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 ABC Bank provides following information: Rs.in crores - 1 st year Net profits - 250 Provisions - 300 Staff expenses - 350 Other operating expenses - 150 Other income - 400 Rs.in crores - 2nd year Net profits - 200 Provisions - 250 Staff expenses - 300 Other operating expenses - 250 Other income - 500 Answer the following questions, based on the above information : 1. What is the amount of capital charge for operational risk, on the basis of 1st year results alone as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses = 250 + 300 + 350 + 150 = 1050 cr Capital charge = 1050 * 15% = 157.50 cr 2. What is the amount of capital charge for operational risk, on the basis of 2nd year results alone as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses = 200 + 250 + 300 + 250 = 1000 cr Capital charge = 1000 * 15% = 150 cr 3. What is the amount of capital charge for operational risk, on the basis of 1st and 2nd year results as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses 1st year = 250 + 300 + 350 + 150 = 1050 cr 2nd year = 200 + 250 + 300 + 250 = 1000 cr Average gross income =(1050 + 1000) / 2 = 2050 / 2 = 1025 cr Capital charge = 1025 * 15% = 153.75 cr 4. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 1st year results alone, as per Basic indicator approach? RWA = Capital charge / 8% = 157.50 / 8% = Rs.1968.75 cr 5. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 2nd year results alone? RWA = Capital charge / 8% = 150 / 8% = Rs.1875 cr 6. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 1st year and 2nd results? RWA = Capital charge / 8% = 153.75 / 8% = Rs.1921.88 cr ------------------------------------------------- ABC Bank provides following information: Rs.in crores -1 st year Net profits - 120 Provisions - 240 Staff expenses - 280 Other operating expenses - 160 Other income - 320 Rs.in crores - 2nd year Net profits - 150 Provisions - 290 Staff expenses - 320 Other operating expenses - 240 Other income - 460 Answer the following questions, based on the above information : 1. What is the amount of capital charge for operational risk, on the basis of 1st year results alone as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses = 120 + 240 + 280 + 160 = 800cr Capital charge = 800 * 15% = 120 cr 2. What is the amount of capital charge for operational risk, on the basis of 2nd year results alone as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses = 150 + 290 + 320 + 240 = 1000cr Capital charge = 1000 * 15% = 150 cr 3. What is the amount of capital charge for operational risk, on the basis of 1st and 2nd year results as per Basic indicator approach? Capital charge = Gross income * 15% Gross income = net profit + provisions + staff expenses + other operating expenses 1st year = 120 + 240 + 280 + 160 = 800cr 2nd year = 150 + 290 + 320 + 240 = 1000cr Average gross income =(800 +1000)/2 = 900cr Capital charge = 900 * 15% = 135 cr 4. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 1st year results alone, as per Basic indicator approach? RWA = Capital charge / 8% = 120 / 8% = Rs.1500 cr 5. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 2nd year results alone? RWA = Capital charge / 8% = 150 / 8% = Rs.1875 cr 6. What is the amount of risk weighted assets for operational risk as per Basel 2 recommendations, on the basis of 1st year and 2nd results? RWA = Capital charge / 8% = 135 / 8% = Rs.1687.50 cr ……………………………………………………………………………………………………………………………………………

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