MA0043 & CORPORATE BANKING

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ASSIGNMENT

DRIVE	FALL 2014
PROGRAM	MBADS (SEM 4/SEM 6) MBAFLEX/ MBA (SEM 4) PGDBMN (SEM 2)
SUBJECT CODE & NAME	MA0043 & CORPORATE BANKING
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.

Q. 1. Explain the role of RBI in growth of Corporate Banking. Write the principles of lending to corporate sector.

Answer:Compared to the pre-90’s reforms era, Indian banking has undergone a paradigm shift and evolved beyond the traditional role of financial intermediation. Over the last decade and a half, the health and resilience of the banking system has improved though there has been some deterioration in the recent past. Analysing the various

Q. 2. Write short notes on:

a) Loan Syndication

b) Commercial Paper

c) Certificate of Deposit

Q. a) Loan Syndication

Answer: It is a process of involving several different lenders in providing various portions of a loan. Loan syndication most often occurs in situations where a borrower requires a large sum of capital that may either be too much for a single lender to provide, or may be outside the scope of a lender's risk exposure levels. Thus, multiple lenders

Q. b) Commercial Paper

Answer: It is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on commercial paper rarely range any longer than 270

Q. c) Certificate of Deposit

Answer: It is a Commercial paper that is not usually backed by any form of collateral, so only firms with high-quality debt ratings will easily find buyers without having to offer a substantial discount (higher cost) for the debt issue.  A major benefit of commercial paper is that it does not need to be registered with the Securities and

Q. 3. Letter of Credit is a letter from bank guaranteeing that a buyer payment to a seller will be received on time and for the correct amount.

Give a brief introduction of letter of credit and write the complete mechanism of letter of credit. Explain the types of letter of credit.

Answer: Letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Letters of credit are often used in international transactions to ensure that payment will be received. Due to the nature of international dealings including

Q. 4.Forfaiting was originated in 1960. It is an international supply chain financing.

Explain the process of forfaiting and its characteristics. Write the differences between Factoring and Forfaiting.

Answer: Forfaiting is a purchasing of an exporter's receivables (the amount importers owe the exporter) at a discount by paying cash. The forfaiter, the purchaser of the receivables, becomes the entity to whom the importer is obliged to pay its debt. By

Q. 5.Explain the internal and external reasons for industrial sickness.

Answer: The various external and internal causes of Internal Sickness in India have been discussed below:

1. External causes

·         Recession in the Market: Sometimes recession hits the whole industry as a result of which individual units are unable to sell their products. The availability of credit is also restricted during such times which jeopardize the

Q. 6. Explain the main features of Foreign Exchange Management Act (FEMA). Give the differences between Foreign Exchange Regulation Act (FERA) and FEMA.

Answer: The Foreign Exchange Management Act (FEMA) was an act passed in the winter session of Parliament in 1999, which replaced Foreign Exchange Regulation Act. This act seeks to make offences related to foreign exchange civil offences. It extends to the whole of India. The Foreign Exchange Regulation Act (FERA) of 1973 in India was replaced on June 2000 by the Foreign Exchange Management Act (FERA), which was passed in 1999. The FERA was passed in 1973 at a time when there was acute shortage of foreign exchange in the country.

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