JAIIB Previous Year Questions & Exam-Pattern Practice (2026)

Correct answer: A. Reconcile entries that passed over the account with the agent bank against those passed internally in the books of the bank to the Nostro account

Correct: (A) Why correct: The chapter states — 'Bank is required to reconcile the entries that have passed over an account with an agent bank against those that are passed internally in the books of the bank to a Nostro account.' Why others wrong: (B) The home bank, not the agent, is responsible per chapter; (C) Chapter does not restrict to year-end; (D) Reconciliation is the bank's responsibility, not the customer's.

Correct answer: B. Intra-branch reconciliation / balancing of books at branch level

Correct: (B) Why correct: The chapter states — 'An important aspect of accountancy at the branch level is the balancing of the books of account … the balance shown in a particular control account in the GL of the branch and the total of balances in all the folios of the subsidiary ledgers, pertaining to that control account, should be same.' That matching at the SAME branch is intra-branch reconciliation. Why others wrong: (A) Inter-branch concerns transactions between branches; (C) Nostro pertains to foreign-currency correspondent accounts; (D) RBI reconciliation pertains to balances with the central bank.

Correct answer: C. A Nostro account — an account a bank holds in a foreign currency in another bank

Correct: (C) Why correct: The chapter defines — 'A Nostro account refers to an account that a bank holds in a foreign currency in another bank.' SBI holding USD balances with Citibank NY perfectly matches the Nostro definition. Why others wrong: (A) A Vostro is the account a foreign bank keeps with the home bank in home currency (the mirror perspective); (B) Loro is a third-party perspective and not the chapter's term for this transaction; (D) Mirror account is an internal record, not the foreign-currency account itself.

Correct answer: B. Debit customer's account and Credit the Inter-Office Account in the issuing branch's books

Correct: (B) Why correct: The chapter's worked example states — 'When a draft is issued, the account of the customer is debited and the Inter office account is credited. This draft is paid by the other branch by crediting the account of the payee and debiting the Inter Office account.' Why others wrong: (A) The chapter does not pass the entry directly to the other branch — it uses the Inter-Office leg; (C) RBI account is not involved in a within-bank draft; (D) Nostro is a foreign-currency account, not used for inland drafts.

Correct answer: A. Debit Inter-Office Account; Credit Cash — only when paid in cash

Correct: (A) Why correct: The chapter's worked example states the paying branch passes the entry by 'crediting the account of the payee and debiting the Inter Office account.' Where payment is made in cash, 'credit the account of the payee' practically means credit Cash. The Inter-Office Account is therefore debited and Cash credited. Why others wrong: (B) Customer-issuer is at the originating branch; (C) RBI is not involved for an inland draft; (D) Reverses the debit/credit direction prescribed.

Correct answer: C. Treated as an inter-office (inter-branch) transaction since ATMs are linked to branches

Correct: (C) Why correct: The chapter expressly lists 'ATM transactions of the customer either at ATMs linked with other branches' among the major types of inter-office debit/credit transactions. The branch where the ATM is hosted and the branch where the customer maintains the account use the Inter-Office Account leg. Why others wrong: (A) NOSTRO is for foreign-currency accounts at foreign banks; (B) Even within the same bank, the branches' books must be reconciled via the IOA; (D) RBI's CRR is not used for ATM settlement between own branches.

Correct answer: B. NEFT/ECS/RTGS, ATM transactions at linked branches and Cash sent/received between branches, in addition to issue and payment of drafts and collection proceeds

Correct: (B) Why correct: The chapter's list under 'MAJOR TYPES OF INTER OFFICE DEBIT OR CREDIT TRANSACTIONS' includes issue of drafts, payment of drafts, payment/receipt of collection proceeds, NEFT/ECS/RTGS, ATM transactions linked to other branches, payment of gift cheques / banker's cheques / interest warrants / dividend warrants / refund warrants / travellers' cheques on behalf of other branches, NOSTRO operations and cash sent/received between branches. (B) captures most of these. Why others wrong: (A) Far too narrow; (C) Loan disbursals and FD renewals are not in the list; (D) Only NOSTRO/TT is incomplete.

Correct answer: B. Inter-office debit or credit transactions — since the chapter lists 'Operations by the authorised branches on the bank's NOSTRO accounts' under inter-office types

Correct: (B) Why correct: The chapter expressly lists 'Operations by the authorised branches on the bank's NOSTRO accounts' under MAJOR TYPES OF INTER OFFICE DEBIT OR CREDIT TRANSACTIONS. Why others wrong: (A) Intra-branch is GL ↔ subsidiary at the same branch; (C) CRR is a regulatory cash reserve, not Nostro; (D) Clearing is separate from inter-office settlement.

Correct answer: A. Br A: Dr Customer / Cr Inter-Office ; Br B: Dr Inter-Office / Cr Payee

Correct: (A) Why correct: At Branch A the customer pays for the DD (debit customer) and a liability arises towards Branch B (credit Inter-Office). At Branch B the liability is settled (debit IO) and the payee is paid (credit payee). This is the textbook DD double-leg cited in the chapter. Why others wrong: (B) reverses the direction — IO is never debited at the originating branch when collecting funds from the customer; (C) Branch A cannot directly credit a payee at Branch B — the IO bridge is mandatory; (D) mixes the legs across branches incorrectly.

Correct answer: B. VOSTRO account — because Wells Fargo is holding a deposit ON BEHALF of SBI

Correct: (B) Why correct: From Wells Fargo's perspective the account is a deposit held BY them ON BEHALF OF SBI — by definition a VOSTRO account ('your account with us'). The same account is NOSTRO ('our account with you') to SBI. Why others wrong: (A) NOSTRO is SBI's view, not Wells Fargo's; (C) LORO is used by a third party (e.g., HDFC referring to SBI's account at Citi) — not by the holding bank itself; (D) ESCROW is a fiduciary arrangement, not the description of a forex correspondent balance.

Correct answer: A. Both A and R are true, and R correctly explains A

Correct: (A). The Governing Council comprises Chief Ministers of all states and Lt. Governors of UTs, and a stated function is 'to promote cooperative federalism... understanding that strong states make a strong nation.' R is the direct rationale for involving states (A). Why others wrong: (B) R does explain A; (C) and (D) are ruled out because both statements are factually true.

Correct answer: A. 1, 2 and 4 only

Correct: (A). Statement 3 is false — the chapter states deficit financing is the 'second most important source of plan financing,' while domestic budgetary resources contribute the most. Statements 1, 2 and 4 match the chapter's description of deficit financing. Why others wrong: (B) and (D) include false statement 3; (C) omits true statements 1 and 4 and also includes false statement 3.

Correct answer: A. 1, 2 and 4 only

Correct: (A). Statement 3 is false — NITI Aayog is an advisory think tank and does NOT formulate or approve Five-Year Plans; that role belonged to the erstwhile Planning Commission (plans were approved by the NDC). Statements 1, 2 and 4 are correct per the chapter. Why others wrong: (B) and (C) wrongly include statement 3; (D) omits the true statements 2 and 4.

Correct answer: B. Domestic budgetary resources contribute the most, and deficit financing is the second most important source

Correct: (B). The chapter states 'domestic budgetary resources contributed the most to plan financing among the three primary sources' and 'deficit financing is the second most important source of plan financing.' Why others wrong: (A) foreign assistance is supplementary, not the largest; (C) deficit financing is second, not first; (D) public borrowing IS listed as a domestic fiscal resource.

Correct answer: B. A Plan Holiday with successive Annual Plans

Correct: (B). The chapter explains that wars caused the Third Plan to fail and the government declared a 'Plan Holiday,' running three successive Annual Plans. Why others wrong: (A) a Rolling Plan is a different mechanism (used during 1978–80); (C) the Gadgil Formula relates to allocation of plan resources among states; (D) decentralised planning is unrelated to the suspension of national plans.