JAIIB PPB cheat sheet

RBI monetary policy tools: repo rate (lending to banks against securities), reverse repo (absorbing liquidity), CRR (cash reserve ratio, no interest paid), SLR (statutory liquidity ratio in approved securities), OMO, MSF.

Money supply measures: M1 = currency with public + demand deposits + other deposits with RBI; M2 = M1 + post office savings deposits; M3 = M1 + time deposits with banks (broad money); M4 = M3 + total post office deposits.

Inflation targeting: CPI (Combined) is the nominal anchor; flexible inflation target of 4% with ±2% band, set by the Monetary Policy Committee (6 members, RBI Governor casting vote).

Priority sector lending (PSL) target: 40% of Adjusted Net Bank Credit (ANBC) or Credit Equivalent of Off-Balance Sheet Exposure, whichever is higher; sub-targets for agriculture (18%), micro enterprises (7.5%), and weaker sections (12%).

Foreign exchange: FEMA 1999 governs; current account transactions freely permitted except negative list; capital account partially convertible. RBI's reference rate based on market; FEDAI rules for interbank.

Negotiable Instruments Act 1881: cheque = bill of exchange drawn on a specified banker payable on demand; holder in due course gets better title; Section 138 dishonour for insufficient funds, 30 days notice, 15 days to pay.

Banking Regulation Act 1949: Section 5(b) defines banking (accepting deposits repayable on demand, for lending/investment); Section 6 permitted businesses; Section 22 licensing; Section 42 CRR; Section 24 SLR.

SEBI regulates securities market; IRDAI insurance; PFRDA pensions; RBI regulates banks, NBFCs, payment systems, and co-operative banks. Financial Stability and Development Council (FSDC) chaired by Finance Minister.

GDP at market prices = GDP at factor cost + indirect taxes − subsidies. Real vs nominal GDP; deflator = nominal/real × 100. Fiscal deficit = total expenditure − total receipts excluding borrowings.

KYC: Customer Due Diligence mandatory; PAN required for deposits/transactions above specified limits; beneficial ownership identification for legal entities; periodic KYC updation based on risk category (low 10 years, medium 8 years, high 2 years).

Banker-customer relationship: debtor-creditor (deposits), creditor-debtor (loans), trustee, agent, bailee (safe custody), lessor-lessee (locker). Obligation to honour cheques subject to sufficient funds and proper presentation.

Garnishee order: attaches bank deposits of a judgment debtor; stops payment up to the amount specified; does not apply to joint accounts where the debtor is not the sole holder, nor to trust accounts.

Limitation Act 1963: time-barred debt cannot be enforced; acknowledgement of debt in writing before expiry restarts limitation (3 years for money claims). Bank cannot appropriate time-barred deposits without consent.

NPA classification: sub-standard (NPA up to 12 months), doubtful (NPA beyond 12 months, with sub-categories), loss assets. Income recognition and asset classification norms mandate 90-day overdue norm for term loans.

Lender's liability: bank must exercise care in opening accounts, honour cheques, maintain secrecy (except under law, customer consent, or public duty). Banker's lien on goods/securities in possession, not on deposits.

Modes of creating charge: pledge (possession), hypothecation (no possession), mortgage (immovable property), assignment (receivables). Registration of mortgage under Transfer of Property Act where applicable.

Payment systems: RTGS (minimum ₹2 lakh, real-time), NEFT (batch, no minimum), IMPS (24x7, up to ₹5 lakh), UPI (per transaction limits set by NPCI). Positive Pay System for cheques above threshold.

Deposit insurance: DICGC covers deposits up to ₹5 lakh per depositor per bank, including principal and interest. Co-operative banks covered subject to conditions.

Accounting equation: Assets = Liabilities + Capital. Double-entry: every transaction affects at least two accounts; debit and credit must balance.

Golden rules: debit the receiver, credit the giver (personal); debit what comes in, credit what goes out (real); debit expenses/losses, credit incomes/gains (nominal).

Trial balance: list of debit and credit balances; total debits must equal total credits. Errors of principle, omission, and compensating errors may not be detected by trial balance.

Bank final accounts: Profit & Loss account and Balance Sheet prepared as per Banking Regulation Act, Third Schedule (Form A for P&L, Form B for Balance Sheet). Capital and reserves shown separately.

Capital adequacy: CRAR = (Tier 1 + Tier 2 capital) / Risk-Weighted Assets × 100. Basel III minimum 8% plus capital conservation buffer; RBI prescribes 9% plus 2.5% CCB for domestic banks.

Provisioning norms: standard assets 0.25%–1% (agriculture, MSME, CRE), sub-standard 15% (secured) or 25% (unsecured), doubtful 25%–100% depending on security, loss assets 100%.

Ratio analysis: current ratio = current assets / current liabilities; debt-equity ratio; return on assets = net profit / total assets; net interest margin = (interest income − interest expense) / earning assets.

Depreciation methods: straight-line (equal charge) and written-down value (fixed % on book value). Provision for depreciation is a charge to P&L; accumulated depreciation is a contra asset.

Bank reconciliation statement: reconciles cash book balance with passbook balance; causes include cheques issued but not presented, cheques deposited but not cleared, bank charges, interest, standing instructions, errors.

Simple interest: SI = P × R × T / 100. Compound interest: A = P(1 + R/100)^T; CI = A − P. For half-yearly compounding, use R/2 and 2T periods.

Present value (PV) = FV / (1 + r)^n; NPV = PV of inflows − initial investment; accept if NPV > 0. IRR is the discount rate making NPV zero.

Annuity: PV of ordinary annuity = PMT × [1 − (1 + r)^−n] / r; future value = PMT × [(1 + r)^n − 1] / r. Annuity due multiplies by (1 + r).

EMI = P × r × (1 + r)^n / [(1 + r)^n − 1], where r is monthly rate (annual/12/100) and n is number of months. Higher tenure lowers EMI but raises total interest.

Ratio and proportion: if a:b = c:d then ad = bc. Percentage change = (new − old)/old × 100. Successive discounts: net price = MP × (1 − d1)(1 − d2).

Time value of money: money today is worth more than the same amount later due to opportunity cost, inflation, and risk. Discounting converts future cash flows to present value.

Average due date: base date + sum of products / sum of amounts. Used for settling multiple debts on a single date; equated due date method for bills.

Bond valuation: price = Σ coupon/(1 + y)^t + face value/(1 + y)^n. Yield to maturity equates price to PV of cash flows; price and yield move inversely.

Break-even point (units) = fixed cost / (selling price − variable cost per unit); margin of safety = actual sales − break-even sales. Contribution = sales − variable cost.