Question 1

When opening an account for a registered Society or Club, which document is critical for determining the authorized signatories and their powers?

The Annual Report.The Certificate of Registration.The Bye-laws of the Society/Club.The Resolution of the Managing Committee.

View Explanation

While the Resolution of the Managing Committee specifies who will operate the account *currently*, the Bye-laws are the fundamental governing rules that define the *constitution* of the society, the powers of the committee, election rules, and the procedure for appointing signatories. The bank must verify that the resolution passed is consistent with the powers conferred by the Bye-laws.

Question 2

If a bank lends money to a Trust for a purpose NOT authorized by the Trust Deed, and the Trustees default, can the bank recover the money from the Trust's assets?

Yes, because the bank acted in good faith.Yes, the Trust is always liable for acts of Trustees.No, the loan is Ultra Vires the Trust, and Trust assets are not liable.Yes, but only up to 50% of the loan value.

View Explanation

Trustees have only those powers granted by the Trust Deed. If they borrow for an unauthorized purpose, the act is Ultra Vires (beyond powers). The Trust estate cannot be bound by such acts. The bank can only look to the trustees personally for recovery, making it a high-risk situation.

Question 3

Who among the following can be a Co-parcener in a Hindu Undivided Family (HUF) governed by Mitakshara Law?

Daughter-in-law of the family.Both sons and daughters born in the family.Wife of the Karta.Only male members born in the family.

View Explanation

Post the Hindu Succession (Amendment) Act, 2005, daughters have the same rights as sons and are considered Co-parceners by birth in their own right. Wives and daughters-in-law are members but not co-parceners (they cannot demand partition).

Question 4

While a blind person is legally competent to contract, banks usually take extra precautions. Which of the following is NOT a valid restriction/rule for a blind person's account?

Cash withdrawals should be made in person.The mark/signature should be witnessed.They cannot be issued an ATM/Debit Card.They can open a cheque-operated account.

View Explanation

This is incorrect. RBI has mandated that banking facilities including ATM/Debit Cards and Net Banking should be offered to visually impaired persons without discrimination. Banks must ensure ATMs are accessible (talking ATMs). Denying a card is a violation.

Question 5

In a Hindu Undivided Family (HUF) account, who has the implied authority to sign cheques and bind the family?

Only the Karta.Any male member above 18.All adult coparceners jointly.The Karta and the eldest son.

View Explanation

Only the Karta (Manager) has the implied authority to operate the account and bind the family/firm. Other coparceners can operate only if the Karta grants them a specific mandate/power of attorney.

Question 6

Can a Partner in a partnership firm execute a Power of Attorney (PoA) authorizing a third party to operate the firm's bank account?

Yes, but only with the consent of all other partners.Yes, if the partnership deed allows it.Yes, any partner can do so.No, a partner is an agent of the firm and "Delegatus non potest delegare".

View Explanation

A partner acts as an agent for the firm. An agent cannot delegate his authority to another (sub-agent) unless expressly authorized. Therefore, a PoA for operating the firm's account requires the joint consent/signature of all partners.

Question 7

Once a "Liquidator" is appointed for a company by the court, the powers of the Board of Directors regarding the bank account:

Are shared with the Liquidator.Are transferred to the shareholders.Cease immediately, and the Liquidator takes control.Continue as usual.

View Explanation

Upon the appointment of a Liquidator, the directors become functus officio (lose their office/powers). The bank must stop the operation of the account by directors and allow operations only by the Liquidator.

Question 8

When opening an account for a "Public Trust", in addition to the Trust Deed, the bank should ask for:

Certificate of Registration with the Charity Commissioner.Letter of Administration.Partnership Deed.Certificate of Incorporation.

View Explanation

Public Trusts are required to be registered under the Public Trusts Act in many states. The Certificate of Registration issued by the Charity Commissioner is a key KYC document confirming the legal existence of the Public Trust.

Question 9

The authority of an "Administrator" to deal with the deceased's estate commences from:

The date of death of the deceased.The date of grant of Letter of Administration by the Court.The date of the Will.The date of filing the application.

View Explanation

Unlike an Executor (whose authority starts from death), an Administrator is appointed by the Court. Therefore, their legal authority commences strictly from the date the Letter of Administration is granted.

JAIIB Quiz

Quiz Finished!