This Bankers Tutorial article is independent educational material. Examples are illustrative, and changing rules or examination requirements should be checked at the official source.
01 / UNDERSTANDING
Understand the idea
Show why a funding plan should describe when money arrives, not merely how much an asset is worth on paper. Liquidity planning becomes clearer when each resource has both an amount and availability date. Contrast this with the error of ignoring concentration in funding sources or payment dates. In a practical demonstration, test the largest withdrawal or delay assumption. Ask the reader to name the controlling fact and explain what additional information would be needed in a different situation, rather than only repeating terminology.
02 / UNDERSTANDING
The concept in context
Funding liquidity risk concerns difficulty meeting obligations as they fall due without unacceptable cost or disruption. It depends on cash-flow timing, access to reliable funding and the ability to convert usable assets into cash. Prepare a near-term cash-flow ladder and distinguish dependable inflows from assumptions about asset sales or refinancing.
A positive accounting net worth does not remove funding-timing risk, and liquid-asset values can become uncertain under stress. A useful study check is to build a dated inflow-and-outflow ladder, then test the largest withdrawal or delay assumption. Explain why the method fits the stated facts before applying it to a changed situation.
03 / UNDERSTANDING
A worked learning case
A fictional bank expects payments of 70 tomorrow, holds usable cash of 25 and has dependable incoming receipts of 30 before those payments. Its specified pre-funding gap is 15. A plan to sell another asset may help, but relying on an uncertain sale price or settlement time introduces further assumptions that should be visible in the analysis.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
What is the cash gap before any uncertain asset sale?
Show the answer and reasoning
15 units.
Available cash and dependable inflows total 25 plus 30, or 55. Against payments of 70, that leaves a shortfall of 15. Counting an uncertain sale as if it were already settled would hide execution risk. This timing calculation does not by itself establish whether the institution is solvent overall.
Two traps to watch for.
- Counting uncertain refinancing as guaranteed cash availability.
- Ignoring concentration in funding sources or payment dates.
YOUR TOPIC-SPECIFIC LEARNING MAP
Turn understanding into practice
Build a dated inflow-and-outflow ladder.
Classify dependable and contingent funding separately.
Test the largest withdrawal or delay assumption.
Explain the idea, apply it to a new situation, then check what changed in your reasoning.
BANKERS TUTORIAL · SOURCE NOTES
Keep the source alongside your notes.
Official links provide subject context and authoritative reference material. This guide’s explanation, scenario and question are original Bankers Tutorial learning content.
- m.rbi.org.in https://m.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=711
- www.rbi.org.in https://www.rbi.org.in/scripts/DataDefinition.aspx
For RBI preparation, check the current official notice before relying on changing dates, rules or examination requirements.
