Professional Knowledge: Banking, Finance and Computer Awareness for Chartered Accountants
What the section tests
The Professional Knowledge paper for CA Officer Scale II is weighted toward practical banking regulation, accounting disclosure, and computer hygiene rather than textbook theory. Expect questions on RBI monetary tools, priority sector lending, NPA/provisioning, Ind AS/Schedule III presentation, and core banking/cyber terms.
Core rules to hold
- CRR is a cash reserve held with RBI and earns no interest; SLR is held in approved securities/gold and may earn yield. Both are percentages of NDTL.
- Basel III minimums: CET1 4.5%, Tier 1 6%, total capital 8%; the capital conservation buffer of 2.5% is additional CET1.
- NPA: overdue more than 90 days. Sub-standard: NPA up to 12 months; doubtful: more than 12 months; loss: identified as uncollectible. Provisioning rises with ageing.
- Priority sector target for RRBs: 75% of ANBC, with sub-targets for agriculture, small/marginal farmers, and weaker sections.
- Computer awareness: phishing is a deceptive message; pharming redirects via DNS/hosts; a firewall filters traffic; a digital signature gives authenticity and integrity, not confidentiality.
Worked example
A bank has CET1 capital of ₹90 crore and risk-weighted assets of ₹1,200 crore. CET1 ratio = 90/1,200 = 7.5%. Minimum CET1 including the 2.5% conservation buffer = 4.5 + 2.5 = 7.0%. The bank is compliant by 0.5 percentage points, or ₹6 crore of excess CET1. If a question asks only for the regulatory minimum, do not add the buffer automatically.
Traps
Do not mix bank rate with repo rate; do not treat SLR as earning no return; do not apply the 90-day NPA norm without checking SMA classification; in computer items, do not confuse authentication with encryption.