Chapter 4: Opening Accounts of Various Types of Customers (JAIIB - Paper 2)
1. A savings account can be opened in the name of a minor provided the minor has completed:
A. 12 years
B. 14 years
C. 10 years
D. 18 years
RBI permits minors above 10 years to open and operate savings accounts independently, subject to bank’s discretion.
2. In a joint account with 'Either or Survivor' mandate, upon death of one account holder, the balance is payable to:
A. The surviving account holder
B. The legal heirs of the deceased only
C. Both surviving holder and nominee jointly
D. Only nominee irrespective of mandate
In 'Either or Survivor' accounts, the surviving account holder has the right to the balance, unless there is a court order.
3. Who can operate the bank account of a Hindu Undivided Family (HUF)?
A. Any male coparcener
B. Any female member of the family
C. Eldest son of the family
D. The Karta of the HUF
The Karta, usually the eldest coparcener, operates the HUF account, though other members may be authorized.
4. A current account of a partnership firm should be opened only after obtaining:
A. No objection from Registrar of Firms
B. Partnership Deed and authorization from partners
C. PAN card of each partner only
D. KYC of managing partner only
Banks require the partnership deed and an authorization letter/resolution from partners to specify authorized signatories.
5. While opening an account for a company, banks must verify:
A. Identity of CEO only
B. Only Articles of Association
C. Certificate of Incorporation, MOA, AOA, and Board Resolution
D. Shareholding pattern only
For company accounts, Certificate of Incorporation, Memorandum, Articles, PAN, and Board Resolution authorizing signatories are mandatory.
6. In the case of a trust account, who is authorized to operate the account?
A. The trustees as per trust deed
B. Any beneficiary of the trust
C. The settlor of the trust
D. The managing trustee only, regardless of deed
Trustees operate accounts strictly as per powers given in the trust deed. Beneficiaries cannot operate the account.
7. An illiterate person opening a savings account must:
A. Sign with a left thumb impression without witness
B. Provide only oral confirmation
C. Nominate any close relative
D. Put thumb impression in presence of a bank official/witness
Illiterate customers must affix thumb impression in presence of a bank official or witness to ensure identity and consent.
8. As per RBI guidelines, current accounts of borrowers can be opened only after obtaining:
A. Approval from SEBI
B. No Objection Certificate (NOC) from existing lending banks
C. Written request from borrower alone
D. RBI’s prior approval in every case
To prevent diversion of funds, RBI requires banks to obtain a No Objection Certificate (NOC) from existing financing banks before opening current accounts for borrowers.
9. What is the maximum credit facility limit above which RBI has mandated banks to use the CIC reporting system while opening current accounts?
A. ₹10 lakh
B. ₹25 lakh
C. ₹50 lakh
D. ₹5 crore
For borrowers with aggregate exposure of ₹5 crore or more, current accounts can be opened only after due diligence using information from Credit Information Companies (CICs).
10. Why are photographs of account holders obtained by banks at the time of account opening?
A. To establish identity and prevent impersonation
B. For use in marketing campaigns
C. As per customer preference only
D. To replace address proof requirement
RBI mandates obtaining photographs to establish customer identity, reduce fraud, and prevent impersonation during transactions.
11. As per RBI, photographs are compulsory while opening accounts of:
A. Only illiterate customers
B. Only non-resident customers
C. All categories of customers
D. Only salaried individuals
RBI has made photographs mandatory for all customers opening accounts, irrespective of account type or status, to strengthen KYC norms.
12. What is the purpose of Legal Entity Identifier (LEI)?
A. To assign tax identification numbers
B. To track foreign exchange remittances
C. To verify credit card transactions
D. To uniquely identify parties in financial transactions
The LEI is a 20-character alphanumeric code used globally to uniquely identify legal entities involved in financial transactions.
13. For which borrowers has RBI made Legal Entity Identifier (LEI) mandatory in India?
A. Retail individual borrowers only
B. Corporate borrowers with exposure above prescribed limits
C. Only government entities
D. All customers irrespective of exposure
RBI mandates LEI for corporate borrowers with aggregate exposure above set thresholds to improve risk management and transparency in financial markets.
14. As per RBI guidelines, can a bank open a current account for a borrower who has cash credit/overdraft with another bank?
A. Yes, without restrictions
B. No, it is completely prohibited
C. Yes, only after obtaining NOC from the lending bank
D. Yes, but only if borrower has turnover above ₹50 crore
RBI requires a No Objection Certificate (NOC) from existing lending banks to ensure credit discipline before opening such current accounts.
15. If aggregate exposure of a borrower is less than ₹5 crore, banks may open current accounts subject to:
A. Customer not being a willful defaulter or fraud account
B. Approval from Ministry of Finance
C. Submission of GST returns
D. Maintaining average balance of ₹1 lakh
For borrowers below ₹5 crore exposure, current accounts may be opened provided the account is not classified as fraud/willful default and due diligence is done.
16. Are photographs required for proprietary concerns when opening accounts?
A. No, since business name is sufficient
B. Only if turnover is above ₹20 lakh
C. Only when GST registration is absent
D. Yes, proprietor’s photograph is mandatory
Proprietorship accounts are linked to the individual, so proprietor’s photograph is compulsory along with KYC.
17. Which of the following is not an acceptable reason to avoid obtaining a photograph of an account holder?
A. Customer is an illiterate person
B. Customer refuses citing religious reasons
C. Customer is a foreign national
D. Customer is elderly and unable to travel to branch
RBI has mandated photographs for all customers. Religious objections are not accepted reasons; in such cases, account cannot be opened.
18. Which global organization is responsible for developing and maintaining the LEI system?
A. Global Legal Entity Identifier Foundation (GLEIF)
B. International Monetary Fund (IMF)
C. World Bank
D. Financial Stability Development Council (FSDC)
GLEIF is a non-profit established by the Financial Stability Board to oversee and maintain the global LEI system.
19. What is the structure of the Legal Entity Identifier (LEI)?
A. 10-digit alphanumeric code
B. 12-character numeric code
C. 20-character alphanumeric code
D. 16-digit numeric code
The LEI consists of 20 characters – a mix of letters and numbers – unique to each legal entity participating in financial markets.
20. In India, which organization issues LEI codes to entities?
A. RBI
B. SEBI
C. NABARD
D. Legal Entity Identifier India Ltd. (LEIL)
LEIL, a subsidiary of CCIL (Clearing Corporation of India), is the Local Operating Unit authorized by RBI to issue LEI codes in India.
