1. BALANCESHEET MANAGEMENT MODULE D
1). Asper BASEL-II,tier-3capital isallowedtomeetwhichadditional categoryof risk: marketrisk
2). Moneyat call andshort notice includesall loansmade inthe interbankcall moneymarketthatis
repayable within 15 daysnotice.
3). Netinterestincome (NII): interestincome –interestexpenses
4). Netinterestmargin(NIM): netinterestincome /average total assets
5). Netinterestmargincanbe viewedasthe spreadonearningassets.
6). the ratio of the shareholdersfundstothe total assetsmeasuresthe shiftsinthe ratioof ownedfunds
to total funds.Thisfact assessesthe sustenancecapacityof the bank.
7). Price matchingbasicallyaimstomaintainspreadsbyensuringthatdeploymentof liabilitieswill be at
a rate higherthanthe costs.
8). Price matchingexercise wouldindicate whetherthe institutionisinapositiontobenefitfromrising
interestratesbyhavinga positive gap (assets>liabilities) orwhetheritisina positiontobenefitfrom
declininginterestratesbya negative gap (liabilities>assets).
9). the bank’sbalance sheetcomprisesof sourcesandusesof fundsliabilities andnetworthfromthe
sourcesof the bankfunds,where asassetsrepresent usesof fundstogenerate revenueforthe bank.
10). Systemicrisk isthe riskthat a defaultbyone financial institutionwillcreate a‘ripple effect’that
leadstodefaultsby otherfinancial institutionsandthreatensthe stabilityof the financial system.
11). in calculatingthe Cooke ratio bothonbalance sheetandoff balance sheetitemsare considered.
The ratio isusedto calculate bank’stotal risk-weightedassets.Itis ameasure of the bank’stotal credit
exposure.
12). A borrowerisrequiredtopay part of principal andaccruedinteresteverymonthasperloan
agreement.He ispromptlypayinginteresteverymonth,butnotpayingprincipal forthe pastfour
months.The account will be classifiedas substandardasset.
13). Pillar1 of capital frameworkrelatesto: minimumcapital requirements.
14). Pillar-3of capital frameworkrelatesto: marketdiscipline.
15). CRAR: capital to riskweightedassets
16). CAR: capital adequacyratio
17). for calculatingthe capital charge for creditriskunderstandardizedapproach,anunratedbankwill
be assigned 100% riskweight.

2. 18). the conceptof expectedloss(EL) and UN expectedloss(UL) are usedincalculatingcapital charge on
operational risk.
19). As perRBI guidelines,whendidthe Indianbankswithoverseaspresence andforeignbanksinIndia
migrate to BASEL-IIguidelines? 31-03-2008
20). Banks are requiredtoaccumulate datafor five years before itcanuse for internal modelsin
calculate capital charge for operational risk.