1. Under the provisions of SARAESI Act 2002 a charge on the moveable property in favor of secured without delivery of possession to the creditor is known as:

1. Mortgage
2. Assignment
3. Lien
4. Hypothecation
5. None of the above

Option “4” is correct.
Under the provisions of SARAESI Act 2002 a charge on the moveable property in favor of secured without delivery of possession to the creditor is known as hypothecation.
2. Under the process of securitization, the non-liquid financial assets (NPA) are converted into markable securities in the form of:

1. Shares
2. Debentures
3. Pass through certificates
4. Security receipts
5. None of the above

Option “4” is correct.
Under the process of securitization the non-liquid financial assets (NPA) are converted into markable securities in the form of security receipts.
3. As per Section 29 of SARFAESI act, 2002 provides for:

1. Offences
2. Protection of action taken in good faith
3. Cognizance of offence
4. Offences by companies
5. All of the above

Option “1” is correct.
As per the section 29 of SARFAESI act, if any person contravenes or Attempts to contravene or abets the contravention of the provisions of this act or of any rules made there under, he shall be punishable with imprisonment for a term which may extend to one year or with fine, or with both.
4. Cash credit account or Overdraft account becomes Special mention account When-

1. It is irregular for at least 45 days
2. It is irregular for at least 6O days
3. It is irregular for at least 90 days
4. It is Irregular for at least 120 days
5. It is Irregular for at least 150 days

Option “4” is correct.
If interest and or installment of the principal amount of loan remain overdue for a period of more than 90 days, of term loan or the account remains ‘out of order’ in case of overdraft/Cash Credit account or the bills purchased /discounted remain overdue for a period of more than 90 days.
5. The Indian banking sector is facing the problem of heavy NPAs. Which among the following industries has contributed least to the level of NPAs?

1. Real estate sector
2. Iron and steel
3. Software and BPO
4. Infrastructural development
5. Manufacturing

Option “3” is correct.
Among the five categories, the highest non-performing assets (NPAs) or bad loans in the ‘industrial’ sector stood at Rs 3,33,143 crore, followed by ‘other categories’ loan at Rs 1,77,275 crore, ‘agriculture and allied activities’ Rs 1,11,328 crore, ‘housing loan’ Rs 17,045 crore and ‘education loan’ at Rs 5,626 crore. Software and BPO has contributed the least.
6. Which of the following statements is/are correct regarding monetary transmission?

(1) It refers to the process by which a central bank’s monetary policy decisions are passed on to the financial markets.
(2) Rising non-performing assets (NPAs) and higher returns on small saving schemes may hinder effective monetary transmission.
(3) Lowering of CRR and SLR requirements may help ensure effective monetary transmission.

Select the correct answer using the codes given below:

1. 1 and 3 only
2. 2 and 3 only
3. 1 and 2 only
4. 1, 2, and 3
5. 1 only

Option “4” is correct.
The monetary transmission mechanism is the process by which asset prices and general economic conditions are affected as a result of monetary policy decisions. Such decisions are intended to influence the aggregate demand, interest rates, and amounts of money and credit in order to affect overall economic performance. Rising non-performing assets (NPAs) and higher returns on small saving schemes may hinder effective monetary transmission. Also Lowering of CRR and SLR requirements may help ensure effective monetary transmission.
7. If outstanding balance is more than sanctioned limit but within the value of security, in which of the following accounts, it is categorized sub-standard (NPA).

1. Loan against govt. security
2. Loan against deposits
3. Loan against life insurance policy
4. Loan against security of national saving certificate
5. Loan against farm credit

Option “1” is correct.
Outstanding balance is more than sanctioned limit but within the value of security, under loan against govt. security accounts, it is categorized sub-standard (NPA).
8. Which of the following statement is not correct regarding sub-standard accounts?

1. If account remains out of order or irregular or overdue, it becomes sub-standard.
2. If account remains out of order or irregular or overdue, for more than 90 days it becomes sub-standard.
3. Account remains substandard max for a period up to one year
4. Sub-standard account can be secured sub-standard or unsecured substandard.
5. All the above

Option “1” is correct.
Sub-standard asset is referred to an asset classified as an NPA (Non-performing asset) for less than 12 months. A doubtful asset means an asset that has been non-performing for more than 12 months. Loss assets are loans with losses identified by the bank, auditor, or inspector that need to be fully written off. Loans classified Substandard are. inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.
9. SARFAESI Act 2002 is not concerned with which of the following aspects:

1. Securitisation of Financial Assets
2. Reconstruction of Assets
3. Authority to enforce without the intervention of the court
4. Setting up of Central Registry
5. All of the above

Option “2” is correct.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law. It allows banks and other financial institution to auction residential or commercial properties of defaulters to recover loans.
10. In which among the following cases, the constitutional validity of the SARFAESI Act 2002 was questioned before the Supreme Court:

1. Manchester Chemicals vs ICICI bank
2. Manchester Chemicals vs Union of India
3. Mardia Chemicals vs Union of India
4. Mardia Chemicals vs ICICI Bank
5. None of the above

Option “3” is correct.
Mardia Chemicals Ltd. v. Union of India1 dissected most of its limbs and upheld the constitutional validity of the Act but struck down Section 17(2) which made it mandatory for borrowers to deposit 75% of the claim amount as a precondition to challenging the lenders’ action at the Debts Recovery Tribunal and on this I shall dwell at length a little later because this would be a core issue of this write-up. Reserve Bank of India has relaxed the cap and banks have been given greater freedom to give unsecured loan, although provisioning has been tightened and that way Reserve Bank recently in its policy statement liberalised the credit delivery system but then the provisions of the SARFAESI Act are to be followed.
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