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JAIIB AFB Notes – Accounting & Finance for Banking Short Notes Part 1

JAIIB AFB Notes – Accounting & Finance for Banking Short Notes Part 1

IIBF conducts JAIIB Exams, one of the flagship courses offered by it, twice a year. It is conducted in May & November every year. This course has 3 subjects and PPB or Principles & Practices of Banking is one.

Accounting & Finance for Banking has 4 modules which are further divided into units.

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PAPER MODULE
Accounting & Finance for Banking
  1. Business Mathematics and Finance
  1. Principles of Bookkeeping and Accountancy
  1. Final Accounts
  1. Banking Operations

 

To check out the detailed syllabus of JAIIB– PPB, AFB & LRAB click here.

Read Also:- JAIIB PPB Principles and Practices of Banking Short Notes Part 2

PPB SHORT NOTES:-

I – MODULE: BUSINESS MATHEMATICS AND FINANCE: 

  1. CALCULATION OF INTEREST

Simple Interest: Simple interest or flat rate interest is the amount of interest paid each year in a fixed %age of the borrowed or lent amount at the start.

The formula for calculating simple interest:-

Interest = Principal x Rate x Time = PRT

Where,

‘Interest’ = I = Total interest amount paid
‘Principal’ = P = Lent or borrowed amount
‘Rate’ = R = %age of the principal charged as interest (p.a).
‘Time’ = T = Time of the loan (in years).

 

Important Topic:- JAIIB AFB Mock Tests | accounting and finance for bankers

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Read Also:- JAIIB Previous Year Question Paper Principles & Practices of Banking PDF

Example:

P = Rs. 60,000.00, R = 10% i.e 0.10, T = 3 yrs. Find the interest amount paid.

Solution:

Interest = PRT

= 60,000 x 0.10 x 3 = Rs. 18,000.00

 

Compound Interest: It is paid on the original principal amount & accumulated part of interest.

The formula for calculating compound interest:

Principal = A (1 +r/n) n t

Where,

P = Principal Amount
A = Deposited Amount
r = the rate (expressed as a fraction)
n = no. of times per year that interest is compounded
t = no. of years invested

 

Read Also:- JAIIB 2022 EXAM STUDY MATERIAL

Frequently compounding of Interest. If the interest is compounded:

Annually = P (1 + r)
Quarterly = P (1 + r/4) 4
Monthly = P (1 + r/12) 12

 

Important Topic:- JAIIB EXAM 2022

Example:

The compound interest on Rs. 60,000 at 7% per annum is Rs. 8694. The period (in years) will be?

Solution:

A = Rs. (60000 + 8694) = Rs. 68,694.00

Let the time be n years.

Then, 60000 (1+7/100) n = 68694

(107/100) n = 68694/60000

(107/100) n = 11449/10000

(107/100) n = (107/100) 2

So, n = 2 years.

 

The Rule of 72: This allows you to determine the no. of years before your money doubles whether in investment or debt. Divide the number 72 by the rate (%)

Formula

The time period for Money to double = 72/r

 

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Example:

If the FD interest rate is 6% & compounded yearly, how much time is required for it to double?

Solution:

Time period for Money to double = 72/6 = 12 years

 

Equated monthly installment (EMIs): The monthly payment a borrower makes on his loan. It’s a combination of interest & principal repayment. The total monthly amount is calculated in such a way that it remains constant all through the repayment tenure. In EMIs, the principal & the interest thereon is repaid through the equal monthly installment over the fixed loan tenure. For borrowers the benefit of an EMI is that they know precisely the money they will need to pay toward their loan each month, making their budgeting process easier.

Formula

E = P × r × (1 + r) n / ((1 + r) n – 1)

Where,

E = EMI
P = Principle Amount of Loan
r = rate of interest calculated on monthly basis = Annual Interest Rate/12/100
(if its 10% annual, then its 10/12/100=0.00833)
n = Tenure in no. of months

 

Example:

For 100000 at 10% annual interest for a period of 12 months, it comes to:

= 100000*0.00833*(1 + 0.00833)12/((1 + 0.00833)12 – 1) = 8792

 

Read Also:- JAIIB Mock Tests/Exams, Study Notes, and PDF Material

You may also be interested in:
Difference between provisions and reserves Click here
Types of Accounts A/C types
AFB syllabus priority Priority
AFB Previous Year Question Papers PY Paper
JAIIB PPB Principles & Practices of Banking Short Notes Part 1 Notes-1
JAIIB PPB Principles & Practices of Banking Short Notes Part 2 Notes-2
Clear JAIIB Exam in Single Attempt in 15 Days JAIIB in 1 Attempt
JAIIB AFB NOTES PART 2 JAIIB AFB NOTES

 

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