JAIBP Branch Banking Syllabus

In Pakistan, which entity operates the automated clearing of cheques?

NIFT (National Institutional Facilitation Technologies), which provides image-based/electronic cheque clearing services across the country.

What is a remittance in banking?

The transfer of funds from one place/person to another through the banking system, either inland (within the country) or foreign (cross-border).

Name the main traditional instruments of inland remittance.

Demand Draft (DD), Pay Order (PO)/Banker's Cheque, Telegraphic/Telephonic Transfer (TT), and Mail Transfer (MT) — now largely replaced by electronic transfers.

What is the difference between a Pay Order and a Demand Draft?

A Pay Order is payable at the SAME branch/bank that issued it (used for local payments). A Demand Draft is drawn on a DIFFERENT branch/place of the same bank for payment elsewhere.

What are RTGS and its purpose in Pakistan?

Real-Time Gross Settlement — Pakistan's RTGS system (PRISM) settles large-value/time-critical interbank fund transfers individually and in real time on a gross basis.

What is the difference between RTGS and a system like clearing/IBFT for transfer settlement?

RTGS settles each transaction individually in real time (gross), typically for large values. Clearing/retail systems batch transactions and settle on a net basis.

Define a cheque.

A bill of exchange drawn on a specified banker, payable on demand, by which the drawer orders the bank to pay a certain sum to a named payee or bearer.

Who are the three parties to a cheque?

The Drawer (account holder who writes the cheque), the Drawee (the bank ordered to pay), and the Payee (the person to whom payment is to be made).

What is the effect of 'crossing' a cheque?

A crossed cheque cannot be paid over the counter in cash; it must be paid into a bank account, improving safety against misappropriation.

Differentiate a general crossing from a special crossing.

General crossing: two parallel lines (with or without 'and company'), payable through any bank into an account. Special crossing: a specific bank's name is written, so it must be paid only to/through that named bank.

What does 'Account Payee Only' crossing mean?

It is a direction that the cheque proceeds be credited only to the account of the named payee, making it non-transferable in practice and reducing fraud risk.

What is an 'order' cheque versus a 'bearer' cheque?

An order cheque is payable to a named payee or their order (requires endorsement to transfer). A bearer cheque is payable to whoever presents (bears) it, without endorsement.

What is endorsement of a cheque?

The signing on the back of an instrument by the holder to transfer rights to another person; types include blank, special (in favour of a named person), and restrictive endorsements.

What is the paying banker's duty before honouring a cheque?

Verify the cheque is properly drawn, signature matches, no material alteration, sufficient funds/arrangement exist, it is not stale/post-dated/stopped, and it is otherwise in order.

What is the collecting banker's role?

The bank that receives a cheque from its customer and presents it (via clearing/collection) to the drawee bank, crediting the customer's account once proceeds are realized.

What statutory protection does a collecting banker get, and on what condition?

Protection against conversion for collecting a crossed cheque, provided it acted in good faith, without negligence, and collected for a customer (e.g., proper KYC and account verification).

What is a 'stale' cheque and a 'post-dated' cheque?

A stale cheque is presented after its validity period (commonly 6 months in Pakistan) and is dishonoured. A post-dated cheque bears a future date and cannot be paid before that date.

What does 'dishonour of a cheque' mean?

Refusal by the drawee bank to pay a cheque, returning it unpaid with a reason such as insufficient funds, signature differs, account closed, payment stopped, or amount in words/figures differing.

List common reasons for cheque return/dishonour.

Insufficient/no funds, 'refer to drawer', signature differs/incomplete, amount in words and figures differ, stale or post-dated, material alteration not authenticated, payment stopped, account dormant/closed.

What liability arises for wrongful dishonour of a cheque by the bank?

If a bank wrongfully dishonours a cheque despite sufficient funds, it is liable to compensate the drawer for resulting damage to credit/reputation; the smaller the cheque, the larger the presumed reputational damage.

What is a stop-payment instruction?

A drawer's instruction to the bank not to pay a specified cheque; once validly recorded, the bank must dishonour that cheque if presented.

What is a Foreign Currency Account (FCY/FCA)?

An account maintained in a permitted foreign currency (e.g., USD, GBP, EUR) under the State Bank's foreign exchange regulations, used for foreign receipts/payments and holdings.

Under SBP rules, who may typically open foreign currency accounts in Pakistan?

Resident and non-resident individuals/firms/companies as permitted under the Foreign Exchange Manual, subject to KYC and source-of-funds rules; eligibility and operations are governed by SBP regulations.

What are 'home remittances' in the Pakistani banking context?

Funds sent by overseas Pakistanis to beneficiaries in Pakistan through banks/exchange companies, often via channels promoted under PRI (Pakistan Remittance Initiative).

What is the Pakistan Remittance Initiative (PRI)?

A joint SBP/Government/banking initiative to channel overseas workers' remittances through formal banking channels, improve speed/efficiency and discourage informal (hundi/hawala) transfers.

Why are formal home-remittance channels encouraged over informal hawala/hundi?

Formal channels are documented, support AML/CFT compliance, build foreign exchange reserves, and protect senders/beneficiaries, whereas hawala/hundi is illegal, undocumented and used for money laundering.

Name the basic trade-services products a branch may handle.

Letters of Credit (LC), Bank Guarantees, documentary collections (bills for collection), advance payments, and open-account/contract registration — facilitating import/export under SBP/trade rules.

What is a Letter of Credit (LC) at the branch level?

A bank's written undertaking, on behalf of an importer, to pay the exporter/beneficiary a stated amount against presentation of compliant documents within terms — providing payment assurance in trade.

Define operational risk at a branch.

The risk of loss from inadequate or failed internal processes, people and systems, or from external events — e.g., processing errors, fraud, system failures, robbery, and non-compliance.

What is the difference between fraud prevention controls and fraud detection controls?

Preventive controls stop fraud before it occurs (segregation of duties, authorization limits, access controls, KYC). Detective controls identify fraud after it happens (reconciliations, audits, exception/MIS reports, surprise checks).

What is a Suspicious Transaction Report (STR) and to whom is it filed in Pakistan?

A report a bank must file when a transaction appears suspicious/unusual or possibly linked to money laundering or terrorist financing; in Pakistan it is filed with the Financial Monitoring Unit (FMU).