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*sampling methods
-judgmental sampling:non-probablity method, based on exprience
- biased sampling: sample do not truly represent population
-radno: simple, systmatic, strait, culuster
simple: with replacement: items saples placed picked again population
withou replace: not placed bankc can't be picked
- systematicc: every nth element is selected from sample
- central imite theorem based on with replacement
- pdf curves of stock returns negatively skewed
- when sampling the sample mean gives expected mean of pouplulation
- correlation between 2 evetns not assure one event cause of
another
- scattehr diagram usually shows one of the six possible
correlation between the variables
- scatter diagram
best fit line has min residual error,
coeficitn of correlation dentoted by r
* variation in time series:
Secular trend:
cyclic fluctation:
seasonal variation:
Irregular variation:
secular trend: expect to sustain over long term
eg- steady increase in cost of living - effective increase
Irregular variati: tsunami, earth quakee
coding: susbstracting mean value from each period in series
cal varry depedning uopon observation even/odd
- seasonal variatio: repetive trend in one year or less
effect of periodic variation in time-series
- sesonalit used to study regular priod effe (within year)
cyclity for longer irregular moves
* Credit management
nationazliaion: 1969 - priority sector
- aspects inclued in loan policy
exposure limits, individual, sector, discretionary powers,
- credit appraisal
-delivery- creating charge over security, method of delivery,
and the procedure for disbursal of term loan
- credit monitoring: optimum utilization of banks funds
reduce default
-rehablilit & recovery
genuie/wilful, genuine - rehablitation, wilful - recover process
- refinance: nabard, sidbi, rbi
* role of rbi in credit management
11-05-16
*analysis of financial statements
incase of banking companies bala shee & pf format - br act
schedule 6th of companies act
* sample questions 2015 by murgan
60% of samll entereprise advance to micro entrprise for foreign
banks
- equilibrium price- market clearing price
- returns on bond which are at premium > current yield
- as standered error decreases, value of sample mean closer
to value of population mean
- decreasing standare erro increasing prec sample mean
can be used to estimate the population mean
- the conduct of LC business is governed by UCPDC 600
- regulated interest rates of rbi, applicable to credit
limit 2 lakh
- priorty sector target for foregin banks - 32%
- if Market price < face valuef , ytm > CR
- job enrichment means higher responsibility
- rbi purchases govt bond - money injected into economy
- when rbi sells govt bons money is sucked from market
* Computation of GDP
- Expenditure method
GDP = conusmption + gross invest + govt spending + (Ex-IM)
consumption: peronsal expediture food,household
gross invest: construction, purcha machin, equip
not investment in financial prodcuts
- Income method
assuem to equal aggregate of incomes generated through
goods manufacuturing and service renderment
GDP = compensation of empl(wages + property income (rent from
goods/service generation activiites) + product tax and dep
on capital
compensation of employees: rep wages, salr and other suppl
property income: corporate profit, propteri income and
* bfM
Crystallization of contigent liabilities called call risk
- in bal sheet of bank = liabilite: sources of fund
asets application of funds
* components of bank's liabilites
capital: sharholders/owner's stake in captial
reserves: statutory requirement
depostts: cheap source, current, saving, term, recurring
borrowing: rbi, IDBI, NABARD, exim
provision: bills payable, sal payable, tax payable,
interest accru
- bank's asset
cash and bal with rbi:
cash in hand, balances with rbi, bal with banks, money
at call and short notice
- investments: gov sec, apprvoe sec, shardes, debent
-Advances: cash credit, term loans, bills purchase and
discounted
- profit loss acc of bank
: Income
fee based: advisory servies;
interest based income:
trading income; other income
Expenses:
- intest expen: interst income > interst expens
NII, when expressed as %age of assets called net int margin
- asset default when not paid inteste in last 180 days
- factors negatively effecting liquidity
decline earning, decrease in quality of assets,
uncertainity in cash flows, downgrading by rating agencies
- liquidity risk
funding risk: uanticipated - liability in foreign currencies
timing mismatch: