Management of Commercial Banking

By Prof. Jitendra Mahakud | IIT Kharagpur

Learners enrolled: 2668

This course deals with the management of commercial banking activities from risk management perspective. The prime focus of this subject is to manage major risks such as interest rate risk, credit risk, liquidity risk and operational risk faced by the banks to maximize the dual objectives of commercial banks i.e. profitability and liquidity. Mostly it deals with the management of deposits, lending activities, investments, bank capital, bank liquidity and off-balance sheet activities. It also covers the use of derivatives and asset backed securities such as credit derivatives etc. to manage the market risk. In addition to this, it also covers the basic features and role of commercial banks, regulatory aspects related to banking activities and evaluation techniques to measure financial performance of banks. Valuation of banks’ balance sheet items and mergers and acquisition of commercial banks are also discussed in this course.

INTENDED AUDIENCE : Economics, Commerce and MBA

PREREQUISITES : Nil

INDUSTRY SUPPORT : Banks, Financial Consulting Companies

Summary

Course Status :	Completed
Course Type :	Elective
Language for course content :	English
Duration :	12 weeks
Category :	Management Studies
Credit Points :	3
Level :	Undergraduate/Postgraduate
Start Date :	24 Jan 2022
End Date :	15 Apr 2022
Enrollment Ends :	07 Feb 2022
Exam Date :	24 Apr 2022 IST

Note: This exam date is subject to change based on seat availability. You can check final exam date on your hall ticket.

Page Visits

Course layout

Module-I: Functions, Regulation, Financial Statements and Performance

Week 1 : • Functions and Forms of Commercial Banking

• Regulations of Commercial Banking

• Banks’ Financial Statements

Week 2 :

• Profitability Measures

• Efficiency Measures

• Stability Measures

• Liquidity Measures

• Loan Quality Measures

Module-II: Valuation of Securities and Commercial Bank Risk

Week 3 :

• Pricing of Bank Stocks

• Pricing of Fixed Income Securities of Commercial Banks

Week 4 :
• Risk management process

• Risk types: Credit risk, Market risk, Operational risk, Liquidity risk, Solvency risk, Legal risk

• Risk measures

Module-III: Asset-Liability Management (ALM): Management of Interest Rate Risk

Week 5 :
• Static Gap Analysis

• Earnings sensitivity analysis

• Duration Gap analysis

• Economic value of equity sensitivity analysis

Week 6 :
• Use of Futures, Options, Swaps and Other Hedging Tools in ALM

• Risk management using Asset-Backed Securities and Credit Derivatives

Module-IV: Management of Lending Activities of Commercial Banks

Week 7 :

• Lending Functions

• Loan Policy

Week 8 :

• Loan Pricing

• Credit Evaluation Process for Industrial and Retail Loans
Module-V: Managing Investment Portfolios and Liquidity of Commercial Banks

Week 9 :

• Investment Alternatives

• Evaluation of Investment Risk

• Investment Strategy

Week 10 :

• Estimation of Liquidity Needs

• Funds Management of Liquidity

• Optimum Bank Liquidity

Module-VI: Management of Liabilities, Capital and Off-Balance Sheet Activities of Commercial Banks

Week 11 :

• Management of Deposits and other liabilities

• Role of Bank Capital

• Capital Adequacy

• Capital Standards

Week 12 :

• Financial Guarantee

• Derivatives

• Trade Finance

• Foreign Exchange

Books and references

(1) Commercial banking: The management of risk by Gup, Benton E., and Kolari, James W., John Wiley & Sons Incorporated, 2005.

(2) Bank management & financial services by Rose, P. S., & Hudgins, S. C., McGraw-Hill Education, 2008.

(3) Management of Banking, 6e. by MacDonald, Scott. S., & Koch, Timonthy. W, Thomson, 2007.

Instructor bio

Prof. Jitendra Mahakud

IIT Kharagpur

Jitendra Mahakud is Professor of Economics and Finance at the Department of Humanities and Social Sciences, Indian Institute of Technology Kharagpur. He is also a joint faculty at the Vinod Gupta School of Management, IIT Kharagpur, in the area of finance. He obtained his PhD from the Indian Institute of Technology, Mumbai. He has published more than 50 papers in leading national and international journals. He has co-authored a book titled Financial Institutions and Markets: Structure, Growth and Innovations published by McGraw Hill Education. He has edited two books one on Advances in Research in Business and Finance (Corporate Finance) and the other on Advances in Research in Business and Finance (Investment Management). His areas of teaching and research include financial markets and institutions, corporate finance, investment management, financial economics, behavioural finance and commercial banking.

Course certificate

The course is free to enroll and learn from. But if you want a certificate, you have to register and write the proctored exam conducted by us in person at any of the designated exam centres.
The exam is optional for a fee of Rs 1000/- (Rupees one thousand only).
Date and Time of Exams: 24 April 2022 Morning session 9am to 12 noon; Afternoon Session 2pm to 5pm.
Registration url: Announcements will be made when the registration form is open for registrations.
The online registration form has to be filled and the certification exam fee needs to be paid. More details will be made available when the exam registration form is published. If there are any changes, it will be mentioned then.
Please check the form for more details on the cities where the exams will be held, the conditions you agree to when you fill the form etc.

CRITERIA TO GET A CERTIFICATE

Average assignment score = 25% of average of best 8 assignments out of the total 12 assignments given in the course.
Exam score = 75% of the proctored certification exam score out of 100

Final score = Average assignment score + Exam score

YOU WILL BE ELIGIBLE FOR A CERTIFICATE ONLY IF AVERAGE ASSIGNMENT SCORE >=10/25 AND EXAM SCORE >= 30/75. If one of the 2 criteria is not met, you will not get the certificate even if the Final score >= 40/100.

Certificate will have your name, photograph and the score in the final exam with the breakup.It will have the logos of NPTEL and IIT Kharagpur .It will be e-verifiable at nptel.ac.in/noc.

Only the e-certificate will be made available. Hard copies will not be dispatched.

Once again, thanks for your interest in our online courses and certification. Happy learning.

- NPTEL team

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