Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance Management of Financial Institutions - II - Question Paper

ques. Paper
Management of Financial Institutions - II (322) : January 2006

part D : Case Study (50 Marks)

This part consists of ques. with serial number one - 5.

ans all ques..

Marks are indicated against every ques..

Do not spend more than 80 - 90 minutes on part D.

Case Study

learn the case carefully and ans the subsequent questions:



1. Comment on the risk profile of the bank based on (i) CAR (ii) avg. Risk Weight (iii) Gross NPAs to Gross Advances (iv) Net NPAs to Net Advances and (v) ENPA.

(12 marks) < ans >

2. Considering the liability side of the balance sheet and the expenditure side of the profit and loss account, calculate the rate of interest to be charged on a loan as per the cost plus loan pricing model by protecting the existing net interest margin. presume the return earned on SLR investments is 6% and CRR balance is 4%.

(8 marks) < ans >

3. You are needed to calculate the maturity gap for different periods up to 1 year. discuss the nature and timing of change in the interest rates during the year that will be advantageous and disadvantageous to the bank. Recently RBI has hiked the reverse repo rate by 25 basis points, which is expected to increase all short term interest rate by the identical amount. In this context, compute the change in the profitability of the banks.

(8 marks) < ans >

4. Recently Banks have been allowed to form alliance with insurance companies to distribute the insurance products. In this context, discuss the benefits that are going to accrue to banks, insurance companies and customers.

(12 marks) < ans >

5. What is a contingent liability? discuss how it helps to improve the income and business of a bank.

(10 marks) < ans >

BALANCE SHEET AS ON 31ST MARCH, 2005

(Rupees in Crores)


Schedule
As on

31.3.2005
As on

31.3.2004

Capital And Liabilities




Capital
01
460.12
460.12

Reserves And Surplus
02
3154.32
2627.02

Deposits
03
61830.59
50558.93

Borrowings
04
2020.96
934.24

Other Liabilities and Provisions
05
4947.27
3736.37

TOTAL

72413.26
58316.68

Assets




Cash and Balances with Reserve Bank of India
06
3647.18
2400.04

Balances with Banks and Money at call and short notice
07
2924.79
1447.89

Investments
08
22792.79
22946.24

Advances

Earning:   Approval pending.