SEMESTER FALL 2013
MONEY & BANKING (MGT411)
ASSIGNMENT NO.02 (NON-GRADED ACTIVITY)
DUE DATE: 26THJANUARY 2014 MARKS: 20
LEARNING’S OBJECTIVES:
It will enable the student to:
• Identify the various items of bank’s balance sheet according to their nature.
• Prepare bank’s balance sheet.
• Identify different types of risks that a bank is exposed to and their effects.
• Design strategy to overcome the effect of those risks.
LEARNING OUTCOMES:
After going through this activity, the students would be able to
• Prepare bank’s balance sheet.
• Identify the nature of specific bank risk.
• Identify the possibilities to overcome the effects of specific risk.
Assignment:
AKS bank limited is a private sector bank in Pakistan. It incorporated in 2004. It offers
broader range of services to its customers including small businesses, other retailers, medium
size and large size corporations.
AKS bank is always concerned for its performance, risk management and customers’
satisfaction. Effective risk and capital management is fundamental to the sustainability of the
bank. So, management identifies, assesses, measures and manages all kind of risks that act as a
hurdle to the bank’s strategic goals. For hunting the shareholder returns, bank focuses to
balance the performance, growth and risk
Assume that you have been working in the accounts department of this bank since 2010, now
you have been given some extra power to act as the member of the management and participate
in management’s decision. Now it is your responsibility:
• To remover errors and mistakes of financial statements before presenting them to your
share holders, in order to reflect true financial position of a bank and keep their
satisfaction level high.
• To take into account all kinds of risks and try to reduce them.
Requirement 1:
Given below are the un-organized and un-arranged accounts of the bank, you have to prepare
balance sheet of the bank by calculating total asset, total liability and net asset.
ITEMS 2014 (Rs)
Cash and balances with treasury banks 8,645,550
Borrowings from financial institutions 25,377,500
Lending’s to financial institutions 8,798,830
Sub‐ordinated loan 2,649,100
Balances with other banks 1,569,440
Bills payable 8,569,600
securities 79,481,480
Advances – net 200,532,700
Reserves 23450000
Checkable deposits 234,375,000
After preparing the balance sheet, keeping in view that it is mandatory for the bank to maintain
reserves 10% of its checkable deposits.
Requirement 2:
Answer the following questions:
1. Calculate the level of AKS bank’s capital.
2. Mr. Sheraz and Mr. Yasir are the two checking accounts holders; withdraw Rs. 25000
each from their accounts. What will be the effect of these transactions on bank’s assets
and liabilities?
3. Does AKS bank face an immediate problem as cause of these two transactions? If yes,
identify the problem and what can bank do to overcome that problem?
MONEY & BANKING (MGT411)
ASSIGNMENT NO.02 (NON-GRADED ACTIVITY)
DUE DATE: 26THJANUARY 2014 MARKS: 20
LEARNING’S OBJECTIVES:
It will enable the student to:
• Identify the various items of bank’s balance sheet according to their nature.
• Prepare bank’s balance sheet.
• Identify different types of risks that a bank is exposed to and their effects.
• Design strategy to overcome the effect of those risks.
LEARNING OUTCOMES:
After going through this activity, the students would be able to
• Prepare bank’s balance sheet.
• Identify the nature of specific bank risk.
• Identify the possibilities to overcome the effects of specific risk.
Assignment:
AKS bank limited is a private sector bank in Pakistan. It incorporated in 2004. It offers
broader range of services to its customers including small businesses, other retailers, medium
size and large size corporations.
AKS bank is always concerned for its performance, risk management and customers’
satisfaction. Effective risk and capital management is fundamental to the sustainability of the
bank. So, management identifies, assesses, measures and manages all kind of risks that act as a
hurdle to the bank’s strategic goals. For hunting the shareholder returns, bank focuses to
balance the performance, growth and risk
Assume that you have been working in the accounts department of this bank since 2010, now
you have been given some extra power to act as the member of the management and participate
in management’s decision. Now it is your responsibility:
• To remover errors and mistakes of financial statements before presenting them to your
share holders, in order to reflect true financial position of a bank and keep their
satisfaction level high.
• To take into account all kinds of risks and try to reduce them.
Requirement 1:
Given below are the un-organized and un-arranged accounts of the bank, you have to prepare
balance sheet of the bank by calculating total asset, total liability and net asset.
ITEMS 2014 (Rs)
Cash and balances with treasury banks 8,645,550
Borrowings from financial institutions 25,377,500
Lending’s to financial institutions 8,798,830
Sub‐ordinated loan 2,649,100
Balances with other banks 1,569,440
Bills payable 8,569,600
securities 79,481,480
Advances – net 200,532,700
Reserves 23450000
Checkable deposits 234,375,000
After preparing the balance sheet, keeping in view that it is mandatory for the bank to maintain
reserves 10% of its checkable deposits.
Requirement 2:
Answer the following questions:
1. Calculate the level of AKS bank’s capital.
2. Mr. Sheraz and Mr. Yasir are the two checking accounts holders; withdraw Rs. 25000
each from their accounts. What will be the effect of these transactions on bank’s assets
and liabilities?
3. Does AKS bank face an immediate problem as cause of these two transactions? If yes,
identify the problem and what can bank do to overcome that problem?
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