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JAIIB PPB Unit 30 — Contracts of Indemnity: 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 30 — Contracts of Indemnity (Module B — Functions of Banks). The Mock Centre holds 40 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 B40 MCQs in the Mock Centre5 free belowPaper on 22 November 2026

Key facts examiners test from this unit

  1. Sec. 124 definition: promise to save from loss caused by the PROMISOR'S or ANY OTHER PERSON'S conduct; contingent contract; express or implied; governed by the ICA 1872.
  2. Two parties (indemnifier/indemnified), ONE contract, PRIMARY liability, CONTINGENT risk, purpose = REIMBURSEMENT — the five-point contrast with guarantee (3 parties, 3 contracts, secondary, subsisting, security).
  3. Sec. 125 rights: damages + costs (prudent-man standard) + compromise sums (prudent/ authorised/not contrary to orders — universal prior notice NOT required); conditions — within authority, no contravention.

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
The word 'indemnity' literally means:
Why (b): The word 'indemnity' literally means TO SAVE FROM LOSSES — protection against loss, distinct from guaranteeing another's debt.
Question 2 of 5
Contract of indemnity is defined in:
Why (b): Contract of indemnity is defined in SECTION 124 of the Indian Contract Act — with guarantee two doors down at 126, the standing pair.
Question 3 of 5
The person promising to save from loss is the:
Why (b): The person promising to save another from loss is the INDEMNIFIER — the promisor of the indemnity.
Question 4 of 5
The person receiving the promise of indemnity is the:
Why (b): The person receiving the promise is the INDEMNITY HOLDER (indemnified) — the promisee protected against the loss.
Question 5 of 5
A bank takes an indemnity from the customer when:
Why (a): A bank takes an indemnity from the customer when issuing DUPLICATES OF LOST INSTRUMENTS — drafts, FDRs, deposit receipts; the classic banking indemnity.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
Sec. 124Sec. 126Indemnity vs guarantee definitions
Sec. 125Sec. 124Holder's RIGHTS vs the definition
Practise all 40 questions on Unit 30. 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.
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← Unit 29: Important Laws Relating to Recovery of Dues · Unit 31: Contracts of Guarantee and Bank Guarantee → · 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 September 2026; verify from official sources before relying on them in practice.