JAIIB Examination 2025

Principles & Practices of Banking

Module A & B
PPB – JAIIB 2025
Q1. As per the Banking Regulation Act, 1949 (BR Act), which of the following statements is/are
correct regarding the requirements to be called a 'Bank'?
1. The term 'Banking' includes accepting deposits for the purpose of lending or investment from
the public, which are repayable on demand or otherwise.
2. Deposits made for trading or manufacturing purposes by a company can be considered as
deposits for a bank.
3. A company incorporated under the Indian Companies Act, 1956 or Companies Act, 2013 can
be a bank, but it must limit deposits to its members only.
A. Only 1
B. 1 and 2
C. Only 2
D. 1 and 3

Answer: Option A
PPB – JAIIB 2025
Q2. Which of the following statements regarding a 'Customer' of a bank are correct?
1. A customer is any person or entity that has an account with the bank or conducts a
transaction with it.
2. Only natural persons can be considered customers of a bank.
3. Beneficiaries of transactions conducted by professional intermediaries such as stock brokers
and chartered accountants are also considered customers.
A. Only 1
B. 1 and 3
C. 2 and 3
D. Only 3

Answer: Option B
PPB – JAIIB 2025
Q3. In 2023, Mr. Ramesh Kumar, a long-time customer of SBI, deposited Rs. 5 lakh into
his savings account. Which of the following statements is true regarding the debtor-
creditor relationship?
A. Mr. Ramesh Kumar is the debtor and SBI is the creditor.
B. Both Mr. Ramesh Kumar and SBI are creditors.
C. Both Mr. Ramesh Kumar and SBI are debtors.
D. SBI is the debtor and Mr. Ramesh Kumar is the creditor.
Answer: Option D
PPB – JAIIB 2025
Q4. In the context of a Bailee-Bailor relationship, which of the following statements
accurately describes the roles of the bank and the customer when the customer
deposits valuables with the bank for safe custody?
A. The bank becomes the bailor and the customer becomes the bailee.
B. The bank becomes the bailee and the customer becomes the bailor.
C. Both the bank and the customer are bailees.
D. Both the bank and the customer are bailors.
Answer: Option B
PPB – CAIIB 2025
Q5. When a customer rents a safe deposit locker from a bank, which of the following best
describes the liability of the bank in case of loss of contents due to the bank's negligence?
A. The bank's liability shall be for an amount equivalent to fifty times the prevailing annual rent
of the safe deposit locker.
B. The bank's liability shall be for an amount equivalent to one hundred times the prevailing
annual rent of the safe deposit locker.
C. The bank's liability shall be for an amount equivalent to ten times the prevailing annual rent
of the safe deposit locker.
D. The bank's liability shall be for an amount equivalent to five times the prevailing annual rent
of the safe deposit locker.

Answer: Option B
PPB – JAIIB 2025
Q6. Which of the following statements are correct regarding the key elements of the KYC (Know
Your Customer) Policy?
1. The KYC policy must be approved by the Board of Directors or a committee delegated by the
Board.
2. The principal Officer is responsible for ensuring the KYC Policy is reviewed at least once a year,
regardless of any external changes.
3. The KYC policy only focuses on Customer Identification Procedures.
A. 1 and 2
B. 2 and 3
C. 1 and 3
D. 1, 2 and 3

Answer: Option A
PPB – JAIIB 2024
Q7. According to the reporting obligations for banks, which of the following transactions are
required to be reported under the Non-Profit Organization Report (NTR)?
A. Receipts by non-profit organizations of more than Rs. 5 lakh or equivalent.
B. Receipts by non-profit organizations of more than Rs. 10 lakh or equivalent.
C. All receipts by non-profit organizations, irrespective of amount.
D. Receipts by non-profit organizations of more than Rs. 50 lakh or equivalent.

Answer: Option B
PPB – JAIIB 2024
8. Which of the following statements regarding Customer Identification Procedures (CIP) is/are
correct?
1. Customer identification is only required when opening an account or establishing an account-
based relationship.
2. Customer identification must be carried out when the transaction or series of connected
transactions exceeds ₹50,000, even for walk-in customers.
3. The bank has the ultimate responsibility for customer identification, even if it relies on a third
party for the process.
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. 1, 2, and 3

Answer: Option C
PPB – JAIIB 2025
Q9. Which of the following statements regarding wire transfers and their associated regulations
are correct?
1. If a customer is found intentionally structuring wire transfers below ₹50,000 to avoid reporting,
the bank must identify the customer and file a Suspicious Transaction Report (STR) with FIU-
IND.
2. The role of the beneficiary bank is limited to transferring funds and does not require reporting
transactions lacking complete originator information.
3. The originator information should be preserved for at least 10 years by the ordering bank.
A. 1 and 2
B. 1 and 3
C. 1 only
D. 2 and 3

Answer: Option C
PPB – JAIIB 2025
Q10. Which of the following statements regarding the accounts of minors are correct?
1. A minor can operate a deposit account if they are above the age of 10 years, and both
the minor and the guardian must complete KYC formalities.
2. Minors can open a joint account with another minor.
3. A minor can operate an account independently, and banks are free to fix the
minimum age for such operations.
A. 1 and 3
B. 1 only
C. 2 and 3
D. 1, 2, and 3
Answer: Option A
PPB – JAIIB 2025
Q11. In the context of the Civil Procedure Code, when a judgment creditor seeks to
attach funds belonging to a judgment debtor that are held by the debtor’s creditors,
including a bank, what is the legal order issued by the Court called?
A. Attachment Order
B. Garnishee Order
C. Debt Recovery Order
D. Judgment Order
Answer: Option B
PPB – JAIIB 2025
Q12. Which of the following statements regarding fixed deposits are correct?
1. Fixed deposits can be accepted for any amount, but those of Rs 3 crore and above for SCBs
and Rs 1 crore and above for RRBs are categorized as 'Bulk' by RBI.
2. Fixed deposits of Rs 1 crore and below for individuals must have a premature withdrawal
facility.
3. If a fixed deposit matures and the proceeds are unpaid, the amount left unclaimed will attract
the rate of interest as applicable to savings accounts.
A. 1 and 2
B. 2 and 3
C. 1 and 3
D. 1, 2, and 3

Answer: Option D
PPB – JAIIB 2025
Q13. What is the main purpose of the Positive Pay System?
A. To increase interest rates on savings accounts
B. To prevent cheque fraud by matching issuer details with presented cheques
C. To automate loan approvals
D. To enhance online banking security
Answer: Option B
PPB – JAIIB 2025
Q14. Which of the following statements regarding the banker's lien are correct?
1. The banker's lien is an implied pledge, allowing the banker to sell goods or securities in case
of default by the customer.
2. A particular lien allows the bank to retain goods only in respect of the charges or dues that
have arisen for those specific goods.
3. A bank has the right to claim a lien over any goods left by the customer, even if they were not
entrusted in the normal course of banking business.
A. 1 and 2
B. 1 and 3
C. 2 and 3
D. 1, 2, and 3

Answer: Option A
PPB – JAIIB 2025
Q15. Which of the following statements regarding the Liberalised Remittance Scheme (LRS) are
correct?
1. The LRS is available to resident individuals, including minors, but not to corporates,
partnership firms, HUF, or Trusts.
2. Under the LRS, remittances can be consolidated for family members, but only if all family
members comply with the terms and conditions.
3. For capital account transactions, clubbing of remittances is permitted even if the other family
member(s) are not co-owners or co-partners of the overseas account or property.
A. 1 and 2
B. 2 and 3
C. 1 and 3
D. 1, 2, and 3

Answer: Option A
PPB – JAIIB 2025
Q16. As per the guidelines of the Non-Resident (Ordinary) Account (NRO) Scheme, what is the
minimum duration (tenor) for which term deposits are allowed to be maintained under this
scheme?
A. 5 days
B. 7 days
C. 10 days
D. 14 days
Answer: Option B
PPB – JAIIB 2025
Q17. Which of the following statements regarding the Diamond Dollar Account (DDA) Scheme
are correct?
1. The DDA Account is available only to individuals involved in the export of diamonds and
related goods.
2. The account can be used for the realisation of export proceeds and local sales of rough, cut,
and polished diamonds in USD.
3. The DDA Account must be an interest-bearing savings account.
A. 1 and 2
B. 2 and 3
C. 1 and 3
D. 2 only

Answer: Option D
PPB – JAIIB 2025
Q18. Which of the following statements about Promissory Notes is incorrect?
A. A promissory note is a written unconditional promise to pay a specific amount of money on a
certain date.
B. A promissory note is valid only for a period of 3 years starting from the date of execution.
C. A minor can execute a promissory note, and the note executed by a minor is enforceable.
D. A promissory note can be made negotiable or non-negotiable.

Answer: Option C
PPB – JAIIB 2025
Q19. Which of the following statements regarding the dishonour of a cheque for insufficiency
of funds under Section 138 are correct?
1. A person is liable to be punished with imprisonment up to 2 years or with a fine up to twice
the amount of the cheque or with both if the cheque is returned unpaid due to insufficient
funds.
2. The cheque must be presented within 6 months from the date of issue for the offence to be
applicable.
3. The drawer must make the payment within 15 days of receiving the demand notice for the
cheque to be valid.
A. 1 and 3
B. 2 and 3
C. 1 and 2
D. 1, 2, and 3

Answer: Option A
PPB – JAIIB 2025
Q20. According to the guidelines for setting up Payment Banks, what is the minimum
percentage of physical access points that Payment Banks need to have, including Business
Correspondents (BCs), in rural centres?
A. 10%
B. 15%
C. 25%
D. 30%
Answer: Option C
PPB – JAIIB 2025
Q21. Which of the following statements regarding ATM operations and related customer
service are correct?
1. Customers are eligible for 5 free transactions every month from their own bank ATMs, and
they are also eligible for 3 free transactions from other bank ATMs in metro centres.
2. If an ATM is out of cash for more than 10 hours in a month, a penalty of Rs 10,000 is charged
to the bank for each ATM.
A. Only 1
B. Only 2
C. Both 1 and 2
D. Neither 1 and 2

Answer: Option C
PPB – JAIIB 2025
Q22. In the event of the bankruptcy of a customer or liquidation of a company, what happens
to the account as per the termination of the bank-customer relationship?
A. The bank continues to allow drawings from the account, and the balance is transferred to the
customer's family.
B. The account is closed immediately, and the balance is given to the Receiver, Liquidator, or
Official Assignee.
C. The bank allows partial withdrawals until the liquidation process is complete.
D. The account remains open until the company is fully liquidated.
Answer: Option B
PPB – JAIIB 2025
Q23. Under the RBI Integrated Ombudsman Scheme 2021, which of the following
rulings are applicable in an award?
1. Direction to the RE (Respondent Entity) for specific performance
2. Compensation for consequential loss with a ceiling of Rs 20 lakh
3. Compensation for loss of time, expenses, harassment, and mental anguish with a
ceiling of Rs 1 lakh
A. 1 only
B. 1 and 2
C. 2 and 3
D. 1, 2, and 3
Answer: Option D
PPB – JAIIB 2025
Q24. Which of the following statements about the Consumer Dispute Redressal Commission is
incorrect?
1. A case where the consideration value exceeds Rs 2 crore is taken to the National Commission.
2. A case where the consideration value does not exceed Rs 50 lakhs is taken to the District
Commission.
3. A case where the value of goods or services paid as consideration is more than Rs 2 crore is
taken to the State Commission.
A. 1 and 2
B. 2 and 3
C. 1 only
D. 3 only

Answer: Option D
PPB – JAIIB 2025
Q25. As per the norms for disposal of request under the RTI Act, which of the following
statements is incorrect?
A. If the requested information concerns the life or liberty of a person, it must be provided
within 24 hours.
B. If a request is rejected, the PIO must inform the applicant about the reasons, appeal period,
and appellate authority.
C. In case of delayed response beyond the stipulated time, the information shall be provided
free of cost.
D. The application fee under RTI shall be paid through cash, demand draft, banker’s cheque, or
Indian Postal Order.

Answer: Option A
PPB – JAIIB 2025
Q26. As per the legal rights of the Karta in a Hindu Undivided Family (HUF), consider the
following statements:
1. Karta has the right to possess and manage the joint family property.
2. Karta is entitled to receive income from the joint family property.
3. Karta does not have the authority to represent the joint family in legal or financial matters.
4. Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. Only 3

Answer: Option A
PPB – JAIIB 2025
Q27. As per the provisions governing One Person Company (OPC), it shall cease to be
an OPC if its average annual turnover exceeds which of the following thresholds?
A. Rs 2 crore in any one financial year
B. Rs 50 lakh in paid-up capital only
C. Rs 2 crore in 4 alternate years
D. More than Rs 2 crore in 3 immediate preceding consecutive years

Answer: Option D
PPB – JAIIB 2025
Q28. As per the assessment methods of working capital, consider the following statements:
1. Net Working Capital is calculated by subtracting current liabilities from current assets.
2. Working Capital Gap is the difference between current assets and total liabilities, including
bank borrowings.
3. Gross Working Capital represents the total investment in current assets.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

Answer: Option C
PPB – JAIIB 2025
Q29. As per the IBA Model Educational Loan Scheme 2021, for education loans, no margin may
be insisted upon for loans of which of the following amounts?
A. Above Rs 4 lakh
B. Between Rs 2 lakh to Rs 4 lakh
C. Upto Rs 4 lakh
D. More than Rs 5 lakh

Answer: Option C
PPB – JAIIB 2025
Q30. With reference to the types of securities offered by borrowers, consider the following
statements:
1. Brand value and goodwill are examples of intangible assets offered as security.
2. Primary security refers to the asset on which the advance is made and margin is applied.
3. Collateral security is always provided by a third party only.
Which of the statements given above is/are correct?
A. 1 only
B. 2 and 3 only
C. 1 and 3 only
D. 1 and 2 only

Answer: Option D
PPB – JAIIB 2025
Q31. Consider the following statements regarding valuation of stock of goods:
1. Value of stock is the function of two factors viz. quantity and price.
2. Valuation of the stock is done on the basis of cost price or market price whichever is less.
3. Goods are usually long term security of self liquidating nature.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. None of the above

Answer: Option A
PPB – JAIIB 2025
Q32. Which of the following is/are true regarding the Del Credere Agent?
A. A del credere agency is a type of principal-agent relationship wherein the agent acts not only
as a salesperson or broker for the principal, but also as a guarantor of credit extended to the
buyer.
B. If the buyer is unable to pay the bill after the transaction is completed, the del credere agent
may become liable for that amount.
C. It is necessary that before a person can claim to be a del credere agent, he must have brought
about the contract in question.
D. All of the above

Answer: Option D
PPB – JAIIB 2025
Q33. Which of the following is/are true regarding the Stamping of Documents?
1. Stamping is required for payment of applicable duty and evidences such payment having
been made.
2. A document shall be stamped in accordance with the Indian Stamp Act as amended by the
concerned State Governments.
3. In case of Promissory Note, Bills of Exchange, Share Transfer, Receipt, Letter of Credit, Policy
of Insurance, being central subjects, the stamp duty is different in various states.
4. In cases like hypothecation/pledge agreement, power of attorney, lease, mortgage etc., the
stamp duty is uniform in all the States.
A. 1 and 4 only
B. 3 and 4 only
C. 1 and 2 only
D. All of the above

Answer: Option C
PPB – JAIIB 2025
Q34. Sunita runs a small boutique and has a cash credit (CC) account with a bank. She has not
made any deposits into this account for the last 95 days, though the outstanding balance has
remained below the sanctioned limit. Under the bank’s criteria, how is her account status likely
to be classified?
A. Active, as long as the balance is below the sanctioned limit.
B. Inactive, because no transactions have occurred in over 90 days.
C. Out of Order, due to no credits in the account for over 90 days.
D. Overdrawn, because it exceeded the sanctioned limit.
Answer: Option C
PPB – JAIIB 2025
Q35. Under the Recovery of Debts and Bankruptcy Act, 1993, what is the minimum qualifying
amount of debt for a case to be covered?
A. ₹5 Lakh
B. ₹10 Lakh
C. ₹15 Lakh
D. ₹20 Lakh

Answer: Option D
PPB – JAIIB 2025
Q36. According to the CRILC guidelines, which of the following is true regarding reporting of
large credits?
A. CRILC reports are submitted on a quarterly basis.
B. The reporting threshold for CRILC-Main report has been reduced to ₹50 million.
C. All Red Flagged Accounts (RFAs) must be reported, regardless of the loan amount.
D. SMA-2 accounts do not need to be included in the CRILC report.

Answer: Option B
PPB – JAIIB 2025
Q37. Consider the following statements regarding the Financial Guarantee:
1. Financial guarantees are direct credit substitutes wherein a bank irrevocably undertakes to
guarantee the repayment of a contractual financial obligation.
2. Financial guarantees essentially carry the same credit risk as a direct extension of credit.
3. These kinds of guarantees are mostly issued on behalf of customers/contractors dealing with
Government departments.
Choose the incorrect answer from the following options:
A. 1 and 2 only
B. 3 only
C. 1 and 3 only
D. None of the above

Answer: Option D
PPB – JAIIB 2025
Q38. Consider the following statements regarding the advantages of using a Letter of Credit (LC)
for both buyers and sellers:
1. The buyer is required to make an advance payment to the seller before shipment.
2. The seller is assured of payment upon complying with the terms of the LC.
3. The buyer can request certificates related to the quality of goods from an independent body.
Which of the following is the correct combination of statements?
A. Only 1 and 3
B. Only 2 and 3
C. Only 2
D. All of the above

Answer: Option B
PPB – JAIIB 2025
Q39. A prominent Indian infrastructure company won a significant contract to construct a
highway. The project's funding involves a large initial investment for materials and labor, for
which the company seeks financial flexibility from its suppliers. The company negotiates with
the suppliers to pay for the materials on a deferred basis, ensuring the suppliers that payment
will be secured and made in full at a later agreed date. To guarantee this arrangement, the
company opts for a financial instrument from its bank. Which financial instrument best suits
this scenario?
A. Letter of Credit
B. Bank Overdraft
C. Deferred Payment Guarantee
D. Factoring

Answer: Option C
PPB – JAIIB 2025
Q40. Consider the following statements in relation to the a 'Bill of Exchange':
1. A 'Bill of Exchange' is a written instrument containing an unconditional order, signed by the maker,
directing a certain person to pay a specified sum of money to a certain person or bearer of the
instrument.
2. In the context of a 'Bill of Exchange,' the maker is referred to as the 'Drawee,' the person directed
to pay is called the 'Drawer,' and the individual entitled to receive the payment is known as the
'Payee.'
3. The 'Drawer' of a 'Bill of Exchange' acts as a creditor or seller, while the 'Drawee' is the debtor or
buyer.
Which of the above statements is/are correct?
A. Only 1
B. Only 2
C. Both 1 and 3
D. Both 1 and 2

Answer: Option C
PPB – JAIIB 2025
Q41. As per the Master Directions issued by the Reserve Bank of India (RBI) on 21st April 2022,
what is the minimum net worth required for Scheduled Commercial Banks (SCBs), excluding
Regional Rural Banks (RRBs), to undertake credit card business either departmentally, through
a subsidiary, or in a tie-up arrangement with another card issuing bank/NBFC?
A. ₹50 Crore
B. ₹100 Crore
C. ₹150 Crore
D. ₹200 Crore

Answer: Option B
PPB – JAIIB 2025
Q42. ________ are financial intermediaries facilitating transfer of capital through various
means such as Initial Public Offering (IPO).
A. Merchant Bankers
B. Lease Financers
C. Stockbrokers
D. Stockists

Answer: Option A
PPB – JAIIB 2025
Q43. Evaluate the following statements regarding the eligibility for availing the Kisan Credit
Card (KCC) facility:
1. Only individual farmers who own and cultivate their land are eligible to avail themselves of
the KCC facility.
2. Tenant farmers, oral lessees, and sharecroppers are eligible to apply for the KCC facility.
3. Self-Help Groups (SHGs) or Joint Liability Groups (JLGs) consisting of farmers, including tenant
farmers and sharecroppers, are not eligible for the KCC facility.
Select the correct combination of statements:
A. 1 and 2
B. 2 only
C. 2 and 3
D. 1 and 3

Answer: Option B
PPB – JAIIB 2025
Q44. Which of the following requirements must a factoring company meet in order for banks to
provide financial assistance?
1. At least 50% of income is from factoring activity.
2. The assets/income shall include that relating to the bill discounting facility.
3. The financial assistance extended by the Factoring Companies is secured by the
hypothecation or assignment of receivables in their favor.
Select the correct combination of statements:
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. All of the above

Answer: Option C
PPB – JAIIB 2025
Q45. It is an electronic platform for facilitating the financing/discounting of trade receivables of
MSMEs through multiple financiers. These receivables may be due from corporates and other
buyers, including Government Departments and Public Sector Undertakings (PSUs). Sellers,
buyers, and financiers are the participants on this platform. Only MSMEs can participate as
sellers. Banks, NBFC-Factors, and other financial institutions as permitted by the RBI, can
participate as financiers.
Which of the following platform is described in the above passage?
A. SAMADHAAN
B. WCD
C. TReDS
D. MSME SAMPATH

Answer: Option C
PPB – JAIIB 2025
Q46. What is the purpose of the Revolving Fund provided under the Deendayal Antyodaya
Yojana - National Rural Livelihoods Mission (DAY-NRLM)?
A. To finance large infrastructure projects in rural areas
B. As an incentive for Self Help Groups (SHGs) to accumulate their own funds to meet their
credit and immediate consumption needs
C. To provide direct cash transfers to the rural poor
D. To fund educational and skill development programs for rural youth
Answer: Option B
PPB – JAIIB 2025
Q47. According to the guidelines for forming Self-Help Groups (SHGs), how many members
from the same family are allowed to join a single SHG?
A. Up to two members from the same family can join the same SHG.
B. There is no restriction on the number of family members in an SHG.
C. Only one member from the same family is allowed to join a single SHG.
D. Each SHG must have members from at least three different families.

Answer: Option C
PPB – JAIIB 2025
Q48. Which of the following statements are correct regarding the requirements for an entity to
be called a bank according to Section 5(b) of the Banking Regulation Act, 1949?
1. A bank must accept deposits only for the purpose of lending or investment.
2. Companies accepting deposits for trading or manufacturing can be considered as a bank.
3. A bank must accept deposits only from the general public and not from its members or
specific groups.
4. The deposit accepted by a bank should be in the form of any asset, not necessarily money.
Select the correct combination of statements:
A. 1 and 2
B. Only 1
C. 3 and 4
D. 1 and 3

Answer: Option D
PPB – JAIIB 2025
Q49. The anti-money laundering (AML) and combating financing of terrorism (CFT)
standards across the globe are an outcome of which of the following organisation?
A. United Nations Peacekeeping
B. Financial Action Task Force
C. UNSC Counter-Terrorism Committee
D. Financial Services and Markets Act
Answer: Option B
PPB – JAIIB 2025
Q50. With reference to the Monitoring of Banking transactions, select the correct statement(s)
from the following:
A. Transaction monitoring requires involvement of various functional units, and also deployment
of suitable Anti Money Laundering monitoring software programs.
B. The Designated Director is the authority for deciding on reporting a transaction as a
suspicious transaction report.
C. Detection of suspicious transactions cannot be done during solicitation of new customer or
business, or concurrent review of transactions.
D. Banks are not required to submit reports of various types of transactions to Financial
Intelligence Unit-India.

Answer: Option A