Question
ABC Bank Ltd has extended a Rs.10 crore loan at 5% over
the repo rate. The loan is to be repaid in equal quarterly instalments. The bank’s funding of the loan is to be done by 5 years deposit, interest rate on it being 6.5%. Which of the following risk associated with this transaction can lead to variation in the bank’s net interest income in one year?Solution
Repricing risk is the risk of changes in interest rate charged (earned) at the time a financial contract's rate is reset . Here the interest on the loan extended (asset) is variable while that on the deposits (liability) is fixed. Any change in the interest rate will impact the net interest income by repricing of the loan of the bank and changing the net spread between interest earned and interest paid.
Consider the following statements concerning the environmental impact of digital content consumption:
A) Digital activities contribute signific...
Which Maharatna company has been honored with the Best Green Bond Corporate Award?
Who will chair the RBI’s 10-member ’Expert Committee on Benchmarking of its Statistics'?
What is the name of the state-of-the-art technology project awarded to M/s Bharti-Airtel Ltd by CBDT to enhance the digital infrastructure of the Income...
In which state of India is the Pobitora Wildlife Sanctuary located?
With reference to the Sanchar Mitra Scheme, consider the following statements:
1. The scheme, launched by the Department of Telecommunications (D...
What is the purpose of the Jiyo Parsi scheme Portal?
What was the primary technology used in the advanced water level monitoring system introduced by Northeast Frontier Railway?
Which Indian state recorded rural inflation of 4.10% in July 2024?
India’s rank has been improved in Global Innovation Index 2020 to 48th rank from _____ in 2019.
