CAIIB BFM CASE STUDY ON NPA part 2

IMPORTANT CASE STUDIES ON EXCHANGE RATES – PART-2 | PRACTISE FOR CAIIB CASE STUDIES FOR CAIIB BFM PAPERS

 

Important CAIIB Case Studies on NPA from latest BFM syllabus 2022 and Preparation material for November 2023 CAIIB Exam with Case Studies

 

This article is the 2nd installment of CAIIB BFM Case Studies on Non Performing Assets for CAIIB Exam 2023. Here we will be publishing next set of important CAIIB  case studies on the concept of NPA from the latest CAIIB syllabus for 2023 Exams. 

 

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BFM CASE STUDIES FOR CAIIB EXAM 2023

CHECK: CAIIB BFM CASE STUDY ON NPA PART 1

NPA – BFM CASE STUDY 2:

 

PMP Bank is providing you with the following information relating to its advance portfolio as on 31st March 2010: 

Total advances = Rs. 40000 cr. 

Gross NPA = 9% and 

Net NPA = 2%. 

 

Based on this information, you need to answer the following questions:

 

Q-01 Considering that all the standard loan accounts are general advances, calculate the provision amount for standard loan accounts:

• Rs. 160.00 cr. 

• Rs. 151.90 cr.

• Rs. 145.60 cr. 

• Rs. 141.50 cr.

 

Q-02 Calculate the provision amount on NPA accounts:

• Rs. 3,600 cr. 

• Rs. 3,200 cr.

• Rs. 2,800 cr.

• Because of incomplete information, it cannot be calculated

 

Q-03 Calculate the provision amount on total advances, including the standard accounts:

• Rs. 3,612.30 cr. 

• Rs. 2,945.60 cr.

• Rs. 2,840.20 cr.

• Because of incomplete information, it cannot be calculated

 

Q-04 Calculate the amount of gross NPA:

• Rs. 4,000 cr. 

• Rs. 3,600 cr.

• Ps. 3,200 cr. 

• Rs. 2,800 cr.

 

Q-05 Calculate the amount of net NPA:

• Rs. 800 cr. 

• Rs. 1,000 cr.

• Rs. 1,200 cr. 

• Because of incomplete information, it cannot be calculated

 

Q-06 Calculate provision coverage ratio for NPA:

• 70.00%

• 74.30%

• 75.20% 

• 77.85%

 

Q-07 Calculate the provision amount to be maintained by the bank to meet the provisioning coverage ratio of 70%

• Ps. 3,600 cr. 

• Rs. 3,200 cr.

• Rs. 2,880 cr. 

• Rs. 2,520 cr.

 

Answers of NPA – BFM Case study 2:

 

1-III 

2-III 

3-II 

4-II 

5-I 

6-IV 

7-IV

 

Explanation of Answers of BFM Case study 2:

 

1: Standard account Total = Rs. 40000 cr. 

9% NPA on std account = Rs. 3600 cr.

Amount for Provisioning = Rs. 40000 — Rs. 3600 = Rs. 36400 cr. 

Provision at 0.4% = Rs. 36400 x 0.4% = Rs. 145.60 cr

 

2: Provision on NPA = Gross NPA 9% – net NPA 2% = 7% 

Hence, Provision amount = Rs. 40000 x 7% = Rs. 2800 cr.

 

3: Provision on NPA = Gross NPA 9% – net NPA 2% = 7% 

Hence, Provision amount = Rs. 40000 x 7% = Rs. 2800 cr.

Provision on standard account = Rs. 145.60 cr. 

Hence total provision = Rs. 2800.00 + Rs. 145.60 = Rs. 2945.60 cr.

 

4: Rs. 40000 x 9% = Rs. 3600 cr.

 

5: Rs. 40000 x 2% = Rs. 800 cr.

 

6: Total provision on NPA / Gross NPA = 2800 / 3600 x 100 = 77.8%

 

7: Gross NPA x 70% = Rs. 3600 x 70% = 2520 cr.

 

NPA – BFM CASE STUDY 3:

 

DAKKOO Bank has following information relating to NPA loans portfolio on its records as on 31st March 2018.

 

• Sub-standard secured loans = Rs. 1,200 cr. (having security value Rs. 1000 cr.),

• Sub-standard unsecured loans = Rs. 200 cr. (having security value Rs. 18 cr.),

• Doubtful for up to 1 year = Rs. 800 cr. (having security value Rs. 600 cr.),

• Doubtful for 1 year to 3 years = Rs. 800 cr. (having security value Rs. 400 cr.),

• Doubtful for more than 3 years loans = Rs. 800 a (having security value Rs. 200 cr.),

• Loss loans = Rs. 200 cr. (having security value Rs. 18 cr.),

• Total advances = Rs. 40,000 cr. 

• Total NPA = Rs. 4,000 cr.

 

On the basis of above data you are required to calculate:

 

Q-01 Calculate the %age of gross NPA:

• 10% 

• 11%

• 12% 

• 8%

 

Q-02 Calculate the amount of provision for sub-standard account:

• Rs. 320 cr. 

• Rs. 240 cr.

• Rs. 230 cr. 

• Rs. 180 cr.

 

Q-03 Calculate the amount of provision for doubtful loans:

• Rs. 1,710 cr. 

• Rs. 1,660 cr.

• Rs. 1,520 cr. 

• Rs. 1,490 cr.

 

Q-04 Calculate the amount of total provisions:

• Rs. 1,640 cr. 

• Rs. 1,760 cr.

• Rs. 1,840 cr. 

• Rs. 2,140 cr.

 

Q-05 Calculate the %age of net NPA:

• 5.18% 

• 4.91%

• 4.65%

• It cannot be calculated on the basis of given data

 

Q-06 Calculate the provision coverage ratio:

• 51.50% 

• 53.50%

• 57.90% 

• 64.50%

 

Answers of NPA – BFM Case study 3:

1-I 

2-III 

3-I 

4-IV 

5-II 

6-II

 

Explanations of Answers of BFM Case study 3:

 

1: %age of gross NPA = Gross NPA / Total advances x 100 = 4000 / 40000 x 100 = 10%

 

2: provision for sub-standard account = Rs. 1200 x 15% + Rs. 200 x 25% = Rs. 180 + Rs. 50 = Rs. 230 cr.

 

3: provision for doubtful loans = DF-1 = Rs. 600 x 25% = Rs. 150 cr. 

Add: Unsecured portion = Rs. 200 x 100 = Rs. 200 cr. 

Total = Rs. 350 cr.

provision for doubtful loans = DF-2 = 400 x 40% = 160 cr. 

Add: unsecured portion = Rs. 400 x 100% = Rs. 400 cr. 

Total = Rs. 560 cr.

provision for doubtful loans = DF-3 = 800 cr. x 100% = Rs. 800 cr. 

 

Total provision = Rs. 350 + Rs. 560 + Rs. 800 = Rs. 1,710 cr.

 

4: Total provisions = 

Sub-standard = Rs. 230 cr. 

Add: Doubtful = Rs. 1710 cr. 

Add: Loss = Rs. 200 cr. 

Total provision = Rs. 2140 cr.

 

5: Net NPA = Rs. 4000 – Rs. 2140 = Rs. 1860 –

Net advance = Rs. 40000 – Rs. 2140 = Rs. 37860

%age of net NPA = Net NPA / Net Advances = Rs. 1860 / 37860 x 100 = 4.91%

 

6: provision coverage ratio = 2140 / 4000 x 100 = 53.5%

 

You might also be interested to read our other articles:

 

You can also find the BFM case studies Part-1 on NPA as well as on exchange rate by visiting our official site. If you want us to publish more case studies on NPA or any other topic of BFM, you can tell us in the comment box.

All the best for your CAIIB Exams 2022!

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