CBI Credit Officer cheat sheet

5 Cs of credit: Character (repayment track record), Capacity (cash flow to service debt), Capital (owner's stake), Collateral (security cover), Conditions (industry and macro environment).

Credit appraisal sequence: application capture, KYC and bureau check, techno-economic feasibility, financial analysis, credit rating/scoring, structuring, sanction, documentation, disbursement, post-disbursement monitoring.

DSCR = (PAT + depreciation + interest on term loan) / (interest on term loan + term loan instalment). A DSCR of 1.50 or above is conventionally treated as comfortable for term lending.

Fixed Obligation to Income Ratio (FOIR) for retail loans = total fixed obligations / net monthly income; many lenders cap FOIR at 50-65% depending on income band.

Working capital assessment: Nayak Committee (Tandon II) method for turnover up to Rs.5 crore, MPBF = 0.75 x (current assets - current liabilities excluding bank borrowing); turnover method is 20-25% of projected turnover.

Drawing power = paid stock + book debts (usually up to 90 days) minus margins; stock and receivables must be verified and insured.

Priority sector lending targets: 40% of ANBC (18% for agriculture, 7.5% for micro enterprises, 12% for weaker sections); shortfall is parked in RIDF.

Project appraisal ratios: Debt-Equity (normally 2:1 or better), Interest Coverage Ratio above 2, Current Ratio 1.33 for working capital, and Break-Even Point analysis.

Loan-to-Value caps: housing loans above Rs.75 lakh up to 75% LTV, MSME and gold loans typically 75% or lower; margin = 1 - LTV.

RBI monetary policy tools: repo rate (lending to banks against securities), reverse repo/SDF (absorption), CRR (cash reserve, no interest paid), SLR (statutory liquid assets, currently 18% of NDTL).

Bank rate is the rate at which RBI rediscounts or lends long-term without collateral; MSF is a collateralised overnight facility priced above the repo rate.

Negotiable Instruments Act 1881: cheque is a bill of exchange drawn on a banker payable on demand; Section 138 deals with dishonour for insufficient funds.

Basel III capital: minimum Common Equity Tier 1 of 5.5%, Tier 1 of 7%, total CRR-inclusive CAR of 9% plus capital conservation buffer of 2.5%.

Key institutions: NABARD (agriculture refinance), SIDBI (MSME), EXIM Bank (trade), NHB (housing), ECGC (export credit insurance), CGTMSE (collateral-free MSME guarantee).

Deposit insurance: DICGC covers deposits up to Rs.5 lakh per depositor per bank, including principal and interest.

NPA classification: substandard (NPA up to 12 months), doubtful (above 12 months), loss assets; provisioning rises across these categories.

Payment systems: RTGS for Rs.2 lakh and above, NEFT for any amount, IMPS and UPI operate 24x7; NPCI operates UPI, IMPS, RuPay and AePS.

Accounting equation: Assets = Liabilities + Equity. Every transaction preserves this balance (double entry).

Current Ratio = current assets / current liabilities (benchmark 1.33-2). Quick Ratio = (current assets - inventory - prepaid) / current liabilities.

Debt-Equity Ratio = total outside liabilities / tangible net worth; a ratio above 2:1 generally signals high leverage for appraisal.

Interest Coverage Ratio = EBIT / interest; a value below 1.5 raises repayment concern.

Return on Capital Employed = EBIT / capital employed; Return on Equity = PAT / net worth; Net Profit Margin = PAT / net sales.

Cash flow statement has three sections: operating, investing and financing. Operating cash flow is the primary source of debt servicing.

Working capital cycle = inventory days + receivable days - payable days; a rising cycle absorbs cash and increases working capital demand.

Window dressing red flags: rising debtors with flat sales, inventory build-up, frequent changes in accounting policy, related-party sales, and cash profits with no cash.

Depreciation reduces book profit but is added back in cash flow; capital expenditure appears in investing activity, not operating.

RBI is the central bank under the RBI Act 1934; banking regulation flows from the Banking Regulation Act 1949 (BR Act).

CRR is maintained as cash with RBI; SLR is held in cash, gold or approved securities. Both are percentages of Net Demand and Time Liabilities (NDTL).

Prudential norms: income recognition, asset classification and provisioning (IRAC) require NPAs to be classified as substandard, doubtful or loss with prescribed provisioning.

Large Exposure Framework caps exposure to a single counterparty at 20% of Tier 1 capital and to a group at 25%, with an additional 5% for infrastructure.

Base Rate and MCLR: MCLR must be published for tenors from overnight to one year; loans are priced as MCLR plus spread. External benchmark lending rates apply to retail and MSME floating loans.

KYC Master Directions require Customer Due Diligence, risk categorisation, periodic updation and record retention of at least five years after account closure.

Priority sector guidelines and the PIDF (Priority Sector Lending Certificates) allow banks to buy/sell PSL achievement without transferring loan assets.

RBI Fair Practices Code: lenders must give a loan application acknowledgement, reasoned rejection in writing, and a copy of the sanction letter with all charges disclosed.

PMLA 2002 obligations: maintain records of transactions for five years, report suspicious transactions (STR) to FIU-IND within seven working days of establishing suspicion, and appoint a designated director.

Cash Transaction Report (CTR) applies to cash transactions above Rs.10 lakh (or as prescribed); NTR for non-profit organisations; CCR for counterfeit currency.

Customer identification: Officially Valid Documents include Aadhaar, passport, driving licence, voter ID and NREGA job card; PAN is required for transactions above Rs.50,000.

Enhanced Due Diligence applies to high-risk customers, PEPs, correspondent banking relationships and non-face-to-face onboarding.

Beneficial ownership: for companies, identify natural persons holding 25% or more (10% for unlisted in some contexts); for trusts, the trustees and beneficiaries.

Money laundering stages: placement, layering and integration. Structuring (smurfing) is splitting transactions to stay below reporting thresholds.

Sanctions screening: check UNSC, OFAC and domestic lists before onboarding and on an ongoing basis; freeze and report matches.

Record keeping under PMLA: five years from the date of transaction; under the BR Act, five years after cessation of relationship.

GDP = C + I + G + (X - M). Nominal GDP uses current prices; real GDP is deflated by the GDP deflator.

Inflation measures: CPI (retail, base 2012) and WPI (wholesale, base 2011-12). RBI's flexible inflation target is 4% CPI with a tolerance band of +/-2%.

Fiscal deficit = total expenditure - total receipts excluding borrowings; it is financed through market borrowing (dated securities and treasury bills).

Monetary policy transmission channels: interest rate, credit, asset price and exchange rate channels.

Current account deficit reflects trade in goods and services plus income and transfers; it is financed by capital flows and reserves.

Key indices: IIP (industrial production), PMI (purchasing managers), GST collections, core sector (eight industries) with a 40.27% weight in IIP.

Financial inclusion: PMJDY (bank accounts), PMSBY (accident insurance), PMJJBY (life insurance), APY (pension), Mudra (micro enterprise loans up to Rs.10 lakh).

Repo rate decisions are taken by the six-member Monetary Policy Committee, which meets at least four times a year.

Simple Interest = P x R x T / 100; Compound Interest = P[(1 + R/100)^T - 1]. For two years, CI - SI = P(R/100)^2.

Profit and Loss: Profit% = (SP - CP)/CP x 100. Successive discounts of a% and b% equal a + b - ab/100.

Time and Work: if A does work in x days and B in y days, together they finish in xy/(x + y) days.

Speed = distance / time; for a train crossing a platform, total distance = train length + platform length.

Ratio and mixture: alligation rule gives the ratio of two components as (higher - mean) : (mean - lower).

Permutation nPr = n!/(n-r)!; combination nCr = n!/[r!(n-r)!]. Probability = favourable outcomes / total outcomes.

Number series and coding-decoding: check differences, ratios and squares/cubes first; in letter coding, map positions A=1 to Z=26.

Blood relations: draw a family tree with gender markers; use 'my father's only son' type clues to fix identity.

Data interpretation: compute percentage change as (new - old)/old x 100 and read tables before attempting questions; approximation is often sufficient.

Reading comprehension: identify the main idea, tone and inference; answers must be supported by the passage, not by outside knowledge.

Subject-verb agreement: a singular subject takes a singular verb; with 'either/or' and 'neither/nor', the verb agrees with the nearer subject.

Articles: 'a' before consonant sounds, 'an' before vowel sounds; 'the' for specific or unique references.

Prepositions with fixed collocations: 'comply with', 'consist of', 'deprived of', 'capable of', 'insist on', 'prefer to'.

Error spotting: check tense consistency, pronoun agreement, parallelism in lists, and misplaced modifiers.

Cloze test: read the whole passage first, then choose the option that fits both grammar and meaning.

Para jumbles: find the opening sentence (general statement without pronouns) and look for connectors such as 'however', 'therefore', 'moreover'.

Vocabulary in context: infer meaning from surrounding words; synonyms and antonyms should match the part of speech used.