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Muskan Jain asked 1 year ago

Mr. Tas was entrusted with responsibility for calculation of Demand and time liability. On 31st March total liability stood at 200 crore. It includes Margin held for funded facilities of 3 crore, credit balance for one branch of 4 crore, adverse balance of nostro Mirror account of 2 crore and unadjusted deposit for agency business of 6 crore. Papa Limited has total 12 directors including 3 women directors. Out of them, Mr. Right was non executive chairman as well as promoter of bank. Papa Limited has a total of 5 independent directors in their board.
While calculating SLR compliance of Papa Limited, what will be value of demand and time liability as on 31st March?
 
 
Please answer case study no 14 from booklet  mcq no. 14.4
How did 191 crore (a) came
 

1 Answers
RaviRavi Staff answered 1 year ago

RBI circular specifies how to calculate Demand & Time Liabilities (DTL), it gives inclusions & exclusions
Exclusions
Shortcut —- > RIL- Mobile

  1. Recoveries from borrowers which were considered bad & doubtful — No need to repay it, so dont consider it as deposit, so dont include it in DTL
  2. Indian currency received for paying import bills, held in sundry deposit —  At one end deposit is received on other end payment for import is already made only knock off is not yet done, so dont include it in DTL
  3. Link branches are having unadjusted deposits (Link branch deal with corporates, other banks & rbi) — Eg HDFC Mumbai Fort branch got 1000 crores  from reliance industries for paying dividend to shareholders, other branches paid 800 crores but amount is not adjusted, now this 800 crores is not repayable, so it should be excluded from DTL
  4. Margin held for loans given — Banks gets Own FDs as security for loan given, these are FDs held as margin, they are not repayable like regular deposits, they should be excluded from DTL 

Inclusions
Shortcut —> New CBI includes everyone

  1. Nostro A/c (Foreign Currency Account in Foreign Country) — If FC deposit is received it should be included in DTL
  2. Net Credit balance in Inter Branch Adjustment Account — It means on net basis some branches have received deposits from customers, which in next few days need to be credited or paid by other branches, its like temporary deposit include it in DTL 
  3. Borrowings from abroad by banks in India, appearing as adverse balance in Nostro Account — This is not liability towards indian banking system but out liability to others, it is included in DTL. Borrowings from indian banks are not covered in DTL
  4. Interest Accrued — It should be included in DTL with deposits

 
Explanation for MCQ
Demand & Time Liability 200 crores

  1. Margin Money (FD) held 3 crores (Deduct it as not included in DTL)
  2. Unadjusted Deposit for Agency Business should be excluded 6 crores (Deduct it as it is not included in DTL)
  3. Foreign currency loan (Adverse balance in nostro mirror account) Rs 2 crores (It is covered in DTL, as it is already included hence no adjustment should be done)

    Nostro A/c is in Foreign Currency
    Nostro Mirror is in Indian Currency

  4. Inter branch credit balance 4 crore (It is covered in DTL, as it is already included hence no adjustment should be done)

    Net balance = 200 – 3 – 6 = 191

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