Estimate the Overall Pricing of product for the data given below

Capital 410
Reserves 12500 Cost
Avg. Advances 125200 Networth 12910 245
Avg. Investments 36000 Deposits 162500 8220
Avg. Deposits 162500 Avg. Borrowings 12500 605
Avg. Borrowings 12500 Total Funds 187910
RWA for Credit Risk 127704
RWA for Market Risk 30600 Operating Expenses 2775 2775
RWA for Operational Risk 19156 CRAR Cost for 9% 146860 991
Cost of Capital 7.50% Tax Provision 425
Other Income 2500 NPA Cost 1810
Operating Expenses 2775 Required ROA
Interest Paid on Deposits 8220 Overall Pricing
Interest paid on Borrowings 605
Dividend paid 245
NPA 250
Carry Forward NPA 1560
Tax Provision 425
Cost %
1.90%
5.06%
4.84%
4.83%

1.48%
0.53%
0.23%
0.96%
0.75%
8.77%
Estimation of Cost of Capital
2019 2018
Tier-I Capital 18740 18005
Subordinated Debt 9500 8550
Total Regulatory Capital 28240 26555

Cost of Tier-II Capital 7.50% 8.25%

Nominal Tax Rate 30.90% 30.90%
Post Tax Tier-II Cost 5.18% 5.70%

Risk free Return(10 year Gsec) 7.25% 8.25%

Beta of Bank's Share 0.85 1.05
Average Return on Security 8.75% 11.50%

Cost of Equity Capital 8.53% 11.66%

Cost of Regulatory Capital 7.40% 9.74%

Opportunity Cost of Regulatory Capital 0.15% 1.49%

( Against 10- year Gsec)
Rate(1- tax rate)

Wtg avg. cost of capital

Reg cap - Risk Free Return

Estimate Risk-Based Pricing

2019 2018
Housing Loans 18500 12115
Risk Weight 75% 85%
CRAR Requirement 10.35% 10.35%
NPA in Housing Loan 275 205
Profit Margin 0.50% 0.50%

Vehicle Loans 4765 4285

Risk Weight 70% 80%
CRAR Requirement 10.35% 10.35%
NPA in Vehicle Loan 75 68
Profit Margin 0.75% 0.75%

Cost of Deposits 5.05% 5.50%

Opt cost 1.75% 1.75%

Pricing of Retail Housing Loans

Risk Weight 75% 85%
NPA 275.00 205.00
CRAR 10.35% 10.35%
Profit Margin 0.50% 0.50%
Loan Amount 18500 12115
Cost of Capital 7.40% 9.74%

NPA cost 1.49% 1.69%

CRAR Cost 0.57% 0.86%

Pricing of Retail Housing Loan 9.36% 10.30%

Pricing of Vehicle Loans

Risk Weight 70% 80%
NPA 75.00 68.00
CRAR 10.35% 10.35%
Profit Margin 0.75% 0.75%
Loan Amount 4765 4285
Cost of Capital 7.40% 9.74%

NPA cost 1.57% 1.59%

CRAR Cost 0.5% 0.8%

Pricing of Vehicle Loans 9.66% 10.39%

 Unallocated
CRM Net Overheads
ROI Balance O/S Valuation Exposure Revenue (%) Expenses PD (%)
11.75% 264.70 66.65 198.05 31.10 0.30% 0.79 1.18%
11.75% 621.81 125.25 496.56 73.06 0.30% 1.87 1.18%
12.25% 100.20 20.25 79.95 12.27 0.30% 0.30 1.18%
13.10% 102.56 25.64 76.92 13.44 0.30% 0.31 1.18%
10.75% 352.67 125.25 227.42 37.91 0.30% 1.06 1.25%
11.25% 346.23 125.75 220.48 38.95 0.30% 1.04 2.25%
10.50% 215.17 55.75 159.42 22.59 0.30% 0.65 4.75%
11.50% 625.00 125.25 499.75 71.88 0.30% 1.88 4.15%
12.05% 178.87 65.25 113.62 21.55 0.30% 0.54 1.89%
13.05% 182.83 75.50 107.33 23.86 0.30% 0.55 1.89%
11.50% 88.90 15.25 73.65 10.22 0.30% 0.27 3.85%
 Total
EAD Expected RWA Credit RWA for Opt Capital Risk Free Return
LGD (%) (Amount) Loss RW Risk Risk Charge (Gsec 365 Days)
65.00% 198.05 1.52 20% 39.61 51.84 9.46 7.25%
65.00% 496.56 3.80 20% 99.31 121.77 22.88 7.25%
65.00% 79.95 0.61 20% 15.99 20.46 3.77 7.25%
65.00% 76.92 0.59 20% 15.38 22.39 3.91 7.25%
65.00% 227.42 1.85 20% 45.48 63.19 11.25 7.25%
65.00% 220.48 3.22 50% 110.24 64.92 18.13 7.25%
65.00% 159.42 4.92 100% 159.42 37.65 20.40 7.25%
65.00% 499.75 13.48 100% 499.75 119.79 64.12 7.25%
65.00% 113.62 1.40 50% 56.81 35.92 9.60 7.25%
65.00% 107.33 1.32 50% 53.67 39.77 9.67 7.25%
65.00% 73.65 1.84 100% 73.65 17.04 9.39 7.25%
 Risk
Income From Economic Adjusted
Capital Capital Income RAROC
0.69 9.46 29.48 3.11
1.66 22.88 69.06 3.02
0.27 3.77 11.64 3.08
0.28 3.91 12.82 3.28
0.82 11.25 35.82 3.18
1.31 18.13 36.00 1.99
1.48 20.40 18.50 0.91
4.65 64.12 61.17 0.95
0.70 9.60 20.32 2.12
0.70 9.67 22.69 2.35
0.68 9.39 8.79 0.94
 Default
Loan Segment Loan % Rating Probability Interest Rate Ópt.Cost
Retail Housing 12% BB 3.45% 8.75% 0.30%
Personal Retail 8% Unrated 8.75% 11.75% 0.30%
SME Segments 26% A 2.75% 10.75% 0.30%
Large Corporate 12% AAA 1.42% 9.75% 0.30%
MS-ME Segment 14% AA 2.05% 10.25% 0.30%
Real Estate Segment 5% C 6.75% 11.75% 0.30%
Agri & Allied Segment 12% Unrated 5.25% 8.75% 0.30%
Start-Up & Venture Capitalist 1% Unrated 10.25% 12.50% 0.30%
Roads,Port & Other Infra segment 10% AA 5.75% 11.05% 0.30%

Total Loan Amount 255000

Cost of Capital 7.50%
Risk Free Interest Rate 5.00%
Opportunity Cost of Capital 0.15%
 RWA
Interest Credit RWA Opt
CRAR LGD Risk Weight Loan Amt Earned EL Risk Risk
10.35% 25% 75% 30600 2677.50 263.93 22950.00 4462.50
10.35% 100% 150% 20400 2397.00 1785.00 30600.00 3995.00
10.35% 48% 75% 66300 7127.25 875.16 49725.00 11878.75
11.50% 50% 25% 30600 2983.50 217.26 7650.00 4972.50
10.35% 65% 50% 35700 3659.25 475.70 17850.00 6098.75
10.35% 40% 100% 12750 1498.13 344.25 12750.00 2496.88
9.00% 50% 100% 30600 2677.50 803.25 30600.00 4462.50
11.50% 80% 100% 2550 318.75 209.10 2550.00 531.25
11.50% 45% 50% 25500 2817.75 659.81 12750.00 4696.25

Risk Adjusted Portfolio Yield

 Risk Risk
Regulatory Cost of Adjusted Adjusted
Total RWA Capital Reg.Capital Operating Cost Income Yield
27412.50 2837.19 4.26 91.80 2317.52 7.57%
34595.00 3580.58 5.37 61.20 545.43 2.67%
61603.75 6375.99 9.56 198.90 6043.63 9.12%
12622.50 1451.59 2.18 91.80 2672.26 8.73%
23948.75 2478.70 3.72 107.10 3072.73 8.61%
15246.88 1578.05 2.37 38.25 1113.26 8.73%
35062.50 3155.63 4.73 91.80 1777.72 5.81%
3081.25 354.34 0.53 7.65 101.47 3.98%
17446.25 2006.32 3.01 76.50 2078.43 8.15%

k Adjusted Portfolio Yield 7.73%

Estimate the Benchmark Prime Lending Rate for SBI

Capital 746 Operating cost

Reserves & Surplus 117,636 NPA Provision
Revaluation Reserves - Standard Asset Provision
Cash in Hand 848 Provision for Tax
Cash balance with banks 47,593 Provision for Others
CRR Reserves 67,837 Interest paid on Deposits
Average Deposits 1,394,408 Interest paid on Borrowings
Average Borrowings 144,293 Dividend & Dividend Tax
Average Tier-II Bonds 38,837 Risk Weighted Assets
Average Investment 398,308 Cost of Capital
Fixed Assets 43,545 Projected Profit Margin

Cost of Funds Calculation

Sources and Amouts Amount Interest /Dividend

Average Deposits 1,394,408 54,550
Average Borrowings an Tier-II Bond 183,130 13,365
Capital & Reserves 118,382 2,538
1,695,920 70,453
Cost of Funds 4.15%

BPLR Estimation
Interest Bearing Funds 1,577,538 Operating cost
Less Cash in Hand 848 Total Provision cost
Cash in Banks 47,593 Cost of Lendable Funds
CRR 67,837 Total Int., Opt., Provs. Cost
Average Investment 398,308
Interest bearing lendabe funds 1,062,952 Dividend
Risk Weighted Assets
Capital 746 Capital Requred for 12% CRAR
Reserves 117,636 Cost of 12% CRAR
Less Revaluation Reserves -
Net Equity Capital 118,382 Total cost
Cost % to Lendable Funds
Fixed Assets 43,545 Add Profit Margin
Other Assets 184,098 BPLR
Total 227,643
Total Lendable Funds 953,691
 35,725
14,223
6,575
5,283
563
54,550
13,365
2,538
1,125,325
7.85%
0.75%

Estimation of Base Rate

Cost of Lendable Funds 39,619
Operating Cost 35,725
Cost of CRR 2,818
Total Cost 78,162
Amount of Lendable Funds 953,691
Base Rate 8.20%

35,725
26,644
39,619
101,988

2,538
1,125,325
135,039
10,601

115,126
12.07%
0.75%
12.82%
Data Sources

Networth 22960 Gsec (10 Years) Yield 6.00%

Current Deposits 18250.00 0.50% Return on Bank Index(%) 8.75%
Savings Deposits 22500.00 1.75% Equity Beta of Bank 0.81

Term Deposits Amount Domestic Borrowings Amount

1-days 3550.00 0.85% 1-days 3447 1.05%
2-7 days 7546.00 1.25% 2-7 days 2225 1.25%
8-14 days 12550 1.75% 8-14 days 9121 1.50%
15-28 days 16550 2.25% 15-28 days 1225 1.75%
29days- 3 month 32550 2.75% 29days- 3 month 1550 2.25%
3- 6month 42551 3.55% 3- 6month 975 2.75%
6month - 1Year 55250 4.05% 6month - 1Year 875 3.05%
Over 1- Year 12550 4.75% Over 1- Year 326 3.25%
 Total Liabilities
AAA 20% (Excls.Equity Capital) 254047
Required CRAR 10% Borrowings 15893
Reverse Rep Rate 3.35% CRR Percentage 3.00%

FX Currency Borrowings Amount FX Currency Deposits Amount

1-days 375 0.55% 1-days 225 0.01%
2-7 days 123 0.75% 2-7 days 155 0.55%
8-14 days 52 1.05% 8-14 days 114 0.85%
15-28 days 22 1.35% 15-28 days 649 1.05%
29days- 3 month 180 1.55% 29days- 3 month 33 1.25%
3- 6month 251 1.75% 3- 6month 273 2.05%
6month - 1Year 44 2.05% 6month - 1Year 49 2.25%
Over 1- Year 53 3.05% Over 1- Year 254 2.75%
 Marginal
Amount Cost % Cost %
Networth 22960
Current Deposits 18250.00 0.50% 0.036%
Savings Deposits 22500.00 1.55% 0.137%
0.000%
Term Deposits Amount Cost %
1-days 3550.00 2.25% 0.031%
2-7 days 7546.00 2.90% 0.086%
8-14 days 12550 3.25% 0.161%
15-28 days 16550 3.55% 0.231%
29days- 3 month 32550 3.85% 0.493%
3- 6month 42551 4.25% 0.712%
6month - 1Year 55250 4.75% 1.033%
Over 1- Year 12550 5.25% 0.259%
0.000%
Domestic Borrowings Amount Cost %
1-days 3447 1.75% 0.024%
2-7 days 2225 2.25% 0.020%
8-14 days 9121 3.55% 0.127%
15-28 days 1225 3.85% 0.019%
29days- 3 month 1550 4.05% 0.025%
3- 6month 975 4.25% 0.016%
6month - 1Year 875 4.45% 0.015%
Over 1- Year 326 4.65% 0.006%
0.000%
FX Currency Borrowings Amount Cost %
1-days 375 2.00% 0.003%
2-7 days 123 2.55% 0.001%
8-14 days 52 2.85% 0.001%
15-28 days 22 3.05% 0.000%
29days- 3 month 180 3.25% 0.002%
3- 6month 251 3.50% 0.003%
6month - 1Year 44 3.75% 0.001%
Over 1- Year 53 4.00% 0.001%
0.000%
FX Currency Deposits Amount Cost %
1-days 225 2.15% 0.002%
2-7 days 155 2.85% 0.002%
8-14 days 114 3.05% 0.001%
15-28 days 649 3.25% 0.008%
29days- 3 month 33 3.55% 0.000%
3- 6month 273 3.75% 0.004%
6month - 1Year 49 3.85% 0.001%
Over 1- Year 254 4.05% 0.004%
Marginal Cost of Deposits
& Borrowings 3.47%
Gsec (10 Years) Yield 6.00%
Return on Bank Index(%) 8.75%
Equity Beta of Bank 0.81
AAA 20%
Required CRAR 10.35%
Reverse Rep Rate 3.35%
Total Liabilities (Excls.Equity Capital) 254047
Operating Cost 1.75%
CRR Percentage 3.00%

Cost of Equity 8.23%

Marginal Cost of Funds 3.85%

Opportunity Cost of Capital 2.23%

Negative Carry on CRR 0.12%

Credit Risk Premium 0.05%

Tenor Premium Yield MCLR

Overnight 0.95% 6.71%
1-Month 1.35% 7.11%
3-Month 1.55% 7.31%
6-Month 2.25% 8.01%
1-Year 2.40% 8.16%
 RBI Repo Rate-Linked
Pricing of Retail Housing Loan 2019 2018
Risk Weight 70% 80% RWA of Retail Housing Loan
NPA 75.00 68.00 Capital Requirement for CRAR
CRAR 10.35% 10.35% CRAR Cost
Profit Margin 0.75% 0.75% CRAR Cost % to Loan Amount
Loan Amount 4765 4285 RBI REPO RATE
Operating Cost 1.75% 1.75% Operating Cost
Cost of Capital 7.40% 9.74% Profit Margin
RBI Repo Rate 4.00% 4.75% NPA Cost
Total Cost ( Pricing)
 Corporate Repo Rate-Linked
2019 2018 2019 2018
3335.50 3428.00 RWA of Retail Housing Loan 3335.50 3428.00
345.22 354.80 Capital Requirement for CRAR 345.22 354.80
25.55 34.57 CRAR Cost 25.55 34.57
0.54% 0.81% CRAR Cost % to Loan Amount 0.54% 0.81%
4.00% 4.75% Corporate Repo Rate 3.50% 4.59%
1.75% 1.75% Operating Cost 1.75% 1.75%
0.75% 0.75% Profit Margin 0.54% 0.81%
1.57% 1.59% NPA Cost 1.57% 1.59%
8.61% 9.64% Total Cost ( Pricing) 7.90% 9.54%
365-Day TBill Rate-Linked
2019 2018
RWA of Retail Housing Loan 3335.50 3428.00
Capital Requirement for CRAR 345.22 354.80
CRAR Cost 25.55 34.57
CRAR Cost % to Loan Amount 0.54% 0.81%
365-DAYS Tbill Rate 3.28% 4.45%
Operating Cost 1.75% 1.75%
Profit Margin 0.54% 0.81%
NPA Cost 1.57% 1.59%
Total Cost ( Pricing) 7.68% 9.40%