CAIIB BFM NPA Case Studies (Part 2): Provisioning & PCR Solved Numericals 2026

If one topic decides your score in Bank Financial Management. It is the CAIIB BFM NPA case study. Every recent attempt has carried numerical case studies on NPA classification. Provisioning, gross and net NPA, and the provision coverage ratio (PCR). Get the method right once, and these become guaranteed marks.

This is Part 2 of our NPA case-study series. Below you get two complete. Exam-style case studies — PMP Bank and DAKKOO Bank — solved line by line.

With the exact formulas. The standard provisioning percentages. A quick-facts table.

The traps that cost candidates marks, and a focused FAQ. Treat it as a worked masterclass, not just an answer key.

Why the CAIIB BFM NPA Case Study Decides Your Score

BFM rewards application, not memorisation. A theory question on asset classification carries one mark. A single NPA case study can carry a cluster of linked questions built on one data set. Master one calculation chain and you unlock the whole block.

The examiner reuses a tight set of skills: classifying advances. Applying the right provisioning percentage to the right base. And converting between gross and net figures. The numbers change; the method does not. That is exactly why a CAIIB BFM NPA case study is so scoreable once drilled.

NPA Provisioning Cheat-Sheet (Quick Facts)

Before the numericals, lock in the structure. The table below is the mental model behind almost every NPA provisioning question. The exact rates are indicative of the standard textbook framework used in these case studies. Always confirm the current figures on the latest official IIBF notification. RBI Master Circular before your attempt.

Memorise the ladder: provisioning increases as recovery prospects fall. The unsecured part of any doubtful loan is always provided at 100%. Hold this and the maths becomes mechanical.

The Three Core NPA Formulas You Will Reuse

Every question in this CAIIB BFM NPA case study set reduces to three formulas. Write them at the top of your rough sheet on exam day.

1. Gross NPA % = (Gross NPA ÷ Gross Advances) × 100
2. Net NPA % = (Net NPA ÷ Net Advances) × 100. Where Net NPA = Gross NPA &minus. Total Provisions and Net Advances = Gross Advances − Total Provisions
3. Provision Coverage Ratio (PCR) = (Total Provisions held ÷ Gross NPA) × 100

CAIIB BFM NPA Case Study 2 — PMP Bank (Provisioning & PCR)

Q1. Provision on standard accounts (all general advances)

First isolate the standard book. NPA is 9% of advances, so:

• Gross NPA amount = Rs. 40,000 × 9% = Rs. 3,600 cr
• Standard advances = Rs. 40,000 − Rs. 3,600 = Rs. 36,400 cr
• Provision @ 0.40% = Rs. 36,400 × 0.40% = Rs. 145.60 cr

Answer: Rs. 145.60 cr. The trap: applying 0.40% to the full Rs. 40,000 cr. Provision the standard portion only.

Q2. Provision on NPA accounts

The gap between gross. Net NPA is the provision already carried on NPAs. So provision on NPA = (Gross NPA % − Net NPA %) of advances:

• = (9% − 2%) of Rs. 40,000 = 7% × Rs. 40,000 = Rs. 2,800 cr

Answer: Rs. 2,800 cr. This shortcut. Net NPA being gross NPA minus provisions. Is the single most useful idea in the whole set.

Q3. Total provision (standard + NPA)

• NPA provision = Rs. 2,800.00 cr
• Standard provision = Rs. 145.60 cr
• Total = Rs. 2,945.60 cr

Answer: Rs. 2,945.60 cr.

Q4. Amount of gross NPA

Rs. 40,000 × 9% = Rs. 3,600 cr. Answer: Rs. 3,600 cr.

Q5. Amount of net NPA

Rs. 40,000 × 2% = Rs. 800 cr. Answer: Rs. 800 cr.

Q6. Provision Coverage Ratio (PCR)

PCR = Provision held on NPA ÷ Gross NPA × 100:

• = Rs. 2,800 ÷ Rs. 3,600 × 100 = 77.8% (closest option 77.85%)

Answer: ~77.85%.

Q7. Provision needed for a 70% PCR

To hold a 70% coverage on gross NPA:

• = Gross NPA × 70% = Rs. 3,600 × 70% = Rs. 2,520 cr

Answer: Rs. 2,520 cr. The bank already holds Rs. 2,800 cr, so it comfortably clears a 70% PCR.

CAIIB BFM NPA Case Study 3 — DAKKOO Bank (Category-wise Provisioning)

This case tests the full classification ladder — sub-standard. Three doubtful buckets and loss — with separate secured and unsecured treatment.

Q1. Percentage of gross NPA

= Gross NPA ÷ Total advances × 100 = Rs. 4,000 ÷ Rs. 40,000 × 100 = 10%. Answer: 10%.

Q2. Provision for sub-standard accounts

Secured sub-standard @ 15%, unsecured sub-standard @ 25%:

• Rs. 1,200 × 15% = Rs. 180 cr
• Rs. 200 × 25% = Rs. 50 cr
• Total = Rs. 230 cr

Answer: Rs. 230 cr.

Q3. Provision for doubtful loans

Split each bucket into its secured and unsecured parts. Unsecured portion = outstanding − security value, provided at 100%.

DF-1 (Rs. 800 cr, security Rs. 600 cr):

• Secured = Rs. 600 × 25% = Rs. 150 cr
• Unsecured = Rs. 200 × 100% = Rs. 200 cr
• Sub-total = Rs. 350 cr

DF-2 (Rs. 800 cr, security Rs. 400 cr):

• Secured = Rs. 400 × 40% = Rs. 160 cr
• Unsecured = Rs. 400 × 100% = Rs. 400 cr
• Sub-total = Rs. 560 cr

DF-3 (Rs. 800 cr):

• Entire amount @ 100% = Rs. 800 cr

Total doubtful provision = Rs. 350 + Rs. 560 + Rs.

800 = Rs. 1,710 cr. Answer: Rs.

1,710 cr.

Q4. Total provisions

• Sub-standard = Rs. 230 cr
• Doubtful = Rs. 1,710 cr
• Loss = Rs. 200 cr (100% of Rs. 200 cr)
• Total = Rs. 2,140 cr

Answer: Rs. 2,140 cr.

Q5. Percentage of net NPA

• Net NPA = Rs. 4,000 − Rs. 2,140 = Rs. 1,860 cr
• Net advances = Rs. 40,000 − Rs. 2,140 = Rs. 37,860 cr
• Net NPA % = Rs. 1,860 ÷ Rs. 37,860 × 100 = 4.91%

Answer: 4.91%. Note both numerator and denominator are reduced by total provisions. Forgetting the denominator is the classic slip.

Q6. Provision Coverage Ratio

PCR = Total provisions ÷ Gross NPA × 100 = Rs. 2,140 ÷ Rs. 4,000 × 100 = 53.5%. Answer: 53.5%.

How to Solve Any NPA Case Study in 4 Steps

Use this repeatable drill on every CAIIB BFM NPA case study in the exam hall:

1. List the formulas first. Gross NPA %, Net NPA %, PCR — write them before touching the data.
2. Separate standard from NPA. Standard advances = Total advances − Gross NPA. Provision them separately.
3. Split secured vs unsecured for every doubtful and loss bucket. Apply the secured percentage to the security value. 100% to the unsecured gap.
4. Reconcile gross and net. Net NPA = Gross NPA − provisions; Net advances = Gross advances − provisions. Then compute ratios.

Reinforce the habit with timed practice. Run a full set of mock tests and revisit our free guides until the four steps are automatic.

Common Mistakes That Cost Candidates Marks

• Provisioning standard assets on the full book. Always exclude the NPA portion first.
• Forgetting the unsecured 100% rule. In doubtful buckets the unsecured gap is fully provided. On top of the secured percentage.
• Using gross advances for net NPA %. The denominator must be net advances (gross minus provisions).
• Confusing PCR base. PCR divides provisions by gross NPA, not by total advances.
• Mixing the doubtful percentages. DF-1 secured is 25%, DF-2 secured is 40%, DF-3 is 100%. Keep the ladder straight.
• Trusting old percentages blindly. Norms are revised. Confirm on the latest official IIBF notification and RBI Master Circular.

Frequently Asked Questions (FAQ)

What is the difference between gross NPA and net NPA?

Gross NPA is the total NPA before any provisioning. Measured against gross advances. Net NPA deducts the provisions a bank already holds from both the NPA amount.

The advances. So it reflects the true uncovered exposure. Net NPA is always lower than gross NPA.

How is the provision coverage ratio (PCR) calculated in CAIIB BFM?

PCR = (Total provisions held on NPAs ÷ Gross NPA) × 100. In the PMP Bank case, Rs. 2,800 cr ÷ Rs. 3,600 cr gives about 77.85%. A higher PCR signals a better-cushioned balance sheet.

Why is the unsecured part of a doubtful loan provided at 100%?

Because there is no collateral to fall back on. The recovery prospect on the unsecured portion is treated as nil. So the secured part attracts the bucket-wise percentage (25% / 40% / 100%). The unsecured gap is fully provided regardless of the doubtful sub-category.

Are the provisioning percentages in this CAIIB BFM NPA case study current?

They follow the standard textbook framework these case studies are built on. RBI revises norms periodically. So always cross-check the current rates on the latest official IIBF notification. RBI Master Circular before your exam.

How many NPA questions appear in the CAIIB BFM exam?

BFM leans heavily on numerical case studies, and NPA is among the most repeated themes. A single case can spawn several linked questions, which is why mastering one calculation chain pays off disproportionately. Practising full sets of mock tests is the fastest way to build speed.

Final Word: Turn NPA Into Your Strongest Section

NPA case studies feel intimidating only until you internalise the ladder. The three formulas. Then they become the most predictable marks in the paper.

Work through PMP Bank. DAKKOO Bank until you can reproduce every step without looking. That is what separates a pass from a strong score.

Keep this guide open beside your practice. Redo each case under time pressure. And verify the latest percentages before exam day. You have the method now; the marks follow the discipline. All the best from Team Learning Sessions.

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