Wednesday, 29 June 2016

MA0038/MA0045 &BANKING MANAGEMENT

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ASSIGNMENT

DRIVE
SPRING 2016
PROGRAM
MBA
SEMESTER
III
SUBJECT CODE & NAME
MA0038/MA0045 &BANKING MANAGEMENT
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.



Question.1. How do the commercial banks assess business potential region-wise or location-wise ?Explain the concept of transfer pricing between different business units or branches.

Answer: Transfer pricing is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price. Legal entities considered under the control of a single corporation include branches and companies that are wholly or majority owned ultimately by the parent corporation. Certain jurisdictions consider entities to be under common control if they share family members on their boards of directors. Transfer pricing can be used as a




Question.2. Explain the applicability of marketing mix for banks in India.

Answer:State Bank of India is a public corporation owned by the government of India. This multinational company deals exclusively in the financial and banking sector. SBI was founded in the year 1806 and at present, its headquarters is in the city of Mumbai. In terms of assets, it is the largest and in terms of ancestry the oldest banking empire in India. In the Indian subcontinent, State Bank of India is spread over 17,000 branches and




Question.3. External Commercial Borrowing has become a popular method of raising finance for businesses in India. Do you agree ? Substantiate with facts.

Answer:An external commercial borrowing (ECB) is an instrument used in India to facilitate the access to foreign money by Indian corporations and PSUs (public sector undertakings). ECBs provide an additional source of funds to the companies allowing them to supplement domestically available resources and take advantage of lower rates of interest prevailing in the international financial markets. ECBs have become very popular amongst the Indian companies, during the past few years due to the limitations in the Indian debt market in the form of short maturity period and high rate of interest.



Question.4. “The volume, mix and cost return of both liabilities and assets need to be planned and monitored in order achieve the short term and long term goals of banks.” Criticallyexplain this statement.

Answer: Initially pioneered by financial institutions during the 1970s as interest rates became increasingly volatile, asset and liability management (often abbreviated ALM) is the practice of managing risks that arise due to mismatches between the assets and liabilities.  The process is at the crossroads between risk management and strategic planning. It is not just about offering solutions to mitigate or hedge the risks arising from the interaction of assets and liabilities but is focused on a long-term perspective: success in the process of maximising assets to meet complex liabilities may increase profitability.




Question.5. What are the different valuation procedures followed by the acquiring company in case of acquisition/merger that assists in arriving at different benchmark price estimates ?

Answer:Valuation is a process used to determine what a business is worth. Determining a private company’s worth and knowing what drives its value is a prerequisite for deciding on the appropriate price to pay or receive in an acquisition, merger transaction, corporate restructuring, sale of securities, and other taxable events. Private companies may include small family-owned enterprises, divisions/subsidiaries of larger private companies, or large corporations.





Question.6. Illustrate the guidelines for FDI in banking sector in India. Explain the procedure for opening of branches by foreign banks in India.

Answer: Prior to the enactment of Banking Regulation Act, 1949 which aims to consolidate the law relating to banking and to provide for the nature of transactions which can be carried on by banks in India, the provisions of law relating to banking companies formed a part of the general law applicable to companies and were contained in Part XA of the Indian Companies Act, 1913. These provisions were first introduced in 1936, and underwent two subsequent modifications, which proved inadequate and difficult to administer.

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