CREDIT GOVERNANCE AND COMPLIANCE APRIL 2023PAST PAPER

WEDNESDAY: 26 April 2023. Afternoon Paper. Time Allowed: 3 hours.
Answer ALL questions. Marks allocated to each question are shown at the end of the question. Do NOT write anything on this paper.

QUESTION ONE

1.  Explain the meaning of the following terms as used in central bank’s prudential guidelines:

Subordinated debt. (2 marks)

Position held with trading intent. (2 marks)

2.  Analyse FOUR forms of powers held by the regulators of financial institutions. (8 marks)

3.  Discuss FOUR challenges inhibiting the growth of a strong credit culture among co-operative societies in your country. (8 marks)

(Total: 20 marks)

 

QUESTION TWO

1.  Outline FOUR business activities prohibited under Microfinance Act. (4 marks)

2.  Assess FOUR achievements of Basel III Accord. (8 marks)

3.  Describe FOUR board committees established by commercial banks. (8 marks)

(Total: 20 marks)

 

QUESTION THREE

1.  Explain the term “loan loss provision”. (2 marks)
Enumerate FOUR factors that affect the calculation of loan loss provision. (4 marks)

2. State SIX agendas for cooperative society’s annual general meeting. (6 marks)

3.  Describe FOUR ways a credit policy could be used as a tool of managing credit risk. (8 marks)

(Total: 20 marks)

 

QUESTION FOUR

1.  Analyse THREE rules guiding profit sharing in Musharakah financing model. (6 marks)

2.  Outline SIX responsibilities of integrity assurance Officers in a bank. (6 marks)

3. Describe FOUR organisational policies that support responsible business conduct in credit providing
institutions. (8 marks)

(Total: 20 marks)

 

QUESTION FIVE

1.  Explain THREE disadvantages of using Value at risk (VAR) as a risk management tool. (6 marks)

2. Examine THREE components of the cooperative society’s governance structure. (6 marks)

3. Summarise FOUR roles and responsibilities of the board audit committee. (8 marks)

(Total: 20 marks)

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