JAIIB PPB Module B Important Questions (Paper 1): Functions of Banks Made Easy

If you want a shortcut to scoring marks in Paper 1. Start with the PPB Module B important questions for JAIIB 2026. Module B of Principles.

Practices of Banking is where examiners reward clear concepts. Not rote learning. This guide breaks down every high-yield topic in plain English.

We cover the exact memory-recalled questions that keep returning year after year. Think call money. Scheduled banks, retail versus wholesale banking, and off-balance sheet items. Read once, revise smartly, and walk into the hall confident.

Why PPB Module B Matters for JAIIB

Principles. Practices of Banking is the most scoring paper in the JAIIB exam. Within it. Module B deals with the functions of banks. The building blocks of the banking system.

These topics are conceptual and stable. Once you understand them, you rarely forget them. That makes Module B a reliable source of easy marks for every candidate.

Examiners love testing definitions and small distinctions here. A single clear concept can fetch you two or three questions. That return on effort is exactly why smart aspirants prioritise this module.

The Money Market: Term, Call and Notice Money

Short-term funds keep banks liquid. The money market is where banks borrow. Lend for very short periods. Three terms dominate this area in the exam.

Call Money

Call money is borrowing or lending of funds for just one day (overnight). It is repayable on demand, or "on call". Banks use it to manage their daily liquidity gaps.

Notice Money

Notice money covers a period of 2 to 14 days. The lender gives short notice before recalling the funds. It bridges the gap between overnight and longer borrowings.

Term Money

Term money refers to borrowing or lending for a period beyond 14 days. It is a slightly longer money-market instrument. The rate is usually negotiated between the two banks.

Memorise this table cold. A direct one-line question on these tenures is almost certain in some form. Always confirm the latest definitions on the most recent official IIBF notification.

Banking Regulation Act: Section 6

The Banking Regulation Act, 1949 governs banking in India. Section 6 lists the forms of business a banking company may undertake besides accepting deposits. Lending.

These permitted activities include things like dealing in bills. Issuing letters of credit, and safe-deposit services. The exam often asks which activities fall under this section.

Remember the spirit of the section. Banks can do a wide range of allied financial activities. The list is broad. So focus on recognising examples rather than reciting them all.

Structure of Indian Banking

Module B also tests your grasp of how the banking system is organised. Two classic questions appear here repeatedly.

Nationalisation of the RBI

The Reserve Bank of India began operations in 1935. It was later nationalised in 1949, bringing the central bank under government ownership. This historical fact is a quick, easy mark.

First Public Sector Bank to Issue Capital to the Public

This is a popular trivia-style question. State Bank of India (SBI) is widely noted as the first public sector bank to access the capital market. Verify the exact detail on the latest official IIBF source before the exam.

What Is a Scheduled Bank?

A scheduled bank is one included in the Second Schedule of the Reserve Bank of India Act. 1934. Inclusion brings privileges, such as access to RBI refinance facilities.

This is one of the most repeated PPB Module B important questions. Examiners test both the definition and the conditions for inclusion.

Conditions to Become a Scheduled Bank

To qualify, a bank must broadly meet these conditions:

1. It must have paid-up capital and reserves of the prescribed minimum value.
2. It must satisfy the RBI that its affairs are not conducted in a way detrimental to depositors.
3. It must be a company. A state cooperative bank, or another eligible institution as defined.

The exact capital figure can change. So always confirm the current threshold on the latest official IIBF notification.

Retail Banking vs Wholesale Banking

This comparison is the crown jewel of Module B. Almost every JAIIB cycle includes a question on the difference between retail. Wholesale banking.

What Is Retail Banking?

Retail banking serves individual customers and small businesses. It offers products like savings accounts, personal loans, and credit cards. The ticket size is small but the volume is huge.

What Is Wholesale Banking?

Wholesale banking serves large clients. Think corporates, government bodies, and other financial institutions. The number of clients is small, but each deal is very large.

Channels of Retail Banking

Retail banking reaches customers through many channels. The exam may ask you to identify these delivery points:

• Branch banking — the traditional face-to-face channel.
• ATMs — for cash and self-service transactions.
• Internet banking — for online account management.
• Mobile banking — services through a smartphone app.
• Phone banking and BCs — call centres and business correspondents.

Off-Balance Sheet Items

Off-balance sheet items are exposures that do not appear as assets or liabilities on the balance sheet. They are contingent in nature. They become real only if a certain event occurs.

Common examples include bank guarantees, letters of credit, and forward contracts. They carry risk even though they sit "off" the balance sheet.

Examiners love this topic because it tests true understanding. Remember the simple rule: a contingent liability that may or may not crystallise is an off-balance sheet item.

Quick-Revision Snapshot of Module B Facts

Use this snapshot the night before your exam. It bundles the most recalled PPB Module B important questions into one fast-revision sheet. Read it twice and you cover the bulk of the module.

Treat each row as a flashcard. Cover the right column and test yourself. This active recall is far more powerful than passive reading.

How to Study PPB Module B Effectively

Concept-heavy modules reward a smart approach. Follow this simple study plan to master Module B quickly. Retain it until exam day.

1. Read the concept first. Understand the "why" before memorising the "what".
2. Build comparison tables. Side-by-side notes make differences stick.
3. Solve previous-year questions. Patterns repeat, so practise the recalled ones.
4. Take timed quizzes. Use mock tests to test recall under pressure.
5. Revise weekly. Short, frequent revision beats last-minute cramming.

Each step compounds the previous one. Concepts feed your tables. Tables feed your practice, and practice exposes weak spots. Loop through this cycle until recall feels automatic.

Pair this routine with our free guides for steady progress. Consistency, not intensity, clears the JAIIB exam.

Common Mistakes to Avoid

Many candidates lose easy marks through small errors. Watch out for these traps in Module B.

• Mixing up tenures. Call, notice, and term money differ only by days — never blur them.
• Confusing the two banking types. Keep retail and wholesale features clearly separate.
• Ignoring contingent items. Off-balance sheet exposures are tested more than students expect.
• Memorising without context. Rote facts fade fast under exam stress.
• Skipping official updates. Always confirm figures on the latest official IIBF notification.

Frequently Asked Questions

What is the difference between call money and notice money?

Call money is overnight (one-day) lending, repayable on demand. Notice money covers 2 to 14 days, recalled after a short notice. The tenure is the key difference.

What is a scheduled bank in simple terms?

A scheduled bank is one listed in the Second Schedule of the RBI Act. 1934. It meets prescribed capital norms and enjoys benefits like RBI refinance access.

Why is retail vs wholesale banking important for JAIIB?

It is one of the most repeated PPB Module B important questions. The distinction is simple. Scoring, and almost always appears in some form in the paper.

Are off-balance sheet items risky for banks?

Yes. Items like guarantees and letters of credit are contingent liabilities. They can become real obligations and therefore carry genuine credit risk.

How many marks does Module B carry in PPB?

The weightage varies by exam cycle. Module B is a high-scoring, concept-based section. Always confirm the exact module weightage on the latest official IIBF notification.

Final Word: Turn Concepts Into Marks

Module B is your easiest path to a strong PPB score. The topics are stable, logical, and endlessly repeated. Master them once and they stay with you for the whole exam.

Focus on understanding, build your own tables, and practise relentlessly. With these PPB Module B important questions sorted. Half your Paper 1 worry disappears. Now go and clear JAIIB in your very first attempt.

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