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

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2. computation of NDTL:

Demand and time liabilities (liabilities to others)

Rs. in crore

Total deposits from others

(Demand deposits from others+ Savings deposits from others+ Time deposits from others)

(4773.42+15197.12+40,508.23)
60,478.77

Bills payable
707.98

Inter-office adjustment (Net)
126.91

Interest accrued
214.65

50% of others (50% of 1833.17)
941.59


62,469.9


Liabilities with banking system

Demand deposits from banks
236.71

Term deposits from banks
1115.10

Borrowings from banks
6.44

Total
1358.25


Assets with banking system

Balance with banks in India

(Balances with banks in India in Current Accounts +In Other Deposit Accounts + Money at Call and short notice with Banks

(344.60+780.00) + (940.00)
2064.60


NDTL = Liabilities to others + Net Inter Bank liabilities (NIBL)

Where NIBL = Liabilities to banking system – assets with banking system

Net inter bank liabilities (NIBL) = 1,358.25-2064.60

= -706.35

NDTL = 62469.9+0 (since NIBL is negitive)

Income from SLR investments =62,469.9´ 0.25 ´ .06 = Rs.937.05

Income from CRR balances =62,469.9´ 0.045 ´ 0.04 = Rs.112.45

Total income from SLR and CRR investments = 937.05+112.45 = 1049.50



Interest expense net of income from SLR and CRR investments

=interest on deposits- Total income from SLR and CRR investments = 2710.32 – 1049.50=1660.82

Total expenses =interest expenses + Operating cost

1660.82 + 1257.49= 2918.31

Amount available for lending from deposits

= Deposits [1 – (SLR + CRR)]

= 60,478.77 [1 – (0.25 + 0.045)]

= 42,637.530

Total expenses as a percentage of lendable amount = = 6.84%

The total cost is 6.84%. The margin needed by the bank is to be added to this. If the current net interest margin* of 2.85% is added the interest to be charged on the loan will be (6.84 + 2.85)= 9.69%. That is 9.71%.

Earning:   Approval pending.