JAIIB AFM MARATHON 4
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of the Cash Reserve Ratio (CRR) as a monetary policy tool?
CRR requires banks to maintain a certain percentage of their Net Demand and Time Liabilities (NDTL) as cash with the RBI, enabling the central bank to control liquidity and credit expansion in the economy.
What is the formula for calculating Return on Equity (ROE) for a bank?
Net profit divided by shareholders' equity, expressed as percentage.
What does the Statutory Liquidity Ratio (SLR) mandate banks to maintain?
SLR requires commercial banks to maintain a specified percentage of their NDTL in the form of liquid assets such as cash, gold, or approved government securities before providing credit to customers.
What is the meaning of 'Substandard Asset' under RBI's NPA classification?
Asset remaining NPA for less than or equal to 12 months.
How is Net Interest Margin (NIM) calculated for a bank?
NIM is calculated as Net Interest Income divided by Average Earning Assets, expressed as a percentage; it measures how effectively a bank generates income from its interest-bearing assets relative to interest paid on liabilities.
What is a Doubtful Asset in the context of bank loan classification?
NPA remaining in substandard category for more than 12 months.
What is the difference between Tier 1 and Tier 2 capital under Basel norms?
Tier 1 capital (core capital) includes paid-up equity, statutory reserves, and retained earnings representing permanent capital, while Tier 2 capital (supplementary capital) includes subordinated debt, revaluation reserves, and hybrid instruments.
What is the minimum Capital to Risk-Weighted Assets Ratio (CRAR) prescribed under Basel III in India?
Minimum CRAR is 9% including capital conservation buffer.
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