Chapter 5: Operational Aspects of Deposit Accounts (JAIIB - Paper 2)
1. What is the minimum age required to open a savings account independently in a bank?
A. 12 years
B. 14 years
C. 18 years
D. 21 years
A minor who has attained the age of 18 years can open and operate a bank account independently. Below 18, accounts are generally opened under guardian/parent control.
2. Which of the following is TRUE regarding Current Accounts?
A. No interest is paid on balances
B. They are mainly for individual salary earners
C. They have restrictions on the number of withdrawals
D. Minimum balance is not required
Current Accounts are primarily for businesses and firms. Banks do not pay interest on balances kept in these accounts.
3. Interest on savings bank accounts in India is calculated on which basis?
A. Minimum balance between 10th and last day of the month
B. Average monthly balance
C. Quarterly average balance
D. Daily product basis
RBI has mandated that interest on savings accounts should be calculated on the daily product basis since April 1, 2010.
4. What is the maximum period for which a Term Deposit can be accepted by banks in India?
A. 5 years
B. 10 years
C. 15 years
D. 20 years
As per RBI guidelines, the maximum tenure for bank term deposits is generally 10 years.
5. A senior citizen (age 60 and above) generally receives:
A. Additional interest over and above the normal rate on deposits
B. Lower interest rate compared to others
C. Same rate of interest as others
D. No interest on fixed deposits
Banks generally offer additional interest (0.25% to 0.75% extra) on deposits made by senior citizens.
6. Which of the following is NOT permitted to open a bank savings account in India?
A. Minors under guardianship
B. Registered trusts
C. Unincorporated association with unlawful objective
D. Partnership firms
Accounts cannot be opened for fictitious or unlawful associations. Minors, trusts, firms are allowed subject to KYC and guidelines.
7. Which of the following is an exemption where quoting of PAN is NOT mandatory?
A. Opening a term deposit above ₹50,000
B. Small accounts opened under PMJDY
C. Cash deposit above ₹50,000 in a day
D. Purchase of bank draft of ₹50,000 or more
RBI allows 'Small Accounts' under financial inclusion without mandatory PAN, subject to relaxed KYC norms and restrictions on balances/transactions.
8. An account is classified as inoperative if there are no customer-induced transactions for a period of:
A. 6 months
B. 12 months
C. 18 months
D. 24 months
If there are no debit or credit transactions initiated by the customer for 2 years, the account is treated as inoperative.
9. Which of the following transactions will NOT make an inoperative account active again?
A. Interest credited by bank
B. Cash deposit by account holder
C. Withdrawal by cheque
D. Fund transfer initiated by customer
Customer-induced transactions reactivate accounts. System entries like interest credit or service charge debit do not change inoperative status.
10. Unclaimed deposits, which remain inoperative for 10 years or more, are transferred by banks to:
A. Investor Protection Fund
B. National Pension Scheme
C. Depositor Education and Awareness Fund (DEAF)
D. Consolidated Fund of India
As per RBI guidelines, unclaimed deposits after 10 years are transferred to the Depositor Education and Awareness Fund (DEAF) maintained by RBI.
11. In a joint account with the instruction “Either or Survivor,” which of the following is TRUE?
A. Only one account holder can operate the account at a time
B. Either account holder can operate the account during their lifetime
C. Both must jointly sign all transactions
D. Account automatically closes on death of one holder
In "Either or Survivor" instructions, any one of the account holders can operate the account. After death of one, the survivor can continue operating.
12. In a joint account with “Former or Survivor” instructions, who can operate the account during the lifetime of both account holders?
A. Both account holders jointly
B. Either of the holders
C. Survivor only
D. The first named account holder
In "Former or Survivor" accounts, only the first named holder operates during his lifetime. The survivor gets rights only after the death of the former.
13. If in a joint account with “Jointly” mandate, one of the account holders dies, what happens?
A. Account operations stop; balance is paid jointly to survivor and legal heirs of the deceased
B. Survivor can continue to operate alone
C. Balance automatically transfers to survivor
D. Account becomes inoperative immediately
When the mandate is “Jointly,” all must sign. On death of one holder, operations stop, and balance is released to survivor along with legal heirs of deceased.
14. How many persons can be nominated in a single deposit account under the Banking Regulation Act?
A. Two persons
B. Three persons
C. Only one person
D. No restriction on number
As per Section 45ZA of the Banking Regulation Act, nomination facility is restricted to only one individual per account.
15. In the absence of a nominee, how are the funds of a deceased depositor settled?
A. Transferred to government
B. Paid only to joint account survivor
C. Paid to the bank’s discretion
D. Paid to legal heirs of the deceased with proof of succession
If no nominee exists, the bank settles the claim of a deceased account holder by paying the legal heirs after verifying succession documents.
16. Which of the following deposit accounts CANNOT be attached by a court order?
A. Savings Account
B. Non-resident (NRE) Account
C. Current Account
D. Term Deposit Account
NRE accounts are maintained in foreign currency and enjoy immunity from attachment by Indian courts or authorities, except for specific cases like FEMA violations.
17. An account has been frozen due to an attachment order from Income Tax Department. What should the bank do?
A. Allow withdrawals but not deposits
B. Close the account immediately
C. Stop operations in the account as per order and report compliance
D. Transfer balance to customer’s other account
On receiving attachment orders, banks must freeze the account and ensure compliance strictly, without allowing debit operations until order is vacated.
18. Who can issue an attachment order to a bank to freeze a customer’s account?
A. RBI only
B. Branch Manager
C. Bank’s internal auditor
D. Competent authorities like Courts, Income Tax, GST, or Enforcement Directorate
Attachment orders are issued by statutory or judicial authorities (Courts, IT, GST, ED etc.). Banks must act only on valid orders received in writing.
19. If a joint account is subject to an attachment order in the name of one account holder, how is it handled?
A. Entire account is frozen, irrespective of joint mandate
B. Only half of the balance is frozen
C. Account continues to operate normally
D. Bank transfers balance to survivor
As per law, attachment orders on one account holder apply to the entire joint account balance, unless otherwise directed by the authority.
20. Which of the following statements regarding garnishee orders is CORRECT?
A. They are issued by RBI to recover NPAs
B. They are instructions from bank to customer
C. They can be issued by income tax authorities only
D. They are court orders directing banks to attach funds of a judgment debtor
A garnishee order is issued by a court to a third party (bank) to stop withdrawal and remit funds of the judgment debtor towards debt settlement.
21. Under which Act can statutory authorities demand submission of records from banks?
A. Companies Act, 2013
B. SEBI Act, 1992
C. Banking Regulation Act, 1949
D. FEMA, 1999
Statutory authorities can demand submission of bank records primarily under the Banking Regulation Act, 1949 and other allied laws.
22. When a court issues a summons to produce customer records, the bank must:
A. Refuse disclosure citing customer confidentiality
B. Submit the required records as per legal order
C. Wait for customer’s written consent
D. Forward the order to RBI for permission
Banks are legally bound to submit required records to courts or statutory authorities when ordered, even overriding customer confidentiality.
23. Which statutory authority can call for records relating to suspicious financial transactions?
A. SEBI
B. IRDAI
C. RBI
D. FIU-IND
The Financial Intelligence Unit – India (FIU-IND) under the Ministry of Finance monitors suspicious transactions and can demand records from banks.
24. As per IT Act, 2000, electronic records submitted by banks to statutory authorities must be:
A. Digitally signed and verifiable
B. Submitted only in paper form
C. Handwritten and attested
D. Scanned and emailed without signature
As per the IT Act, 2000, electronic records must be digitally signed and verifiable to ensure authenticity before submission to statutory authorities.
25. Which of the following is TRUE regarding submission of bank records to statutory authorities?
A. Customer consent is always required
B. Only balance sheets can be submitted
C. Banks must comply with lawful orders even without customer consent
D. Records can be altered before submission
When statutory authorities or courts issue lawful orders, banks must submit the required records, and customer consent is not mandatory.
