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
For original practice, give a fictional committee three options: change loan pricing, extend funding or slow deployment. Ask which additional facts distinguish them. In a paper review, classify mistakes as missing cash timing, rate-reset effects or implementation constraints. This produces a reusable decision method without claiming that any example appeared in an official examination.
02 / UNDERSTANDING
The concept in context
A useful committee paper distinguishes the measured exposure, assumptions, available responses and implementation constraints. Management must consider customer behaviour and market access as well as contractual maturity. A decision record should explain why the selected response fits the risk appetite and when the underlying assumptions need to be challenged again.
03 / UNDERSTANDING
A worked learning case
A fictional bank proposes longer fixed-rate loans while relying heavily on deposits that can leave sooner. The lending team presents margin expectations; treasury presents funding alternatives; risk presents adverse scenarios. ALCO compares the whole position, chooses a funding and pricing response and assigns a review if deposit retention differs from the forecast.
ORIGINAL EDUCATIONAL PRACTICE
Try it before you check.
Why should ALCO review a profitable loan campaign alongside its funding plan?
Show the answer and reasoning
Profitability alone does not establish manageable funding and repricing risk.
The lending proposal creates receipts over time, while its funding can create earlier payments and different rate-reset dates. Reviewing the two together exposes timing, concentration and earnings sensitivity. The committee can then judge whether the projected margin compensates for the combined position under plausible changes in behaviour and markets.
Two traps to watch for.
- Treating ALCO as a meeting that merely receives spreadsheets.
- Approving growth without identifying its funding consequences.
YOUR TOPIC-SPECIFIC LEARNING MAP
Learn from the attempt
Connect the loan proposal to its funding cash flows.
Separate contractual dates from behavioural assumptions.
Write an owner and review trigger for the selected action.
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.
- iibf.org.in https://iibf.org.in/caiib-certified-associate-IIBF
- iibf.org.in https://iibf.org.in/documents/RulesSyllabus/2026/FlagshipCourses/60%20-%20CAIIB_24.07.25_Change_Final%20Website_23.02.2026.PDF
- www.rbi.org.in https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7680
For CAIIB preparation, check the current official notice before relying on changing dates, rules or examination requirements.
