Syllabus for the subject Commercial Banking : Post Graduate Diploma in Management 3rd Semester

Objectives :
The objective of the course is to acquaint students with the nuances of banking in the perspective of the recent changes in banking. The course would start with the discussion covering the importance of banking in the economy and then gradually take students to the different aspects of banking in the present day context.

Unit 1. Introduction : Structure of Financial System, Origin of Banks, Banking In Indian Concepts
Three Phases Pre Nationalization , Post nationalization but pre liberalization ( 1991) , Post liberalization ( post 1991); Main Functions of Commercial Banks, Changing Role of Commercial Banks in India.

Unit 2 : Structure of Banking System : Forms of Banking : Branch Banking, Unit Banking, Group
Banking, Chain Banking, Deposit Banking, Investment Banking and Mixed Banking.

Unit 3 : The Reserve Bank of India : Organisation of the Bank, Functions of the Bank, Central
Banking Functions, Supervisory Functions, Promotional functions, Control of credit by RBI, Commercial Banks and RBI, Collection and furnishing of credit information, Banking Policy of RBI, Bank Rate, PLR, SLR, CRR, Repo Rate, Reverse Repo Rate.

Unit 4 : Sources of Bank Funds : Deposits Types of Liabilities Deposits Type of deposits Term Deposits , Demand Deposits, Recurring Deposits, Fixed Deposits, Cumulative Deposits.

Unit 5 : Application of Bank Funds : Loans and Advances : Forms of Advances : Demand loans,
Term loans/Hire Purchase/Lease, Overdrafts clean and Secured, Cash Credit, Bills purchased and discounted, Letter of Credit and Guarantees. Assessment of Term Loan Products Details Assessment Process, Retail Assets Products Descriptions, Pricing and Assessment Process, Case Studies.

Unit 6 : Types of Borrowers : Examining the capacity to borrow of Minors, Insolvents,

Lunatics/Persons of unsound mind, Sole Proprietary Concerns, Joint Accounts, Joint Hindu Family, Partnership firms, Trusts, Local Bodies/Statutory Bodies/Corporations, Limited companies.

Unit 7 : Working Capital Finance : Definition of Working Capital, Difference between Gross & Net
working capital, End-use of Working Capital, Estimation & Financing of working capital needs, Types of current assets, Methods of lending, Concept of Working Capital operating cycle lending, Assessment of working capital as per operating cycle method, Case Study, Turnover Method of lending, Case Study, Lending by Cash Budget System, Case Study.

Unit 8 : Project Appraisal & Term Loans : Preliminary Project Report, Managerial competence,
Technical feasibility, Economic Appraisal, Social Cost Benefit Analysis, Commercial Appraisal, Marketing Appraisal, Managerial Appraisal, Sources of Finance, Performa Financial Statements, Accounting period, Provisions of law, Appraisal of capital projects, Methods of Project Appraisal, Refinements in Cash Flow Statements, Break- even- analysis, Infrastructure Finance Issues, Perspective and Process of assessment, Acceptance/Rejection of project, Analysis of project Balance Sheets, Project loan/term loan, Working Capital loan. Case Studies

Unit 9 : Guarantees and Indemnity: Off-Balance sheet Items : Meaning, Types of guarantees,
Liabilities of the surety, Rights of the surety, Obligations of the creditor towards surety, Precautions for averting frauds, Procedure for issuing Bank Guarantees, Extension/Invocation/Revocation of Bank Guarantees, Analysis, Security, Commission and Precautions , The Reserve Banks Guidelines, Case Studies.

Unit 10 : Letters of Credit : Off Balance Sheet Items : Definition of Letter of Credit, Parlance
with explanations, Mechanism of LCs, Stages in Letter of Credit, Liabilities and responsibilities of parties to LC, Types of Letter of Credit, some special types of LCs, Procedure for opening of LCs, Scrutiny of documents under LC, Amendments in LC, Discounting of bills under LC, UCPDC-major changes for Letter of Credits, Case Studies.

Unit 11 : Bank Balance Sheet : Comparison between Bank Balance Sheet and other business entities
balance sheet. Uniqueness of the Bank Balance Sheet and its business operation. Risk associated with Financial Intermediary Due to highly leveraged capital structure Measures adopted by the regulator to contain such risk- Building up of ideas only, Case Study.

Unit 12 : Sources of Bank Funds : Tier I and Tier II Capital, Negotiable Deposits Features, Pricing
and Present Trend in Indian Market and Global Market Call and Notice Money Features, Pricing and procedure for raising money through these products, Raising funds by using the open market operation Procedures, Pricing and methodology of raising money through these products, Raising Funds through refinance scheme- Types of refinance scheme available in the market, features of such refinance schemes, pricing and present trend in Indian, European and United States Market.

Unit 13 : Investment of Bank Funds : Investment in Fixed Assets Restrictions logic and details;
Position of our country vis--vis other countries, Investment in Investments Types of Investments Government Securities , PSU Bonds , Corporate Bonds , Shares and Debentures - Features, Procedures and Pricing Present situation with Indian Banks and comparison with other countries. Investment in Loans and Advances- Comparison of loans and advances with Investments, Case Study

Unit 14 : Credit Risk Management in Banks : Credit Risk, Types of Risk, Risk Process, Credit Risk
Management under Basel-II, Macro approach to risk management, Prudential norms for appropriate CRM environment, scope of CRM, Strategy and Policy, Organisational Structure, Operations/Systems, Models of CRM, Components of credit risk, Training as measure of Risk Management, Case Studies. Recommended Books : 1. Bank Management Fifth Edition Koch and Macdonald. 2. Banking Theory and Practice 20th Edition - K.C. Shekhar and Lekshmi Shekhar, Vikas Publication, Delhi. 3. Kalyanis Banking Law and Practice S.N. Maheshwari, Kalyani Publications, New Delhi.