1 DEPARTMENT OF INDUSTRIAL AND MANAGEMENT ENGINEERING INDIAN INSTITUTE OF TECHNOLOGY KANPUR e-Masters in Financial Technology & Management First Course Handout MBA971 - Banks and Financial Institutions Faculty: Prof. Harshal Mulay Email: hrmulay@iitk.ac.in Department: Industrial & Management Engineering Class Hours: Sundays - 10:00 AM - 11:15 AM AND 11:30 AM to 12:45 PM Classroom: Online (e-Masters: https://ipearl.emasters.iitk.ac.in/login) COURSE DESCRIPTION 1. OBJECTIVES & SCOPE This compulsory course will provide participants with an understanding of how the Banking and Financial Institutions operate and their role in enabling global and domestic economies. This course takes a micro-view of banking and coverage will include banking theories, evaluating health of banks and evaluations of borrowers done by banks. We will also briefly cover evolution and role of financial institutions and the regulatory system governing them. 2. COURSE LEARNING OUTCOMES By the end of the course, the student should be able: • • • • • • To understand roles and functions of banks and Financial Institutions To understand why banks exist – banking theories. To evaluate health and performance of banks. To understand basics of lending To understand credit appraisal process and its special cases To understand history of banking regulation and monetary policy in India 2 3. Course Contents Week Topics Description 1 Banking (Financial Intermediation) Theory An Overview, Functions and Roles of Banks, Why do Banks exist?: Information Asymmetry Theory and Power Theory 2 Understanding Financial Statements of Banks Sources and Application of Funds, Income Statement, Balance Sheet, Cash-flow Statements, Deposit Services, Non-deposit Liabilities, Capital, Non-Fund based Functions 3,4 Evaluating Health of Banks Ratio Analysis for Banks: Capital Adequacy. Liquidity of Reserves Risk Management, Analysis of Asset & Liability - ALM Mismatch, Basel Norms and Risk Management, NPAs. LAF, MSF, Repo, CRR, SLR, 5 Fundamentals of Lending Types of Loans, Features of Loans, Different Types of Interests and Repayment structures, 6 Credit Appraisal Overview: General Corporate Loans Credit Appraisal, Risk Assessment and Risk Mitigation, Lending Covenants, Fund Flow Analysis, 7 Credit Appraisal Special Cases: Working Capital Loans and Project Finance Evaluating Working Capital Requirements of borrowers, Different WC Management Products offered by Banks, History of Banking and Regulations Impact of Government Policies and Regulations, RBI Regulations and Monetary Policy, Need for Independence of Central Banks, Bankruptcy Laws 8 Financing Infrastructure Projects, SPVs and PPPs 4. Prerequisite: None 5. Course Materials ● ● ● Benton E Gup, Wiley India Pvt Ltd, Commercial Banking: The Management of Risk, ISBN13:9788126510443 Suresh Padmalatha, Management of Banking and Financial Services | Fourth Edition | By Pearson, ISBN-13:978-935286187 H.R. Machiraju, New Age International (P) Ltd., Publishers, Edition 2, ISBN 9788122420913 3 6. Requirements and Grading Attendance Policy: As per the academic office Evaluation policy a. Group Project 1: 25%. Detailed instructions about the assignment will be provided during classroom discussions. b. Group Project 2: 25%. Detailed instructions about the assignment will be provided during Classroom discussions. c. End-Term Exam: 50%. As per the schedule of e-Masters Program. 7. Make-up exams: o DOAA guidelines on make-up exams will be followed. o There will be no make-up exam for the quiz component.
