This is an original preparation plan, not a new examination announcement. Check dates, stages, eligibility and application instructions in the issuing authority’s current notice.
01 / UNDERSTANDING
Plan your preparation
Prepare by drawing the proposed loan and funding timelines from memory. Next explain how a deposit-retention surprise affects the recommendation. Finish by drafting a short committee minute with the decision, responsible function and evidence needed at review. Readiness means defending the trade-off, rather than remembering a list of committee names.
02 / UNDERSTANDING
The concept in context
A balance sheet contains assets and funding with different cash-flow, repricing and behavioural characteristics. Evaluating each business separately can miss interactions: an attractive loan campaign may increase funding needs, while a deposit campaign changes cost and concentration. ALCO provides a forum for assessing these connected consequences.
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
Build your next study session
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.
