MA0044 - Institutional Banking

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Summer 2013

Master of Business Administration - MBA Semester 4

MA0044 - Institutional Banking– 4 Credits

(Book ID: B1313)

Assignment- 60 marks

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.

Q1. Development Banks or Development Financial Institutions (DFIs) in India were established mainly to provide long term capital for industry and trade. Write a detailed note on the origin of DFIs and the various facilities offered by them.

( explanation of the origin of DFIs -5 marks+ Listing the facilities offered by FDI-5 marks) 10 marks

Answer :  Origin of DFIs:

The concept of development banking rose only after Second World War ,Successive of the Great Depression in 1930s. The demand for reconstruction funds for the affected nations compelled in setting up a worldwide institution for reconstructions. As a result the IBRD was set up in 1945 as a worldwide institution for development and reconstruction..

Q2. In India, the concept of Micro Finance was launched in the year 1992. Discuss the products and services offered by MFIs in India.

( explanation of MFI- 3 marks; explanation of products and services offered by MFIs in India -7marks) 10 marks

Answer : MFI :

Microfinance is a form of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are:

(1) relationship-based banking for individual entrepreneurs and small businesses; and

(2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

Q3. Discuss the role of NABARD in rural housing development.

(introduction of NABARD-3 marks; explanation of role of NABARD-7marks) 10 marks

Answer : Introduction of NABARD :

National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India having headquarters based in Mumbai (Maharashtra)[3] and other branches are all over the country. The Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD), set up by the Reserve Bank of India (RBI) .

Q4. Discuss the various activities carried out by commercial banks these days that are common to clients of both commercial banks and development banks.

(Commercial banks- 2 marks; development banks-2 marks; explanation of activities that are performed by both commercial and development banks-6marks) 10 marks

Answer :  Commercial banks :

A commercial bank is a type of bank that provides services, such as accepting deposits, giving business loans and basic investment products. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to individual members of the public (retail banking).

Q5 What are the various products and services offered by the Derivatives section of a bank treasury? (Derivatives meaning- 2marks; explain the products and services offered by the Derivatives section of a bank treasury –8marks) 10 marks

Answer :  Derivatives :

A derivative is a financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate- it has no intrinsic value in itself. Derivative transactions include a variety of financial contracts, including structured debt obligations and deposits, swaps, futures, options, caps, floors, collars, forwards, and various combinations of these.

Q6. FIU-IND was set up by the Government of India on 18th November 2004 as the central national agency responsible for receiving, processing, analysing and disseminating information relating to suspect financial transactions. Discuss the role of FIU-IND?

(FIU-IND origin- 2marks; explanation of role of FIU-IND -8 marks) 10 marks

Answer : FIU-IND Origin :

Financial Intelligence Unit – India (FIU-IND) was set by the Government of India vide O.M. dated 18th November 2004 as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes.