Banking Operations – Chapter 2
High‑Yield Q&A Study Pack
Section 1 — The Check
Q1. What are the 4 ways a check may be made payable (as shown in the chapter)?
Answer: • To the bearer
• Blank check (treated as bearer)
• To drawer’s order
• To the beneficiary (named payee)
Q2. Before issuing a checkbook to a new customer, what 2 consultations must the
bank do?
Answer: 1) Consult the Central Bank of Lebanon central file to verify the person is not under
a check‑issuance ban.
2) Consult the bank “intelligence” file to assess the customer’s history with this bank and
other banks.
Q3. Give examples of optional information that may appear on a check (from the
chapter).
Answer: Examples: payee/beneficiary name, crossing, reason for payment.
Q4. Define a crossed check and its practical effect.
Answer: A crossed check has two parallel lines on the front. It cannot be cashed
immediately at the counter; it must be cashed through a bank.
Q5. What are the two types of check crossing mentioned, and what’s the basic
distinction?
Answer: General crossing vs restrictive/special crossing (both are crossed checks; the
restrictive/special crossing is more limiting as to how/through whom it can be cashed).
Q6. When is a check non‑endorsable (cannot be endorsed)?
Answer: • When payment is to the first beneficiary (i.e., payable only to the initial payee)
• When it is payable to the beneficiary (not ‘to the order’ of the beneficiary).
Q7. What is ‘provision’ (funds) in the context of checks, and why may the beneficiary
ask about it?
Answer: Provision refers to the availability of funds to pay the check. Because a check can
be issued without provision, the beneficiary may want reassurance that provision exists.
Q8. Define a cashier’s check (as per the chapter) and why it is reassuring to the
holder.
Answer: A cashier’s check is issued by a bank (on one of its branches or on another bank).
Because the drawer is the bank, the holder is assured of payment throughout the check’s
validity period.
Q9. Who can request a cashier’s check and how is it funded?
Answer: • A customer: the bank debits the applicant’s account upon issuance.
• A passing customer: the bank requires cash in return.
Q10. If a check is issued ‘to the order’ of a third party, what must that third party
ensure before presenting it?
Answer: They must ensure signatures are regular and that delivery to the bank is done via
proper endorsement.
Q11. Before paying a check in cash, what precautions must the teller take?
Answer: • Verify the beneficiary’s identity using an ID document
• Ensure check regularity (mandatory info, validity period, no stop‑payment, no barring)
• Verify existence of provision.
Q12. At payment, what does the teller ask the customer to write/sign on the back and
why?
Answer: The customer signs on the back preceded by the mention “received” to
acknowledge receipt of funds.
Q13. For bank collection, what does the bank verify before collecting a check
(high‑level)?
Answer: Check regularity, check validity, and a regular series of endorsements if the check
is endorsable.
Q14. In a ‘same bank’ scenario, how is a check settled between drawer and
beneficiary?
Answer: The bank debits the drawer’s account and credits the beneficiary’s account within
the same establishment.
Q15. In an ‘other bank’ scenario, what’s the role of the clearing house (high‑level
flow)?
Answer: Banks use the clearing house to exchange/settle checks: the beneficiary’s bank
presents the check through clearing; the drawer’s bank debits the drawer and settles via its
intermediary/clearing accounts; if unpaid, the check is returned.
Q16. List the 3 methods to regularize (settle) an unpaid returned check.
Answer: 1) Represent the check (beneficiary presents again; paid if provision becomes
sufficient)
2) Return the check to the drawer’s bank (proves the creditor was settled by another
means; sometimes a notary letter if the check can’t be returned)
3) Block the provision (customer asks the bank to block funds dedicated to paying the check
upon later representation).
Q17. Explain the rule on partial payment of a check when provision is insufficient.
Answer: The holder is entitled to payment up to the amount of provision, cannot refuse
partial payment, and the drawee may require the partial payment to be noted on the check.
Section 2 — Bank / Payment Cards
Q18. Define a bank card (what does it allow?), and what can vary by card type?
Answer: A bank card allows withdrawal of cash and/or payment for goods/services.
Depending on the card type, withdrawals or payments may be limited by amount and/or
geographical area.
Q19. List key physical/security elements of a payment card highlighted in the
chapter.
Answer: Card includes security elements for transactions, especially remote shopping;
examples of security codes: CVV, CCV, CVC, CID, CSC.
Q20. Differentiate withdrawal (ATM) cards vs payment cards (high‑level).
Answer: Withdrawal cards are used to withdraw money from ATMs of the issuing or
affiliated institutions; some are restricted to the bank’s own ATMs, others work across
broader networks (Lebanon and/or abroad). Payment cards also enable payments at
merchants/remote purchases.
Q21. In Lebanon, what does the chapter mention about withdrawal fees?
Answer: Withdrawal cards are usually free; withdrawal billing is rare or small, and depends
on the network of ATMs used in Lebanon.
Q22. What are the 4 bank card types shown in the chapter’s table, and the core
difference between debit vs credit forms?
Answer: • Debit card (immediate withdrawal from account; uses account balance)
• Prepaid card (uses preloaded funds)
• Carte Charge (deferred withdrawal; total payment at end of cycle)
• Revolving / credit card (credit line with revolving repayment structure).
Q23. What is cobranding on cards and what benefits can it add?
Answer: Cobranding places a retailer’s logo next to the issuing bank’s name; it keeps normal
card functions and adds merchant‑specific benefits (installments/facilities, loyalty points,
tariff advantages, etc.).
Q24. Give key advantages of bank cards for (a) the holder and (b) the merchant (as
per the slide).
Answer: Holder: no cash handling, 24/7, national/international use, FX, withdrawals, POS
payments, remote purchase, security (secret code), related services.
Merchant: no cash handling, lower risk vs NSF checks, faster settlement/collection vs paper
instruments.
Q25. What should be done in case of long‑distance (remote) fraudulent card use, and
what is the bank’s duty mentioned?
Answer: Cardholder files an objection; the bank must recredit the amounts fraudulently
debited. Banks may use single‑use numbers + OTP (One Time Password) to limit remote
fraud.
Section 6 — Commercial Papers
Q26. Define a bill of exchange and name the parties (drawer, drawee, beneficiary).
Answer: A bill of exchange is a written order where the drawer (creditor) orders the
drawee (debtor) to pay a sum to the beneficiary at a certain time. The beneficiary can be the
drawer or a third person.
Q27. Is the bill of exchange considered a commercial act?
Answer: Yes. The chapter states the bill of exchange is always a commercial act.
Q28. What happens if no maturity is specified on a bill of exchange?
Answer: It is considered payable ‘on demand’ from its presentation for cashing.
Q29. List the accepted maturity formats stated in the chapter.
Answer: • On a specific date
• On demand
• At a certain period of time (e.g., 30 days from creation)
• At a certain point in time (e.g., 30 days after acceptance).
Q30. What is acceptance of a bill of exchange and why is it useful (especially for
discounting)?
Answer: Acceptance is the drawee’s signature acknowledging the debt and agreeing to pay
at maturity; it consolidates the creditor’s position and facilitates discounting.
Q31. How is acceptance written on the bill, and what is the minimum that still counts
as acceptance?
Answer: Typically written on the front with ‘accepted for the sum of…’ + date + drawee
signature; however, the simple signature of the drawee on the front constitutes acceptance.
Q32. When must acceptance be dated?
Answer: When the bill is payable within a certain period of time (e.g., ‘X days after
acceptance’), acceptance must be dated.
Q33. What is the practical meaning of refusal of acceptance (per the chapter)?
Answer: Refusal of acceptance is assimilated to refusal of payment; the bearer can act to
recover funds without waiting for the due date.
Q34. What is the ‘No recourse / No charge’ clause and what does it do?
Answer: It exempts the bearer from having to use an enforcement agent to file recourse in
case of non‑acceptance or non‑payment at maturity.
Q35. Define ‘provision’ in a bill of exchange and what common confusion must be
avoided.
Answer: Provision is the debt of the drawer on the drawee. It must not be confused with
funds deposited in an account for paying the bill.
Q36. What does the chapter say about provision and acceptance in relation to
endorsers?
Answer: Acceptance presupposes provision and proves it with respect to endorsers;
ownership of the provision transfers to successive holders.
Q37. Explain the ‘solidarity of signatories’ rule and what right it gives the bearer.
Answer: All who drew, accepted, endorsed, or approved are jointly liable; the bearer may
proceed against any of them individually or collectively without respecting an order.
Q38. What are the bearer’s remedies in case of outstanding payment (with vs without
recourse)?
Answer: With recourse: must disclose non‑payment by recourse before legal action.
Without recourse (free of charge): can act immediately.
Q39. What are the notification deadlines stated after non‑payment (bearer →
endorser chain)?
Answer: Bearer must notify his endorser within 4 days of presentation/recourse; each
endorser must notify his own endorser within 2 days (back toward the drawer).
Q40. What are the appeals deadlines stated in the chapter?
Answer: Bearer has 1 year to act against endorsers and the drawer; endorsers have 6
months (from payment date or from being sued).
Q41. If a bill of exchange is lost, what must the bearer do immediately, and how does
the procedure differ if it’s accepted vs not accepted?
Answer: Immediate blocking of payment with the drawee. If not accepted: bearer may
pursue recovery on a second/third bill. If accepted: must obtain a judge’s order and provide
a guarantee.
Q42. Define a promissory note and name the parties.
Answer: A promissory note is a written undertaking where the subscriber (debtor)
promises to pay a sum to the beneficiary (creditor) on a certain date.
Q43. Why is a promissory note generally a disadvantage for the beneficiary (as
stated)?
Answer: It is generally issued by the subscriber; the beneficiary cannot mobilize the debt
until the subscriber takes the initiative to issue the note.
Q44. List the mandatory information required for a valid promissory note (as per the
slide).
Answer: Must include: ‘promissory note’ wording; amount (figures & letters); subscriber
name; due date; place of payment (domiciliation); beneficiary name; date & place of
creation; subscriber signature (handwritten or stamp).
Q45. What are truncated instruments (LCR / BOR) and what is the main advantage
mentioned?
Answer: They may not circulate in paper form and are transferred electronically to banks
for cashing; advantage is reduced processing/management costs for banks.
Q46. What disadvantage is mentioned for truncated instruments regarding
non‑payment?
Answer: No immediate recourse: you must first recreate the paper support for the LCR/BOR
before asking the enforcement agent to intervene.
Q47. From the comparison slide: what’s a key difference between a check and
commercial papers regarding bank account requirement?
Answer: For a check, bank account is compulsory; for bills of exchange/promissory notes,
the bank account mention is not compulsory (and payment is not necessarily through a
bank).
Q48. From the comparison slide: what’s the remedy focus for (a) bill of
exchange/promissory note vs (b) check?
Answer: Commercial papers: turn against all signatories (solidarity). Check: turn against the
drawer (NSF account holder).
Section 7 — Other Transactions (Only Slide 141 Included)
Q49. Differentiate ‘transaction date’ vs ‘value date’ and why the difference matters.
Answer: Transaction date is when the operation is recorded; value date is when it starts
affecting interest. Debit/credit value dates determine debtor interest (agios) or creditor
interest.
Q50. Define a safe‑deposit box service and the key protection elements mentioned.
Answer: A bank service to store valuables/documents in the bank vault, protected by
security systems (alarms, detectors, cameras, etc.).
Q51. What is the typical contract duration for a safe‑deposit box and what
fee/guarantee may be required?
Answer: Typically a one‑year lease, renewable. A security deposit may be required to cover
unpaid rent and forced opening if the tenant disappears or loses the key.