CAIIB · Banking Regulations & Business Laws · Module B — Important Acts/Laws & Legal Aspects of Banking Operations, Part A
CAIIB BRBL Unit 13 — Law Relating to Securities and Modes of Charge – II: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 29 October 2026 · Paper IV of the December 2026 cycle (Sunday 20 December 2026)
This is the free practice page for CAIIB BRBL Unit 13 — Law Relating to Securities and Modes of Charge – II (Module B — Important Acts/Laws & Legal Aspects of Banking Operations, Part A). The CAIIB Mock Centre holds 179 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five practice questions with explanations, and the traps that cost marks.
BRBL · Module B179 MCQs in the Mock Centre5 free belowPaper on 20 December
Key facts examiners test from this unit
Appropriation of payments — the debtor chooses the debt, failing which the creditor may choose any debt due, failing which the oldest debt is paid first; in a running account, first credits meet first debits.
Assignment of actionable claims — actionable claims are assigned by a signed writing, complete on execution; the debtor is bound after notice, and the assignee takes subject to equities.
Pledge: creation and delivery — pledge is the bailment of existing goods as security; delivery may be physical, symbolic or constructive; owners, mercantile agents and some possessors can pledge.
Changed since the textbook
Gold and silver loan Directions (6 Jun 2025). LTV 85%, 80% or 75% by loan size; pledged gold released within 7 working days of repayment, or ₹5,000 a day; auction reserve at least 90% (85% after two failures). Source: KS&K
Documents and charges released in 30 days (13 Sept 2023). Lenders must return original movable or immovable property documents and remove registered charges within 30 days of repayment, or pay ₹5,000 a day. Source: Business Today
5 free practice questions — tap an option
Five practice questions from this unit. Answers lock on the first tap, exactly as in the exam, and an explanation opens underneath. The Mock Centre has all 179 questions on this unit, from easy to tough, with caselets and key-in numericals, why every other option is wrong and the exam tip — and tracks your score and revision dates.
Question 1 of 5
What is the rule in Clayton's case?
Why (c): In a running account, the first debit is discharged by the first credit. (a) is wrong: Size does not decide. (b) is wrong: That reverses the rule. (d) is wrong: The rule is not proportional.
Question 2 of 5
A transfers to C a debt due from B, while A owes B ₹1 lakh. C sues B. What can B do?
Why (a): Section 132 illustration: B may set off A's debt against C, even though C did not know of it. (b) is wrong: C's ignorance does not matter. (c) is wrong: B need not sue separately. (d) is wrong: B need not pay twice.
Question 3 of 5
Under a deed of hypothecation of stocks, how must the borrower deal with the money from selling the hypothecated goods?
Why (c): A deed of hypothecation provides that the sale proceeds of the charged goods are held for the bank and brought into the cash-credit account; the borrower may sell in the course of business but may not divert the proceeds. (a) is wrong: The proceeds are charged to the bank, not free money. (b) is wrong: Paying interest does not entitle him to keep the proceeds. (d) is wrong: The proceeds must come to the bank, not be invested at will.
Question 4 of 5
What happens when a bank takes possession of hypothecated goods under the deed?
Why (b): Once possession is given, the charge becomes a pledge. (a) is wrong: The bank never becomes owner. (c) is wrong: Movables are not mortgaged. (d) is wrong: Possession converts it into a pledge.
Question 5 of 5
On negotiable instruments under lien, what is the banker's status?
Why (c): A banker with a lien on negotiable instruments is a holder for value to the extent of the lien. (a) is wrong: It is not the outright owner. (b) is wrong: The lien gives it rights as holder for value. (d) is wrong: It is not a trustee.
0 of 5 answered.
Traps in this unit
A payment cannot go to a debt not yet due.
Proportion applies only to debts of equal standing.
Notice protects; execution completes.
Practise all 179 questions on Unit 13. The free CAIIB demo opens Units 1–2 of every paper with full explanations; the BRBL Online Mock Centre unlocks all 5,800+ BRBL questions, the full-length papers with caselets and key-ins, module mocks and Smart Revision for 18 months (₹1,499).
Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. CAIIB content follows rules and developments up to IIBF's cut-off of 30 June 2026 (where a rule changed later, the update box says so); verify from official sources before relying on them in practice.