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JAIIB PPB Unit 23 — Appraisal and Assessment of Credit Facilities: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 2 November 2026 · Paper 2 of the November 2026 cycle (22 November 2026)

This page is a free slice of our JAIIB PPB question bank for Unit 23 — Appraisal and Assessment of Credit Facilities (Module B — Functions of Banks). The Mock Centre holds 88 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

PPB · Module B88 MCQs in the Mock Centre5 free belowPaper on 22 November 2026

Key facts examiners test from this unit

  1. Appraisal = critical evaluation (safety-liquidity-profitability); first step — borrower identification/ verification; company capacity = Board resolution; wilful default = integrity failure; cross-checks — CIC, CERSAI, ROC, RBI lists + unit visit.
  2. Collateral = exit option only; preferred repayment source = OPERATING cash flow; four repayment sources.
  3. WC arithmetic: NWC = CA−CL (>1:1), WCG = TCA − CL(other than bank borrowings), GWC = total CA investment; components exclude fixed assets; need-based finance.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
Which is NOT a primary objective of credit appraisal?
Why (d): Appraisal protects the safety, liquidity and profitability of lending; maximising the amount sanctioned is not an objective — the aim is the right amount.
Question 2 of 5
For sufficient liquidity, NWC should make the current ratio:
Why (c): For sufficient liquidity, NWC should make the current ratio MORE THAN 1:1 — current assets exceeding current liabilities is the cushion itself.
Question 3 of 5
The Average Payment Period relates to:
Why (b): The Average Payment Period relates to SUNDRY CREDITORS — creditors ÷ daily credit purchases; the one component that REDUCES the cycle.
Question 4 of 5
Non-fund-based limits are generally of:
Why (b): Non-fund-based limits are of TWO types — bank guarantees and letters of credit; money moves only if the contingency crystallises.
Question 5 of 5
Which of these is NOT a feature of a term loan?
Why (d): Term loans run for a fixed period (typically one to ten years), are repaid in instalments and usually finance fixed assets; repayment on demand is a feature of demand loans.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
25% of turnover20% of turnoverTotal WC vs bank finance (Nayak)
25% of WCG25% of TCATandon Method I vs Method II margins
Practise all 88 questions on Unit 23. The free demo opens a slice of every subject with the same explanations; the PPB Online-only pass unlocks all 3,200+ PPB questions, the full and module mocks, Smart Revision and the Readiness Score for 18 months (₹1,299). Not sure where you stand? Sit the free 120-question mock first (all four papers, questions drawn from pages like this one, real exam screen).
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← Unit 22: Principles of Lending, Types of Borrowers and Credit Facilities · Unit 24: Operational Aspects of Loan Accounts → · All PPB units · JAIIB 2026 guide

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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. Regulatory figures verified as of November 2026; verify from official sources before relying on them in practice.