JAIIB 2021 syllabus: Paper 3 — LRAB

5 min readFeb 24, 2021

MODULE A — REGULATIONS AND COMPLIANCE

Legal Framework of Regulation of Banks: Business of Banking; Constitution of Banks; RBI Act, 1934; Banking Regulation Act, 1949; Role of RBI; Govt. as a Regulator of Banks; Control over Co-operative Banks; Regulation by other Authorities.

Control over Organization of Banks: Licensing of Banking Companies; Branch Licensing; Paid up Capital and Reserves; Shareholding in Banking Companies; Subsidiaries of Banking Companies; Board of Directors; Chairman of Banking Company; Appointment of Additional Directors; Restrictions on Employment; Control over Management; Corporate Governance; Directors and Corporate Governance.

Regulation of Banking Business: Power of RBI to Issue Directions; Acceptance of Deposits; Nomination; Loans and Advances; Regulation of Interest Rate; Regulation of Payment Systems; Internet Banking Guidelines; Regulation of Money Market Instruments; Banking Ombudsman; Reserve Funds; Maintenance of CRR, SLR; Assets in India.

Returns Inspection, Winding up, Mergers & Acquisitions: Annual Accounts & Balance Sheet; Audit & Auditors; Submission of Returns; Preservation of Records and Return of Paid Instruments; Inspection and Scrutiny; Board for Financial Supervision; Acquisition of Undertakings; Amalgamation of Banks; Winding up of Banks; Penalties for offences.

Public Sector Banks and Co-operative Banks: SBI and its Subsidiaries; Regional Rural Banks; Nationalized Banks; Application of BR Act to Public Sector Banks; Disinvestment of Shares by Govt.; Co-operative Banks

Financial Sector Legislative Reforms: Need, Approach for Financial Sector Legislative Reforms; Important Reforms

Recent Legislative Changes in RBI Act: Recent Legislative Changes in RBI Act, Need thereof

Financial Sector Development Council: Role and Functions of Financial Sector Development Council

MODULE B — LEGAL ASPECTS OF BANKING OPERATIONS

Different Types of Borrowers: Types of Borrowers; Limited Liability Partnership

Types of Credit Facilities: Cash Credit, Overdraft, Demand Loans, Term Loans, Bill Finance

Secured and Unsecured Loans, Registration of Firms and Incorporation of Companies: Definition of Secured and Unsecured loans; Need for Secured Loans; Registration of Firms; Consequences of Non-registration of Firms; Incorporation of a Company

Indemnities: Definition of Contract of Indemnity; Features of Indemnity Contract & Guarantee; Scope and Application of Indemnity Contracts to Banks; Obligations of a Banker; Precaution & Rights of an Indemnity Holder

Bank Guarantees: Definition and Types of Bank Guarantees; Banker’s Duty to Honor Guarantee; Precautions to be taken for Issuance of Bank Guarantee; Precautions to be taken for Payment under Bank Guarantee; Invocation & Enforcement.

Letters of Credit: General Considerations of Letters of credit; Parties to a Letter of credit; Types of Letters of credit; Documents under a Letter of credit; UCPDC 600; Banks obligation for payment of Letter of credit.

Deferred Payment Guarantees: Purpose of DPGs; Methods of Payment

Laws Relating to Bill Finance: Class of Bills and Laws Governing Bills; Classification of Bills; Categories of Bill Finance; Bill Finance and Legal Position of Banker

Various Types of Securities: Types of Securities; Escrow Arrangements; Trust and Retention Arrangements.

Laws Relating to Securities and Modes of Charging — I : Mortgage; Types of Mortgage; Enforcement of Mortgages

Laws Relating to Securities and Modes of Charging — II: Lien; Pledge; Hypothecation; etc.

Registration and Satisfaction of Charges: Definition of Charge; Procedure for Registration of Charge; Effect of Non-registration of Charges; Provisions of Law relating to Registration of Charges

Case Laws on Responsibility of Paying Bank: Negotiable Instruments Act and Paying Banks; Liability of Paying Banker; Payment in due course; Payment in Good Faith; Whether Payment under Mistake Recoverable

Case Laws on Responsibility of Collecting Bank: Statutory protection to Collecting Bank; Duties of Collecting Bank

MODULE C — BANKING RELATED LAWS

Recovery of Debts due to Banks and Financial Institutions Act, 1993(DRT Act) : Objective of the Act, Constitution of Tribunal, Procedure to be followed, Enforcement process

Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI): Constitutional Validity; Definitions; Regulation & Reconstruction; Enforcement of Security Interest; Central Registry; Offences & Penalties; Miscellaneous Provisions

Banking Ombudsmen Scheme: Purpose; Extent; Definitions; Establishment; Powers; Procedure for Redressal Grievance

Bankers Books Evidence Act, 1891: Applicability; Definition; Important Provisions

The Legal Services Authorities Act, 1987: Lok Adalats- Organization; Jurisdiction; Disposal of Cases; Awards

The Consumer Protection Act, 1986 and CERSAI: Preamble, Extent & Definitions; Consumer Protection Councils; Consumer Disputes Redressal Agencies; Objectives and important provisions of Central Registry of Securitisation Asset Reconstruction and Security Interest of India

The Law of Limitation: Definition; Computation of Limitation; Important Provisions in schedule to the Limitation Act

Tax Laws: Income Tax; Commodity Transaction Tax; Service Tax

Negotiable Instruments Act, 1881: Applicability; Definition; Important Provisions

Payment & Settlements Systems Act, 2007: Applicability; Definition; Important Provisions

MODULE D — COMMERCIAL LAWS WITH REFERENCE TO BANKING OPERATIONS

Indian Contract Act, 1872: Meaning and essentials of contract; Contract of Indemnity & Rights of Indemnity Holder; Contract of Guarantee; Contract of Bailment; Contract of Pledge; Contract of Agency

The Sale of Goods Act, 1930: Features; Sale & Agreement to Sell; Conditions and Warranties; Express & Implied; Rights of Unpaid Seller

Indian Partnership Act, 1932: Definition & Types of Partnerships; Relation of partners to one another & to third Parties; Minor admitted to benefits of partnership; Dissolution of a firm; Effect of non registration; Limited liability partnerships formation, registration, rights and liabilities of partners

Definition and features of a company: Definition & Features of a Company; Distinction between Company and Partnership

The Companies Act, 1956 (Now Companies Act, 2013): Definition, Features & Types of companies; Memorandum and Articles of Association; Doctrine of Ultra Vires, Constructive Notice, Indoor Management; Membership of Company- Acquisition, Cessation, Register, Rights & Duties of Members, Prospectus; Directors; Winding up of Companies

Foreign Exchange Management Act, 1999: Important Terms; Powers of RBI, Regulation and Management; Directorate of Enforcement

Transfer of Property Act, 1882: Sale, Mortgage of Immovable Property; Types of Mortgages; Sale with and without court intervention; Lease of Immovable Property

The Right to Information Act, 2005: Applicability; Definition; Important Provisions

Right to Information and Obligation of Public Authorities: Obligations; Procedure; Disposal; Appeal; Orders; Penalties.

The Prevention of Money Laundering Act, 2002: Obligations; Records to be Maintained; Procedure for Maintaining & Furnishing Information; Maintenance & Verifications of Records of Identity of Clients.

Information Technology Act, 2000: Definitions; Electronic Governance; Certifying Authorities; Digital Signature Certificates; Penalties; Appeal.