Various Information

Off Balance Exposure Part 1

1. A contract to perform the promise or discharge the liability of a third person in case of his defaults is known as
a) L/C
b) B G
c) a or b
d)a and b

2. For executing a contract entered by the customer of the bank where earnest money or in lieu of earnest money Bank guarantee is required to be furnished is called
a) Performance Guarantee
b) Financial Guarantee
c) DPG
d) any one of the above

3 The guarantee meant for performance of a contract entered into by the customer is called performance guarantee. In such cases
a) Banks agree and undertake that his customer on his part shall duly discharge & effectively observe and perform the conditions of the contract entered by him
b) Bank declares that in the event of default by the customer make payment for such default as agreed in the guarantee
c) A or b
d) a & b

4. The guarantee issued for payment of purchase of capital goods like machinery, the guarantee is called
a) Performance Guarantee
b) Financial Guarantee
c) DPG
d) any one of the above

5. In case of DPG issued
a) Bank undertake to pay the installment due under the deferred payment schedule
b) Payments have to be made by Bank on accepted due dates
c) Generally 10 to 15% amount is paid in advance and 10-15% after receipt of capital goods and balance amount in installment
d) All the above

5. As per the section 28 of Indian Contract Act 1872 amended w.e.f 08.01.1997, even when period of liability is mentioned in the guarantee, the beneficiary can enforce his remedies
a) till the limitation period is alive
b) 3 years where the beneficiary is other than Govt.
c) 30 yeras where the beneficiary is Govt.
d) In other cases from the stipulated expiry date/ invocation whichever is earlier.
e) All of them.

7. As per the Policy for issuance of the Bank Guarantee of the bank, No Bank guarantee shall have the maturity of more than
a) 5 years
b) 10 years
c) 15 Years
d) 30Yeras

8. As per the Bank’s Policy the unsecured guarantee can be issued within overall exposure for unsecured advances to the extent of ------- of the total credit exposure.
a) 25%
b) 30%
c) 50%
d) 35%

9. The Bank Guarantee issued where realizable value of security offered is less than 10% ab-initio then such B G is treated as
a) 10% secured and 90% unsecured
b) 100% unsecured
c) Such B G can not be issued
d) a & c

10. While issuing the Bank Guarantee, the recommendations made by the High Level Committee chaired by ---------- shall be adhered to
a) Shere Committee
b) Ghosh Committee
c) Rangarajan Committee
d) Narsinham Committee

Other Parts
Off Balance Exposure Part 2
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