Chapter 18: Duties and Rights of a Banker and Customer Rights (JAIIB – Paper 2)
1. As per the duty of secrecy, a banker must not disclose a customer’s account information except in which of the following cases?
A. When the customer’s competitor requests information
B. When a friend of the customer asks for details
C. When disclosure is required under law or with the customer’s consent
D. When an employee of the bank is curious
The banker’s duty of secrecy is not absolute; information may be disclosed under legal obligation, with customer consent, or under public interest.
2. A customer’s account details were disclosed by a banker to a telemarketing agency without consent. This is a violation of which principle?
A. Duty of Secrecy & Confidentiality
B. Duty of Reasonable Care
C. Right of Set-off
D. Banker’s Lien
Disclosing account details without authority breaches the duty of secrecy and confidentiality which every banker owes to the customer.
3. Which of the following is an example of a banker’s duty of reasonable care?
A. Disclosing account details on social media
B. Allowing withdrawal without signature verification
C. Ignoring suspicious forged cheques
D. Verifying the authenticity of a cheque before making payment
Duty of reasonable care requires a banker to act cautiously, for example, by verifying signatures and documents to prevent fraud or loss.
4. A banker disclosed account information to prevent money laundering activities. This disclosure is:
A. A breach of confidentiality
B. Permissible under public duty and legal obligation
C. Violation of customer’s rights
D. Negligence in reasonable care
Disclosure to prevent crime or money laundering is allowed under public duty and legal requirements such as PMLA (Prevention of Money Laundering Act).
5. If a banker pays a cheque with a forged signature, the banker is liable because it violates:
A. Right of Appropriation
B. Banker’s Lien
C. Duty of Reasonable Care
D. Duty of Secrecy
A banker must verify signatures before honoring cheques. Paying against a forged signature breaches the duty of reasonable care.
6. A Garnishee Order is issued by:
A. Reserve Bank of India
B. A Court of Law
C. Enforcement Directorate
D. Income Tax Department
A Garnishee Order is issued by a court of law directing a banker to attach the funds of a judgment debtor to satisfy a decree.
7. Which of the following accounts can be attached under a Garnishee Order?
A. Joint accounts where only one holder is a judgment debtor
B. Trust accounts
C. Minor’s account
D. Single account of the judgment debtor
A Garnishee Order can attach balances in a single account of the judgment debtor, but not joint, trust, or minor accounts unless all holders are judgment debtors.
8. When a Garnishee Order is received, the banker must:
A. Immediately freeze the available balance of the judgment debtor’s account
B. Allow free withdrawals until the court confirms the order
C. Transfer all funds to the decree holder
D. Close the account of the judgment debtor
On receipt of a Garnishee Order, the banker must stop payment from the debtor’s account up to the amount specified until further court direction.
9. Which of the following types of accounts are exempt from Garnishee Orders?
A. Current account of a partnership firm
B. Fixed deposit of the judgment debtor
C. Government Treasury Accounts
D. Overdraft account of the debtor
Certain accounts such as government treasury accounts, trust funds, and those protected by statute cannot be attached under a Garnishee Order.
10. If the balance in the judgment debtor’s account is less than the decree amount under a Garnishee Order, the banker should:
A. Close the account
B. Pay nothing to the court
C. Borrow from other accounts to pay
D. Attach and remit the available balance only
The banker is liable only to the extent of the funds available in the judgment debtor’s account, not beyond.
11. The right of a banker to adjust the credit balance in a customer’s account towards any outstanding loan is known as:
A. Right of Set-off
B. Right of Lien
C. Right of Appropriation
D. Right of Assignment
The Right of Set-off allows a banker to combine and adjust the customer’s accounts, applying credit balances to offset debit balances.
12. When a banker retains goods or securities of a customer until a debt is repaid, this is called:
A. Right of Appropriation
B. Right of Subrogation
C. Right of Lien
D. Right of Pledge
The Right of Lien allows the banker to retain goods or securities of the customer until repayment of dues.
13. If a customer deposits money without instructions, the banker can apply the funds to any of the customer’s debts. This is called:
A. Right of Lien
B. Right of Set-off
C. Banker’s General Right
D. Right of Appropriation
The Right of Appropriation allows a banker to apply customer’s funds towards any debt when no specific instructions are given by the customer.
14. Which of the following is NOT a right of a banker?
A. Right of Lien
B. Right to breach confidentiality without cause
C. Right of Set-off
D. Right of Appropriation
A banker cannot disclose customer information without valid reason. Hence, breaching confidentiality without cause is not a banker’s right.
15. Which initiative has been launched by RBI to enhance customer awareness about banking services and grievances redressal?
A. UPI 2.0
B. Bharat BillPay
C. Banking Ombudsman Scheme awareness campaigns
D. Digital India Initiative
RBI frequently conducts awareness campaigns about the Banking Ombudsman Scheme to educate customers about their rights and grievance mechanisms.
16. The Banking Codes and Standards Board of India (BCSBI) was set up in 2006 on the recommendations of which committee?
A. Narasimham Committee
B. Rangarajan Committee
C. Damodaran Committee
D. Tarapore Committee on Banking Reforms
BCSBI was set up based on the Tarapore Committee’s recommendation to oversee adherence to codes and fair practices by banks.
17. Which of the following is the primary purpose of BCSBI?
A. To ensure fair treatment of customers by banks through voluntary codes
B. To regulate interest rates on deposits
C. To investigate frauds in banks
D. To issue banking licenses
BCSBI’s main role is to ensure banks follow fair practices codes, enhancing transparency and customer service quality.
18. Which of the following is NOT covered under the BCSBI Code of Commitment to Customers?
A. Transparency in interest rates
B. Quick redressal of complaints
C. Guarantee of profits on customer’s investments
D. Confidentiality of customer information
BCSBI ensures fair practices but does not guarantee profits on investments, which depend on market risks and product performance.
19. As per BCSBI codes, customers are also obligated to:
A. Expect unlimited credit facilities
B. Provide accurate information and update KYC documents
C. Hide adverse financial information
D. Refuse to comply with loan agreements
Customers are obligated to provide correct details, comply with KYC norms, and update information to help banks serve responsibly.
20. Which of the following is an example of customer obligation towards banks?
A. Safeguarding cheque books and promptly reporting loss
B. Demanding unlimited withdrawals without balance
C. Refusing to repay loans on time
D. Withholding PAN details from the bank
Customers must cooperate with banks by safeguarding instruments, providing information, and honoring their financial obligations.
