SOLVED CAIIB COMBINED PAPER 46:
1. Balance sheet of a bank provides the following information:
Fixed Assets - 1000cr
Investment in central Govt Securities - Rs 10000cr
In standard loan accounts
Housing Loans - RS 6000cr (Secured, below Rs 10 lac)
the Retail loan - Rs 4000cr
Other loans - Rs 8000 cr
sub-standard secured loans - Rs 1000 cr
sub-standard unsecured loans - Rs 500 cr
Doubtful loans (D-1, secured) - Rs 800 cr
Doubtful loans (D-1, unsecured) - Rs 600 cr
Doubtful loans (D-2, secured) - Rs 500 cr
Doubtful loans (D-2, unsecured) - Rs 1000 cr
Doubtful loans (D-3, secured) - Rs 1000 cr
Doubtful loans (D-3, unsecured) - Rs 600 cr
Loss Assets - 50 cr and
other assets - Rs 500 cr.
Answer the following questions, based on this information, by using standard Approach for credit risk.
1. What is the amount of RWAs for investment in govt securities?
a. Rs 5000cr
b. Rs 3500cr
c. Rs 2500cr
d. Nil
2. What is the amount of RWAs for sub-standard secured accounts?
a. Rs 500cr
b. Rs 7500cr
c. Rs 1000cr
d. Rs 1500cr
3. What is the amount of RWAs for sub-standard unsecured accounts?
a. Rs 500cr
b. Rs 7500cr
c. Rs 1000cr
d. Rs 1500cr
4. What is the amount of RWAs for doubtful (D-1, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
5. What is the amount of RWAs for doubtful (D-1, unSecured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
6. What is the amount of RWAs for doubtful (D-2, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
7. What is the amount of RWAs for doubtful (D-2, unSecured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
8. What is the amount of RWAs for doubtful (D-3, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
9. What is the amount of RWAs for doubtful (D-3, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
10. What is the amount of RWAs for retail loans?
a. 3000cr
b. 4000cr
c. 5000cr
d. 6000cr
11. What is the amount of RWAs for housing loans?
a. 3000cr
b. 4000cr
c. 5000cr
d. 6000cr
Solution :
1. d
RW against Govt Securities = 0 %
So, RWA
= 10000 x 0%
= 0 Cr
2. d
If the provision is less than 20 %, then RW is 150%
If the provision is 20-50 %, then RW is 100%
If the provision is more than 50 %, then RW is 50%
Provision in Sub-Standard Secured - 15 %, and so, RW = 150 %
So, RWA
= 1000 x 150 %
= 1500 Cr
3. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in Sub-Standard Un-Secured - 25 %, and so, RW = 100 %
So, RWA
= 500 x 100 %
= 500 Cr
4. c
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-1, Secured) - 25 %, and so, RW = 100 %
So, RWA
= 800 x 100 %
= 800 Cr
5. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-1, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 600 x 50 %
= 300 Cr
6. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-2, Secured) - 40 %, and so, RW = 100 %
So, RWA
= 500 x 100 %
= 500 Cr
7. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-2, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 1000 x 50 %
= 500 Cr
8. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-3, Secured) - 100 %, and so, RW = 50 %
So, RWA
= 1000 x 50 %
= 500 Cr
9. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-3, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 600 x 50 %
= 300 Cr
10. a
RW on retail loans = 75 %
So, RWA
= 4000 x 75%
= 3000 Cr
11. a
RW on housing loans = 50 %
So, RWA
= 6000 x 50%
= 3000 Cr
2. Basic Indicator Approach (BIA) is one of the methods for computation of capital charge for:
a. Interest rate risk
b. Market risk
c. Operational risk
d. Credit risk
Ans - c
3. For standard assets, the provision required is ...... of the outstanding amount.
a. 0.10%
b. 0.20%
c. 0.40%
d. 0.25%
Ans - c
4. As per Basel III, general provisions and loss reserves are included in Tier-2 capital maximum to the extent of:
a. 1.25% of total risk weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
b. 0.6% of total risk weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
c. 0.6% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach
d. 1.25% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach
Ans - a
5. As per Basel III, the value of revaluation reserve is to be taken at ...... % discount to include in Tier 2 capital
a. 60%
b. 55%
c. 50%
d. 45%
Ans - b
6. A bank has compiled following data for computing its CRAR as on 30 Sep 2014
Tier I capital 2500
Tier ii capital 2000
RWA for credit risk other than retail assets
(include 2000 crores of commercial real estate - 35,500
Exposure on retail assets - 8,700
Total eligible financial collaterals available for retail assets - 1200
Capital charge for general market risk net position - 450
Capital charge for specific risk - 190
Capital charge for equity - 150
Vertical adjustment - 15
Horizontal adjustment - 10
Total capital charge for options - 70
Gross income for the previous year - 495
Gross income for the year before previous year - 450
Gross income for 2nd year before previous year - 390
Based on the data given above, answer the following questions.
The capital required for credit risk at minimum required rate as per RBI is ......
a. Rs. 4585 Crores
b. Rs. 4383 Crores
c. Rs. 3701 Crores
d. Rs. 3508 Crores
Ans - c
= 8700-1200=7500
@ 75% =5625
35500+5625=41125
9%= 3701 Crs
7. Total Risk weighted assets for market risk is ......
a. Rs. 9833 Crores
b. Rs. 9553 Crores
c. Rs. 8952 Crores
d. Rs. 7156 Crores
Ans - a
Total Risk weighted assets for market risk
= 450+190+15+10+150+70
= 885/.09
= 9833 Crores
8. Total weighted assets for operational risk is ......
a. Rs. 4944 Crores
b. Rs. 4323 Crores
c. Rs. 9553 Crores
d. Rs. 7156 Crores
Ans - a
1335/3
=885/.09
=4944
9.The CRAR of the bank as on 30th Sept 2014 is ......
a. 7.35 %
b. 8.05 %
c. 9.22 %
d. 10.23 %
Ans - b
41125+9833+4944 = 55902
4500/55902
= 8.049
10. The bank compares its tier I CRAR with minimum require tier I CRAR And finds
a. Its tier I CRAR is more and exceeds requirement by 675 Crs
b. Its tier I CRAR is more and exceeds requirement by 355 Crs
c. Its tier I CRAR falls short by Rs 854 Crs
d. None of these
Ans - c
(As per RBI, Tier I capital adequacy ratio should be atleast 6 %)
RWA is 55902
6 % of 55902 = 55902 x 6/100 = 3354.
Tier I capital is 2500.
So, 3354-2500=854
Tier I capital will be short fall by Rs. 854 Crores.
Fixed Assets - 1000cr
Investment in central Govt Securities - Rs 10000cr
In standard loan accounts
Housing Loans - RS 6000cr (Secured, below Rs 10 lac)
the Retail loan - Rs 4000cr
Other loans - Rs 8000 cr
sub-standard secured loans - Rs 1000 cr
sub-standard unsecured loans - Rs 500 cr
Doubtful loans (D-1, secured) - Rs 800 cr
Doubtful loans (D-1, unsecured) - Rs 600 cr
Doubtful loans (D-2, secured) - Rs 500 cr
Doubtful loans (D-2, unsecured) - Rs 1000 cr
Doubtful loans (D-3, secured) - Rs 1000 cr
Doubtful loans (D-3, unsecured) - Rs 600 cr
Loss Assets - 50 cr and
other assets - Rs 500 cr.
Answer the following questions, based on this information, by using standard Approach for credit risk.
1. What is the amount of RWAs for investment in govt securities?
a. Rs 5000cr
b. Rs 3500cr
c. Rs 2500cr
d. Nil
2. What is the amount of RWAs for sub-standard secured accounts?
a. Rs 500cr
b. Rs 7500cr
c. Rs 1000cr
d. Rs 1500cr
3. What is the amount of RWAs for sub-standard unsecured accounts?
a. Rs 500cr
b. Rs 7500cr
c. Rs 1000cr
d. Rs 1500cr
4. What is the amount of RWAs for doubtful (D-1, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
5. What is the amount of RWAs for doubtful (D-1, unSecured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
6. What is the amount of RWAs for doubtful (D-2, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
7. What is the amount of RWAs for doubtful (D-2, unSecured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
8. What is the amount of RWAs for doubtful (D-3, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
9. What is the amount of RWAs for doubtful (D-3, Secured) accounts?
a. Rs 300cr
b. Rs 500cr
c. Rs 800cr
d. Rs 900cr
10. What is the amount of RWAs for retail loans?
a. 3000cr
b. 4000cr
c. 5000cr
d. 6000cr
11. What is the amount of RWAs for housing loans?
a. 3000cr
b. 4000cr
c. 5000cr
d. 6000cr
Solution :
1. d
RW against Govt Securities = 0 %
So, RWA
= 10000 x 0%
= 0 Cr
2. d
If the provision is less than 20 %, then RW is 150%
If the provision is 20-50 %, then RW is 100%
If the provision is more than 50 %, then RW is 50%
Provision in Sub-Standard Secured - 15 %, and so, RW = 150 %
So, RWA
= 1000 x 150 %
= 1500 Cr
3. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in Sub-Standard Un-Secured - 25 %, and so, RW = 100 %
So, RWA
= 500 x 100 %
= 500 Cr
4. c
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-1, Secured) - 25 %, and so, RW = 100 %
So, RWA
= 800 x 100 %
= 800 Cr
5. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-1, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 600 x 50 %
= 300 Cr
6. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-2, Secured) - 40 %, and so, RW = 100 %
So, RWA
= 500 x 100 %
= 500 Cr
7. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-2, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 1000 x 50 %
= 500 Cr
8. b
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-3, Secured) - 100 %, and so, RW = 50 %
So, RWA
= 1000 x 50 %
= 500 Cr
9. a
If the provision is less than 20 %, then RW is 150%
If the provision is 20-49 %, then RW is 100%
If the provision is 50% or more, then RW is 50%
Provision in doubtful (D-3, unsecured) - 100 %, and so, RW = 50 %
So, RWA
= 600 x 50 %
= 300 Cr
10. a
RW on retail loans = 75 %
So, RWA
= 4000 x 75%
= 3000 Cr
11. a
RW on housing loans = 50 %
So, RWA
= 6000 x 50%
= 3000 Cr
2. Basic Indicator Approach (BIA) is one of the methods for computation of capital charge for:
a. Interest rate risk
b. Market risk
c. Operational risk
d. Credit risk
Ans - c
3. For standard assets, the provision required is ...... of the outstanding amount.
a. 0.10%
b. 0.20%
c. 0.40%
d. 0.25%
Ans - c
4. As per Basel III, general provisions and loss reserves are included in Tier-2 capital maximum to the extent of:
a. 1.25% of total risk weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
b. 0.6% of total risk weighted assets under standardized approach and 0.6% of total risk weighted assets under IRB approach
c. 0.6% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach
d. 1.25% of total risk weighted assets under standardized approach and 1.25% of total risk weighted assets under IRB approach
Ans - a
5. As per Basel III, the value of revaluation reserve is to be taken at ...... % discount to include in Tier 2 capital
a. 60%
b. 55%
c. 50%
d. 45%
Ans - b
6. A bank has compiled following data for computing its CRAR as on 30 Sep 2014
Tier I capital 2500
Tier ii capital 2000
RWA for credit risk other than retail assets
(include 2000 crores of commercial real estate - 35,500
Exposure on retail assets - 8,700
Total eligible financial collaterals available for retail assets - 1200
Capital charge for general market risk net position - 450
Capital charge for specific risk - 190
Capital charge for equity - 150
Vertical adjustment - 15
Horizontal adjustment - 10
Total capital charge for options - 70
Gross income for the previous year - 495
Gross income for the year before previous year - 450
Gross income for 2nd year before previous year - 390
Based on the data given above, answer the following questions.
The capital required for credit risk at minimum required rate as per RBI is ......
a. Rs. 4585 Crores
b. Rs. 4383 Crores
c. Rs. 3701 Crores
d. Rs. 3508 Crores
Ans - c
= 8700-1200=7500
@ 75% =5625
35500+5625=41125
9%= 3701 Crs
7. Total Risk weighted assets for market risk is ......
a. Rs. 9833 Crores
b. Rs. 9553 Crores
c. Rs. 8952 Crores
d. Rs. 7156 Crores
Ans - a
Total Risk weighted assets for market risk
= 450+190+15+10+150+70
= 885/.09
= 9833 Crores
8. Total weighted assets for operational risk is ......
a. Rs. 4944 Crores
b. Rs. 4323 Crores
c. Rs. 9553 Crores
d. Rs. 7156 Crores
Ans - a
1335/3
=885/.09
=4944
9.The CRAR of the bank as on 30th Sept 2014 is ......
a. 7.35 %
b. 8.05 %
c. 9.22 %
d. 10.23 %
Ans - b
41125+9833+4944 = 55902
4500/55902
= 8.049
10. The bank compares its tier I CRAR with minimum require tier I CRAR And finds
a. Its tier I CRAR is more and exceeds requirement by 675 Crs
b. Its tier I CRAR is more and exceeds requirement by 355 Crs
c. Its tier I CRAR falls short by Rs 854 Crs
d. None of these
Ans - c
(As per RBI, Tier I capital adequacy ratio should be atleast 6 %)
RWA is 55902
6 % of 55902 = 55902 x 6/100 = 3354.
Tier I capital is 2500.
So, 3354-2500=854
Tier I capital will be short fall by Rs. 854 Crores.