CAIIB ABFM By Ashish Sir Class 6
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Business and Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of Treasury Management in a bank?
Treasury Management aims to optimize liquidity, manage interest rate risk, and ensure profitability by efficiently deploying surplus funds in money and capital markets while meeting regulatory requirements like CRR and SLR.
What is the Standardised Approach (TSA) for computing operational risk capital under Basel?
Banks use business line gross income multiplied by fixed beta factors.
What does ALM stand for and what is its core purpose in banking?
ALM stands for Asset-Liability Management; its core purpose is to manage the balance sheet risks arising from mismatches between assets and liabilities in terms of maturity, interest rate sensitivity, and currency.
What is the Advanced Measurement Approach (AMA) for operational risk capital?
Banks use their own internal models based on loss data and risk assessments.
What is the difference between Net Interest Income (NII) and Net Interest Margin (NIM)?
NII is the absolute difference between interest earned on assets and interest paid on liabilities, while NIM is NII expressed as a percentage of average earning assets, indicating the bank's interest rate profitability efficiency.
What is the difference between Tier 1 and Tier 2 capital in banking?
Tier 1 is core capital; Tier 2 includes supplementary instruments like subordinated debt.
What is a Re-pricing Gap in the context of interest rate risk management?
A Re-pricing Gap is the difference between rate-sensitive assets (RSA) and rate-sensitive liabilities (RSL) maturing or repricing within a given time bucket; a positive gap implies NII rises when rates increase, and a negative gap implies the opposite.
What is the Capital Conservation Buffer (CCB) under Basel III?
An additional 2.5% CET1 buffer banks must hold above the minimum requirement.
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