Trade Finance BD · Original revision handnote · Edition 2026.1
LPGB — Laws and Practice of General Banking
JAIBB · Compulsory · 14 October 2026
Combine legal principles with account-opening, negotiable-instrument, cash and control practice. Check current consolidated law alongside legacy syllabus references.
Use this revision pack with the full syllabus and official papers. Important topics are revision priorities, not a promise of future questions.
Contents
- I-A · Institutional law and debt recovery
- I-B · Negotiable instruments and note handling
- I-C · Foreign exchange and financial-crime law
- I-D · Business, property and limitation law
- I-E · Evidence, technology and information
- I-F · Other legal safeguards
- II-A · Banker–customer relationships
- II-B · Account opening and customer due diligence
- II-C · Cheques, endorsements and collection
- II-D · Digital services and account operations
- II-E · Cash, liquidity and branch services
- II-F · Reconciliation and records
- Worked example
- Applied case and model response
- Terminology
- Official syllabus and papers
Revision priorities
Account mandates, bank powers and negotiable instruments — Reviewed 7th paper: 7th Banking Professional Exam, page 1, Q1–Q4
Digital control, cash and reconciliation — Syllabus priority. Editorial judgement based on syllabus importance.
Syllabus-mapped handnotes
Module I-A
Institutional law and debt recovery
Syllabus scope: BB Order 1972; Bank Company Act 1991; legacy Financial Institutions Act 1993; Artho Rin Adalat Ain 2003
A banking licence determines permitted activities; prudential rules constrain how they are performed. Separate central-bank powers from a commercial bank’s contractual relationship with its customer. Related-party lending requires attention to authority, conflicts, limits and independent assessment. Debt recovery needs enforceable documentation and a clear record of default, demand and required steps before litigation. The syllabus includes legacy statute names: finance-company questions should also be checked against the Finance Company Act 2023 and subsequent rules. Do not memorise an old act as the sole current framework.
Apply it in bankingBefore a recovery suit, verify borrower identity, liability, security enforceability, notices and the applicable statutory preconditions. Cite the current provision when the question requests a section.
Practice question: Explain institutional legal powers and the controls needed before legal loan recovery.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module I-B
Negotiable instruments and note handling
Syllabus scope: Negotiable Instruments Act 1881; note-refund rules
A promissory note contains a promise to pay; a bill of exchange contains an order to pay; a cheque is drawn on a bank under its legal characteristics. Negotiability and endorsement affect transfer and holder rights. Distinguish the paying bank from the collecting bank and apply the relevant standard of care. Crossing directs the collection route but does not excuse fraud or defective authority. Damaged-note handling follows the applicable refund rules and evidence requirements; it is different from returning a dishonoured cheque.
Apply it in bankingWhen a crossed cheque is presented over the counter, examine the crossing and applicable payment restrictions before considering the signature and account balance.
Practice question: Compare a note, bill and cheque and explain the responsibilities of paying and collecting banks.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module I-C
Foreign exchange and financial-crime law
Syllabus scope: FERA 1947; MLPA 2012; Anti-Terrorism Act 2009; current amendments and directions
Foreign-exchange permission, customer due diligence and transaction reporting are separate requirements. Authorised-dealer status does not permit every foreign-currency transaction without conditions. AML controls identify the customer and beneficial owner, understand purpose and monitor activity. Terrorist financing can involve lawfully obtained funds, so a lawful income source alone does not resolve end-use risk. Apply current sanctions, reporting and confidentiality obligations through the institution’s procedure. Distinguish a suspicious-transaction decision from proof of an offence and avoid tipping off the customer.
Apply it in bankingA plausible invoice does not resolve an unexplained third-party beneficiary. Establish the relationship and purpose, then escalate unresolved inconsistency.
Practice question: Explain how foreign-exchange compliance and AML/CFT controls apply together to a remittance.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module I-D
Business, property and limitation law
Syllabus scope: Companies; contract; property transfer; limitation; bankruptcy; customs; stamp; partnership; registration
Capacity, authority, consent and enforceability determine whether a contract binds the parties. Verify the legal form of a customer and the authority of signatories; ownership is different from authority to borrow. Security creation may require appropriate execution, stamping, registration or perfection under the applicable instrument. Limitation periods affect remedies and require careful tracking of dates and legally effective acknowledgements. A recovery judgement and a valid security interest address different legal questions. Legacy customs references in the syllabus must be read with the current Customs Act and amendments.
Apply it in bankingFor a company mortgage, examine board authority, title, encumbrances, execution and required registrations rather than relying solely on a property valuation.
Practice question: Explain the legal checks needed to create and enforce a bank’s security.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module I-E
Evidence, technology and information
Syllabus scope: Bankers’ Books Evidence; ICT; legacy digital-security references; right to information; current cyber law
Records must be reliable, accessible and protected against unauthorised alteration. Bank statements, system logs and electronic instructions can require proof of authenticity and compliance with evidentiary rules. Confidential customer information cannot be disclosed merely because someone requests it; establish the lawful basis, recipient and scope. The syllabus’s older digital-security labels are revision prompts, not confirmation of current law. For a current-law answer, check the official consolidated cyber legislation and its commencement and repeal provisions. Identify legal duties separately from the bank’s internal technology policy.
Apply it in bankingPreserve transaction logs with access controls and an audit trail. An editable screenshot alone may not demonstrate a complete or authentic banking record.
Practice question: Explain evidence preservation and lawful disclosure in electronic banking.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module I-F
Other legal safeguards
Syllabus scope: Environment; power of attorney; deposit protection; legacy deposit-insurance references
A power of attorney must be valid and cover the proposed transaction; it does not transfer ownership by itself. Check scope, execution, validity and any revocation or termination issue. Environmental duties can affect a borrower’s licence, cash flow, liability and security value. Deposit-protection arrangements support confidence but have eligibility, limits and current legislation that must be verified. Avoid applying a historical protection amount to a present customer without checking the current framework. Distinguish a statutory protection scheme from an unconditional bank guarantee.
Apply it in bankingIf an attorney requests withdrawal, establish both valid authority and its scope. A general-looking document does not automatically authorise every financial act.
Practice question: Explain power-of-attorney checks and the purpose and limits of deposit protection.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-A
Banker–customer relationships
Syllabus scope: Contractual relationships; duties; rights; charges; lien and set-off context
The relationship depends on the service. A deposit generally creates a debtor–creditor relationship; collection can involve agency; safe custody has different duties. Understand mandate, confidentiality, reasonable care and lawful instructions. A bank’s lien and set-off rights have conditions and exceptions; do not assume every asset or joint balance secures every personal liability. Charges require a proper basis and disclosure. Identify capacity and ownership before applying a right, and distinguish a contractual power from a statutory duty.
Apply it in bankingA trust or joint account may not be available to set off a separate personal debt. Analyze ownership and mutuality before proposing a debit.
Practice question: Explain how the banker–customer relationship changes across deposits, collection and custody.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-B
Account opening and customer due diligence
Syllabus scope: KYC/eKYC; CDD/EDD; PEP; beneficial ownership; sanctions; legal forms
Account opening establishes identity, legal existence, authority, beneficial ownership, purpose and expected activity. Companies require relevant incorporation and authority documents; partnerships require partner identity, agreement and an appropriate mandate. Risk classification guides due diligence and monitoring. A PEP is not automatically prohibited, but may require enhanced measures under the framework. Electronic onboarding must establish identity and protect records, not merely collect an image. Sanctions screening and beneficial-owner checks should continue when information or risk changes.
Apply it in bankingFor a company, identifying its authorised director is insufficient if the ultimate beneficial owner remains unknown. Document the ownership chain and control arrangements.
Practice question: Prepare an account-opening and ongoing monitoring checklist for a partnership and a company.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-C
Cheques, endorsements and collection
Syllabus scope: Bills/notes; endorsements; crossing; paying and collecting responsibilities
Examine the mandate, signature, date, amount, alterations, crossing, endorsements and any relevant stop instruction. The paying bank addresses authority and payment from the account; the collecting bank addresses collection for its customer and applicable protection conditions. Endorsement transfers rights in the manner allowed by law; blank, special and restrictive forms have different implications. A material alteration or suspicious chain requires verification. Clearing technology improves processing speed but does not eliminate the legal and operational checks.
Apply it in bankingAn apparently valid signature does not cure a material alteration in the payee or amount. Escalate the inconsistency and preserve the evidence.
Practice question: Explain cheque examination and compare paying-bank and collecting-bank duties.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-D
Digital services and account operations
Syllabus scope: Transfers; stop instructions; dormant/minor/no-frill accounts; taxes and duties; digital banking
Execute instructions through authenticated channels and the account mandate. A stop-payment request requires timely recording and communication to the relevant process. Dormant-account activation needs identity and authority checks; inactivity does not remove the bank’s responsibilities. Minor and no-frill accounts have distinct eligibility and operational conditions. Taxes, duties and charges need current bases, exemptions and rates. Explain customer authentication, authorisation, confirmation and dispute handling separately. An OTP confirms one control step, not the absence of social-engineering fraud.
Apply it in bankingIf a customer disputes a digital transfer, preserve logs and follow the incident and complaint process before assuming that the mere use of an OTP settles liability.
Practice question: Explain controls for dormant-account activation and disputed digital transfers.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-E
Cash, liquidity and branch services
Syllabus scope: DTL/CRR; vault/counter limits; counterfeit notes; lockers; IBC/OBC; e-chalan; remittance
Cash operations need dual custody where required, segregation of duties, verified counts, limits, reconciliation and physical security. DTL and reserve requirements use regulatory definitions and reporting dates; do not treat every balance as interchangeable. Identify suspected counterfeit notes under the prescribed handling procedure and record the event. Lockers and custody services need clear terms and access control. Inward and outward bill collection require instrument tracking and proceeds reconciliation. Electronic government payment and remittance channels still require customer identity, transaction purpose and correct accounting.
Apply it in bankingA cash shortage requires investigation and controlled reconciliation; it must not be concealed through a temporary unauthorised account debit.
Practice question: Prepare a branch cash-control and bill-collection checklist.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Module II-F
Reconciliation and records
Syllabus scope: Internal controls; records retention; general ledger; balancing; DCFCL context
Reconciliation compares independent records and identifies timing differences, errors and unauthorised items. Every unresolved entry needs an owner, ageing and an escalation date. General-ledger balancing is necessary but cannot prove that each underlying transaction is authorised or correctly classified. Retain records for the applicable legal and policy periods with secure access and reliable retrieval. Control checklists should document evidence, not merely signatures. Separate preparation, review and exception approval to reduce the chance that one person creates and hides an error.
Apply it in bankingAn old inter-branch suspense item may indicate more than a timing difference. Obtain the underlying transaction, reconcile both sides and resolve it through an authorised adjustment.
Practice question: Explain reconciliation and how a branch should manage ageing exceptions.
Answer framework: use the explanation above, add the banking example, then address assumptions and controls. Expand to match the question’s marks and command words.
Worked example
Monthly instalment calculation
A BDT 1,000,000 loan is amortised monthly over five years at a nominal annual rate of 12%, compounded monthly. Calculate the equal monthly instalment and total payments, ignoring fees.
- Monthly rate r = 0.12/12 = 0.01; number of payments n = 5×12 = 60.
- EMI = P×r / [1 − (1+r)^−n].
- EMI ≈ BDT 22,244.45; total payments ≈ BDT 1,334,667.00 using the rounded instalment.
- The actual schedule may adjust the final instalment for rounding. This practice calculation does not determine a bank’s legal charging terms.
Common mistake: Use the monthly rate with the monthly payment count; do not mix an annual rate with 60 periods.
Case clinic
Unauthorised account mandate
A company employee brings a signed letter asking the branch to add a new signatory. The existing account mandate requires a board resolution, and the company’s ownership recently changed. Advise the branch.
Model response
Authenticate the instruction through established channels. Verify the current legal identity, board authority and the requirement under the mandate; the employee’s possession of a letter is not sufficient evidence.
Obtain the required resolution, updated authorised-signatory records and customer/beneficial-owner information. Review whether the ownership change affects risk, control or required approvals.
Until authority is established, avoid executing the disputed change. Document the issue, communicate clearly with authorised representatives and escalate any suspected fraud. Preserve records and update ongoing monitoring after a valid change.
Practice marking guide · 20 marks- Identify authority issue (5)
- Legal and KYC checks (6)
- Proportionate interim action (4)
- Records and monitoring (5)
Terminology and comparisons
| Lien / set-off | Retention of eligible property versus combining eligible mutual debts; both depend on their legal conditions. |
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| Holder / holder in due course | Possession and entitlement versus additional statutory qualifications and protections. |
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| KYC / beneficial ownership | Identifying the customer versus identifying natural persons who ultimately own or control the customer. |
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| Liquidity reserve / capital | Resources addressing payment needs versus resources absorbing losses. |
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Official references
Official papers are linked for comparison; their full text and official model answers are not reproduced. This pack’s explanations, examples and cases are original. Numerical examples are practice assumptions. Current law, instructions and subsequent amendments must be checked for regulatory answers.