IIBF & NISM Adda

Sunday, 28 April 2019

Jaiib Recollected

Jaiib Recollected:

JAIIB today's exam recollected 04 November 2018 ...

1.Two questions on Basel 2 and 3 ... each 2 marks question

2.NEFT and RTGS details for 4questions

3.Can you accept it with as NEFT or RTGS or vice versa

4. Sections are asked from NI Act around 6 questions

5.PMDJY - 3Qtns

6.A has dream cheque at Delhi, and sent for clearing to bank Y where he has his AC, it was returned due to insufficient funds

Which Court A can approach

A resident location

Delhi

Y Bank

7.Mandate holder features in two questions

8.Can Two minors open a Joint AC?

9.LC issued for 10 lakh, at the time payment it was found in the bills mentioned as 10.90.. can it be acceptable or not Answer Accept

10.Use of DRS system to CBS

11.Matching of

Lien

Set off

Pledge

Appropriation

with

Rights of Physical property FD created before maturity of loan

12.Where as ASBA can be used

13.One qtsn Selective Credit Control.

Asked to find out which is not a feature of SCC

14.No of Cycle of a Product

15.Stages of Product ..4

16.What's your reason while accept/not to accept to provide an acknowledgement for Loan request

17.Electronics chq is defined under sec...

18.Sec 6 ni act

19.Which asset cannot assign for loan?

Book Dept

LIC

Share certificate

Copy rights**

20.Minimum credit rating of company for issue CP should be _

AAA

Aa1

A3**

21.Asset of mutual fund are held by

Custodian**

Registar

Trusstee

Amc

22.Corporate security dealt with __market money market

23.Codes which are withdrawn by RBI?

24.Question related to bcsbi was there..

25.Which one is stamp duty

Bill purchase

Bank guarantee**

Bill discounting

26.A partner acts as agent of firm is called______

27.In call money what% can commercial bank take an advance?125

28.Electronic cheque is defined in section 6

29.Under LRS resident can remit______

30.. Servuction means what,

31. Pull strategy pull means demand, supply, price, quality.

32. Who introduces NEFT.

34. in joint account nominee is their A expired in that what you will do.

35. Kotler marketing defination.

36.Forfiating,factoring

37.BG

May 2018

Lc se question tha

Lok adalat

Indemnity

Gurantee

Collecting banker

Awards under banking ombundsman

5 questions from FEMA

Limitations act lot of 2 marks

Bailee bailor pledge mortgage

Mortgage 3-4 question English n equitable

Paid up capital

Securities questions

Saffaesi 2-4 questions

Lok adalat 3 questions

Ultra vires questions

Equity mortgage questions

Collecting bank 2 questions

JAIIB LEGAL RECOLLECTED:: Most important Previous years questions

1. Section on which partners are defined

2. Tenure of director of banking company

Compiled by Srinivas Kante All the best

3. Preservation of records

4. Maximum share in company related one question

5. Question to the condition on which depositor has to deposit-25% amount

6. Who has power to inspect bank-rbi officer, state officer,police officer, custom officer

7. Bfs-one director nominated by

8. Central government power in banking

9. Term loan given and default occurs-limitation period-3 years

10. A issued a check with amount 300 and left space in both side i.e. in words as well as

figure. Some employee forged it to 3300 unknowingly and sign style was little different

but it was cleared-who should be responsible

11. Question related to responsibility of collecting banker

12. A cheque is a drawn on some bank what collecting bank should do

13. Check crossing related one question

14. Liability of paying banker

15. There is one partnership firm ABC. With operation E/S upto the limit of 5000. A

draws cheque to B for 4553. B transfers it to his account…then who is liable wand what

is the role of bank here

16. A minor shares profit of the firm does he will be have liability with the firm if

something went wrong

17. An OD facility is given the customer he but he has drawn beyond his limits and also

many cheques have been returned-what a bank should do?

18. To which type of company there is restriction on transfer of share-private company

19. Main objective and other objective are mentioned in-MOA

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20. Question based on types non fund based credit facility21. No of parties in indeminity-2

22. A lost FD and asking bank to reissue duplicate bank issues it- what is the role of A

here?-indemnifier

23. Right of indemnity holder related one question

24. Types of bank guarantee based one question

25. Liability of a bank to honor BG

26. What does negotiating bank does?

27. Question related to with recourse and without recourse lc

28. DPG-deffered payment guarantee based question

29. One case study was given with relation to simple mortgage and equitable mortgageratio

of share on default was asked

30. Types of mortgage with examples, gold loan, car lone, home loan, lic policy arrange

31. What is fixed charge

32. Registration of charge-central registry

33. Banking ombudsman:

a. Matters where complain ts can be made

b. If not satisfied with BO then to whom w e should approach

34. Effects of non-registered company

35. DRT AND DRAT based question:

a. who is higher authority of drat

b. power to modify drt-central go vt

c. case related where only it can be handled by DRT

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d. Property is somewhere loan is taken from another place where drt has to be

approached?

36. SARFAESI ACT based question:

a. Validity

b. Security interest

c. Security receipts

d. Cancellation of re gistration of SRC

e. Powers and its applicability , enfor cement of security interest

37. A guarantees OD for his son that it will be paid- which type of financing it is?

38. Bankers book evidence-prima facie related question

39. Consumer complaints

40. Who is the head of state consumer protection council-minister in charge of the

consumer affair?

41. Question related to tds and TAN NUMBER

42. CONDITION of contract

43. Liability of surety

44. Bailment of goods

45. Right of unpaid seller

46. Rti applicability area

47. Supply bills related 2-3 questions

a. It is related to whom

b. To whom it should be financed- 2 marks

48. Hypothication

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49. Pledge

50. Mortgage

51. Charge

52. Contract of sale

53. Minor account

54. Question from FEMA

55. Reverse mortgage

56. Fees of RTI

57. Term of director of bank

58. Who is regulatory authority of DRT

59. Security receipt

60. Floating charges/Fixed charge

1. Members of public and private company - Public - Min-7, Max-No Restriction. Private -

Min-2, Max-200

2. No. Of directors in public and private company - Public - 3 to 15, Private - 2 to 15

3. Interest payable by RBI on CRR - 0 %

4. Pledge hypothetican

5. What is equitabe mortgage

6. NI Act

7. RTI

8. Questions based on limitation period

9. Diff b/w partenership and company

10. Questions on mortgage and cheque

Compiled by Srinivas Kante All the best

11. Heads of object of memorandum of association

12. Related equitable mortgage

13. BR act

14. Partnership accounts

15. Person appeal to drt after receiving reply from sc with in period of

16. payment and settlement system regulated by

17. About mortgage types 4 questions

18. FEMA deals with transactions of

19. Bailment & pleadge

20. Equitable morgatge

21. Lc

22. Deferred payment guarantee

23. Limitation

24. In how many days TDS file to gov

25. For cancel of lease or rent how many month notice?

1. Section 131

2. Actionable claim

3. Which one is NI

4. Equitable mortgage

5. Mortgage deed is necessary foe which mortgage

6. Which LC is called anticipatory credit

7. Members and directors of pvt and public company (2questions)

8. Which is not a company classified under liability category

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9. With what memo a cheque should be returned if collected by one bank and presented

by other bank

10. When a partnership will dissolve

11. Demand notice period under SARFAESI-ACT

12. DRT is applicable for : SBI, nationalised, RRB, all

13. DRT

14. Bank Guarantees

15. Many questions on mortgages

16. Income tax act

17. Preference shares

18. LC

19. Bill of exchange

20. Agreement

21. Hypothecation

1. Clatons rule

2. Minimum directors-3&2

3 Around 8 qtns from mortgage. like english, equitable, act for mortgage etc.

4. 4 qtns from MOA & AOA of company

5. Doctine of constructive

6. Diff. partnership and company

7. Indemnity-loss of fdr

8. Hypothication

9. Ddiff. pledge and lien

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10. Consumer complaint act-complainant

11. Credit card award-1 lakh

12. Common seal

13. Green letter of credit

14. Negotiating bank

15. Surity is -secondary

16. Deffered guaranty

17. DRAT head post

18. Chq alteration not visible to naked eyes bank not liable

19. SARFAESI Act apeal to drt in how many days 45

20. LC credit related question credit allow something like that ans green lc

21. BO related complain how many days to dispose by BO.

22. RTI how many days to required by the PIO to settle the information.

23. Not registerd partnership firm related question can sue or not.

24. Min No of director in public and private

25. Arbitrage

Under which section of income tax donations come? - 80G of the Income Tax Act

Min and max no of member in private companies - 2 & 200

No. of members in public limited co (Min & Max) - 7 & unlimited

Banking ombudsman applicable - in whole india

Indemnity which type of liability? - Contingent.

Who can rectify the clerical or arithmetical errors in order passed by DRT? - Presiding

officer

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Which income doesn't come under service tax? - Interest income

Within how many days can a consumer file complaint if he is not satisfied with the

service? - 30 Days

Which is the negotiating bank in case of LC? - Exportrs country bank

Relationship between bank n customer in case of pledge - pawnor-pawnee'

Debt recovery tribunal established by - Government of India under an Act of Parliament

(Act 51 of 1993)

How many types of LC ? - 8

Jurisdiction of appellate tribunal - The Central Government is also empowered to decide

and specify the areas within which the tribunal may exercise jurisdiction for entertaining

and deciding the applications filed before it.

DRT applicable - Above 10 Lakhs

DRT is controlled by - Recovery of Debts Due to Banks and Financial Institutions Act

(RDDBFI Act), 1993

RTI is not applicable to - J&K

UCPDC 600 is in respect of - Letters of credit

Pay as you earn is a...... tax - is a withholding tax on income payments to employees

20% profits should maintain with rbi - NBFC

NI act application - Whole India

Cersai time limit - within 30 days of creation of mortgage

Bills payable on demand are - paid when the payee asks for it.

Term of every member in national commission - 5 years or up to the age of seventy

years, which ever is earlie

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A securitization company carries out the function of - Acquisition of financial asset from

the originator

Limitation period of for takng immovable property under sarfaesi? - 12 Years

Amount of TDS should be submitted before how many days? - 7th of the next month

Number of directors of private company? - 2 to 15 (Min & Max)

Casual vacancies of directors can be filled by? - the Board of Directors at a meeting of

the Board

Collecting bank will get safety under NI act for what - Forged sign of endroser

Which is not consider as NI - Share

Tax dedcuted from salary has to be payed as on - Monthly basis

Limitation perod for foreclosure is - 30 Years

Llimitation perod for possession of immovable property is - 12 years

Banking regulation act 1949 - Regulates banking

Banking ombudsman 4 questions

DRT appllete is headed by ........appointed by central govt.

LC 3 questions case study 1

Advising banking is called......

Whether advising bank is to take part in liability of LC

Macmillan book back questions 5-6 - Average 3-5 questions coming

Key used to create digital signature.....Private key

RTI Act .....Getting info from.....Public authorities

Exemption of RTI Act

Bankers book evidence 2 questions one from Macmillan book

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How much we have to pay to get copy from the abovesaid paper n copies...

Sarfaesi 3-4 questions out of one case study....

What type of charge in case of goods under manufacturing.....

Under pledge unlike mortgage....Some differences were given in the options

N deposit in bank Z with branch manager C .L is the introducer of N.N got LOD from

that bank.Who has lended to whom?

R has shares in limited company.R dies what will happen to shares.....?

In case of safe deposit vault, customer is called as....

X a customer lost the TDR and bank gave duplicate receipt receiving indemnity from

X.Here who is indemnified to whom?

Parties in a contract......

Bank guarantee 2 questions...

What is reverse mortgage

Tenure of banking ombudsman

Fee require for RTI

Mode of accepting complain by banking ombudsman

One question on arranging orders for different type of mortgage

One question on arranging orders for different type of charges

Limitations period will be extended,-on credits to ac

Material alteration of cheque without authentiaction of bearer

Bank buy a cheque from A and give advance but cheque got returned-from whom bank

will recover

A presented a cheque for clearing and went abroad, cheque got returned for financial

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reason after I year. A returned and found no credit in his account and bank lost the

cheque- responsibility of bank and customer

Lmitaton period of of account

Lok adalat is conducted by....

No. of max members in pvt company - 200

........................................

Pawnor pawnee

The bailment of goods as security for payment of a debt or performance of a promise is

called "pledge". The bailor is in this case called the "pawnor". The bailee is called the

"pawnee".

............... .........................

Min deposit to appeal to DRAT - 50000

........................................

Min and max directors in public limited co -

........................................

Complaints can lodge to banking ombudsman through - Authorised Representative

........................................

Safe custody of articles.. Bailment

........................................

Clubs n societies r registered under - either under the Companies Act, 1956 or under the

Societies Registration Act or the Co-operative Societies Act

........................................

Sale notice period ie. 30 days

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........................................

Authorized officer of public sector bank min designation.. Chief manager

........................................

Jurisdiction of filing suit - at place of mortgaged property situated

1.Deffered credit

2.minimum and maximum members in private company..

3.accalaration.

4.equity mortgage..

5.demand biill also called as sight bill.

6.presiding officer tunere...

7.relationship in safe locker ..bank customer.

8.relatioanaship in loan on FD..

9.pladge..

10..origanater.

11.about drt

12.3days for book evidence..

Under how many phases is cases of sarfaesi settled under civil courts?

EM is required to be done in specified town of property

Payment to minor

Right of member in a company

Fund based non fund based

Metropolitan Magistrate

Endorsement in cheque

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Advantages of corporate form of enterprises

To whom the assignment notice send in case of loan taking against insurance policy

Lok adalat max compensation?

Banking ombudsman

Title deed not required to be deposited in whch type of mortgage?

Mortgage-transfer of property act

Sale of goods act

partnership

Huf law

Safe deposit locker

FEMA

3 - 4 case studies on protection to collecting banker and paying banker

Appointment of banking ombudsman , regulation of tenure of banking ombudsman

Minimum and maximum number of members in private company

2-3 questions from MoA and AoA

Object is described in MOA /AOA

Difference between partnership and company..

If a director in company wants get member of another company what needs to effect in

both companies article of Asso.

For how many years a banking company use non banking assets- 10, 11,12 or 15 years

Mutual fund transaction which kind of account in dealing foreign transaction.

RTI act not applicable which of the following

Renounce sport board

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Cabinet ministry

AD bills

Floating charge

Fixed change

If a customer deposit an order cheque to A bank and A bank put a collection stamp on it

but customer take the cheque and deposit to B bank but B bank return the cheque.What

The B bank site the return reason

National commission tenure

What is the conversion?

HUF created by

Who pays money to beneficiary in LC

Appeal days in DRT

............................. ...........

E filing system in charge registration

........................................

Contract two to three questions

........................................

SARFAESI act applicability

...................................... ..

DRT Applicability

......................... ...............

Banking omb

..................... ...................

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According to tax lawas income definition

........................................

Major powers of RBI

.............................. ..........

Rti act

........... .............................

Law of limited for foreclosure of mortgage

........................................

What is called judgment of Banking ombdsuman is.Award

........................................

Indemnity

security or protection against a loss or other financial burden.

security against or exemption from legal responsibility for one's actions.

........................................

Deferred payment guarantees

MARKETING CONCEPT
Market
A situation where buyers and sellers of a
commodity interact.
Coming together of buyers and sellers of
the same or similar commodities
TYPES OF MARKET
Geographical Area
Product
Nature of Transaction
Volume of Transaction

MARKETING
Marketing is the process of determining
consumer demand for a product or service,
motivating its sale and distributing it into
ultimate consumption at a profit
A management function
A Business Philosophy

EVOLUTION OF MODERN MARKETING
Industrial revolution
Digital revolution
Barter System
Customer and market driven
Wants of customers
CRM
Customer Satisfaction
Nothing is worthwhile unless it
touches the customer

Selling Vs Marketing

Selling is an operational
activity
Marketing is a total
management
Selling is product
focused
Marketing is customer
focused
Selling is oriented to the
needs of the firms
Marketing is oriented to
the needs of the buyer
Selling encashes
profitable opportunity
marketing coverts
customer needs into such
opportunities
Selling aims at
maximizing sales volume
Marketing aims at
maximizing customer
satisfaction

Selling=
Factory > Products > Selling and
promotion > Profits
Marketing=
Target market > Needs > integrated
marketing > Profit by customer
satisfaction

MSME recollected on 27 April 2019

MSME FOR BANKERS (EXAM DATED 27.04.2019)
1. MSME represent ------- policies of Government of India which emphasized to use foreign exchange for imports etc (Ans: Socio Economic)
2. Objectives of MSME identification which among is not an objective (Page 4 of Text Book)
3. Limitations of MSME. Identify which among is correct (Page 4 of Text Book)
4. The MSME is made important subject in development in (Ans: Worldwide including countries like USA, Japan)
5. The classification of industries is based on different factors. Which among the following is wrong (Ans: Loan Amount)
6. Explanation of export oriented Unit (Ans: Industry that undertakes to export 30% of annual production at the end of third year)
7. Which among the following is not falls in Small Business (Ans: Wholesale Trade)
8. For the transport operator is categorized as MSE, if total vehicle owned does not exceed (Ans: 10)
9. The de reservation of items as per Sec 29 B of Industries act 1951. Find out wrong features (Page 10 of Text Book)
10. Micro Enterprises Manufacturing & service investment criteria (Ans. 25 Lacs & 10 lacs)
11. Which among the following is the example of indirect finance (Ans: MFI lending to co-operatives of producers)
12. Which among the following is not a feature of Sole Proprietary firm (Ans: Income is distinguished for taxation)
13. Mr. Ram a minor turned major on 01.02.2016, who was admitted to a partnership firm during his minority. What is the maximum time before which he can repudiate his liability (Ans: 6 months from date )
14. Which among the following is not a feature of partnership firm (Ans: A partnership firm can be a partner in another firm)
15. Which among the following is a feature of partnership firm (Ans: A partnership firm not require compulsory registration of deed)
16. The usage of common seal is explained in which document. (Ans: Articles of Association)
17. Maximum number of share holders in Private Limited Company is (Ans: 200)
18. Which among the following is not a feature of Public Limited Company (Ans: The shares are freely not transferrable)
19. For getting environmental clearance for the setting up of an enterprises one must (Ans: Obtain clearance from the pollution board)
20. If the ownership of any enterprise is individually or jointly hold by women above 51%, the same is termed as (Ans: Woman Enterprises)
21. The gender discrimination in Market is by (Ans: Differential wage for the same work)
22. Which among the following is not a classification of categories of Women Entrepreneurs (Ans: Literate and illiterate women)
23. Exclusive scheme to provide equity support to women entrepreneurs (Ans: Mahila Udhyam Nidhi)
24. Which among the following is not a supportive measures for Women’s economic activities (Ans: Refer Page ; 24 in text book)
25. MSME DO is earlier known as (Ans; Small industries Development Organization)
26. The development of MSME is a (Ans: State Subject )
27. An industrial undertaking, a company with interests in industry can invest up to _____ in a MSE unit (Ans; 24%)
28. Similarity features identification between LLP & a Private Limited Company (Ans: Refer Page ; 45 in text book)
29. TReDS full form (Ans: Trade Receivables Discounting system )
30. Which among the features pertains to Priority Sector Lending Certificates
31. CERSAI is formed as per the (Ans: SARFAESIA act of 2002)
32. Calculation for maximum CGTMSE coverage available for unit with Rs 30.00 Lacs fund based & 15 Lacs non fund based limit.
33. The current liability is 50000. The current ratio is 2.5. calculate Current asset
34. The CLSS scheme gives subsidy of ( 15% or 0.15)
35. Which among the given option is not a rating agency (Ans; NSIC)
36. Which among the following is give overall guidelines of SIDO (Ans; Directorate of industries)
37. Features of HUDCO. Select the one wrongly explained (Ans: Refer Page ; 61 in text book)
38. Activities of TCO. Which among is correct combination (Ans: Refer Page ; 62 in text book)
39. Which among the following is features of KVIC (Ans: Refer Page ; 63 in text book)
40. The credit limit up to 5 Lacs to be disposed in maximum of (Ans; 2 Weeks)
41. Which among the following is wrongly stated regarding the functions of SIDBI (Ans: Refer Page ; 70 in text book)
42. Major problems faced by MSME in the given option (Ans: Refer Page ; 92 in text book)
43. Which among the following is not a feature for commercial banks or promoting the MSE advance portfolio (Ans: Low NPA)
44. Identify which are the following is bill financing
45. Which among the following is example of post shipment finance (Ans: Refer Page ; 109 in text book)
46. RED Clause LC Feature (Ans: Refer Page ; 111 in text book)
47. Specialized MSME branch (Ans: if advance is 60% MSE portfolio)
48. BCSBI guidelines for MSE regarding acknowledgement of application & issuance of rejection letter with reason
49. Which among the given option is not associated with 5 Cs of the borrower (Ans: CIBIL score )
50. Identify and add the total assets from the given balance sheet component
51. What is the implication and effect in increase of Sundry Debtors or creditors (Ans; Refer Page ; 124 in text book)
52. Maximum Limit of loan that can be sanctioned under Turnover method (Ans: Rs 500.00 Lacs)
53. Factors affecting/determine the working capital limit (Ans: Refer Page ; 138 in text book)
54. Calculation using II method of lending (Ans; Refer Page ; 143 in text book)
55. Overview of Risk features , by way of match the following (Ans: Refer Page ; 145 in text book)
56. Features and requirement of credit rating (Ans: Refer Page ; 148 in text book)
57. Economic benefits of MSME. Identify the features (Ans: Refer Page ; 165 in text book)
58. The common parlance and practices of BDS is (Ans: Operational)
59. Identify the support by BDS (Ans: Refer Page ; 170 in text book)
60. Nature of deficiencies and remedial measures in cluster development (Ans; Refer Page ; 198 in text book)
61. Growth phase of MSE cluster features
62. Role of CDE in the cluster (Ans; Refer Page ; 209 in text book)
63. Why agricultural land is not taken as collateral security for securing the loan
64. Delayed payment of the bill raised by the MSE entrepreneur is compensated by (Ans: 3 times of bank rate announced by RBI)
65. RBI definition of Sick unit
66. Identify which among the following is external cause of sickness (Ans: Power Shortage)
67. When long term source is used for short term uses, the same is amounts to (Ans; Diversion of funds)
68. Feature of an enterprises tending towards sickness (Ans: Refer Page ; 242 in text book)
69. Symptoms of incipient sickness in activity (Ans; Refer Page ; 243 in text book)
70. Explanation of SICK GREY AREA
71. Hand holding stage features (Ans: Refer Page ; 253 in text book)
72. The account of NPA with dues of Rs 2.00 lacs, who will finalize the viability (Ans: Branch manager)
73. Viability criteria (Ans: Refer Page ; 256 in text book)
74. Primary purpose of secured creditors with NPA asset is (Ans; To sell off for the purpose of loan)
75. The 13(2) notice to be given as per SARFAESIA for how many days (Ans: 60 days )
76. Asset Reconstruction companies are registered with (Ans: RBI)
77. The reason for the existence of MFI (Ans: Refer Page ; 273 in text book)
78. Multiple lending and over indebtedness of MFI (Ans: Refer Page ; 276 in text book)
79. Primary Objectives of Mudra Bank (Ans: Refer Page ; 279 in text book)
80. Primary security & Collateral security features
81. Customer DNA means
82. Insolvency & Bankruptcy difference between two
83. Features of Bank’s Board Bureau
84. Impact of WTO agreements in domestic industry (Ans: Refer Page ; 305 in text book)
85. Which sector among the given option is contributing to exports (Ans: Textile)
86. Calculation of Plant & machineries value from given options (Ans: Not to include Jigs, generator sets etc)
87. Which among the following is not a participant of importance/much role in an LC? (Ans: Beneficiaries’ Bank)
88. Explanation of LC, which among the given options is correct
89. Which among is pre shipment finance?
90. Which among the following is not correct for loan sanction in MSME segment (Ans: Compulsory to give collateral free loan till 100 lacs)

Saturday, 27 April 2019

Current affair s on 27.04.2019

Today's Headlines from www:

*Economic Times*

📝 Amazon brings 1-day delivery for prime members

📝 RBI extends ombudsman scheme to non-deposit taking NBFCs

📝 Forex reserve falls by $739 mn to $414.14 bn

📝 Warren Buffett says Berkshire could buy back $100 billion shares

📝 Sebi fixes minimum net worth for clearing corporations at IFSC

📝 CCI clears CDPQ's acquisition of debentures in Edelweiss arm

📝 IL&FS arm puts its China road arm JV on the block

📝 India-Bhutan sign Rs 4,500 crore Mangdechhu Hydro project’s power tariff protocol

*Business Standard*

📝 Maruti's exit from diesel could be a blessing in disguise for competitors

📝 YES Bank posts first-ever quarterly loss of Rs 1,507 cr on IL&FS, Jet loans

📝 Chinese brands corner two-thirds of India's smartphone market: Report

📝 Naspers exits MakeMyTrip, Ctrip raises stake to 49% in share-swap deal

📝 Hero MotoCorp Q4 net profit tanks 24% to Rs 730 crore on weak sales

📝 SBI General's profit before tax rises 11% to Rs 470 crore in Q4

📝 US economy posts 3.2% growth in first quarter on shrinking trade deficit

📝 HDFC Mutual Fund reports 61% rise in Q4 profit at Rs 276 crore

📝 Uber sets terms for a $90-billion IPO, posts $1 billion loss in Q1

*Financial Express*

📝 Mahindra arm’s Chennai cluster to see Rs 3500 crore investment

📝 Non-food credit up 14.2 per cent, deposits grow 10.6 per cent

📝 Goldman Sachs says dragged-out Brexit is doing deeper damage to UK economy

📝 Scheme for Non-PPA units: States show interest in 1,400 MW of power

📝 Air India to charge no fees if cancellation or change in ticket done within 24 hrs of booking

📝 PepsiCo proposes settlement to Gujarat potato farmers sued by it

📝 Blockbuster IPO: Neogen Chemicals issue subscribed over 40 times last day; sees stellar demand

*Mint*

📝 China’s Leagoo forays into India with plans to invest $200 million

📝 Axis Bank plans to raise ₹35,000 crore

📝 CCI gives approval to Baring PE-NIIT Technologies' ₹2,627 crore deal

📝 Ruchi Soya insolvency: Lenders to vote on Patanjali's ₹4,350cr offer next week

📝 Hotel Leelaventure gets shareholders' nod to sell hotels

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Friday, 26 April 2019

Loans and Advances::(Useful for Certified credit officers( professionals) , Caiib also)) very important for bankers

Loans and Advances::(Useful for Certified credit officers( professionals) , Caiib also)) very important for bankers

1. ˜Credit Rating Agencies in India are regulated by: RBI

2. ˜CRISIL stands for: Credit Rating Information Services of India Ltd.

3. ˜Deferred Payment Guarantee is : Guarantee issued

when payment by applicant of guarantee is to be made in installments over a period of time.

4. ˜If Break Even Point is high, it can be construed that the margin of safety is ____: Low.

5. ˜Long Term uses – 12; total Assets – 30; Long Term source 16; What is net working capital : 4

6. ˜On which one of the following assets, depreciation is applied on Straight line method: Computers.

7. ˜Projected Turnover is Rs.400 lacs, margin by promoter is Rs. 20 lacs. What is maximum bank

finance as per Annual Projected Turnover method: 80 lakhs.

8. ˜Rohit was a loanee of the branch and news has come that he has expired. On enquiry, it was

observed that he left some assets. Upto what extent the legal heirs are liable to the Bank? Legal heirs are

liable for the liabilities upto the assets inherited by them.

9. ˜The appraisal of Deferred Payment Guarantee is same as that of a) Demand Loan b) OD c) Term

Loan d) CC : Term Loan.

10. A cash credit account will be treated as NPA if the CC limit is not renewed within ___days from the

due date of renewal: 180 days.

11. A director of a bank wants to raise loan of Rs 10 lakh from his bank against Life Insurance Policy with

surrender value of more than Rs 15 lakh. What will be done?: Bank can sanction.

12. A firm is allowed a limit of Rs.1.40 lac at 30% margin. It wants to avail the limit fully. How much will

be the value of security : Rs.2 lac

13. A guarantee issued for a series of transactions is called: Continuing guarantee

14. A lady who has taken a demand loan against FD come to the branch and wants to add name of her

minor son, as joint a/c holder. What you will do?: Name can be added only after adjustment of the loan.

15. A letter of credit which is issued on request of the beneficiary in favour of his supplier: Back to Back

LC

16. A loan is given by the bank on hypothecation of stock to Mr. A. Bank receives seizure order from

State Govt. What should bank do?: Bank will first adjust its dues and surplus if any wilt be shared with

the Govt.

17. A loan was sanctioned against a vacant land. Subsequently a house was constructed at the site.

What security is available now to the bank? : Both

18. A minor was given loan. On attaining majority he acknowledges having taken loan and promises to

pay. Whether the loan can be recovered? : He can not ratify the contract. Hence recovery not possible.

19. A negotiating bank and issuing bank are allowed days each for scrutiny of documents drawn

under Letter of credit to ensure that documents are as per LC: 5 banking days each.

20. Age limit staff housing loan: 70 years;

21. An L/C is expiring on 10.05.2008. A commotion takes place in the area and bank could not open.

Under these circumstances can the LC be negotiated?: The L/C can not be negotiated because expiry date

of LC can not be extended if banks are closed for reasons beyond their control.

22. As per internal policy of certain banks, the net worth of a firm does not include: a. Paid up capital b.

Free Reserve c. Share Premium d. Equity received from Foreign Investor : Revaluation Reserves

23. Authorised capital is Rs.10 lac. Paid up capital Rs.6 lac. The loss of previous year is Rs.1 lac. Loss in

current year is Rs3 _ lac. The tangible net worth is : Rs.2 lac

24. Authorised capital= 10 lac, paid-up capital = 60%, loss during current year = 50000, loss last year =

2 lacs, what is the tangible net worth of the company? : 3.5 lac

25. Bailment of goods by a person to another person, to secure a loan is called : Pledge

26. Balance outstanding in a CC limit is Rs.9 lakh. Value of stock is Rs.5 lakhs. It is in doubtfUl for more

than two years as on 31 March 2012. What is the amount of provision to be made on 31-03-2013?: Rs.9

lakhs (100% of liability as account is doubtful for more than 3 years)

27. Balance Sheet of a firm indicates which of the following – Balance Sheet indicates what a firm

owes and what a firm owns as on a particular date.

28. Bank limit for working capital based on turn over method: 20% of the projected sales turnover

accepted by Banks

29. Banks are required to declare their financial results quarterly as per provisions of : SEBI

30. Banks are required to maintain -a margin of ___ for issuing Guarantee favouring stock exchange on

behalf of share Brokers.

31. Banks are required to obtain audited financial papers from non corporate borrowers for granting

working capital limit of: Rs.25 lakh &above

32. Banks provide term loans and deferred payment guarantee to finance capital assets like plant and

machinery. What is the difference between these two: Outlay of funds.

33. Benchmark Current Ratio under turn over method is: 1.25

34. Break Even Point: No profit no loss. ( TR-TC=Zero)

35. Calculate Debt Equity ratio – Debenture – Rs 200, capital 50; reserves – 80; P& L account credit

balance – Rs 20: 4: 3 ( 200 divided by 150).

36. Calculate Net working capital– Total assets 1000; Long Term liabilities 400; Fixed assets, Intangible

assets and Non current assets (i.e. long term uses) Rs 350; What is net working capital : 400- 350= Rs

50

37. Calculate Tangible Net Worth: Land and building: 200 Lacs; Capital:80000 intangible asset:15000:

65,000

38. CALCULATION OF INTEREST IN LOAN ACCOUNT: MONTHLY

39. CARE stands for : Credit Analysis & Research Ltd

40. Cash Budget method is used for sanctioning working capital limits to : Seasonal Industries

41. CC limit Rs 4 lacs. Stock 6 lacs. Margin 25% . What is drawing power? : NOTIONAL - 4.5 lacs, BUT

ACTUAL Rs. 4 LAC.

42. Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) is a

government company licensed under Section 25 of the Companies Act, has been incorporated to operate

and maintain the Central Registry under the provisions of _____: SARFAESI Act 2002.

43. CIBIL is the agency that provides information to the member banks on (i) Credit Rating (ii)

Information on credit History: Information on Credit History of borrowers

44. Contribution means : profit + fixed cost

45. Current Assets 600, Long Term sources - 600, Total Assests1000, what is NWC and Current Ratio: CR

1.5 : 1; NWC = 200 .

46. Current Liabilities are those liabilities which are to be paid: within one Year

47. Current Ratio = 2:1, Net working Capital=60000, What is the Current Liability of the firm? : 60000

48. Current ratio indicates: Liquidity of the firm (ability of a firm to pay current liabilities in time)

49. Current Ratio is 1.33:1, Current Assets is 100, what will be the amount of Current Liability: 75 lakhs

50. Debt Equity Ratio indicates: Long term solvency or capital structure of the firm.

51. Debt Securitization refers to: Conversion of receivables into debt instruments.

52. Debt Service coverage ratio is used for: Sanction of Term Loans

53. Deferred Payment guarantee is: Financial Guarantee

54. Deferred payment guarantee issued by a bank is a : Contingent Liability.

55. Difference between Long Term Source and Long Term Use is called: Net Working capital.

56. DSCR indicates: Ability of firm to repay term loan instalments

57. DSCR is for evaluating: Term Loan repayment-surplus generating capacity.

58. Duty of confirming bank: Only to verify the genuineness of L/C.

59. Equitable Mortgage is created by deposit of title deeds with bank at – (a) any where in India; (b)

state capital; (c) only at Mumbai, Chennai or Kolkatta; (d) Any place notified by state government for this

purpose: Correct answer is (d).

60. Excess of current liability over current assets means the firm may face difficulties in meeting its

financial obligations in short term.

61. Expand CRILC: Central Repository of Information on large credits.

62. Expand IRR : Internal Rate of Return

63. Finance for construction of road and port is classified as: Infrastructure Finance.

64. For ascertaining that a firm will be able to generate sufficient profit to repay instalments of term

loan, which ratio is computed?: Debt Service Coverage Ratio

65. For assessing Fund Based Working Capital limit for MSME upto _______Turnover method is followed

under Nayak committee: Rs.5 crore.

66. For classification of assets in consortium accounts, which of the following is to be considered?: In

consortium accounts, each bank will classify the account as per its record of recovery.

67. For Takeover of accounts from other Banks, the account copies of all the borrower accounts with the

present bankers / financial institution shall be obtained at least for the last ______: 12 months.

68. Formation of consortium, when essential : When bank touches its exposure ceiling

69. Full form of DSCR: Debt Service coverage ratio;

70. Gold is pledged with bank as security for a Bank Guarantee by a borrower. Bank Guarantee stands

expired. Whether a temporary overdraft availed by the borrower which is overdue can be got adjusted by

selling the Gold held as security for issue of guarantee: Yes, because Bankers lien is a general lien and is

an implied pledge. Further, the Gold was deposited in the ordinary course of business.

71. Green field project is related to : setting up new projects

72. Guarantee issued by a bank in favour of Custom department that party will fulfill export obligation for

availing exemption from custom duty regarding tax. Such guarantee is called: Financial Guarantee

73. Guarantee issued by a bank which is still outstanding is shown in the Balance Sheet as: Contingent

Liability.

74. Guarantors Liability: Recall the a/c and cause demand against the borrower and guarantor. Balance

in guarantor's SB a/c cannot be appropriated directly.

75. Holiday period given for repayment of installements in a loan is termed as: Moratorium period

76. How DSCR is calculated?: (Profitafter tax + Depreciation + Interest on Term Loan) divided by (Annual

instalment of term loan+ interest on term loan)

77. How much additional risk weight has been provided on restructured loans?: 25%

78. Hypothecation can be converted to pledge by: taking possession with the consent of the borrower.

79. Hypothecation described under SARFEASI Act.

80. If a businessman start a business with a Capital investment of Rs.3,00,000/- and withdraw

Rs.25,000/- later. If Net Profit is Rs.1,20,000/- and income tax paid thereon is Rs.30,000/-, what is the

position of capital account (net worth) at the end of the year – 395000; 365000; 360000; nil:

Rs.3,65,000/-

81. If a LC contains a clause "about" regarding the amount and quantity of goods, how much tolerance is

permitted?: 10%

82. If current ratio is 2:1, net working capital is Rs 20,000, current asset will be: Rs 40,000

83. If debtors are Rs 4 lac, annual sale is 60 lac, what is the Debt collection period: 0.8 months

84. If Debtors velocity ratio increases, it means debt collection period has increased or sales have

decreased.

85. If documents are to be presented in about July month: these can be presented within 5 days before

or 5 days after.

86. If in a Guarantee issued is silent, what will be the limitation period: 3 yrs and in case of Govt

guarantee it is 30 years.

87. If in a LC words around is written with date then variation of is allowed in the period: +/- 5 calendar

days

88. If limit is 3 lacs, margin is 25% what should be stock to avail full limit?: Rs4 lac

89. If on a letter of credit it is not mentioned whether it is revocable or irrevocable, then as UCPDC 600, it

will be treated as : Irrevocable LC

90. If on a Letter of Credit, date is mentioned as "end of the month", then as per UCPDC 600, it will

mean: 21st to last day of the month.

91. If stock statement is not submitted for 3 months from its due date and DP is allowed on the basis of

old stock report, then the account will be considered NPA after:90 days

92. If the projected sale of a-small (manufacturing) enterprise is Rs 80 lakh, margin available with the

borrower is Rs 4 lakh, then as per turnover method, working capital limit will be: Rs 16 lakh.

93. If working capital limit to a borrower is Rs 10 crore and above, then as per RBI guidelines, the loan

component should be at least: as per bank's discretion.(earlier it used to be 80%).

94. In a company, the registration of charges is required for: a)loan against FD b)lien on Govt Securities

c) assignment of Book Debts d) lien on Shares : Book Debts

95. In A current account OD of Rs. 12000 is made. The FDR has become due later on if the right of

appropriation can be used. The borrower has objected that he never requested for overdraft, hence

payment can not be appropriated. The customer is right.

96. In a letter of credit, it is written that documents can be negotiated about 30th June. In this case, the

documents can be negotiated: Before or after 5 clays of 30th June.

97. In case of a loan under consortium, each bank can have Maximum working capital limit of Rs-No

rule in this regard. Rules of consortium to be framed by members of consortium.

98. In case of loan given by more than one bank under a consortium, how the asset classification is done

by various banks?: Each bank will classify the account based on its record of recovery.

99. In case of revaluation of fixed assets, what percentage of revaluation reserve will be added to Tier

II capital of the bank?: 45%

100. In Letter Of Credit jmporter is called: Opener of Letter of Credit

101. In project finance, Debt Equity Ratio requirement for other than Infrastructure finance is: 2:1

102. In respect of a project report, the feasibility which is given least importance by the preparers of the

report, but very important for a banker is : a) Commercial b) Technical c) economic d) financial Ans: C

103. In the Balance Sheet of a bank, Contingent Liabilities are shown as: footnote to the Balance Sheet.

104. In the case of advance to a limited company for purchase of vehicle, the charge is registered with

Regional Transport Authority in addition to registration of charge with. Registrar of Companies. Why this is

done?:So that borrower can not sell the vehicle without intimation to the bank

105. Interest rate on advances is related to – Bank rate; Base Rate; PLR: MCLR Rate

106. Limit sanctioned Rs 5 lac; Stock Rs 6 lac; Margin 25%; What will be Drawing power: Rs 4.5 lac

107. Loan Delivery System is not applicable to: a) Loan to Soft ware industry b) export credit: export

credit

108. Loan Delivery System suggested by Rashid Mani Committee is applicable on borrowers with working

capital limits of: Rs 10 crore and above

109. Loan is in the name of A&B. Both have signed documents. A signs the Balance Confirmation but B

does not. In this case limitation will extend against: both

110. Lorry Receipts issued by Transport Operators approved by IBA are preferred. The reason is the

Transport Operators will take care of: Carriers Risk.

111. Stand by LC is just like : Financial guarantee (A guarantee of payment issued by a bank on behalf of a

client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment with

a third party. Standby letters of credit are created as a sign of good faith in business transactions, and are

proof of a buyer's credit quality and repayment abilities)

112. Standard Score under CIBIL: 300 to 900

113. Stock Audit is required in respect of loans of : Rs.1.00 crore & above

114. Subordinate Debt is shown as part of in the Balance Sheet of a bank: Other Liabilities and

Provisions

115. Tangible Net Worth (TNW) is calculated as: Total paid up capital + Reserves – Intangible Assets.

116. The appraisal of deferred payment guarantee is similar to term loan: The difference is outlay of funds.

117. THE APPRAISAL OF DEFERRED PAYMENT GUARANTEE IS SIMILAR TO: TERM LOAN

118. The Audited Balance sheet for the latest financial year is to be obtained within ______ to finalise

credit rating and re-fix interest accordingly: 6 months.

119. The Bank did not disclose all material facts regarding loan to the guarantor while obtaining

guarantee. Can guarantor escape liability?: Guarantor cannot escape from his liability as it is not

necessary to disclose all the materials facts with regards to the loan.

120. The Borrower has to bring funds as his contribution for loan from: Long term Sources

121. The charge on stocks is created by: Hypothecation ( also by pledge or lien)

122. The concept of Base Rate is not applicable in the case of: Loan against Bank’s own deposit

123. The limitations of financial statements are : only quantitative not qualitative.

124. The long term liability to tangible net worth ratio implies : Long term solvency of the firm .

125. The main distinction between Hypothecation and Pledge is on accountof : Possession

126. The Meaning of Debtor Velocity Ratio is: Cycle of Debt Collection Period

127. The procedure used for ascertaining Customers Credit worth is called: Credit Rating

128. Time Limit for registration of equitable mortgage with CERSAI: 30 days from date of deposit of

title deeds. (Normally 30days and then delay can be condoned up to 30days on payment of penalty).

129. To improve Current Ratio of 2:1, what has to be done? a) Recover cash from Receivables b) Cash

sales c) Decrease the Bills payables.

130. Total Indebtedness Ratio is represented by: Total outside liabilities divided by Tangible Net Worth

131. What is "pari passu" means: Sharing in the ratio of outstanding.

132. What is a Break even point-The level of sales at which a firm does not earn any profit and does not

incur any loss.

133. What is cash loss : net loss before depreciation (Net loss minus depreciation)

134. What is Deffered Payment Guarantee?: Guarantee issued when payment by applicant of

guarantee is to be made in instalments over a period of time.

135. What is Mortgage? Transfer of interest in specific immovable property to secure an existing

or future debt.

136. What is nature of Banker's Lien?: It is implied pledge because Banker can dispose-off the goods after

giving notice to the borrower.

137. What is Pari Passu charge?: In case of consortium advance sale proceeds of security will be

shared among banks in proportion to their outstanding.

138. What is Real Rate of Interest?: Prevailing interest rate minus inflation rate

139. What is the meaning of Group in Exposure Norms: Commonality of management & Effective Control

140. What is the relationship between bank and customers in case of overdraft?: Creditor and Debtor

141. What is the risk weight for Personal Loans? 125%

142. What is the risk weight for Unrated companies?: 100%

143. What is the type of liability for the bank on account of issue of Bank Guarantee?: Contingent Liability

144. What type of bank gaurentee bank gives when a customer purchases a machine on instalment basis?:

Deferred Payment guarantee.

145. What type of Guarantee is Deffered Payment Guarantee: Financial Guarantee

146. What type of liability is represented by Bank Guarantee?: Contingent Liability and shown as a

footnote in the Balance Sheet.

147. What will be the tangible net worth if total assets are Rs 35 crore; total outside liability Rs 30 crore;

intangible assets Rs 3 crore: Rs 2 crore

148. What will happen in case of negative working capital limit: Current Liabilities are more than

Current Assets

149. Which is not a Credit Rating Agency – CRISIL, CARE, SMERA, ICRA, CIBIL: CIBIL

150. Which is not found in operating expenses statement of P&L statement - Salaries, Rent, Power: Power

151. Which is not included in Contingent liability – Bank Guarantee; Letter of Credit; Forward Contract;

Bills Payable: Bills payable

152. Which of the following is a contingent liability – deposits, borrowings, capital, guarantee: Bank

Guarantee

153. Which of the following is a Credit Information company – CIBIL, FIMDA, AMFI, CRISIL: CRISIL

154. Which of the following is part of the Solvency Ratios: debt equity ratio.

155. Which of the following represent Debt Service Coverage Ratio: (Net Profit after tax + Depreciation

+ Interest on Term loan) divided by (Annual instalment of term loan + interest on term loan)

156. Which of the items will not be an asset in banks bal sheet: Advances/Fixed Asset / Deposits :

Deposits

157. Which one of following is credit information company?: Equifax

158. Which system replaced Benchmark Prime Lending rate in banks: Base Rate

159. While arriving Drawing Power for financing against book debts, only Book Debts _____and below are

to be taken in to consideration. (other than MSME advances): 90 days

160. While doing Project Appraisal, sensitivity analysis is useful for: Viability and sustainability of project.

161. While financing for TL, Bank should look for the ability of the firm to generate the income to service

the debt

162. While granting loans to a partnership, banks generally insist that the firm should be registered

whereas registration of a partnership firm is optional. What is the reason for the same?: An

unregistered firm can not sue its debtors for recovery of its dues whereas other can sue the

firm for recovery of their dues

163. While undertaking technical appraisal, the following is not considered: cost of production and sales (it

is used for economic viability).

164. Who is bound to file particulars of charge with the Registrar of Companies under MCA 21, when a

company creates charge of somebody on its movable or immovable property except by way of

pledge?: officials of the company.

165. Why banks do not grant loan to a minor?: A minor is not competent to contract Therefore, Ioan given

to a minor can not be recovered.

166. Why banks ensure that charge created on any asset of the company should be registered with ROC

within stipulated period?: If charge is not registered, bank will become unsecured creditor.

167. Why banks prefer financing of bills?: because the advance is self liquidating

168. Why fund flow statement is taken from the borrower?: To know sources from where funds have been

raised and how funds have been utilized and to know changes in net working capital position.

169. Why loan against Partly Paid Shares are not preferred by banks?: Because partly paid shares

represent contingent liability. In case company makes demand and the borrower does not pay the

amount then the bank will have to pay the amount otherwise share may be forfeited. Moreover it is

prohibited by RBI

170. Working capital requirement of a firm is required to be met through : Short term sources and surplus

Loans and Advances::(Useful for Certified credit officers( professionals) , Caiib also)) very important for bankers

A&L

Liabilities

Assets

Net worth/Equity :

Fixed Assets :

Funds brought in by the promoters as their investment in

Assets which are purchased for long term and not meant to be

business or generated by and retained in business, Share

sold but used for production.

capital/partner's capital/ Paid up equity share

Land & Building,Plant & Machinery

capital,/owners funds

Vehicles,Furniture & Fixture

Reserves & Surplus e.g. General Reserve, CapitalReserve,

Office equipment,Capital Work in Progress These are

Revaluation Reserve and Other Reserves),Retained

represented as under:

Earnings, Undistributed Profits,Preference share capital

Original value (Gross Bock) Less depreciation

(not redeemable within 12 years)

Net Block or book value or written down

Value Method

Long term liabilities:

Non Current Assets:

Liabilities which are not due for payment within 12 months

Assets which cannot be classified as current or

from the date of the Balance Sheet)

fixed or intangible assets Book Debts or Sundry Debtors more

Term loans from financial institutions;

than 6 months old/ Disputed Debts, Investment of long term

Term loan from banks; Debentures/Bonds;

nature in shares,

Deferred payment liability;Preference Shares redeemable

govt. securities, associates or sister firms or

within 12 years;

companies. Long term security deposits. Unquoted investments;

Fixed Deposits maturing after one year;

Investments in subsidiaries or sister concerns; Loans & Advances

Provision for gratuity; Unsecured Loans

to directors, officers; Accounts receivables in respect of sale of

plant &

machinery; Advances to concerns in which directors are

interested; Deposits with customs port trust etc

Intangible & fictitious Assets Which do not have physical

existence. For example: Goodwill, Patents, Trade Mark, Copy

Right, Preliminary or pre operative expenses, other formation

expenses, debit balance of P & L account, accumulated losses,

bad debts, Capital issue expenses e.g. discount on issue of share

& debentures, commission on underwriting of shares &

debentures; Deferred revenue expenditure

Short term or CurrentyLiabilities :

Current Assets :

Liabilities which are due for payment within 12 months

Cash in hand, Bank balance

from the date of the balance sheet and are to be repaid

including fixed ,deposits with banks. Stocks/inventory (such as

out of proceeds of current assets,Short term borrowings

raw material, stock in process, finished goods, consumable stores

from banks (C/C, 0/D or B/P, B/D limits) for working

and spares),Book debts/Sundry debtors/Bills Receivable/

capital.,Sundry/trade creditors/creditors/ Account

Accounts receivable/ debtors, Government and other trustee

payable,Bills Payable / trade acceptances

securities

Fixed Deposits from public payable within one year,Short

(other than for long term purposes e.g. sinking funds, gratuity

duration loans or deposits

funds etc.),Readily Marketable/quoted govt. or other securities

Provision for taxation, Proposed Dividends, Provision for

meant for sale,Interest accrued and

bonus, unclaimed dividend.

receivables,Advance payment of taxes,

Deposits from dealers, selling agents etc.

pre-paid expenses,Advance payments for merchandise; unexpired

Advance payments from customers,

insurance

outstanding expenses and Accruals e.g. wages & salaries,

rent; expenses payable

e.g. Advertisement

important Ratios

Financial Ratios ::: (Most useful) Very important read everyone

The broad categories in which Financial

Ratios are classified are:

 Liquidity Ratios

 Gearing Ratios

 Profitability Ratios

 Turnover Ratios

 Coverage Ratios

Liquidity Ratios

 Liquidity Ratios are important for the working

capital lenders, who provide loans for shorter

duration. As such Banks, which generally

provide working capital loans, want to know

the liquidity position of the unit over a short

term period say one year. These ratios can

be analysed in under noted two forms:

 Current Ratio

 Acid Test Ratio or Quick Ratio

Current Ratio

 Current Ratio = Current Assets / Current

Liabilities

 Acid Test Ratio = (Current Assets - Inventory)

/ Current Liabilities

Gearing Ratios

 Gearing Ratios are of two types:

 Total Debt/Equity Ratio =

Total Outside Liabilities (TOL)

Tangible Net Worth (TNW)

 Total Debt/Equity Ratio =

Long-Term Liabilities

Tangible Net Worth

Total Outside Liabilities (TOL)

The sources of funds of an enterprise can broadly be

classified into following three categories:

 Own funds or Tangible Net Worth [Total Networth (ie

Capital plus reserves) less Intangible assets]

 Short-term loans and

 Long-term loans

 Among the above three, the last two are external

sources of funding and therefore are together

classified as Total Outside Liabilities (TOL).

Profitability Ratios

 Profitability ratios measure the profit earning capacity of the unit

vis-à-vis many parameters like sales, capital employed etc. The

ratios used for ascertaining the profitability of the main activity

of the unit are :

Operating Profit Ratio

 Operating Profit Before Interest = --------------------------------------

 (Before Finance Cost) Net Sales

Operating Profit After Interest

 Operating Profit Ratio =

-----------------------------------------

(After Finance Cost) Net Sales

Turnover Ratios

Raw Material holding

Stock of raw material X 365/

Annual consumption of raw

material

Stock in process holding

Stock in process level X 365/

Cost of production

Finished goods holding

Finished goods level X 365/

Cost of production

Receivables holding level

Bills receivables level X 365/

Annual gross sales

Trade Creditors holding level

Expression

Trade Creditors level X 365/

Annual purchase

Coverage Ratios

The two types of coverage ratios are:

 Interest Coverage Ratio

 Debt Service Coverage Ratio

Interest Coverage Ratio

 Interest Coverage Ratio are computed as –

Interest Coverage Ratio = (Profit before Tax +

Depreciation + Interest) / Interest

Gross Debt Service Coverage Ratio

The Gross Debt Service Coverage Ratio

(DSCR), is computed as –

 Gross Debt Service Coverage Ratio

Profit after tax + Depreciation + Interest on TL

= ----------------------------------------------------

Annual principal instalments + Interest

on TL

IIBF & NISM Adda

Sunday, 28 April 2019

Jaiib Recollected

MARKETING CONCEPT JAIIB PPB

MSME recollected on 27 April 2019

Saturday, 27 April 2019

Current affair s on 27.04.2019

Friday, 26 April 2019

Loans and Advances::(Useful for Certified credit officers( professionals) , Caiib also)) very important for bankers

Loans and Advances::(Useful for Certified credit officers( professionals) , Caiib also)) very important for bankers

A&L

important Ratios

IIBF Certificate Exams(Adda)

Followers