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JAIIB · Principles & Practices of Banking · Module B — Functions of Banks

JAIIB PPB Unit 33 — Deferred Payment Guarantee: 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 33 — Deferred Payment Guarantee (Module B — Functions of Banks). The Mock Centre holds 26 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 B26 MCQs in the Mock Centre5 free belowPaper on 22 November 2026

Key facts examiners test from this unit

  1. DPG = bank's guarantee of the DEFERRED INSTALMENTS on capital-goods purchases — a fixed-asset (term-loan-substitute) financing method.
  2. Staging: 10–15% advance + 10–15% on documents (LC) + balance in instalments over 1–7 years.
  3. Consideration = the seller's supply on deferred terms (Sec. 127 logic); schedule lives in the main buyer-seller contract.

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
A Deferred Payment Guarantee guarantees:
Why (b): A Deferred Payment Guarantee guarantees TIMELY PAYMENT OF THE DEFERRED INSTALMENTS — payment assurance to the seller, nothing about delivery or quality.
Question 2 of 5
Short-term credit does not suit capital goods because:
Why (b): Short-term credit does not suit capital goods because THE AMOUNT IS SUBSTANTIAL — the asset's cash generation takes years, hence deferred instalments.
Question 3 of 5
Under a DPG, the instalments are guaranteed by:
Why (b): Under a DPG, the instalments are guaranteed by a THIRD PARTY — the bank's guarantee persuades the seller to extend multi-year credit.
Question 4 of 5
The bank's liability under a DPG is:
Why (b): The bank's liability under a DPG is PRIMARY AND INDEPENDENT — the autonomy principle extends from guarantees to DPGs.
Question 5 of 5
The difference between issuing a DPG and granting a term loan is:
Why (b): The difference: the SELLER extends the credit while the BANK'S exposure stays CONTINGENT — funding source and balance-sheet character differ; the risk economics match a term loan.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
DPGTerm loanContingent (seller funds) vs funded (bank lends)
DPGFinancial guaranteeInstalment-payment promise vs cash-substitute promise
Practise all 26 questions on Unit 33. 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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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.