Management of Commercial Banks

Inbuss Highlights

"My stint at Infinity has brought out various facets of my personality that were previously unknown to me. So, appears that I'm ripe for Citius, Altius, Fortius!!” - Suruchi Berry, Batch of 2007

Management of Commercial Banks

Contact Hours : 30 hrs
Credit : 1 Credit
Prerequisite : None
Instructor : Abhijit Roy

 

Course Background

Commercial banks continue to remain the primary financial intermediaries of the Indian financial system. During the last decade and half, seminal changes have been witnessed in the Indian economy as well as the Indian banking sector. While the Indian Government and business look at banks for supplying credit requirements for industry, trade and agriculture, individuals look at banks for their savings requirements as well as consumer and housing loans. Banks are also an important component of the monetary system.

 

Objectives

The course is designed to enable the participants:

  • To obtain an overview of the Indian banking industry
  • To understand basic principles of banking company operations
  • To get an understanding of standard banking products
  • To understand basic concepts in risk management in banks

 

Pedagogy

The course is planned to be conducted through class room lectures, students’ presentations and case analysis.

 

Evaluation

Grading will be based on:

Case Discussion/ Class Participation:        15%
Quizzes:                    20%            
Final examination (closed book):        40%
Team project:                    25%


Examination will mainly be of short answer type questions to test your understanding of the concepts and your ability to apply them. Three quizzes will be held and all of them will be considered for the grades.

 

For the team project as well as regular class room work, including case preparations, I suggest that you form teams of around 5/6 members on a voluntary basis.

 

Class attendance is crucial as class discussions will deviate significantly from the textbook.  You are liable to be tested on the material in the text book, class notes as well as what is covered in the class discussions.

 

For the team project report, may I request that extensive downloading from the net without editing or understanding is not resorted to. A word limit could be discussed in class. In addition, each team would be asked to make an oral presentation in class not exceeding twenty minutes including 5 minutes for Q & A.  Grading will be based on presentation and writing as well as substance of analysis.  Providing a bibliography is essential. We shall discuss this issue in class in greater detail.


Session Plan and Contents

Session

Topic

Principal Issues

1,2,3,4

An Overview of the Banking Sector in India

Laws relating to Banking

 

Policy Environment

Commercial Bank Survey

Banking Sector Reforms

The Interaction of Monetary & Fiscal Policy

Strengths and Weaknesses of the Indian Banking Sector

5.6

Financial Performance of Banks

The Business of Banking

The Balance Sheet: Assets & Liabilities Shareholders’ Equity

Capital Adequacy Norms

Incomes and Expenses

Bank Profitability

7

Introduction to Risk Management in Banks

Market Risks

Credit Risks

Operating Risks

8,9,10

Asset  Liability Management

 

Objectives of Asset/Liability Management, Asset/ Liability Management Strategies: Spread Management, Gap Management, Interest Sensitivity Analysis, Hedging Instruments

Liquidity Risks

RBI Guidelines

11,12, 13

Bank Investment Instruments

An Introduction to Treasury Management in Banks

 

An Introduction to Primary and Secondary Securities Market

The Debt Market

Money Market Instruments

Market Conditions and Investment Portfolio Management

 

 

14,15

Credit Risk Management

Prudential Norms

Income Recognition and Asset Classification

 

16,17, 18

Loan Products of Banks

Priority Sector Advances

 

Methods for Financing Working Capital Requirements

Credit Rating Methods

Term Financing by Indian Banks

19,20

Management of Non-Performing Assets (NPAs)

 

The Warning Signs

Prudential Norms on Income Recognition

Provisioning Issues

Securitisation Act

21,22

Capital Adequacy Issues

Developments in Basel  I and II

Calculation of capital requirements

An Introduction to Stress Tests

23-24

Project Presentations

 



Text Book
Management of Banking and Financial Services: Justin Paul & Padmalatha Suresh, Pearson Education

 

Reference Books
Commercial Banking: The Management of Risk: Benton E. Gup & James E. Kolari, Wiley India
Banking Theory and Practice: K.C.Shekhar & L.Shekhar, Vikas Publishing
Risk Management in Banks: S Singh & Yogesh Singh, Excel Books

 

Supplementary Readings
RBI Annual Reports
RBI Circulars
Select Readings

 
image