GOA INSTITUTE OF MANAGEMENT

Post Graduate Diploma in Management (PGDM) Term IV

EL FI
Instructor: Prof. Nagarajan .R

COMMERCIAL BANKING

COURSE CODE: CREDIT: 3

TRIMESTER: 4 SESSIONS: 20

LEARNING OBJECTIVES:

1 Get an overview of commercial banking in the Indian context, particularly keeping the evolving regulatory and market changes that are taking place.

2. To understand all the risks that banks face, such as operational risk, credit risk etc. and have an over view of the emerging techniques that are evolving to measure and manage them.

3. Computation of Regulatory Capital requirements in the context of the various BASLE accords.

4. Understanding Profit/profitability drivers in banking business, Balance sheet structure, etc.

5. Banking products credit/ deposit based. Need and relevance.

5. The importance of interest rates and their movements on bank profitability, risk, product pricing.

6. Need and, importance of fee based products and services like FOREX, Bills etc. for bank profitability. Basics of exchange arithmetic.

At the end of the course the student would have reasonable knowledge of the functioning of banks in India and would be able to use their services effectively.

READINGS Web sites of RBI, SBI, ICICI bank and other banks, Many books on banking have been acquired and kept in the library. They cover some of the aspects listed above.

EVALUATION There will be 2 components

Discussion papers (5) -The papers will carry a weightage of 15% each 1. Credit rating models- methodology. A frame work for a model for use in Indian banks

2. Predict how the Indian economy will move during second half of 2013-14.What is the likely scenario as on 31/03/2014 for Indian growth rate, inflation, Rupee Dollar and such other economic Indicators 3. Take the exposure of an Indian bank as at the end of FY2013 in real estate as the base. Examine, with the help of your analysis and modelling, the improvement/deterioration in this portfolio as on 31st march 2014. Would the bank need to make additional provisions? 4. Do the same analysis for retail segment housing and indicate your findings. 5. Design a Banking product for the retail segment customers for i) A gold deposit scheme ii) Inflation linked bonds While doing so, please ensure that risks in the product design are factored into and also the product is operationally easy to implement . It should have enough attraction for the customer. Will such a product eat into existing products which are similar. The work on the papers will be done in groups of 5/7 and the groups will need submit, both-hard copy of the paper for evaluation as well as PPTs for class room presentation. The discussion papers will need to be submitted in time for the class room presentations/discussions, when scheduled. End term examination. This will carry a weightage of 25%

COURSE OUTLINE Commercial banking in India. An overview. Products and services offered by Indian banks. Indian Financial marketglobalization issues Macro economic issues affecting banks, the importance of tracking and understanding interest rate movements Role of regulators in Banking, Impact on the Balance sheet and profitability of banks BASLE accord, role of capital and its mobilization

Operations management, Risk issues, Basics of Negotiable instruments act and other legal frame work like consumer protection act, ombudsman etc. Credit risk issues Management of credit, supervision and follow-up issues Commercial credit, Credit to SME, exports etc Rural banking, micro finance FOREX and related matters Documentary letters of credit, guarantees, Bill negotiation and other non funded business Management of stressed assets, restructuring, asset sale etc.

DETAILED SYLLABUS pic No.of Session s 1

Commercial banking in India. An overview. Intermediation, fractional banking.

Bank financial statements

1 Banking products and their relevance Discussion on importance of interest rates for banks, forecasting of major economic 1 parameters Credit products and credit management Non- credit products, particularly L/Cs guarantees, forex etc 2 2

Group presentations on forecasting of economic parameters such as interest rates, 1 exchange rates Banks ,structure and product delivery 1 3 Risk management- credit risk, operational risk, liquidity risk, liquidity management 1 Management of non- performing assets Group presentations on credit models, industry forecasts on loan portfolio movements 2 1 Micro-finance 1 Review