INSTITUTE OF BANKERS IN MALAWI

DIPLOMA IN BANKING EXAMINATION

SUBJECT: LAW RELATING TO BANKING (IOBM – D216)

Date: Thursday, 12th November 2015

Time Allocated: 3 hours (08:00 – 11:00 Hours)

INSTRUCTIONS TO CANDIDATES

1 This paper consists of TWO Sections, A and B.

2 Section A consists of 4 questions, each question carries 15 marks.

Answer ALL questions.

3 Section B consists of 4 questions, each question carries 20 marks. Answer

ANY TWO questions.

4 You will be allowed 10 minutes to go through the paper before the start of the
examination, you may write on this paper but not in the answer book.

5 Begin each answer on a new page.

6 Please write your examination number on each answer book used.

Answer books without examination numbers will not be marked.

7 All persons writing examinations without payment will risk expulsion from the
Institute.

8 If you are caught cheating, you will be automatically disqualified in all subjects
seated this semester.

9 DO NOT open this question paper until instructed to do so.

SECTION A (60 MARKS)

Answer ALL questions from this section.

QUESTION 1

Jones has opened an account with one of the commercial banks in Town. He has
duly filled the forms as required by the bank. Jones however is not aware what
constitutes the contract between himself and the bank with respect to implied terms.

Required:

Advise Jones on implied terms of the contract between himself and the bank ?

(Total 15 marks)

QUESTION 2

(a) X Insurance Company has been liquidated due to many financial challenges it
was facing. The Reserve Bank of Malawi is the liquidator of the company.

Required:

As a liquidator, outline five powers that Reserve Bank of Malawi has as per
Section 32 (3) of the Reserve Bank of Malawi Act? (10
marks)

(b) Differentiate between criminal conversion and theft? ( 5 marks)

(Total 15 marks)

QUESTION 3

(a) Outline powers and duties of directors as officials of a bank? (Total 15 marks)

A qualification examined by the Institute of Bankers in Malawi

QUESTION 4

Explain in detail how the following Statutes affect the confidentiality principle in
banker/customer relationship:

(a) Drug Trafficking Offences Act, 1986 (7 marks)

(b) Taxes Management Act 1970 (4 marks)
(c) Criminal Justice Act 1987 (2 marks)
(d) Companies Act 1985 (2 marks)

(Total 15 marks)

SECTION B (40 MARKS)

Answer ANY TWO questions from this section

QUESTION 5

(a) Briefly, outline the rules that are to be considered before closure of a bank
account by the bank to avoid a dispute? ( 15
marks)

(b) Discuss any three factors that must be considered by a banker when opening a
new account. (5 marks)

(Total 20 marks)

QUESTION 6

(a) The African Development Bank considers private sector development as a

major objective of its development activities. How does the bank undertake
this objective? (8 marks)

(b) Every year in Malawi, the International Monetary Fund (IMF) sends a
delegation to discuss with government and all relevant stakeholders on
economic issues affecting Malawi. However, many Malawians are not well
conversant with the functions/roles of the Fund. State six functions of the
3

A qualification examined by the Institute of Bankers in Malawi

 Fund. ( 12
marks)

. (Total 20 marks)

QUESTION 7

(a) A bill payable on demand should be presented for payment as soon as

possible within a reasonable time. In certain circumstances, presentment for
payment is dispensed with. Mention four of such circumstances? ( 8 marks)

(b) Under what six conditions will a person be a holder in due course? (6 marks)

(Total 20 marks)

QUESTION 8

(a) Define undue influence and state four principles to be applied once undue
influence is alleged on the part of the bank by the guarantor? (10 marks)

(b) Explain five ways through which a valid guarantee is determined? (10 marks)

(Total 20 marks)

END OF EXAMINATION PAPER

A qualification examined by the Institute of Bankers in Malawi