MA0038 & BANKING OPERATIONS

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ASSIGNMENT

 

DRIVE WINTER 2014
PROGRAM MBADS (SEM 3/SEM 5)MBAFLEX/ MBA (SEM 3)PGDBMN (SEM 1)
SUBJECT CODE & NAME MA0038 & BANKING OPERATIONS
BK ID B1616
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.

 

  1. 1. Banking accepts deposits of money from public for the purpose of lending and investment. Based on this explain the principles of banking and payment system constituent.

 

Answer:Explanation of principles of banking: The central practice of banking consists of borrowing and lending. As in other businesses, operations must be based on capital, but banks employ comparatively little of their own capital in relation to the total volume of their transactions. Instead banks use the funds obtained through deposits and, as a precaution, maintain capital and reserve accounts to protect against losses on their loans and investments and to provide for unanticipated cash withdrawals. Genuine banks are distinguished from

 

 

 

 

  1. 2. To reach a destination, a definite plan is required. Business planning creates definite strategies. Give the introduction of business planning and targeting. Write down steps involved in the process of business planning and targeting and explain the planning tools and methods put in analysis.

 

Answer:A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals.

 

Business plans may target changes in perception and branding by the customer, client, taxpayer, or larger community. When the existing business is to

 

 

 

  1. 3. Banks accepts deposits and deposits are repayable to the depositors through the proceeds of investment and loans. You are supposed to explain the need for credit policy with bank rates. Also explain the credit process.

 

Answer:Explanation of need for credit with bank rates:Controlling credit in the Economy is amongst the most important functions of the Reserve Bank of India. The basic and important needs of Credit Control in the economy are-

 

  • To encourage the overall growth of the “priority sector” i.e. those sectors of the economy which is recognized by the government as “prioritized” depending upon their economic condition or government interest. These sectors broadly totals to around 15 in number.
  • To keep a check over the

 

 

 

  1. 4. Write short notes on:

 

  1. a) Interest rate risk:Interest rate risk is the risk that arises for bond owners from fluctuating interest rates. How much interest rate risk a bond has depends on how sensitive its price is to interest rate changes in the market. The sensitivity depends on two things, the bond’s time to maturity, and the coupon rate of the bond.The risk that an investment’s value will change due to a change in the absolute level of interest rates, in the spread between two rates, in the shape of the yield curve or in any other interest rate relationship. Such changes usually affect securities inversely and can be reduced by diversifying (investing in

 

 

 

  1. b) On-balance sheet adjustment:Traditionally, banks lend to borrowers under tight lending standards, keep loans on their balance sheets and retain credit risk—the risk that borrowers will default (be unable to repay interest and principal as specified in the loan contract). In contrast, securitization enables banks to remove loans from balance sheets and transfer the credit risk associated with those loans.

 

For example, when a bank has

 

 

  1. c) Off-balance sheet adjustment: Off-balance sheet (OBS), or Incognito Leverage, usually means an asset or debt or financing activity not on the company’s balance sheet. Some companies may have significant amounts of off-balance sheet assets and liabilities. For example, financial institutions often offer asset management or brokerage services to their clients. The assets managed or brokered as part of these

 

 

 

 

  1. 5.What do you understand by forfaiting? Explain on Forfaiting an export finance option. Write the benefits of exporters from forfaiting.

Answer: In trade finance, forfaiting is the financial transaction involving the purchase of receivables from exporters by a forfaiter. The forfaiter takes on all the risks associated with the receivables but earns a margin.[citation needed] The forfaiter may also be immunized from certain risks if the transaction involves payment by negotiable instrument. The forfaiting is a transaction involving the sale of one of the firm’s transactions. Factoring is also a financial transaction involving the purchase of financial assets, but factoring

 

 

  1. 6. Explain Automated Teller Machine (ATMs), write the benefits of ATM. Explain the benefits of leveraging technology.

 

Answer:An automated teller machine or automatic teller machine(ATM, American, Australian, Singaporean, Indian, Maldivian, Hiberno and Sri Lankan English), also known as an automated banking machine (ABM, Canadian English), cash machine, cashpoint, cashline, or colloquially hole in the wall (British and South African English), is an electronic telecommunications device that enables the customers of a financial institution to perform financial transactions without the need for a human cashier, clerk or bank teller.

 

 

Dear students get fully solved assignments

Send your semester & Specialization name to our mail id :

 

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or

Call us at : 08263069601

(Prefer mailing. Call in emergency )

 

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