Chapter 44: Alternate Delivery Channels – Digital Banking (JAIIB – Paper 2)

1. Which of the following is NOT an example of Alternate Delivery Channels (ADCs) in banking?

• A. Internet Banking
• B. Mobile Banking
• C. Automated Teller Machines (ATMs)
• D. Branch Teller Counters

Alternate Delivery Channels are non-branch channels like ATMs, Internet Banking, Mobile Banking, POS, etc. Branch teller counters are traditional banking, not ADCs.

2. Which of the following is a primary function of an Automated Teller Machine (ATM)?

• A. Granting new loans
• B. Cash withdrawal and balance enquiry
• C. Approving overdrafts
• D. Sanctioning fixed deposits

ATMs allow customers to withdraw cash, deposit money, check balances, and perform basic banking without visiting a branch.

3. A customer uses another bank’s ATM and is charged a fee. This transaction is an example of:

• A. On-us transaction
• B. Branch transaction
• C. Off-us transaction
• D. POS transaction

An off-us transaction occurs when a customer uses another bank’s ATM. On-us means using the same bank’s ATM.

4. As per RBI guidelines, how many free transactions (financial and non-financial) are allowed per month at ATMs of other banks in metro cities?

• A. 3
• B. 5
• C. 7
• D. 10

In metro cities, RBI allows 3 free transactions per month at other bank ATMs. In non-metro cities, it is 5.

5. Which type of ATM is specifically set up by non-bank entities and allows customers of multiple banks to use it?

• A. On-site ATM
• B. Off-site ATM
• C. Mobile ATM
• D. White-label ATM

White-label ATMs are set up by non-bank entities but authorized by RBI. Customers of any bank can use them.

6. What is the main difference between a magnetic stripe card and an EMV chip card?

• A. Both store data in the same way
• B. EMV chip cards store data in encrypted form, making them more secure
• C. Magnetic stripe cards are safer than chip cards
• D. EMV cards cannot be used internationally

EMV chip cards (Europay, MasterCard, Visa) provide higher security by storing encrypted data and using dynamic authentication, unlike static magnetic stripe cards.

7. Which type of card requires entering a PIN at POS terminals for authorization in India?

• A. Contactless card
• B. Credit card (magnetic stripe)
• C. Virtual card
• D. EMV debit/credit card

RBI mandates PIN authentication for EMV chip-based debit and credit cards at POS machines in India for security.

8. A customer reports that his magnetic stripe card has been cloned and misused. What type of fraud is this?

• A. Phishing
• B. Spoofing
• C. Skimming
• D. Malware attack

Skimming occurs when card details from the magnetic stripe are illegally copied using a skimmer device and misused.

9. Which of the following is NOT considered electronic banking?

• A. Passbook updation at branch counter
• B. Internet banking
• C. Mobile banking
• D. ATMs

Electronic banking includes Internet banking, mobile banking, ATMs, and POS. Manual passbook updation is branch banking, not e-banking.

10. Which RBI-regulated system allows customers to make instant fund transfers 24×7 through mobile banking apps and internet banking?

• A. NEFT
• B. RTGS
• C. IMPS
• D. ECS

IMPS (Immediate Payment Service) allows instant fund transfer anytime via mobile or internet banking, unlike NEFT (batch) and RTGS (high-value).

11. As per RBI guidelines, if an unauthorized electronic transaction occurs due to the bank’s negligence, the customer’s liability is:

• A. Limited to ₹5,000
• B. Limited to ₹10,000
• C. Zero liability
• D. 50% of transaction amount

RBI mandates that if the loss is due to the bank’s negligence (system failure, security lapse), the customer has zero liability.

12. A customer reports unauthorized debit within 3 working days of the transaction. What is his liability?

• A. Zero liability
• B. ₹5,000
• C. ₹10,000
• D. 50% of loss

If the customer notifies the bank within 3 working days, RBI guidelines ensure zero liability irrespective of transaction value.

13. If a customer reports unauthorized electronic transaction after 4–7 working days, what is the maximum liability for savings bank accounts (as per RBI)?

• A. ₹5,000
• B. ₹10,000
• C. ₹25,000
• D. ₹10,000 (for SB accounts)

RBI circular states that if reported within 4–7 working days, liability is capped at ₹10,000 for savings bank accounts.

14. If unauthorized transactions are reported after 7 working days, liability is decided by:

• A. Zero liability automatically
• B. Bank’s Board-approved customer liability policy
• C. RBI directly
• D. Indian Banks’ Association (IBA)

For cases reported beyond 7 working days, the bank’s own Board-approved customer liability policy decides the extent of liability.

15. If loss occurs due to customer’s negligence (e.g., sharing PIN/OTP), what is the liability?

• A. Full liability until the bank is notified
• B. Zero liability always
• C. Limited to ₹10,000
• D. Decided by RBI

If the customer’s own negligence causes the fraud, he bears full liability till he informs the bank. After notification, liability shifts to the bank.

16. For an ATM withdrawal where the account is debited but cash is not dispensed, the maximum TAT for auto-reversal is:

• A. T + 1 day
• B. T + 3 days
• C. T + 5 days
• D. T + 7 days

RBI’s TAT framework requires proactive reversal within T + 5 days for “cash not dispensed but account debited” at ATMs.

17. For the ATM case in Q16, compensation payable to the customer for delay beyond the TAT is:

• A. ₹100 per day of delay beyond T + 5
• B. ₹50 per day of delay beyond T + 5
• C. ₹100 per day of delay beyond T + 3
• D. Flat ₹500 irrespective of delay

Compensation is ₹100 per day for each day of delay after the T + 5 outer limit for ATM cash-not-dispensed failures.

18. In IMPS, if the remitter’s account is debited but the beneficiary account is not credited, the beneficiary bank must auto-reverse by:

• A. End of T day
• B. T + 2 days
• C. T + 5 days
• D. T + 1 day

For IMPS credit failures, auto-reversal to the originator must be completed by T + 1 day.

19. For the IMPS scenario in Q18, the compensation payable for delay beyond the TAT is:

• A. ₹50 per day beyond T + 1
• B. ₹100 per day beyond T + 1
• C. ₹200 per day beyond T + 1
• D. No compensation is payable

RBI prescribes ₹100 per day for delay beyond the T + 1 day outer limit for IMPS failed credits.

20. In UPI person-to-person transfer, account is debited but beneficiary is not credited. The correct TAT and compensation are:

• A. TAT: T + 1 day; Compensation: ₹100/day beyond T + 1
• B. TAT: T + 5 days; Compensation: ₹100/day beyond T + 5
• C. TAT: T + 2 days; Compensation: ₹50/day beyond T + 2
• D. TAT: T + 7 days; Compensation: ₹100/day beyond T + 7

For UPI fund transfers (P2P), auto-reversal by beneficiary bank must be completed by T + 1; else ₹100/day is payable.

21. In UPI merchant payments, account is debited but confirmation is not received at the merchant location. What applies?

• A. TAT: T + 1; ₹100/day beyond T + 1
• B. TAT: T + 2; ₹50/day beyond T + 2
• C. TAT: T + 7; ₹100/day beyond T + 7
• D. TAT: T + 5; ₹100/day beyond T + 5

For UPI merchant (P2M) where confirmation isn’t received, the auto-reversal outer limit is T + 5; delay attracts ₹100/day.

22. Card-to-card transfer: card debited but beneficiary card not credited. The TAT for reversal is:

• A. T + 5 days
• B. T + 1 day
• C. T + 3 days
• D. T + 7 days

For card-to-card credit failures, reversal must be completed latest by T + 1 day; else ₹100/day compensation applies.

23. PoS (card-present) including Cash@PoS: account debited but merchant doesn’t receive confirmation (no charge slip). The TAT and compensation are:

• A. T + 1; ₹50/day beyond T + 1
• B. T + 3; ₹100/day beyond T + 3
• C. T + 5; ₹100/day beyond T + 5
• D. T + 7; ₹100/day beyond T + 7

For PoS “debit but no confirmation”, auto-reversal must occur within T + 5; compensation is ₹100/day for any delay beyond that.

24. In NACH, delay in crediting the beneficiary’s account (or reversal of amount) must be resolved within:

• A. T + 1 day, else ₹100/day compensation
• B. T + 2 days, else ₹50/day compensation
• C. T + 5 days, else ₹100/day compensation
• D. T + 7 days, else ₹100/day compensation

For NACH credit/reversal delays, the beneficiary bank must complete reversal by T + 1; if not, ₹100/day compensation is payable.

25. Which statement best describes RBI’s general principle behind the TAT framework for failed “credit-push” transactions?

• A. Penalty is always paid to the originator
• B. Penalty is paid only if the customer files a complaint
• C. No penalty applies if failure is due to network issues
• D. If beneficiary isn’t credited but originator is debited, credit must be effected within TAT; failing which penalty is paid to the beneficiary

RBI states that for credit-push failures, timely credit must occur; if not, compensation is payable to the beneficiary. Also, wherever compensation applies, it must be credited suo motu.