IBB Banking Diploma Examination

The Institute of Bankers, Bangladesh (IBB)

Banking Diploma Examination November-December 2018

DAIBB

International Trade and Foreign Exchange (FE)

Ka Set

THE INSTITUTE OF BANKERS, BANGLADESH (IBB)

Banking Diploma Examination, July, 2016

DAIBB

Management of Financial Institutions (MFl)

Time-3 hours

Full marks-100

Pass marks- 50

[N.B. The figures in the right margin indicate full marks. Answer any five questions.]

                                                                                                                                                                                                                                                                             Marks

1 (a) Give an overview of the present situation of Banking sector of Bangladesh.

b) Discuss on 'the role of Central Bank is perfect' as a regulatory body.

c) Does Bangladesh need more banks? Justify your arguments. 5

2. (a) What do you mean by AD ratio? 5

(b)  How its changes impact bank's Liquidity and assets management portfolios

(c) What is meant by interest rate spread? 5

3 (a) Explain components of CAMELS Rating.                           8

(b) How CAMELS Rating helps to measure financial soundness of a bank?

(c) What is Stress Testing? 4

4(a) What are the causes of nonperforming loans?                      l0

(b/ What are the impacts of bad loan. on banks profitability?       5

(c) Explain the impact of classified loans on interest rates of banks       5

and financial institutions.

5 (a) What do you mean by Islamic Banking? 5

(b) What are the deposits and loan components of  islamic Banking? . l0

(c) Why AD Ratio is different for Islamic Banks? 5

(6 (a) State the main services provided by Agent Banking.                             6

(b) What do you mean by e-commerce? 6

(c) What do you mean by interoperatibility of Mobile Financial Services? What might be its benefits?

[Please turn over]

7 (a) what are the credit risk mitigation techniques of a Financial Institution?

(b) How profitability irnpacts banks' capital account

(c) What are the main sources of fund of financial institutions?

8 (a) Discuss the main features of BASEL III.

(b) Write the importance of loan securitization.

(c) Discuss loan classification and its provisioning.

9 (a) what are the major financial statements prepared by a commercial bank? Describe the purposes of preparing each statement.

(b) Define money laundering and its steps.

(c) Describe :

(i) IP and PEPS;

(ii) KYC and KYE;

(iii) EDDI

(iv) Beneficiary Owners.

10. Write short notes (any eight):-                20

(a) Crypto currency;

(b) NPSB;

(c) Off-shore Banking

(d) SMS Banking;

(e) Trade Base Money Laundering

(f) Insurable interest;

(g) Market Risk; 

(h) Shell Bank

(i)Collateral Security:

(j) Core Capital;

(k) BFIU;

(l) Option.

THE INSTITUTE OF BANKERS, BANGLADESH (IBB) 
 Banking Diploma Examination, November-2016

DAIBB

Central Banking & Monetary Policy (CMP)

Time--3 hours

Full marks-100

Pass marks-50

[N.B. -- The figures in the right margin indicate full marks. Please answer any five questions. Question No. 1 and 2 are compulsory.]

Marks

1. Please write short notes on any five of the following :—                                  4x5.20

a) Money Multiplier;

(b) Bangladesh Bank Order, 1972;

(c)  Bank Company (Revised) Act, 2013;

(d) Floating of Taka;

(e) Convertibility of Currency;

(f) Capital adequacy of banks;

(g) Green Banking;

(h) On-line Banking;

(i) Terms of Trade;

(j) IT risks for the banks and its monitoring.

2. Distinguish between any four of the following :—                                           5X4=20

(a) Merchant Bank and Offshore Bank;

(b) Money Laundering and Black Money; 

(c) Tariff and Taxes; 

(d) Repo Rate and Snake in the Tunnel; 

(e) Reserve and Provision for Bad deb.; 

(f) Spot Rate and Forward Rate of exchange;

(g) Depreciation and Devaluation of currency;                                                 

(h)Share and Debenture;

(i) Bridge Financing and Excess Liquidity;

(j) Venture Capital and Globalization.

3. (a) What is base money and how it is related to money.supply?                      10

(b) Explain the mechanism through which Bangladesh Bank try to regulate the movement of base money. 10

4. (a) What is balance of payment disequilibrium? What is the role of International Monetary Fund in intigating adverse crisis in balance  of payment?

(b) Discuss the salient features of balance of payment of Bangladesh in recent years.              10

5. (a) "Risk management is very important for banks and financial institutions to continue its activities while maximizing profits"— Discuss.  10

(b) How does Bangladesh Bank try to ensure internal control mechanism of Commercial Banks and Financial Institutions in Bangladesh?   10

6. (a) Assume that in the face of severe liquidity crisis, the competition of the banks is forcing the deposit rate upwards. What actions you will recommend for Bangladesh Bank to take?   10

(b) Do you think that your recommendation will not hamper the deregulation effect of the financial sector? Why?   10

7. What is money market? Discuss the present state of Capital Market in Bangladesh. What are the reasons behind the frequent fluctuations in Capital Market in Bangladesh in recent years?    20

8. (a) Explain the concept of "Prudential Regulation". Why these are issued?        10
 (b) Why L/C margin is generally reduced at the time of severe inflation 10 when credit restriction becomes necessary?

9. (a) "The task of Central Bank supervision of banks and Financial Institutions, basically aim at ensuring market discipline."—Do you agree? Please explain.   10

(b) Briefly highlight on the basic guideline that Bangladesh Bank follows in supervision activities.    10

10. Explain CAMEL Rating System. How it can be used by Bangladesh Bank as an effective tool for Bank Supervision.   10

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Ka Set 

THE INSTITUTE OF BANKERS, BANGLADESH (IBB) 

Banking Diploma Examination, July 2018 

DAIBB

International Trade and Foreign Exchange (FE)

Time-3 hours

Full marks-100

Pass marks-50

(N. B. --The figures in the right hand margin indicate full marks. Answer any 

four questions from group A and one question from group B.] 

Group A 

Ka Set

1. (a) Discuss briefly the role of Management Accounting in planning, control and decision making a in bank with examples relevant to your answer. 7

(b) Describe briefly the uses and limitations of financial statement analysis. 7
(c) Distinguish between Management Accounting and Financial Accounting. 6

2. (a) Discuss the difference between Product Cost and Period Cost. 5

(b) Cost department of the ABC Company made the following data and cost available for the year 201 7 :-

Inventories	January-l	Deccmbcr-31
Finished goods	350 units	450 units
Work in process	Tk. 90,000	Tk. 45,000
Raw material’s	Tk. 35,000	Tk. 50,000
Finished goods unit cost	162	?
Depreciation :
Office equipment		2800
Factory plant and Machinery		21500
Vehicle engaged for marketing		3200
Maintains : Generation machine		9500
Factory building		5200
Internal roads and drain		10000
Sales @ Tk. 220 per unit		8,53,600
Income Tax paid		5000
Miscellaneous expenses and cost :
Fuel (gas bill)		4500
Telephone factory		6000
Power for light (90% for factory, 10% for administration)		3000
Water		4000
Land, rates and taxes (80% factory, 20% office)		4300
Indirect materials		2645
Raw materials purchase		3,64,000
Direct labour		1,62,500
Wages paid to worker which there was no production due to power failure.		17000
Leave and bonus		40000

Factory office expenses :
Factory foreman salary ‘ .		6000
Factory manager salary		16000
Truck, hire cost to carry purchased materials		8000
Purchase discount		5200
Marketing expenses		20000
Administration expenses		15000
Interest earned (aher tax deduction) .		6000

Required :
(i) Statement of cost of goods sold. 8
(ii) Income statement showing gross and net profit in total and per unit. 7
3 (a) What is meant by working capital cycle?

(b) Discuss the influence of factors in determining the working capital requirement of a manufacturing company.
(c) Following is the cost statement of ABC Company :10

Raw materials	T k. 50 per unit
Direct labour cost	Tk. 20 per unit
Overheads cost	Tk. 40 per unit
Total cost	Tk. 10 per unit
Profit	Tk. 30 per unit
Selling price	Tk. 140 er unit

You are also given the following additional information :
(i) Average Raw material, in stock . One month
(ii) Average Raw materials in process Half a month
(iii) Stock of finished goods 30 days
(iv) 20% sales are cash sales . .
(v) Expected cash balance Tk. 1,00,000
(vi) Credit allowed to debtors Two months
(vii) Credit allowed by creditors 45 days
(viii) Time lag in payment of wages 15 days
(ix) Time lag in payment of overhead 1 month
(Note: 360 days in a year)
You are required to prepare statement showing the working capital requirement if level of activity of the company is 70,000 units. Assume 360 days In a year.
4 (a) Discuss the compensation strengths and weakness of the techniques of capital budgeting.4

(b) The Commitment company is considering the purchases of new machine costing Tk. 20.00.000. The estimated cash benefits are : .

Year	Cash benefits (in taka)
1	500000
2	10,00,000
3	8,00,000
4	10,00,000
5	5,00,000
6	6,00,000

The machine is to be depreciated on a straight line basis over a period of six years. The salvage value of the machine is expected to be Tk. 2,00,000. Assume a 35% tax rate and a cost of capital is 10%.
Required :
(i) Payback period.
(ii) Average Annual Rate of Return (ARR).
(iii) Net Present Value (NPV).
(iv) Present value of payback period.
(v) Profitability Index (131)
(vi) Comment on financial viability of buying the machine.
(The present values of Tk. 1 for six years at 10% are : 0.909, 0.826, 0.751, 0.683, 0.621, 0.564)
5 (a) The Bay Shoe Company sells five different styles of shoes with identical costs and selling12 prices. The company is trying to find out the profitability of opening another store, which have the following expenses and revenues :-

Per pair	Taka
Selling price	30.00
Variable cost	19.50
Salesmen’s commission	1.50
Total variable cost	21.00
Annual fixed expenses are :-
Rent	60,000
Salaries	2,00,000
Advertising	80,000
Other fixed expenses	20,000
Total	3,60,000

Required :
(i) Calculate the annual break-even point in units and in taka sales. Also determine the profit or loss if 45,000 pairs of shoes are sold.
(ii) The sales commissions are proposed to be discontinued, but instead a fixed amount of Tk. 54.000 is to be incurred in fixed salaries. A reduction in selling price of 5% is also proposed. What will be the Break-even point in unit and in taka sales?
(iii) It is proposed to pay the store manager 50 paisa per pair as additional commission. The selling price is also proposed to be increased by l0%. What would be the Break-even point in units and in sales taka?
(iv) Refer to the original data. If the store manager were to be paid 30 paisa (Tk. 0-30) commission on each pair of shoes sold in excess of the Break-even point. What would be store‘s net profit, if 50,000 pairs were sold?
(v) Determine the point of indifference between commission plan and salary plan.
(Note: Consider each part of the question separately.)
(b) What are the assumptions underlying in construction of a Break-even chart? 4
(c) “The effect of a price rise is always to increase the p/v ratio and to get reduced the Break-even point.” Explain the statement with example.
6. XYZ Airport‘s Board of Representative is considering the construction of a longer runway at the airport. Currently, the airport can handle only private aircraft and small commuter jets. A new, long runway would enable the airport to handle the mid size jets used on many domestic flights.~ Data pertinent to the Board’s decision appear below :

	Taka
Cost of acquiring additional land for runway	7,000,000
Cost of runway construction	20,000,000
Cost of extending perimeter fence	2,984,000
Cost of runway lights	3,960,000
Annual cost of maintenance of new runway	2,800,000
Annual incremental revenue from landing fees	4,000,000

In addition to the preceding data, two other facts are relevant to the decision. First, a longer runway will require a new showplow, which will cost Tk. 10,000,000. The old showplow could be sold now for Tk. 1,000,000. The new, longer plow will cost Tk. 1,200,000 more in annual operating costs. Second, the Board of representatives believes that the proposed long runway and the major jet service it will bring to the airport will increase economic activity in the community. The Board projects that the increased economic activity will result in Tk. 6,400,000 per year in additional tax revenue for the airport. In analyzing the runway proposal, the Board has decided to use a 10 year life. The airport’s hurdle rate for capital projects is 12%.
Required:
(a) Compute the initial cost of the investment in the long runway.
(b) Compute the annual cost or benefit from the runway.
(c) Prepare a net present value analysis of the proposed long runway.
(d) Should the Board representatives approve the runway?

7. The financial statements of LLM Company are presented below :

Particulars	Amount	Amount
	Taka	Taka
Net Sales (All on account)		6.00.000
Less : Cost of goods sold		4.50.000
Gross profit		1,50,000
Less : Operating expenses : Selling expenses	60,000
Administrative expenses	25,000
Total operating expenses		85,000
Net operating income		65,000
Less: Interest expenses		5000
Income before tax		60,000
Less: Income Tax expenses		17,500
Net Income		42,500

LLM Company
Comparative Balance Sheet
on 31^st December

Assets :	2014	2016
	Taka	Taka
Cash	60.000	32,500
Accounts Receivable(Net)	50,000	35,000
Merchandise Inventories	95,000	87,500
Land	75.000	-
Property, Plant and Equipment	1,75,000	1,95,000
Accumulated Depreciation	75,000	60,000
Total Assets	3,80,000	2,90,000
Liabilities and Stockholder’s Equity :		-
Accounts Payable	65,000	82,500
Income Taxes Payable	37,500	50,000
Notes Payable	50,000	25,000
Bond Common Share	75,000 62,500	- 62,500
Retained camings	90,000	70,000
Total Liabilities and Stockholder’s Equity	3,80,000	290,000

Additional Information:
(a) During the year Plant and Equipment was sold for Tk. 25,000 cash.
(b) The original costs of the assets were Tk. 37,500 and has a book value of Tk. 25,000 at time of sale.
(c) Dividend of Tk. 25,000 were declared and paid.
(d) Depreciation expenses altogether Tk. 27,500.
(e) Additional equipment was purchased for Tk. 17,500.
(f) In the year of 2017 LLM Company issued Bond to purchase land. These Bonds were exchanged with the land owner.

Required:
(i) Prepare a statement of Cash Flow for 2017, under the direct method.
(ii) Prepare a statement of Cash 1" low for 2017, under the indirect method.

8. (a) What is profitability? How can a firm improve the profitability of a project? 5

(b) Apex Company Ltd. operating at 80% level of activity produces and sells two products A and B. The cost sheet of these two products are as follows :

	Product (A)	Product (B)
Units products and sold	600 units	500 units
	Taka	Taka
Direct Materials (per unit)	2.00	4.00
Direct Labour (per unit)	4.00	4.00
Factory overhead per unit (40% iixcd)	5.00	3.00
Selling and administrative overhead (60% fixed)	8.00	5.00
Total cost per unit	19.00	16.00
Selling price per unit	23.00	19.00

Factory overheads are absorbed on the basis of machine hours which is the limiting (key) factor. The machine hour rate is Tk. 2 per hour. The company receives an offer from China for the purchase of product ‘A‘ at a price of Tk. 17-50 per unit. Alternatively, the company has another offer from Iran for purchase of product B at a price of Tk. 15-50 per unit. In both case a special packing charge 0f Tk. 0.50 per unit has to be borne by the company. The company can accept either of the two export orders and in both the case the company can supply such quantities as may be possible by utilizing the balance 0f 25% 0f its capacity.

You are required to prepare:--
(i) A statement showing the economics of the two export proposals giving your recommendations as to which proposal should be accepted.
(ii) A statement showing the overall profitability of the company after incorporating the export proposal recommended by you.
9. MML Company needs to expand its facilities. To do so, the firm must acquire a machine costing Tk. 80.000. The machine can be leased or purchased. The firm is in the 40% tax” bracket, and its after-tax cost of debt is 9%. The terms of the lease and purchase plans are as follows:

Less: The leasing arrangement requires end of year payments of Tk. 19,800 over 5 years. All maintenance costs will be paid by the loser, insurance and other costs will be borne by the lessee. The lessee will exercise its option to purchase the asset for Tk. 24,000 at termination of the lease.

Purchase: If the firm purchases the machine, its cost of Tk. 80.000 will be financed with a 5 year. 14% loan requiring equal end-of-year payments of Tk. 23,302. The machine will be depreciated under straight line method, assuming zero salvage value. The firm will pay Tk. 2.000 per year for a service contract that covers all maintenance costs; insurance and other costs will be borne by the firm. The firm plans to keep the equipment and use it beyond its 5 year recovery period.

Required:
(a) Determine the after-tax cash outflows of MML under each alternative. 8
(b) Find the present value of each after-tax cash outflow stream, using the after-tax cost of debt. 8
(c) Which alternative lease or purchase--would you recommend? Why? 4
10. Write short notes on any five of the following:-- 4x5=20

(a) Credit analysis and its shortcomings;
(b) Cost of capital and financial leverage;
(c) Budgetary control systems;
(d) Management report;
(e) Variance analysis;
(f) Inventory management;
(g) Hire purchase finance;
(h) Receivables management.

Ka Set 

THE INSTITUTE OF BANKERS, BANGLADESH (IBB) 

Banking Diploma Examination, July, 2018 DAlBB Lending Operation & Risk Management.(LRM) 

Time-3 hours Full marks--100 

Pass marks-50

[N.B.-AII questions carry equal marks. Answer any five questions. Diferent parts of a question should be answered in a same place] 

1.(a) What is creditworthiness? Discuss the points those are essentially to be considered by a banker while assessing the creditworthiness of a perspective borrower. 

(b) State how will you deal with existing borrower needing enhancement of the creditability. 

2. (a) Define the SME credit in the light of Bangladesh Bank’s guidelines and mention the booster sector. 

(b) Bangladesh Bank has of late made some changes as regards provisioning on SME loans, but some banks are reported to have been measuring the revised concept through unfair convension of some other loans to SME loans. Give your opinion on the matter. How to relief to this unfair Situation? Please suggest. 

3. (a) Distinguish between Lending Risk Analysis (LRA) and Credit Risk Grading (CRG). Write down the expected CRG requirement for extending credit. 

(b) Explain the risk factors that make an industry sick. How would you proceed to consider rehabilitation needed of a sick project? 

4. (a) Define portfolio management. Highlight the role of responsibility of Branch Manager in respect of borrower selection and loan processing. 

(b) What will you do when a loan proposal does not fall within set criteria of approved credit policy but the applicant affears to be potential and helpful for the bank’s branch? 

5. (a) Define ALCO and its formation structure. Discuss the role and responsibility of ALCO for profer leading of a bank. 

(17) Do you think that the absence of asset liability management in the bank may cause damage to its image and foundation? Elaborate your answer. 

(a). Define Green banking as per Bangladesh Bank’s guidelines Discuss the importance and need of green banking in the context of present and future global warming situation of the country 

(b) Briefly give a resume of green banking activity of your bank/institution 

(a) What is provisioning? Discuss the basis of determining the status of classified loans and advances. 

(b) Is it due to the increase of classified loans of the bank that they now facing liquidity problems and borrow interbank call money at very high rate? Justify the view. If you areagreed or not agree- comment. 

(a) What do you mean by a project and its app1aisal? During appraisal of a project loan proposal what factors does a banker take into consideration? Please explain. 

(b) Mr. Ahmed Ali an enterprise of your branch area has applied for a loan of Tk. 20,00,000 to establish a nursery project (to ensure green banking) to your branch. Please write an appraisal report of the banks loan proposal explaining the following points -

(i) About the applicant 

(ii) About the enterprise (nursery) 

(iii)About the security, calculating maximum credit Limit (MCL) 

(iv) About the credit needs , 

(v) About the income and expenses ie. profitability

(Vi) About marketing 

(Vii) Recommend loan amount considering the above analysis. 

9. (a) Banks usually extend credit against securities. Please list down the different types of securities against which Banks sanction loans to its c1ient. Discuss their advantages & disadvantages in brief. 

(b) In selecting a borrower, if it is perfectly made, “Loan cannot term into bad”. Elaborate your comment on this statement. 

Write short notes on five of the following: -

a) Debt: Equity Ratio; 

(b) .Bankers Book Evidence Act; 

(C) MicroCredit Regulatory Authority (MRA);

d) CAMELS Rating; 

e) Sensitivity Analysis for a p1oject loan Appraisal;

f) Bill of lading  

g) Single Borrower exposure 

h) G.S.P

THE INSTITUTE OF BANKERS, BANGLADESH (IBB) 

Banking Diploma Examination, November-2016

DAIBB

Central Banking & Monetary Policy (CMP)

Time--3 hours

Full marks-100

Pass marks-50