Checked 3 October 2026. RBI revises its directions often: the priority sector directions were updated as on 11.09.2026 and the KYC direction as on 14.08.2025. The NI Act text could not be fetched from India Code on 03.10.2026. Re-check any number against the current direction before an exam.
Four of the areas banks name for the promotion test are law and regulation, and they have fixed answers: the Negotiable Instruments Act, deposit rules, KYC reporting and priority sector lending and asset classification. Union Bank prints sections of the Negotiable Instruments Act in its syllabus, PNB names priority sector and loan documentation, and Bank of India tests "Banking Law and Practice". Those are the areas where a day of reading from the primary text moves a score. Our five practice quizzes are built on exactly these areas; this guide gives you the source behind each number, in the order we suggest you study them. The exam pattern guide shows which bank names which topic. One caution from it: none of the five circulars names KYC, so treat that topic as sound banking knowledge, not as a promised paper section.
RBI Master Circular on IRAC; FIU-IND FAQs; Negotiable Instruments Act, section 138 as amended in 2002.
The five topics, the primary source and the figures it states
| Topic | Primary source | Figures and rules the source states |
|---|---|---|
| Banker-customer relationship and deposits | RBI circular of 01.01.2024 on inoperative accounts; RBI circular of 21.04.2025 on minors’ accounts | A savings or current account is inoperative when there is no customer-induced transaction for over two years. A balance not operated for ten years or more goes to the Depositor Education and Awareness Fund. A minor above a bank-set age limit, not less than 10 years, may open and operate a savings or term deposit account independently |
| Negotiable Instruments Act and cheques | Negotiable Instruments Act 1881, sections 6, 138, 142; RBI circular of 04.11.2011 | Section 138 notice within 30 days of information of dishonour, then 15 days for the drawer to pay; complaint within one month of the cause of action (section 142). Banks do not pay a cheque presented more than three months after its date (from 01.04.2012) |
| KYC and anti-money laundering | RBI Master Direction on KYC (updated 14.08.2025); FIU-IND FAQs | Periodic KYC updation at least every 2 years for high-risk, 8 for medium-risk and 10 for low-risk customers. Records of identification kept for at least five years after the relationship ends. Cash Transaction Report by the 15th of the succeeding month; Suspicious Transaction Report within seven working days of being satisfied, through the Principal Officer |
| Priority sector lending | RBI Master Directions on Priority Sector Lending, 2025 (updated 11.09.2026) | For domestic commercial banks (excluding RRBs and small finance banks) and foreign banks with 20 or more branches: total 40% of ANBC or CEOBSE, whichever is higher; agriculture 18% (14% for non-corporate farmers, of which 10% for small and marginal farmers); micro enterprises 7.5%; weaker sections 12%. For regional rural banks: total 75% and weaker sections 15% |
| Loans, securities and NPAs | RBI Master Circular on IRAC (01.04.2025); SARFAESI Act 2002, section 13(2) | A term loan is an NPA when interest or an instalment is overdue for more than 90 days; short-duration crops two crop seasons, long-duration crops one. A substandard asset is one that has been an NPA for 12 months or less; it becomes doubtful after 12 months as substandard. A secured creditor’s notice under section 13(2) gives the borrower sixty days before the creditor may act under section 13(4) |
Each row is taken from the document named in the second column. Where a direction has "updated as on" dates, the figure shown is the one on the page we read on 3 October 2026.
Read the bank category before you memorise a priority sector number
- The 40% total, 18% agriculture, 7.5% micro and 12% weaker-sections figures are in the column for domestic commercial banks (other than regional rural banks and small finance banks) and foreign banks with 20 or more branches.
- Regional rural banks have a 75% total and a 15% weaker-sections target.
- A question can change only the category and keep the rest, so the number alone is not the answer.
RBI Master Directions on Priority Sector Lending, 2025, paragraph 7.1.
Study order and what to read first
Start with deposits and the banker-customer relationship, because every later topic assumes you know what an account, a mandate and a customer are. The two RBI circulars above are short. Then the Negotiable Instruments Act: read the definition of a cheque, the crossing and endorsement sections, the protection given to the paying and collecting banker, and the dishonour provisions in sections 138 to 142. Union Bank’s syllabus names sections 4 to 6, 10, 15, 16, 18 to 20, 31, 45, 47 to 49, 64, 84, 85, 87, 118, 123 to 131 and 138 to 142, so that is a sensible reading list even for another bank.
Next, KYC and anti-money laundering. The numbers to fix are the three updation intervals (2, 8 and 10 years by risk), the five-year record rule and the two FIU-IND time limits: the monthly cash report by the 15th and the suspicious transaction report within seven working days. Then priority sector lending: learn the table by bank category, because a question can change only the category. Last, loans, securities and NPAs: hypothecation versus pledge versus mortgage, the 90-day rule and its crop and overdraft variants, the asset categories and the SARFAESI notice.
Four sample questions from the audited bank
These four questions are read straight from our audited practice quizzes. Each one has been checked against its primary source; we do not write new questions for this page. Try to answer before you read the key.
Sample from the Negotiable Instruments Act and cheques quiz
Under section 138, within how many days of receiving information of dishonour must the payee send the drawer a notice demanding payment?
- A. 60 days
- B. 3 months
- C. 30 days
- D. 15 days
Answer: C. The payee or holder must make the demand in writing within 30 days of receiving information from the bank about the dishonour. The drawer then has 15 days from receipt of that notice to pay, and only if he fails does the cause of action for prosecution arise.
From our audited practice-quiz bank (Negotiable Instruments Act and Cheques). Option order here differs from the live quiz, which shuffles.
Sample from the KYC and anti-money laundering quiz
Within what time must a bank furnish a Suspicious Transaction Report to FIU-IND?
- A. By the 15th of the following month
- B. Within 30 days of the transaction
- C. Within 24 hours of the transaction
- D. Within 7 working days of being satisfied that the transaction is suspicious
Answer: D. The PML Rules require an STR to be furnished within seven working days of the principal officer being satisfied that a transaction is suspicious. The 15th of the succeeding month is the deadline for monthly reports such as the Cash Transaction Report.
From our audited practice-quiz bank (KYC Norms and Anti-Money Laundering). Option order here differs from the live quiz, which shuffles.
Sample from the loans, securities and NPAs quiz
Under RBI's income recognition and asset classification norms, when does a term loan become a non-performing asset?
- A. When the borrower misses any single payment
- B. When interest or an instalment of principal remains overdue for more than 90 days
- C. When interest remains overdue for more than 30 days
- D. When interest remains overdue for more than 180 days
Answer: B. A term loan becomes an NPA when interest and/or an instalment of principal remains overdue for more than 90 days. Earlier stages of overdue are tracked as Special Mention Accounts (SMA-0, 1 and 2) so that stress is caught before the account slips.
From our audited practice-quiz bank (Loans and Advances: Securities and NPAs). Option order here differs from the live quiz, which shuffles.
Sample from the banker-customer relationship and deposits quiz
Under RBI instructions, a savings or current account is treated as inoperative when there have been no customer-induced transactions for how long?
- A. Over one year
- B. Over ten years
- C. Over two years
- D. Over six months
Answer: C. Under RBI's revised instructions of 1 January 2024, a savings or current account becomes inoperative when there has been no customer-induced transaction in it for over two years. A customer-induced transaction is wider than a deposit or withdrawal: it includes a financial transaction made by or at the instance of the account holder, a non-financial transaction, and KYC updation done in person or through digital channels. Bank-induced entries such as interest credits, charges and taxes do not count. Ten years is the separate threshold at which an unclaimed balance moves to the DEA Fund.
From our audited practice-quiz bank (Banker-Customer Relationship and Deposit Accounts). Option order here differs from the live quiz, which shuffles.
A four-week plan (our suggestion)
| Week | Topic | What to do |
|---|---|---|
| 1 | Banker-customer relationship and deposits | Read the two RBI circulars; list the three time limits (two years, ten years, age floor of 10); take the quiz and read every explanation |
| 2 | Negotiable Instruments Act and cheques | Read sections 6, 85, 87, 124, 130, 131 and 138 to 142; write the section 138 timeline on one page; take the quiz |
| 3 | KYC and anti-money laundering, then priority sector lending | Memorise the 2/8/10-year intervals, five-year record rule and FIU-IND limits; copy the PSL table by bank category; take both quizzes |
| 4 | Loans, securities and NPAs, then a full revision | Work through the IRAC definitions and the SARFAESI notice sequence; retake any quiz you scored below 8 on; then read your own bank’s product circulars |
This is a suggestion of ours, not any bank’s schedule. If your bank’s notice names other areas (Bank of Baroda’s digital banking, Bank of Maharashtra’s IT), add them in week 4.
Preparation checklist
Tick each fact when you can state it without looking. Every line is a figure or rule from the primary sources above.
0 of 15 done
Ticks are saved only in this browser on this device.
Practise it, don't just read it
Reading shows you the rule; a quiz shows whether you can pick it out under time. Take the quiz for the topic you finished this week.
Five practice quizzes of ten questions each are live: Banker-Customer Relationship and Deposits, Negotiable Instruments Act and Cheques, KYC and Anti-Money Laundering, Priority Sector Lending, and Loans, Securities and NPAs. Every answer carries an explanation.
Back to the rest of the series: eligibility by bank, pattern and syllabus, selection and officer pay.
More in this series
- Eligibility by bank: years, JAIIB/CAIIB, age
- Exam pattern and syllabus by bank
- Selection: merit, seniority, vacancies and posting
- Officer pay after promotion: Scale I, DA and allowances
- SBI clerk to officer promotion (Trainee Officer / JMGS-I): what is public
- Bank promotion Scale I to Scale II: cycles we could source
- Bank promotion Scale II to Scale III: cycles we could source
- JAIIB and CAIIB increments and PQP: pay calculator
- JAIIB and CAIIB syllabus: every paper and module on one map
- Alerts and updates for JAIIB / CAIIB (IIBF)
Which topics should I prepare for the bank clerk to officer promotion test?
Start with what your bank’s circular names. Across Union Bank, PNB and Bank of India that is banking operations, deposits, customer service, the Negotiable Instruments Act, loans and loan documentation, priority sector and banking law. KYC and anti-money laundering are not named in any of the five circulars we read.
What are the time limits in section 138 of the Negotiable Instruments Act?
The payee must give a written notice within 30 days of receiving information from the bank that the cheque was returned unpaid. The drawer has 15 days from receiving the notice to pay. A complaint must be filed within one month of the cause of action arising (section 142). We could not fetch India Code on 3 October 2026, so check the current text.
How soon must a bank report a suspicious transaction?
The FIU-IND FAQs say a suspicious transaction report must be furnished not later than seven working days on being satisfied that the transaction is suspicious. Cash transaction reports are due by the 15th day of the succeeding month.
When does a loan become an NPA?
Under RBI’s Master Circular on income recognition, asset classification and provisioning, a term loan is an NPA when interest or an instalment of principal is overdue for more than 90 days. Short-duration crops take two crop seasons and long-duration crops one. An overdraft or cash credit is an NPA when it is "out of order".
What is the priority sector lending target for banks?
For domestic commercial banks (excluding RRBs and small finance banks) and foreign banks with 20 or more branches it is 40% of ANBC or CEOBSE, whichever is higher, with 18% for agriculture, 7.5% for micro enterprises and 12% for weaker sections. Regional rural banks have different figures: 75% in total and 15% for weaker sections.
Are the sample questions on this page real exam questions?
No. They are from our own audited practice-quiz bank, written from the primary sources and checked before going live. No bank publishes its promotion-test questions in the circulars we read.
Sources
- official — Negotiable Instruments Act, 1881 (India Code): sections 6, 138 and 142 (India Code was not reachable for our fetch on 03.10.2026; the periods quoted are those of the Act as amended in 2002)
- official — RBI circular RBI/2011-12/251 of 04.11.2011: Payment of Cheques/Drafts/Pay Orders/Banker’s Cheques (three-month validity from 01.04.2012)
- official — RBI circular RBI/2023-24/105 of 01.01.2024: Inoperative Accounts / Unclaimed Deposits in Banks - Revised Instructions
- official — RBI circular RBI/2025-26/26 of 21.04.2025: Opening of and operation in deposit accounts of minors
- official — RBI Master Direction - Know Your Customer (KYC) Direction, 2016 (updated as on 14.08.2025): periodic updation, record keeping
- official — FIU-IND, Frequently Asked Questions: time limits for Cash Transaction Reports and Suspicious Transaction Reports
- official — RBI Master Directions - Priority Sector Lending - Targets and Classification Directions, 2025 (RBI/FIDD/2024-25/128 of 24.03.2025, updated as on 11.09.2026)
- official — RBI Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances (RBI/2025-26/13 of 01.04.2025)
- official — Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (India Code): section 13(2) sixty-day notice
- reported — Union Bank of India Staff Circular 101648-2026 of 03.02.2026: Promotion Process from Clerical to Officer Cadre (JMGS-I) 2025-26, with Annexures I-III (full text of the bank’s own circular; copy hosted by BankersAdda)
- official — Our audited practice-quiz bank for this exam (50 questions, five quizzes, all matching the live quizzes on 03.10.2026)
official = a document published by the conducting body. reported = a news or coaching site we could not check against an original. Where sources disagree this page says so rather than picking one.
