CAIIB ABM cheat sheet

Advanced Bank Management - Core Reference

• CRR is held as cash with RBI; SLR is held in cash, gold, or approved securities; both are computed as a percentage of Net Demand and Time Liabilities (NDTL), where NDTL = liabilities to outsiders excluding interbank netting adjustments.

• Money multiplier = 1 / reserve ratio (CRR + SLR when treated jointly); a CRR cut raises the multiplier and expands credit-creating capacity of the banking system.

• Capital adequacy under Basel III: CRAR = (Tier 1 + Tier 2 capital) / Risk-Weighted Assets; minimum 9% in India (8% global) plus Capital Conservation Buffer of 2.5% in CET1.

• Basel III liquidity ratios: LCR = High Quality Liquid Assets / net cash outflows over 30 days (minimum 100%); NSFR = available stable funding / required stable funding (minimum 100%).

• NPA classification: Substandard (<=12 months as NPA), Doubtful (>12 months), Loss (identified as uncollectible); provisioning rises with age and security cover.

• Provisioning norms: standard assets generally 0.40% (0.25% for some categories); substandard 15% of secured exposure; doubtful up to 100% for loss assets; provisioning is on outstanding minus realisable security value.

• ROE = Net Profit / Average Equity; ROA = Net Profit / Average Total Assets; NIM = Net Interest Income / Average Earning Assets; Cost-Income Ratio = Operating Expenses / Operating Income.

• Duration gap and repricing gap measure interest rate risk: positive gap benefits from rising rates; modified duration x rate change approximates percentage price change in the bond portfolio.

• Yield to maturity equates present value of coupons and redemption to price; bond price moves inversely to yield, with convexity making price gains exceed losses for equal yield moves.