Infinity Business SchoolCourse: Management of Commercial Banking

PGPFM Trimester VProf. Abhijit Roy

Mobile: 09810817716e-mail: royabh@gmail.com

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: 10%Quizzes: 30%Final examination (closed book): 40%Team project: 20%

Examination will mainly be of short answer type questions to test your understanding of the concepts and your ability to apply them. Several 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 4 members on a voluntary basis.

Class attendance is crucial as class discussions may deviate 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 Issues1,2,3,4 An Overview of the

Banking Sector in India Laws relating to Banking

Policy EnvironmentCommercial Bank SurveyBanking Sector ReformsThe Interaction of Monetary & Fiscal PolicyStrengths and Weaknesses of the Indian Banking Sector

5.6 Financial Performance of Banks

The Business of BankingThe Balance Sheet: Assets & Liabilities Shareholders’ EquityCapital Adequacy NormsIncomes and ExpensesBank ProfitabilityCase: Axis Bank

7 Introduction to Risk Management in Banks

Market RisksCredit RisksOperating Risks

8,9,10 Asset Liability Management

Objectives of Asset/Liability Management, Asset/ Liability Management Strategies: Spread Management, Gap Management, Interest Sensitivity Analysis, Hedging InstrumentsLiquidity RisksRBI GuidelinesCase: State Bank of Hyderabad

11,12, 13

Bank Investment InstrumentsAn Introduction to Treasury Management in Banks

An Introduction to Primary and Secondary Securities MarketThe Debt MarketMoney Market InstrumentsMarket Conditions and Investment Portfolio ManagementCase Study

14,15 Credit Risk Management Prudential NormsIncome Recognition and Asset Classification

16,17, 18

Loan Products of BanksPriority Sector Advances

Methods for Financing Working Capital RequirementsCredit Rating Methods

Term Financing by Indian BanksCase Studies

19,20 Management of Non-Performing Assets (NPAs)

The Warning SignsPrudential Norms on Income RecognitionProvisioning IssuesSecuritisation Act

21,22 Capital Adequacy Issues Developments in Basel I, II and IIICalculation of capital requirementsAn Introduction to Stress TestsCase: Axis Bank

23-24 Project Presentations

Text BookManagement 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 IndiaBanking Theory and Practice: K.C.Shekhar & L.Shekhar, Vikas Publishing Risk Management in Banks: S Singh & Yogesh Singh, Excel Books

Supplementary ReadingsRBI Annual ReportsRBI CircularsSelect Readings