Chapter 6: Operational Aspects of Handling Clearing/Collection/Cash (JAIIB - Paper 2)
1. What is the main purpose of the Cheque Truncation System (CTS)?
A. To replace physical movement of cheques with electronic images
B. To increase the validity period of cheques
C. To introduce new cheque designs only
D. To eliminate the use of demand drafts
CTS replaces physical cheque movement with electronic transmission of cheque images, ensuring faster and safer clearing.
2. Which of the following features is mandatory in CTS-2010 standard cheques?
A. Signature panel on the back side
B. Use of multiple colors and designs
C. Absence of watermark
D. Pantograph with “VOID/COPY” feature
CTS-2010 cheques must include features like watermark, standardized field placement, and a pantograph to prevent fraud.
3. In CTS, how many sessions of cheque clearing are currently permitted in India?
A. 1 Session
B. 2 Sessions
C. 3 Sessions
D. 4 Sessions
RBI permits three sessions in CTS: Presentation clearing, Return clearing, and Contingency clearing.
4. A customer presents a post-dated cheque in CTS before its due date. What will happen?
A. It will be cleared immediately
B. It will be returned unpaid
C. It will be put on hold automatically
D. It will be converted into a demand draft
Post-dated cheques presented before the date are returned unpaid with reason code “Post-dated cheque presented”.
5. In CTS, who is responsible for capturing the cheque image and MICR data?
A. The paying bank
B. The Reserve Bank of India
C. The customer depositing the cheque
D. The presenting bank (Collecting bank)
The presenting/collecting bank captures cheque images and MICR data using a scanner and sends them to the clearing house.
6. As per RBI guidelines, what is the standard cheque validity period in CTS?
A. 3 months
B. 6 months
C. 1 month
D. 12 months
Since April 2012, cheque validity in India is standardized at 3 months from the date of issue.
7. As per RBI guidelines, what is the maximum time frame for collection of outstation cheques drawn on state capitals?
A. 7 working days
B. 10 working days
C. 10–14 working days
D. 21 working days
RBI’s collection policy requires cheques drawn on state capitals to be collected within 7–10 working days, and in other major cities within 10–14 days.
8. What is the maximum time frame prescribed by RBI for collection of outstation cheques drawn on rural/semi-urban centers?
A. 7 working days
B. 14–21 working days
C. 30 working days
D. No limit specified
For cheques drawn on rural and semi-urban centers, banks are expected to collect them within 14–21 working days as per RBI guidelines.
9. If a bank fails to collect a local cheque within the stipulated time, what compensation must be paid to the customer?
A. Interest at savings bank rate for the delay
B. Penalty of ₹500 fixed
C. Interest at FD rate
D. No compensation is required
For delays in collection of local cheques, banks must pay compensation at least at the savings bank interest rate.
10. What is the compensation rate if there is a delay in collection of outstation cheques?
A. Savings rate only
B. No compensation
C. 2% above savings rate
D. At the term deposit rate applicable for the period of delay
In case of delay in outstation cheque collection beyond the stipulated period, the bank must compensate at the term deposit rate.
11. What is the RBI-stipulated time frame for local cheque collection under normal clearing?
A. Same day
B. Maximum 2 working days
C. 7 working days
D. 14 working days
RBI mandates that local cheques must be collected and funds credited within 2 working days.
12. A customer deposits an outstation cheque for ₹20,000 which takes 25 days to collect instead of 14 days. What is the bank’s obligation?
A. No compensation as amount is below ₹50,000
B. Pay ₹500 as penalty
C. Pay interest at applicable FD rate for 11 days
D. Report delay to RBI only
Since the cheque collection exceeded RBI’s stipulated time, the bank must pay interest at the applicable FD rate for the period of delay (25-14 = 11 days).
13. Who is primarily responsible for the custody of cash in a bank branch?
A. Branch Manager
B. Joint Custodians (usually Head Cashier and Officer)
C. Auditor
D. Any staff member
As per bank practice, branch cash is held under joint custody, generally by the Head Cashier and another officer, to ensure dual control.
14. Which of the following is the correct practice for vault/strong room keys in a bank branch?
A. Both keys should remain with one custodian
B. Keys can be given to temporary staff
C. Keys can be kept in the branch locker
D. Keys must be held separately by two different custodians
For security, strong room keys are split under dual custody — two different custodians must hold them separately.
15. What is the insurance cover normally taken by banks for cash in transit?
A. Cash-in-transit insurance
B. Term insurance
C. Credit insurance
D. Life insurance
Banks take Cash-in-Transit insurance to protect against risks during movement of cash between branches, ATMs, and currency chests.
16. A shortage of ₹2,000 is detected in the branch cash at the end of the day. What is the correct procedure?
A. Adjust it against branch profits
B. Ignore as it is a small amount
C. Report immediately, investigate, and debit the concerned staff if responsible
D. Adjust it against suspense account permanently
Any shortage/excess in cash must be reported immediately and investigated. Responsibility is fixed, and the amount is recovered from concerned staff if applicable.
17. Which of the following statements is TRUE regarding fake note detection in banks?
A. Fake notes must be returned to the customer
B. Fake notes can be adjusted in customer account
C. Fake notes must be destroyed immediately
D. Fake notes must be impounded, recorded, and forwarded to RBI/Police
As per RBI/FIU guidelines, counterfeit notes must be impounded, recorded, and reported to RBI/Police. They are not returned to customers.
18. What is the limit beyond which cash remittances should be escorted by armed guards as per RBI security guidelines?
A. ₹5 lakh
B. ₹10 lakh
C. ₹15 lakh
D. ₹20 lakh
RBI security guidelines require cash remittances of ₹10 lakh and above to be transported under armed guard escort.
19. As per RBI guidelines, how often should banks conduct security drills/mock exercises at branches?
A. Daily
B. Monthly
C. Quarterly
D. Annually
RBI and bank security policies mandate quarterly mock security drills in branches to ensure staff preparedness for emergencies.
20. Which of the following security measures is MANDATORY for ATMs as per RBI instructions?
A. Appointment of a greeter
B. Cashier inside ATM cabin
C. Full-time branch officer presence
D. CCTV surveillance and recording
RBI mandates CCTV surveillance at all ATMs with at least 90 days recording backup for security and monitoring.
21. What is the primary purpose of a time-lock in strong room doors of bank branches?
A. Prevent duplicate key usage
B. Prevent opening of vault during unauthorized hours
C. Prevent loss of keys
D. Allow only one custodian to access vault
Time-locks ensure vaults cannot be opened outside business hours, even if both custodians are present with keys.
22. As per security norms, what is the minimum height prescribed for a compound wall around currency chests/branches with vaults?
A. 2.4 meters with barbed wire fencing
B. 1.5 meters without fencing
C. 3 meters plain wall
D. No specific guideline
Currency chests/branches must have a compound wall of at least 2.4 meters topped with barbed wire as per RBI and police security guidelines.
23. In case of an ATM theft attempt, which of the following is the correct immediate action by bank officials?
A. Inform customer care
B. Wait till next day for reconciliation
C. File an insurance claim directly
D. Report immediately to police and higher bank authorities
In case of ATM theft or attempted burglary, immediate reporting to police and bank’s controlling office is mandatory.
24. Which security measure is mandatory at ATMs to protect customers against skimming and card fraud?
A. Display of loan products
B. Presence of guard at all times
C. Installation of anti-skimming devices and software
D. Use of deposit machines only
RBI has instructed banks to install anti-skimming devices and fraud detection software on ATMs to protect customers from card fraud.
