Break-even Analysis useful for Certified credit professionals

Break-even Analysis : Break even point can be defined as the business volume that balances total costs with total gains. At break even volume, in other words, cash inflows equal cash outflows, exactly, and net cash flow equals zero. Break even analysis In the simple analysis, break even is the quantity (unit volume) that balances total costs with total gains for a net cash flow of 0. The break even quantity depends on at least three variables: Fixed cost, variable cost per unit, and revenues per unit. Break even analysis attempts to find break even volume by analyzing relationships between fixed and variable costs on the one hand, and business volume, pricing, and net cash flow on the other. Understanding how these factors impact each other is crucial in budgeting, production planning, and profit forecasting, And, break even analysis, is central to this understanding. The basic components of simple break even analysis include:  Cash inflows (or revenues).  Fixed costs.  Variable costs.

Cash inflows The simple analysis assumes that each unit brings the same cash inflow. This usually means the unit selling price. Fixed costs Fixed costs remain fixed, or constant, regardless of unit volume. For example, if the costs of floor space, manager's salaries, and janitorial services, do not change with volume, they are fixed costs.

Variable costs

These costs vary in direct proportion to quantity sold or unit volume. Variable costs for

selling goods, for instance, might include the direct cost the seller pays to acquire each

unit. As a result, the total variable cost can be simply cost per unit multiplied by

the unit volume.

Types of Break even

Break even point as unit volume

In business, break even point usually means the unit volume that balances total costs

with total gains. For the analyst, break even is the quantity Q for which cash outflows

equal cash inflows, exactly. At the break even quantity, therefore, net cash flow equals

zero.

Simple break even analysis finds Q by analyzing relationships between just three

variables: fixed costs, variable costs, and cash inflows. The analysis must consider

additional factors, however, when semi-variable costs or variable pricing are present.

Break even point as a time period

Note that business people also refer to a similar but different concept, the break even

point in time, or payback period. Payback period is the time necessary for investment

returns to cover investment costs. Payback analysis does not consider units, but instead

the timing of cash inflows and outflows. For more on the break even point in time,

see Payback period.

Break even points for business start up

Business people starting a new business need especially to understand both kinds of

break even points (break even time and break even unit volume). This is because start

ups typically lose money for a while before becoming profitable. There is a limit,

however, to the time owners can tolerate losses.

Break-EvenAnalysis: Problem with Solution # 1. 

Fromthe following particulars, calculate:

(i) Break-even point in terms of sales value and in units.
(ii) Number of units that must be sold to earn a profit of Rs.90,000.

Break-EvenAnalysis: Problem with Solution # 2 

Fromthe following data, you are required to calculate break-even point and net sales value at this point:

If sales are 10% and 25% above the break even volume, determine the net profits.

Break-Even Analysis: Problem with Solution # 3

From the following particulars, find out the break-even-point:

What should be the selling price per unit, if the break-even

point should be brought down to 6,000 units?

Break-Even Analysis: Problem with Solution # 4. 

The fixed costs amount to Rs. 50,000 and the percentage of variable costs to sales is given to be 66 ⅔%.If 100%capacity sales are Rs. 3,00,000, find out the break-even point and thepercentage sales when it occurred. Determine profit at 80% capacity:

Break-EvenAnalysis: Problem with Solution # 5. 

Fromthe following information, ascertain by how much the value of sales must be increased by the company to break-even:

Break-Even Analysis: Problem with Solution # 6 

Calculate:

(i) The amount of fixed expenses.

(ii) The number of units to break-even.

(iii) The number of units to earn a profit of Rs. 40,000.

The selling price per unit can be assumed at Rs. 100.

The company sold in two successive periods 7,000 units and 9,000 units and has incurred a loss of Rs. 10,000 and earned Rs. 10,000 as profit respectively.Solution:

Break-EvenAnalysis: Problem with Solution # 7

Acompany is making a loss of Rs. 40,000 and relevant information is as follows:

Sales Rs. 1,20,000; Variable Costs Rs. 60,000; Fixed costs Rs. 1,00,000.

Loss can be made good either by increasing the sales price or by increasing sales volume. What are Break even sales if

(a) Present sales level is maintained and the selling price is increased.

(b) If present selling price is maintained and the sales volume is increased. What would be sales if a profit of Rs. 1,00,000 is required ?

Solution:

Very Important ABBREVIATIONS for MSME

Very Important ABBREVIATIONS for MSME ::
ACWW: Associated Country Women of the World
AIC: Agro Industries Corporation
ANC: Ancillary Undertakings
APTDC: A. P. Technology Development Centre (CII)
ASBA :Alliance of Small Business Associations in the USA
ASI: Annual Survey of Industries
ASSOCHAM Association of Chambers of Commerce and Industry
AWEK Association of Women Entrepreneurs of Karnataka
BDS Business Development Services
CAR Common Annual Return
CDCC Central Documentation and Clearance Centre
CDR Corporate Debt Restructuring
CGTMSE: Credit Guarantee Fund Trust for Micro and Small Enterprises
CGTSI Credit Guarantee Trust for Small Industries
CII Confederation of Indian Industry
CITD Centre for International Trade in Agriculture and Agro-based Industries,
New
Delhi
COSIA Chamber of Small Industry Associations
CRM Customer Relationship Management
CWEI Consortium of Women Entrepreneurs in India
CWEI Consortium of Women Entrepreneurs of India
DIC District Industries Centre
DICGC Deposit Insurance & Credit Guarantee Corporation
DRT Debt Recovery Tribunal
DWCRA Development of Women and Children in Rural Areas
EDIT Entrepreneurship Development Institute of India
EOU Export Oriented Units
EU European Union
EXIM BankExport Import Bank of India
FAPCCI Federation of Andhra Pradesh Chambers of Commerce and
Industry
FAPSIA Federation of Andhra Pradesh Small Industries Association
FASII Federation of Associations of Small Industries of India
FDI Foreign Direct Investment
FICCI Federation of Indian Chambers of Commerce and Industry
FISME Federation of Indian Micro & Small and Medium Enterprises
FISME Federation of Indian Small & Medium Enterprises
FIWE Federation of Indian Women Entrepreneurs
FOSMI Federation of Small & Medium Industries
GATT General Agreement on Trade and Tariff
Gol Government of India
HUDCO Housing & Urban Development Corporation
HUF Hindu Undivided Family
ICSI Indian Council of Small Industry
ICWE India Council of Women Entrepreneurs, New Delhi
IDLSS Integrated Development of Leather Sector Scheme
IIA Indian Industries Association
IIC Industrial Infrastructure Corporation
IIE Indian Institute of Entrepreneurship, Guwahati

IRAC Income Recognition and Asset Classification
ISEC Interest Subsidy Eligibility Certification
JHF Joint Hindu Family
KVIC Khadi & Village Industries Commission
LLP Limited Liability Partnership
MFA Multi-Fibre Arrangement
MSE-CDP Micro & Small Enterprises Cluster Development Programme
MSMED Micro Small and Medium Enterprises Development
NABARD National Bank for Agriculture and Rural Development
NAYE National Alliance of Young Entrepreneurs
NGO Non-Governmental Organization
NIC National Industrial Classification
NIESBUD National Institute for Entrepreneurship and Small Business
Development,Noida
NIMSME National Institute for Micro, Small and Medium Enterprises
NISBET National Institute of Small Business Extension Training
NMCP National Manufacturing Competitiveness Programme
NPA Non-Performing Asset
NPV Net Present Value
NRY Nehru Rojgar Yojna
NSIC National Small Industries Corporation
OECD Organisation for Economic Co-operation and Development
OGL Open General License
OTS One Time Settlement
PACS Primary Agricultural Cooperative Credit Society
PCB Pollution Control Board
PMEGP Prime Minister's Employment Generation Programme
PPP Public Private Participation
PRF Portfolio Risk Fund
PRODIP Product Development, Design Intervention and Packaging
QRs Quantitative Restrictions
RBI Reserve Bank of India
RGUMY Rajiv Gandhi Udyami Mitra Yojana
SEZ Special Economic Zone
SFC State Financial Corporation
SFURTI Scheme of Fund for Regeneration of Traditional Industries
SHG Self Help Group
SIDBI Small Industries Development Bank of India
SIDC State Industrial Development Corporation
SIDO Small Industries Development Organisation
SIIC State Industries Investment Corporation
SMERA Small & Medium Enterprises Rating Agency of India Ltd.
SMEs Small and Medium Enterprises
SNDP State Net Domestic Product
SPV Special Purpose Vehicle
SSIDC State Small Industries Development Corporation
SSSBE Small Scale Service and Business (industry-related) Enterprises
TANSTIA Tamil Nadu Small and Tiny Industries Association
TCO Technical Consultancy Organisation
TREAD Trade Related Entrepreneurship Assistance and Development
TRIPs Trade-Related Intellectual Property Rights
TRYSEM Training for Rural Youth for Self Employment
TUFS Technical Upgradation Fund Scheme
WE Town and Village Enterprises
UNIDO United Nations Industrial Development Organization
VAT Value Added Tax
WASME World Association for Small and Medium Enterprises
WASME World Association of Small and Medium Enterprises
WAWE World Association of Women Entrepreneurs
WE Women Enterprises
WTO World Trade Organisation

Mahila Coir Yojana

Mahila Coir Yojana
Objectives
Mahila Coir Yojana is the first women-oriented self-employment programme in the
industry. The scheme envisages distribution of motorized and motorized
traditional coir yarn spinning ratts to the women coir workers who are trained to
operate the ratt and are able to raise the beneficiary contribution from their own
resources, sponsoring organization or take a loan.
Salient Features
(i) The Mahila Coir Yojana Scheme is being implemented by the Coir
Board all over the country.
(ii) Under this scheme, women coir workers are given subsidy to the
extent of 75% of the cost of the motorized ratt (upto a maximum of
Rs. 7,500/-) or a motorized traditional ratt (upto a maximum of Rs.
2,925).
(iii) As part of the implementation of the schemes, a two-month training
programme is organised at all training centres of the Coir Board.
Eligibility
Applicants in the 18-45 age group and who have successfully completed training
in motorized ratt/motorized traditional ratt are eligible to get motorized
ratts/motorized traditional ratts for spinning coir yarn under Mahila Coir Yojana.
The needs of balanced regional development are also kept in view in the
selection of beneficiaries.

Export Market Promotion Scheme— External Market Development Assistance

Export Market Promotion Scheme— External Market Development Assistance
Objectives
The scheme of External Market Development Assistance was introduced with
effect from 2000-01 for encouraging small exporters in the coir sector. The salient
features of the scheme are as follows.
Salient Features
(i) Activities covered:
(a) Individual sales-cum-study tour/trade delegation/buyer-seller meet
abroad; and
(b) Individual participation in trade fairs and exhibitions abroad.
(ii) Assistance is available for air travel and space rental.
Eligibility
l In a financial year assistance will be extended for a maximum three
programmes—two exhibitions and one sales tour or vice versa.
l For a particular event assistance will be extended to a maximum
three times including past cases.

Market Development Assistance (MDA) Scheme for Khadi and Polyvastra

Market Development Assistance (MDA) Scheme for Khadi and Polyvastra
Objectives
Based on the recommendations of the High Power Committee headed by the
then Prime Minister in 1994, Pant Committee Report of 2001, and the Expert
Committee Report of 2005 followed by pilot projects, and consultations with
stakeholders, the scheme of providing rebate on sales of khadi has been replaced
with effect from April 1, 2010 with the approval of the Cabinet Committee on
Economic Affairs with
a more flexible, growth stimulating and artisan-centric scheme of Market
Development Assistance (MDA) on production of khadi for implementation by the
Khadi and Village Industries Commission (KVIC) during 2010-11 and 2011-12.
The scheme provides for financial assistance to khadi institutions @ 20% of
production value on khadi and polyvastra to be shared among artisans, producing
institutions and selling institutions in the ratio 25:30:45. The guidelines of the
scheme are available on the KVIC’s website www.kvic.org.in. Under the new
system of MDA, sales are expected to be evenly spread throughout the year, and
the institutions will have the flexibility to use the assistance as per their actual
needs and priorities to improve production and marketing infrastructure such as
improving the outlets, designing products as per market demands or even giving
incentives to customers, etc.
Salient Features
The newly introduced MDA scheme makes it mandatory for the institutions to
pass on 25% of the total MDA to the spinners and weavers as incentive or bonus
in addition to their wages through their bank accounts or post office accounts
which facility did not exist under the rebate scheme. Sales are also expected to
be spread
across the year under MDA Scheme and would not get restricted to only 108 days
as used to happen under rebate scheme. The erstwhile scheme of rebate on
sales usually caused delay in release of rebate claimed by the institutions as they
had to wait firstly till completion of sale and then wait further till the ensuing year
to get the claims reimbursed after completion of audit, wherever required. Under
MDA, incentives would be provided the same year, after the end of the quarter of
production and this is expected to ease the working capital situation of the
institutions by ensuring immediate liquidity which would in turn ensure timely
payment to the artisans.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
Objectives
In pursuance of the announcement of the Finance Minister in his Budget Speech
of July 2004 for setting up of a Fund for Regeneration of Traditional Industries
with an initial allocation of Rs. 100 crore for development of traditional industries,
the Ministry of Micro, Small and Medium Enterprises (erstwhile Ministry of Agro
and Rural Industries) in October, 2005 has launched a scheme titled Scheme of
Fund of Regeneration of Traditional Industries (SFURTI) for development of 100
clusters (25 clusters for khadi, 50 clusters for village industries and 25 clusters for
coir industry) over a period of five years. The Scheme would cover an estimated
50,000 beneficiary families.
Salient Features
(i) The main features of the scheme are:
(a) To make traditional industries more competitive with more marketdriven,
productive, profitable and sustained employment for the
participants;
(b) To strengthen the local socio-economic governance system of the
industry clusters with the active participation by the local
stakeholders that can help to continue undertake development
initiatives by themselves; and
(c) To build up innovated and traditional skills, improved technologies,
advanced processes, market intelligence and new models of publicprivate-
partnerships, so as to gradually replicate similar models of
cluster-based regenerated traditional industries.

ii) Nodal Agency: Khadi and Village Industries Commission (KVIC) and Coir
Board have been designated as Nodal Agencies for implementation of the
Scheme. The Nodal Agencies are responsible for holding and
disbursement of funds to the identified Implementing Agencies and
monitoring of the Scheme under the overall supervision of the Scheme
Steering Committee (SSC) of SFURTI.
(iii) Selection of Cluster: The selection of clusters will be based on their
geographical concentration which should be around 500 beneficiary
families of artisans/micro enterprises, suppliers of raw materials, traders,
service providers, etc. located within one or two revenue sub-divisions in a
District (or in contiguous Districts). The clusters would be from khadi, coir
and village industries including leather and pottery.
(iv) Assistance: Under this scheme assistance/support is to be provided in the
selected clusters for:
(a) Replacement of charkhas and looms in khadi sector,
(b) Setting up Common Facility Centres,
(c) Development of new products, new designs for various Khadi and
Village Industry (VI) products, new/improved packaging, etc.
(d) Market promotion activities,
(e) Capacity building activities such as exposure visits to potter clusters
and institutions, need-based training, support for establishment of
cluster level networks (industry associations) and other need-based
support, and
(f) Other activities identified by the Implementing Agency (IA) as
necessary for the development of the cluster as part of the
diagnostic study and included in the annual Action Plan for the
cluster.

Quasi credit (Non Fund based)

Quasi credit (Non Fund based):
Quasi Credit signifies financing for trade, and it concerns both domestic and
international trade transactions. A trade transaction requires a seller of goods and
services as well as a buyer. Various intermediaries such as banks and financial
institutions can facilitate these transactions by financing the trade
Non Fund Business
Bank Guarantee: As a part of Banking Business, Bank Guarantee (BG) Limits are
sanctioned and guarantees are issued on behalf of our customers for various
purposes. Broadly, the BGs are classified into two categories:
i) Financial Guarantees are direct credit substitutes wherein a bank irrevocably
undertakes to guarantee the payment of a contractual financial obligation. These
guarantees essentially carry the same credit risk as a direct extension of credit i.e.
the risk of loss is directly linked to the creditworthiness of the counter-party against
whom a potential claim is acquired. Example – Guarantees in lieu of repayment of
financial securities/margin requirements of exchanges, Mobilization advance,
Guarantees towards revenue dues, taxes, duties in favour of tax/customs/port/excise
authorities, liquidity facilities for securitization transactions and deferred payment
guarantees.
ii) Performance Guarantees are essentially transaction-related contingencies that
involve an irrevocable undertaking to pay a third party in the event the counterparty
fails to fulfill or perform a contractual obligation. In such transactions, the risk of loss
depends on the event which need not necessarily be related to the creditworthiness
of the counterparty involved. Example – Bid bonds, performance bonds, export
performance guarantees, Guarantees in lieu of security deposits/EMD for
participating in tenders, Warranties, indemnities and standby letters of credit related
to particular transaction.
Though, BG facility is a Non-fund Facility, it is a firm commitment on the part of the
Bank to meet the obligation in case of invocation of BG. Hence, monitoring of Bank
Guarantee portfolio has attained utmost importance. The purpose of the guarantee is
to be examined and it is to be spelt out clearly if it is Performance Guarantee or
Financial Guarantee. Due diligence of client shall be done, regarding their experience
in that line of activity, their rating/grading by the departments, where they are
registered. In case of Performance Guarantees, banks shall exercise due caution to
satisfy that the customer has the necessary experience, capacity and means to
perform the obligations under the contract and is not likely to commit default. The
position of receivables and delays if any, are to be examined critically, to understand
payments position of that particular activity. The financial position of counter party,
type of Project, value of Project, likely date of completion of Project as per
agreement are also to be examined. The Maturity period, Security Position, Margin
etc. are also to be as per Policy prescriptions and are important to take a view on
charging BG Commissions

Branches shall use Model Form of Bank Guarantee Bond, while issuing Bank
Guarantees in favour of Central Govt. Departments/Public Sector Undertakings. Any
deviation is to be approved by Zonal Office. It is essential to have the information
relating to each contract/project, for which BG has been issued, to know the present
stage of work/project and to assess the risk of invocation and to exercise proper
control on the performance of the Borrower. It is to be ensured that the operating
accounts of borrowers enjoying BG facilities route all operations through our Bank
accounts. To safeguard the interest of the bank, Branches need to follow up with the
Borrowers and obtain information and analyze the same to notice the present stage
of work/project, position of Receivables, Litigations/Problems if any leading to
temporary cessation of work etc.
The Financial Indicators/Ratios as per Banks Loan Policy guidelines are to be
satisfactory. Banks are required to be arrived Gearing Ratio (Total outside
liabilities+proposed non-fund based limits / Tangible Networth - Non Current Assets)
of the client and ideally it should be below 10.
In case where the guarantees issued are not returned by the beneficiary even after
expiry of guarantee period, banks are required to reverse the entries by issuing
notice (if the beneficiary is Govt. Department 3 months and one month for others) to
avert additional provisioning. Banks should stop charging commission on expired
Bank Guarantees with effect from the date of expiry of the validity period even if the
original Bank Guarantee bond duly discharged is not received back.
Letter of Credit: A Letter of Credit is an arrangement by means of which a Bank
(Issuing Bank) acting at the request of a customer (Applicant), undertakes to pay to
a third party (Beneficiary) a predetermined amount by a given date according to
agreed stipulations and against presentation of stipulated documents. The
documentary Credit are akin to Bank Guarantees except that normally Bank
Guarantees are issued on behalf of Bank’s clients to cover situations of their non
performance whereas, documentary credits are issued on behalf of clients to cover
situation of performance. However, there are certain documentary credits like
standby Letter of Credit which are issued to cover the situations of non performance.
All documentary credits have to be issued by Banks subject to rules of Uniform
Customs and Practice for Documentary Credits (UCPDC). It is a set of standard rules
governing LCs and their implications and practical effects on handling credits in
various capacities must be possessed by all bankers. A documentary credit has the
seven parties viz., Applicant (Opener), Issuing Bank (Opening of LC Bank),
Beneficiary, Advising Bank (advises the credit to beneficiary), Confirming Bank –
Bank which adds guarantee to the credit opened by another Bank thereby
undertaking the responsibility of payment/negotiation/acceptance under the credit in
addition to Issuing Bank), Nominated Bank – Bank which is nominated by Issuing
Bank to pay/to accept draft or to negotiate, Reimbursing Bank – Bank which is
authorized by the Issuing Bank to pay to honour the reimbursement claim in
settlement of negotiation/acceptance/payment lodged with it by the paying /
negotiating or accepting Bank. The various types of LCs are as under:
i) Revocable Letter of Credit is a credit which can be revoked or cancelled or
amended by the Bank issuing the credit, without notice to the beneficiary. If a credit
does not indicate specifically it is a revocable credit the credit will be deemed as
irrevocable in terms of provisions of UCPDC terms.
ii) Irrevocable Letter of credit is a firm undertaking on the part of the Issuing
Bank and cannot be cancelled or amended without the consent of the parties to letter
of credit, particularly the beneficiary.
iii) Payment Credit is a sight credit which will be paid at sight basis against
presentation of requisite documents as per LC terms to the designated paying Bank.

iv) Deferred Payment Credit is a usance credit where payment will be made by
designated Bank on respective due dates determined in accordance with stipulations
of the credit without the drawing of drafts.
v) Acceptance Credit is similar to deferred credit except for the fact that in this
credit drawing of a usance draft is a must.
vi) Negotiation Credit can be a sight or a usance credit. A draft is usually drawn in
negotiation credit. Under this, the negotiation can be restricted to a specific Bank or
it may allow free negotiation whereby any Bank who is willing to negotiate can do so.
However, the responsibility of the issuing Bank is to pay and it cannot say that it is
of the negotiating Bank.
vii) Confirmed Letter of Credit is a letter of credit to which another Bank (Bank
other than Issuing Bank) has added its confirmation or guarantee. Under this, the
beneficiary will have the firm undertaking of not only the Bank issuing the LC, but
also of another Bank. Confirmation can be added only to irrevocable and not
revocable Credits.
the amount is revived or reinstated without requiring specific amendment to the
credit. The basic principle of a revolving credit is that after a drawing is made, the
credit reverts to its original amount for re-use by beneficiary. There are two types of
revolving credit viz., credit gets reinstated immediately after a drawing is made and
credit reverts to original amount only after it is confirmed by the Issuing Bank.
ix) Installment Credit calls for full value of goods to be shipped but stipulates that
the shipment be made in specific quantities at stated periods or intervals.
x) Transit Credit – When the issuing Bank has no correspondent relations in
beneficiary country the services of a Bank in third country would be utilized. This
type of LC may also be opened by small countries where credits may not be readily
acceptable in another country.
xi) Reimbursement Credit – Generally credits opened are denominated in the
currency of the applicant or beneficiary. But when a credit is opened in the currency
of a third country, it is referred to as reimbursement credit.
xii) Transferable Credit – Credit which can be transferred by the original
beneficiary in favour of second or several second beneficiaries. The purpose of these
credits is that the first beneficiary who is a middleman can earn his commission and
can hide the name of supplier.
xiii) Back to Back Credit/Countervailing credit – Under this the credit is opened
with security of another credit. Thus, it is basically a credit opened by middlemen in
favour of the actual manufacturer/supplier.
xiv) Red Clause Credit – It contains a clause providing for payment in advance for
purchasing raw materials, etc.
xv) Anticipatory Credit – Under this payment is made to beneficiary at preshipment
stage in anticipation of his actual shipment and submission of bills at a
future date. But if no presentation is made the recovery will be made from the
opening Bank.
xvi) Green Clause Credit is an extended version of Red Clause Credit in the sense
that it not only provides for advance towards purchase, processing and packaging
but also for warehousing & insurance charges. Generally money under this credit is
advanced after the goods are put in bonded warehouses etc., up to the period of
shipment.
Other concepts
i)Bill of Lading: It should be in complete set and be clean and should generally be
to order and blank endorsed. It must also specify that the goods have been shipped
on board and whether the freight is prepaid or is payable at destination. The name of
the opening bank and applicant should be indicated in the B/L.

iv) Deferred Payment Credit is a usance credit where payment will be made by
designated Bank on respective due dates determined in accordance with stipulations
of the credit without the drawing of drafts.
v) Acceptance Credit is similar to deferred credit except for the fact that in this
credit drawing of a usance draft is a must.
vi) Negotiation Credit can be a sight or a usance credit. A draft is usually drawn in
negotiation credit. Under this, the negotiation can be restricted to a specific Bank or
it may allow free negotiation whereby any Bank who is willing to negotiate can do so.
However, the responsibility of the issuing Bank is to pay and it cannot say that it is
of the negotiating Bank.
vii) Confirmed Letter of Credit is a letter of credit to which another Bank (Bank
other than Issuing Bank) has added its confirmation or guarantee. Under this, the
beneficiary will have the firm undertaking of not only the Bank issuing the LC, but
also of another Bank. Confirmation can be added only to irrevocable and not
revocable Credits.
the amount is revived or reinstated without requiring specific amendment to the
credit. The basic principle of a revolving credit is that after a drawing is made, the
credit reverts to its original amount for re-use by beneficiary. There are two types of
revolving credit viz., credit gets reinstated immediately after a drawing is made and
credit reverts to original amount only after it is confirmed by the Issuing Bank.
ix) Installment Credit calls for full value of goods to be shipped but stipulates that
the shipment be made in specific quantities at stated periods or intervals.
x) Transit Credit – When the issuing Bank has no correspondent relations in
beneficiary country the services of a Bank in third country would be utilized. This
type of LC may also be opened by small countries where credits may not be readily
acceptable in another country.
xi) Reimbursement Credit – Generally credits opened are denominated in the
currency of the applicant or beneficiary. But when a credit is opened in the currency
of a third country, it is referred to as reimbursement credit.
xii) Transferable Credit – Credit which can be transferred by the original
beneficiary in favour of second or several second beneficiaries. The purpose of these
credits is that the first beneficiary who is a middleman can earn his commission and
can hide the name of supplier.
xiii) Back to Back Credit/Countervailing credit – Under this the credit is opened
with security of another credit. Thus, it is basically a credit opened by middlemen in
favour of the actual manufacturer/supplier.
xiv) Red Clause Credit – It contains a clause providing for payment in advance for
purchasing raw materials, etc.
xv) Anticipatory Credit – Under this payment is made to beneficiary at preshipment
stage in anticipation of his actual shipment and submission of bills at a
future date. But if no presentation is made the recovery will be made from the
opening Bank.
xvi) Green Clause Credit is an extended version of Red Clause Credit in the sense
that it not only provides for advance towards purchase, processing and packaging
but also for warehousing & insurance charges. Generally money under this credit is
advanced after the goods are put in bonded warehouses etc., up to the period of
shipment.
Other concepts
i)Bill of Lading: It should be in complete set and be clean and should generally be
to order and blank endorsed. It must also specify that the goods have been shipped
on board and whether the freight is prepaid or is payable at destination. The name of
the opening bank and applicant should be indicated in the B/L.

ii) Airway Bill: Airway bills/Air Consignment notes should always be made out to
the order of Issuing Bank duly mentioning the name of the applicant.
iii)Insurance Policy or Certificate: Where the terms of sale are CIF the insurance
is to be arranged by the supplier and they are required to submit insurance policy
along with the documents.
iv) Invoice: Detailed invoices duly signed by the supplier made out in the name of
the applicant should be called for and the invoice should contain full description of
goods, quantity, price, terms of shipment, licence number and LC number and date.
v) Certificate of Origin: Certificate of origin of the goods is to be called for. Method
of payment is determined basing on the country of origin.
vi) Inspection Certificate: Inspection certificate is to be called for from an
independent inspecting agency (name should be stipulated) to ensure quality and
quantity of goods. Inspection certificate from the supplier is not acceptable
Co-acceptance Facilities : RBI Guidelines, Co-acceptance of
Bills covering supply of Goods & Machinery
Bills co-acceptance Co-acceptance is a means of non-fund based import finance
whereby a Bill of Exchange drawn by an exporter on the importer is co-accepted by a
Bank. By co-accepting the Bill of Exchange, the Bank undertakes to make payment to
the exporter even if the importer fails to make payment on due date
RBI guidelines on co-acceptances:
In the light of the above, banks should keep in view the following safeguards:
(i) While sanctioning co-acceptance limits to their customers, the need therefor should
be ascertained, and such limits should be extended only to those customers who enjoy
other limits with the bank.
(ii) Only genuine trade bills should be co-accepted and the banks should ensure that the
goods covered by bills co-accepted are actually received in the stock accounts of the
borrowers.
(iii) The valuation of the goods as mentioned in the accompanying invoice should be
verified to see that there is no over-valuation of stocks.
(iv) The banks should not extend their co-acceptance to house bills/ accommodation
bills drawn by group concerns on one another.
(v) The banks discounting such bills, co-accepted by other banks, should also ensure
that the bills are not accommodation bills and that the co-accepting bank has the
capacity to redeem the obligation in case of need.
(vi) Bank-wise limits should be fixed, taking into consideration the size of each bank for
discounting bills co-accepted by other banks, and the relative powers of the officials of
the other banks should be got registered with the discounting banks.
(vii) Care should be taken to see that the co-acceptance liability of any bank is not
disproportionate to its known resources position.
(viii) A system of obtaining periodical confirmation of the liability of co-accepting banks
in regard to the outstanding bills should be introduced.
(ix) Proper records of the bills co-accepted for each customer should be maintained, so
that the commitments for each customer and the total commitments at a branch can be
readily ascertained, and these should be scrutinised by Internal Inspectors and
commented upon in their reports.
(x) It is also desirable for the discounting bank to advise the Head Office/ Controlling
Office of the bank, which has co-accepted the bills, whenever such transactions appear

to be disproportionate or large.
(xi) Proper periodical returns may be prescribed so that the Branch Managers report
such co-acceptance commitments entered into by them to the Controlling Offices.
(xii) Such returns should also reveal the position of bills that have become overdue, and
which the bank had to meet under the co-acceptance obligation. This will enable the
Controlling Offices to monitor such co-acceptances furnished by the branches and take
suitable action in time, in difficult cases.
(xiii) Co-acceptances in respect of bills for Rs.10,000/- and above should be signed by
two officials jointly, deviation being allowed only in exceptional cases, e.g. nonavailability
of two officials at a branch.
(xiv) Before discounting/ purchasing bills co-accepted by other banks for Rs. 2 lakh and
above from a single party, the bank should obtain written confirmation of the concerned
Controlling (Regional/ Divisional/ Zonal) Office of the accepting bank and a record of the
same should be kept.
(xv) When the value of the total bills discounted/ purchased (which have been coaccepted
by other banks) exceeds Rs. 20 lakh for a single borrower/ group of
borrowers, prior approval of the Head

Credit risk in brief

Credit Risk is the risk of default by a borrower to meet commitment as per agreed terms
and conditions. In terms of extant guidelines contained in BASEL-II, there are three
approaches to measure Credit Risk given as under:
 Standardized approach
IRB (Internal Rating Based) Foundation approach
 IRB (Internal Rating Based) Advanced approach

1. Standardized Approach
RBI has directed all banks to adopt Standardized approach in respect of Credit Risks. Under standardized approach, risk rating will be done by credit agencies. Following
Agencies are approved for external rating:
(AI) CARE 2. FITCH India (New name – India Rating.) 3.CRISIL 4. ICRA
5.Brickwork
(BI) SMERA (For SME units) and 7. Onicara (also for
SME units) Risk weights prescribed by RBI are as under:
Rated Corporate
Rating Risk Percentage
AAA 20%
AA 30%
A 50%
BBB 100%
BB & below 150%
Education Loans 75%
Retail portfolio and SME portfolio 75%
Housing loans secured by mortgage 50 to 75%
Commercial Real Estates 100%
Unrated Exposure 100%
2. IRBA – Internal rating Based Approach
At present all advances of Rs. 5.00 crore and above are being rated from external agencies
in our bank.
IRBA
IRBA is based on bank‘s internal assessment. It has two variants (Foundation and
advanced). Bank will do its own assessment of risk rating and requirement of Capital will be
calculated on
 Probability of default (PD)- It measures the likelihood that borrower will default.  Loss given default (LD) – It measures proportion of exposure that will be lost in
case of default
 Exposure of default (ED) – It measures the facility that is likely to be drawn in
the event of default.  Effective maturity. (M) – It measures the remaining economic maturity of
Exposure.

Bank has developed its own rating module system to rate the undertaking internally. The
internal rating is being used for the following purposes:
Credit decisions
Determination of Powers
 Price fixing

Various Acts, sections and descriptions.(Negotiable Instrument Act )

Negotiable Instrument Act
Sec
4 Definition of Promissory Note
5
Definition of Bill of Exchange
6
Definition of Cheque
8
Holder
9
Holder in due course
10
Payment in due course
13
Meaning of Negotiable instrument
15
Endorsement: Endorsement should be in free running handwriting and not in block letters also it should tally, letter to letter, with the name of the payee in the cheque
18
When there is difference in amount between the words and figures, the amount in words is to be treated as the amount ordered by the drawer to pay
20
Inchoate Instrument
22
Three days of grace for calculating the maturity date of usance instrument
25
Maturity date in holiday usance instrument is payable on next preceding business day
26
Minor may draw, endorse and accept a negotiable instrument so as to bind all parts except himself
31
Liability of drawee banker: Banker to compensate for wrongful dishonour
45A
Holder rights to get duplicate of lost bill
63
The drawee of a Bill of Exchange has to accept it within 48 hours of presentation (excluding public holidays)
82 I
If no rate of interest is mentioned in the Promissory Note, interest @ 18% p.a. is to be paid
85-A
Protection paying banker in case of Bank drafts.
85-(1)
Paying banker is protected by payment in due course of an order cheque which is properly endorsed by the payee or his agent
85-(2)
Protection to Paying banker in case of bearer cheques. Once a bearer, always a bearer
87
Material alteration of Negotiable Instrument renders it void
89
Paying Banker gets protection where a cheque is materially altered but does not appear to have been altered
99
Noting
100
Protest
118
Presumptions as to negotiable instruments of consideration
123
Cheque crossed Generally
124
Cheque crossed Specially
128
Payment in due course of crossed cheque
130
Not Negotiable crossing. The transferee cannot have a better title to the cheque than that of the transferor
131
Collecting Banker’s protection in respect of crossed cheques
138
Dishonour of cheque for insufficiency, etc. of funds in the account
139
Presumption in favour of holder
142
Payee / holder of the cheque should file a case within 1 month under Sec 138 of NI Act
Indian Companies Act (1956)
Section
11
No partnership / association can be formed with more than 20 partners. In the case of banking firms, the number shall not exceed 10.
48
A company may empower person to act as its attorney. The authorization should be in writing and under the common seal of the company.
100
A special resolution is necessary for reduction of capital of a company; further, the approval of
National Company Law Tribunal’s (NCLT) is required.
125
Charges to be filed with the Registrar of companies within 30 days from the date of creation.
130(3)
The Register of Charges kept by the Company Registrar is open for inspection by any person on payment of a fee. These facilities the prospective creditor can find out whether any charge is subsisting on the assets of the Company.
35
Modification of Charge to be filed.
38
Satisfaction of Charge to be filed.
141
If a Charge is not registered within 60 days, the company or any .Interested. party can approach NCL for registration showing satisfactory reasons for the omission.
293
If the borrowings exceed the aggregate of the paid up capital and free reserves, the (1)(d)
Borrowings should be authorized by the general meeting of the shareholders.

Various Acts, sections and descriptions( Banking Regulation Act 1949)

Various Acts, sections and descriptions.
Banking Regulation Act 1949
Sec.5(b) Banking: Banking means the acceptance of deposit for the purpose of lending or investment, the deposits of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise.
Sec.5(c) Banking Company: It means any company, which transacts the business of Banking in India.
Sec.8 Prohibition on Trading: No banking company shall directly or indirectly deal on the buying or selling of goods (every kind of movable property other than actionable claim), except in connection with realization of security held by it.
Sec.9 Disposal of Non-Banking Assets: No bank shall hold any immovable property howsoever acquired (except for its own use) for any period exceeding 7 years. RBI may extend the period by 5 years where it is satisfied that such extension would be in the interest
Sec.17(1) Reserve Fund: Stipulation that a bank must create reserve fund equivalent to not
less than 20% of profits out of the balance of profit of each year, before any dividend is declared (RBI has enhanced it to 25% of net profit w.e.f. 31st March 2001).
Sec.18 Cash Reserve: Every banking company, not being a scheduled bank shall maintain 3% of demand and time liabilities by way of cash reserve with itself or by way of balance in current account with RBI.
Sec.20 Restriction on advances against own shares: No banking company shall grant loans/advances on the security of its own shares, since it shall amount to purchase of its own capital.
Sec.21(a) Rate of Interest charged by banks not to be subject to scrutiny by Courts: A transaction between the banking company and its debtor shall not be reopened by any court on the ground of excessive charging of rate of interest.
Sec.24 Maintenance of SLR: A banking company is required to maintain at the close of business on any day a certain percentage of its total demand and time liabilities in India in form of cash, gold and unencumbered approved securities. This is known as SLR. Minimum SLR 25% and Maximum 40% to be maintained. SLR to be maintained with reference to Total Demand and Time Liabilities as on last Friday of the second preceding fortnight.
Sec.45(y) Preservation of Bank Records: Central Govt. in consultation with RBI has power to frame rules regarding preservation of books, accounts and other documents.
Sec.45 Z Returns of Paid Instruments to Customer: Guidelines for returning the paid instruments to customer by keeping a true copy.
Sec.45 ZA Nomination: For nomination in Deposit accounts.
Sec.45 ZC Nomination: For nomination in Safe Custody accounts.
Sec.45 ZE Nomination: For nomination in Locker accounts

Registration of charges

Registration of charges:
(Section 77 to Section 87 and the Companies (Registration of Charges) Rules, 2014)
-“charge” means an interest or lien created on the assets of the company or any of its undertakings or both as security and includes a mortgage.
- This is newly incorporated definition. Earlier Act did not define what is charge but
listed different types of charges which required registration.
-The issue whether Bankers' lien under Section 171 of the Indian Contract Act or Negative lien created by the loan agreements is required to be registered is still a grey area and is being debated. In our view both need not be registered. However, if any power of attorney is given the same should be registered.
- Under Section 77 particulars of all charges created on its property or assets or any of
its undertakings, within or outside India, have to be registered with Registrar of Companies (ROC) within thirty days from the date of creation of charges. It is necessary that all charges created in favour of the Bank are registered with ROC within thirty days else there is a possibility that the Bank may lose priority of the Charge.
- The ROC on the application of the company, on being satisfied that the company had sufficient cause for not filing particulars of charge within 30 days may allow registration after 30 days but within a period of 300 days from the date of creation of charge.
- If the particulars of charge or for modification or satisfaction of charge are not filed within 300 days the company or any person interested in registration of charge can file an application to the Central Govt. for condonation of delay and extension of time for filing particulars of charges. Central Govt. can impose conditions for extension of time
Sincere thanks to all who gave input/material and the training colleagues/organizations who took pains to prepare/disseminate knowledge.Compiled
from various sources. Please share this with colleagues within BANK only. Pl think twice before printing this and anything. Errors if any noticed

- Pledge is not expressly excluded by Section 77 but excluded in the Form CHG.1.It is advisable to register charge of pledge also under the head “others” in the Form1. Even if omitted to be registered the Bank can take umbrage under exclusion provided in the Form1.
- I f the company fails to register the charge within a period of 30 days from the date of creation of charge, the person (the BANK) can apply for registration of charge along with copy of the instrument by which charge was created, and the ROC with in a period of 14 days from such application, after giving notice to the company allow registration of charge subject to payment of fees.
. By virtue of Section 79 of the Act, provisions of Section 77 relating to registration of charge also apply to
(a) A company acquiring property subject to a charge;
(b) Any modification or extent or operation of the registered charge. In other words modification of charges is also to be registered.
- Under Section 82 the company has to report satisfaction of charges.
IMPORTANT- It is important to note that it is imperative that charges created in favour of the Bank are registered within a period of 30 days from the date of creation of charge. Otherwise it is possible that Bank may lose priority of charge created in favour of the Bank.

Target JAIIB and Its strategy

Target JAIIB and Its strategy

If you have just joined the banking Industry, you must have applied for JAIIB or if not yet, you’ll be applying soon. And one thing everyone wants to know is how to pass JAIIB in first attempt. The obvious reason for clearing JAIIB i.e., Junior Associate of Indian Institute of Bankers is to get an extra increment. So sooner you pass the JAIIB exam, earlier you get an extra increment. If you have joined as Scale – I Officer (P.O.), your initial basic salary would be Rs.23700 and if you clear JAIIB, you get one increment and your basic salary increase by Rs.970. So, if you miss it first time, your increment gets delayed by 6 months. That means loss of Rs.5820+DA. So it becomes important to clear the JAIIB in first attempt itself.

JAIIB exam is held twice a year (June and December) and around 1.50 lacs candidates appear for the exam. Only 22-25% candidates are able to clear the exam each time. So, does it mean that JAIIB is difficult to crack? What should be the strategy to clear the JAIIB in first attempt itself? How one should prepare for JAIIB.


Passing marks for JAIIB are 50% aggregate and 45% in each subject. If aggregate marks are less than 50% or marks in a particular paper are less than 45% but you score 50% or more in any subject, you do not qualify the exam but you need not give that particular paper in next attempt, in which you score 50% or more.  The best part of JAIIB exam is that result of each paper is shown to you immediately after you submit your online exam.

Simple steps to prepare for the JAIIB exam

Take off the burden from your mind, you are required to score only 50%, which is not very difficult. And the good thing is that there is no negative marking.

Here is a simple step by step guide which will help the bankers to be prepared for JAIIB.


If you come from finance or commerce background and have studied B.Com, MBA (Finance) etc., it is relatively easy to crack the JAIIB. Because you would have studied atleast 60% of the topics covered in JAIIB. If you are not from commerce or finance background, you need to make little extra efforts

Preparation strategy for JAIIB examination:
JAIIB exam needs some dedicated preparation to crack the exam, especially for the non commerce graduates. Many young bankers prepare for the exam only during the last week; Then they write one paper after getting low marks, they simply give up the attempt. Some take two days leave before the exam and prepare for it eventually they fail because of shortage of four or five marks. These strategies may work for few talent bankers but not for all.  After our busy working hours, daily we have to spend some time for preparation of the exam. Since most of us are very new to the banking industry and its concepts, we need regular revisions to familiarise with the concepts.So all it needs a self disciplined and determined mind to prepare for the exam.
Allocation of Study time:
Daily we need to spend at least 1 1/2 to 2 hours a day for preparation of the JAIIB exam. Cramming before the exam night or before two days won’t help for understanding the information. It may help for few direct questions but it won’t be useful for complex questions. Also we wont have enough time to complete the sy1llabus and will lead to anxiety & stress. Sacrificing our sleep before the exam night will also make us counterproductive so it better to study every day.
Importance of Studying daily:
Studying daily and revising regularly helps to familiarise with concepts. It also helps us to understand the information. Having a study routine is not only helpful for exam but also improves our reading habit which every banker needs, as our industry is very dynamic. In our hectic banking hours finding time for continuously 2 hrs a day is very hard. But having small sessions of 30 to 40 minutes thrice in a day is easy to find. In the era of smart phones, we can study anything at anywhere so when you find a spare time please use it.
Study Material:
For preparation, I strictly recommend the three comprehensive courseware developed by IIBF, published by MacMillan for each paper. These books are not only helpful for the exam but also for our Banking career. If you really want to pursue your career as banker then these books are must and fundamental. They act like a reference manual for us. So my humble request to all, please don’t prepare only for clearing the exam; Kindly prepare with the motive of improving knowledge in the banking field. Because the knowledge gathered during our JAIIB exam will also aid us during our day-to-day banking life.
Apart from the MacMillan books, the books and work books prepared by JAIIB coaching centres such as N S Noor, Deewan Banking Academy etc,. are also available in the market. Mostly they are good but not comprehensive and may not have clear explanation for some topics. All the books are about same cost, so I recommend the Macmillan books

They are many free study material is available in the facebook groups and in websites also. If possible get that too for your reference but my best suggestion is to buy Macmillan books. The amount spent is more than worthy, the book will be useful for our banking career.
For Latest developments & Current affairs related to Banking Industry:
Apart from the above syllabus we need to refer the following for full preparation of the JAIIB exam.
1. Current developments in Master Circulars/ Master revisions issued by RBI
2. Websites of RBI,  SEBI, BIS, IRDAI, FEDAI for reference and development in concerned subjects
3. IIBF Vision and Bank Quest published by IIBF for the members it is free and sent to email id.
4. Financial newspapers/publication can also be referred for current affairs.
5. New Government Schemes related to banking sector.
Nature of Questions:
Depending upon the complexity of the question, the marks of the question varies.
0.50 mark – Direct question which requires one word answers. Answer this questions with 100% accuracy. Most of these questions are from definitions, types or classification, abbreviation, simple explanations etc,. So at least read and go through all the topics in Macmillan Book twice.

Planning a study schedule:
Now we have allocated our time and purchased  & collected the necessary materials for preparation of JAIIB exam. Now, “What is next??;” Having a strategy/plan/routine schedule for preparation of JAIIB Exam. Strategic planning is important for any activity because it provides a sense of direction and evaluation of progress in our efforts towards goal. A goal without a plan is just a wish, so please make a plan and try to stick to it.

We have already seen the JAIIB syllabus here. In order to pass the JAIIB exam all we need to do is to get 50% of marks in each paper within four consecutive attempts. So we don’t need to study all modules deeper and do research on each topic. If we cover 75% of the syllabus for each paper is enough to get more than 50%.



The strategy and study plan I discuss below are just an example for understanding, viewers and readers are instructed to prepare their own schedule based on their level of knowledge and skills in each subjects.

Overlapped Topics:
Some topics of a paper is also a covered in other papers and questions can be asked in any of the paper. For example AML/KYC is also common for Accounting & Finance and Legal & Regulatory aspects of Banking. Since questions can be asked in any of three exams from this topics, prepare for the paper which has most topics & sub-topics in that particular subject. Also revise the same when you need to prepare for the overlapped topic.

Study Plan: Principles & Practices of Banking:
In my view this is the easiest subject to pass when compared to other papers. Because in this paper, all the topic are conceptual and mostly related to our day-to-day banking activities. Hence most of the topics (not all) are already familiar to us.
Module A: Indian Financial System
Read and understand all the topics and sub topics without any omission.
If possible take notes in the form of snippets this will help for revision of the topic. Since we all new to banking terms repeated revisions are required for this module.
We can expect 20 to 25 marks in this unit.
Question from current development is asked from this unit.
Prepare to score all the marks from this module.

Module B: Functions of Banks
This unit is also important and all the topics should be thoroughly studied.
We can expect 20 to 25 marks from this unit.
This unit is also needed repeated revision so taking notes while studying is recommended.
Question from current development is asked from this unit.
This is also the our scoring section, prepare in a way to get all the marks from this module.

Module C: Banking Technology
If your are techie, take full 6 hrs and study thoroughly.
For techies, this unit helps to surpass the minimum marks comfortably.
Others prepare in a way to answer the direct question from this module.
From this unit we can expect 15 to 20 marks.
We can expect question from latest development in Banking related to IT.

Module D: Support Services & Marketing of Banking Services/Products
If you are BBA or MBA and studied marketing related concepts in your graduation then take full 6 hrs and thoroughly study the unit.
Others prepare to answer for direct questions.
We can expect 10 to 15 marks from this unit.


Study Plan: Accounting & Finance for Bankers:

Many bankers treat the Accounting & Finance paper as tough. The main reason is cramming of information won’t work here like other papers. Since here we have to study, understand and apply the concepts, we need to study regularly and practice. So a good study routine is must and here all the modules are important for exam purpose as well as for our knowledge. So there is no skipping of modules in this paper and give importance to all topics.

Module A: Business Mathematics and Finance
This is a must read and must know module for all bankers. So don’t even skip a small topic.
Since these module is mathematical in nature, write down all the formulas and go thorough it daily.
Practice yourself with formulas by assuming different values from the exercise and solved examples.
Don’t ever fail to take notes and snippets for formula’s explanation & applicability.
We can expect 25 or more marks in this unit.
Understanding of calculation and concepts is must so that we can answer confidently if the questions are twisted.

Module B: Principles of Book Keeping and Accountancy
This unit is also important and all the topics should be thoroughly studied because if we are in bank we should know the accountancy.
We can expect 20 to 25 marks from this unit.
Understand the concept is key for this paper. Don’t mug-up; if you cannot understand a topic just ask your B.Com friend. Or ask him to simply explain the basics of accountancy.
This unit is also needed repeated revision so taking notes while studying is highly recommended.
This is also the our scoring section, prepare in a way to get all the marks from this module.

Module C: Final Accounts
This unit is the most important and very useful for our day-to-day activities.
This unit is conceptual as well mathematical.
So take notes for formulas and revise it.
B.Com friend is the best mentor for this module.
From this unit we can expect 20 to 25 marks.

Module D: Banking Operations and Accounting Functions
This unit is comparatively less important but good preparation of this unit will help to score the pass mark.
This unit will have many overlapped topics
Prepare to answer for direct questions.
We can expect 15 to 20 marks from this unit.
Question from latest development can be asked in this module.


Study Plan: Legal & Regulatory Aspects of Banking:
Many people underestimate the legal paper and say this exam is very easy to clear. This is purely a law oriented paper, so many of the legal terms used in the topics are new to us. In order to familiarise and to understand those topics, we have to spend more time for this paper. Also good memorization skill is required to remember the numbers & data. All the modules are about equally important, hence don’t skip a topic.

Module A: Regulation and Compliance
This is a less important but easier module compared to other modules of the paper.
This module is full of theory related to Banking Regulation and its compliance.
Don’t ever fail to take notes and snippets for explanation & applicability.
We can expect 15 to 20 marks in this unit.
Question from latest development can be asked in this unit.

Module B: Legal aspects of Banking Operations
This module is a foundation and must study.
Understand the concepts and definitions for legal terms
Take notes, Take notes, Take notes and revise it until having a clear picture about the topic.
This is a scoring module so prepare well.
20-30 marks can be expected from this unit.

Module C: Banking related laws
A toughest module and it is a must study for all
Repeated revision is required to remember the numbers & data.
This unit will consume more time and make us feel bore. So study the topics in different sessions of 30 mins.
We can expect 25 to 30 marks from this unit, so it is a mark scoring unit.
Question can be asked from current developments or amendments so update accordingly.

Module D: Commercial Laws with reference to banking operations
This module is conceptual and also requires memorization too.
Some of the topics are common with Module D of Paper 2: Accounting & Finance.
This also a scoring module we can expect 20 – 25 marks from this unit.


On the actual test day
Choose the easy questions first as they will give you an estimate of the score. Then come back to the questions which were missed. Also, there is no negative marking, so attempt all questions. If you stuck in a question, leave that by marking and go ahead.

We hope this will help you out to pass the JAIIB in first attempt. If you have any queries/ suggestions, please write in comment box below.

Conclusion:
The time period mentioned above are for studying those topics at least one time and indicative for understanding. It will vary depending upon personal capacity, skill and knowledge in the subjects. So prepare your own study schedule and stick with it. Remember a determined and self disciplined mind is key to the success. So whatever the strategy you follow for JAIIB examination make sure you are sticking with your plan and be true to yourself.

One Member Review for CAIIB Exam: Nice review for New Comers

Maiden attempt of CAIIB and I am through. I dnt mean to boast about myself by writing this post here. Here am I sharing my strategy of studies... 

1) Dint apply some magical tricks or shortcut,so you must be thinking I must have studied way too hard or probably must have prepared for a long time. The answer is no and neither m I a genius.

Simple it is: Went through Macmillan text books 

1 week of proper study per subject is sufficient provided you practise the practical questions. If you are working in credit it will help you answers questions in ABM with ease.
I found ABM relatively tougher this time compared to BFM as it involved lot of practical questions from statistics which I had ignored.So advise is do not ignore statistic portion's sums. 
BFM requires little more hours are required as the course is lengthy and people with non finance background will have to give little extra time compared to people who are MBA or basically from financial background.The sums here needs little practice and understanding, mugging up won't help. So read the text first, create a base and then you will be able to answer questions based on concept. As I came across many questions this time asked on concepts. These questions are not available in the book readily. I started preparation a week before, so that doesn't mean you also have to do that. 
I repeat it depends on your liking and understanding on the subject. And finally Retail is just a cake walk, in mine case it was a day before exam and if you have studied marketing in your PG/MBA, it would be easier to answer questions based on your understanding and yes, logic works!! 
And finally the questions posted by other members who had appeared during the morning sessions helped me answer many questions.Many were repeated. Thanks to all the members here and congratulations to everyone who made it. Those who couldn't better luck next time. As they say "Its ok to fall but the moment you fall, you have to have the motivation to rise again, but this time higher!!!! Thanks to Sir for all your support and guidance. You deserve a bow!!! And here it is . All smiles