| Pokhara University | |
| Level: Bachelor | Year: 2024 |
| Programme: BBA/BBA-TT/BCIS | Full Marks: 100 |
| Course: Bank Operations & Management (Concentration II) | Pass Marks: 45 |
| Semester: VI | Time: 3 hrs. |
Bank Operations & Management Questions
Section “A”
Brief Answer Questions [10*2]
1. What are the secondary functions of a Commercial Bank?
2. What do you understand by Credit Creation?
3. Define Consumer lending.
4. What is Gap Analysis?
5. What do you understand by Financial Charges?
6. What do you understand by Credit Ratings?
7. The total Equity of the firm is Rs. 1000, and owner’s equity is Rs. 200. If the firm earns profit of Rs. 100, what is the return on owner’s equity?
8. What are the major components of Bank Balance Sheet?
9. ABC firm has receivable of 80 days, Inventory of 60 days, and firms pay its creditors in 30 days. What is Cash Conversion Cycle of the firm?
10. Rama has purchased a house with Fair Market Value of Rs 50 Million and she has requested for financing the loan from bank of Rs. 30 Million. What is Loan to Value ratio?
Section “B”
Long Answer Questions [6*10]
11. Define investment policy. What are the principles of banking investment policy?
12. What is Risk? What are the various risks associated in the Banking System?
13. What is BAFIA? Explain some of the important salient features of Banking and Financial Institution Act.
14. What do you understand by Collateral? What are the Characteristics of good collateral?
15. Given the following information of ABC National Bank.
| Assets | Amount (Rs) | Rate (%) | Duration (yrs) | Liabilities (Rs.) | Amount | Rate (%) | Duration (yrs.) |
| Cash | 2,000 | – | – | Saving Deposits | 6,000 | 4 | 0.5 |
| Government Securities | 4,000 | 4 | 5 | Fixed Deposit | 18,000 | 6 | 4 |
| Loans | 20,000 | 8 | 4 | Equity | 2,000 | – | |
| Total Assets | 26,000 | Total Liabilities | 26,000 |
a) If the interest rate rises by 4%, what is the Net Interest Margin before and after the change in interest rate?
b) What is the Duration Gap?
16. Commercial Bank of Nepal holds assets and liabilities whose average duration and amount are shown as below:
| Assets & Liabilities | Average Duration | Amount |
| Investment Bonds | 8.0 yrs | Rs. 60 M |
| Commercial Loans | 3.6 yrs | Rs. 320 M |
| Consumer Loans | 4.5 yrs | Rs 140 M |
| Deposits | 1.1 yrs | Rs. 490 M |
| Non-Deposit borrowings | 0.1 yrs | Rs. 20 M |
| Equity | 0.0 yrs | Rs. 10 M |
a) Segregate Assets and Liabilities.
b) What is the weighted duration of bank’s assets portfolio and liability portfolio? What is the duration gap?
17. What is the Yield Curve in Investment? Elaborate different types of the Aggressive Investment Strategy.
Section “C”
Case Analysis
Nepal Auto Limited has the following balance sheet and income statement for 2023.
| Balance Sheet | Rs. 000 | Income Statement | Rs. |
| Land & Building | 100,000 | Sales (all credit) | 2,000,000 |
| Machinery | 400,000 | Less; Cost of goods sold | 1,200,000 |
| Furniture | 50,000 | Gross Profit | 800,000 |
| Net Fixed Assets | 550,000 | Less: Operating expenses | 480,000 |
| Inventory | 300,000 | Operating Profit | 320,000 |
| Sundry Debtors | 300,000 | Add: Non-operating income | 48,000 |
| Cash/ Bank Balance | 50,000 | 368,000 | |
| Current Assets | 650,000 | Less: Non-operating expenses | 16,000 |
| Total Assets | 1,200,000 | Profit Before Tax | 352,000 |
| Equity Share Capital | 500,000 | Less: Tax @ 30% | 105,600 |
| General Reserve | 300,000 | Net Profit After Tax | 246,400 |
| Secured Loan | 300,000 | ||
| Sundry Creditors | 100,000 | ||
| Total Liabilities | 1,200,000 |
Based on the above information, Calculate the following ratios;
a) Gross Profit Ratio
b) Operating Profit Ratio
c) Net Profit Ratio
d) Current Ratio
e) Net Working Capital
f) Debt Equity Ratio
g) The average collection period (consider 360 days)
h) Inventory Turnover ratio (in times)
i) Assets Turnover ratio
j) Return on assets