This is the first part of a series of article to discuss Phase 2 (RBI mains) preparation strategy. In this article Finance and Management (paper 3 of phase 2) strategy is discussed. Most students face problems in this section of the paper (especially “non-MBA” candidates). But contrary to believe it is very easy to score in this paper. The structure of this article is as follow:
1) Analysis of finance part of paper III.
2) Major insights which can be drawn from the analysis
3) Segregation of RBI grade b syllabus on basis of topic. This will help in chalking out a study plan.
4) A glimpse of study plan is covered; the full study plan will be shared in another article.
RBI Grade b recruitment process consists of three phases.
There is usually 15 days window between Phase 1 and Phase 2 exam. So exam preparation for Phase 1 and Phase 2 exam should be done simultaneously. Initially, the major focus should be on Phase 2 and then the focus should shift to Phase 1 prior to 2-month of Phase 1 Examination.
RBI grade B Exam Pattern for Phase-II Paper is as under.
In Paper 3 almost equal weight-age is given to RBI Grade B Finance and Management part (Organisation behavior, Human Resource Management, Corporate Governance etc.)
* Corporate Governance questions are considered part of Management part.
Here only the Finance part is discussed.
Finance Part of Paper III
Total 31 questions of 48 marks were asked in this part. There were 17 questions of two marks each and rest were one marks questions. There were around 5-6 numerical in this part. And rest are conceptual. You can find list of questions in end of this article.
This part can be broadly divided under following heads
Topic wise Breakup of question is depicted in following graph.
Financial Markets (Total 11 questions; 17 marks)
Broad categorization of questions
Both the bond market and Stock market covered and 5 questions from each have been asked. While only one question is asked from the derivative market. One can easily do all these questions if one has covered the NCFM module from NSE.
RBI grade b advertisement (Notification) clearly mentioned about this part of the syllabus and most of the questions are from their only. Why RBI gave so much weight-age to this part- don’t know (only either God or Mr UP knows :)). But perhaps it may be due to present government inclination towards the development of stock and bond market. So much in the news that why they have asked. Also, information handout also having these type of questions.
So prepare all the technical stuff which is in news prior to the examination. For Example: if Option market (Call or Put Option) is in news prior to exams then one should prepare its basic technical details like how they are priced, their types etc.
RBI/Banking/ Bank Regulation (Total 8 Ques; 11 marks)
“Detail Study matters: If you carelessly observed the paper it seems that nothing is asked from the economy survey. But if one study economy survey then he can answer many of these questions. For example, there is a question on RWA (Risk-weighted Average) which one can easily answer if one know the reason why the capitalization of the bank is needed which is mentioned in the economic survey. It is required to comply with Basel norms. If one knows the BASEL norms he knows about RWA. So cover the Economy survey in detail. This will also help in Phase 1 and Phase 2 – Paper-1 (ESI) ”
Every serious aspirant who had gone through RBI website should be able to do RBI function and interest rate questions. Further if one knew about the BASEL norm he can easily answer the question-related banking financial statements question like the full form of RWA and ICAAP.
Management Accounting (Total 7 questions; 13 marks)
Any company has three Financial (Balance Sheet, Profit & Loss Account and Cash flow statement) if one knows about their analysis then can easily answer 6 out of 7 questions.
This part is a surprise for non-MBA people. If one has gone by only the syllabus provided in notification no one can guess these types of questions can come into RBI grade B finance examination. But if one looked into information handout provided by RBI, then these types of questions are quite probable.
So remember to see the information handout before any examination. Then we can escape from the surprises during RBI grade B finance examination.
Miscellaneous (5 questions; 7 marks)
Here are few miscellaneous questions which I have put in the separate head
1) Numerical based on Compounding concept (perhaps compounding interest)
2) Year of the 1st five-year plan
3) Who is Mutual fund regulator
4) Some question related to Outbound liability (OBL) <there are two questions, but not clear>.
1) Read the information Handout provided for the exam.
2) Prepare all type of question asked in that handout on priority and the complete topic mentioned in notification later.
3) Many of questions can be easily answered after studying few basic MBA finance courses. The study material for them will be uploaded soon. To study the MBA course may seems to be huge task but it will only take 3-4 weeks to study the relevant portion from those courses.
4) Financial market questions were most in number as well in term of marks weightage. NCFM material should be enough for this. I will look into it and then upload the same.
5) No questions or very few questions were asked on many topics like only one question on regulator other than RBI, no question on financial inclusion, PPP, alternative source of finance, Union Budget etc.
6) RBI provided a list of books to prepare for RBI exam. But the book list is huge and not easy to understand. To cover all the topics, one should more rely on an internet blog.
So now how to prepare for exam then? Here first I will discuss the segregation of syllabus and target each topic individually.
The Whole of Finance part of paper 3 can be segregated into the following head
Questions from Finance part of RBI Grade B Phase 2 Question paper (2016)
“The questions are taken from various internet sources and after talking with some of the candidates who have given an exam” So some questions are incomplete. However RTI for paper has been planned, will update as soon as an actual paper is available.”
1) Risk Management + Risk premium + Risk-return tradeoff (2 ques)
2) Meaning of negative Beta
3) Capital gearing ratio + cash from operating activities+ Breakeven point ( Numerical 3 questions)
4) RBI function ( 3 ques)
5) Outbound liability (OBL) <question is not clear> (2 ques)
6) Leverage +EBIT+ Current Ratio (3 ques, Numerical)
7) Bond yield + price of bond (3 ques)
1) What are Perpetual bond ?
2) What is Zero Coupon bond
3) Full form of ICAAP
4) Full form of RWA
5) RBI Repo
6) Which is not a component of MLCR
7) When was 1st five year plan commenced
8) Who is Mutual fund regulator
9) What is Meaning of Systematic Risk
10) Numerical related to Compounding
11) Question related to NSDL &CDSL
12) What are Nostro accounts?
13) How value of derivative is determined
14) Name the model that combine 5 financial ratio
RBI Grade B Finance and Management Questions from past year papers (2017)
1. Rule 72? Number of years required to double your money at a given annual rate of return
2. Capital account convertibility risks and examples?
3. Peer to Peer lending characteristics?
4. An index to measure systematic risk?
Bonds that does not pay any coupon is called as?
5. A bank has CRAR of 11.5% for capital of 230,000 crores. calculate the minimum capital required as per BASEL 2 and RBI requirement for BASEL 2
6. A person invests in a share of 400 rupees and after one month sold for 440 rupees. If he invests in future of the same share with 20% margin money and sells the same after one month, what will be the %age gain for both?
7. Difference between small and payment bank?
8. How does one transfer price risk?
9. A numerical based on CRR- if present bank has X money and has 20% CRR limit –if the limit is increased identify the amount of money in the market
10. WACC numerical
11. Another numerical where 400 converted to 800 –identify the years
12. CRAR was given- we need to identify the capital equivalent based on BASEL AND RBI limit
13. Which of the following is off exchange agreement?
14. Stock brought for Rs 45, dividend received Rs 5 and sold for Rs 85. what is the rate of return?
15. Difference between primary and secondary market?
16. Which among this is not a solvency ratio? options were debt to equity ratio, liquid ratio, quick acid test ratio, both liquid and quick acid, interest rate returns.
17. How does government reduce its debt – options were selling government bonds, printing currency and 3 other options
18. A process in which a cooperative is concerted into a stock company
19. What is assumption in internal rate of return—
20. UPI question- identify the wrong statements.
21. A discount rate problem where discount rate is given and an amount is given. need to identify the years
22. One numerical based on a construction company cash flow- initial investment 4000 Crore—cash flow statement was given for 5 years-you need to identify if project is financially sustainable or not –if it is then why?
23. Definition of an annuity?
24. statement regarding equity theory and asked to identify the theory
25. Chief of committee on corporate governance?
26. According to fayol double command is a source of_________- conflict
27. Off exchange transactions are called as?
28. Rule 72 numerical-250 is converted into 1000 in 16 years-identify the rate of return
29. A numerical based on CRR- if present bank has X money and has 20% CRR limit –if the limit is increased identify the amount of money in the market
30. Numerical based on identifying the interest if you receive 90 in total in an year based on 45 principle amount
31. Financial inclusion doesn’t include which among the following- savings account, subsidies benefits etc
32. Options were given choose which properly defines annuity?
33. Systemic risk co-efficiency is identified through which among the following
34. CRAR was given- we need to identify the capital equivalent based on BASEL AND RBI limit?
34. Reduction in import quota is considered as which reform?
35. Which among these is generally not done “over the counter exchange”?
1. Duality of command according to fayol causes?
2. The study of eye movement is called as?
3. Which would drive all the team together towards a common goal
4. Managerial leadership is also called as?
5. leadership theory in which manager shares decision making with his colleagues
6. Corporate governance committee under whom?
7. What is the first step in decision making
8. A process of steps where job is defined and necessary qualifications are prescribed
9. Similar question on job analysis where a job needs to be identified
10. A in BARS Stands for?
11. MBO is also known as?
12. Path goal theory given by?
13. Goal setting theory given by?
14. What kind of leadership helps in bringing change in organization?
15. what differentiates a company from another
16. What does paralanguage mean?
17. After identifying the critical incidents in BARS ,whats the next process?
18. statement based on goal setting theory and asked to identify the theory
19. companies goals, skills, vision, mission is identified in- options were functional, organisations, technical competencies
20. what does a leader do in transformational leadership?
21. A leader who is visible all the time and motivates his team- which kind of leadership
22. A leader who has power to correct the mistakes and even provide rewards when they perform well?
23. Communication through eye movements
24. What makes an employee feel connected to his company even during downturn
25. Question on job analysis where a job needs to be identified
26. Kind of leadership where a leader allows subordinate to take decisions in defined limits?
27. Managerial leadership is also known as—transactional, strategic and two other options
28. Leadership where leader shares decision making with his colleagues?
29. Bargaining technique where employees bargain for bonus in relation to productivity?
30. A process of steps where job is defined and necessary qualifications are prescribed
31. Group dynamics definition was given—we need to identify it based on the statement
32. A question based on non-verbal language. will it create positive first impression or negative first impression? we need to identify false statement among 5 options.
33. Decision making process is a cognitive psychoanalytical
34. A passage was given regarding assessment center- question was asked if assessment center was a center or a process or a result
35. A process where employee identifies himself and is determined and motivated to work
36. Which would drive all the team together towards a common goal?
37. What is known as ability in a person which can be developed or not developed—skill, aptitude, expertise were the options