MA0043 - CORPORATE BANKING

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ASSIGNMENT

DRIVE FALL	2013
PROGRAM	MBADS – (SEM 4/SEM 6) / MBAN2 / MBAFLEX – (SEM 4)
SUBJECT CODE & NAME	MA0043 - CORPORATE BANKING
SEMESTER	4
BK ID	B1817
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.

Q1. Research over the Internet or newspapers, and find the highest amount of advance extended by a Corporate Bank to an individual and to a Company and quote the reasons given by the debtor for seeking the advance.

Answer. The name of such bank is canara bank. Its borrowed Borrowing by banks under the Reserve Bank of India’s (RBI) daily Liquidity Adjustment Facility (LAF) touched a record high on Thursday for the financial year, at Rs 170,140 crore.

It was Rs 164,615 crore yesterday. The system generally sees such high borrowing in March, when liquidity is invariably tight. On March 30, banks had

Q2. List and explain briefly the various types of letter of credit documents. List and explain the steps that must be taken to evaluate the documents attached with the letters of credit.

(Various types of letter of credit documents-5 marks, Explain the steps-5 marks) 10 marks

Answer.

Various types of letter of credit documents

An LC is an undertaking by the importer’s bank that if the exporter exports the goods and produces the documents as stipulated in the letter, the bank would make the payment to the exporter. Thus the obligation of the importer under the contract is supplemented by a superior obligation of a bank to make payment. The exporter then looks to the bank which opened the letter of credit for payment instead of relying on the importer. An LC may be a clean credit or a documentary credit. Almost all commercial credits (issued for financing foreign trade) are

Q3. Prepare a report on the role of EXIM bank in facilitating pre and post-shipment finance. (Pre -shipment finance-5 marks, Post shipment finance-5 marks) 10 marks

Answer.

Exim Bank lays special emphasis on extension of Lines of Credit (LOCs) to overseas entities, national governments, regional financial institutions and commercial banks. Exim Bank also extends Buyer’s credit and Supplier’s credit to finance and promote country’s exports. The Bank also provides financial assistance to export-oriented Indian companies by way of term loans in Indian rupees or foreign currencies for setting up new production facility, expansion/modernization or up gradation of existing facilities and for acquisition of production equipment or

Q4. Prepare a chart listing some of the important Indian banks that have introduced channel banking and Green Banking programs.

(channel banking-5 marks, Green Banking programs-5 marks) 10 marks

Answer.  

Evolution of Channel Banking

Banking jargon like multi-channel banking, cross-channel banking and now, omni-channel banking, has led to confusion among bankers and customers alike. Bankers are unsure as to what banks actually want to offer to their customers, while customers do not know what they can expect from banks' channel banking solutions.

Banks tend to use the omni-channel pitch to rise above competition but clients may not discern this as a significant value-add to the existing services. The onus is therefore on banks to communicate clearly and educate their customers about the difference between omni-

Q5. Reliance industries want to raise capital by selling stocks, through the mechanism of book building, by offering Initial Public Offers (IPOs). Discuss the book building process.

(Book building process.-5 marks, Methods and guidelines-5 marks) 10 marks

Answer.

Book building process

Book Building is basically a capital issuance process used in Initial Public Offer (IP0) which aids price and demand discovery. It is a process used for marketing a public offer of equity shares of a company. It is a mechanism where, during the period for which the book for the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The process aims at tapping both wholesale and retail investors. The offer/issue price is then determined after the bid closing date based on certain evaluation criteria.

The Process:

·         The Issuer who is planning an 120 nominates a lead merchant banker as a book runner'.

·         The Issuer specifies the number of securities to be issued and

Q6. Suppose you are working as risk manager in a private bank. As a manager, discuss the issues and challenges of corporate banking

(Issues of corporate banking-5 marks, Challenges of corporate banking-5 marks)10 marks

Answer:

Issues of corporate banking

Corporate Banking, through its main tool of lending, integrates the monetary and real sectors of the economy. This paper attempts to analyze the evolutionary and revolutionary developments in corporate banking, the critical issues today and the future prospects of a healthy, collaborative, and competitive relationship between the banking an d corporate sectors, in the Indian context. Theories and empirical studies have deliberated on the roles of the banking and market systems, and actual events corroborate their findings that both play important roles in financial development. Technology and innovation have transformed corporate banking, which also weathered many storms, including the recent meltdown n. India has emerged better than many countries from the crisis, thanks

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