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JAIIB PPB Unit 34 — Laws Relating to Bill Finance: 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 34 — Laws Relating to Bill Finance (Module B — Functions of Banks). The Mock Centre holds 56 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 B56 MCQs in the Mock Centre5 free belowPaper on 22 November 2026

Key facts examiners test from this unit

  1. Bill (Sec. 5) = unconditional ORDER; drawer (maker/creditor), drawee (debtor; acceptor on acceptance), payee; holder (Sec. 8) vs HIDC (Sec. 9); payment in due course (Sec. 10).
  2. Liabilities: drawer (Sec. 30 — notice of dishonour essential), acceptor (Sec. 32), endorser (Sec. 35); interest — Sec. 79 (stated rate) vs Sec. 80 (18% default).
  3. Classification: place (inland Sec. 11/foreign Sec. 12 — sets, protest), period (demand/sight Sec. 19 vs usance — acceptance, maturity + 3 grace days, holiday = preceding day), nature (clean vs documentary; D/P vs D/A); supply bills = assignment-financed.

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 an advantage of bill finance over CC/OD?
Why (c): Bill finance identifies the underlying trade transaction, has a definite maturity, and gives a transferable, rediscountable asset backed by the goods' documents; an unsecured exposure is not one of its advantages.
Question 2 of 5
The MAKER of a bill (Sec. 7) is the:
Why (c): The MAKER of a bill (Section 7) is the DRAWER — the drawer draws, the drawee pays, the payee receives.
Question 3 of 5
Bills are classified on the three bases of:
Why (b): Bills are classified on three bases: PLACE (inland/foreign), PERIOD (demand/usance) and NATURE (clean/documentary).
Question 4 of 5
A DOCUMENTARY bill travels with:
Why (b): A DOCUMENTARY bill travels with DOCUMENTS OF TITLE TO GOODS — the LR/RR/BL securing the bill.
Question 5 of 5
When a bank discounts or purchases a bill for value, in good faith and before maturity, it becomes:
Why (b): Under Section 9 of the NI Act, a person who takes a bill for value, before maturity and without cause to believe the title defective is a holder in due course — so a bank that discounts or purchases a bill on those terms takes it free of prior defects and can sue all prior parties.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
Sec. 79Sec. 80Stated interest rate vs 18% default
Sec. 11Sec. 12Inland vs foreign bills
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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.