200+ Formulas CAIIB - 2026 | QUICK REVISION

CAIIB - 2026 || EXAM SCHEDULE

Exam Dates	Subject
31^st May 2026	Advanced Bank Management
07^th June 2026	Bank Financial Management
13^th June 2026	Advanced Business & Financial Management
14^th June 2026	Banking Regulations and Business Laws
21^st June 2026	1. Rural Banking 2. Human Resources Management 3. Information Technology & Digital Banking 4. Risk Management 5. Central Banking

We will discuss in detail all the most important formulas for upcoming CAIIB Exam. Chapterwise formulas are available in this post. Revision of these formulas/bullet points is must for CAIIB exam.

🏦 Advanced Bank Management (ABM) | 31st May, 2026

Core Concepts & Formulas

Balance Sheet Equation: Assets = Liabilities + Capital
Current Ratio (CR): Current Assets/Current Liabilities (Ideal 1.33:1 to 1.5:1)
Debt-Equity Ratio (DER): TL/TNW or Debt/Equity
Quick Ratio (Acid Test): (CA – Stock)/CL
Net Worth (NW): CA – CL or Total Assets – Total Liabilities
Price Elasticity of Supply: % change in quantity supplied / % change in price
Price Elasticity of Demand: % change in quantity demanded / % change in price

Money Supply Measures (M0 to M4)

M1 (Narrow Money): Currency with public + Demand deposits + Other deposits with RBI
M2: M1 + Savings deposits of Post Office savings banks
M3 (Broad Money): M1 + Time deposits with banking system
M4: M3 + All deposits with Post Office savings banks (excluding NSC)

Inflation & National Income

Inflation Rate: [(Price index current year – Price index base year)/Price index base year] × 100
GDP at market price: C + I + G + (X – M)
GDP at factor cost: GDP at market price – (Indirect taxes – Subsidies)
GNP: GDP + Net income from assets abroad (net income receipts)
Total Revenue Receipts: Net tax revenue + Total non-tax revenue
Per Capita Income: National Income/Population
Disposable Income: Personal income – Direct personal taxes

Time Value of Money

Present Value (PV): $\frac{Cash FLow}{(1+r)^t}$
Future Value (FV): $Present Value \times (1+r)^t$
Discount Factor: 1/(1+r)^t
Effective Interest Rate (EIR): (1+r/n)^n – 1 where n = compounding frequency
EMI Calculation: P × R × (1+R)^T / [(1+R)^T – 1]
Net Present Value (NPV): –Co + C1/(1+r) (sum of discounted cash flows minus initial investment)
Internal Rate of Return (IRR): Discount rate that makes NPV = 0
Current Yield on Coupon: (Coupon yield × 100)/Current market price
Rate of Return: (Coupon + Price change)/Investment

Statistics & Probability

Probability of Event: P(E) = n(E)/n(S) (Favourable outcomes/Total outcomes)
Simple Correlation (r): Cov(x,y)/σ_xσ_y
Simple Linear Regression: Ŷ = a + bx (Ŷ = estimated value of dependent variable)
Mean (x̄): Σx_i/n
Standard Deviation (σ): √[Σ(x_i – x̄)²/n]
Sample Variance: Σ(x_i – x̄)²/(n–1)
Coefficient of Variation: (σ/|x̄|)×100
Rule of 72: Years to double = 72/Rate of interest

Sampling & Estimation

Sample Size Formula: (Z × σ / ME)² (Z = z-score, ME = margin of error)
Moving Average (k-period): Average of k consecutive data points
Fisher’s Ideal Index: √(Laspeyres × Paasche)
Pearson Correlation Range: –1 to +1 (0 = no correlation, ±1 = perfect correlation)
Linear Programming: Surplus variable (excess resource), Slack variable (unused resource)

HRM & Vroom’s Theory (Also relevant for HRM)

Motivation (Force): Valence × Expectancy (Expectancy theory of motivation)
Comparatio: (Employee current salary/Midpoint of salary range)×100
PCR (Performance to Contribution Ratio): Performance rating × Target contribution

Sampling Methods & Errors

Random Sampling (Simple Random, Stratified, Systematic, Cluster)
Non-Random Sampling (Convenience, Judgement, Quota, Snowball)
Sampling Errors (due to sample selection), Non-Sampling Errors (data collection mistakes)

💰 Bank Financial Management (BFM) | 07th June, 2026

Risk Management Framework

Credit Risk (Default by borrower)
Market Risk (Loss from market movements – interest rate, forex, equity)
Operational Risk (Loss from failed internal processes/people/systems)
Liquidity Risk (Inability to meet obligations when due)
Interest Rate Risk (Loss from adverse interest rate movements)
Reputational Risk (Loss from negative public perception)
Strategic Risk (Loss from poor business decisions)
Price Risk: (Expected price – Actual price)/Expected price

Liquidity & Capital Ratios (Basel III)

LCR (Liquidity Coverage Ratio): HQLA / Net cash outflows (over 30 days) ≥ 100%
NSFR (Net Stable Funding Ratio): Available stable funding / Required stable funding ≥ 100%
Tier 1 Capital: Common Equity Tier 1 (CET–1) + Additional Tier 1 (AT1)
Tier 2 Capital: Subordinated debt, revaluation reserves, general provisions (max 2% of RWA)
Minimum CET–1: 5.5% of RWA
Minimum Tier 1 Capital: 7% of RWA
Minimum Total Capital (Tier 1 + Tier 2): 9% of RWA
Capital Conservation Buffer (CCB): 2.5% of RWA (above minimum)
Countercyclical Buffer (CCyB): 0–2.5% of RWA (RBI discretion)
Total Capital Adequacy Ratio (CAR): (Total Capital/RWA)×100 ≥ 11.5% with buffers
Maximum Additional Tier 1 (AT1): 1.5% of RWA
Maximum Tier 2 Capital: 2% of RWA
RWA Calculation: Credit RWA + Market RWA + Operational RWA

Earnings & Profitability

Net Interest Income (NII): Interest earned – Interest expended
Net Interest Margin (NIM): (NII/Average interest-earning assets)×100
Net Profit Margin (NPM): (Net Profit/Total Income)×100
Yield on Advances: (Interest on advances/Total advances)×100
Cost of Deposits: (Interest on deposits/Total deposits)×100
Cost to Income Ratio: (Operating expenses/Operating income)×100 (Lower is better)
Return on Assets (RoA): (Net Profit/Average total assets)×100
Return on Equity (RoE): (Net Profit/Average shareholders equity)×100
Earnings Per Share (EPS): (Net Profit – Preference dividend)/Number of equity shares

Asset-Liability Management (ALM)

Gap Analysis: Rate Sensitive Assets (RSA) – Rate Sensitive Liabilities (RSL)
Gap Ratio: RSA/RSL
Duration Gap: Duration of assets – Duration of liabilities × (Liabilities/Assets)
Modified Duration: Duration/(1+yield)
Basis Point Value (BPV): Price change for 1 basis point (0.01%) move in yield
Price Change using Duration: –Modified duration × Change in yield × Current price

Value at Risk (VaR)

VaR (Parametric Method): Portfolio value × Z-score × Daily volatility × √time
VaR Confidence Levels: 95% (Z=1.65), 99% (Z=2.33), 99.9% (Z=3.09)
VaR Holding Period: 1 day (trading book), 10 days (minimum capital calculation), 1 year (economic capital)

Risk-Adjusted Return

RAROC (Risk-Adjusted Return on Capital): (Expected return – Expected loss)/Economic capital
Economic Capital: Capital required to cover unexpected losses at given confidence level
Herfindahl-Hirschman Index (HHI): Sum of squares of market shares of all firms (measures concentration)
Expected Loss (EL): Probability of default (PD) × Exposure at default (EAD) × Loss given default (LGD)

Bond Valuation

Bond Price (Zero-coupon): Face value/(1+r)^n
Bond Price (Coupon): Present value of all future coupon payments + Present value of face value
Current Yield: Annual coupon payment/Current market price
Yield to Maturity (YTM): Interest rate that equates bond’s price with present value of future cash flows
Duration: Weighted average time to receive bond’s cash flows

Forex Management

Direct Quote: ₹X per 1 unit of foreign currency
Indirect Quote: 1/₹X (units of foreign currency per ₹)
Cross Rate: Currency A/B = (Currency A/C) × (Currency C/B)
Forward Premium/Discount: [(Forward rate – Spot rate)/Spot rate] × (12/n) × 100

SLR & NDS (Treasury)

SLR (Statutory Liquidity Ratio): (SLR assets/Net demand & time liabilities)×100
Leverage Ratio: Tier 1 capital/Total exposure (minimum 3%)

📊 Advanced Business & Financial Management (ABFM) | 13th June, 2026

Leverages (Fixed Cost Concept)

Degree of Operating Leverage (DOL): % change in EBIT / % change in Sales or Contribution/EBIT
Degree of Financial Leverage (DFL): % change in EPS / % change in EBIT or EBIT/EBT
Degree of Combined Leverage (DCL): DOL × DFL or Contribution/PBT or % change in EPS/% change in Sales
Contribution Margin: Sales – Variable cost
Break-Even Point (BEP) in units: Fixed cost/Contribution per unit
BEP in value: Fixed cost/PV ratio where PV ratio = Contribution/Sales
Margin of Safety (MOS): (Actual sales – BEP sales)/Actual sales × 100
Capital Gearing Ratio: Fixed income bearing funds/Equity capital
Debt to Assets Ratio: Total debt/Total assets
Debt to Equity Ratio: Total debt/Total equity (also from ABM)

Capital Budgeting

Payback Period: Time taken to recover initial investment
Discounted Payback Period: Payback using discounted cash flows
Accounting Rate of Return (ARR): Average annual profit/Average investment × 100
NPV (Net Present Value): Sum of discounted cash flows – Initial investment
Profitability Index (PI): Present value of future cash flows/Initial investment
IRR (Internal Rate of Return): Rate where NPV = 0 (use interpolation)
Modified IRR (MIRR): Assumes reinvestment at cost of capital
Reinvestment Rate Assumption: NPV (cost of capital), IRR (same as IRR rate)

Cost of Capital (WACC)

Cost of Equity (Ke): (D₁/P₀) + g (Dividend growth model)
Cost of Debt (Kd): Interest/(P–F) (P = proceeds, F = flotation cost)
WACC: (E/V × Ke) + (D/V × Kd × (1–T)) (T = tax rate)

Valuation Models

DCF Valuation: ΣCF_t/(1+r)^t
Relative Valuation: Using Price multiples (P/E, P/BV, EV/EBITDA)
Equity Valuation Multiples: Market cap/Net income, Price/Book value
Enterprise Value Multiples: EV/EBITDA, EV/Sales
Book Value Approach: Net worth/Number of shares

Dividend Decision

Gordon Growth Model (GGM): P₀ = D₀(1+g)/(Ke – g)
Dividend Payout Ratio: Dividend per share/EPS
Retention Ratio (b): 1 – Dividend payout ratio
Dividend Yield: Dividend per share/Market price per share × 100

Working Capital Management

Operating Cycle: Raw material holding period + Work in progress period + Finished goods period + Debtors collection period – Creditors payment period
Cash Conversion Cycle: Operating cycle – Creditors payment period
Inventory Turnover Ratio: COGS/Average inventory
Debtors Turnover Ratio: Credit sales/Average debtors
Creditors Turnover Ratio: Credit purchases/Average creditors

Financial Ratios

Current Ratio (Ideal 2:1 in traditional accounting, but banker benchmark 1.33–1.5)
Quick Ratio (Ideal 1:1)
Leverage Ratios (Debt/Equity, Interest Coverage, Debt/Assets)
Profitability Ratios (Gross/Net profit margin, RoA, RoE)
Efficiency Ratios (Asset turnover, Working capital turnover)

⚖️ Banking Regulations & Business Laws (BRBL) | 14th June, 2026

Banking Regulation Act, 1949

Section 5(b): Banking defined – accepting deposits of money from public for lending/investment
Section 6(1): Business of banking – 15 permitted activities (borrowing, lending, deposits, LC/BG, forex, safe custody, etc.)
Section 8: No trading (banks cannot deal in goods)
Section 9: Immovable property holding limited to own use (dispose within 7 years)
Section 10: Board of Directors – prohibition on certain persons (undischarged insolvent, convicted etc.)
Section 11: Minimum paid-up capital and reserves (₹5 lakh initially, now schedule banks ₹500 crore)
Section 14A: Prohibition on loans to directors/interests
Section 21: RBI power to control advances and investments
Section 22: Licensing of banks – RBI sole authority to grant, cancel, or suspend
Section 24: SLR maintenance requirement
Section 27: Monthly return of assets/liabilities
Section 29: Accounts and balance sheet
Section 35: Power of RBI to conduct inspection (annual inspection – statutory)
Section 35A: RBI power to issue directions to banks
Section 36: RBI power to remove directors/managers
Section 36AE: Winding up of banking companies

Negotiable Instruments Act, 1881

Section 4: Promissory note – unconditional undertaking in writing to pay a certain sum
Section 5: Bill of exchange – unconditional order in writing to pay a certain sum
Section 6: Cheque – bill of exchange drawn on a specified banker payable on demand
Section 13: Negotiable instrument – promissory note, bill of exchange, or cheque
Section 85(1): Banker’s protection when paying cheque in due course
Section 89: Liability when cheque altered (instrument avoided if material alteration without consent)
Section 123: Crossing (general crossing – two parallel transverse lines)
Section 124: Special crossing – banker’s name mentioned
Section 138: Dishonour of cheque for insufficiency of funds
Section 139: Presumption of consideration (holder deemed holder for consideration)
Section 142: Cognizance of offence – within 30 days of receiving cause of action
Holder – person entitled to possession and recovery
Holder in due course – holder for consideration, before maturity, in good faith
Presentment for payment – to maker (PN), drawee (bill), or banker (cheque)
Notice of dishonour – mandatory for drawer/endorser liability

Prevention of Money Laundering Act (PMLA), 2002

Money laundering: Process of converting illegal money into legal
Placement: Placement of illegal cash into financial system
Layering: Multiple transactions to hide source
Integration: Re-entering legal economy as legitimate funds
PMLA, 2002: Came into force July 1, 2005
Reporting Entities: Banks, financial institutions, intermediaries (to FIU-IND)
Sections 3: Offence of money laundering
Section 12: Maintenance of records (KYC, transaction records for 5 years)
Section 45: Bail under PMLA – stringent conditions
Section 50: Summons, discovery, production of documents
Attachment of property: Freezing property involved in money laundering
FIU–IND: Financial Intelligence Unit, India – receives and analyses suspicious transaction reports
STR: Suspicious Transaction Report (any transaction worth ₹10 lakh or above)
CTR: Cash Transaction Report (cash transactions above ₹10 lakh)
CDD: Customer Due Diligence (identify, verify, monitor)

Information Technology Act, 2000

Section 2(1)(r): Electronic form – any information generated by electronic means
Section 43: Penalty for damage to computer systems (₹1 crore max)
Section 66: Computer related offences (hacking – imprisonment up to 3 years/₹5 lakh fine)
Section 66A: (Struck down) – punishment for sending offensive messages
Section 66B: Dishonestly receiving stolen computer resource
Section 66C: Identity theft (using electronic signature/password of another)
Section 66D: Cheating by impersonation using computer
Section 66E: Violation of privacy (capturing/distributing private images)
Section 66F: Cyber terrorism – imprisonment up to life
Section 67: Publishing obscene electronic material – first conviction 3 years/₹5 lakh
Section 72A: Disclosure of personal information without consent
Section 79: Intermediary liability (safe harbour if due diligence observed)
Digital Signature Certificate (DSC) : Issued by Certifying Authorities licensed by CCA
Cyber Appellate Tribunal (CAT) : Appeals against orders of Adjudicating Officer
Adjudicating Officer: Appointed by central government for compensation claims up to ₹5 crore

Contract Act, 1872

Section 2(a): Proposal (offer)
Section 2(b): Promise/acceptance
Section 2(d): Consideration – “something in return”
Section 2(e): Agreement – every promise and set of promises
Section 2(h): Contract – legally enforceable agreement
Section 10: Essentials of valid contract (free consent, lawful object, lawful consideration, competent parties)
Section 14: Free consent – not caused by coercion, undue influence, fraud, misrepresentation, or mistake
Section 17: Fraud – intentional misrepresentation
Section 18: Misrepresentation – innocent false statement
Section 19: Voidability of agreements without free consent
Section 20: Bilateral mistake of fact – void
Section 23: Unlawful agreements (illegal object or consideration) – void
Section 25: Agreement without consideration – void
Section 56: Doctrine of frustration (contract becomes impossible – void)
Section 73: Compensation for breach of contract
Section 124: Contract of indemnity
Section 126: Contract of guarantee (surety, principal debtor, creditor)
Section 129: Continuing guarantee
Section 130: Revocation of continuing guarantee
Section 141: Surety’s rights to securities

Companies Act, 2013

Section 2(20): Company – incorporated under this Act
Section 2(34): Director
Section 2(41): Financial year
Section 2(47): Independent director
Section 2(68): Private company – restriction on transfer, 200 members limit
Section 2(71): Public company
Section 2(76): Related party
Section 2(85): Small company
One Person Company (OPC) : Single member
DIN (Director Identification Number) : Mandatory for directors (Section 152)
KMP (Key Managerial Personnel) : MD, WTD, manager, company secretary, CFO
Section 149: Minimum directors (3 for public, 2 for private, 1 for OPC)
Section 152: Appointment of directors
Section 164: Disqualifications for director
CSR (Section 135) : Companies meeting thresholds (net worth ₹500 cr, turnover ₹1000 cr, net profit ₹5 cr) – 2% average net profit of preceding 3 years
Section 149(4): One-third independent directors in listed public companies

Other Important Acts

Partnership Act, 1932: Maximum partners 50 (Section 464 read with Rule 10)
Sale of Goods Act, 1930: Conditions vs warranties, sale vs agreement to sell
Consumer Protection Act, 2019: Consumer rights, 3-tier redressal (District/State/National Commission)
RTI Act, 2005: Public authorities – mandatory disclosure within 30 days
Payment and Settlement Systems Act, 2007: Regulation of payment systems
FEMA, 1999: Foreign exchange transaction regulations

KYC & Compliance

CDD (Customer Due Diligence) : Verify customer identity and beneficial ownership
ECDD (Enhanced Customer Due Diligence) : For high-risk customers (cross-border PEP, high-risk jurisdiction)
PEP (Politically Exposed Person) : Public function holders (domestic/foreign)
Travel Rule (FATF Recommendation 16) : Originator and beneficiary information for wire transfers
Cryptocurrency Risk Assessment: By FIU–IND for Virtual Digital Assets (VDA) reporting entities

🌾 Rural Banking (RB) | Elective 1, 21st June, 2026

Key Institutional Framework

NABARD (National Bank for Agriculture and Rural Development) : Established July 12, 1982 (Act 61 of 1981)
NABARD Functions: Refinance to RRBs/Cooperative banks/Commercial banks, promotional role, supervision, developmental functions
SHG-Bank Linkage Programme: Launched by NABARD in 1992, now world’s largest microfinance programme
RRB (Regional Rural Bank) : Established under RRB Act 1976 – sponsored by commercial bank
Cooperative Credit Structure: Short-term (PACs/DCCBs/SCBs) + Long-term (PLDBs/SCARDBs)
SIDBI (Small Industries Development Bank of India) : For MSME finance

Priority Sector Lending (PSL)

PSL Target (Domestic Commercial Banks) : 40% of Adjusted Net Bank Credit (ANBC)
Agriculture Target: 18% of ANBC
Micro Enterprises Target: 7.5% of ANBC
Weaker Sections Target: 12% of ANBC
Small & Marginal Farmers: Target 10% of ANBC to be achieved by 2025-26
Collateral-free Agriculture Loans: Up to ₹1.6 lakh
DRI (Differential Rate of Interest) Scheme: Loans at 4% p.a. to poorest

Major Rural Development Schemes

KCC (Kisan Credit Card) : Launched 1998 – revolving credit for farmers
PM-KISAN: Income support of ₹6,000/year to small/marginal farmers
PMFBY (Pradhan Mantri Fasal Bima Yojana) : Crop insurance – farmer pays 1.5-5% premium
MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) : 100 days wage employment guaranteed per rural household
PMGSY (Pradhan Mantri Gram Sadak Yojana) : All-weather roads in rural areas
NSAP (National Social Assistance Programme) : Pension for elderly/widows/disabled
DAY-NRLM (Deendayal Antyodaya Yojana – NRLM) : SHG-based livelihoods mission
PM Awas Yojana (Rural) : Housing for all in rural areas (PMAY-G)
National Mission for Sustainable Agriculture (NMSA) : Climate-resilient agriculture

Credit Delivery Mechanisms

Microfinance: Collateral-free small loans to low-income households
SHG Model: 10-20 members – group lending with joint liability
JLG (Joint Liability Group) : 4-10 members – individual loans with cross-guarantee
Swavlamban: NABARD’s SHG rating system
CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) : Guarantee for MSME loans up to ₹5 crore
ECGC (Export Credit Guarantee Corporation) : Covers export credit risk in rural exports

NABARD – Key Functions & Allocation

Short-Term Refinance (STR): To SCBs for agriculture and allied activities
Long-Term Refinance (LTR): For term loans for agriculture and rural infrastructure
RIDF (Rural Infrastructure Development Fund) : Created 1995-96, funded by shortfall in priority sector lending
WDF (Warehouse Infrastructure Fund) : Funding for scientific warehousing
FIF (Food Processing Fund) : For food processing units
NABARD Infrastructure Development Assistance (NIDA) : For rural infrastructure
Producer Organizations (POs): FPOs (Farmer Producer Organizations)
CISS (Credit Information System Software): For credit assessment and monitoring
NABARD’s Supervisory Role: Over Cooperative Banks and RRBs

Financial Inclusion

Financial Inclusion Plan (FIP) : Banks mandated for universal coverage
BC (Business Correspondent) : Agent banking for doorstep services
Bank Sakhis: Women banking correspondents in villages
PMJDY (Pradhan Mantri Jan Dhan Yojana) : Basic savings account with overdraft and insurance
RuPay Card: Indigenous card network for domestic transactions
CSP (Customer Service Point) : Banking point through BC model

Agriculture Finance

Crop Loans (Kharif/Rabi): Scale of finance determined by District Level Technical Committee
Post-harvest Loans: Against warehouse receipt (negotiable warehouse receipt)
Warehouse Receipt Financing: Pledge of agricultural produce stored in registered warehouse
NAM (National Agriculture Market) : Electronic trading platform for agri commodities
e-NAM: Online trading – single license for multiple markets
Agri-Tech: GIS mapping, drone surveys, satellite monitoring for crop health
IoT (Internet of Things) : Soil sensors, weather stations in agriculture

Self-Help Groups

SHG Definition: Voluntary association of 10-20 rural poor (women-focused)
Savings First: Regular savings mandatory before credit linkage
SHG-Bank Linkage (SBL): Three models – Model I (Bank-SHG), Model II (NGO-Bank), Model III (NGO as facilitator)
SHG Credit Linkage: Bank loan to SHG without collateral
Promotion of SHGs: By NABARD, Banks, NGOs, DAY-NRLM (SHPIs)
NPA in SHG Lending: As per SHG linkage guidelines

👥 Human Resources Management (HRM) | Elective 2, 21st June, 2026

Core HR Functions

Human Resource Planning (HRP) : Process of forecasting future manpower needs
Recruitment: Process of attracting potential candidates (internal/external source)
Selection: Choosing the most suitable candidate (tests, interview, reference check)
Induction (Onboarding) : Introducing new employee to organization culture and policies
Training: Skill development for current job (technical/soft skills)
Development: Preparing for future roles (career planning)

Performance Management

KRA (Key Result Areas) : Critical areas where employee must perform
KPI (Key Performance Indicators) : Measurable metrics for KRAs
Balanced Scorecard (BSC) : Four perspectives – Financial, Customer, Internal Process, Learning & Growth
360-degree Appraisal: Feedback from superiors, peers, subordinates, and self
Potential Appraisal: Identify latent talent for future roles
MBO (Management By Objectives) : Goal setting by mutual agreement between manager and employee
Performance Linked Incentive (PLI) : Reward based on performance rating

Rewards Management

Salary Administration: Internal equity + external competitiveness
Comparatio: Employee salary/Midpoint of salary range × 100 (60-80 poor, 80-120 competitive, 120+ high)
6th Pay Commission Recommendations: For public sector banks
Variable Pay: Performance-based component of compensation
Fringe Benefits: Perquisites (car, housing, medical, LTA)
Employee Stock Option Plan (ESOP) : Shares at discounted price

Industrial Relations

Trade Union Act, 1926: Registration, rights, immunity from civil suit
Industrial Disputes Act, 1947: Settlement mechanism – Works Committee, Conciliation, Arbitration, Adjudication
Factories Act, 1948: Working conditions for factory workers (health, safety, welfare)
Minimum Wages Act, 1948: Fixation of minimum wages (scheduled employments)
Payment of Bonus Act, 1965: Minimum 8.33%, maximum 20% of salary
Employees’ PF Act, 1952: Provident fund (12% employee + 12% employer), pension fund
Employees’ Deposit Linked Insurance (EDLI) : Life insurance cover (max ₹7 lakh)
Payment of Gratuity Act, 1972: 15 days wages per completed year of service (max ₹20 lakh)
Maternity Benefit Act, 1961: 26 weeks paid leave
Payment of Wages Act, 1936: Timely payment of wages (no deduction without authority)

Employee Relations

Grievance Handling: Formal procedure for employee complaints
Disciplinary Proceedings: Charge sheet, enquiry, punishment
Workplace Stress: Causes (role ambiguity, work overload, job insecurity)
Stress Management: EAP (Employee Assistance Program), flexible hours
Work-Life Balance: Family-friendly policies (childcare, parental leave, flexible work arrangements)

Talent Management

Competency Mapping: Identify competencies required for each job role
Succession Planning: Identify and develop future leaders for key positions
Career Planning: Individual’s plan for career growth
Career Development: Organizational support for career advancement
Job Rotation: Moving employees across roles for skill development
Job Enrichment: Adding motivating factors (responsibility, autonomy) vs Job enlargement (horizontal expansion)
Job Analysis: Job description (JD) + Job specification (JS)

HR Analytics

Workforce Analytics: Data-driven HR decisions (attrition, hiring, retention, promotion)
Attrition Rate: (Number of employees leaving during period/Average total employees)×100
Absenteeism Rate: (Total days lost/Average employees × working days)×100
Training ROI: (Training benefits – Training costs)/Training costs × 100

Organisational Behavior

Vroom’s Expectancy Theory: Motivation = Valence × Expectancy × Instrumentality
Maslow’s Hierarchy of Needs: Physiological → Safety → Social → Esteem → Self-actualization
Herzberg’s Two-Factor Theory: Hygiene factors (dissatisfiers) vs Motivators (satisfiers)
McClelland’s 3 Needs: Need for Achievement, Power, Affiliation
Fink Model: Integrated model for organizational effectiveness
Transformational Leadership: Inspire and motivate (idealized influence, inspirational motivation, intellectual stimulation, individualized consideration)
Transactional Leadership: Reward and punishment based on performance
Quality Circle: Small group of employees meeting to solve work-related problems
Six Sigma: Methodology for process improvement (DMAIC – Define, Measure, Analyze, Improve, Control)

Labour Welfare

Employee Welfare: Facilities for health, safety, recreation
Canteens, Crèches, Rest Rooms: Statutory under Factories Act
Housing Loans, Medical Facilities, Transport: Common in banking
Triple Bottom Line: People, Planet, Profit (sustainability framework)

💻 Information Technology & Digital Banking (ITDB) | Elective 3, 21st June, 2026

Networking

IPv4: 32-bit address (4 bytes, 4.3 billion addresses)
IPv6: 128-bit address (16 bytes, 340 undecillion addresses)
IP Address Classes: A(1-126), B(128-191), C(192-223), D(224-239 – multicast), E(240-255 – reserved/R&D)
IPv4 Header Size: 20-60 bytes (typically 20 bytes without options)
Subnet Mask: Divides IP address into network/host portion
OSI Model (7 Layers) : Physical – Data Link – Network – Transport – Session – Presentation – Application
TCP/IP Model (4 Layers) : Network Access – Internet – Transport – Application
MAC Address: 48-bit physical address embedded in NIC
Router: Connects different networks (Layer 3)
Switch: Connects devices within same network (Layer 2)

Database Management

RDBMS (Relational DBMS) : Data stored in tables with rows and columns
Oracle, MySQL, PostgreSQL, MS SQL Server: Popular RDBMS
NoSQL: Non-relational database for unstructured data
Database: Organized collection of data
Centralized Database: Single server location
Distributed Database: Data stored across multiple locations
SQL (Structured Query Language) : SELECT – Retrieve data, INSERT – Add data, UPDATE – Modify data, DELETE – Remove data
Metadata: Data about data (schema, constraints)
Data Warehouse: Large repository for business intelligence and analytics
Data Mart: Subset of data warehouse for specific department
OLTP (Online Transaction Processing) : Day-to-day transactions
OLAP (Online Analytical Processing) : Business intelligence and reporting
ACID Properties:
- Atomicity: All or nothing (transaction fully completes or fully rolls back)
- Consistency: Data integrity maintained (valid before and after transaction)
- Isolation: Concurrent transactions don’t interfere
- Durability: Committed changes persist after system failure

Programming Languages

Machine Language (1GL) : Binary 0s and 1s – directly understood by hardware
Assembly Language (2GL) : Mnemonics (ADD, MOV, SUB) – assembler required
High-Level Language (3GL) : C, C++, Java, Python – compiler/interpreter required
4GL: Query languages (SQL), report generators
5GL: Visual programming, AI-based tools
Python, Java, COBOL: Used in banking systems
Oracle RDBMS Features: PL/SQL, stored procedures, triggers, transaction management, security

Digital Payments

UPI (Unified Payments Interface) : Immediate money transfer through mobile (NPCIL)
IMPS (Immediate Payment Service) : 24×7 real-time interbank fund transfer (NPCI)
NEFT (National Electronic Funds Transfer) : Hourly batches (24×7 from Dec 2019)
RTGS (Real Time Gross Settlement) : High-value transactions (minimum ₹2 lakh, 24×7 from Dec 2020)
AEPS (Aadhaar Enabled Payment System) : Biometric authentication using Aadhaar
PPI (Prepaid Payment Instrument) : Wallets, prepaid cards
NCMC (National Common Mobility Card) : One card for all transit (metro/bus/parking)
QR Code: Quick Response code for contactless payments
PoS (Point of Sale) : Machine at merchant location for card payments
mPoS: Mobile-based PoS using smartphone
Tap-n-Pay (NFC) : Near Field Communication for contactless payments (max ₹5000 without PIN)
Tokenization: Replace card details with unique token for security

Security & Cyber Risks

Cybersecurity: Protecting systems, networks, data from digital attacks
Firewall: Monitors and filters incoming/outgoing network traffic
Man-in-the-Middle (MitM) Attack: Attacker intercepts communication between two parties
Phishing: Fraudulent attempt to obtain sensitive information by masquerading as legitimate entity
Vishing: Phishing through voice calls
Smishing: Phishing through SMS
Ransomware: Malware that encrypts data and demands payment for decryption
DoS (Denial of Service) / DDoS (Distributed DoS) : Overwhelming system with traffic to cause shutdown
Social Engineering: Manipulating people into divulging confidential information
Encryption: Converting plaintext to ciphertext using key
Decryption: Converting ciphertext back to plaintext
Symmetric Encryption: Same key for encryption and decryption (AES, DES)
Asymmetric Encryption: Public key for encryption, private key for decryption (RSA)
Digital Signature: Electronic authentication using cryptography

Computer Generations

1st Generation (1940-1956) : Vacuum tubes (ENIAC, UNIVAC)
2nd Generation (1956-1963) : Transistors – smaller, faster, more reliable
3rd Generation (1964-1971) : Integrated circuits (ICs) – multiple transistors on single chip
4th Generation (1971-Present) : Microprocessors – computer on a chip
5th Generation (Present & Future) : Artificial Intelligence (AI), Parallel processing, Quantum computing
Quantum Computing: Uses quantum bits (qubits) – superposition and entanglement
Moore’s Law: Transistor count doubles every 2 years

E-Learning Standards

SCORM (Sharable Content Object Reference Model) : Set of technical standards for e-learning software
Learning Management System (LMS) : Software for delivering, tracking e-learning content
CBT (Computer-Based Training) : Training delivered via computer
WBT (Web-Based Training) : Training delivered via internet/intranet
Interoperability: Seamless exchange of information between different systems/platforms

Latest Technologies in Banking

Artificial Intelligence (AI) : Chatbots, fraud detection, credit scoring
Blockchain: Distributed ledger technology for secure transactions
Open Banking: Sharing financial data through APIs (with customer consent)
Cloud Computing: On-demand computing resources (IaaS, PaaS, SaaS)
Biometric Authentication: Fingerprint, iris scan, face recognition
Robotic Process Automation (RPA) : Automating repetitive back-office tasks
Core Banking Solution (CBS) : Centralized real-time banking platform

Compliance & Regulations in IT

IT Act, 2000: Legal framework for electronic transactions, cybercrimes
DPDP Act, 2023: Data protection – consent for data collection, Data Fiduciary obligations
ISO 27001: Information Security Management System (ISMS) standard
PCI DSS: Payment Card Industry Data Security Standard for card processing

⚠️ Risk Management (RM) | Elective 4, 21st June, 2026

Types of Risks in Banking

Credit Risk: Risk of default by borrower (largest risk)
Market Risk: Risk from adverse market movements (interest rate, forex, equity)
Operational Risk: Risk from failed internal processes, people, systems, or external events
Liquidity Risk: Inability to meet obligations when due
Interest Rate Risk: Adverse movements in interest rates
Price Risk: Adverse movement in asset prices
Reputational Risk: Negative public perception (not directly measurable)
Strategic Risk: Poor business decisions or strategy implementation
Compliance Risk: Violation of laws/regulations
Systemic Risk: Failure of one institution affecting entire system

Basel Norms (I, II, III)

Basel I (1988) : Minimum 8% Capital Adequacy Ratio (CAR)
Basel II (2004) : Three Pillars (Minimum Capital, Supervisory Review, Market Discipline)
Basel III (2010) : Higher capital requirements, LCR, NSFR, Capital Buffers
Pillar 1 (Basel II) : Minimum capital requirements (credit, market, operational risk)
Pillar 2 (Basel II) : Supervisory review (ICAAP – Internal Capital Adequacy Assessment Process)
Pillar 3 (Basel II) : Market discipline (public disclosure of risk profile)

Risk Measurement

LCR (Liquidity Coverage Ratio) : HQLA/Net cash outflows over 30 days ≥ 100%
NSFR (Net Stable Funding Ratio) : ASFR/RSFR ≥ 100%
RWA (Risk Weighted Assets) : Credit RWA + Market RWA + Operational RWA
Capital Adequacy Ratio (CAR) : (Tier 1 + Tier 2 Capital)/RWA × 100
Probability of Default (PD) : Likelihood of default over 1 year
Loss Given Default (LGD) : % loss when default occurs
Exposure at Default (EAD) : Total exposure at time of default
Expected Loss (EL) : PD × LGD × EAD
Unexpected Loss (UL) : Standard deviation of expected loss (capital requirement)
Economic Capital: Capital to cover unexpected losses at given confidence level

Value at Risk (VaR)

VaR: Maximum expected loss over specific time at given confidence level
Historical Method: Using past data distribution
Variance-Covariance Method: Assuming normal distribution µ – Z×σ
Monte Carlo Simulation: Random simulation of multiple scenarios
Confidence Levels: 95% (Z=1.65), 99% (Z=2.33), 99.9% (Z=3.09)
Basel VaR: 99% confidence, 10-day horizon
Backtesting: Compare actual P&L with VaR estimates
Stress Testing: Scenario analysis for extreme but plausible events

Credit Risk Management

Credit Rating: Internal/external rating of borrower (AAA to D)
Rating Migration: Movement of rating over time
Credit Scoring: Statistical model for default prediction
Risk-Based Pricing: Interest rate based on PD/LGD
Credit Enhancement: Collateral, guarantees, credit derivatives
Loan Review Mechanism: Independent review of credit decisions
NPA (Non-Performing Asset) : 90 days overdue
Provisioning: % of NPA set aside as loss reserve (IRAC norms)

Operational Risk Management

Basel Approaches: Basic Indicator Approach (BIA), Standardized Approach (STA), Advanced Measurement Approach (AMA)
Alpha Factor (BIA) : 15% of Gross Income (average last 3 years)
Beta Factors (Standardized Approach) : Business line-specific percentages (12-18%)
Key Risk Indicators (KRIs) : Metrics for monitoring risk levels
Risk Control Self-Assessment (RCSA) : Self-assessment of controls by process owners
Loss Data Collection: Internal loss events for analysis
Scenario Analysis: “What-if” analysis for potential loss events

Asset-Liability Management (ALM)

Liquidity Gap: RSA – RSL (Rate Sensitive Assets – Rate Sensitive Liabilities)
Duration Gap: DA – DL × (L/A) (Duration of Assets – Duration of Liabilities × Liabilities/Assets)
NII Sensitivity: Change in Net Interest Income due to 1% rate change
Gap Ratio: RSA/RSL (>1 = assets repricing faster, <1 = liabilities repricing faster)
MISMATCH Limit: RBI mandated – cumulative mismatch up to 1 year ≤ 20% of outflows

Market Risk Management

BPV (Basis Point Value) : Price change/100th of 1% (0.01%) yield change
Modified Duration: Duration/(1+Yield)
PV01: Present value impact of 1 basis point change
Hedging: Using derivatives to offset risk (futures, options, swaps)
Forex Risk: Open position limit (daylight and overnight)
Stop Loss Limit: Maximum loss limit before forced liquidation

Risk Mitigation & Governance

Credit Risk Mitigants (CRM) : Collateral, netting, guarantees, credit derivatives
Collateral Types: Cash, government securities, bank guarantee, property
Haircut: Discount applied to collateral value
Derivatives: Futures, Options, Swaps, Credit Default Swaps (CDS)
Securitization: Pooling loans and selling securities (Asset Backed Securities – ABS, Mortgage Backed Securities – MBS)
Credit Default Swap (CDS) : Insurance against default (protection buyer pays premium)
Risk Appetite Statement (RAS) : Board-approved statement of acceptable risk levels
Risk Limit Framework: Counterparty limits, industry exposure limits, concentration limits

🏛️ Central Banking (CB) | Elective 5, 21st June, 2026

Central Bank’s Core Functions

Banker to Government: Manages government accounts and public debt
Banker to Banks: Holds reserves of commercial banks, provides liquidity, acts as lender of last resort
Lender of Last Resort (LOLR) : Provides emergency liquidity to solvent but illiquid banks
Monetary Policy Functions: Formulate and implement monetary policy
Currency Issue & Management: Sole authority for issuing banknotes (RBI under Section 22, RBI Act 1934)
Payment & Settlement Systems: Oversee, regulate, and operate payment systems
Regulation & Supervision: Licenses, supervises, and regulates banks and financial institutions
Ensuring Financial Stability: Monitors systemic risks, prevents contagion
Foreign Exchange Management: Maintains external value of currency, manages forex reserves
Promotional Functions: Development of financial markets and institutions

Monetary Policy (RBI)

RBI Act, 1934 Section 45Z: Monetary Policy Committee (MPC) framework
MPC Composition: 6 members (3 RBI + 3 external) – majority vote with Governor tie-breaker
Bi-monthly Policy Cycle: 6 meetings per year
Inflation Target (CPI) : 4% ±2% (2% to 6%)
Repo Rate: Rate at which RBI lends to banks (against government securities)
Reverse Repo Rate: Rate at which RBI borrows from banks (absorbs liquidity)
Marginal Standing Facility (MSF) : Emergency borrowing from RBI (above repo rate)
Bank Rate: Long-term lending rate (penal rate for default)
CRR (Cash Reserve Ratio) : % of NDTL kept with RBI (non-interest bearing) – Formula: (CRR amount/NDTL)×100
SLR (Statutory Liquidity Ratio) : % of NDTL in liquid assets (gold, government securities) – Formula: (SLR assets/NDTL)×100
MSF Rate: Repo rate + 0.25% (as of latest policy)

Selective Credit Controls

Margin Requirements: % of loan not financed by bank
Consumer Credit Regulation: Minimum down payment, maximum tenure
Credit Rationing: Ceiling on specific sector advances
Moral Suasion: Persuasion/timely warnings to banks

Liquidity Adjustment Facility (LAF) : Repo + Reverse Repo for daily liquidity management

Net borrowing under LAF: LAF borrowing (Repo) – LAF absorption (Reverse repo)

Open Market Operations (OMO) : Purchase/sale of government securities

Outright OMO: Permanent injection/absorption
Repo OMO: Temporary injection/absorption (now LAF)
Market Stabilization Scheme (MSS) : Government securities for absorbing excess liquidity (proceeds held in separate account, not for government expenditure)
Currency Chest: RBI managed – stores banknotes and coins for currency distribution

Central Bank Communication

Monetary Policy Statement: Released after each MPC meeting
Monetary Policy Report (MPR) : Half-yearly report to Government
Transparency: Forward guidance on future policy stance
Accountability: MPC accountable to Government for inflation targeting
Autonomy/Independence: Instrument independence (MPC) and goal independence (inflation target set by Government)

Foreign Exchange Management

Forex Reserves Composition: Foreign currencies (mainly USD), gold, SDRs, Reserve position in IMF
Forex Reserve Management: Safety, liquidity, and returns (in that order)
Exchange Rate Regime: Managed float with no pre-announced path
Intervention: RBI buys/sells dollars to manage volatility (not target level)
LIBOR Transition: Shift to ARR (Alternative Reference Rates – SOFR, SONIA, €STR, MIFOR discontinued in India)

CAMELS Framework (Supervision)

C – Capital Adequacy: CAR, CET–1, Tier 1, Leverage ratio
A – Asset Quality: NPAs, provisioning, concentration risk
M – Management: Governance, controls, risk culture
E – Earnings: RoA, RoE, NIM, cost-to-income ratio
L – Liquidity: LCR, NSFR, ALM gaps
S – Sensitivity to Market Risk: Interest rate risk, forex risk (BPV, duration, VaR)

Basel Norms (Risk Management context)

Pillar 1: Minimum capital requirement for credit, market, operational risk
Pillar 2: Supervisory review (ICAAP – Internal Capital Adequacy Assessment Process)
Pillar 3: Market discipline (disclosure)

NBFC & Primary Dealers (PDs)

NBFC (Non-Banking Financial Company): Financial institution not holding banking license
NBFC Layers (Scale Based Regulation – SBR): Base, Middle, Upper, Top layer with increasing regulatory intensity
Norms for NBFCs: Minimum Tier 1 capital (15%), CRAR (15%)
PDs (Primary Dealers) : RBI approved – Government securities market making
PD Responsibilities: Bid commitment in primary auctions, market making in secondary market
Standalone PDs: Capital requirement (higher than bank PDs)

Other Important Points

Phillips Curve: Inverse relationship between unemployment and inflation (short run)
Money Multiplier (m) : $\frac{1}{CRR}$ (simple formula) – higher CRR = lower m
Quantitative Easing (QE) : Large scale asset purchases by central bank during crisis
Forward Guidance: Communication of future policy intentions
FOMC (Federal Open Market Committee) : US Fed’s monetary policy decision body
OMOs vs LAF: OMOs (outright/buy-sell) – permanent injection/absorption, LAF (repo/reverse repo) – overnight temporary liquidity management
MSS vs OMOs: MSS (Market Stabilization Scheme) – securities issued specifically to absorb excess liquidity, OMOs – outright purchase/sale of existing securities