CAIIB Exam – Bank Financial Management [BFM] Case Study 2023

In this post of CAIIB for the June 2023 attempt, we are providing you with some of the important case studies for Paper no. 2 of Certified Associate of the Indian Institute of Bankers. Candidates will be provided with videos on case studies as well as some case studies within this post to solve. So, we hope you are ready to do some practice for the upcoming June 2023 exams!

BFM 2022 EXAM | IIBF CAIIB

Bank financial management or Bank Finance Management is said to be the most difficult exam in CAIIB. Because candidates appearing for CAIIB have very less conceptual clarity regarding the different paradigms of CAIIB. Then how is it possible to clear the BFM paper in one attempt?

First Things First, I am saying that the exam is difficult if we compare it with other papers of CAIIB. But it is not impossible to cover the syllabus for BFM. And surely, we can clear Bank financial management exam in one attempt.

Strategy for passing BFM paper:

There is no magical wand around there that can help you. I mean there is no shortcut for clearing the BFM exam. You have to put effort, have to learn the basics, and most important, cover the syllabus priority-wise.

PASS DEC Bank Financial Management 2023 EXAM IN 1 ATTEMPT!

Are Case Studies important in Bank Finance Management?

Yes of course case studies are important. But you need to understand one thing that case studies are also part of the theoretical portion. Or you can consider that it may be a formula that is used. So for concentrating on the case studies first of all you need to concentrate on the theoretical part.

Also See: CAIIB 2023: Exam Dates, Eligibility, Syllabus, Pattern

Basics for BFM?

Now many candidates have a question in their mind “is Macmillan enough to clear the Bank financial management paper?” And answer to that – no doubt Macmillan is very good book but the professional language and the difficult terms make it very much difficult for the candidates to understand the basic concepts.

How to Clear the Basics for CAIIB then!

But do not worry, we have bilingual full video course for you. This is basically a Hindi mix English language video course. And you can easily understand each and every concept with proper clarity. Every situation has been explained in a very practical manner with proper examples wherever required. Moreover, we have covered more than 80+ case studies in our videos.

That’s not the end, you also get memory recorded previous year chapter wise questions paper of Caiib. So that is all you need to cover to crack the CAIIB exam in one attempt. Watch this video on case study over foreign exchange which is a very important topic in JAIIB as well as CAIIB:

Done with the Case study?

Let’s cover some other important case studies of BFM for exams!

BFM CASE STUDY 1

GIVEN:

Fixed Assets = 600.00 Crores & Govt. Securities = 6000.00 Crores

Standard Assets:

Retail = 4000.00 Crores, HL = 3000.00 Crores & Other loans = 12000.00 cr

Sub-Standard Assets:

Secured Assets = 600.00 Crores, Unsecured Assets = 200.00 Crores & Doubtful (DAI) = 1000.00 Crores

Q1. Calculate the amount of Risk Weighted Assets for Standard Assets (Retail).

1. 1,500.00 Crores
2. 3,000.00 Crores
3. 12,000.00 Crores
4. 16,500.00 Crores

Q2. Calculate the amount of Risk Weighted Assets for Standard Assets (HL).

1. 15,00.00 Crores
2. 3,000.00 Crores
3. 12,000.00 Crores
4. 16,500.00 Crores

Q3. Calculate the amount of Risk Weighted Assets for Standard Assets (Other loans).

1. 15,00.00 Crores
2. 3,000.00 Crores
3. 12,000.00 Crores
4. 16,500.00 Crores

Q4. Calculate the amount of Risk Weighted Assets for Standard Assets.

1. 15,00.00 Crores
2. 3,000.00 Crores
3. 12,000.00 Crores
4. 16,500.00 Crores

Q5. Calculate the amount of Risk Weighted Assets for Govt. Securities.

1. 0.00 Crores
2. 200.00 Crores
3. 900.00 Crores
4. 1,000.00 Crores

 Q6. Calculate the amount of Risk Weighted Assets for SS Secured.

1. 0.00 Crores
2. 200.00 Crores
3. 900.00 Crores
4. 1,000.00 Crores

 Q7. Calculate the amount of Risk Weighted Assets for SS Unsecured.

1. 0.00 Crores
2. 200.00 Crores
3. 900.00 Crores
4. 1,000.00 Crores

 Q8. Calculate the amount of Risk Weighted Assets for Doubtful D1.

1. 0.00 Crores
2. 200.00 Crores
3. 900.00 Crores
4. 1,000.00 Crores

 Q9. Calculate the amount of Total Risk-Weighted Assets.

1. 10,500.00 Crores
2. 12,000.00 Crores
3. 16,500.00 Crores
4. 18,600.00 Crores

Case study 1 Solution:

A1. II i.e RWA for Standard Assets (Retail) = 4000*75/100.00 = 3000.00 Crores

A2. I i.e RWA for Standard Assets (HL) = 3000*50/100.00 = 1500.00 Crores

A3. III i.e RWA for Standard Assets (Other loans) = 12000*100/100.00 = 12000.00 Crores

A4. IV i.e RWA for Standard Assets = 3000.00 + 1500.00 + 12000.00 = 16500.00 Crores

A5. I i.e RWA for Gsec = 5000*0/100.00 = 0

A6. III i.e RWA for SS Secured = 600*150/100.00 = 900.00 Crores

A7. II i.e RWA for SS Unsecured = 200*100/100.00 = 200.00 Crores

A8. IV i.e RWA for Doubtful D1 = 1000*100/100.00 = 1000.00 Crores

A9. IV i.e Total RWAs = 3000.00 + 1500.00 + 12000.00 + 900.00 + 200.00 + 1000.00 = 18600.00 Crores

BFM CASE STUDY 2

Aabra ka Dabra Bank has a Repo transaction. The details of it has been given below:

Type of the Security – GOI security having Residual Maturity = 5 years, Coupon = 6% p.a. & Current Market Value = Rs.3000.00

Other details:

Cash borrowed = Rs.2000.00, Modified Duration of the security = 3.6 years, assumed frequency of margining to be Daily, the haircut for security (after adjusted for minimum holding period) = 1.40 %, Haircut on cash = 0.00 & Minimum holding period = 5 business days, & Change in yield to compute the capital charge for general market risk = 0.70 % p.a.

Q1. Calculate Capital Charge for CCR

1. 0.00
2. 23.97
3. 75.60
4. 57

Q2. Calculate Capital Charge for credit risk

1. 0
2. 23.97
3. 75.6
4. 57

Q3. Calculate Capital Charge for market (specific) risk

1. 0
2. 23.97
3. 75.6
4. 57

Q4. Calculate Capital Charge for market (General) risk

1. 0
2. 23.97
3. 75.6
4. 57

Q5. Calculate the Total capital required

1. 0
2. 23.97
3. 75.6
4. 57

Case Study 2 Solution:

1. II i.e. the Capital Charge for CCR

1. 1. 1. Exposure = MV of the security = 3000.00
      2. CCF for Exposure = 100.00%
      3. On=Balance Sheet Credit Equivalent = 3000.00* 100.00% = 3000.00
      4. Haircut = 1.4 %
      5. Exposure adjusted for haircut = 3000.00* 1.014 = 3042.00
      6. Collateral for the security lent = Cash = 2000.00
      7. Haircut for exposure = 0.00%
      8. Collateral adjusted for haircut = 2000.00* 1.00.00= 2000.00
      9. Net Exposure (5= 8) = 3042 = 2000.00= 1042.00
      10. Risk weight (for a Scheduled CRAR complaint bank) = 20.00%
      11. Risk-weighted assets for CCR (9 x 10) = 1042 * 20.00% = 208.4
      12. Capital Charge for CCR (11 x 11.5 %) = 208.4 * 0.115 = 23.97
2. I i.e. the capital for credit risk (when the security is held under HTM) =

= 0.00 (being Govt. security)

3. I i.e. Capital for market (specific) risk (when the security is held under AFS/HFT) =

= 0.00 (being Govt. security)

4. III i.e. the capital for market (General) risk =

= (Assumed yield change (%) * Modified duration * market value of security)

= 3.60 * 0.70% * 3000.00

= 75.60

5. IV i.e. Total capital required =

= (for CCR + credit risk + specific risk + general market risk)

= 23.97 + 0.00+ 0.00+ 75.60

= 99.57

YOUR TICKET TO CAIIB 2023 SUCCESS!

For more such case studies & notes & questions, you can check out the latest Study Material of Bank Financial Management for your CAIIB JUNE 2023 Exams. The Full BFM course as well as other CAIIB paper courses are also available at the lowest prices.

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