Indian Institute of Management, Kashipur

Post Graduate Program in Management

COMMERCIAL BANK MANAGEMENT
Term IV, 2019-20
Credit: 1
Instructor: Kunal and Visiting Faculty
Contact details: kunal@iimkashipur.ac.in mobile no. 9027014865

Office hour: Students can come to my office any time. No prior permission is required.

Prerequisites: Nil

Course Description
The Commercial Bank management is the course which focuses on functions of banks in India and
worldwide and risk management in banks. The course intends to introduce the administration in banks
along with functions and emphasis in risk management practices. The course aims to introduce students
to the banks and their services; organization and structure of banks; financial statements of bank;
measuring and evaluation of bank performance; asset and liability management and understanding and
hedging against various type of risks and the management of the bank’s investment function and liquidity
function.

Course Objectives
The main aim of this course in to provide students with an introductory yet comprehensive overview of
banking services and organization structure of the banks. Students are also expected to learn bank
financial statement analysis and performance evaluation. Asset and liability management techniques like
GAP and duration analysis are also among the teaching and learning objective of the course.
• To get an overview of commercial banks particularly in India context and its relationship with foreign
banks, keeping the evolving regulatory and market changes that are taking place. (PLO1 a/b)
• To understand various types of risk. (PLO1 a/b)
• To understand the regulatory requirements including the context of Basel Accords and its applicability
(PLO1 g/f)
• To understand profit/ profitability drivers in bank To understand Product offered by banks and their
pricing and risk. (PLO1 a/b)
Required Textbook
• Bank Management and Financial Services by Peter S Ros and Sylvia C. Hudgins, Mcgraw Hill
Education
• Compendium with some articles, cases and relevant readings will be provided by the instructor.

Pedagogy and Course Requirements

Lectures with good mix of real life caselets, detail case studies and illustration will be part of sessions.
Some practical problems including numerical will be solved for better understanding of the concepts
especially in case of capital, loans and deposit pricing and financial statements of banks. The course will
rely heavily on participant-intensive activities. Participants will have the responsibility to come prepared
in class with pre reading of chapters. Each student must accept the responsibility for course preparation.
Thus, for each session, every student must study the assigned readings. In addition, each student is
expected to participate actively in classroom discussions.

Grading
Mid Term Exam 30%
End Term Exam 30%
Poster Presentation 20%
Group Project Report (Submission Only) 20%

Tentative Class Schedule

(Additional readings, cases, and articles may be assigned as they become available)

Session Topics Readings

MODULE I: Theory, Process, Regulation and Reforms

Session 1 Theory of Financial Cases:
Intermediation State Bank of India: Transforming a state
Commercial bank : A Financial owned giant, HBS (Case no. 9-511-114)
Intermediary Goldman Sachs: A bank for all seasons
Role, functions, process HBS Case no. 9-310-055
Scott P. Mason, Elizabeth R. Lawrence
(1991). “U.S. Bank of Washington,”
Harvard Business School

Readings:

Session 2 Banking Industry
Theory of commercial banking
Business models
Competition in Industry
(Competitive models)
Franklin Allen & Anthony M.
Santomero, 1999. "What Do Financial
Intermediaries Do?," Center for Financial
Institutions Working Papers 99-30,
Wharton School Center for Financial
Institutions, University of Pennsylvania.
References:
Bert Scholtens & Dick van Wensveen,
2003."The Theory of Financial
Intermediation: An Essay On What It
Does (Not) Explain," SUERF
Studies,SUERF - The European Money
and Finance Forum, number 2003/1
edited by Morten Balling, February.
Franklin Allen & Anthony M.
Santomero, 1996."The Theory of
Financial
Intermediation," Center for Financial
Institutions Working Papers 96-32,
Wharton School Center for Financial
Institutions, University of Pennsylvania.
Scholtens, Bert & van Wensveen, Dick,
2000."A critique on the theory of
financial
Intermediation," Journal of Banking &
Finance, Elsevier, vol. 24(8), pages 1243-
1251, August.
Readings:
Bhattacharya Sudipto & Thakor Anjan
V., 1993."Contemporary Banking
Theory,"
Journal of Financial Intermediation,
Elsevier, vol. 3(1), pages 2-50, October.
References:
Modern Money Mechanics, A Workbook
on Bank Reserves and Deposit
Expansion,
Federal Reserve Bank of Chicago
Santomero, Anthony M, 1984."Modeling
the Banking Firm: A Survey," Journal of
 Money, Credit and Banking, Blackwell
Publishing, vol. 16(4), pages 576-602,
November
Cases:
YES Bank: Mainstreaming development
into Indian banking HBS case no. 9-311-
063
Santander’s Acquisition of Abbey:
Banking across border: HBS case no. 9-
707-485

Session 3 Domestic Banking Reforms & Readings:

Regulation Ministry of Finance (1991), Report of the
Implications of Priority Sector committee on the Financial System
Lending (Narasimham Committee), New Delhi,
Government of India.
Regulation & Implications-
Reserve Bank of India (1998).
Reserve Ratios
Narsimham Committee Report on
Banking Sector
Reforms. Bombay: Reserve Bank of
India.
Reserve Bank Of India (2005). “Draft
Technical Paper by The Internal Working
Group on Priority Sector Lending,”
September

Case:
ICICI (A) , HBS case
Product no. 701064-PDF-ENG

Session 4 -5 Global Banking Reforms & Readings:

Regulation (BASEL Norms) Bryan J. Balin, 'Basel I, Basel II, and
Emerging Markets: A Nontechnical
Notes Analysis' as approved May 10 2008, The
BASEL III : An evaluation of new Johns Hopkins School of Advanced
banking regulations, Ivey Notes Studies in Washington DC

Session 6 Performance measure

Capital adequacy, Asset quality,
Management, Earning and
Liquidity and Sensitivity
(CAMEL) model
Session 7 Credit Appraisal & Lending Readings:
Decisions Scott P. Mason and Susan L.
Roth(1991). “Note on Bank Loans”
Harvard Business School
Case:
Thomas R Piper (1986). “Advanced
Medical Technology Corporation,”
Harvard Business School
MODULE II : ALM and Risk Management
Session 8 Asset Liability Management Case:
(ALM) Peter Tufano and Benjamin C. Esty
(1994).”Banc One Corp.: Asset and
Liability Management,” Harvard
Business School

Session 9 -10 Bank Capital Management and Readings:

Basel Accord BASEL III : An evaluation of new
Calculation of Tier 1 capital, Tier banking regulations, Ivey Notes
II Capital, Risk weightage to Bank of International Settlements(2006).
different assets, Capital adequacy Basel II: International Convergence of
ratio (CAR) Capital Measurement and Capital
Standards: A Revised Framework -
Comprehensive Version
Session 11 • Interest rate risk Readings:
• Market risk Merton, Robert C, 1974."On the Pricing
• Liquidity risk of Corporate Debt: The Risk Structure of
Interest Rates," Journal of Finance,
American Finance Association, vol.
29(2), pages 449- 70, May.

Session 12 -14 Credit Risk Modeling 1. Modelling Credit Risk, Centre for
Central Banking Studies , Bank of
England (Handbook no. 34)
2. CRISIL, Credit Risk Estimation
Techniques
3. CREDIT RISK MODELLING:
CURRENT PRACTICES AND
APPLICATIONS
Basle Committee on Banking
Supervision, 1999
3. Case Study on Credit Risk Modelling ,
Asian Institute of Finance
 4. THE USE OF PORTFOLIO CREDIT
RISK MODELS IN CENTRAL BANKS,
European Central Bank

MODULE III : Digital Banking

Session 15-16 Digitalisation of Business Models Case:
of commercial Bank Citibank’s E-Business strategy for global
-Process, Impact, Regulation corporate bank (2008) ACRC

Session 17-18 Online Banking Cases:

ACTOnline: ACTDirect’s Electronic
Banking System (CABC)
Wells Fargo Bank and Electronic
Banking

Session 19 Mobile Banking Case:

Notes: Bank of America : Mobile Banking, HBS
Mobile banking for the unbanked, case no. 9-510-063
HBS notes

Session 20 Branchless banking and other Cases:

emerging business models due to
digitalisation
Notes
Financial network and informal
banking in China HBS
Shinsei Bank : HBS case no. 9-302-036
ACCION International: Maintaining high
performance through time : HBS case no.
9-304-095

Session 21 Frauds in Digital Banking Cases:

HDFC : Securing online Banking
BANKING DAY@IIM KASHIPUR
(Poster Presentation Session)
Session 22 Wrap up Session

Course Policies [choose or replace with your own]

1. Responsibility for Course Materials: You are responsible for all material covered in class. If
you are absent, you are responsible for obtaining the information you missed.
2. Classroom Behavior: We expect you to participate in class activities in a mature and appropriate
manner. Disruptive or otherwise unacceptable behavior will not be tolerated.
3. Use of Mobile and Laptop: Mobiles are not permitted in the classroom.. In the class, you must
carry your laptop and keep it down unless asked by the instructor.
4. Academic Conduct: All members of the academic community at IIM Kashipur are expected to
practice and uphold standards of academic integrity and honesty. Academic integrity means
representing oneself and one’s work honestly. Misrepresentation is cheating since it means
students are claiming credit for ideas or work not actually theirs and are thereby seeking a grade
that is not actually earned. Following are some examples of academic dishonesty:
i. Cheating on quizzes and examinations. This includes using materials such as books
and/or notes when not authorized by the instructor, copying from someone else’s paper,
helping someone else copy work, substituting another’s work as one’s own, theft of exam
copies, or other forms of misconduct on exams.
ii. Plagiarizing the work of others. Plagiarism is using someone else’s work or ideas without
giving that person credit; by doing this students are, in effect, claiming credit for someone
else’s thinking. Whether students have read or heard the information used, they must
document the source of information. When dealing with written sources, a clear distinction
should be made between quotations (which reproduce information from the source word-
for-word within quotation marks) and paraphrases (which digest the source of information
and produce it in the student’s own words). Both direct quotations and paraphrases must
be documented. Even if students rephrase, condense or select from another person’s work,
the ideas are still the other person’s, and failure to give credit constitutes misrepresentation
of the student’s actual work and plagiarism of another’s ideas. Buying a paper or using
information from the World Wide Web or Internet without attribution and handing it in as
one’s own work is plagiarism.
iii. Falsifying records or providing misinformation regarding one’s credentials. iv.
Unauthorized collaboration on computer assignments and unauthorized access to
and use of computer programs, including modifying computer files created by others
and representing that work as one’s own.
v. Unless they specifically indicate otherwise, instructors expect individual, unaided work on
homework assignments, exams, lab reports and computer exercises, and documentation of
sources when used. If instructors assign a special project other than or in addition to exams,
such as a research paper, or original essay or a book review, they intend that work to be
completed for that course only. Students must not submit work completed for a course
taken in the past or for a concurrent course unless they have explicit permission to do so
from both faculty members.

Any academic misconduct will automatically result in a failing grade for the class and the
student will be reported to the committee on academic misconduct for further disciplinary
action.

4. Attendance: As far as I am concerned, you are an adult and it is your decision whether or not you
attend class. However, your decision not to attend a class may have negative consequences for
your class grade. (Please consult PGP Participants’ Handbook for this purpose).
 If you decide to attend a class, you must come to the class and take your seat sufficiently before
the beginning of the class time. Under no circumstances you would be allowed in once the class
has started. You are expected to sit through the class unless you have a prior permission from the
instructor to leave the classroom before the end of the class.
5. Late submission: Any late submission beyond the deadline (even by few seconds) will result
in 0 point. Except in case of emergencies, with a doctor's note, any questions about late
submission will not be entertained.
6. Missed exam: There is no make-up for the missed exams unless the student has discussed and
made an arrangement with the instructor for a valid reason beforehand. In all other instances, the
student must produce a valid doctor's note for the day the student missed the exam. Such doctor's
note must be produced in the same week the student missed the exam.
7. Grade Discussion: It is the student’s responsibility to monitor his or her own grades and raise any
questions s/he may have within one week of the grades assigned.
8. Extra Credit: No Extra credit shall be given to make-up for missed quizzes, assignments, exams,
project, or poor performance in the course.

Learning Accommodations
To provide equal access to the educational programs and opportunities, IIM Kashipur is dedicated to providing
appropriate accommodations to students with documented disabilities such as attention deficit-hyperactivity
disorders, physical disabilities, sensory impairments, and psychiatric disorders in order to help them achieve their
academic and personal potential. These academic accommodations are provided to students at no cost.
Inclusivity Statement

IIM Kashipur believes that diversity and inclusiveness are essential to excellence in education and innovation.
Our community represents a rich variety of backgrounds, experiences, demographics, and perspectives. IIM
Kashipur is committed to fostering a learning environment where every individual is respected and engaged. To
facilitate a dynamic and inclusive educational experience, we ask all members of our community to:
• be open to the perspectives of others
• appreciate the uniqueness of their colleagues
• take advantage of the opportunities to learn from each other
• exchange experiences, values, and beliefs
• communicate in a respectful manner
• be aware of the individuals who are marginalized and involve them • keep confidential discussions private