Sarfaesi Act 2002 - 15 Important Questions for JAIIB

The SARFAESI Act provides for setting up of asset reconstruction companies for acquiring financial assets including NPAs which helps in clearing balance sheet of banks. Today I am providing 15 important questions for JAIIB exam.

1. SARFAESI Act 2002 does not concern which of the following aspects:
a. Securitisation of Financial Assets
b. Reconstruction of Assets
c. Authority to enforce without the intervention of the court
d. Setting up of Central Registry
e. None of the above

2. In which of the following cases, the constitutional validity of the SARFAESI Act 2002 was questioned before Supreme Court:
a. Manchester Chemicals vs ICICI bank
b. Manchester Chemicals vs Union of India
c. Mardia Chemicals vs Union of Indiadc. 
d. Mardia Chemicals vs ICICI Bank
e. none of the above

3. In case of Mardia Chemicals cases in the relation of SARFAESI  Act 2002, which part was declared as invalid by Supreme Court:
a. pre-condition of deposit of 75% of the amount by the borrower before going to the DRT
b. pre-condition of deposit of 75% of the amount by the borrower before going to the DRT
c. pre-condition of deposit of 75% of the amount by the borrower if the bank sells the immovable property and borrower wants to appeal the DRT
d. the condition of deposit of 75% of amount by the borrower after DRT decision
e. none of the above

4. Under the provision of SARFAESI Act 2002, where a transaction of securitisation is registered:
a. Registrar of Companies
b. Registrar of Assurances
c. Registrar of Firms
d. Registrar of Central Registry
e. none of the above

5. Under the provision of SARAESI Act 2002 a charge on moveable property in favour of securd without delivery  of possession to the creditor is called:
a. mortgage
b. assignment
c. pledge
d. lien
e. hypothecation

6. In the process of securitisation the non-liquid financial assets (NPA) are converted into markable securities in the form of:
a. shares
b. debentures
c. pass through certificates
d. security receipts
e. bonds

7. What norm has to be followed by a securitisation company regarding owned funds and the acquired financial assets i.e. owned funds as % age of acquired assets
a. 20%
b. 15%
c. 12.5%
e. 5%

8. At the time of take over the badd loans from 3 banks it is found that these banks have field suits in different DRTs. Securitisation company wants to get these cases in one DRT, which can be permitted by:
a. Central Govt.
b. Supreme Court
c. High Court
d. RBI

9. When the securitisation company fails to realize the securitized assets, the qualified institutional buyers holding _______ % of total value of the security receipts can force the securitisation company for a particular decision:
a. 75%
b. 60%
c. 50%
d. 40%
e. 25%

10. Under the provision of SARFAESI Act 2002 which of the following is not part of the financial asset reconstruction:
a. take over of management of the unit
b. sale if the asset
c. re-schedulement of the dues payable by the borrower
d. taking possession of the assets
none of the above

11.What is the maximum period allowed to a securitisation company for recovery of reconstructed financial asset:
a. 2 years   
b. 3 years
c. 4 years
d. 5 years
e. 6 years

12. Under the provision of SARFAESI Act 2002, what is meant by enforcement of security interest:
a. sale of assets of the borrowing party by the bank
b. sale of charged assets by the secured creditor through DRT
c. sale of charged assets by the secured cdeditor without without court intervention
d. getting bank's charge registered with Central Registry

13. I an asset is sold by the secured creditor, what would be the order for the appropriation of proceeds:
a. first towards costs, charge incidental towards the preservation of securities
b. first towards the dues of the secured creditor
c. first towards costs and dues to the secured on prorate basis
d. secondly, if there is surplus towards other person entitled to the asset

14. if after sale of secured asset, the dues of the secured creditor are not paid fully, what option does the secured creditor have:
a. ha has to write off the same
b. he can file a suit in a civil court
c. he can file a suit in a DRT
d. he can file a suit in DRAT
e. b and c

15. What time period is to be given to the borrower as a notice before sale of the secured asset:
a. 30 days
b. 45 days
c. 60 days
d. 75 days
e. 90 days

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