FD 603 Management of Financial Institutions 61017910

FD 603: MANAGEMENT OF FINANCIAL INSTITUTIONS
Course Objective:
This Paper discusses the tools and techniques of management of banks and other financial
institutions.
Learning Outcomes
· Understand the functioning of a financial institution.
· Understand the entire process of operating a bank and other financial institutions with
respects to the rules and regulations prescribed by the regulators.
· Understand the problems faced by the banks like that of NPA or of liquidity challenge
etc. and tools and techniques to manage them.
Course Contents:
Unit I (2 weeks)
Financial Intermediation; Kinds of Intermediation; Financial Institution and its kinds; An
overview of the Indian financial system; Regulation of Banks, NBFCs & FIs; Products offered
by Banks and FIs. CRR & SLR management; Capital Adequacy: Capital adequacy norms;
Basel agreement-II&III; effect of capital requirements on bank operating policies.
References:
Saunders & Cornett – “Financial Institutions Management – A risk management approach”
Tata McGraw Hill (Chapter 1 and 2)
Resti & Sironi – “Risk management and shareholders‟ value in banking” John Wiley (Chapter
20 and 21)
Unit II (3 weeks)
Statement of Financial Sector: Flow of Funds Accounts – Sector wise and Instrument wise.
Statements of Financial Institution: Analyzing Bank’s Financial Statement: The balance sheet;
income statement; Cash Flow Statement; profitability, liquidity and solvency analysis;
Performance Analysis of banks: CAMELS Risk system; KPIs; Data Envelopment Analysis.
Asset Liability Management: RBI guidelines on asset liability management
References:
Justine Paul & Padmalatha Suresh-“ Management of Banking and Financial Services” Perason
(Chapter 6)
Page 82 of 118
MANAGEMENT OF FINANCIAL INSTITUTIONS

Tata McGraw Hill (Chapter 6 and 13)
Unit III (3 weeks)

Institutional Risk Management: Interest Rate Risk; Market Risk; Credit Risk; Liquidity Risk;
Operational Risk. Determination of Interest Rate. Theories of Interest Rates: Classical Theory;
Loanable Funds Theory; Liquidity Preference Theory; Term Structure of Interest Rates.
Interest Rate Risk Management: Measurement of Interest Rate Risk; Duration and its kinds;
Convexity. Managing Interest Rate Risk: Repricing Gap Model, Maturity Matching Model,
Duration Gap Model, Cash Flow Matching Model; Convexity Adjustments.
References:
Tata McGraw Hill (Chapter 7, 8, 9, 10 and 11)
Resti & Sironi – “Risk management and shareholders‟ value in banking” John Wiley (Chapter
1, 2, 3, 4 and 5)
Unit IV (4 weeks)
Credit & Liquidity Risk Management: Types of Assets, NPA & its types, Management of
NPA, Measurement of Credit Risk – Qualitative and Quantitative models. Modelling Credit
Risk; Term Structure of Credit Risk; Managing Credit Risk: Credit Analysis and kinds of
Loans; Pricing of Loans. Liquidity Risk Management: Measurement of Liquidity Risk;
Measures of Liquidity Exposure; Causes of Liquidity risk: Asset-Side and Liability-Side;
Managing Liquidity Risk: Purchased Liquidity management and Stored Liquidity
management; Liquidity Planning; Deposit Insurance; Discount Window
References:
Tata McGraw Hill (Chapter 17, 18 and 19)
Text Books:
1. Saunders & Cornett – “Financial Institutions Management – A risk management
approach” Tata McGraw Hill
2. Resti & Sironi – “Risk management and shareholders‟ value in banking” John Wiley
Page 83 of 118
MANAGEMENT OF FINANCIAL INSTITUTIONS
Teaching Learning Process:

Class room lecture, Case study discussion, Numerical Problem solving, Class presentation
on the assigned topic by students individually or in group, Workshop, Tutorials, Role play
Assessment Method
1. Internal evaluation of 25% marks
a. Attendance 5% marks
b. Two internal evaluations by the teacher with 10% marks each out of which one must
be a class test and other may be another test or home assignment or presentation.
Faculty may take more than two assignments and (or) tests but total will be only 20%
marks.
2. End term University Exam of 75% marks
Key words:
Financial Intermediation, Capital Adequacy, Asset Liability Management, NPA, Data
Envelopment Analysis, Duration Gap Model
Page 84 of 118

FD 603 Management of Financial Institutions 61017910

Uploaded by

Copyright:

Available Formats

FD 603 Management of Financial Institutions 61017910

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

FD 603 Management of Financial Institutions 61017910

Uploaded by

Copyright:

Available Formats

FD 603: MANAGEMENT OF FINANCIAL INSTITUTIONS

Saunders & Cornett – “Financial Institutions Management – A risk management approach”

Unit III (3 weeks)

Teaching Learning Process:

You might also like