JAIIB · Principles & Practices of Banking · Module B — Functions of Banks
JAIIB PPB Unit 25 — Types of Collaterals and Their Characteristics: Free MCQs with Explanations
By Swarnakshi Jha (ex-banker) · Updated 20 September 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 25 — Types of Collaterals and Their Characteristics (Module B — Functions of Banks). The Mock Centre holds 91 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 B91 MCQs in the Mock Centre5 free belowPaper on 22 November 2026
Immovables: mortgage; suits < ₹20 lakh in civil courts (DRT ≥ ₹20 lakh); SARFAESI sale without court; EC 13 years, parent documents 30 years; leasehold value = unexpired term; forced-sale valuation; minor's property needs COURT permission.
Goods: key CC = pledge, open CC = hypothecation; margins 25–30% (export 10%); lower-of-cost- or-market; DP = stock − unpaid stock − margin; stock audit > ₹5 crore; Sec. 176 ICA sale after notice; SARFAESI (2002) armed hypothecatees.
Law update, September 2026. Current law: from 1 July 2026 RBI's Capital Market Exposure amendment directions replaced the ₹10 lakh (physical) / ₹20 lakh (demat) pair with a single ceiling of ₹1 CRORE per individual for loans against shares, debentures and REIT/InvIT units, applied at the banking-system level. 'Currently' → ₹1 crore. Current law (1 July 2026): ₹1 CRORE per individual for loans against shares — the physical/demat distinction is gone. Current law (1 July 2026): IPO/FPO/ESOP subscription finance to an individual is capped at ₹25 LAKH at the banking-system level.
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
An unsecured/'clean' loan rests on:
Why (b): An unsecured or 'clean' loan rests on PERSONAL INTEGRITY AND CREDITWORTHINESS — character and capacity carry the loan, with no charge on any asset.
Question 2 of 5
Brand value and goodwill are:
Why (d): Brand value and goodwill are INTANGIBLE assets — non-physical business value that banks rarely accept as security.
Question 3 of 5
Advances against goods are called:
Why (b): Advances against goods are called TRADE FINANCE — goods-backed working capital for trading and manufacturing stock.
Question 4 of 5
The charge over SHARES is a:
Why (b): The charge over SHARES is a PLEDGE — physical scrips with blank transfer forms, demat holdings through the depository pledge mechanism.
Question 5 of 5
The charge on a gold loan is a:
Why (c): The charge on a gold loan is a PLEDGE — the ornaments sit in the bank's possession, the classic possessory security.
0 of 5 answered.
Traps in this unit
Confusable A
Confusable B
The difference
Key cash credit
Open cash credit
Pledge (bank keys) vs hypothecation (borrower possession)
EC 13 years
Title flow 30 years
Encumbrance search vs parent documents
Practise all 91 questions on Unit 25. The free demo opens a slice of every subject with the same explanations; the PPB Online-only pass unlocks all 3,280 PPB questions, the full and module mocks, Smart Revision and the Readiness Score for one year (₹1,299). Not sure where you stand? Take the free 10-question test first.
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 September 2026; verify from official sources before relying on them in practice.
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