JAIIB Paper 2 – Principles & Practices of Banking: Key Topics & Study Guide

Principles & Practices of Banking (PPB) is the second paper in the JAIIB exam, designed to test candidates’ knowledge of banking operations, regulations, risk management, digital banking, and customer service. A strong understanding of these concepts is crucial for banking professionals to excel in their careers.

To help you prepare effectively, here’s a list of the most important and frequently asked topics in JAIIB Paper 2, along with expert preparation tips.

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1. Banking Regulations & Compliance

A strong grasp of banking laws and regulatory frameworks is essential for every banker. Key topics include:

Reserve Bank of India (RBI) – Functions & Role – Monetary policy, credit control, financial supervision

Banking Regulation Act, 1949 – Licensing, branch regulations, capital adequacy, NPA classification

Negotiable Instruments Act, 1881 – Types of negotiable instruments (cheques, promissory notes, bills of exchange)

SARFAESI Act, 2002 – Asset recovery and NPA resolution

Foreign Exchange Management Act (FEMA), 1999 – Rules for forex transactions and international trade

Prevention of Money Laundering Act (PMLA), 2002 – KYC norms, AML guidelines, financial crime prevention

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2. Banking Products & Services

Bankers must understand the various financial products offered to customers. Frequently tested areas include:

Types of Bank Accounts – Savings, current, fixed deposits, recurring deposits

Loans & Advances – Secured vs. unsecured loans, term loans, working capital loans, personal loans, priority sector lending

Retail Banking Products – Home loans, car loans, education loans, credit cards

Trade Finance Services – Letters of credit, bank guarantees, remittances, forex transactions

Insurance & Mutual Fund Products – Bancassurance, ULIPs, debt vs. equity mutual funds

Payment Systems in Banking – UPI, NEFT, RTGS, IMPS, mobile banking, fintech innovations

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3. Risk Management in Banks

Risk management plays a critical role in banking operations and financial stability. Key concepts include:

Types of Risks in Banking – Credit risk, market risk, operational risk, liquidity risk

Basel Norms & Capital Adequacy – Basel I, Basel II, Basel III, importance of CAR (Capital Adequacy Ratio)

Asset-Liability Management (ALM) – Interest rate risk, liquidity risk, gap analysis

Non-Performing Assets (NPAs) & Recovery Mechanisms – NPA classification, write-offs, provisioning norms

Operational Risk & Fraud Prevention – Cybersecurity threats, phishing, digital frauds, risk mitigation strategies

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4. Digital Banking & Financial Technology (FinTech)

With the rapid growth of digital banking, candidates must be familiar with banking technology trends. Important topics include:

Core Banking Systems (CBS) – Features, benefits, integration with digital platforms

Electronic Payment Systems – UPI, AEPS, e-wallets, digital lending platforms

Cybersecurity in Banking – Data privacy laws, fraud detection, multi-factor authentication

Blockchain & Cryptocurrencies in Banking – Applications, risks, RBI’s stance on digital currencies

Regulatory Guidelines for Digital Banking – RBI’s digital banking framework, fintech regulations

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5. KYC, AML & Customer Due Diligence

Banks must comply with strict KYC and AML guidelines to prevent financial crimes. Key topics include:

Know Your Customer (KYC) Guidelines – KYC documentation, customer identification process

Anti-Money Laundering (AML) Compliance – Reporting suspicious transactions, FATF recommendations

Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD) – Risk-based approach to customer verification

Financial Intelligence Unit – India (FIU-IND) – Role in monitoring suspicious transactions

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6. Ethics in Banking & Customer Service

Banking professionals must adhere to ethical principles and provide superior customer service. Important topics include:

Code of Banking Ethics – Transparency, fair practices, grievance redressal mechanisms

Customer Rights & Banking Ombudsman Scheme – Consumer protection laws, handling complaints

Service Quality in Banking – Relationship management, CRM tools, customer retention strategies

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Expert Tips to Crack JAIIB Paper 2

Prioritize High-Scoring Topics – Focus on risk management, banking laws, digital banking, and customer service.

Study from IIBF Study Material – The official IIBF books cover all topics in depth.

Practice Case Studies & MCQs – Solve case-based questions to understand practical applications.

Stay Updated on RBI Regulations – Follow RBI circulars, monetary policy updates, and banking news.

Revise Regularly – Make short notes, mind maps, and quick revision cards for important concepts.

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Conclusion

JAIIB Paper 2 – Principles & Practices of Banking is a crucial paper that covers banking operations, regulations, digital banking, and risk management. Focusing on frequently asked topics will help streamline your preparation and improve your chances of clearing the exam on your first attempt.

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