registrar of Assurances?

Option A.  Simple mortgage.

Option B.  Equitable Mortgage.

Option C.  Mortgage by conditional sale.

Option D. Usufructuary mortgage.

 

The correct answer is Option B.
Equitable Mortgage.

 

 

47.  In which of the following mortgages,
mortgagor is principally liable in individual capacity?

Option A.  Simple mortgage.

Option B.  Equitable mortgage.

Option C.  English mortgage.

Option D.  Mortgage by conditional sale.

 

The correct answer is Option A.
Simple mortgage.

 

 

48.  In which of the following types of mortgage,
right of foreclosure is available to mortgagee?

Option A.  Simple mortgage.

Option B.  Equitable mortgage.

Option C.  Mortgage by conditional sale.

Option D. Usufructuary mortgage.

 

The correct answer is Option C.
Mortgage by conditional sale.

 

 

49. In which of the following mortgages,
repayment of the loan is made out of the proceeds of rents and profits accruing
from the mortgaged property?

Option A.  Simple mortgage.

Option B.  Equitable mortgage.

Option C.  Mortgage by conditional sale.

Option D. Usufructuary mortgage.

 

The correct answer is Option D.
Usufructuary mortgage.

 

 

TYPES OF CHARGES, SECURITIES & DOCUMENTATION With Multiple Choice Questions and answers (MCQs) – Part 1

50.  Equitable Mortgage can be created by deposit
of title deeds at

Option A.  Calcutta, Madras and Bombay.

Option B.  any town notified by RBI for this purpose.

Option C.  any town notified by state Govt.  In official gazette for this purpose.

Option D.  either Option A. or Option C. above.

 

The correct answer is Option D.
either Option A. or Option C. above.

 

 

51.  For creating equitable mortgage, title deeds
can be deposited by

Option A.  owner of property himself.

Option B.  Authorised agent of the owner of the property.

Option C.  Mortgagee.

Option D.  either Option A. or Option B. above.

 

The correct answer is Option D.
either Option A. or Option B. above.

 

 

52. A loan was sanctioned to a
partnership.  The firm wants to create
equitable mortgage of its Property in favour of the bank.  The title deeds of the property can be
deposited with the bank by

Option A.  all the partners acting together.

Option B.  any one of the partners because every partner
has implied authority.

Option C.  any one partner having authority from other
partners to act on their behalf for executing mortgage.

Option D.  either Option A. or Option C. above.

 

The correct answer is Option D.
either Option A. or Option C. above.

 

 

53.  A borrower did not repay the loan in
time.  He had mortgaged his land &
building to the bank. The bank wants to exercise a right in such a way that
borrower is absolutely debarred of his right to acquire the property back.  this right is referred to as.

Option A.  Right of redemption.

Option B.  Right of subrogation.

Option C.  Right of foreclosure.

Option D.  Right of set off.

 

The correct answer is Option C.
Right of foreclosure.

 

 

54.  Which of the following statements is/are not
true about equitable mortgage?

Option A.  The property of which title deeds are being
deposited should be located in a place notified by state Government.

Option B.  The property should be specific immovable
property.

Option C.  EM is created by deposit of title deeds with
the mortgagee (bank) at a place notified by the State Govt.

Option D.  Deposit of title deeds should be with an
intention to secure a loan.

 

The correct answer is Option A.
The property of which title deeds are being deposited should be located in a
place notified by state Govt.

 

 

55.  An immovable property was mortgaged to the
bank by deposit of title deeds to secure a loan. After some time, when the loan
is still outstanding, the borrower requests the bank to deliver the title deeds
temporarily as he has to show it to his advocate in connection with some tax
liability.  What should the bank do?

Option A.  The bank can accept the request of the
borrower as records in title deed register are sufficient proof of mortgage.

Option B.  The bank should not accept the request as
with the delivery of title deeds back to mortgagor equitable mortgage shall
come to an end.

Option C.  The bank should not accept the request of the
borrower as he may create mortgage in favour of another creditor.

Option D.  The bank can deliver the document only to the
legal counsel of the borrower.

 

The correct answer is Option C.
The bank should not accept the request of the borrower as he may create
mortgage in favour of another creditor.

 

 

56.  A company is required to create equitable
mortgage of its property by deposit of title deeds for securing the loan.  In this case, title deeds can be deposited by.

Option A.  Chief Finance Officer.

Option B.  Managing Director.

Option C.  Officials of the company who are authorized
by the managing director to sign the loan documents.

Option D.  An official authorized as per the resolution
passed by the Board of Directors of the Company.

 

The correct answer is Option D.
An official authorized as per the resolution passed by the Board of Directors
of the Company.

 

 

57.  A borrower mortgaged his immovable property
for securing a loan.  on repayment of the
loan, by the borrower to get the property released? the mortgagee refuses to
release the mortgage.  which of the
following rights can be exercised?

Option A. right of foreclosure.

Option B. right of redemption.

Option C.  Right set off.

Option D.  Right of Appropriation.

 

The correct answer is Option B.
right of redemption.

 

 

58.  Which of the following is the most
appropriate statement relating to equitable mortgage?

Option A.  It does not require any registration.

Option B.  It does not attract any stamp duty.

Option C. it does not require
registration but level of stamp duty varies from state to state.

Option D. mortgage deed is
prepared but its registration is not required.

 

The correct answer is Option C.
it does not require registration but level of stamp duty varies from state to
state.

 

 

59.  Equitable Mortgage can be created:

Option A.  only at the station where the concerned bank
has a branch.

Option B.  only at notified towns in India.

Option C.  in Delhi and all cities having population of
12 lacs or more as per 1991 census.

Option D.  any city in India.

 

The correct answer is Option B.
only at notified towns in India.

 

 

60.  The essence of equitable mortgage lies in.

Option A.  existence of debt in the present, past or
future.

Option B.  deposit of title deeds.

Option C.  intention that title deed will be security
for the debt.

Option D.  all above.

 

The correct answer is Option D.
all above.