JAIIB PPB Module B Most Important Questions 2026 (Free PDF, Hindi + English)

Do you ever freeze while staring at the giant JAIIB syllabus. Unsure where to even begin? You are not alone.

The single biggest mistake aspirants make is treating every chapter as equal. And then running out of time before exam day. This 2026 crash guide fixes that.

Here you will get the most repeated JAIIB PPB Module B important questions. Explained in simple Hindi-English (Hinglish) language. Plus a clear priority strategy.

A free PDF to revise on the go.

This is Day 0 of our JAIIB Principles. Practices of Banking (PPB) crash course. We open with a smart Syllabus Priority Strategy.

Then dive straight into the top-scoring. Exam-favourite questions from Module B. Whether you are a first-time candidate or re-attempting the paper.

This session lays a rock-solid foundation so you can plan your study schedule. Squeeze the maximum marks out of minimum time.

Why JAIIB PPB Module B Deserves Your First Attention

PPB is one of the most scoring papers in JAIIB. If you study it in the right order. Module B deals with the functions of banks: how loans are structured.

How working capital is assessed. How letters of credit and guarantees work. And how bad loans (NPAs) are provisioned.

These topics are application-based, not just theory. That means once you understand the logic. You can solve almost any twist the exam throws at you. Memorisation alone fails here; understanding wins. That is exactly why we attack Module B on Day 0.

The Smart Module Priority Strategy

Time is your scarcest resource. Spend it where the return is highest. Here is the order our toppers follow:

1. Module B — highest weight of solvable, formula-driven questions.
2. Module A — indian financial system & banking fundamentals.
3. Module C — banking technology and customer relations.

Always cross-check the exact module weightage on the latest official IIBF notification before you finalise your plan. As the syllabus is revised periodically.

Contract of Guarantee — The 3-Party Concept

A contract of guarantee is a favourite Module B question. Under Section 126 of the Indian Contract Act. 1872, a guarantee always involves three parties:

• Creditor — the party giving the money (usually the bank).
• Principal Debtor — the party borrowing the money.
• Surety / Guarantor — the party that promises to repay if the debtor defaults.

The exam loves this twist: when the principal debtor defaults. The surety pays the creditor. Once the surety pays.

It steps into the creditor's shoes through the Right of Subrogation. Gaining the same rights the creditor had against the debtor. Remember the word subrogation; it appears again and again.

Letter of Credit (LC) — Role of the Issuing Bank

A Letter of Credit is a written undertaking by a bank. On behalf of a buyer. To pay the seller once agreed conditions are met. It powers trust in domestic and international trade.

The key exam point: once the seller presents the correct documents within the stipulated period (commonly within 21 days of shipment. Unless the credit states otherwise. Confirm the exact tenor on the latest official IIBF notification). The issuing bank gives an unconditional undertaking to honour the payment. The bank pays against compliant documents, not against the goods themselves.

Types of Letter of Credit You Must Know

• Irrevocable LC: Cannot be amended or cancelled without the beneficiary's consent. Most LCs today are irrevocable.
• Transferable LC: Can be transferred to a second beneficiary. But typically only once.
• Confirmed LC: A second (confirming) bank adds its own guarantee on top of the issuing bank's.
• Revolving LC: The amount is reinstated after use. Only the used portion is restored. Not a fresh full limit each time.

Term Loan Basics & the DSCR Logic

A term loan finances long-term needs. Recognise it by these features:

• Disbursed in a single lump sum (or in agreed tranches).
• Repayable over the medium to long term, commonly 3–10 years.
• Used to buy fixed assets like plant, machinery and equipment.

Banks judge whether the borrower can repay using the Debt Service Coverage Ratio (DSCR). In simple words. DSCR checks if the cash a project generates is enough to comfortably cover its loan instalments. Interest. A higher DSCR means a safer loan.

Working Capital Explained — Gross vs Net

Working capital keeps day-to-day business running. Two definitions are frequently tested:

• Gross Working Capital = Total Current Assets.
• Net Working Capital = Current Assets − Current Liabilities.

Net Working Capital also tells you the liquidity cushion a firm enjoys. A positive figure signals the business can meet its short-term obligations comfortably.

Tandon & Nayak Committee Methods (High-Yield Numericals)

This is where Module B scores are won or lost. The exam regularly asks you to compute bank finance using these methods. Learn the formulas cold.

Tandon Method I

• Bank Finance = Working Capital Gap (WCG) − 25% margin (margin from the borrower's own funds).
• Minimum acceptable Current Ratio = 1.17 : 1.

Tandon Method II

• Bank Finance = 75% of Total Current Assets, with the borrower funding 25%.
• Minimum acceptable Current Ratio = 1.33 : 1.

Nayak Committee (Turnover Method)

• Gross Working Capital is taken as 25% of projected annual turnover.
• The borrower brings a 5% margin of turnover. So the bank sanctions a limit of about 20% of turnover.

The Nayak (turnover) method is designed mainly for smaller borrowers / MSMEs. Making credit simpler and faster to assess.

Comparison Table — Working-Capital Assessment Methods

NPA Provisioning — A Solved Exam Scenario

NPA (Non-Performing Asset) provisioning sums look scary but follow a fixed logic. Work through this classic example slowly.

Scenario: A loan of ₹40 lakh turns into an NPA. Of this, ₹20 lakh is secured and ₹20 lakh is unsecured. The account also carries ECGC cover of 60% on the unsecured part.

1. ECGC cover: 60% of ₹20 lakh = ₹12 lakh. This portion is excluded from provisioning because the guarantee absorbs it.
2. Provision on the secured portion: ₹20 lakh × 40% (the Doubtful-2 / DF2 rate used in this example) = ₹8 lakh.
3. Provision on the remaining unsecured portion: After the ₹12 lakh ECGC cover. ₹8 lakh remains unsecured and is provided at 100% = ₹8 lakh.
4. Total provision: ₹8 lakh + ₹8 lakh = ₹16 lakh.

Always apply the provisioning percentages that match the asset's exact classification (Sub-standard. Doubtful 1/2/3, or Loss). The slabs are revised from time to time. Verify the current rates on the latest official IIBF notification or RBI master circular.

Fund-Based vs Non-Fund-Based Facilities

Examiners love this clean distinction. Burn it into memory:

• Fund-Based facilities involve actual outflow of bank funds — e.g. Cash Credit and Term Loans.
• Non-Fund-Based facilities create contingent liabilities only — e.g. Letters of Credit and Bank Guarantees. No money leaves the bank unless the customer defaults.

MCLR, External Benchmark & Base Rate — Lending Rate Regimes

How banks price loans has evolved. Three milestones matter:

• Base Rate — the earlier minimum lending-rate system.
• MCLR (Marginal Cost of Funds based Lending Rate) — introduced from 1 April 2016.
• External Benchmark Lending Rate (EBLR). Newer floating-rate loans are linked to an external benchmark such as the repo rate or 3-month / 6-month Treasury Bills.

What MCLR Includes and Excludes

• Includes: Marginal cost of funds. The negative carry on CRR, operating costs and tenor premium.
• Excludes: The bank's profit margin — a very common trick question.

How to Study Module B in 7 Days (Practical Plan)

Concepts stick only when you apply them. Use this quick how-to routine:

1. Day 1–2: Learn Guarantee, LC types and Fund vs Non-Fund concepts. Make one-line flash notes.
2. Day 3–4: Drill the numericals — Tandon I & II, Nayak, DSCR. Solve at least 10 sums each.
3. Day 5: Master NPA provisioning with 5–6 varied scenarios.
4. Day 6: Revise MCLR vs Base Rate vs EBLR plus working-capital definitions.
5. Day 7: Attempt full-length mock tests and review every wrong answer. Read more free guides to fill gaps.

Common Mistakes to Avoid in PPB Module B

• Mugging up formulas without logic. The exam reshuffles the numbers; understanding saves you.
• Confusing Tandon I and II. Remember: Method I uses the 25% margin on the gap. Method II finances 75% of total current assets.
• Forgetting to deduct ECGC/DICGC cover before computing NPA provision. It inflates your answer.
• Assuming MCLR includes profit margin. It does not.
• Ignoring the priority order. Do not start with Module C. Run out of time for the high-scoring Module B.
• Skipping mock tests. Reading is not revising. Practise under time pressure.

Quick-Facts Revision Table

Frequently Asked Questions (FAQ)

Which module of JAIIB PPB should I study first?

Start with Module B, then Module A, then Module C. Module B carries the most application-based. Scoring questions like working-capital assessment and NPA provisioning. Always confirm the current weightage on the latest official IIBF notification.

What are the most important topics in PPB Module B?

The top topics are Contract of Guarantee. Letter of Credit. Term Loans & DSCR. Working-Capital Assessment (Tandon & Nayak), NPA Provisioning, and lending-rate systems (MCLR / EBLR). These repeat almost every exam cycle.

What is the difference between Tandon Method I and Method II?

In Tandon Method I. Bank finance equals the working-capital gap minus a 25% margin. With a minimum current ratio of 1.17:1.

In Method II. The bank finances 75% of total current assets. With a minimum current ratio of 1.33:1.

How is NPA provisioning calculated?

First deduct any guarantee cover (like ECGC/DICGC). Then apply the provisioning percentage for the asset's exact classification on the secured. Unsecured portions. And add them up. Verify the current provisioning slabs on the latest RBI / IIBF circular.

Is this PPB Module B PDF available in Hindi?

Yes. This guide and the downloadable notes are explained in simple Hindi-English (Hinglish) so concepts are easy to grasp. Combine the PDF with our mock tests for the best results.

Final Word — Turn Strategy Into Marks

You now have the exact roadmap toppers use for JAIIB PPB Module B important questions: the right priority order. The high-yield concepts, the must-know numericals, and the traps to dodge. The syllabus is no longer a wall. It is a checklist you can finish.

Do not just read this once. Revise with the free PDF, solve the numericals daily, and put yourself under exam pressure with full-length mock tests. Consistency beats cramming every single time. Your JAIIB badge is closer than you think — go earn it.

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