GCEMP 2021 RTCBOM

Credit risk or default risk involves the inability or unwillingness of a customer or a counterparty to

meet contractual commitment(s) in relation to lending, trading, hedging, settlement and other

financial transactions. What is your understanding of NPA treatment with regard to customer and counterparty obligations?

• No difference

• In case of customer its customer liability and in case of counterparty its on bank

• In case of customer its bank liability and in case of counterparty its on customer

• There is no NPA on counterparty

Any fresh / additional exposure to Specified Borrower beyond NPLL will attract additional provision

of % & additional Risk Weight of %. (Response separated by comma)

What is Normally Permitted Lending Limit (NPLL)?

• 50% of the incremental funds raised by the Specified

  Borrower over and above its ASCL as on the reference date, in the financial years succeeding the

  FY in which the reference date falls.

• 30% of the incremental funds raised by the Specified

  Borrower over and above its ASCL as on the reference date, in the financial years succeeding the

  FY in which the reference date falls.

• 25% of the incremental funds raised by the Specified

  Borrower over and above its ASCL as on the reference date, in the financial years succeeding the

  FY in which the reference date falls.

• 10% of the incremental funds raised by the Specified

  Borrower over and above its ASCL as on the reference date, in the financial years succeeding the

  FY in which the reference date falls.

When dealing with single customer/counterparty there are 2 types of risk that are transaction risk and default risk.In case of portfolios whats extra?

• Concentration Risk, Migration Risk

• Asset correlation risk, Size of individual exposure

• Asset correlation risk, Size of individual exposure, migration risk

• Asset correlation risk, Size of individual exposure,Concentration Risk

What is Economic Value Added (EVA)?

• Returns over hurdle rate

• Returns over cost of deposits

• Returns over cost of funds

• Returns over BRLLR

1.To approve the Policy and set all the major credit risk appetite and monitoring limits.

2.To provide support and advice to the Board in all matters relating to credit risk exposure

management, including the formulation of the Policy and its periodic review. Which Committee is responsible?

• CPC

• RMCB

• ERMC

• PPAC

Proposals falling within the delegated lending powers of

the Corporate Office level Sanction

C ommittees are required to be s ent to the CRO at least 2 working days prior to submitting them to

the respective sanctioning committees. The CRO shall review such proposals from the risk angle

and accordingly communicate his / her observations to the sanctioning committees concerned. This describes what process?

• CREP

• SREP

• EREP

• ERM

The following types of proposals will be routed through

1.In case of fresh /modification or additional exposure of Rs 5 crore & above to a single counterparty

2.Decline in rating by two notches in BOB 1 rated accounts & one notch in BOB 2 & below rated

accounts, with exposure of Rs. 5 crore and above at the time of review

3.IBPC without risk sharing

4.CREC for Pool Purchase accounts will be undertaken only at Counterparty level.

ln case of Review/Review with decrease proposals of Rs 5 crs and above referred to CREP

• Deviations in any two key financial ratios (as mentioned in the section of Indicative financial

  ratios) from the acceptable level of the ratios as per Bank’s guidelines.

• Modification pertaining to dilution in tangible security coverage and/or extension of timelines

  for security creation/perfection. However the same shall not be applicable to the cases

  where our Bank is having second / subservient charge over the securities.

• In case Commencement of Commercia l Operation (DCCO) is not achieved within the

  stipulated timeline.

• All of the above

Cost of Equity (COE) is our present hurdle rate

• True

• False