Mumbai University Solved Question Papers
Law of Banking and Negotiable Instruments
Previous Year Question Paper with Solution
LLB 3 years · Sem 6
Apr 2014 Examination
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LLB 3 years Sem 6 Law of Banking and Negotiable Instruments Apr 2014 Question Paper with Solutions
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First published on munotes.in on 24 October 2026.
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Model answers written and edited by the munotes.in editorial desk.
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The University does not publish an official answer key for this paper. The answers in this volume are model answers, written to show how a full-mark answer is built. They are a study aid, not an authority on what an examiner marked.
The question paper reproduced here is the paper as set by the University of Mumbai at the Apr 2014 examination.
Contents
The questions below are the paper as the University of Mumbai set it at the Apr 2014 examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the Apr 2014 examination, reproduced as the University of Mumbai set them, in the order it set them. Nothing has been reworded, added or left out. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 100 · 25 questions answered
Instructions printed on the paper
- N.B: (1) All questions are compulsory. (2) Figures to the right indicate full marks.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q.1
Q.1: Answer in not more than two sentences
20 Marks - 2 marks each
(a)What do you mean by 'approved securities'?[2]
Answer
The definition. Section 5(a) of the Banking Regulation Act, 1949 says that "approved securities means the securities issued by the Central Government or any State Government or such other securities as may be specified by the Reserve Bank from time to time."
What it covers. So approved securities are of two kinds:
- Government securities. Bonds and treasury bills issued by the Central Government or by any State Government.
- Securities the Reserve Bank specifies. Any other security the Reserve Bank names from time to time.
The earlier definition. Until 18 January 2013 the clause pointed to the Indian Trusts Act, 1882. Approved securities were those in which a trustee may invest under section 20 of that Act, and such others as the Rules prescribed. The Banking Laws (Amendment) Act, 2012 (Act 4 of 2013) put in the present, simpler words. That was already the law when this paper was set in 2014.
Why the term matters. It decides what counts as a safe, liquid asset under the Act:
- Statutory liquidity ratio (section 24). A bank must keep a set share of its demand and time liabilities in cash, gold or unencumbered approved securities. "Unencumbered" means not pledged against a loan.
- Foreign banks (section 11(2)). Their deposit with the Reserve Bank may be in cash or unencumbered approved securities.
- Dividends (section 15(2)). Depreciation in approved securities need not be written off before a dividend, if it has not been capitalised or treated as a loss.
Conclusion. Approved securities are Central and State Government securities and any others the Reserve Bank specifies (section 5(a)). They are the safe assets in which a bank may hold its statutory liquidity reserve under section 24.
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