Do you ever feel overwhelmed staring at the vast JAIIB syllabus, wondering where to even begin? You’re not alone! Most aspirants struggle with identifying which modules matter most and which questions are exam favorites.
In today’s Day 0 of our JAIIB Crash Course for Principles and Practices of Banking (PPB), we kick off with Syllabus Priority Strategy and dive deep into the top-scoring questions from Module B. Whether you’re a first-time candidate or re-attempting the exam, this session lays the perfect foundation to plan your study schedule and maximize your score in minimal time.
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We break down:
- Contract of Guarantee (Section 126)
- Term Loan & Working Capital Assessment
- Letter of Credit Parties & Undertakings
- Nayak & Tandon Committee Methods
- NPA Provisioning & Cash Credit Logic
Who’s this for?
Bankers preparing for JAIIB PPB, anyone seeking clarity in Module B, and those short on time but high on ambition!
👇 Watch the video, engage in the comments, and let’s master PPB together.
🎥 Embed YouTube Video
👉 Before we dive in, watch this video for a complete breakdown:
Module B Kickoff – Contract of Guarantee (00:01:25)
3 parties involved:
- Creditor – the one giving money
- Principal Debtor – the one borrowing
- Surety – the one guaranteeing repayment
When the debtor defaults, the surety pays, and then exercises the Right of Subrogation, gaining creditor-like rights.
Understanding Letter of Credit – Role of Issuing Bank (00:05:06)
Once documents are presented correctly within 21 days of shipment, the issuing bank gives an unconditional undertaking to honor the payment.
Term Loan Basics & DSCR Logic (00:07:47)
- Disbursed in one lump sum
- Repayable in 3–10 years
- Used for fixed assets like plant & machinery
Banks assess repayment using DSCR (Debt Service Coverage Ratio).
Working Capital Explained – Gross vs Net (00:09:29)
- Gross Working Capital = Total Current Assets
- Net Working Capital = Current Assets – Current Liabilities
Tandon & Nayak Committee Methods (00:11:33 – 00:13:30)
Tandon Method I:
- Bank Finance = WCG – 25% Margin
- Min Current Ratio = 1.17:1
Tandon Method II:
- Bank Finance = 75% of Total Current Assets
- Min Current Ratio = 1.33:1
Nayak Committee:
- 25% of turnover = Gross WC
- 5% Margin → 20% Limit sanctioned
NPA Provisioning Calculation (00:44:15)
Scenario: ₹40 lakh loan, ₹20 lakh secured, ₹20 lakh unsecured
ECGC cover: 60% of ₹20 lakh → ₹12 lakh (excluded from provision)
Provision: ₹8 lakh on secured @40% (DF2) + ₹8 lakh on unsecured @100% = ₹16 lakh
Fund vs Non-Fund Based Facilities (00:28:59 & 00:50:24)
Fund-Based:
- Cash Credit, Term Loans
- Involves actual disbursement
Non-Fund-Based:
- LCs, Bank Guarantees
- Contingent liabilities only
MCLR, External Benchmark, Base Rate Review (00:34:30 – 00:53:58)
MCLR: Started 1 April 2016
- Includes: Marginal cost of funds, CRR carry, Operating costs
- Excludes: Profit margin
External Benchmarks: Repo, 3M/6M T-Bills
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Letter of Credit Types Explained (00:40:57)
- Irrevocable LC: Can’t be changed without beneficiary’s consent
- Transferable LC: Transferable only once
- Confirmed LC: Confirming bank adds its guarantee
- Revolving LC: Only used portion restored, not full limit
Conclusion
Key takeaways:
- Focus on Module B, then A, then C
- Master concepts: Guarantee, LC, WC Assessment
- Practice calculation questions: Provisioning, Nayak Method
🎯 Now it’s your turn! Watch the video, post your answers in the comments, and share this with your JAIIB study group!
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