BANK MANAGEMENT

.
Meaning
 Bank management governs various concerns
associated with bank in order to maximize profits. The
concerns broadly include liquidity management, asset
management, liability management and capital
management.

 What is the importance of bank management?

 Bank relationship management provides processes and
technology that help a company track and manage all
their bank relationships by: Providing a single view of
all accounts and activities with a bank, worldwide. This
includes bank accounts, insurance, lines of credit, and
foreign exchange.
 To ensure a smooth running of the banking
system, it must be properly managed. So
banking management takes care of all
banking activities including risk management,
planning and policy formulation, profit
monitoring and other relevant roles.
 A bank management system ensures proper

supervision of the processes of banking to

maximize profit.
Objectives of Bank Management
 Maximization of profitability: one of the main objective of the bank
management is to maximize profitability of bank.
 social responsibility: it is the objective of the bank management to
discharge social responsibility towards Society specially its weaker
sections.
 To meet challenge of competitors: Another important objective of bank
management is to meet the challenge of changing environment. This
challenge come from competition and globalization.
 To improve the customer service: one of the important objective of bank
management is to improve the customer service.
 Introduction of new schemes: the objective of the bank management is to
be innovative and introduce new schemes to expand the banking business.
 Manpower planning: it is objective of bank management to develop its
manpower by giving required training.
 improvement of Productivity: the bank management makes serious efforts
to improve the output of the bank to compete with private banks.
 Improvement in the system of inspection: the Bang management tries to
improve the system of inspection and social audit.
Principles of bank management
There are four main parts of bank management. These are as
follows-
Liquidity management:
Managing financial obligations through liquidity or cash
money
Asset management:
Assent management relates to trying to obtain high-interest
rates from borrowers and reducing the risks of those loans.
Liability management:
Liability management is about trying to find cheap funds and
use them as a loan.
Capital adequacy management
Capital adequacy management is maintaining a minimum
level of capital adequacy in the bank. Available capital
should not be too little or too high.
Functions of Bank Management
1. Planning: it is activity through which a bank decides its
future course of action. it is relating to forecast the future
activities of a bank. it refers to set the objective or goals of a
bank and determine the policies and programmes and
procedure to achieve the desired objective.
2. organizing: organizing is the second important function of
bank management. it is the process of arranging and
allocating the bank activities, authority and resources among
the bank employees so that they can efficiently achieve the
goals of the organization.
3. staffing: stuffing is the management of human resource in
the organization. it refers to the function of selecting,
training, deciding the wages and salary and appraisal of the
work of the members of the bank staff. it is concerned with
provision of right person in the right numbers,at the right
time and in the right place in the bank
4. directing: in bank management directing refers
to instructing, guiding, counseling and
supervising the bank staff.
5. Communication: the another important function
of bank management is communication. It is the
process of communicating the establish
objectives, policies and rules of operation to all
who have need of them. it is a way of conveying
the ideas, views, information and directions from
one person to another.
6. Controlling: The control process involves the
establishment of standards and measuring
performance in accordance with these standards
and correcting deviations from the established
plans and programmes.
Importance of Bank Management
1. Regulation of service charges
One of the aspects of banking is the management ensuring that bank fees
and charges across boards are unified. It is also concerned with setting up
reasonable market prices for banking products and services. It is important
that this regulation meets the demands of customers. That way, the bank is
able to track performance and monitor sales volume.
2. Approval and disapproval of loan request
In banking, part of the core responsibilities of the bank managers is to
supervise the request for the loan. They monitor the processing of loan
requests. As loan operation is a crucial matter in banking, it is important
there is an adequate assessment of who is given loan and for what purpose.
3. Bank reserve management
The reserves of any bank are their cash holdings, which majorly from the
deposits held in the bank accounts with the central bank. This also falls
into one of the aspects of banking that is duly managed.
4. Supervision of directors recruitment
Another significant aspect of banking management is the supervision of
recruitment of the directors. To ensure the smooth running of the bank, the
hiring of the directors is an essential process in the management system.
5. Controls Issuance of Deposits
One of the core functions of the banking sector is
that it controls the issuance of deposits.
6. Suitable environment for bank operation
Among the many aspects of managing a bank is
finding the best location for the branching. In
order to achieve this, the bank has to put several
factors into consideration.
7. Capital Adequacy
Is a bank capital adequate? This is a revenant
question especially when it is considering serving
your teeming customers seamlessly. Effective
management of banking would include a look into
the capital adequacy.
Functional Areas
1. Deposit Mobilization: The bank management formulates saving
schemes, and makes efforts for mobilization of deposits. The bank
management plays an important role inculcating banking habits.
2. financial management: the financial management includes cost
control, financial planning, management accounting and other related
problems
3. credit management: the credit management refers to appraisal
sanction ,distribution ,recovery and administration of the loans and
other types of credit.
4. profit evolution: it is important functional area of bank
management . It requires a dynamic approach. it covers cost benefit
analysis , forecasting , flows of funds and estimation of return.
5. liquidity management: it is the mean determinant of bank reputation
and goodwill. It relates to cash reserve ratio, statutory liquidity ratio,
trading in bank receipt and other short-term securities.
6. Investment management: investment
management is another important functional area
of bank management. the main source of bank’s
profit is the investment made by banks of their
deposits. it relates to the underwriting of securities
and investment in equities.
7. marketing management: marketing management
refers to marketing services, customer services
and marketing research.
8. portfolio management: the portfolio refers to the
composition of different type of income earning
assets. This functional area is mainly related with
asset management. the bank management has to
select, make appraisal and Evaluate different type
of assets.
Organizational structure of
commercial banks