MA0038 - BANKING OPERATIONS

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ASSIGNMENT

DRIVE	SUMMER 2015
PROGRAM	MBADS – (SEM 3/SEM 5) / MBAFLEX / MBAN2 – (SEM 3)
SUBJECT CODE & NAME	MA0038-BANKING OPERATIONS
SEMESTER	3
BK ID	B1616
CREDITS	4
MARKS	60

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

1 Explain the principles of banking. Explain the role of banks.

Answer: Principles of banking: The central practice of banking consists of borrowing and lending. As in other businesses, operations must be based on capital, but banks employ comparatively little of their own capital in relation to the total volume of their transactions. Instead banks use the funds obtained through deposits and, as a precaution, maintain capital and reserve accounts to protect against losses on their loans and investments and to provide for unanticipated cash withdrawals. Genuine banks are distinguished from other kinds of financial intermediaries by the readily transferable or “spendable” nature of at least some of their liabilities (also

2 Explain about the operational efficiency and productivity planning. Explain about the business planning and targeting.

Answer: Operational efficiency: In a business context, operational efficiency can be defined as the ratio between the input to run a business operation and the output gained from the business. When improving operational efficiency, the output to input ratio improves.

Inputs would typically be money (cost), people (headcount) or time/effort. Outputs would typically be money (revenue, margin, cash), new customers, customer loyalty, market differentiation, headcount productivity, innovation, quality, speed &

3 Explain the applicability of Marketing Mix in Banks. Write about Private Vs Public Banks.

Answer: Applicability of Marketing Mix in Banks: Bank marketing in general and Customer Relationship Management (CRM) in particular are of vital importance for Indian banks, particularly in the current context when banks are facing tough competition from other agencies, both local and foreign, that offer value-added services. The Role of marketing in the banking industry continues to change. For many years the primary focus of bank marketing was public relations. Then the focus shifted to advertising and sales promotion. That was followed by focus on the development of a sales culture. Today banking sector all elements of the marketing concept –

4 Explain the Asset Liability Management (ALM) Strategy. Write about the ALM perspectives.

Answer: Asset Liability Management (ALM) Strategy: Asset-liability management (ALM) is a term whose meaning has evolved. It is used in slightly different ways in different contexts. asset-liability management was pioneered by financial institutions, but corporations now also apply asset-liability management techniques. This article describes asset-liability management as a general concept, starting with more traditional usage.

Traditionally, banks and insurance companies used accrual accounting for essentially all their assets and liabilities. They would take on liabilities, such as

5 Explain the kinds of mergers. Write about the valuation procedures in mergers and acquisitions.

Answer: Kinds of mergers: There are many types of mergers and acquisitions that redefine the business world with new strategic alliances and improved corporate philosophies. From the business structure perspective, some of the most common and significant types of mergers and acquisitions are listed below:

Horizontal Merger

This kind of merger exists between two companies

6 Write short notes on:

(a)Profitability Analysis Models:

Answer: A profitability analysis model as described in here can be defined as a simulation model of an initial investment and subsequent operations. The cash flow from operations must be estimated carefully on the basis of a thorough business plan. The cash flow and the development of balance sheet is then simulated over the lifetime of the

(b)Risk based Models

Answer:

Growth: The goal of the Growth model is long-term capital appreciation.  It is best suited for investors who seek an above average exposure to equity markets and the risk and returns associated with them. The typical investor will have an investment time horizon of 8 or more years.

Moderate Growth

The goal of the Moderate Growth

(c)Traditional Performance Models

Answer: The performance of prediction models can be assessed using a variety of different methods and metrics. Traditional measures for binary and survival outcomes include the Brier score to indicate overall model performance, the concordance (or c) statistic for discriminative ability (or area under the receiver operating characteristic (ROC) curve), and goodness-of-fit statistics for calibration.

Several new measures have recently been proposed that can be seen as refinements of discrimination measures, including variants of the c statistic for survival, reclassification tables, net reclassification improvement (NRI), and integrated discrimination improvement (IDI). Moreover, decision–analytic measures have been proposed, including decision curves to plot the net benefit achieved by making decisions based on model predictions.

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