The worked question on this page is original educational practice. It is not represented as a question from an official previous-year examination paper.
01 / UNDERSTANDING
Review the question
Create an original loan-cost exercise where a fee offsets the apparent advantage of a smaller instalment. Use a stated upfront charge that cancels a repayment-total difference. An original checkpoint is: What is the stated total outflow under offer A? Supported answer: 10,900 units. Explain the decisive fact, then alter one condition and solve again. This is an original practice method, not a claim that the question appeared in an official past paper.
02 / UNDERSTANDING
The concept in context
A simple total-cost calculation does not replace the current official disclosure or an appropriately calculated annualised cost measure. A useful study check is to list amount received and every stated outflow, then read current official disclosures for omitted terms. Explain why the method fits the stated facts before applying it to a changed situation.
03 / UNDERSTANDING
A worked learning case
Two fictional offers each provide 10,000. Offer A requires ten repayments of 1,080 and a stated upfront charge of 100; offer B requires ten repayments of 1,090 with no stated charge. Their listed total outflows are both 10,900. The identical totals do not prove every term is equivalent, because payment timing and other conditions still need comparison.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
What is the stated total outflow under offer A?
Show the answer and reasoning
10,900 units.
Ten repayments of 1,080 sum to 10,800. Adding the stated upfront charge of 100 gives 10,900. This total includes only the cash flows provided in the exercise. It does not establish an annualised rate or determine which offer suits a person, because timing, disclosures and other contractual conditions remain relevant.
Two traps to watch for.
- Comparing instalments without checking tenure and charges.
- Calling equal total outflows identical loan contracts.
YOUR TOPIC-SPECIFIC LEARNING MAP
Learn from the attempt
List amount received and every stated outflow.
Align tenure and payment dates before comparison.
Read current official disclosures for omitted terms.
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.
- www.rbi.org.in https://www.rbi.org.in/commonman/images/FAME%20Booklet%20second%20edition/FAME%20Booklet%20English/FAME30072020.pdf
- www.rbi.org.in https://www.rbi.org.in/commonperson/english/Scripts/FAQs.aspx
For Banking foundations preparation, check the current official notice before relying on changing dates, rules or examination requirements.
