End term Exam PGP (2011-13) Bank Lending and Credit Appraisal Time: 2 hour Max Marks: 20 All

questions are compulsory. Each question carry equal marks. Q1. Deposit accumulation in banks continues to outpace loan disbursements this financial year. Bank Deposits grew by Rs 91853 crore, and outstanding credit fell by Rs 11153 crores over the last quarter. Discuss the scenario in the light of the implications on the Banks and Depositors. Q2. a. When a small business applies for a loan, the bank or other lender follows a certain protocol in evaluating the application. Explain. b. CAMELS rating is a tool used for evaluating the overall health of a financial institution. Explain in comparison with the Financial ratios used to evaluate Bank's Profitability. Q3.Given below is the information and balance sheet of ABC Bank. You are required to comment on the performance of the bank. Arrange the following information into its income statement and compute the bank's net income (Rs. Lakhs)

Commission, exchange and brokerage received Income on Investments Interest paid on deposits Payments to and provisions for employees Interest paid on RBI/inter bank borrowings Interest received on advances and bills(net of interest tax) Income from Leasing and Hire purchase Interest paid-others Profit on exchange transactions-net Rent, taxes, lighting, Insurance, law charges Profit on sale of land Miscellaneous Income Auditor's fees

38920 224820 348222 134500 2920 289200 360 12286 16831 13284 18 28600 432

Printing and stationery Profit on sale of investments Depreciation on bank property Income from dividends Advertisement and publicity Interest earned-others Director's fee and expenses Repairs and Maintainence Other expenses Interest received from RBI Balance sheet of ABC Bank as on 31st March 2009 Liabilities Equity Share Capital Reserve Deposits Borrowings Other Liabilities Rs. (Lakhs) Assets

1, 900 16756 6867 3120 345 54 16 2820 15324 54890

Rs. (Lakhs) 382678 925640 2848122 2424540 58920 323785 6963685

58200 Cash and Balance with RBI 265890 Money at Call 6168250 Loans & Advances 142825 Investments 328520 Fixed Assets Other Assets

TOTAL Other Information

6963685 TOTAL

1. NPAs for the year are 150 Lakhs 2. Balance carried forward to the balance sheet is 100 Lakhs.

Q4 Answer the following: 1. ____________________ provide the banking services, without meeting the legal definition of a bank. 2. ____________________ are regulated under the provisions of Section 51 of Banking Regulation Act, 1949. 3. The margin between the Interest Income earned and Interest Spent by a bank is called ______________________

4. _________________ risk arises from the possibility of defaults/ delayed repayments of loan EMI's. 5. _________________ is an official benchmark rate for majority of deals struck for floating rate debentures and term deposits in India. 6. ___________________ ratio is a measure of the amount of a banks capital expressed as a percentage of its risk weighted credit exposures. 7. Three types of trade financing facilities for SME, given by bank are_______________. 8. _______________is for short term funds repayable on demand and with a maturity between varying between 1 day to a fortnight 9. __________________ and ________________ are two common approaches used for pricing of deposits. 10. Apart from Asset Liquidity Management, other two liquidity management strategies are __________________________________________. Provide Full Forms for the below acronyms regularly used in banking terminology. 1. AML is __________________________________________________ 2. BCSBI is ________________________________________________ 3. CASA is _________________________________________________ 4. AIFI is _________________________________________________ 5. ICICI is _________________________________________________ 6. IFSC is __________________________________________________ 7. SWIFT is _________________________________________________ 8. CMS is ___________________________________________________ 9. IBA is ____________________________________________________ 10. NABARD is ________________________________________________