Android App
cover image

100 Basics of Legal and Regulatory Aspects of Banking - JAIIB

Legal & Regulatory aspects of Banking

JAIIB Exam Study Material: 100 Basics of Legal and Regulatory Aspects of Banking - JAIIB

JAIIB Exam Study Material: 100 Basics of Legal and Regulatory Aspects of Banking - JAIIB


In this article, we provide you some of the Important Notes of JAIIB LRAB which have been taken from the LRAB Syllabus 2022 to make the concepts clear and understandable. 2022 LRAB Short Notes will help you revise the JAIIB Material that is prescribed by IIBF.


The below written pointers are from JAIIB Exam Study Material 2022, to help you understand the JAIIB Concepts better. One has to go through the basics of JAIIB to clear the concepts.



PPB Syllabus Priority 2022

LRAB Syllabus Priority 2022

AFB Syllabus Priority 2022


01. In the case of a bearer cheque, the identity is not necessary.

02. When an order cheque is endorsed in blank, it becomes payable to bearer and transferable by mere delivery

03. A cheque crossed “Not Negotiable”, is still transferable

04. As per section 138 of Negotiable Instruments Act, there is a provision of penalty when the cheque issued in discharge of a liability is dishonoured due to insufficient funds in the account, subject to the condition that the cheque has been presented to the bank within a period of three months and is not honoured due to insufficient funds

05. A fixed deposit receipt cannot be endorsed

06. A cheque is presented in an account but there is no sufficient balance to meet the same. The cheque will be returned with the remarks – insufficient funds

07. The cheque on behalf of a partnership firm can be stopped for payment by any partner whether authorized to operate the account or not

08. The marginal farmer is one who possesses agriculture land upto 1.25 acres of irrigated land or 2.5 acres of non-irrigated land

09. Registration of charge is not required in the case of pledge, lien, set-off and appropriation

10. Loans for construction of godown for own use of farmers is not part of indirect finance to agriculture

11. Olericulture is cultivation of vegetables

12. Agriculture labourer is a labourer whose income from agriculture is more than 50%

13. Nostro account is an account of a bank established in India with a Foreign Bank in another country and the account is maintained in foreign currency

14. Resident Foreign Currency (RFC) account scheme is available for home returned Non resident Indians

15. Under packing credit limit, the extent of finance is computed on the basis of Freight on Board basis

16. Forfeiting refers to discounting of export bill without recourse to the seller

17. In an overdraft account, when the death notice of partner is received the bank should stop the operations to avoid application of Clayton’s case

18. A company is not dissolved by lunacy of a director or bankruptcy of a director or death of a director

19. In the case of insolvency, the banker’s obligation to honour customer cheques comes to an end when the customer is adjudged insolvent

20. A lien is the right to retain goods or securities belonging to a debtor until he has discharged a debt due to the retainer thereof

21. The shareholders of a Private Limited Company cannot transfer the shares to any other individual other than the shareholders of the company

22. The rule in Clayton’s case applies in the case of running accounts having debit balances in respect of partnership accounts

23. The term banking has been defined in Banking Regulation act – 1949



Jaiib Recollected Questions 2021

Jaiib Free Mock Test 2022

JAIIB AND DB&F Paper 1 Syllabus: Principles & Practices of Banking

24. Bills drawn in respect of goods delivered by parties to various Government/Semi Government departments are known as supply bills

25. Goiporia committee has made the recommendations – Commencement of employee working hours should be 15 minutes before commencement of business hours

26. Banking companies are registered under – Banking Regulation act - 1949

27. Bipartite settlements are registered under Industrial Disputes Act

28. Financial products, whose prices are derived from the price of the underlying currency, interest rate, stocks etc. are called as– securitization

29. Revaluation reserves is a part of subsidiary capital/tier II capital

30. The committee headed by Y V Reddy –revised the concept of liquidity and monetary aggregates

31. Verma Committee was appointed to examine the restructuring of weak banks

32. The process through which any member-owned organization becomes a shareholder-owned company is called demutualization

33. Official Language deals with the following articles of constitution – 343 to 351

34. Hindi was declared as the official language of the union on 14-09-1949

35. The system of electronic funds transfer was suggested by the committee headed by – B D Shah

36. INFINET is – RBI’s VSAT based communication system

37. The negotiable instruments act is applicable for the entire part of the country

38. If the cheque is drawn in favour of “Mother God” or order, the cheque is to be returned with the reasons – “since drawn on fictitious name”

39. A cheque payable to Rohit is endorsed as follows – Pay to “Kabil on his marriage”. This endorsement is conditional endorsement

40. The cheque crossed – “account payee” drawn in favour of Mr Brij Nand is presented by Raman in his account and in this case the bank should not make the payment

41. The following are not negotiable instruments – airway bill, a currency note, a letter of credit and lorry receipt

42. Under section 25 of Negotiable Instruments Act, public holidays are declared by – the respective state governments by notifications in the official gazettes

43. Conversion means – not crediting the amount in the account of true owner

44. By “General Crossing”, we mean two transverse parallel lines on top left hand corner of a cheque

45. Forward exchange contract is an agreement where the foreign exchange is delivered at predetermined future date at a contracted date

46. Unless otherwise specified in the letter of credit, the insurance amount should be expressed in the currency of the letter of credit

47. On the death of the partner, bank opens a new account to rule-of the existing account to avoid application of Clayton’s case

48. Executor in banking means a person named by the deceased in his will for which probate is obtained

49. The partnership firm doing the banking business cannot have more than 10 partners and for other business not more than 20 partners; otherwise it will become illegal association. This is the condition as per Indian Companies act 1956.

50. Prospectus is an invitation to the public to subscribe shares or debentures or deposits

Related Links:




Principles & Practices of Banking Syllabus 2022

JAIIB PPB Study Material PDF 2022

JAIIB PPB Notes PDF 2022

Accounting & Finance for Bankers Syllabus 2022

JAIIB AFB Study Material PDF 2022

JAIIB AFB Notes PDF 2022

Legal & Regulatory aspects of Banking Syllabus 2022

JAIIB LRAB Study Material PDF 2022


JAIIB/CAIIB Full Video Course


51. According to the rule in Clayton’s case, the money paid in by a customer has to be applied towards adjustment in overdraft account in order of time in which the debits were incurred

52. Banking company is prohibited from undertaking business like trading of goods etc under – Banking Regulation act 1949

53. For availing remedy under section 138 of Negotiable Instruments act, the holder will have to give notice to the drawer within 30 days of return of the cheque

54. When a firm has branches at different places and wishes to avail the loan at all stations, the documents will be executed at its Head Office and sub limits will be allocated to branches at different places

55. In the case of any doubt about stamp duty, clarification can be sought from State Stamp Authority and Controller of stamp duty

56. Banks were nationalized under – Banking Companies (Acquisition and transfer of undertaking) act-1970

57. When an account shows debit balance, the banker is a creditor and when the account shows credit balance, the banker is the debtor

58. Partnership firms cannot do the business of banking and it is provided under the banking regulation act 1949

59. The concept of authorized deduction and illegal deduction is mentioned in the act – Payment of wages act

60. The process of replacing paper securities into electronic holding of shares is known as – dematerialization

61. Official Language policy came into force from 16.01.1950

62. The Central Processing Unit – CPU- consists of control unit and arithmetic logic unit

63. When the price of dollar is raised from Rs. 48 to Rs. 55 the exporter will be benefited in terms of rupee

64. A cheque is the mandate of the accountholder

65. When a cheque without a date is presented for payment, the banker should return the cheque

66. In a cheque the name of the banker had been written with or without the words – “Not negotiable” – In this case, it is called as a special crossing

67. For negotiating a negotiable instrument there are no limits

68. A bearer cheque is transferable only by delivery

69. A bill drawn in Paris and drawn in favour of a trader in Mumbai and payable in Chennai is called a foreign bill

70. The Negotiable Instruments Act provides protection to the collecting banker in respect of Conversion

71. Crossing of a cheque denotes that it should be paid to a banker only

72. By noting, it is meant that the fact of dishonour has been recorded by the notary public on a dishonoured bill or/and on a plain paper attached to the bill

73. Sericulture is classified under – direct agriculture advance

74. Mahima relates to refinance by NABARD to banks for onlending to agencies for marketing of non farm products of rural women

75. Foreign exchange transactions are viewed always from the angle of the bank

76. The responsibility of managing the foreign exchange resources lies with – Reserve Bank of India

77. Exim policy is announced by the Ministry of Commerce

78. In a Free on Board contract, freight and insurance will be borne by the importer

79. If a letter of credit is slient about the revocability, then the letter of credit is irrevocable

80. Crystalisation of sight export bills purchased/negotiated will be done on the expiry of transit period plus 30 days 81. A transferable letter of credit can be transferred only once

82. Natural guardian under Hindu Minority and guardianship act, 1956 will be – his father and after him the mother

83. For banking transactions, an administrator is one who is appointed by the court if the deceased has died intestate

84. Banker’s lien is an implied pledge

85. A contract of insurance is a contract of indemnity

86. Acceptance of a usance bill will be made on the face of the bill

87. The right of set-off can be exercised by the banker only when the relationship between the customer and the banker is that of debtor and creditor

88. Bank must create reserve fund and 25% of the profits should be transferred to this fund before any dividend is declared and this is as per Banking Regulation act 1949

89. Limitation period for availing the remedy under Section 138 of Negotiable Instruments Act is one month from the date of cause of action

90. In case the amount of loan to a company is decreased or increased, the memorandum of modification or charge should be submitted to the Registrar of companies

91. The rate of revenue stamp is the same throughout India except in Jammu and Kashmir

92. When articles are kept in safe custody, the relationship between banker and customer is that of bailee and bailor

93. In the case of minor’s joint account with the guardian and when the minor attains majority, the guardian should not be allowed to operate the account

94. Wages of employees are settled under Minimum wages act

95. CB Bhave committee has looked into ways to reduce cost of demat operations and the said companies should bear a substantial part of dematerialization costs

96. Basle committee relates to Capital Adequacy

97. In Camel’s rating – E stands for earnings

98. The revised definition of a sick SSI unit has been given by Kohli committee

99. Greenshoe option is retaining the full/part of equity subscribed by investing public over and above that issued

100.Hindi is accepted as an official language of the union under Devanagiri script


Related Articles of Legal & Regulatory aspects of Banking

Related Articles of Legal & Regulatory aspects of Banking

youtube facebook facebook instagram
Video Name Here Ok
Video description goes here