This is Set 25 of 42 in the smartvidya question bank on the Central Civil Services (Conduct) Rules, 1964. Part VI: Investment, debt and property. This set covers Rule 16(4)(i)(a) and (b), the provisos, Rule 16(4)(ii), and GoI decisions on sureties, fixed deposits and ex post facto sanction.
Try each question first, then tap Show answer to see the correct option, a short explanation and the rule reference. The gift limits in Rule 13(3) are as revised in 2019, and share-trading intimation follows the DoPT OM of 07.02.2019.
Set 25: Rule 16(4) – Lending, borrowing and deposits
1. Under Rule 16(4)(i)(a), a Government servant shall not lend, borrow or deposit money with which persons, except in the ordinary course of business with a bank or public limited company?
(a) Any public limited company
(b) Any relative
(c) Any person, firm or private limited company within the local limits of his authority or with whom he is likely to have official dealings
(d) Any nationalised bank
Ans. (c) Any person, firm or private limited company within the local limits of his authority or with whom he is likely to have official dealings — Explanation: Rule 16(4)(i)(a) targets persons, firms and private limited companies within the local limits of his authority or likely to have official dealings with him. [Ref: Rule 16(4)(i)(a)]
2. Rule 16(4)(i) does not apply to transactions in the ordinary course of business with:
(a) A private moneylender
(b) A private limited company in his jurisdiction
(c) A contractor of his office
(d) A bank or a public limited company
Ans. (d) A bank or a public limited company — Explanation: The rule opens with "save in the ordinary course of business with a bank or a public limited company". [Ref: Rule 16(4)(i)]
3. Under Rule 16(4)(i)(b), a Government servant shall not:
(a) Lend a small interest-free sum to a friend
(b) Lend money to any person at interest or in a manner whereby return in money or in kind is charged or paid
(c) Take a home loan from a bank
(d) Deposit money in a post office savings account
Ans. (b) Lend money to any person at interest or in a manner whereby return in money or in kind is charged or paid — Explanation: Rule 16(4)(i)(b) bars lending money at interest, or where a return in money or kind is charged or paid, to any person. [Ref: Rule 16(4)(i)(b)]
4. Which of the following is permitted by the first proviso to Rule 16(4)(i)?
(a) Giving or accepting a purely temporary loan of a small amount, free of interest, to or from a relative or personal friend
(b) Lending money at interest to a neighbour
(c) Borrowing from a contractor of his office
(d) Lending money to a firm in his jurisdiction
Ans. (a) Giving or accepting a purely temporary loan of a small amount, free of interest, to or from a relative or personal friend — Explanation: The first proviso allows purely temporary, small, interest-free loans with relatives or personal friends, credit accounts with bona fide tradesmen and advances of pay to private employees. [Ref: Rule 16(4)(i), first proviso]
5. Under the first proviso to Rule 16(4)(i), a Government servant may operate a credit account with:
(a) A contractor having official dealings
(b) A subordinate
(c) A bona fide tradesman
(d) A private moneylender
Ans. (c) A bona fide tradesman — Explanation: The proviso permits operating a credit account with a bona fide tradesman, such as a grocer. [Ref: Rule 16(4)(i), first proviso]
6. May a Government servant give an advance of pay to his private domestic employee?
(a) Only with previous sanction
(b) Yes, the first proviso to Rule 16(4)(i) expressly permits it
(c) Only if charged interest
(d) No, it is lending money
Ans. (b) Yes, the first proviso to Rule 16(4)(i) expressly permits it — Explanation: The first proviso permits making an advance of pay to his private employee. [Ref: Rule 16(4)(i), first proviso]
7. According to the second proviso to Rule 16(4)(i), the restrictions do not apply to transactions entered into:
(a) With the previous sanction of the Government
(b) Below Rs. 10,000
(c) With any relative
(d) Outside India
Ans. (a) With the previous sanction of the Government — Explanation: The second proviso excludes any transaction entered into with the previous sanction of the Government. [Ref: Rule 16(4)(i), second proviso]
8. Under Rule 16(4)(ii), what must a Government servant do when appointed or transferred to a post that would involve him in a breach of Rule 16(2) or 16(4)?
(a) Refuse the transfer
(b) Sell all investments within six months
(c) Resign from the post
(d) Forthwith report the circumstances to the prescribed authority and act as ordered
Ans. (d) Forthwith report the circumstances to the prescribed authority and act as ordered — Explanation: Rule 16(4)(ii) requires him to forthwith report to the prescribed authority and thereafter act in accordance with its orders. [Ref: Rule 16(4)(ii)]
9. A Tehsildar borrows Rs. 2 lakh at interest from a local businessman in his tehsil. Which rule is breached?
(a) No rule, since it is a private loan
(b) Rule 17 only
(c) Rule 16(4)(i)(a), since the lender is within the local limits of his authority
(d) Rule 13 only
Ans. (c) Rule 16(4)(i)(a), since the lender is within the local limits of his authority — Explanation: Borrowing from a person within the local limits of his authority, other than a bank or public limited company, is barred without previous sanction. [Ref: Rule 16(4)(i)(a)]
10. Rule 16(4)(i)(a) also bars a Government servant from otherwise placing himself under any:
(a) Pecuniary obligation to such person, firm or private limited company
(b) Obligation to his service association
(c) Obligation to pay taxes
(d) Moral obligation to his family
Ans. (a) Pecuniary obligation to such person, firm or private limited company — Explanation: Besides lending, borrowing and depositing, Rule 16(4)(i)(a) bars placing himself under any pecuniary obligation to such persons or firms. [Ref: Rule 16(4)(i)(a)]
11. Rule 16(4)(i)(a) covers transactions "as principal or agent". This means:
(a) Only transactions by his agents are covered
(b) He cannot do such transactions for others as their agent either
(c) Only transactions for himself are covered
(d) Agents are exempt
Ans. (b) He cannot do such transactions for others as their agent either — Explanation: The words "as a principal or an agent" cover transactions for himself and those he undertakes on behalf of others. [Ref: Rule 16(4)(i)(a)]
12. A Government servant lends Rs. 50,000 to a friend at 12% annual interest. The friend has no official dealings. Is this permitted?
(a) No, Rule 16(4)(i)(b) bars lending to any person at interest
(b) Yes, if he reports within one month
(c) Yes, since the amount is small
(d) Yes, since the friend has no official dealings
Ans. (a) No, Rule 16(4)(i)(b) bars lending to any person at interest — Explanation: Rule 16(4)(i)(b) bars lending money to any person at interest, whatever the relationship. Only small, temporary, interest-free loans to friends are allowed. [Ref: Rule 16(4)(i)(b)]
13. Under Government instructions of 25.05.1966, senior officers should NOT:
(a) Lend to their private employees
(b) Take loans from banks
(c) Stand surety for relatives
(d) Seek surety from their subordinates for loans
Ans. (d) Seek surety from their subordinates for loans — Explanation: The 1966 instructions say senior officers should not ask subordinates to stand surety for them, because it places the subordinate under pressure. [Ref: Rule 16(4); GoI decision dt 25.05.1966]
14. Under Government instructions of 12.05.1982, how are fixed deposits treated under Rule 16?
(a) All deposits are prohibited
(b) All deposits need previous sanction
(c) Bank deposits are exempt, while deposits with private companies are treated as loans
(d) Deposits with private companies are exempt
Ans. (c) Bank deposits are exempt, while deposits with private companies are treated as loans — Explanation: The 1982 instructions exempt bank deposits but treat deposits with private companies as loans, bringing them within the restrictions. [Ref: Rule 16(4); GoI decision dt 12.05.1982]
15. Government instructions of 26.06.1961 under Rule 16 say that ex post facto sanction for transactions:
(a) Is available only to Group 'A' officers
(b) Is the normal procedure
(c) Is never possible
(d) Is discouraged; sanction should be taken in advance
Ans. (d) Is discouraged; sanction should be taken in advance — Explanation: The 1961 instructions discourage seeking ex post facto sanction. Where previous sanction is required, it should be obtained before the transaction. [Ref: Rule 16; GoI decision dt 26.06.1961]
16. A Government servant deposits money with a private chit company in his jurisdiction that has dealings with his office. Which statement is correct?
(a) It is permitted if the interest is low
(b) It is barred by Rule 16(4)(i)(a), since deposits with such parties are covered
(c) It is permitted as a bank deposit
(d) It needs only an intimation
Ans. (b) It is barred by Rule 16(4)(i)(a), since deposits with such parties are covered — Explanation: Rule 16(4)(i)(a) covers depositing money with persons, firms or private limited companies within his jurisdiction or likely to have official dealings. It is not a bank. [Ref: Rule 16(4)(i)(a)]
17. Consider these statements about Rule 16(4): 1. A small temporary interest-free loan from a friend is permitted. 2. An advance of pay to a private employee is permitted. 3. Lending money at interest to a relative is permitted. Which are correct?
(a) 1 and 2 only
(b) 1, 2 and 3
(c) 1 and 3 only
(d) 2 and 3 only
Ans. (a) 1 and 2 only — Explanation: The first proviso permits the first two. Rule 16(4)(i)(b) bars lending at interest to any person, relatives included. [Ref: Rule 16(4)]
18. A Government servant is transferred as District Collector to the district where his father-in-law's private firm has large loans from him. What must he do?
(a) Nothing, since the loans were given earlier
(b) Forthwith report the circumstances to the prescribed authority under Rule 16(4)(ii)
(c) Recover the loans within a week
(d) Seek transfer without informing anyone
Ans. (b) Forthwith report the circumstances to the prescribed authority under Rule 16(4)(ii) — Explanation: When a posting would involve him in a breach of Rule 16(4), Rule 16(4)(ii) requires him to report forthwith and follow the authority's orders. [Ref: Rule 16(4)(ii)]
19. A Government servant takes a home loan from a nationalised bank. Does Rule 16(4) restrict this?
(a) Yes, he needs previous sanction
(b) Yes, if the bank is in his district
(c) No, transactions in the ordinary course of business with a bank are excluded
(d) Only if the loan exceeds Rs. 10 lakh
Ans. (c) No, transactions in the ordinary course of business with a bank are excluded — Explanation: Rule 16(4)(i) excludes transactions in the ordinary course of business with a bank. A mortgage for a house may however involve reporting under Rule 18 of the Conduct Rules. [Ref: Rule 16(4)(i)]
20. A Government servant borrows from a public limited company in the ordinary course of its business. Under Rule 16(4)(i):
(a) It is barred
(b) It is permitted only if interest-free
(c) It is permitted, as transactions with a public limited company in the ordinary course of business are excluded
(d) It needs sanction of the President
Ans. (c) It is permitted, as transactions with a public limited company in the ordinary course of business are excluded — Explanation: The exclusion in Rule 16(4)(i) covers both banks and public limited companies, in the ordinary course of business. [Ref: Rule 16(4)(i)]
21. A Government servant buys groceries on monthly credit from the local shop. Is this permitted?
(a) Only with previous sanction
(b) Only if paid within seven days
(c) No, it is borrowing
(d) Yes, operating a credit account with a bona fide tradesman is permitted
Ans. (d) Yes, operating a credit account with a bona fide tradesman is permitted — Explanation: The first proviso to Rule 16(4)(i) permits operating a credit account with a bona fide tradesman. [Ref: Rule 16(4)(i), first proviso]
22. Which authority receives the report under Rule 16(4)(ii)?
(a) The Central Vigilance Commission
(b) The prescribed authority
(c) The Government in every case
(d) The Reserve Bank of India
Ans. (b) The prescribed authority — Explanation: The report under Rule 16(4)(ii) goes to the prescribed authority, who then passes orders. [Ref: Rule 16(4)(ii)]
23. Rule 16(4)(i) applies to transactions done by the Government servant:
(a) Himself, or through any member of his family or any other person acting on his behalf
(b) Only himself
(c) Only through his bank
(d) Only through his spouse
Ans. (a) Himself, or through any member of his family or any other person acting on his behalf — Explanation: The rule covers transactions made himself or through any family member or any other person acting on his behalf. [Ref: Rule 16(4)(i)]
24. A subordinate is asked by his superior to stand as guarantor for the superior's personal loan. Which Government instruction discourages this?
(a) The 07.02.2019 OM on shares
(b) The 18.09.1976 instructions on directors' quota
(c) The 12.05.1982 instructions on fixed deposits
(d) The 25.05.1966 instructions on seniors not seeking surety from subordinates
Ans. (d) The 25.05.1966 instructions on seniors not seeking surety from subordinates — Explanation: The 1966 instructions discourage senior officers from seeking surety from subordinates. [Ref: Rule 16(4); GoI decision dt 25.05.1966]
25. The words "purely temporary", "small amount" and "free of interest" in the first proviso to Rule 16(4)(i) apply to loans with:
(a) A relative or a personal friend
(b) A bank
(c) A subordinate
(d) A contractor
Ans. (a) A relative or a personal friend — Explanation: The proviso permits giving to, or accepting from, a relative or personal friend a purely temporary loan of a small amount free of interest. [Ref: Rule 16(4)(i), first proviso]
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These questions are prepared for practice from the text of the CCS (Conduct) Rules, 1964 and related Government of India instructions. Always check the latest DoPT orders before relying on any point for official decisions.