Sr No. Detailed Topics Learning Outcome Reference Reading 1 Evolution of Banking, functions of a Bank, RBI Act, Formation of SBI, Banking Regulation Act, Nationalisation of banks ,Banker/customer Relationship, Types of customers, obligation of a Banker, classification of deposits , Banking Spread, Fee based incomes, KYC norms-AML, Short Brief on Different Departments- their functions-Customer Service, RMs,Tellers,Collections,Prio rity banking,Retail Assets (explain HML,LAP,LACP,PIL,BT,Top up), Retail Liabilities, Audit, Treasury Operations MTM/HTM/AFS/AFT, Cash management, securitization To be able to calculate the theoretical value of “Rights” in the case of Rights Issue for compensating the seller of the Rights. To understand “Financial Services” in general and available services in India in particular To appreciate the process in the case of certain Financial Services like bill discounting, venture capital, factoring, forfeiting, real estate services etc. Merchant Banking by Verma J C Merchant Banking by Machi Raju Please include the different types of banks and functions, Central Banks definition and function, scheduled and non scheduled banks, Evolution of Banking The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Indian Banking Regulation Act 1949 was formulated to govern the financial sector. In 1921 the presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. During the First 5 year plan in 1951, an act was passed in Parliament in May 1955 nationalizing the Imperial Bank and the State Bank of India was constituted on 1 July 1955 During the period 1906-1911, several Commercial banks such as BOI, Central Bank of India, BoB, Bank of Mysore etc were established which were all Joint Stock Banks
Transcript
Sr No. Detailed Topics Learning Outcome Reference Reading
1 Evolution of Banking, functions of a Bank, RBI Act, Formation of SBI, Banking Regulation Act, Nationalisation of banks ,Banker/customer Relationship, Types of customers, obligation of a Banker, classification of deposits , Banking Spread, Fee based incomes,KYC norms-AML, Short Brief on Different Departments- their functions-Customer Service, RMs,Tellers,Collections,Priority banking,Retail Assets (explain HML,LAP,LACP,PIL,BT,Top up), Retail Liabilities, Audit, Treasury Operations MTM/HTM/AFS/AFT, Cash management, securitization
To be able to calculate the theoretical value of “Rights” in the case of Rights Issue for compensating the seller of the Rights.
To understand “Financial Services” in general and available services in India in particular
To appreciate the process in the case of certain Financial Services like bill discounting, venture capital, factoring, forfeiting, real estate services etc.
Merchant Banking by Verma J C
Merchant Banking by Machi Raju
Please include the different types of banks and functions, Central Banks definition and function, scheduled and non scheduled banks,
Evolution of Banking
The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Indian Banking Regulation Act 1949 was formulated to govern the financial sector.In 1921 the presidency Banks of Bengal, Bombay and Madras with their 70 branches were merged in 1921 to form the Imperial Bank of India. During the First 5 year plan in 1951, an act was passed in Parliament in May 1955 nationalizing the Imperial Bank and the State Bank of India was constituted on 1 July 1955During the period 1906-1911, several Commercial banks such as BOI, Central Bank of India, BoB, Bank of Mysore etc were established which were all Joint Stock Banks
Definition of a Bank
Indian Banking Regulation Act (1949) defines Banking as the Acceptance of money for the purpose of lending or investment, from deposits received from the public, repayable on demand or otherwise withdrawable by cheques, drafts or order to otherwise (Standing Instructions, ECS).
Nationalization of BanksFirst only State Bank of India (SBI) was nationalized in July 1955 under the SBI Act of 1955. Nationalization of Seven State Banks of India (formed subsidiary) took place on 19th July, 1960.
In 1969, Mrs. Indira Gandhi the then prime minister nationalized 14 banks then. These banks were mostly owned by businessmen and even managed by them.
Central Bank of India Bank of Maharashtra Dena Bank Punjab National Bank Syndicate Bank Canara Bank Indian Bank Indian Overseas Bank Bank of Baroda Union Bank Allahabad Bank United Bank of India UCO Bank Bank of India
1980 : Nationalisation of seven more banks with deposits over 200 crores.
Problems: Nationalized banks had job guarantee so employee efficiency very low, indiscipline and high absenteeism, trade union problems etc. Compare with present banks
TYPE OF BANKS AND THEIR FUNCTIONS
1. Central Bank 2. State Bank of India 3. Scheduled and Non Scheduled Banks 4. Retail Banking 5. Private Banking 6. Co operative Banking 7. Investment Banking 8. Corporate Banking
1. CENTRAL BANK: RBI1. A Central bank has the sole right of note issuance2. It should be the channel, and the sole channel for the output and intake of legal tender currency. 3. It should be the holder of all the government balances, and the holder of all the reserves of the other banks and branches of banks in the country. 4. It should be the agent , so to speak, through which the financial operations, at home and abroad, of the government would be performed. 5. Based on its Monetary Policy It should further be the duty of the central bank to effect so far as it could , suitable contraction and suitable expansion on money supply, aiming generally at stability. (OMO, sterilization, CRR, SLR, Bank Rate etc)6. When necessary, it should be the ultimate source from which emergency credit might be obtained in the form of rediscounting approved bills, or advances on approved short term securities or government papers. Lender of last resort/ Banker to Banks7. It does not deal directly with the public. It indirectly helps agriculture, industry by augmenting resources of other banks8. Maintains the foreign exchange reserves and gold reserves for the country9. Clearing House of Commercial Banks (To be discussed in details later)10. Moral Suasion
2. STATE BANK OF INDIA-(are priority lending rates higher or lower)The State Bank of India acts as an agent of the Reserve Bank of India and performs the following functions:(1) Borrows money:- The Bank borrows money from the public by accepting deposits such as current account deposits, fixed deposits and demand deposits.(2) Lends money:- It lends money to merchants and manufacturers. It also lends to farmers and co-operative institutions. It lends mostly on the security of easily realizable commodities like rice, wheat, cotton, oil-seeds, cloth, gold and government securities. The Bank can lend against agricultural bills upto a maximum period of fifteen months and incase of other bills upto a maximum period of six months.(3) Banker’s Bank:-The State Bank of India acts as the banker’s bank. In discharging this responsibility, the bank provides loans to commercial bank when required and also rediscount their bill.(4) It also acts as the clearing house of the commercial bank where RBI doesnot have its branches (CLEARING FUNCTIONS IN DETAILS TO BE DISCUSSED LATER). SBI and its Associate banks are responsible for clearing: SBBJ – State Bank of Bikaner & Jaipur, SBH – State Bank of Hyderabad, SBM – State Bank of Mysore, SBIN – State Bank of Indore, SBP – State Bank of Patiala, SBT – State Bank of Travancore.
(4) Government’s Bank:- The State Bank of India also acts as the agent of the Reserve Bank of India.
As an agent, the State Bank of India maintains the treasuries of the State Government. The Bank also
manages the debts floated by the State Governments.
(5) Remittance:- The State Bank of India facilitates remittance of money from one place to another. It
also helps in the transfer on the funds of the State and Central Government.
(6) Functions as Central Bank:- The State Bank of India performs the functions of a Central Bank
where RBI does not have its presence.
(7) Subsidiary service functions:- The State Bank performs various subsidiary services also. It collects
checks, drafts, bill of exchange, dividends interest, salaries and pensions on behalf of its customers..
It receives valuables and documents for safe custody and maintains safe deposit vaults
3. SCHEDULED AND NON SCHEDULED BANKS
In the RBI ACT OF 1934, all banks listed in the second schedule is known as Scheduled banksAll Scheduled bank operations are under strict surveillance of RBI. All nationalised banks, most private sector banks, foreign banks are scheduled. Most cooperative banks are non- scheduled (not subjected to strict financial discipline).Advantages of scheduled banks: 1. RBI can rediscount the bills already discounted by them 2.Their drafts, bank guarantee, letter of credit accepted in all government offices 3.RBI acts as lender of last resort 4. All government accounts and transaction through them 5. More account holders and lesser interest payment towards deposits as compared to non scheduled banks
4. RETAIL BANKING
Basic Functions
1. Acceptance of Deposits: Classification of Deposits:Demand Deposits/Current Deposits-Repayable on demand-Savings accounts for individuals, Current Accounts for businesses (CASA)Fixed Deposits/Time DepositsThe deposit is placed for a fix time period and fixed interest rate/ instructions needed for premature withdrawal. In exchange for the lack of liquidity, banks offer a higher yield on time deposits than they offer on regular savings accounts.
2. Loans & Advances: Accepts funds so that they can lend out credit to customers for consumption towards cars, houses, consumer goods, construction etc
3. Use of Cheques: Since the deposits with banks are withdrawable by cheques it elevates bank deposits to the position of money
4. Banking as a part of the Financial Services industrya. Acting as an Intermediary: Collects Savings from those who have them and give to those who need them.b. Distribution of third party products such as mutual funds, insurance, RBI bonds etcc. General Utility services such as Bill payments, safety lockers, tax payments, issuing travellers’ cheques etcd. Non Traditional financial services in the recent times: Wealth Management and Relationship Management Services
Major Income Streams for Retail BanksBANKING SPREAD: The bank spread is the difference between the bank's cost of funds, in terms of interest paid to depositors, and the rate of interest the bank charges to debtors on bank loans.Interest income on term loans,home loans, personal loans , credit cards, overdrafts, cash credit. (NIM)FEE BASED INCOMES: Third party incomes as Distributors of mutual funds, life insurance, general Insurance i.e. mediclaims & Property insurance, RBI Bonds, equity trading brokerage , portfolio management schemes, merchant outlets: swipe machines, issuing bank guarantees, letter of credit etcFOREIGN EXCHANGE INCOMES:
1. Conversion charges on currency notes OTC 2. Conversion charges on Inward and Outward fund remittances 3. Converting foreign currency for exporters and importers4. Foreign Currency loans to Exporters / Importers via Corporate Banking5. Multi currency accounts (2007) for exporters with inter project fund transferability in any
currency and country
Negotiable InstrumentsTransactions related to NI are governed by the negotiable instruments act 1881. Section 13 defines “ a negotiable instrument means a promissory payable either to order or bearer”Bills of exchange/cheques/drafts/ certificate of deposits-unsecured borrowing by scheduled banks for a period ranging 3 months to 1 yr by issuing promissory notes/ Accommodation bill- it is a bill of exchange where a reputed third party is providing a guarantee towards repayment as a favor without any compensation for the same. This third party remains liable till the bill amount is repaid to the bank
KYC-Know your Customer or Client/ AML- Placement, Layering and Integration (Please refer to notes given in class)
Credit Creation of Banks: Loans Created DepositPrimary deposits: hard cash, cheque, drafts etc, total supply of money does not increase from that when people come and open the account with these.When banks loan out these primary deposits Derivative deposits are created which add to the money supply. Banks advance loans to Brokers, financial institutions, individuals etc and Discount Bill of exchange, promissory notes etc thereby increasing credit money supply.The loan amounts are credited to the respective borrower’s accounts and they are authorised to draw cheques up to the sanctioned amounts. Therefore debt gets converted to money. Therefore the deposits of the respective borrowers bank increases. Incase the borrower is an account holder in the same bank that has advanced the loan; the deposits of the same bank will increase.Where the bank had lent out via the cheque route, the borrower will credit the cheque into his respective bank account, whether in a different bank or the same one. This will increase that banks deposit base by the equivalent amount. Thus money available for credit increases.Whenever any bank purchases an income earning asset, it credits that amount to the account of the seller, thereby indirectly creating a new deposit, which the respective borrower/seller can withdraw using cheques. Thus banks convert debt into money
Balance Sheet approach: Let us assume a Deposit of INR 2000, of which the bank has to keep 20% as cash reserves and may lend the rest
Step 1: Bank ALiability Asset New Dep: Rs 2000 New cash: 2000Total: Liab: 2000 Asset: 2000
Step 2: bank A Liability Asset Deposit: 2000 Cash: 400
Loan to X: 1600Total: Liab: 2000 Asset: 2000
Step 3 : Bank B (X is an Account holder)Liability Asset New Dep: 1600 Cash in hand: 1600Total: Liab: 1600 Asset: 1600
Step 4 : bank B Liability Asset Deposit: 1600 Cash in hand:320
Loan to Y: 1280Total Liability: 1600 Total Asset: 1600
Step 5: Bank C (Y is an Account holder)Liability Asset
New Dep: 1280 Cash in hand: 1280Total: Liab: 1280 Asset: 1280
Credit creation multiplier (K) K (Deposit multiplier)=1/ r , where r=percentage of deposit to be kept as liquid money under the Cash Reserve Ratio requirement , which is currently at 5%
Therefore K=1/5% which is 20 times. Thus Credit creation can take place up to 20 times the initial deposit amount.
ROLES AND FUNCTIONS OF DIFFERENT DEPARTMENTS
1. MIHU: May I help you: 1. Primary screening and addressing customers’ requirements when they enter the branch and then directing them to the respective departments as per their queries and demands. 2. Judge the potential of customers for cross sale of banking products based on their perceived net worth and thereby directing them to Branch Banking or Priority banking for either starting a new relationship or deepening existing relationship. 3. Divert customers to Alternate Delivery Channels (ADC) such as Phone Banking and Internet Banking to save the time of Service executives. 4. Assist in resolving very basic service queries
2. CUSTOMER SERVICE: Following services are performed by them1. Operational aspect of physically opening customer Accounts post checking the accuracy of
all documents and resolution of any discrepancy 2. Ensuring that all KYC norms (Address proof, photo ID, photograph etc) are followed and
collected during account opening3. Follow AML guidelines diligently. Track accounts with heavy inflow/outflow and report to
the relevant authorities to safeguard the interest of the bank. Raise STRs i.e. Suspicious Transaction Report based on these heavy irregular fund flows
4. Keep a tab on clients whose cash flows highly exceed their mentioned profession or business.
5. Resolve queries pertaining to Credit cards, personal loans and home loans, assisting clients in their payments, change of EMI structure or part or full foreclosure and services related to accounts.
6. Responsible for service and resolution of queries pertaining to products such as interest calculation on deposits, placing fresh deposits and renewing the ones which have maturing selecting the optimum interest rates and time periods as per client specifications
7. Assist the customers in inward and outward remittances 8. Cross Sale of investments and other banking products by selling some of the products
themselves like credit cards or else directing the customer to the Relationship Manager for the respective product or department.
9. All services pertaining to Locker opening, maintenance and collecting the charges are their responsibility
10. Maintaining Branch inventories of credit cards, debit cards, Sealed passwords for Accounts, internet banking, phone banking and cards. These are all held by them confidentially
11. Ensuring all transactions, documentation, accounts opening formalities, service standards are followed as per rules laid down by group compliance. They are responsible for meeting branch audit requirements
3. TELLERS (CASHIERS)1. Receipt and payment of cash over the counter and following certain security norms in case the
amounts are very large i.e. letter from customer stating source of funds or its usage/Pan Card copy etc
2. Account to account fund transfers within the same bank/ branch. 3. Safeguard interest of customers from fraudulent practices by identifying signature mismatches
and forgery on cheques, since they have a specimen signature on the records4. Identify and destroy counterfeit currency5. Encashment and also issuance of traveller’s cheques, gift cheques and demand drafts.6. RTGS-real Time Gross Settlement-/ NEFT-National Electronic Fund transfer 7. Maintenance of Cash in ATMs8. Exchanging foreign currency OTC9. Acceptance and Clearing of cheques
RTGS: The acronym 'RTGS' stands for Real Time Gross Settlement. RTGS system is a funds transfer mechanism where transfer of money takes place from one bank to another on a 'real time' and on 'gross' basis. This is the fastest possible money transfer system through the banking channel. Settlement in 'real time' means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. 'Gross settlement' means the transaction is settled on one to one basis without bunching with any other transaction. NEFT settlement takes place 6 times a day during the week days (9.00 am, 11.00 am, 12.00 noon. 13.00 hours, 15.00 hours and 17.00 hours) and 3 times during Saturdays (9.00 am, 11.00 am and 12.00 noon). Any transaction initiated after a designated settlement time would have to wait till the next designated settlement time. Contrary to this, in RTGS, transactions are processed continuously throughout the RTGS business hours. The minimum amount to be remitted through RTGS is Rs.1 lakh. There is no upper ceiling for RTGS transactions. No minimum or maximum stipulation has been fixed for EFT and NEFT transactions.
4. BRANCH BANKING SEGMENTHSBC- Power Vantage/ Citibank-Citi BlueMid market and Mass market Customers. The account opening cheques range from Rs.5000 for Mass market, while 1 Lac for Mid market, especially in multinationalsRelationship Managers and Financial Consultants are assigned to customers to cross-sell banking products and offer wealth management services. Apart from the other products such as retail assets, credit cards etc, the focus though is to primarily to sell Life Insurance with a secondary focus on mutual funds. Commissions on basic insurance products ranged from 15% to 40% on the first years premium as against 2.25% in mutual funds when Entry Load was prevalent i.e. ( 5 lac of Premium in insurance @ 40% commission gives a revenue of INR 200,000 , while approx INR 90,00,000 of MF sales gave the similar revenues)Even now with entry load ban on MFs upfront charges and reduced charges on insurance, even then insurance is much more profitable. Since Branch banking is a Volumes game and not a Value proposition the products aggressively sold are all very high revenue products, so that large percentage of income may be derived from the smaller amounts sold per customer
5. PRIORITY BANKING
HSBC- Premier/ ABN Amro-Van Gogh Preferred Banking/ Citibank-Citigold/ Standard Chartered- Priority CircleValue proposition with account opening amounts ranging from 25 – 30 lacs1. Experienced Relationship Managers and Customer Service Managers assigned to fewer groups of
customers for personalised and specialised services2. Wealth Management Services to customers, consolidating previous, existing and fresh
investments spanning equity, debt and sectoral mutual funds, stocks, bonds, gold, deposits, commodities, insurance, foreign investments, real estate etc. Thereby providing customised investment solutions which are extensively tracked, rebalanced and allocated according to customer risk profiling and cash flows
3. Structured investment products using derivatives etc are designed especially for these clients4. Higher Deposit rates are offered, while fees are waived off in mostly all banking transactions and
products5. Very high limits offered on debit and credit cards with international service facilities included
which are either free or heavily subsidised. All annual charges on cards are waived.6. Extremely competitive rates are offered on currency conversion, while remittance charges are
mostly waived or discounted7. Multiple account facilities in different countries offered to High Net worth clients with business
interest across the globe8. Interest Rates charged on Home loans and personal loans are at a significant discount to Branch
banking customers, and also with much lesser documentation requirements
2. Managing incremental cross sale of investments and other banking products
3. Retention of customers, deepen the relationship with constant interaction and ensure
quality service and resolution of queries within given TAT
4. Acquire new relationships and grow their balances through investments in various products
5. Sales of all categories of Life Insurance products i.e. market linked plans (ULIPs), term
policies and Endowment Plans
6. Equity research, advisory, monitoring and stock trading through the Portfolio Management
Services route
7. Constant reviewing and monitoring customer’s portfolios and detailed financial planning to
address any need gaps using proprietary software. Thereby make changes in the portfolio
based on current market levels and movements debt, equity and commodities side
8. Provide structured products to HNI clients. Most products are designed with inbuilt features
to participate in the derivatives segment and involve aggressive option trading strategies
and positions in Futures, to either enhance profitability or hedge risks
9. Track foreign currency markets to enable Non Resident customers profit from exchange rate fluctuations
10. Also focus on the corporate relationship segment (company accounts) as an avenue for high revenue from large company investments, by liaising with the corporate banking channel
11. Ensuring all audit and compliance norms are followed. Cross border investment and insurance norms have been followed. All investments have to be documented extensively capturing the minutest of investor/investment details
12. Conduct regular market research to review, assess, analyze, report on competitor activities
of other banks and financial institutions ,and capturing changing consumer behavior and
general industry trends
7. RETAIL ASSETS
1 Selling Home loans, car loans and Personal loans to existing and new customers2. For home loans, liaison with designated lawyers and property valuers to ensure that the property to be kept as mortgage is secure with clear title, no encumbrances and with required market valuation for ensuring the security of the loan.4. Credit managers verify customer income documents, calculate his repayment capacity and then Sanction loans.5. The final Disbursal of loan ie. Cheque handed out to borrower, takes place post a clear legal report of the property papers from lawyers and based on the technical valuation report by property valuer of the current market value of property6. Hold marketing events at the bank, companies, societies, clubs, malls, multiplexes etc sometimes offering concessional interest rates to promote loans.
8. RETAIL LIABILITIES 1. Selling CASA: Current accounts and savings accounts2. Selling Fixed deposits to increase the banks deposit base
9. CUSTOMER ACQUISITIONS TEAM (CAT)
1. Initiating and implementing Marketing efforts for acquiring new accounts by individual sales
2. Procuring databases from various sources for cold calling and selling banking propositions
3. Taking customer references from existing and prospective clients for sourcing more accounts
4. Collecting and completing the required documentation for account opening
10. TRAINING & DEVELOPMENT
1. Ensure all mandatory certifications are completed by the sales and service staff and provide training for the same
2. Develop Learning & management modules covering a wide range of banking, finance and investment topics with online tests for getting a formal qualification
3. Extensive training provided on identifying money laundering trails and investments routed from high risk countries.
4. Provide training on new product launches, changes in bank policies, new technologies, rebranding and re launching existing products
5. Regular training on investments, insurance and financial planning for customers6. Create talent pools by identifying and segregating employees based on various skill sets
ranging from team management, selling skills, knowledge quotient, customer handling techniques etc by conducting regular workshops
7. Update staff on new legislations, competitor strategies and prevailing market opportunities
11. AUDIT & COMPLIANCE 1. Oversee that all branch operations are conducted based on Group compliance norms and
legalities laid down by external entities such as the central bank, IRDA, AMFI etc2. Ensure Sales Quality is maintained on all banking product sales. Checking that there is no
wrong selling due to target pressure, forgery of documents, mismatch of signatures, product not matching the clients risk profile and age.
3. Conduct regular audit on all investment & insurance sales making sure that cross border investment norms are maintained (US, Canada Australia etc) AML guidelines are followed, documentation and records are all in order, the Sales person had all the mandatory licenses and customer interest has been met
12. RESEARCH TEAM 1. Daily updates, mails & messages on market trends and occurrences spread over all investment
types 2. Compile extensive and detailed studies about markets, economics, new & existing funds, equity,
global and local trends, sectors etc.3. Track and research all mutual funds based over many parameters and compile a ‘White list’ or
‘Choice list’ which streamlines the best mutual funds in every sector and category based on their research which are recommended by the bank
4. Assist the sales team in closing large investment deals with their value added inputs based on views and market direction
13. BACK OFFICE OPERATIONS
Back office functions. Issuance of cheque books, debit and credit cards and their respective passwords, placement and withdrawal of deposits, generating internet & phone banking passwords, generating account opening kits, bank statement etc
14. COLLECTIONS
Recovery and settlement of bad loans, credit card defaults etc
Customer background checks, field investigation reports and risk management measures such as verifying customer’s area of residence and whether he stays in a negative area , healthiness of his prior banking transactions, previous loan repayment records etc before the bank authorizes loans or credit cards
RATES GOVERNING BANKS
PLR-PRIME LENDING RATE: RBI: 11-12%/ 5 top Commercial Banks 11-15%- Prime Lending Rate (PLR) is that rate of interest at which a bank lends to its best customers with highest credit worthiness
CASH RESERVE RATIO: 5.75%- liquid cash that banks have to maintain with the Reserve Bank of India (RBI) as a percentage of their demand and time liabilities and borrowing from CBLO market
STATUTORY LIQUIDITY RATIO: 25% - SLR refers to the amount that all banks require to maintain in form of approved government securities.
BANK RATE: 6%- Longer term borrowing rate from RBI, bill re discounting rate
REPO RATE: 4.75%- Short term Bank borrowing from RBI by pledging government bonds as security when banks have to meet temporary shortfalls
REVERSE REPO RATE: 3.25%- Short term lending to RBI when banks have surplus liquidity
CAR- Capital Adequacy Ratio- As per Basel 2 norms the minimum is 8% while RBI has fixed 9% as CAR -It is amount of a bank's capital expressed as a percentage of its risk weighted credit exposures i.e. (Capital/Risk) determines the capacity of the bank in terms of honoring deposit withdrawals and managing other risk such as credit default risk, operational risk. In case of Scheduled Commercial Banks CAR= 9 per centFor New Private Sector Banks CAR = 10 per centFor Banks undertaking Insurance Business CAR = 10 per centFor Local Area Banks CAR =15 per cent
LAF: Liquidity Adjustment facility- The RBI uses Repo and Reverse Repo to aid banks in adjusting their liquidity requirements and help in meeting Monetary policy measures
15. TREASURY FUNCTIONS
1. Cash Management: Maintaining the cash reserves, capital and liquidity of the bank. Ensuring that the bank maintains the Cash reserve ratio and Statutory Liquidity Ratio requirements as laid down by the central bank. Participating in Repo, Interbank call money markets & CBLO incase of shortfall and park excess money in Reverse Repo market or lend in the Call money markets in case of surplus
Maintaining the Tier 1 & tier 2 capital of the bank:Tier I Capital = Ordinary Share Capital + Retained Earnings Tier II Capital = Undisclosed Reserves + General Bad Debt Provision+ Revaluation Reserve + preferential share capital + Subordinate debt (Debt that is either unsecured or has a lower priority than that of another debt claim
2. Monitoring & Control of Interest Rate risk and price risks on government securities Trading in money market securities and government Bonds are done by them. The Government Securities are maintained in 3 categories: HTM (Held to Maturity), AFS (Available for Sale) and AFT (Available for Trade)Banks have to maintain 25% of their Total Demand and Time liabilities in Government Securities as per SLR requirement. Currently an average of 28% in government securities is being maintained by banks. The maximum HTM limit is 25% and this does not have to be marked to Market (MTM) as per movement in yields/bond prices. However there is the additional 3% in AFS & AFT segment in banks which attract the MTM requirement, Thus losses or profits on the government security holdings have to be reflected as per regulations. Bonds are held in AFT up to 45 days, post 45 days the bonds have to be shifted to the AFS category. These 2 categories have to reflect the notional profits or losses arising from both Price risk and interest rate risk. Presently since 2008 due to rising yield the banks are showing MTM losses on their treasury earnings. (Discussed in details)
Bank Treasury also participates in the derivative markets such as Interest rate futures to reduce risk from bond price fluctuations. The underlying instrument for this is a 10-year notional coupon-bearing government security. This underlying security is assumed to pay interest (called a coupon) at a rate compounded at 7% p.a. on a half-yearly basis. For example go short on the underlying bond in the interest rate futures market if the Spot price of Government Securities is expected to fall, thus offsetting the loss in the Spot segment by gaining in the futures segment (explain in details in class)
3. Maintaining the Foreign exchange reserves of the bank- a. Proprietary trading in foreign exchange for profitability & risk management measures. Also take part in currency futures market to hedge risk.b. Meet foreign exchange needs of importers and exporters and giving them loansc. Make profits from foreign currency conversion both OTC and remittancesd. Providing options for hedging of foreign currency fluctuation risks to corporate by providing OTC derivative instruments such as forward covers e. e. Participate in the currency futures market to hedge fluctuation based risks. For example short dollar futures if Spot price of dollars is expected to fall, thus offsetting the loss in the cash segment by gaining in the futures segment (explain in details in class)
4. Capital Issuance: Raising capital for the bank through the following methodsa. Public offer through IPO or FPO, Divestment, issuance of ADRs, GDRs and Rights issue (Rights are issued whereby existing shareholders have the privilege to buy a specified number of new shares from the firm at a specified price within a specified time) b. Private placement of stocks or bonds (QIP-Qualified Institutional placements with DII, FII, PE funds etc)c. Raising fund in the short term via the Repo window, interbank call money markets (overnight to 14 days), CBLO, COD-Certificate of deposits (3 months to 1 year unsecured promissory notes issued by scheduled banks)d. Raising long term funds through Bonds, FCCB,CD, NCD and Preferred stocks (preferred stocks are not traded in the stock exchanges and share holders receive fixed percentage of dividend per share every year. The core right is that of preference in the payment of dividends. There is a negotiated fixed coupon payment with cumulative option and non cumulative. In case of bankruptcy or liquidation preferential share holders will get their part before common stock holders. Preferential share holders are not entitled to voting rights.
d. Securitization: It is a process of aggregating a portion of existing debt of a bank where there is a cash flow receivable over a period of time into a common pool, and thereby issuing new securities backed by this pool to collect fresh funds from public or financial institutions etc. These securities are often known as MBS- Mortgage Backed Securities, CDO- Collateralized Debt Obligation and ABS-Asset Backed Securities
5. Invest in short term money market instruments to enhance profitability : a. Certificate of Deposits of other banksb. Govt Treasury bills: These are short term (up to one year) borrowing instruments of the Government of India. T-Bills for three different maturities are available: 91 days, 182 days and 364 days. Treasury Bills are available for a minimum amount of Rs.25,000 and issued at a discount to face value. On maturity the face value is paid to the holderc. Invest in Commercial papers of top companies. These are unsecured money market instruments issued in the form of promissory notes by high grade companies when they wish to borrow money for a short period and offering competitive interest ratesd. Park excess funds in Short term Debt Mutual Fund schemes such as Cash funds/ Ultra short term bond funds/Liquid funds and Liquid plus funds where there is no risk of capital erosione. Lend surplus in Call money markets or park excess in Reverse repo market with RBI
Type of Accounts
Resident Accounts /NRE- Non Resident External/NRO- Non Resident Ordinary/FCNR/ RFC FCNR: Foreign Currency Non Resident Accounts: In this type of accounts funds are held in foreign currencies but only in the form of fixed deposits.
RFC-Resident Foreign currency accounts. These accounts are held by Indians who travel abroad very frequently and do not wish to pay conversion charges on foreign currencies each time they travel. Thus in these accounts funds are held in foreign currencies. However no interest is paid on this account.
Funds held in NRE and NRO are in Indian Currency. Difference between NRE and NRO:1. Funds can be freely repatriated from NRE accounts back to the foreign country, while from NRO accounts money can be transferred out only post CA certification that any taxes due to Indian government has been paid on the amount, so not very easily. The limit of repatriation on NRO is up to USD 200000 per year.2. NRE SAVINGS account interest does not attract any tax, while NRO savings account interest attracts tax3. In NRE accounts, the interest rates on deposits are not taxed, but are very low (3-4%), while NRO account deposit interest rates are taxed as per investors tax slab, since the higher Resident Indian deposit rates are received (8.5%)4. One cannot deposit domestic currency (rupees) in the NRE account, only foreign currency. Which then gets converted into Indian rupees and then credited to the account. While in NRO accounts Indian currency can be deposited5. One can transfer funds from NRE to NRO but not vice versa
5. PRIVATE BANKING
Caters to Super High Net worth customers- minimum account opening cheques: 4 crores (HSBC), 1 Crore (ICICI). Aim is to make fee based incomes by offering structured and specialized investment services from which bank earns commissions. Stress is mainly on customized investment products. Lending functions are secondary and a part of the service functions. Customer service being rendered on a more personal basis, dedicated Relationship Managers with 8 to 10 years of investment experience. All products and services are offered at discounted or special rates. Deposit rates better, remittance charges waived, foreign exchange conversion rate few paises plus minus the interbank rate, loan rates discounted, documentation waived (fundamentally similar services given to HNIs in Retail banking except Investment products which are personally customized for these individual clients while in Retail HNI banking, products are customized for the entire group of customers)
6. COOPERATIVE BANKINGDefinition by Paul Lambert: It is an enterprise formed and directed by an association of users, applying within itself the rules of democracy and directly intended to serve both its own members and the community as a whole. It is a voluntary concern with equitable participation and control among all concerned.1. It is organized by those who themselves need credit2. Runs as a democracy: Run by Board of Director elected on the basis of one vote per member
1. Rural Co-operative banks: predominantly agriculture credit banks-short, medium and long term to agriculture, handicraft, cottage industries. Issues: Recovery, problem of valuing land, livestock, perishable agricultural commodities, improper title of property as security, limited resources, chances of financial mis-management by the management itself (corruption).
2. Urban Co-operative banks: Formed for meeting the credit requirement of the urban lower middle class which larger banks do not wish to lend due to high cost of advancing and recovery. Nor do these people have large incomes or large assets to offer as security. Membership open to traders, merchant, professionals etc who have to contribute to share capital. They have their own funds (paid up share capital) and borrowed funds (deposits and borrowing from other banks)
6. INVESTMENT BANKING 1. Investment banking is a field of banking that aids companies in acquiring funds, through the
public or through Venture capitalists, Private equity funds and Mezzanine funds.Thus through investment banking, an institution generates funds in two different ways. a. They may draw on public funds through the capital market by selling stock in their company b. They may also seek out venture capital or private equity in exchange for a stake in their company.
Venture capital and Private equity Funds typically invest in early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or sale of stake in the company in the secondary markets. These investments are generally made as cash in exchange for shares in the invested company. Venture capital typically comes from institutional investors and high net worth individuals and is pooled together by dedicated investment firms. Venture Capitalists look more towards new early ventures which are starved of funds with exponential growth potential while PE firms look more towards high growth existing companies in need of funds.
Mezzanine funds are like a hybrid PE fund acquiring part equity and part debt to finance the expansion of existing companies. The debt holding provides for regular interest payment, while superior upside comes from the equity holding. The debt capital also gives the Fund the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.
In India, the venture capital funds (VCFs) can be categorised into the following groups:-
Those promoted by the Central Government controlled development finance institutions such as IFCI Venture Capital Funds Limited (IVCF), SIDBI Venture Capital Limited (SVCL) Those promoted by State Government controlled development finance institutions: Gujarat Venture Finance Limited (GVFL),Kerala Venture Capital Fund Pvt Ltd, Punjab Infotech Venture Fund, Hyderabad Information Technology Venture Enterprises Limited (HITVEL).Those promoted by public banks: Canbank Venture Capital Fund, SBI Capital Markets Limited . Those promoted by private sector companies, for example:IL&FS Trust Company Limited, Infinity Venture India Fund
2. An investment banking firm also does a large amount of Fee based consulting on Mergers, Acquisitions and Take Overs.
Mergers : They combine two or more previously separate firms into a single legal entity. The combined business, through structural and operational advantages secured by the merger, can cut costs and increase profits, boosting shareholder values for both groups of shareholders. The sum of its parts is worth more than the individual parts. In a merger of two corporationsAcquisitions: It is characterized by the purchase of a smaller company by a much larger oneT akeover: Hostile or otherwise involves buying the management rights through outright purchase of shares
3. Track the market in order to give advice on when to make public offerings and how best to manage the business assets, when to sell them and the pricing for the same. Also advice on debt restricting and company restructuring.
4. Fee based consultative activities such as buy-and-sell advice on equities, commodities, debt, derivatives, advisory on foreign exchange trading and calls based on foreign currency fluctuations and predictions.
5. Merchant banking services to companies for equity sale such as price band calculation, Lot size, timing for sale.
6. Advisory on divestment/disinvestment. On the stake sale, the proportion of dilution, timing, pricing etc.
7. Underwriting services for IPO/FPO/Bond issues: This is a way of placing a newly issued security, such as stocks or bonds, with investors. Investment Banks take on the risk of distributing the securities to investors. Should they not be able to find enough investors,
then they have to purchase the securities themselves. Underwriters make their income from the price difference, or underwriting spread, between the price they pay the issuer and what they collect from investors or from broker-dealers who buy portions of the offering – sometimes they earn fixed underwriting fees, commission on sales , but mostly underwriting spread
8. Bridge Financing: Providing short term financing to companies before their IPO for the maintenance of operations. These funds are usually supplied by the investment bank while they are underwriting the new issue. As payment, the company acquiring the bridge financing will give a number of shares at a discount to the issue price to the investment bank that equally offsets the loan. These are also Short term temporary loans given to companies before they secure long term permanent ones.
9. Investment advisory in highly specialised or niche investment options where the risk and return probability is very high. The investment bank manufactures structured products which are derivatives based and customised to suit specific customer requirements and designed to optimise on current and future market trends.
7. CORPORATE BANKING
Micro Small & Medium Enterprises< 50 crore turnoverMid Market Enterprises: 50-250 crore turnoverLarge Local Corporates> 250CIB (Corporate institutional banking) GCB (Global Corporate Banking – These are for Indian companies who have business both local and Global eg. Bajaj, Thermax or for foreign companies who have business in India e.g. Mercedes. Loans can be in foreign currency and are of very large denominations.
Functions:
Employment of funds—fund based and non-fund basedFund based lending: It is where there is actual lending by the bank with direct funds being provided to customers through disbursing term loans, bill discounting, factoring etc
Non Fund based lending: Here the bank does not actually lend funds to the customer but acts as a backing to a customer for a certain fee to help him avail funds from another organization. The bank takes on the risk of meeting payment obligations on behalf of the customer in case the customer defaults on his payments. These are in the form of Letters of credit and bank guarantees. Thus only if the customer defaults then the bank has to make the payment on his behalf to the lender and that becomes fund based lending for the bank. This is a contingent liability for the bank.
Term Loans: Banks lend money in this mode when the repayment is sought to be made in fixed, pre-determined installments. This type of loan is normally given to the borrowers for acquiring long term assets i.e. Plants, machinery, business expansion funding-organic/inorganic
Letter of Credit: Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. The parties to a letter
of credit are usually a beneficiary or seller who is to receive the money, the issuing bank of whom the applicant or buyer is a client, and the advising bank of whom the beneficiary is a client. Almost all letters of credit are irrevocable, i.e. cannot be amended or cancelled without prior agreement of the beneficiary, the issuing bank and the confirming bank. It is an instrument used for settling trade payments, where payment is made against certain Financial documents such as bill of exchange, Invoice and packing list, shipping documents such as bill of lading for ships, airway bill and insurance certificate proving the shipment was insured against loss or damage in transit etc. The bank will only issue a letter of credit if they know the buyer will pay. Some buyers have to deposit (or already have) enough money to cover the letter of credit, and some customers use a line of credit with the bank. A seller only gets paid after performing specific actions mentioned in the LOC that the buyer and seller agree to and the banks simply review documents proving that a seller performed his required actions
Bank Guarantees: A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. An importer may request his bank for a bank guarantee against his payment obligation or a business house.
Difference between LC and Bank guaranteeA letter of credit is a bank’s direct undertaking to the seller (called the beneficiary) to pay. When a letter of credit is in use, the issuing bank does not wait for the buyer to default, and for the seller to invoke the undertaking.
In contrast, a guarantee is a written contract stating that IN THE EVENT the primary party (the buyer) is unable or unwilling to pay its dues to the supplier only then the bank, as guarantor to the transaction, would pay the client's debt to the seller.With a bank guarantee, only if a client defaults the bank assumes liability. With a letter of credit, liability rests solely with the issuing bank which then must collect the money from its client. Therefore, the principal character of an LC is that it is a potential claim against the bank, rather than a bank's client as in the case of bank guarantee. So LC is riskier for the issuing bank as compared to a bank guarantee.
Pre shipment finance: This is also called Packing Credit, which is short term working capital provided to exporters to procure raw materials, manufacture, arrange for shipment , warehousing etc. This is provided to the seller by his bank on furnishing a Letter of credit issued from the buyer’s bank or a confirmed order from a reputed foreign purchaser. This is provided before the goods are loaded for departure.
Post shipment finance: Working capital provided to exporters when the bank advances funds from the time a shipment that has been dispatched to the importer till the time the export proceeds are realized by seller. Post Shipment Finance is an insured deal, the seller submits to his bank the Bill of Lading from the Ship, The official Bill charged to the buyer, a copy of the insurance policy insuring the goods in case the ship sinks, goods damaged etc. against which the bank provides payment. Incase a letter of credit has been provided by the importer/buyer’s bank, then the exporter/seller’s bank checks whether these documents are in conformity to the LOC and then provides the capital.
Factoring: It is a financial transaction whereby a business sells its accounts receivable (i.e. invoices) to a third party (called a factor) at a discount in exchange for immediate money with which to finance continued business. The factor (bank) obtains the right to receive the payments made by the debtor for the invoice amount and must bear the loss if the debtor does not pay the invoice amount.Factoring is the sale of receivables whereas bill discounting is borrowing where the receivable is used as collateral. The duration of lending capital under Factoring is usually for less than 180 days.
Factoring is an insured deal (Credit risk- ICICI Lombard, Atradius, Coface, New India Assurance), since risk is transferred to the bank post purchasing the Bill/ invoice. Factoring does not need a LOC or bank guarantee from the buyer unlike forfeiting and these are finances for short durations. The factor charges the seller a service charge, as well as interest based on how long the factor must wait to receive payments from the debtor. The factor also estimates the amount that may not be collected due to non-payment, and makes accommodation for this when determining the amount that will be given to the seller. The factor's overall profit is the difference between the price it paid for the invoice and the money received from the debtor, less the amount lost due to non-payment
Forfaiting: “ Forfait” is derived from French word “a forfait” which means forfeiting or surrender of rights. It is a method of export trade financing, especially when dealing in capital goods (which have long payment periods- 180 days up to 7 years) or with high risk countries. In forfaiting, a bank advances cash to an exporter against invoices or promissory notes guaranteed by the importer's bank or against LOC issued by importer’s bank. The amount advanced is always 'without recourse' to the exporter i.e. once exporter obtains financing payments, he will not be responsible for the solvency of the debtors any more. The amount funded is less than the invoice or note amount as it is discounted by the bank. The discount rates depends on the terms of the invoice/note and the level of the associated risk. There is no more payments or administrative expenses due from the exporter. Unlike forfeiting however, factoring does not require a bank guarantee or LOC, can be used by small exporters and covers small amounts and short maturities such as less than 180 days.
Bill discounting: discounting is borrowing by the seller/exporter where the receivable i.e. promissory note is used as collateral and the seller/ exporter thereby avails working capital from the bank. Type of bills:Clean Bills: These bills are not supported by any ‘document of title to goods’ since both the goods and documents such as bill of lading etc which allows the delivery to buyer has already been sent to the buyer. Thus this is like an unsecured loan which depends on the creditworthiness and honesty of counterparties.
Accommodation Bill: Bill of exchange endorsed by a reputable third party (called an accommodation party or accommodation endorser) acting as a guarantor, as a favor and without compensation. The bill then can be discounted on the financial strength of the guarantor who remains liable until the bill is paid.
Documentary Bill: These are bills accompanied by ‘documents of title to goods’ such as airway bills, bill of lading, lorry receipt , warehouse receipt etc, which gives the holder of these documents the right to take delivery and possession of these goods. These are safer than Clean bills since they are backed by the security of the ‘documents of title to goods’ which are endorsed in the favor of the bank who can take delivery of the goods, liquidate them and realize the debt in the case of nonpayment.
2 types of these bills is Documents against payment (The buyer has to first pay the seller’s bank, then collect the documents of title to goods, and then taking delivery of goods) and documentary usance bill or Document against acceptance (These bills give a credit period to the buyer, where the seller instructs his bank to hand over the “document of title to goods” only if the buyer accepts the bill payment in writing mentioning a specified date of payment)
Supply bills: Do not fall under the negotiable Instruments Act. These are raised when the buyer is the government or some very large corporations. Delivery is made first against a ‘work order’ and post the buyer inspects the goods an ‘invoice’ is raised by buyer along with a certification of acceptance of goods. Both these are then submitted to the bank by the supplier and finance is raised..
Cash credit facilities: This account is the primary method in which Banks lend money against the security of commodities, inventories etc. It runs like a current account except that the money that can be withdrawn from this account is not restricted to the amount deposited in the account. Instead, the account holder is permitted to withdraw a certain sum called "limit" or "credit facility" in excess of the amount deposited in the account. The banks also levy a ‘commitment charge’ on the unutilized amount due to opportunity cost.Cash Credits are, in theory, payable on demand. These are, therefore, counter part of demand deposits of the Bank.
Overdraft facilities- Borrower may overdraw his current account up to an agreed limit and pays interest only for the time the money is used, the act of overdrawing from a Bank account. In other words, the account holder withdraws more money from a Bank Account than has been deposited in it. Difference between Cash Credit and over draft: In the case of Cash Credit, a proper limit is sanctioned which normally is a certain percentage of the value of the commodities/inventory pledged by the account holder with the Bank. Overdraft, on the other hand, is allowed against a host of other securities including financial instruments like shares, units of mutual funds, surrender value of LIC policy and debentures even personal guarantee of borrower or his ‘net worth’, which is called a Clean overdraft. This makes it riskier hence a higher interest rate than cash credit. Overdraft is not on demand like cash credit but has to be appraised by the bank after the customer approaches the bank
Charge: When banks accept different securities in respect to loans granted, the bank is said to have a ‘charge’ over these assets which constitute these securities. There is Fixed charge (A specific charge giving the bank the right to sell designated properties to recover debt) and Floating charge (This is a charge on present and future property and not attached to any specific asset)
Mortgage: It is the transfer of interest to the lender in specific immovable property for the purpose of securing a loan, on the condition that this interest will be returned to the owner when the terms of the mortgage have been satisfied. It is a security for the loan that the borrower provides to the lender. The ownership remains with the borrower, but some rights are transferred to the bank such as recovering its dues by selling the property. Most prevalent is Equitable mortgage where all the original title deeds of the property and GPA is given to the bank and taken back by the borrower once loan is repaid.
Pledge: There should be bailment of goods. Bailment is derived from the French word bailer which means to deliver. The objective of the bailment should be to hold the goods as security for the payment of a debt or the performance of a promise. There is actual or constructive delivery of goods to the lender. The bank is the Plegee, who enters into an explicit contract with borrower (Pledgor) under which the securities are delivered to the bank. This then can get liquidated and sold by the bank in case of non payment.
Hypothecation: Hypothecation is a charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. Hypothecation is a charge against movable property. The goods will, unlike a pledge, be retained by the borrower and be in the borrower’s
possession. The borrower gives only a letter stating that the goods are hypothecated to the banker as security for the loan granted. Legally the borrower cannot sell these goods till the time the repayment is made. The document contains a clause that obligates the borrower to give possession of the goods to the bank on demand by the bank.
Difference between the three: In a mortgage there is transfer of interest in the immovable property till the re-payment of the loan and borrower has to sign General power of attorney in favour of the bank which remain worthy until the full & final payment. Hypothecation involves movable property which is given as security for the loan however the possession of movable property remains with the debtor. In the case of pledge too, movable property is the security, but here, the creditor i.e. bank, is given physical possession of the movable property.
Assignment: The borrower assigns actionable claims to the bank. Actionable claims or receivables due to the borrower are money due from government departments or semi government organizations or receipts from Life insurance policies. The bank gets absolute right over the funds assigned to it and other creditors of the borrower do not get priority over the bank in realizing their dues from the assigned debt.
Banker’s Lien: ‘Lien’ is the right of the bank to retain the securities given by the borrower until the debt due is fully repaid. There is General Lien which confers the right to the bank to retain any goods bailed to them till payment is recovered. And there is Particular Lien where specific securities are earmarked for specific debt. The bank has the right to sell the goods and securities of the borrower defaults.
CLEARING AND SETTLEMENT FUNCTIONS : http://www.rbi.org.in/SCRIPTs/PublicationsView.aspx? id=157
BASEL NORMS ON INCOME RECOGNITION, ASSET CLASSIFICATION AND PROVISIONING: http://www.google.co.in/search?hl=en&q=income+recognition+and+asset+classification+norms&meta=&aq=4&oq=income+re (Have attached the PPT) Also Page 331 Justin Paul
SARFAESI ACT 2002
The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) empowers Banks / Financial Institutions to recover their non-performing assets without the intervention of the Court. The Act provides three alternative methods for recovery of non-performing assets, namely: -
Securitization Asset Reconstruction Enforcement of Security without the intervention of the Court
The provisions of this Act are applicable only for NPA loans with outstanding above Rs. 1.00 lac. NPA loan accounts where the amount is less than 20% of the principal and interest are not eligible to be dealt with under this Act. Non-performing assets should be backed by securities charged to the Bank by way of hypothecation or mortgage or assignment.
To issue demand notice to the defaulting borrower and guarantor, calling upon them to discharge their dues in full within 60 days from the date of the notice.
To give notice to any person who has acquired any of the secured assets from the borrower to surrender the same to the Bank.
To ask any debtor of the borrower to pay any sum due or becoming due to the borrower.
MICRO CREDIT AND MICRO FINANCE CORPORATIONS IN INDIA: http://blog.santoshmaharshi.com/2009/09/29/the-list-of-micro-finance-micro-credit-institutions-in-india/
SELF HELP GROUPS: http://74.125.153.132/search?q=cache:Yyj3Xo3azkEJ:www.edarural.com/documents/SHG-Study/Executive-Summary.pdf+self+help+groups+in+india&cd=1&hl=en&ct=clnk&gl=in
Risk Management in banks: Chapter 12 Credit Risk and Loan losses Section 1: Page 311 - Expected loss versus unexpected losses, defining credit risk, Basel committee’s principles of credit risk management, Classifying Impaired Loans, credit risk models / ‘credit concentrations’.
Section2: Page 316: Credit risk transfers : Syndication, Novation, Participation and Securitization (details not required, just understand the concept)
Asset liability management- Justin Paul Page 502/503/504
