JAIIB PPB MCQ Practice Questions 2026 — 100 Questions with Answers

Last updated by BankersClub on October 25, 2026

Principles and Practices of Banking (PPB) is the highest-failure paper in JAIIB. Most failures happen because candidates read theory but do not practice enough case-study MCQs. This page has 100 practice questions covering all major PPB topics for the 2026 exam. Questions are grouped by topic so you can focus on your weak areas first.

How to use this: Do 20–25 questions per day. Write down the reason for each wrong answer. Revisit wrong answers before the exam. For the actual exam, always read the case-study scenario twice before choosing an option.

PPB exam pattern reminder: 100 MCQs, 2 hours, no negative marking. Case-study questions (KYC, lending scenarios, NPA situations) account for approximately 40% of the paper. These are the questions most candidates get wrong — prioritise them in your practice.

Module A: Indian Banking System — MCQs 1–15

Q1. Which of the following is the apex bank of India?

(a) State Bank of India (b) NABARD (c) Reserve Bank of India (d) SIDBI

Answer: (c) The Reserve Bank of India is the central bank and apex bank, established under the RBI Act 1934. It regulates the monetary system, issues currency, and supervises all scheduled banks.

Q2. Scheduled Banks in India are those which are included in which schedule of the RBI Act?

(a) First Schedule (b) Second Schedule (c) Third Schedule (d) Fourth Schedule

Answer: (b) Scheduled banks are listed in the Second Schedule of the RBI Act, 1934. They are eligible to borrow from RBI at Bank Rate and must maintain CRR and SLR.

Q3. Under Basel III norms, what is the minimum Capital Adequacy Ratio (CAR) prescribed for Indian banks?

(a) 9% (b) 10.5% (c) 11.5% (d) 12%

Answer: (c) RBI has prescribed a minimum CAR of 11.5% for Indian banks under Basel III, which includes a 2.5% Capital Conservation Buffer. The global Basel III minimum is 10.5%.

Q4. The priority sector lending target for domestic commercial banks is:

(a) 32% of ANBC (b) 36% of ANBC (c) 40% of ANBC (d) 45% of ANBC

Answer: (c) Domestic scheduled commercial banks must lend 40% of their Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposures, whichever is higher, to priority sectors. Foreign banks with under 20 branches must meet 40% from 2020.

Q5. Which type of bank account cannot be opened by a minor?

(a) Savings account (jointly with guardian) (b) Fixed deposit (with guardian) (c) Overdraft account (d) Recurring deposit (with guardian)

Answer: (c) A minor cannot be held liable for a debt or contract under the Indian Contract Act (Section 11). Therefore, overdraft or loan accounts — which create liability — cannot be opened in a minor’s name. Savings, FD, and RD accounts with guardians are permissible.

Q6. Which Act governs the Negotiable Instruments in India?

(a) Indian Contract Act, 1872 (b) Negotiable Instruments Act, 1881 (c) Transfer of Property Act, 1882 (d) Banking Regulation Act, 1949

Answer: (b) The Negotiable Instruments Act, 1881 governs cheques, bills of exchange and promissory notes. Section 138 (cheque dishonour) is the most frequently tested provision in PPB.

Q7. A cheque is valid for how many months from the date of issue?

(a) 1 month (b) 2 months (c) 3 months (d) 6 months

Answer: (c) As per RBI directive, cheques are valid for 3 months (90 days) from the date of issue. A cheque presented after this period is a “stale cheque” and should be returned unpaid.

Q8. The Banking Regulation Act of India was enacted in:

Answer: (c) The Banking Regulation Act was enacted in 1949. It governs the licensing, operations, inspections, and winding up of banks in India. The RBI Act was enacted in 1934.

Q9. Repo rate is the rate at which:

(a) Banks borrow from each other (b) RBI lends money to commercial banks (c) Commercial banks lend to their best customers (d) RBI borrows from commercial banks

Answer: (b) Repo (Repurchase) rate is the rate at which RBI lends short-term money to commercial banks against government securities. Reverse Repo is the rate at which RBI borrows from commercial banks (Option d).

Q10. Which of the following is NOT a function of commercial banks?

(a) Accepting deposits (b) Issuing currency notes (c) Granting loans and advances (d) Providing locker facilities

Answer: (b) Only the Reserve Bank of India has the exclusive right to issue currency notes. Commercial banks accept deposits, grant loans, provide locker facilities and offer other ancillary services, but cannot issue currency.

Q11. Under Pradhan Mantri Jan Dhan Yojana (PMJDY), what is the overdraft facility available to eligible account holders?

(a) ₹5,000 (b) ₹10,000 (c) ₹15,000 (d) ₹25,000

Answer: (b) Under PMJDY, eligible account holders (with satisfactory operation for 6 months) can avail an overdraft of up to ₹10,000. Earlier the limit was ₹5,000, which was revised upward.

Q12. The minimum paid-up capital required for setting up a new bank in India (private sector) as per RBI guidelines is:

(a) ₹100 crore (b) ₹300 crore (c) ₹500 crore (d) ₹1,000 crore

Answer: (c) RBI requires a minimum paid-up voting equity capital of ₹500 crore for setting up a new universal bank in the private sector. Small Finance Banks and Payment Banks have lower thresholds.

Q13. What is the full form of NBFC?

(a) National Banking Financial Corporation (b) Non-Banking Financial Company (c) New Banking and Finance Centre (d) National Bureau of Financial Control

Answer: (b) NBFC stands for Non-Banking Financial Company. NBFCs are regulated by RBI but cannot accept demand deposits, issue cheques drawn on themselves, or be part of the payment and settlement system.

Q14. CRR stands for:

(a) Credit Reserve Ratio (b) Cash Reserve Ratio (c) Capital Requirement Ratio (d) Central Reserve Rate

Answer: (b) CRR is Cash Reserve Ratio — the percentage of a bank’s net demand and time liabilities (NDTL) that must be kept in cash with RBI. It is a monetary policy tool to control money supply.

Q15. Which type of bank account is most suitable for a business that has high transaction volume and needs overdraft facility?

(a) Savings Account (b) Current Account (c) Fixed Deposit (d) Recurring Deposit

Answer: (b) Current accounts are designed for businesses with high transaction volume. They do not carry interest but offer overdraft facility. Savings accounts restrict transactions and are meant for individuals.

Module B: KYC, AML & Banking Operations — MCQs 16–35

Q16. Under the Prevention of Money Laundering Act (PMLA), banks must maintain transaction records for a minimum period of:

(a) 3 years (b) 5 years (c) 7 years (d) 10 years

Answer: (d) Under PMLA 2002, all transaction records must be maintained for 10 years from the date of the transaction. KYC records must be maintained for 10 years after the account is closed.

Q17. A Suspicious Transaction Report (STR) must be filed with FIU-IND within how many days of becoming aware of the suspicious transaction?

(a) 3 days (b) 7 days (c) 15 days (d) 30 days

Answer: (b) Banks must file an STR with the Financial Intelligence Unit of India (FIU-IND) within 7 days of forming a suspicion about a transaction. Cash Transaction Reports (CTR) above ₹10 lakh must be filed monthly.

Q18. Under RBI’s KYC guidelines, which document is accepted as proof of identity AND address for an Indian citizen?

(a) PAN Card only (b) Aadhaar Card (c) Electricity bill (d) Employer ID card

Answer: (b) Aadhaar is an Officially Valid Document (OVD) accepted as both identity and address proof. PAN is only identity proof. Electricity bill is only address proof. Employer ID is not an OVD under KYC norms.

Q19. FATF stands for:

(a) Financial Action Task Force (b) Foreign Assets Transfer Fund (c) Federal Authority for Trade Finance (d) Financial Analysis and Tracking Framework

Answer: (a) FATF (Financial Action Task Force) is the global inter-governmental body that sets standards and promotes effective implementation of anti-money laundering (AML) and counter-terrorism financing (CTF) measures.

Q20. A bank customer deposits ₹15 lakh in cash in a single transaction. The bank must:

(a) Report immediately to RBI (b) Refuse the deposit (c) File a Cash Transaction Report (CTR) with FIU-IND (d) Ask the customer to deposit in multiple transactions

Answer: (c) All cash transactions above ₹10 lakh must be reported as CTR to FIU-IND on a monthly basis. The bank should accept the deposit but file the report. Refusing or splitting deposits is incorrect practice.

Q21. Under the Right to Information Act 2005, who is appointed in each public authority to receive RTI applications?

(a) Chief Information Commissioner (b) Public Information Officer (PIO) (c) Nodal Officer (d) Compliance Officer

Answer: (b) Each public authority must designate a Public Information Officer (PIO) and an Appellate Authority. A PIO must provide the requested information within 30 days (or 48 hours for life/liberty matters).

Q22. Nomination facility in a bank account is governed by which section of the Banking Regulation Act?

(a) Section 26A (b) Section 45ZA (c) Section 47A (d) Section 31

Answer: (b) Section 45ZA of the Banking Regulation Act, 1949 deals with nomination facility for bank deposits. Only one nominee can be registered per deposit account. A minor can be a nominee (with a guardian specified).

Q23. Case Study: A customer approaches your branch and wants to open a savings account. He provides only his driving license as proof of identity and address. What should the bank officer do?

(a) Reject the application as driving license is not valid (b) Accept it as driving license is an OVD valid for both identity and address (c) Accept for identity but ask for a separate address proof (d) Accept the application without KYC as it is a small account

Answer: (b) A driving license is an Officially Valid Document (OVD) under RBI KYC guidelines and is accepted as both identity and address proof (as it contains address details). The bank can proceed with account opening based on a driving license alone.

Q24. Case Study: Mr. Suresh is a 75-year-old customer. He visits the branch to withdraw ₹2,00,000 from his savings account and appears confused about the transaction. What should the bank officer do?

(a) Refuse the withdrawal immediately (b) Process the withdrawal without delay (c) Verify the purpose in a gentle, non-intrusive manner and check for signs of financial elder abuse before processing (d) Ask the customer to bring a family member

Answer: (c) RBI has issued guidelines on protection of senior citizens. Bank officers should be sensitive to signs of financial abuse or coercion. While the officer cannot refuse a valid transaction, they should gently verify the purpose and ensure the customer is acting willingly. Filing an STR may be appropriate if there are strong suspicions.

Q25. Ombudsman scheme for banks was introduced by RBI under which act?

(a) Consumer Protection Act (b) Banking Regulation Act, 1949 (c) RBI Act, 1934 Section 35A (d) It has no statutory basis — it is a voluntary scheme

Answer: (c) The Banking Ombudsman Scheme (now Integrated Ombudsman Scheme since 2021) is issued by RBI under Section 35A of the Banking Regulation Act 1949. Any customer can file a complaint free of charge if the bank has not resolved the issue within 30 days.

Q26. The maximum compensation that can be awarded by the Banking Ombudsman is:

(a) ₹5 lakh (b) ₹10 lakh (c) ₹20 lakh (d) ₹30 lakh

Answer: (c) Under the Integrated Ombudsman Scheme 2021, the Ombudsman can award compensation up to ₹20 lakh. This is for actual loss suffered. Additionally, compensation up to ₹1 lakh can be awarded for mental agony and harassment.

Q27. Secrecy of customer accounts in banking is mainly governed by which principle?

(a) It is a statutory obligation under the RBI Act (b) It is implied in the banker-customer contract based on Tournier v. National Provincial Bank (c) It is covered under Information Technology Act (d) It is covered under Banking Regulation Act Section 44A

Answer: (b) The landmark case Tournier v. National Provincial Bank (1924) established that maintaining secrecy is an implied duty in the banker-customer relationship. Banks can disclose under four exceptions: compulsion of law, duty to the public, bank’s own interests, express or implied consent of the customer.

Q28. Case Study: A court issues a Garnishee Order on a bank account. The bank’s correct response is:

(a) Close the account immediately (b) Inform the customer and let them handle it (c) Freeze the account and attach the balance as directed by the court order (d) Transfer the funds to the court registry immediately

Answer: (c) A Garnishee Order (now called Attachment Order) by a court directs the bank (garnishee) to hold funds in the debtor’s account and not release them. The bank must comply and freeze the specified amount. The funds are held until the court’s further directions, not immediately transferred.

Q29. A Minor has a savings account in ABC Bank (jointly with his mother as guardian). On attaining majority, what must the minor do?

(a) Nothing — the account continues automatically (b) Open a new separate account (c) Inform the bank, provide fresh KYC and sign new account opening forms in their own right (d) Only the guardian needs to inform the bank

Answer: (c) On attaining majority (18 years), the erstwhile minor must inform the bank, provide fresh KYC documents (now as an adult), and sign new account opening forms. The guardian’s authority ends automatically and the account must be converted to a regular adult account.

Q30. NEFT transactions are settled in:

(a) Real time as each transaction occurs (b) Hourly batches (c) Twice a day — morning and evening (d) On a net basis at the end of each day

Answer: (b) NEFT (National Electronic Funds Transfer) settles transactions in half-hourly batches, 24×7 since December 2019. RTGS settles in real time (Option a). Do not confuse NEFT batches (half-hourly) with RTGS (real-time gross settlement).

Q31. The minimum and maximum amount limits for RTGS transactions are:

(a) Min ₹1 lakh, No maximum (b) Min ₹2 lakh, No maximum (c) Min ₹5 lakh, Max ₹10 crore (d) No minimum or maximum

Answer: (b) RTGS has a minimum transaction value of ₹2 lakh. There is no upper limit. NEFT has no minimum or maximum (Option d applies to NEFT/IMPS). RTGS is used for high-value real-time transfers.

Q32. A crossed cheque can be:

(a) Encashed at any bank counter (b) Paid only through a bank account (c) Cancelled by the payee (d) Issued only by banks

Answer: (b) A crossing on a cheque means it can only be paid through a bank account (not over the counter in cash). The two parallel lines are the crossing mark. “Account Payee” crossing further restricts it to the named payee’s account only.

Q33. Which of the following is NOT a valid reason for a bank to return a cheque unpaid?

(a) Insufficient funds (b) Signature mismatch (c) Cheque is 89 days old (d) Cheque is post-dated

Answer: (c) A cheque that is 89 days old is still within the 3-month validity period and is a valid instrument. It should not be returned. Options (a), (b), and (d) are all valid reasons for returning a cheque unpaid.

Q34. A bank receives a Stop Payment instruction from the account holder after the cheque has already been paid. The bank’s liability is:

(a) The bank is fully liable to refund the amount (b) The bank has no liability as the cheque was paid before the instruction was received (c) The bank is 50% liable (d) The payee is liable

Answer: (b) If a cheque has already been paid (debited from the account) before the stop payment instruction is received and acted upon, the bank has no liability. The bank is only liable if it pays the cheque AFTER receiving and acknowledging the stop payment instruction.

Q35. The concept of “Know Your Customer” (KYC) in banks is primarily aimed at:

(a) Improving customer service quality (b) Preventing money laundering and financing of terrorism (c) Reducing NPA levels in banks (d) Increasing the bank’s customer base

Answer: (b) KYC is primarily a risk management framework to prevent banks from being used for money laundering, terrorist financing, and other financial crimes. It is mandated by RBI under the Prevention of Money Laundering Act (PMLA) and RBI KYC Master Directions.

Module C: Lending, NPA & Credit — MCQs 36–60

Q36. A loan account is classified as a Non-Performing Asset (NPA) when overdue for:

(a) 60 days (b) 90 days (c) 120 days (d) 180 days

Answer: (b) A term loan becomes NPA when interest or principal is overdue for more than 90 days. For agricultural loans, the NPA recognition depends on the crop season (2 crop seasons for short-duration, 1 for long-duration crops).

Q37. A Doubtful Asset in NPA classification is one that has been in the Substandard category for more than:

(a) 6 months (b) 9 months (c) 12 months (d) 18 months

Answer: (c) NPA classification: Standard → Substandard (NPA for 0–12 months) → Doubtful (NPA for >12 months, classified as D1/D2/D3) → Loss Asset (identified as loss but not written off). The progression is: Substandard for 12 months → moves to Doubtful.

Q38. SARFAESI Act 2002 allows banks to recover secured loans without court intervention. The minimum loan outstanding to invoke SARFAESI is:

(a) ₹1 lakh (b) ₹5 lakh (c) ₹10 lakh (d) ₹20 lakh

Answer: (b) SARFAESI can be invoked for secured loan accounts where the outstanding amount is ₹5 lakh or more (earlier it was ₹1 lakh, revised upward). Banks issue a 60-day demand notice before taking possession of the secured asset.

Q39. Under the MUDRA scheme, Tarun category loans cover amounts:

(a) Up to ₹50,000 (b) ₹50,001 to ₹5 lakh (c) ₹5 lakh to ₹10 lakh (d) ₹10 lakh to ₹50 lakh

Answer: (c) MUDRA (Micro Units Development and Refinance Agency) has 3 categories: Shishu (up to ₹50,000), Kishore (₹50,001–₹5 lakh), Tarun (₹5 lakh–₹10 lakh). Now also Tarun Plus (₹10 lakh–₹20 lakh) introduced later.

Q40. Case Study: A borrower’s term loan account has been NPA for 14 months. It should be classified as:

(a) Substandard (b) Doubtful-1 (D1) (c) Doubtful-2 (D2) (d) Loss Asset

Answer: (b) After 12 months as NPA (substandard), the account moves to Doubtful-1 (D1). D1: 12–24 months as Doubtful. D2: 24–36 months. D3: More than 36 months. At 14 months NPA total, the account is 2 months into the Doubtful category = D1.

Q41. One-Time Settlement (OTS) in banking is primarily used for:

(a) Rewarding good borrowers with interest waiver (b) Resolving NPA accounts by accepting a lump-sum amount less than the total outstanding (c) Converting a term loan to overdraft (d) Restructuring the repayment schedule without haircut

Answer: (b) OTS allows banks to accept a lump-sum (which may be less than total dues including interest) to close an NPA account. The bank takes a haircut (foregoes some amount) to recover a portion quickly rather than going through prolonged legal proceedings.

Q42. Credit Information Companies (CICs) in India are regulated by:

(a) SEBI (b) IRDAI (c) RBI (d) Ministry of Finance

Answer: (c) Credit Information Companies (like CIBIL, Equifax, Experian, CRIF High Mark) are regulated by RBI under the Credit Information Companies (Regulation) Act 2005. Banks are required to share credit data with CICs monthly and use credit reports for lending decisions.

Q43. Which guarantee scheme covers loans to MSMEs without collateral up to ₹2 crore?

(a) ECGC (b) MUDRA (c) Credit Guarantee Fund Trust for MSEs (CGTMSE) (d) DICGC

Answer: (c) CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) provides guarantee cover for collateral-free loans to MSEs up to ₹2 crore. ECGC covers export credit risk. DICGC covers deposit insurance up to ₹5 lakh per depositor.

Q44. Case Study: A borrower has a term loan outstanding of ₹25 lakh against a property worth ₹40 lakh. The account becomes NPA. The bank invokes SARFAESI. The borrower does NOT respond to the 60-day notice. The bank can:

(a) Only file a case in court for recovery (b) Take possession of the secured asset and auction it (c) Write off the loan immediately (d) Convert the loan to equity

Answer: (b) Under SARFAESI Act 2002, if the borrower does not respond or repay within 60 days of the demand notice, the bank can take symbolic or physical possession of the secured asset and sell (auction) it to recover the outstanding dues. No court order is required for this step.

Q45. Priority Sector target for Agriculture lending for domestic banks is:

(a) 10% of ANBC (b) 12% of ANBC (c) 15% of ANBC (d) 18% of ANBC

Answer: (d) Out of the 40% overall PSL target, 18% must go to Agriculture (with 10% specifically for small and marginal farmers). The sub-targets are: Agriculture 18%, Small/Marginal Farmers 10%, Weaker Sections 12%.

Q46. Interest on a Housing Loan under priority sector can be subsidised under which scheme?

(a) PMAY-U (Pradhan Mantri Awas Yojana — Urban) (b) CGTMSE (c) SIDBI scheme (d) NABARD RIDF

Answer: (a) PMAY-U (Pradhan Mantri Awas Yojana — Urban) provides Credit Linked Subsidy Scheme (CLSS) for home loans. Eligible beneficiaries get an upfront interest subsidy on the principal component of their housing loan.

Q47. The lien given by a borrower on goods to a bank as security for a loan is called:

(a) Pledge (b) Mortgage (c) Hypothecation (d) Assignment

Answer: (c) In hypothecation, possession of the asset (typically movable goods like stock, vehicles) remains with the borrower but ownership is charged to the bank. In Pledge (option a), possession is actually transferred to the bank. Mortgage is for immovable property. Assignment is transfer of rights.

Q48. A mortgage where the borrower transfers ownership (not just charge) of property to the bank is called:

(a) Simple Mortgage (b) Equitable Mortgage (c) English Mortgage (d) Usufructuary Mortgage

Answer: (c) In English Mortgage, the mortgagor transfers absolute ownership to the mortgagee (bank) with a condition that ownership reverts on repayment. In Equitable Mortgage (option b) / Mortgage by Deposit of Title Deeds — the most common in banking — the borrower only deposits title documents, no ownership transfer occurs.

Q49. Case Study: XYZ Ltd has a working capital limit of ₹50 lakh (CC account). The current stock is ₹35 lakh and debtors are ₹20 lakh. Creditors are ₹8 lakh. What is the Drawing Power (DP)?

(a) ₹47 lakh (b) ₹55 lakh (c) ₹50 lakh (limit applies) (d) ₹43 lakh

Answer: (a) DP = Stock + Debtors − Creditors = 35 + 20 − 8 = ₹47 lakh. The borrower can draw up to ₹47 lakh (the DP), even though the sanctioned limit is ₹50 lakh. Drawing Power limits the actual permissible borrowing based on current assets.

Q50. The process of converting physical securities into electronic form is called:

(a) Securitisation (b) Dematerialisation (c) Digitisation (d) Hypothecation

Answer: (b) Dematerialisation (Demat) is the process of converting physical share certificates and securities into electronic form held in a Demat account with NSDL or CDSL. Securitisation is pooling of loans into securities for sale to investors.

Q51. A Debt Recovery Tribunal (DRT) can hear cases where the bank’s loan outstanding is:

(a) Any amount (b) Above ₹5 lakh (c) Above ₹10 lakh (d) Above ₹20 lakh

Answer: (d) DRT has jurisdiction for recovery of debts above ₹20 lakh. Cases below this threshold are handled by civil courts. DRT was established under Recovery of Debts Due to Banks and Financial Institutions (RDDBFI) Act, 1993.

Q52. Kisan Credit Card (KCC) is primarily designed for:

(a) Urban salaried customers (b) Farmers, fishermen, and allied agriculture sector (c) MSME exporters (d) Self-help groups only

Answer: (b) KCC provides short-term credit to farmers, allied activities (fisheries, animal husbandry), and fishermen for their crop production and allied needs. The limit is based on crop requirements and is typically in the form of a revolving credit facility.

Q53. Which type of charge is created when a specific movable asset is pledged as security?

(a) Fixed charge (b) Floating charge (c) Pledge (d) Lien

Answer: (c) A Pledge is a specific form of bailment where the borrower delivers possession of movable goods to the lender (bank) as security. A Fixed charge is on specific assets (immovable). A Floating charge is on all assets of a company (current and future). A Lien is the right to retain possession of goods until payment.

Q54. Case Study: ABC Bank has sanctioned a term loan of ₹1 crore to PQR Pvt Ltd. The repayment is ₹10 lakh per quarter. After 3 quarters (9 months), the borrower has paid only 1 instalment. What is the overdue amount and the NPA classification?

(a) Overdue ₹20 lakh, NPA (b) Overdue ₹30 lakh, NPA (c) Overdue ₹20 lakh, still standard (d) Overdue ₹30 lakh, still standard

Answer: (a) After 3 quarters, ₹30 lakh was due. Only ₹10 lakh paid. Overdue = ₹20 lakh. Since the 2nd instalment (due at 6 months) has been unpaid for 90 days+, the account is classified as NPA. Overdue = ₹20 lakh, Status = NPA (Substandard).

Q55. Which of the following is NOT included in the definition of “credit information” under the Credit Information Companies Regulation Act?

(a) Loan repayment history (b) Credit enquiries made (c) Income tax returns (d) Current loan balances

Answer: (c) Credit Information as defined under the CICRA covers loan accounts, repayment history, enquiries, balances, and related banking data. Income tax returns are not shared with Credit Information Companies and do not form part of the credit report.

Q56. Maximum interest rate on a loan against Gold under priority sector as per RBI guidelines (for loans up to ₹3 lakh) is:

(a) MCLR (b) MCLR + 2% (c) Cannot exceed 3% above the cost of funds (d) RBI does not prescribe a cap

Answer: (a) Agricultural gold loans up to ₹3 lakh under priority sector are required to be extended at a rate not exceeding MCLR (linked to the 1-year MCLR). The interest subvention scheme further reduces the effective rate for farmers.

Q57. MCLR replaced which base rate system for bank lending?

(a) PLR (Prime Lending Rate) (b) BPLR (Benchmark Prime Lending Rate) (c) Base Rate (d) Repo Rate Linked Rate

Answer: (c) MCLR (Marginal Cost of Funds based Lending Rate) was introduced by RBI from April 2016 to replace the Base Rate system. The sequence of lending rate evolution in India: PLR → BPLR → Base Rate (2010) → MCLR (2016) → External Benchmark Lending Rate (EBLR) for retail and MSME loans (2019).

Q58. A Letter of Credit (LC) in international trade is issued by:

(a) The exporter’s bank (b) The importer’s bank (c) RBI (d) ECGC

Answer: (b) An LC is issued by the importer’s bank (issuing bank) at the request of the importer (applicant) in favour of the exporter (beneficiary). The exporter’s bank is the advising/confirming bank. The LC assures payment to the exporter once conditions are met.

Q59. Bank Guarantee (BG) is a:

(a) Credit product — the bank lends money directly (b) Non-fund based credit facility — the bank gives a commitment, not cash (c) Investment product (d) Deposit product

Answer: (b) Bank Guarantee is a non-fund based facility. The bank gives a guarantee on behalf of the borrower (applicant) to a third party (beneficiary). Funds are deployed only if the beneficiary invokes the guarantee (i.e., the applicant defaults). LC is also non-fund based.

Q60. Case Study: A farmer applies for a Kisan Credit Card limit of ₹4 lakh. Under RBI guidelines, this loan will attract:

(a) No special treatment — normal commercial rates (b) Compulsory NABARD refinance (c) Interest subvention (currently 3% p.a. for prompt repayment) under the interest subvention scheme (d) MUDRA guarantee cover

Answer: (c) Under the Government’s interest subvention scheme for short-term crop loans (including KCC up to ₹3 lakh — note: revised thresholds apply), banks get 2% subvention from the government; borrowers who repay on time get an additional 3% prompt repayment incentive, making the effective rate 4% p.a. for the farmer.

Modules D & E: Ethics, Technology & Case Studies — MCQs 61–100

💡 Note: Questions 61–100 follow the same format covering: Banking Regulation, Technology (internet banking, cybercrime, UPI, digital banking), Business correspondence, Insurance, Mutual Funds, Forex basics, and Additional Case Studies. We are expanding this section — join the list below to get notified when the full 100-question set is published.

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How many case-study questions come in JAIIB PPB exam?

Approximately 35–45 out of 100 MCQs in the JAIIB PPB paper are case-study based. These present a scenario (a customer situation, a lending decision, a KYC issue, a cheque dispute) and ask you to identify the correct action or applicable rule. They are the primary reason most candidates fail PPB — the theory alone is not sufficient for these questions.

Which topics are most important for JAIIB PPB?

The highest-weightage topics in PPB are: (1) KYC / AML — 10–15 MCQs, (2) NPA classification and SARFAESI — 10–12 MCQs, (3) Negotiable Instruments Act — 8–12 MCQs, (4) Priority Sector Lending — 8–10 MCQs, (5) Banker-customer relationship — 6–8 MCQs, (6) Types of deposits and accounts — 6–8 MCQs. Focus on these 6 areas to cover approximately 60% of the paper.

Is the PPB paper difficult to pass in the first attempt?

PPB has the highest failure rate among the 4 JAIIB papers — approximately 35–40% of candidates fail it. The difficulty is not the volume of content but the case-study questions that test application rather than memory. Candidates who practice 300+ case-study MCQs typically pass comfortably. Reading the textbook alone, without MCQ practice, is the most common reason for failure.

For the complete PPB syllabus and strategy, visit the JAIIB PPB Paper Guide. For all JAIIB resources in one place, visit the JAIIB Complete Hub.

JAIIB PPB MCQ Practice Questions 2026 — 100 Questions with Answers

Module A: Indian Banking System — MCQs 1–15

Module B: KYC, AML & Banking Operations — MCQs 16–35

Module C: Lending, NPA & Credit — MCQs 36–60

Modules D & E: Ethics, Technology & Case Studies — MCQs 61–100

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How many case-study questions come in JAIIB PPB exam?

Which topics are most important for JAIIB PPB?

Is the PPB paper difficult to pass in the first attempt?

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JAIIB PPB MCQ Practice Questions 2026 — 100 Questions with Answers

Module A: Indian Banking System — MCQs 1–15

Module B: KYC, AML & Banking Operations — MCQs 16–35

Module C: Lending, NPA & Credit — MCQs 36–60

Modules D & E: Ethics, Technology & Case Studies — MCQs 61–100

📚 Get More JAIIB MCQs + Study Alerts

How many case-study questions come in JAIIB PPB exam?

Which topics are most important for JAIIB PPB?

Is the PPB paper difficult to pass in the first attempt?

0 Comments

Leave a Reply Cancel reply

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IBPS RRB 2026 — 13,745 Vacancies for Office Assistant & Officer Posts: Dates, Eligibility, Pattern

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IBPS Clerk 2026 (CRP CSA-XVI) — Prelims Held 10–11 October, 11,663 Vacancies, Mains on 27 December