JAIIB PPB generally covers:
- Module A: Indian Financial System – Banks, NBFCs, RBI, Money Market, Credit Rating.
- Module B: Functions of Banks – Deposits, Lending, KYC/AML, Priority Sector Lending.
- Module C: Banking Operations – Accounts, Clearing, Negotiable Instruments, E-banking.
- Module D: Regulatory & Compliance – Basel norms, Risk Management, Banking Ombudsman.
We’ll start with Module A: Indian Financial System (Q1–Q50), including explained answers.
JAIIB PPB – Module A: Indian Financial System (Q1–50)
Q1. What is the main function of the RBI?
Answer: Central bank of India; regulates currency, credit, and banking system.
Explanation: Issues currency, controls money supply, lender of last resort.
Q2. Functions of RBI – main types
- Monetary policy regulation
- Issuing currency notes
- Banker to banks & govt
- Lender of last resort
- Regulating credit & banking system
Q3. Repo rate meaning
Answer: Rate at which RBI lends to commercial banks against securities.
Explanation: Lower repo → more liquidity, higher repo → tighter liquidity.
Q4. Reverse Repo rate meaning
Answer: Rate at which RBI borrows from commercial banks.
Explanation: Used to absorb excess liquidity.
Q5. Cash Reserve Ratio (CRR) definition
Answer: % of net demand & time liabilities that banks must keep with RBI.
Explanation: Tool to control credit expansion.
Q6. Statutory Liquidity Ratio (SLR)
Answer: % of NDTL to be maintained in approved securities (G-sec, bonds).
Q7. Functions of Commercial Banks
Answer: Accept deposits, advance loans, credit creation, remittance, foreign exchange.
Q8. Scheduled vs Non-Scheduled Banks
- Scheduled → Listed in 2nd schedule of RBI Act, follow RBI guidelines, access to RBI liquidity support
- Non-scheduled → Not listed, limited RBI access
Q9. Types of Banks in India
- Public sector banks
- Private sector banks
- Foreign banks
- Regional Rural Banks (RRBs)
- Cooperative banks
Q10. Priority Sector Lending (PSL) – main categories
Agriculture, MSME, Education, Housing, Export credit, Weaker sections.
Q11. Non-Banking Financial Companies (NBFCs) definition
Answer: Financial institutions providing credit & investment services but cannot accept demand deposits.
Q12. Functions of Money Market
- Short-term funds
- Debt instruments trading
- Liquidity management
- Interest rate benchmark
Q13. Capital Market vs Money Market
- Capital → Long-term, equity, bonds
- Money → Short-term, commercial papers, treasury bills
Q14. Credit Rating Agencies in India
ICRA, CRISIL, CARE, SMERA, India Ratings.
Purpose: Assess creditworthiness of companies/bonds.
Q15. Banking Regulation Act 1949 – importance
- Regulates banking companies
- Provides RBI powers
- Licensing of banks
Q16. Banker vs Customer – relationship types
- Debtor-Creditor
- Trustee-Bailor
- Agent-Principal
Q17. Types of Deposits
- Current account
- Savings account
- Fixed deposit / Term deposit
- Recurring deposit
Q18. KYC / AML – full form
- KYC → Know Your Customer
- AML → Anti-Money Laundering
Q19. KYC documents
- Identity proof: PAN, Aadhaar, Passport
- Address proof: Aadhaar, utility bills
Q20. Negotiable Instruments
- Cheque
- Promissory Note
- Bill of Exchange
Q21. Definition – Cheque
Answer: Written order directing bank to pay specified sum to bearer/payee.
Q22. Types of Cheques
- Bearer
- Order
- Crossed / Account Payee
- Post-dated
Q23. Dishonor of cheque – under which act?
Answer: Section 138, Negotiable Instruments Act, 1881 → criminal liability.
Q24. Clearing House – function
- Settles interbank cheques and payments
- Reduces cash movement
Q25. RTGS vs NEFT
- RTGS → Real-time gross settlement, high-value, immediate
- NEFT → Net settlement, batch-wise, any amount
Q26. SWIFT meaning
Society for Worldwide Interbank Financial Telecommunication → international fund transfer messaging.
Q27. Bank rate meaning
Answer: Long-term lending rate of RBI → influences lending and credit creation.
Q28. Securitization
Answer: Converting loans/receivables into marketable securities for liquidity.
Q29. Basel Norms – purpose
- Maintain capital adequacy
- Reduce banking risk
- Global standard
Q30. Capital Adequacy Ratio (CAR)
Answer: (Tier 1 + Tier 2 Capital) ÷ Risk-Weighted Assets ×100
RBI norm: ≥ 9%
Q31. Tier 1 Capital
- Equity capital + Retained earnings
- Core capital
Q32. Tier 2 Capital
- Subordinated debt, general reserves
- Supplementary capital
Q33. CRR vs SLR difference
| Parameter | CRR | SLR |
|---|---|---|
| Maintained with | RBI | Own bank or approved securities |
| % | 4–5% | 18–24% |
| Purpose | Liquidity control | Liquidity & safety |
Q34. Priority sector – agriculture sub-targets
- Small farmers
- Marginal farmers
- Allied activities (dairy, poultry)
Q35. MSME definition (as per 2020)
- Micro → Investment ≤ ₹1 Cr, Turnover ≤ ₹5 Cr
- Small → Investment ≤ ₹10 Cr, Turnover ≤ ₹50 Cr
- Medium → Investment ≤ ₹50 Cr, Turnover ≤ ₹250 Cr
Q36. Credit guarantee scheme for MSME
- CGTMSE – Govt. provides guarantee for loans to MSME → no collateral required
Q37. Banking Ombudsman – role
- Resolves customer complaints
- Free, quick dispute resolution
- RBI supervises
Q38. Types of risk in banking
- Credit risk
- Market risk
- Operational risk
- Liquidity risk
Q39. Asset Classification (NPA norms)
- Standard → 0–90 days overdue
- Substandard → 90–365 days
- Doubtful → >1 year
- Loss → identified loss
Q40. Interest on NPA
- Accrual stops for substandard/doubtful
- Written off/loss → charged to P&L
Q41. Know Your Customer – purpose
- Prevent fraud
- Prevent money laundering & terrorism financing
- Ensure compliance with RBI guidelines
Q42. Core Banking Solution (CBS) – definition
- Centralized banking software connecting branches
- Allows online transactions & unified ledger
Q43. E-Banking / Mobile Banking services
- Fund transfer (IMPS, NEFT, RTGS)
- Balance inquiry
- Bill payment & recharge
- Account statement download
Q44. Internet banking security measures
- Two-factor authentication
- OTP / SMS alerts
- Encrypted transaction
Q45. Types of Loans
- Term loan
- Working capital loan
- Overdraft
- Cash credit
- Letter of credit
Q46. Cash Credit vs Overdraft
| Feature | Cash Credit | Overdraft |
|---|---|---|
| Security | Hypothecation / collateral | Usually against fixed deposits |
| Purpose | Working capital | Temporary shortage |
| Interest | On amount utilized | On amount withdrawn |
Q47. Bill of Exchange definition
- Written unconditional order by drawer to drawee to pay specified sum on demand or future date
Q48. Banker’s lien
- Right of bank to retain customer property/cheque until dues cleared
Q49. Foreign exchange – spot vs forward rate
- Spot → settlement within 2 business days
- Forward → settlement in future, rate fixed today
Q50. Money laundering – definition & Act
- Concealing origin of illegally obtained money
- Prevention of Money Laundering Act (PMLA) 2002
JAIIB PPB – Module B: Functions of Banks (Q51–100)
Q51. What are the main functions of a commercial bank?
Answer: Accept deposits, advance loans, credit creation, remittance of funds, agency functions, investment, foreign exchange operations.
Q52. Deposits – types
- Demand deposits → Can be withdrawn on demand (Current account, Savings account)
- Time deposits → Withdrawable after fixed period (Fixed deposits, Recurring deposits)
Q53. Current account – characteristics
- No interest
- Unlimited withdrawals
- Suitable for businesses
Q54. Savings account – features
- Interest paid
- Withdrawal restrictions
- For individuals
Q55. Fixed deposit – definition
Answer: Deposit for a fixed tenure earning predetermined interest.
Q56. Recurring deposit – definition
Answer: Fixed sum deposited every month for a fixed tenure earning interest.
Q57. KYC / Customer identification
Answer: Know Your Customer → verify identity & address to prevent fraud & money laundering.
Q58. KYC documents – mandatory
- Identity proof (PAN, Aadhaar, Passport)
- Address proof (Utility bills, Aadhaar)
Q59. Bank-customer relationship – types
- Debtor-Creditor
- Principal-Agent
- Trustee-Bailor
- Contractual relationship
Q60. Types of lending by banks
- Secured loans → against collateral
- Unsecured loans → personal guarantee, creditworthiness
- Term loans → long-term investment
- Working capital loans → day-to-day operations
Q61. Cash credit vs Overdraft
| Feature | Cash Credit | Overdraft |
|---|---|---|
| Purpose | Working capital | Temporary need |
| Security | Hypothecation of stock/debtors | Usually against FD |
| Interest | On amount utilized | On amount withdrawn |
Q62. Priority Sector Lending (PSL) – overview
- Agriculture, Micro, Small & Medium Enterprises, Export Credit, Education, Housing, Weaker Sections.
Q63. Small Farmers – PSL target
- Loan up to ₹2 lakh under agriculture category
Q64. Microfinance & SHG lending
- Loans to Self-Help Groups & micro-entrepreneurs
- Collateral-free
Q65. Gold loans – key points
- Secured loan against pledged gold
- Short-term, usually 6–12 months
Q66. Overdraft vs Cash Credit – differences
- Overdraft → facility to withdraw up to limit from current account
- Cash Credit → advance against hypothecated stock/debtor
Q67. Working capital – meaning
Answer: Short-term funds required to meet day-to-day operations of a business
Formula: Working Capital = Current Assets − Current Liabilities
Q68. Components of working capital financing
- Cash credit
- Overdraft
- Bill discounting
- Short-term loans
Q69. Bills discounted – definition
- Bank advances money against bill of exchange before due date, charges discount
Q70. Types of bill of exchange
- Inland bill → within India
- Foreign bill → import/export
- Clean bill → without documents
- Documentary bill → with documents
Q71. Banker as an agent – functions
- Payment of bills, standing instructions, collection of cheques, dividend/interest collection
Q72. Banker as trustee
- Safe custody of securities, valuables, locker items
Q73. Banker as debtor
- When bank accepts deposits, it owes money to customer
Q74. Banker as lender
- Provides loans and advances to customers
Q75. Credit appraisal process
- Assessment of creditworthiness before sanction
- Steps: Proposal, Project report, Financial analysis, Security evaluation, Sanction
Q76. Credit risk
- Risk of borrower defaulting
- Mitigated by collateral, monitoring, credit rating
Q77. Lending to MSME – important points
- Collateral-free loans up to ₹50 lakh under CGTMSE
- Priority sector loan
- Timely monitoring mandatory
Q78. Cash management services
- Collection, payment, pooling, investment of cash efficiently
Q79. Bank guarantee – definition
Answer: Commitment by bank to pay beneficiary in case customer defaults
Q80. Letter of Credit (LC)
- Bank undertakes payment to seller on behalf of buyer under conditions
- Used in import/export
Q81. Types of LC
- Sight LC → payable immediately
- Usance LC → payable after a period
- Revolving LC → multiple payments under same LC
Q82. Documentary vs Clean LC
- Documentary → requires shipping docs
- Clean → no documents
Q83. Types of lending under priority sector – agriculture
- Crop loans
- Term loans for farm equipment
- Allied activities (dairy, poultry)
Q84. Lending to weaker sections
- Marginal farmers, SHGs, micro-enterprises
- Usually collateral-free
Q85. Lending limits for personal loans
- Depends on income, credit history, bank policy
Q86. Asset classification – importance
- Standard → 0–90 days overdue
- Substandard → 90–365 days
- Doubtful → >1 year
- Loss → identified loss
Q87. NPA recognition – definition
- Loan overdue > 90 days (term loan)
- Overdraft / cash credit → >90 days
Q88. Recovery mechanisms for NPAs
- SARFAESI Act 2002 → securitization & foreclosure
- DRT → Debt Recovery Tribunal
- Lok Adalat → compromise
Q89. Credit Information Companies
- CIBIL, Equifax, Experian → maintain borrower credit history
Q90. KYC importance in lending
- Prevent fraud & money laundering
- Ensure regulatory compliance
Q91. Customer due diligence (CDD)
- Collect, verify, and update customer info
- Mandatory before opening account or lending
Q92. Enhanced due diligence (EDD)
- Required for high-risk customers
- Includes source of funds, purpose, risk assessment
Q93. Types of loans by banks
- Term loan → long-term projects
- Working capital loan → daily operations
- Overdraft / CC → short-term liquidity
- Bill discounting → short-term financing
Q94. Interest calculation – simple & compound
- Simple = P × R × T /100
- Compound = P(1+R/100)^T
Q95. Repo & Reverse Repo – impact on lending
- Repo ↑ → banks borrow more → liquidity ↑ → lending ↑
- Reverse repo ↑ → banks deposit more → liquidity ↓ → lending ↓
Q96. Cash credit interest calculation
- Interest = Average daily balance × Rate × Days / 365
Q97. Overdraft interest calculation
- Charged only on amount withdrawn
- Usually on daily/weekly balance
Q98. Bill discounting interest / discount
- Discount = Face value − PV
- PV = FV / (1 + r × t)
Q99. Lending policy of banks – components
- Credit appraisal norms
- Risk management
- Limits & collateral
- Repayment terms
Q100. Monitoring of advances
- Regular site visits
- Review of financial statements
- Early warning signals detection
✅ Summary – Module B Tips:
- Know PSL categories & limits (Agriculture, MSME, Education, Housing)
- Understand types of deposits, loans, and bill instruments
- Practice numerical problems on interest, cash credit, overdraft, NPA recognition
- Regulatory terms like KYC, CDD, EDD are frequently asked
JAIIB PPB – Module C: Banking Operations (Q101–150)
Q101. Types of bank accounts
- Savings account
- Current account
- Fixed deposit account
- Recurring deposit account
Q102. Savings account – features
- Interest paid
- Minimum balance requirement
- Limited withdrawals
Q103. Current account – features
- No interest
- Unlimited withdrawals
- Used by businesses
Q104. Fixed deposit – features
- Fixed tenure
- Fixed interest
- Premature withdrawal may incur penalty
Q105. Recurring deposit – features
- Monthly fixed installments
- Fixed interest rate
- Maturity amount = Principal + Interest
Q106. KYC & AML in banking operations
- KYC → Customer identification & verification
- AML → Prevent money laundering
- Mandatory for opening account, high-value transactions
Q107. Types of KYC documents
- Identity: PAN, Aadhaar, Passport
- Address: Aadhaar, utility bills, bank statements
Q108. Banker-customer relationship
- Debtor–Creditor
- Principal–Agent
- Trustee–Bailor
- Contractual
Q109. Standing instructions
- Customer instructs bank to make automatic payments/transfer regularly
Q110. Types of negotiable instruments (NI)
- Cheque
- Promissory note
- Bill of exchange
Q111. Cheque – definition
- Written order to pay specified sum to bearer/payee
- Drawn on bank
Q112. Types of cheques
- Bearer cheque → payable to holder
- Order cheque → payable to named person
- Crossed cheque → cannot be encashed over counter
- Post-dated cheque → payable on future date
Q113. Dishonor of cheque – Section 138 NI Act
- Cheque bounced due to insufficient funds
- Criminal liability, fine or imprisonment
Q114. Cheque truncation system (CTS)
- Electronically process cheque images instead of physical movement
- Reduces clearing time
Q115. Clearing House – function
- Settlement of interbank cheques
- Netting of transactions
Q116. RTGS vs NEFT
| Parameter | RTGS | NEFT |
|---|---|---|
| Settlement | Real-time | Batch-wise |
| Minimum Amount | ₹2 lakh | No minimum |
| Speed | Immediate | Usually 30 min–1 hr |
| Availability | 24×7 | 24×7 |
Q117. IMPS – Immediate Payment Service
- Instant fund transfer via mobile / internet
- 24×7 service
- Max limit varies by bank (usually ₹2 lakh)
Q118. SWIFT – definition
- Society for Worldwide Interbank Financial Telecommunication
- Secure international fund transfer messaging
Q119. Core Banking Solution (CBS)
- Centralized software connecting all branches
- Allows real-time transactions & account updates
Q120. Mobile / Internet Banking – key services
- Fund transfer
- Balance inquiry
- Bill payments
- Mini statement / e-statement
Q121. ATM – features
- Cash withdrawal
- Mini statement
- Fund transfer
- PIN-based security
Q122. E-wallets & UPI
- UPI → Unified Payment Interface
- Interoperable between banks & apps
- Instant payment
Q123. Standing instructions vs ECS
- Standing instruction → specific to customer for recurring payments
- ECS → Bank-initiated debits/credits for bulk transactions (salaries, bills)
Q124. Banker as agent – functions
- Collection of bills/dividends
- Payment of insurance/premium
- Acting on customer’s instructions
Q125. Banker as trustee
- Safe custody of securities, valuables, locker items
- Acts as executor of instructions
Q126. Banker as debtor
- Bank owes money to customer (deposits)
Q127. Banker as lender
- Advances loans, cash credit, overdraft
Q128. Opening of accounts – important points
- KYC verification mandatory
- Know customer type: individual, corporate, trust, HUF
- Signatories and mandate verification
Q129. Deposit insurance
- DICGC – Deposit Insurance and Credit Guarantee Corporation
- Insures deposits up to ₹5 lakh per depositor per bank
Q130. Types of lending – recap
- Term loan → long-term
- Working capital loan → short-term
- Overdraft / Cash Credit → revolving credit
- Bill discounting → short-term liquidity
Q131. Cash Credit interest calculation
- Interest = Rate × Average Daily Utilization × Days / 365
Q132. Overdraft interest calculation
- Charged only on drawn amount
- Interest = Drawn × Rate × Days / 365
Q133. Bill discounting
- Bank gives PV of bill before due date
- Discount = FV − PV
Q134. Calculation example – Cash Credit interest
- Limit ₹10 lakh, avg. utilization ₹8 lakh, rate 12%, 90 days
Interest=8,00,000×0.12×90/365≈₹23,561Interest = 8,00,000 × 0.12 × 90/365 ≈ ₹23,561Interest=8,00,000×0.12×90/365≈₹23,561
Q135. Calculation example – Overdraft interest
- Withdrawn ₹1,50,000, rate 10%, 30 days
Interest=1,50,000×0.10×30/365≈₹1,232Interest = 1,50,000 × 0.10 × 30/365 ≈ ₹1,232Interest=1,50,000×0.10×30/365≈₹1,232
Q136. Types of accounts for NRIs
- NRE (Non-Resident External) → repatriable, interest tax-free
- NRO (Non-Resident Ordinary) → non-repatriable, interest taxable
- FCNR (Foreign Currency NRI) → deposits in foreign currency
Q137. Remittance facilities
- NEFT / RTGS / IMPS / SWIFT
- Demand drafts, pay orders
Q138. Demand Draft (DD)
- Bank’s order to pay a sum to beneficiary
- Safe than cheque, payable at branch
Q139. Pay order / Banker’s cheque
- Similar to DD, drawn by bank on itself
- Immediate payment
Q140. Cash management services (CMS)
- Collection, pooling, investment, disbursement
- Helps corporate customers manage liquidity
Q141. E-banking risk management
- Two-factor authentication
- Encryption / secure channels
- Monitoring transactions
- Fraud detection
Q142. RTGS example numerical
- Transfer ₹5 lakh via RTGS at 12 pm
- Beneficiary receives immediately (real-time settlement)
Q143. NEFT example numerical
- Transfer ₹50,000 via NEFT at 2 pm
- Batch settlement → 2:30 pm credit
Q144. Interest calculation – Term Loan
- Principal = ₹5 lakh, Rate = 12%, 1 year
- Interest = 5,00,000 × 0.12 = ₹60,000
Q145. Compound interest example
- Principal ₹1,00,000, Rate 10%, 2 years, annually
FV=1,00,000×(1+0.10)2=1,21,000FV = 1,00,000 × (1+0.10)^2 = 1,21,000FV=1,00,000×(1+0.10)2=1,21,000
Q146. ECS – Credit & Debit
- ECS Credit → Salary / Pensions
- ECS Debit → Utility bills / Loan EMIs
Q147. Cheque truncation – benefit
- Reduces clearing cycle
- Faster settlement
- Reduces fraud risk
Q148. Interbank settlement
- Netting process
- Reduces physical cash movement
- Managed by clearing house / RBI
Q149. RTGS vs IMPS
| Parameter | RTGS | IMPS |
|---|---|---|
| Settlement | Real-time gross | Immediate / instant |
| Timing | 24×7 | 24×7 |
| Limit | ₹2 lakh min | ₹2 lakh max usually |
Q150. Security measures for e-banking
- OTP, PIN, password
- Token-based authentication
- Biometric verification (fingerprint/face)
- Encrypted transactions (HTTPS / SSL)
✅ Module C Key Points:
- Clearing, RTGS/NEFT/IMPS, CBS, mobile banking, ATMs are frequently asked.
- Numerical practice on cash credit, overdraft, interest, and bill discounting is essential.
- Know security and regulatory measures for e-banking.
🧾 JAIIB PPB – Module D: Regulation, Compliance & Risk Management (Q151–200)
Q151. What is the primary function of RBI as a regulator?
A. Printing currency
B. Supervising and regulating banks ✅
C. Managing fiscal deficit
D. Issuing government bonds
Explanation:
RBI ensures the stability of the banking system through licensing, inspections, monetary policy, and prudential norms.
Q152. The Banking Regulation Act was enacted in which year?
A. 1934
B. 1949 ✅
C. 1955
D. 1969
Explanation:
The Banking Regulation Act, 1949 governs all banking companies in India (except cooperative banks until recent amendments).
Q153. Section 22 of Banking Regulation Act relates to:
A. Licensing of banks ✅
B. Winding up of banks
C. Merger of banks
D. Inspection of banks
Explanation:
Every banking company must obtain a license from RBI under Section 22 before commencing business.
Q154. What is CRR (Cash Reserve Ratio)?
A. Percentage of total deposits kept in cash with RBI ✅
B. Loan-to-deposit ratio
C. Minimum capital requirement
D. Reserve kept with other banks
Explanation:
CRR is the mandatory reserve banks keep with RBI to maintain liquidity and control money supply.
Q155. What is SLR (Statutory Liquidity Ratio)?
A. Cash + Gold + Government Securities kept with bank itself ✅
B. Deposit with RBI
C. Loan limit
D. Lending rate
Explanation:
SLR ensures banks maintain a portion of their deposits in liquid assets to meet withdrawal demands.
Q156. Who regulates NBFCs in India?
A. SEBI
B. RBI ✅
C. IRDAI
D. Ministry of Finance
Explanation:
RBI regulates and registers NBFCs under the RBI Act, 1934 (Chapter III-B).
Q157. Basel norms deal with:
A. Accounting standards
B. Capital adequacy and risk management ✅
C. Interest rate control
D. Tax compliance
Explanation:
Basel norms (I, II, III) define capital adequacy ratios and risk controls for global banking stability.
Q158. Basel III minimum CRAR (Capital to Risk-weighted Assets Ratio)
A. 8%
B. 9% (India) ✅
C. 10%
D. 12%
Explanation:
RBI mandates 9% CAR/CRAR (Basel III standard), higher than global 8% for extra safety.
Q159. Tier I capital includes:
- Paid-up equity capital
- Statutory reserves
- Retained earnings
Tier II capital includes:
- Revaluation reserves
- Subordinated debt
- General provisions
Q160. What is the Leverage Ratio (Basel III)?
Answer: Tier 1 Capital ÷ Total Exposure
Minimum: 3%
Q161. What is the objective of Basel III?
To improve:
- Capital adequacy
- Risk coverage
- Liquidity standards (LCR, NSFR)
Q162. What is LCR (Liquidity Coverage Ratio)?
Answer: Banks must hold high-quality liquid assets sufficient to survive a 30-day stress scenario.
Minimum LCR = 100%.
Q163. What is NSFR (Net Stable Funding Ratio)?
Answer: Ensures banks maintain stable funding for long-term assets over one year horizon.
Q164. What is PCA (Prompt Corrective Action)?
Answer: RBI framework for early intervention when a bank breaches financial thresholds (like CRAR < 9%, NPAs > 6%).
Q165. NPA definition (as per RBI)
Loan overdue for more than 90 days.
Q166. Asset classification norms:
- Standard → Performing asset
- Sub-standard → NPA < 12 months
- Doubtful → NPA > 12 months
- Loss → Identified as loss
Q167. Provisioning norms for NPAs:
- Substandard: 15%
- Doubtful: 25–100% (based on security & duration)
- Loss: 100%
Q168. SARFAESI Act, 2002 allows:
Banks to recover dues without court intervention ✅
Through securitization, asset sale, or possession of collateral.
Q169. DRT (Debt Recovery Tribunal) established under:
Recovery of Debts Due to Banks & Financial Institutions Act, 1993 ✅
Q170. Banking Ombudsman Scheme (BOS) launched by:
RBI in 1995 ✅
For resolving customer complaints related to banking services.
Q171. Banking Ombudsman covers:
- ATM / debit / credit card issues
- Account delays
- Non-adherence to fair practices code
Q172. RBI Ombudsman (2021 revision)
Integrated scheme covering banks, NBFCs, digital payments under One Nation One Ombudsman system.
Q173. Which act prevents money laundering in India?
Prevention of Money Laundering Act, 2002 (PMLA) ✅
Q174. KYC Guidelines issued under:
Section 35A of Banking Regulation Act, 1949 ✅
Q175. Components of KYC:
- Customer Identification
- Customer Due Diligence (CDD)
- Monitoring of transactions
Q176. Types of due diligence:
- Simplified DD → low risk
- Regular DD → normal customers
- Enhanced DD → high-risk (PEPs, NRIs, HNIs)
Q177. Financial Action Task Force (FATF):
Global body combating money laundering and terror financing. India is a member since 2010.
Q178. Risk management in banks includes:
- Credit risk
- Market risk
- Operational risk
- Liquidity risk
Q179. Operational risk examples:
- Fraud, system failure, human error, natural disaster
Q180. Credit risk examples:
- Loan default by borrower
- Counterparty risk
Q181. Market risk examples:
- Interest rate risk
- Currency risk
- Price volatility
Q182. ALM (Asset Liability Management):
- Tool for managing liquidity and interest rate risk
- Monitored by ALCO (Asset Liability Committee)
Q183. Internal Audit – purpose:
- Independent evaluation of control systems
- Detect irregularities and suggest improvements
Q184. Concurrent Audit:
- Real-time / continuous audit in high-risk areas (branches, forex, advances)
Q185. Statutory Audit:
- Mandated under Banking Regulation Act, 1949
- Conducted annually by external auditors
Q186. Corporate Governance in banks aims to:
- Ensure transparency
- Accountability
- Stakeholder trust
Q187. Principles of good corporate governance:
- Fairness
- Transparency
- Accountability
- Responsibility
Q188. Fit & Proper Criteria – directors of banks:
- RBI ensures directors are competent, trustworthy, and financially sound.
Q189. Whistleblower Policy:
- Protects employees reporting unethical practices or frauds.
Q190. Ethics in banking – core values:
- Integrity
- Confidentiality
- Fairness
- Objectivity
Q191. Conflict of interest – example:
An employee approving a loan for a relative violates ethical standards.
Q192. Code of Conduct for bankers:
Issued by IBA (Indian Banks’ Association).
Q193. Corporate Social Responsibility (CSR):
Mandatory for large companies under Companies Act 2013 (Sec 135) – min 2% of average profits.
Q194. RTI Act, 2005 – applicability to banks:
Public Sector Banks fall under RTI; Private Banks don’t, except for public dealings through RBI.
Q195. Cyber Security Framework for Banks – issued by:
RBI in 2016, ensuring incident response, detection, reporting.
Q196. Customer Protection in Digital Banking:
- Zero liability for customers in case of unauthorized electronic transactions if reported promptly.
Q197. IT Act, 2000 relevance:
Provides legal recognition to electronic records and digital signatures.
Q198. Green Banking:
Promotes environment-friendly initiatives – paperless banking, digital KYC, green loans.
Q199. ESG in banking:
Environmental, Social, and Governance factors integrated into risk management and investment decisions.
Q200. Main compliance departments in banks:
- RBI compliance
- AML/CFT compliance
- Internal audit & inspection
- Risk & governance committees
✅ Module D Quick Revision Tips:
- Basel norms → capital & risk
- RBI Acts → sections 22, 35A, 45L, etc.
- CRR, SLR, CAR, PCA numerical thresholds
- Ethics + Corporate Governance + CSR concepts
- SARFAESI / DRT / Ombudsman = frequent exam topics