Operational Aspects of Loan Accounts
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
Which lending-rate benchmark incorporates marginal cost of funds, negative carry on CRR, operating cost, and tenor premium for floating-rate rupee loans?
MCLR (Marginal Cost of Funds Based Lending Rate) is the benchmark that uses these four components to price floating-rate rupee loans sanctioned from April 2016 onwards.
From which date were all new floating-rate rupee loans and limits mandated to be priced at MCLR by RBI?
1st April 2016 (w.e.f. 1.4.2016)
What does 'negative carry on CRR' mean in the context of MCLR computation?
Negative carry on CRR refers to the cost a bank incurs because funds kept as Cash Reserve Ratio with RBI earn zero or below-market returns, and this opportunity cost is factored into the MCLR calculation.
From which date did RBI mandate external benchmark-linked pricing for new floating-rate personal/retail loans and MSME loans?
1st October 2019 (1.10.2019)
What type of working capital arrangement allows a borrower to draw funds up to a sanctioned limit and repay freely, with interest charged only on the outstanding balance?
A Cash Credit (CC) account allows a borrower to draw and repay within the sanctioned limit at any time, with interest levied only on the daily outstanding balance.
Name the four components that constitute the MCLR build-up under RBI guidelines.
Marginal cost of funds, negative carry on CRR, operating cost, and tenor premium
What is the key difference between an overdraft account and a cash credit account in lending operations?
An overdraft is typically granted against securities such as fixed deposits, shares, or life insurance policies and is more short-term, whereas a cash credit is a continuing credit facility primarily for working capital needs secured by stock and book debts.
Which categories of floating-rate loans are EXEMPT from the external benchmark requirement introduced in October 2019?
Fixed-rate loans above three years, advances against own deposits, and advances to own employees
MCQ practice tests
Chapter-wise mock tests with instant scoring.
More chapters in Module B - Lending Operations of Banks
Related articles & notes
In-depth Principles and Practices of Banking guides from our blog.
Master the full PPB syllabus
Every chapter of Principles and Practices of Banking — videos, tests, notes and one-liner decks in one place.