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    MCQ (New Topics-Special Laws) - Part

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    JEP Walwal
    This document discusses key aspects of banking law as it relates to deposits and account holders' rights. It addresses the nature of deposits, distinguishing features of demand deposits versus time deposits, circumstances under which a bank can be held liable for dishonoring checks due to insufficient funds, liability for allowing unauthorized withdrawals, and lawful actions a bank can take without violating its duties to depositors.

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    © All Rights Reserved
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    MCQ (New Topics-Special Laws) - Part

    Uploaded by

    JEP Walwal
    172 views2 pages
    This document discusses key aspects of banking law as it relates to deposits and account holders' rights. It addresses the nature of deposits, distinguishing features of demand deposits versus time deposits, circumstances under which a bank can be held liable for dishonoring checks due to insufficient funds, liability for allowing unauthorized withdrawals, and lawful actions a bank can take without violating its duties to depositors.

    Original Description:

    MCQ (NEW TOPICS-SPECIAL LAWS) - Part (14)

    Original Title

    Mcq (New Topics-special Laws) - Part (14)

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    This document discusses key aspects of banking law as it relates to deposits and account holders' rights. It addresses the nature of deposits, distinguishing features of demand deposits versus time deposits, circumstances under which a bank can be held liable for dishonoring checks due to insufficient funds, liability for allowing unauthorized withdrawals, and lawful actions a bank can take without violating its duties to depositors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    172 views2 pages

    MCQ (New Topics-Special Laws) - Part

    Uploaded by

    JEP Walwal
    This document discusses key aspects of banking law as it relates to deposits and account holders' rights. It addresses the nature of deposits, distinguishing features of demand deposits versus time deposits, circumstances under which a bank can be held liable for dishonoring checks due to insufficient funds, liability for allowing unauthorized withdrawals, and lawful actions a bank can take without violating its duties to depositors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    1.

    That a deposit is in the nature of a loan –


    a. Is inconsistent with the fiduciary duty imposed on banks in
    the handling thereof.
    b. Means that the same may be classified as a preferred credit.
    c. Means that the bank which has loaned the depositor money has a
    right to compensation if both loan obligations are already due
    and demandable, even without prior consent of the depositor.
    d. Means that in cases where banks are placed under receivership
    or liquidation, a depositor has no other means to recover on
    his deposit except through such receivership and liquidation
    proceedings where he will be treated as a creditor of the
    bank.

    2. A time deposit differs from a demand deposit in that –


    a. Numbered accounts are not allowed for time deposits, but are
    allowed for demand deposits.
    b. Instruments issued pursuant to a time deposit are generally
    non-negotiable, while instruments issued pursuant to a demand
    deposit are negotiable.
    c. Funds in time deposit account earn interest, while funds in a
    demand deposit account cannot earn interest.
    d. Funds in a time deposit account cannot be withdrawn at any
    time, while funds in a demand deposit account can.

    3. A bank dishonors a check drawn against an account with


    insufficient funds. Under which circumstances can the bank be
    held liable for such dishonor?
    a. If the depositor has another account in the bank with
    sufficient funds to cover the amount of the check drawn but
    the bank did not apply such funds to cover said check.
    b. If the bank did not notify the depositor that it had
    previously availed of its legal right to compensation and
    applied the funds in the checking account in payment of
    depositor’s loan to the bank resulting in the insufficiency of
    the funds to cover the amount of the check drawn.
    c. If before dishonoring the check, the bank did not notify the
    depositor that his funds are insufficient to cover the amount
    of the check drawn as to give him an opportunity to deposit
    sufficient funds.
    d. If the bank does not allow the depositor to deposit the funds
    needed to cover the check drawn within a reasonable time after
    presentment in order to avoid dishonor of said check.

    4. A Bank is liable to the depositor if it allows withdrawal of the


    funds in the depositor’s account by someone who is not actually
    authorized by the depositor, but who –
    a. Presents the passbook and a withdrawal slip signed by the
    depositor.
    b. Surrenders the certificate of time deposit.
    c. Appears as an authorized signatory of a corporate depositor in
    the latest board resolution submitted to the bank, but is
    actually no longer connected with the corporate depositor.
    d. Appears in the bank records as the depositor but is actually
    merely a trustee for the true owner of the funds.

    5. What can a bank lawfully do or omit to do without violating its


    duty to exercise extraordinary diligence in the handling of
    deposits?
    a. Allowing a crossed check to be cashed provided that the payee
    is personally known to the bank.
    b. Accepting as deposit a check which is not indorsed by the
    payee, provided that the check is a manager’s check.
    c. Closing a demand deposit account with prior notice to a
    depositor who has been misusing such account repeatedly
    overdrawing against it.
    d. Disclosing information regarding “and/or” savings account
    where one of the two depositors has given his written
    permission for such disclosure.

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