Project 1

UNIVERSITY OF MUMBAI
PROJECT ON
CORPORATE GOVERNANCE IN BANKS
BACHELOR OF COMMERCE
BANKING & INSURANCE
SEMESTER V
(2017-2018)
SUBMITTED
In partial Fulfillment of the requirement for the
Award of Degree of Bachelor of Commerce Banking & Insurance.
SUBMITTED BY,
SAURABH SADANAND BAGWE
ROLL NO. - 06
UNDER GUIDANCE,
Asst. Prof. KUNAL SONI
MAHARSHI DAYANAND COLLEGE OF ARTS, SCIENCE &

COMMERCE PAREL, MUMBAI 400 012.
MAHARSHIDAYANANDCOLLEGE
OF ARTS, SCIENCE & COMMERCE
PAREL, MUMBAI 400 012.
CERTIFICATE
This is to certify that MISS/MR. SAURABH SADANAND BAGWE

of B.Com (Banking & Insurance) Semester V (2017-2018) has
successfully completed the project on CORPORATE GOVERNANCE
IN BANKS under the guidance of ASST. PROF. KUNAL SONI.
Course Coordinator Principal
Project Guide/Internal Examiner External Examiner

DECLARATION
I am MISS/MR SAURABH SADANAND BAGWE. The student of B.

com (Banking & Insurance) Semester V (2017-2018) hereby declares
that I have completed the Project on CORPORATE GOVERNANCE
IN BANKS. The information submitted is true and original to the best of
my knowledge.
Signature of student
Name of Student
MR. SAURABH S BAGWE.
Roll No. 06
ACKNOWLEDGEMENT
The college, the faculty, the classmates & the atmosphere, in the college
were all the favorable contributory factors right from the point when the
topic was to be selected till the final copy was prepared. It was a very
enriching experience throughout the contribution from the following
individuals in the form in which it appears today. We feel privileged to
take this opportunity to put on record my gratitude towards them.
PROF. KUNAL SONI made sure that the resource was made available
in time & also for immediate advice & guidance throughout making this
project. The principal of our college DR. T.P. GHULE and our Vice-
Principal Mrs. SANJEEVANI PHATAK has always been inspiring &
driving force. We are thankful to Mr. SANTOSH SHINDE associated
with administration part of Financial Markets & Banking & Insurance
section has been very helpful in making the infrastructure available for
data entry.
EXECUTIVE SUMMARY
The important role of the private sector in economic development and job
creation has become more visible in the past few years. Policy makers and
regulators in the public sector are increasingly recognizing the positive impact of a
good Corporate Banking regime in safeguarding the interests of a wide range of
constituencies as well as the communities in which they are active. They also
realize its importance for the efficient use of corporate capital.
Corporate Banking is, in fact, now considered by the Basle Committee on

Banking supervision of the Bank for international Settlements to be a basic
element in the stability of financial markets.
This report is aimed at presenting the most important principles of corporate

banking and their implications for banking organizations.
INDEX
1. Introduction . 1
1.1 What Is Corporate Banking ... 2
2.Literature Review 5
2.1 Why Banks Are Special ......... 5
2.2 The Challenge posed by Bank Holding Companies .. 6
3. Brief Description of Corporate Banking . 8
3.1 The Service Offered ............... 8
3.2 Trends & Critical Issues 10
3.3 CSR Initiatives ... 11
4. Role of Banks in Indian Economy ... 12

5. Significance of Corporate Banking . 14
6. Corporate Finance Vs. Investment Banking 15

6.1 Corporate Finance .. 15
6.2 Significance ... 15
6.3 Investment Banking ... 16
6.4Importance 16
6.5 Relationship ... 17
7. Difference Between Corporate & Commercial Banking . 18
7.1 Commercial Banking . 18
7.2 Corporate Banking . 18
7.3 Government ... 19
7.4 Globalization . 19
8. Benefits of a Corporate Banking Account ... 20
8.1 How to set One Up 20
8.2 What Are the Benefits ... 20
9. Challenges And Opportunities for Retail and Corporate
in a Fast Changing and Globalizing World . 22
10. Features of Corporate Banking 30
10.1 International Transactions ... 31
10.2 Investment Banking . 31
10.3 Project Financing . 31
10.4 Insurance .. 31
10.5 Advisory services 32
10.6 Corporate Brokerage Services . 32
10.7 Shareholding 32
10.8 Asset Custody .. 32
11. Options and Corporate Finance: Extensions and

Applications . 33
12.Corporate Internet Banking 36
12.1 Overview . 36
12.2 Key Product Features are . 36
12.3 Transaction Initiation 36
12.4 Work Flow Automation ... 37
12.5 Exchange Rates .... 38
12.6 Loans, Depot and standing Orders .. 38
12.7Statement of Account ... 38
12.8Leading Edge Security .. 38
13. Career Information About Corporate Banking 39

13.1 Cash Management 39
13.2 Credit Analysis & Approval 39
13.3 Credit Administration .. 39
13.4 Project Financing . 39
13.5 Relationship Management-Enterprise Banking ... 40
13.6 Relationship Management Wholesale Banking . 40
13.7 Sales & Marketing- Transaction services 40
13.8 Structured Financing Advisory 40
13.9 Trade Finance .. 41
13.10 Transaction Processing, Control & support ... 41
13.11 Career Progression . 41
14. Future of corporate Banking .... 43

14.1 Realistic Goals . 43
14.2 Next-Gen step .. 44
15. Conclusion ... 45

16. Bibliography 47
M. D. College of Arts, Science and Commerce Corporate Banking
1. INTRODUCTION
A social institution including a corporate entity derives its legitimacy from

its ability and desire to fulfill social needs. It is therefore, accountable to the
society. No institution, however high and mighty it is, can ignore its responsibility
towards society from which it derives its strength and sustenance. In the case of
bank the public stake is very high as the maximum amount of deposit belongs to
them in comparison to the owners of the bank; the public stake is very high as the
maximum amount of deposits belongs to them in comparison to the owners of the
bank. Therefore the accountability of banks to public is much higher. The number
and the magnitude of scams in the banking industry during the last few years and
crisis in co-operative banks have rocked the nation and faith of the depositors
which calls for a greater need for corporate governance. The only way which can
rebuild public faith to run the financial institutions is to adopt good governance.
Corporate Governance is a very broad concept. As Governance is not

Government, Corporate Governance is not just Corporate Management. It is
something much broader to include a fair, efficient and transparent administration
to meet certain well- defined objectives.
It is the system by which businesses are directed and controlled by the

management in the best interest of the stakeholders and others ensuring greater
transparency and better and timely financial reporting. It is a system of running a
business organization on certain ethical principles. There cannot be a universally
accepted definition of the term corporate governance. It can be broadly understood
as a system of structuring, operating and controlling a company with a view to
achieve long term strategic goals to satisfy shareholders, employees, customers and
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suppliers and complying with the legal and regulatory requirements, apart from
meeting environmental and local community needs. Its main emphasis is on
accountable business leadership, which is a vital element of corporate democracy.
Corporate Governance strives to develop a system of checks and balances major
key players namely Board of Directors, Management, Auditors and last but not
least shareholders.
1.1 What Is Corporate Banking?
Corporate banking, also called corporate financing, is a specialized branch

of finance that deals specifically with corporations and their needs.
The job of a corporate banker is to enhance the corporate value of the

company--its overall worth, not just income--and to make sure that financial risks
are minimal. Managerial finance, which deals with the financial needs of all firms,
is a similar but more generalized field.
1.1.1 Function
A corporate banker or financier is expected to make a variety of long-term

and short-term decisions regarding the corporation's financial future. Most
short-term decisions involve dealing with cash flow, managing inventory
and general questions of credit and debt.
o Long-term decisions that a corporate banker would be responsible for

involve what investments the company will make and what dividends
would be paid out to shareholders. Some corporations use specialized
investment bankers to design their investment portfolios and raise
appropriate capital.
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1.1.2 Types
The various short-term responsibilities of a corporate banker can be grouped

together under the heading of "working capital." This involves managing
working capital and deciding how to handle the corporation's short-term
finances. Meanwhile, the long-term responsibilities can be gathered together
under the heading of "capital investment," which involves making decisions
related to the corporation's fixed assets and capital structure.
1.1.3 Benefits
o A corporation deals with significantly larger sums of money than
individuals or smaller firms, and as a result there are a number of

specialized tools and analysis disciplines that have evolved to deal
solely with the needs of corporations. Many of these disciplines have
limited use outside of the corporate field. Therefore it is a clear
benefit to the firm to have someone who is familiar with those tools.
1.1.3.1 Theories or Speculation related to Cooperative Banking
o Risk management is a process that involves measuring what risks the
corporation has to take and how to minimize them. Many large firms
will have their own risk management teams, but since most financial
risk a business is exposed to is a result of corporate financial
decisions, it is important for a corporate banker to be familiar with the
discipline.
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1.1.4 Considerations about Corporate Banking

There are a number of ways to approach a career in corporate banking. These
include qualifications such as a master's degree in finance or business
administration, certifications such as Chartered Financial Analyst, Certified
Business Manager, Certified Public Accountant or Chartered Accountant.
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2. LITERATURE REVIEW
2.1 Why Banks Are Special?
The role of banks is integral to any economy. They provide financing for
commercial enterprises, access to payment systems, and a variety of retail financial
services for the economy at large. Some banks have a broader impact on the macro
sector of the economy, facilitating the transmission of monetary policy by making
credit and liquidity available in difficult market conditions.17 The integral role that
banks play in the national economy is demonstrated by the almost universal
practice of states in regulating the banking industry and providing, in many cases, a
government safety net to compensate depositors when banks fail. Financial
regulation is necessary because of the multiplier effect that banking activities have
on the rest of the economy. The large number of stakeholders (such as employees,
customers, suppliers etc), whose economic well-being depends on the health of the
banking industry, depend on appropriate regulatory practices and supervision.
Indeed, in a healthy banking system, the supervisors and regulators themselves are
stakeholders acting on behalf of society at large. Their primary function is to
develop substantive standards and other risk management procedures for financial
institutions in which regulatory risk measures correspond to the overall economic
and operational risk faced by a bank. Accordingly, it is imperative that financial
regulators ensure that banking and other financial institutions have strong
governance structures, especially in light of the pervasive changes in the nature and
structure of both the banking industry and the regulation which governs its
activities.
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2.2 The Challenge posed by Bank Holding Companies
According to Akhgbe et al (2004), bank holding companies and financial

conglomerates pose a special type of agency problem for regulators because these
financial companies often own separate subsidiaries and divisions that perform
various financial functions, often in multiple jurisdictions. The complex structure
of conglomerates and financial holding companies pose a particular type of agency
problem which is not necessarily the same as within the individual bank or
financial institution. This is an important question because most banks and
financial institutions operate within holding companies and multi-national financial
conglomerates that are composed of hundreds of subsidiaries and affiliate
companies that operate in multiple jurisdictions. What is the nature of the
principal-agent problem within these banking groups or conglomerates? It may
depend on the structure of the management within the conglomerate. For instance,
does the holding company have a centralized management structure controlled by
the board of directors and managers of one company, or is it more diffuse with
management authority shared among several or more subsidiaries and affiliates
within the group? Identifying the exact nature of the principal-agent problem will
likely depend on which company or individual(s) exercise, or have the ability to
exercise, control over the groups operations. Saunders (1990) argues that this will
depend on whether there is alignment of interests and incentives between managers
and the block shareholders. This view is based on the notion that there are two
main factors affecting risk taking within the financial holding company: managers
incentive and block ownership.
The goal of regulating bank and financial holding companies should be to

align the incentives of the managers and directors of the holding company with
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those of the managers and directors of the subsidiaries which they control. The
regulator has a further responsibility to ensure that the incentives of the holding
company and its subsidiaries are socially optimal in so far as the social costs of
financial risk-taking should be minimised throughout the conglomerate. The
evidence from block ownership in bank holding companies shows that the presence
of safety nets (eg., lender of last resort) increases the incentive for risk-taking in
holding company structures, and these incentives can be difficult to estimate
because most financial holding companies in G10 countries operate in multiple
jurisdictions, which have different levels of safety net protection.
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3. BRIEF DESCRIPTION OF CORPORATE BANKING
Corporate banking typically refers to financial services offered to

large clients ('wholesale clients').
Although many wholesale clients are large corporations, they may also
include other institutions like pension funds, governments and other (semi-) public
entities. Corporate banking is a very profitable division for banks, far more
profitable than retail banking, which is aimed towards households and small and
medium
enterprises (SME's).
3.1 The Services Offered
The services offered by corporate divisions of banks include (a) general

commercial banking activities, and (b) services particularly tailored to large
clients such as multinational companies. (a): Commercial banking activities
include traditional banking services like deposit taking, lending, lines of credit, and
facilitation of various kinds of financial transactions (e-banking, credit cards, etc.).
Households and small and medium enterprises (SME's) also rely on this
range of services for their financial needs. (b): For wholesale clients, however,
many additional financial services are available, such as:
International transactions. International banking services include trade

financing and foreign exchange transactions. Banks also offer services to protect
firms against currency and price fluctuations.
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Investment banking. Large corporations and public institutions are

financed not only through loans, but through the sale of securities (stocks and
bonds) to the public. The services related to the issuing of securities are called
'investment banking', a business that used to be completely separated from
traditional commercial banking. In recent decades, the distinction between
traditional commercial and investment banks has become blurred, and nowadays
many banks offer both types of services. Investment banks perform underwriting,
that is they assist companies in issuing bonds or shares, and buy the initial offers at
a fixed price. Investment banking also includes providing advice and financing for
mergers and acquisitions (M&A's).
Project finance. For large infrastructure and other projects, banks offer
specific loans which are repaid based on the revenue generated by that project. For
some large and potentially risky projects, the bank can arrange a banking
syndicate, wherein a group of banks each lend a client a portion of a large loan.
Project finance can also include the sale of project-specific bonds.
Insurance. Banks may also sell insurance products, although insurance is

traditionally not a banking activity. Again, consolidation in the financial services
industry has brought together many different financial services. These services
allow corporate clients to access many different services within a single financial
institution. While banks may also offer retail insurance products to individuals,
corporate insurance may cover company activities, staff and management.
Advisory services. Wholesale banking activities also include financial

advising for all kinds of corporate and financial activities, such as mergers and
acquisitions, asset management, and taxation (e.g. the use of tax havens)
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Shareholding. Banks can participate in the management of , and own

shares in, companies. A bank can, for example, buy a company's shares to help to
provide the company with some extra liquidity, if the company is in financial
distress.
3.2 Trends & Critical Issues

Speculative finance / Ponzi finance. Recently, there has been a trend
towards more speculative methods of financing. Previously, clients used to pay
back both the principal and the interest on loans through their cash flows;
nowadays many companies' cash flows are only sufficient to service their debt --
that is, cover their interest payments. Adverse circumstances, like small rises in
interest rates or declining company incomes, can result in the company not being
able to service their debt at all. This situation can lead to Ponzi finance, where a
company constantly raises new funds, often through hidden or innovative systems,
in order to pay other creditors. This practice is often facilitated by banks and other
financial firms that seek to make profits from increasingly complex finance
mechanisms. Obviously, an economy dominated by such speculative 'Ponzi
finance' may be fragile and susceptible to crisis, as it becomes dependent on
continuing asset price inflation and larger amounts of debt. Increasingly, there are
cases of companies that get into trouble as a result of using Ponzi finance, and may
go bankrupt. Authorities can intervene, but such intervention may only encourage
more 'Ponzi finance' to a point where the excessive amount of debt is beyond
salvation.
Conflict of interests. As mentioned above, banks offer an increasingly
broad scope of financial services to their corporate clients. One could argue this
leads to a more comprehensive provision of financial services. On the other hand,
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however, the danger for conflicts of interest to occur also increases, as banks and
companies become more and more intertwined. For instance, if banks underwrite
bonds for a certain company at a specific price, they may be tempted to sell these
bonds to investors who seek the bank's advice in their asset management decisions.
Another risk that became apparent in recent years stems from the use of the above-
mentioned Ponzi schemes. When a company is accumulating debt, and is not able
to meet its interest obligations, financial firms may help develop all kinds of
'creative' mechanisms to channel funds to the company, and hide the company's
debt. Banks may become increasingly involved in fraudulent practices, especially
if bank representatives also have a seat in the company's board or own its shares.
This occurred in the collapse of Parmalat, the Italian dairy producer.
3.3 CSR Initiatives

Of course, protecting investors from the practices described above is not
really a matter of Corporate Social Responsibility. The practices described, like
false prospectuses and misleading advices, are simply illegal. Following the
corporate scandals in United States and Europe, governments have taken some
steps to reduce these conflicts, but critics argue that the reforms have not gone far
enough.
More traditional sustainability issues are also critical for the corporate
banking sector. Given its role in facilitating all kinds of corporate practices, banks
have a great role and responsibility in advancing sustainability. Currently, CSR
initiatives directed to corporate banking mainly cover only a small part of company
financing by banks. The Equator Principles, for example, offers clear indicators to
what environmental and social conditions projects have to fulfil to be financed.
Several other banks have adopted other environmental standards around forestry,
oil & gas, and mining. However, corporate banks have a long way to go in
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addressing sustainability. For example, most investment banks still do not perform
environmental and social screening on the companies for which they raise funds.
Also, the practice of assisting clients with the use of tax havens and other offshore
markets is very dubious. Since September 11, governments have paid more
attention how these offshore centres can be linked to all kinds of illegal and
unsustainable activities. Although some steps have been made to prevent money
laundering, efforts to combat tax havens have been limited.
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4. Role of Banks in Indian Economy
In India , as in many developing countries , the commercial banking sector

has been the dominant element in the countrys financial system . The sector has
performed the key functions of providing liquidity and payment services to the real
sector and has accounted for the Bulk of the financial intermediation process .
Besides institutionalizing savings , the banking sector hascontributed to the process
of economic development by serving as a major source of credit tohouseholds ,
government , business and to weaker sectors of the economy like village and
smallscale industries and agriculture. Over the years, over 30-40% of gross
household savings , havebeen in the form of bank deposits and around 60% of the
assets of all financial institutionsaccounted for by commercial banks.
An important landmark in the development of banking sector in recent years

has been theinitiation if reforms following the recommendations of the first
Narasimham Committee onFinancial System. In reviewing the strengths and
weaknesses of these banks , the Committeesuggested several measures to
transform the Indian banking sector from a highly regulated to amore market
oriented system and to enable it to compete effectively in an increasingly
globalisedenvironment . Many of the recommendations of the Committee
especially those pertaining toInterest rate , an institution of prudential regulation
and transparent accounting norms were in line with banking policy reforms
implemented by a host of developing countries since 1970s .
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5. SIGNIFICANCE OF CORPORATE BANKING
1) Banks have an overwhelming dominant position in developing economy

financial systems and are extremely importance engines of economic
growth.
2) As financial markets are usually underdeveloped banks in developing

economies are typically the most important source of finance of majority of
the firms.
3) As well as providing a generally accepted means of payment, banks in

developing countries are usually the main depository for the economys
savings.
4) Many developing economies have recently liberalized their banking system

through privatization disinvestment and reducing the role of economies
regulation. Consequently, managers of banks in these economies have
obtains greater freedom in how they run their banks.
5) Due to the unique nature of the banking firms, whether in the developing or
developed world, requires that the board view of corporate banking, which
encapsulates both shareholder and depositors, to be adopted for banks. In
particularly, the nature of banking firm is such that regulation is necessary
to protect depositors as well as the overall financial system.
6) The separation of ownership and control has given rise to agency problem
whereby Management operate the firm in their own interest, not those of
shareholders.
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6. CORPORATE FINANCE Vs.

INVESTMENT BANKING
Businesses need cash to finance their operations, especially when sales are
mediocre or customers show sluggish payment patterns. In fact, the economic and
operational stakes might be considerable for firms with no access to fresh sources
of funding.
To ensure that a company's cash levels are adequate for short-term business
funding, top management relies on corporate finance and investment banking
professionals.
6.1 Corporate Finance
Corporate finance consists of tools, strategies and the analytical framework

that an organization relies on to fund its activities. All organizations -- including
charities and government agencies -- use financial procedures to ensure that
operating strategies are appropriate, depending on business needs.
For corporate finance personnel, the order of the day is to make sure the firm
has enough cash to pay for day-to-day expenses without depleting long-term,
rainy-day liquidity reserves.
6.2 Significance
In the corporate setting, financial activities enable department heads to

prevent the operational standstill that often comes with insufficient cash flows.
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Usually a tell-tale sign of moribund sales or poor financial planning, a lack of

funds presents business unit chiefs with various challenges, most notably the
inability to pay vendors and hire qualified personnel.
To avoid the doldrums associated with deficient cash flows, top leadership
reviews liquidity movements in various business units, focusing on how these
individual cash flows affect total amounts in corporate coffers.
6.3 Investment Banking
Investment banking professionals help companies meet their liquidity needs,

with an emphasis on how to fund long-term projects. By helping businesses and
governments raise money, investment bankers provide the platform necessary to
spur economic growth.
A company may raise cash on financial markets or in private transactions.

Financial markets, also known as securities exchanges, include the New York
Stock Exchange and London Stock Exchange. Publicly listed firms may sell stocks
or bonds, among other products. In private transactions, a company discusses loan
arrangements directly with a group of institutional investors, such as banks,
insurance companies and private-equity funds.
6.4 Importance
Investment banking plays an important role in the economy. In addition to

helping companies raise cash, investment bankers provide guidance in a string of
activities.
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These include mergers, acquisitions and divestitures, which are transactions

in which companies sell business units. Investment banking permeates other facets
of the economic sphere, helping individuals reach retirement goals through wealth-
advisory services.
6.5 Relationship
Corporate finance is distinct from investment banking, but both concepts

often interrelate. The primary objective of investment banking is to help companies
raise cash, a goal that stands atop the list for corporate finance professionals.
To carry out their tasks adeptly, investment bankers rely on performance

metrics and operating indicators. Also known as financial ratios, these metrics
enable investors to come to terms with a company's economic status.
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7. DIFFERENCE BETWEEN CORPORATE &

COMMERCIAL BANKING
The banking sector has played a major role in the modern economy since its
introduction during the commercial revolution of the 17th century, providing the
basic infrastructure that underlies most economic activity.
While the banking sector may appear at times to be largely homogeneous, this
is far from the truth, with many specializations existing within the industry. The
difference between corporate and commercial banking is largely the difference
between the customers being served.
7.1 Commercial Banking
o Commercial banking usually describes banking that is focused on the
average consumer. These are mostly the services provided by any

local savings and loan bank. Checking and savings accounts, as well
as personal and small business loans, make up the core activities of
commercial banking.
7.2 Corporate Banking
o Corporate banking is generally used to describe those banking
activities that deal with large businesses and corporations. Large-scale

loans to businesses and major investments make up the largest part of
this activity.
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o Many large businesses would be unable to operate without the ready

credit supplied by corporate banking. Corporate bankers issue short-
term debt to large businesses in the form of "commercial paper,"
without which many businesses would be unable to operate and
perform day-to-day operations.
7.3 Government
o The federal government has come to play an extensive role in the
activities of both corporate and commercial banking. Through the

Federal Deposit Insurance Corporation, the federal government
directly insures the money placed in every personal banking account.
The federal government has been involved in the large-scale bailout of
many banks to avert economic crisis. A system of regulation exists to
regulate activities in both corporate and commercial banking.
7.4Globalization
o As the modern economy has become more global in nature, corporate

banking has followed suit and become very much a part of an
international network of investment and trade.
Commercial banking has been much slower to follow this trend as
consumers continue to prefer their local banks. The average
consumers are much more likely to trust a bank that they are already
familiar when it comes to securing their own personal savings.
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8. BENEFITS OF A CORPORATE BANKING ACCOUNT
Opening a corporate bank account is quite simple, but it is a big step

forward for any organization. If youre opening a corporate bank account, chances
are your business is growing to a point where banking is becoming a necessary
part of doing business (which is great because that usually means the money is
flowing in). Here is what you need to know about a corporate banking account.
8.1 How to Set One Up
The first step in getting a corporate bank account is setting one up. To get a
corporate bank account, you need to select a bank, and then bring in a copy of your
certificate of incorporation issued by your state. You also need to sign up for a
Federal Employer Identification Number (EIN) and bring that with you as well.
Depending on your company type, you may not need an EIN for taxes, but most
financial institutions require one for banking.
On the company side of things, you need to pass a corporate resolution that
will specifically state that you can have a bank account, and which individuals are
allowed to act for the corporation in banking matters. The bank will require a copy
of this as well. Make sure that you only have people you trust conducting banking
transactions for you.
8.2 What Are the Benefits
Having a corporate banking account has a lot of benefits. As your company

grows, it is helpful to have different corporate finance accounts for different
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purposes, including ones for reserves and other savings. Should another financial
crisis occur, and cash flows become tight, you want to have a reserve available to
continue to be able to conduct business.
Another perk of having a corporate banking account is the access to

professional bankers that can help you with any aspect of finances in regard to
your company. This could be help with cash management, accounts payable and
receivable, conducting international transactions, and more. Also, corporate
bankers can help you make sure that your liquid accounts stay safe, so that you can
always be ready to conduct business as needed.
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9. CHALLENGES AND OPPORTUNITIES FOR RETAIL

AND CORPORATE BANKS IN A FAST CHANGING AND
GLOBALIZING WORLD
The deep crisis in the banking sector and the fast-changing environment are
forcing retail and corporate banks around the globe to change their business
models, and to look for new profit opportunities.
Banks in mature markets are focusing on deleveraging their balance sheets,
complying with solvency and liquidity requirements, and increasing their
operational efficiency. Return on Equity expectations have been gone back to pre-
2002 levels. At the same time, there are plenty of growth opportunities in the new
economies.
Management Centre Europe sees a big opportunity for banks serving the
growing middle class and the still un-banked population in the new world. Small
and Medium Enterprises (SME) are a major driver of economic growth. Some of
the emerging markets are leapfrogging ahead on infrastructure and taking the lead
in the convergence between banking, mobile communication and retailing.
A. Growth opportunities in emerging markets
1. Fast growth of the middle class
Strong growth in the young urban educated population results in an

important increase of Consumer Lending, both for housing and personal loans.
We observe a fast-growing portfolio with relatively high yields and good risk
indicators in countries like India, Russia, Turkey and selective African countries.
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At the same time, the Wealth Management segment is booming in almost

all emerging markets, and especially in new oil- or natural resource-rich
economies. The growing demand for Asset Management products creates a strong
need to improve the quality of service and to develop advisory services for the
wealthy and middle class population.
The major challenge for banks is to become customer-centric while
increasing the banks profitability.
2. SME banking is the driver for economic growth
In emerging economies, Small and Medium Enterprises have even a higher

impact on economic growth compared to the Western world. Moreover, they
develop faster than large corporations. Now they are already responsible for up to
50% of GDP and over 70% of the workforce. SMEs are critical for the economic
and social development in creating jobs and generating income.
Offering services to SMEs is a key opportunity for economic growth. Often
these companies are too large for micro-financing and too small to obtain loans
from international institutions (funding gap). Creative solutions might include the
development of innovative financial packages with smart subsidies from local
government to sustain SME financing, local-international partnerships to
mitigate currency and transactional cost risks (local banks with offshore partners),
or the structure of lending to SMEs with the option to convert credit in to equity
at lower interest rates.
To increase customer loyalty, a customer-centric model and a relationship
approach are needed. The creation of a simple value proposition to cover
customer needs (current account with overdraft, simple cash management, user-
friendly electronic banking system, payment cards, number of allowed transactions
within basic price) combined with risk-adjusted relationship pricing and
23 | P a g e
dedicated relationship management will make the difference. It is clear that the
SME segment (different from Corporate) requires a standardized and centralized
process for up to 90% of its transactions and a special track for long-term
investment loans.
3. Access to financial services for the 'un-banked'
In places like Africa and India, a high percentage of the population lives in
rural areas not meeting the qualifying criteria to open a bank account. In these
countries, the government, together with central banks, are setting up programmes
for regulatory reform, liberalization, and modernization of the banking industry.
The focus is on payment systems, settlement and clearing to support economic
growth. A key success factor of the business model is to lower the cost of retail
banking to service low-income customers with high efficiency and profitability.
The combination of a high percentage of un-banked (over 70% of

population), the boost in sales of mobile phones (over 400 million), the
partnerships between mobile operators and banks and the governmental support
(regularity reform) allows Africa to lead the way in mobile banking. Today
already 37% of cell phone owners in Africa use mobile banking services
(compared to 8,5% in leading European markets). By 2015, 238 million Africans
(or 55% of cell phone owners) are expected to be using mobile financial services.
It is the opportunity to reach a new customer segment and to boost fee revenues
while limiting the costs.
One of the success stories is M-PESA in Kenya, in partnership with
Safricom. M-PESA made the mobile phone the ATM, point of sale and internet
banking in one, creating access to financial services for the large un-banked (poor)
population. It has a large network of 17.500 agents compared to only 840 bank
branches to reduce the costs, generating high volumes of daily transactions with
interesting margins at lower costs for the clients. The financial services include
payments (mobile wallet), account management and mobile micro finance.
India required a different solution to provide safe, fast and easy payments
for the un-banked population. Only 1% of the cell phone owners in India uses it for
banking transactions. Branch penetration is low, while cost of banking
24 | P a g e
intermediation is high. The Federal Bank of India introduced an innovative

payment strategy to improve access to banking channels and to boost electronic
transactions. A unique 12- digit number linked to basic demographic and biometric
information (photograph and finger print scan) prevents fraud and makes it
possible to offer personal payment service from person to person, domestic and
international, in a few seconds. The same number can be used for payments with
both cards and mobiles.
B. Challenges for banks

Given these trends, Management Centre Europe sees fives major challenges
for retail and corporate banks around the globe:
1. Setting up for increased competition and expansion Prepare for new global
players entering local markets. Expand in new geographies with relevant customer
value propositions.
2. Keeping customers loyal in a multi-banking environment Become and remain
the customers bank of choice in times of decreasing customer loyalty.
3. Investing in the right technology Invest in technological innovation to achieve or
maintain leadership in a fast changing market place.
4. Ensuring profitability Adapt the operating model to ensure efficiency and
profitability.
5. Managing risk through the economic cycle Focus on sustainable growth while
managing risk and complying with Basel III requirements and new regulations.
C. Strategic directions to future growth in emerging markets
1. Customer centricity to improve customer trust and loyalty
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When competition increases in an industry, the best companies stand out

from the rest. Typically they do this by structuring a customer-needs-based
approach (value proposition and segmentation) combined with a proper right
pricing strategy (relationship pricing and risk based pricing) for each customer
segment. The same principle applies to the banking industry. Because of the higher
customer profitability a strong focus on the Wealth Management segment
(advisory, different product mix, relationship banking) is needed.
Not too many banks give great customer service. Therefore, it is exactly in service
excellence that a competitive bank can differentiate itself from rivals. This is the
key to retaining existing customers and gaining new ones. Having the right profile
of front end staff and giving them the necessary training and coaching is critical for
success.
There are clearly cross-selling opportunities between the corporate, SME

and retail segments if the one customer approach for both the private and
company needs gets implemented. A full integration of SME services in the Retail
Branch network makes sense, as well as cross-selling to corporate businesses
(promoting salary domiciliation, unsecured overdraft and loans, debit and credit
cards).
Russian mid-sized private banks, for example, have a tremendous

opportunity to gain market share if they develop a customer centric business model
with focus on service excellence and innovation.
2. Technological enhancement to support Customer Centricity
To be customer-centric and to be able to do the right segmentation, it is

important to invest in data capture and analytic capabilities. A 360-degree
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customer view and CRM tool is needed to understand and develop the needs of
the different customer segments and to create sales and cross-sales opportunities.
A high-performance core banking platform (automated, real time) is a competitive

advantage. Payments can be a money maker, but high-tech development is needed
to make it safe, fast and easy. Multi concepts, language, currency,... facilitate the
transfer to global markets.
Plenty of examples in Africa (mobile banking), India (unique customer

identification) and Brazil (ATM) demonstrate the implementation of high tech
solutions to capture new customer segments and to limit the cost of the branch
network. In Brazil the Central Bank of Brazil plays a leading role in technological
development creating efficiency and reliability for the whole Brazilian banking
system seen as one of the best in the world.
3. Efficient operating model to export to global markets
A centralized service with multi-product and multi-segment capabilities

together with lean processes (standardized, automatic, digitized, paperless and real
time) ensure safe, fast and easy service. Its important to focus on the core activity
and to consider outsourcing of non-core activities.
An industrialized approach for the mass market and SME segments

offering standard packages and relationship pricing ensure cost effective processes.
And with the right pricing strategy, you can drive the customers to the most
efficient channel.
There are attractive opportunities for partnerships with mobile operators and
retailers to capture the high volume business amongst the low income population,
through a low-cost distribution model. There are plenty of examples in Africa with
existing partnerships between banks, mobile operators and retailers.
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4. Smart branch network expansion or direct mobile banking?
With strong GDP growth in emerging markets, competitive focus is on

expansion and not on cost optimization. The question becomes how to expand in a
profitable and cost-effective way while adjusting to the local business
environment.
The right multi-channel mix between branches, ATM, Mobile Banking,

Internet and Call Centre provides the customer a 24/7 accessibility, while directing
him or her to the most efficient channel. In this mix, we see a clear trend to move
more towards mobile banking, complementing or even replacing the branch
network. For mass affluent and unbanked customers, it is the right time to
introduce Direct Mobile Banking 2.0 with the full range of Retail Banking
services.
In particular markets, there are still opportunities to expand the branch

network. This is thanks to the high economic growth, fast-growing middle class
and still relatively low branch penetration. The new branch model will be advisory
and service and sales oriented with a customer friendly pro-active approach
towards the most profitable segments (middle class, Wealth Management and
SME) and this way improve cross-sales and customer profitability.
Another possible solution to limit costs of distribution is the use of mobile

branches as Equity Bank in Kenya does. It has a good mix of prestige branches for
affluent customers, regular branches servicing all, with separate service for each
segment, and mobile branches (vans) to serve rural communities up to twice a
week. In Brazil, ATMs are high-performing and enable the customer to execute all
standard retail banking transactions. Banks in Brazil favor expansion of the ATM
network rather than expanding their branch network.
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5. Managing risk through the cycle
Western banks worry about the negative impact of the new Basel III
requirements on their profitability and economic growth (higher cost of capital
passed to borrowers). Emerging market bank can be more optimistic thanks to a
higher investment appetite (historically good return of banking stocks), growth
potential of their economies, and having escaped much of the crisis faced by the
West.
A major concern for banks is to maintain healthy credit portfolios and to

grow in a controlled way, monitoring all key credit ratios carefully to avoid too
high write offs. In particular markets, fast economic growth and a boost in
consumer lending during the last decade led to huge losses for banks. However in
Brazil, the second private bank, Banco Bradesco, grew its market share to 15% and
has become one of the leaders in assets with a very healthy credit portfolio.
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10. FEATURES OF CORPORATE BANKING
10.1 International Transactions

Banks can facilitate foreign exchange transactions and provide trade
financing. They can also work to protect their customers by mitigating the impact
of currency and price fluctuations.
10.2 Investment Banking

Bad credit car loans will generally cost borrowers more in interest than other
types of financing available. If keeping costs down as much as possible is the plan,
seeking out reasonably priced vehicles is not a bad idea. This, however, does not
mean that new cars need to be removed from the picture entirely. Sometimes
purchase incentives make new cars the wiser and even cheaper purchase on a
monthly basis than used.
10.3 Project Financing

Banks offer loans for large-scale projects, particularly infrastructure
projects. Those loans are repaid based on the revenue the project winds up
generating. If the project is deemed particularly risky, a group of banks can
agree to lend the client portions of the required loan. That way, if the risk
doesnt pay off, the fallout is reduced for every bank involved.
10.4 Insurance
Banks offer insurance to their large-scale clients. The insurance can cover
corporate activities, as well as staff and management.
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10.5 Advisory Services

Banks offer financial advice for an assortment of corporate and
financial activities. That includes:
Mergers and acquisitions
Asset management
Taxation issues, such as using tax havens.
10.6 Corporate Brokerage Services
Banks offer corporate brokerage services, negotiating financial transactions,

particularly mergers and acquisitions. This can include working with clients that
want to either:
sell off all or part of their businesses
acquire businesses and parts of the businesses
raise the funds necessary to make the above-mentioned transactions

successful
10.7 Shareholding
Banks can manage and own shares of their client companies. This is usually
done to assist financially distressed companies. Buying shares can provide it with
extra liquidity.
10.8 Asset Custody
Banks can protect their clients corporate assets. This includes setting up
accounts to store them, making regular audits to make sure that they remain intact
and issuing reports that assess the assets status on annual bases.
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11. Options and Corporate Finance: Extensions and

Applications
1. Many decisions have few embedded options and, in these cases, optionality can
be ignored. However, in many cases, options are an important aspect of the
decision and must be separately valued. In practice, there is a decision continuum.
At one end of the continuum are decisions with little optionality and at the other
are decisions with significant optionality.
2. Although Black-Scholes mode is more well known, the binominal model is

probably used more frequently in the real world. The flexibility of the binomial
model allows it to be applied to a wider range of situation.
3. Executive Stock Options:
I. Executive compensation is usually made up of base salary plus some or all of the
following elements:
a. Long-term compensation.
b. Annual bonuses.
c. Retirement contributions
d. Options.
II. Why are options increasingly being granted to executives?
a. Options make executives share the same interests as the stockholders. By

aligning their interests, it is argued that executives will make better decisions for
32 | P a g e
the benefit of the stockholders.
b. Using options allows the company to lower the executives base pay.
c. Options put an executives pay at risk, rather than guaranteeing it independent of

the performance oft the firm.
d. Options are a tax-efficient way to pay employees.
III. Valuing Executive compensation:
a. The exercise price is generally set equal to the market price of the stock on
the date the executive receives the options.
b. A call option on a dividend-paying stock is worth less than a call on a stock that
pays no dividends.
c. When options are a large portion of an executives new worth and the executive
is forced by the company to be undiversified, the total value of the position is
worth less to the executive than the fair financial market value.
4. Valuing a start-up
a. Two options: the option to abandon under bad conditions and the option to
expand under good conditions.
b. The notion of embedded options is at the heart of business.
5. Binomial model: option problems can be handled most easily by assuming

riskneutral pricing.
Step 1: Determining the risk-neutral probabilities: determine the probabilities
such that the expected return on the project (underlying asset) exactly equals the
33 | P a g e
riskfree rate. Under risk-neutrality, the expected return on any asset would equal
the riskless rate of interest. No one would demand an expected return above this
riskless rate, because risk-neutral individual do not need to be compensated for
risk-bearing.
Step 2: value an option using risk-neutral pricing (using risk-neutral probabilities

on returns on options).
Three-Date: assume the same variability as we move forward from one date to the
next.
Step 1: Determining the risk-neutral probabilities.
Step 2: valuing the option as of the last interval.
Step 3: valuing the option as of the second to last interval
Extension to many dates:
where is the standard deviation of the annualized return on the underlying asset
and n it the number of intervals over a year.
Although the value of the call changes as the number of intervals increases,
convergence occurs quite rapidly. Although Black-Scholes may save us time, it
does not materially affect our estimate of value.
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12. CORPORATE INTERNET BANKING
12.1 Overview
Ecobanks Corporate Internet Banking (ECIB) is a secure internet based service

that provides corporate clients with access to online banking. Benefits:
Speed in payment processing
Access to critical account information for decision making
Access to information such as daily exchange rates for several currencies

including major trading currencies
Access to reports of all transactions processed by clients through the

platform
Availability of audit trail information of all user activities
Processing of several payments in one bulk remittance transaction.
12.2 Key Product Features are:
Enquiries
The user is provided with account balances and transaction history of all
activities on the accounts. Information on transaction history can be downloaded in
formats including CSV, Excel & MT 940. Optionally, the banks client can also
obtain a hardcopy of their statements.
12.3 Transaction Initiation

Book Transfers
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On this module, the client can transfer funds between accounts on the
internet banking platform.
Third Party Transfers
Clients can use this module to effect payments to suppliers or employees

irrespective of the bank where the beneficiarys accounts are domiciled. The
transaction process follows the Central and Reserve Banks rules and regulations on
interbank transfers; and subject to clearing regulations, Electronic Funds Transfer
(EFT) process etc.
Bulk Payments
All payment instructions can be effected through the bulk payment module.
Payments to suppliers and staff salaries are made easy through upload of a file on
the platform which is guided by a maker and checker approach. Our system has
different authorization level matrices embedded in it. No individual can upload
transactions as well as authorize the same.
12.4 Work-Flow Automation
The solution allows the client to replicate and automate his current manual
process. Assigning different roles to users (initiator, approver, authorizer etc), the
client is able to control and restrict access of personnel to accounts. As a result of
the automated workflow, the customer achieves efficiency in operations and
minimizes costs substantially.
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12.5 Exchange Rates
Enables the customer to view on-line; real-time exchange rates offered by

the bank.
12.6 Loans, Deposits and Standing Orders
Using this module, the corporate user can view their loan repayment
schedules. On a Term Deposits icon, the client can select any of their accounts and
review term deposits. Similarly, Standing Orders for frequently occurring
payments can be requested on the system and can be reviewed via this module.
12.7 Statement of Account
Request for certified statements are available via a module.
12.8 Leading Edge Security
In line with its business ethics, Ecobank has gone the extra mile in ensuring
the product meets all the international security standards. Key security features
available on the ECIB system are:
RSA Secure ID tokens utilized These incorporate two factor authentication

(very high security standard complied with by developed economies)
128-bit SSL Encryption
Role-based security implementation
User ID & password encryption
Soft keypad for password capture
Password security policies
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13. CAREER INFORMATION ABOUT CORPORATE

BANKING
13.1 Cash Management

A career in Cash Management requires you to provide various solutions to
meet diverse needs of corporate clients in banking transactions and cash flow
management in order to manage their collections and payments efficiently.
13.2 Credit Analysis & Approval

A career in Credit Analysis & Approval requires you to perform independent
analysis on the credit worthiness of corporate clients and loan structuring as well as
recommend and approve credits in order to achieve the appropriate balance
between risk and return.
13.3 Credit Administration

A career in Credit Administration requires you to perform loan processing,
monitoring and reporting activities including the verification and maintenance of
documentation to ensure the credit facilities are properly administrated in
accordance with the statutory requirements and the banks policy.
13.4 Project Financing

A career in Project Financing requires you to structure and arrange financing
for large, complex and long-term infrastructure and industrial projects that might
include, for example, power plants, chemical processing plants, mines,
transportation infrastructure, environment, and telecommunications infrastructure.
Project finance is a method of funding in which the lender looks primarily to the
38 | P a g e
revenues generated by a single project, both as the source of repayment and as

security for the exposure
.
13.5 Relationship Management Enterprise Banking

A career in Relationship Management - Enterprise Banking requires you to
build and manage relationships of small to medium-sized companies to deliver
timely and relevant customised commercial banking products and services.
13.6 Relationship Management Wholesale Banking

A career in Relationship Management Wholesale Corporate Banking
requires you to understand the wide range of banking issues facing highly complex
institutions for effective delivery of tailored products and services to corporations
(medium to large corporates), government agencies and public sector
organisations.
13.7 Sales & Marketing Transaction Services

A career in Sales and Marketing Transaction Services requires you to sell
and market cash management, trade, treasury and securities services (custody,
clearing, depositary receipts, and agency and trust services) to financial institutions
and corporate clients.
13.8 Structured Financing Advisory

A career in Structured Financing Advisory requires you to understand the
clients requirements, research market and other relevant conditions in order to
optimize value and deliver complex, high value-added financing structures to help
customers meet their financing or investment needs. Such financing or investment
39 | P a g e
needs may include large leasing transactions, leveraged buyouts, mergers and
acquisitions, monetization of assets, equity/debt analysis and recapitalizations.
13.9 Trade Finance

A career in Trade Finance requires you to provide import and export
transactional products, trade guarantees as well as structured trade finance
advisory.
13.10 Transactions Processing, Control & Support

A career in Transactions Processing, Control and Support requires you to
perform a back office function involving transaction processing activities and
information technology as well as control and support with respect to compliance
with corporate policies and product programs.
13.11 Career Progression

As a new entrant in this field, you will start off your career as an Analyst
(Role IV), in which you will be exposed to the diverse aspects of Corporate
Banking. After 2-3 years in this role, as you gain more experience, you could
progress to the role of an Associate (Role IV) in which you will be expected to
take on greater responsibilities. As you become more conversant in your role as an
Associate, you could progress to take on the role of a Team Leader (Role V) in
which you will supervise a group of analysts/ associates. From a Team Leader,
your further progression will be to a Department Head (Role VI), in which you will
be responsible for formulating products and business strategies, providing
leadership and accounting for business bottom-line.
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Below is an illustration of how FICS has been structured according to job roles to
see you through your career advancement:
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14. FUTURE OF CORPORATE BANKING
14.1 Realistic Goals
Banks need to be realistic about what customers want from them and it's
not always bells and whistles, said Ather Williams III, managing director, head of
global payments, global treasury solutions, Bank of America Merrill Lynch.
"Clients care less about channels they want the payment to get to where it needs
to be," he said. Accordingly, the industry needs to "rethink the infrastructure,"
Williams added. "It's straight-through but fragmented it's a bit of a mess." But
while there is a need for more standardization, that can be a double-edged sword
for banks, he noted. "A balance has to be struck. Standardization can become
commoditization."
Williams elaborated on this issue in a conversation with BS&T after the

panel session, explaining, "There's fragmentation in the payments infrastructure.
Every country has its own clearing [system] and formats. When you look inside
each bank, even though they all run on the same sets of 'rails,' the infrastructure is
very different. So attempts to standardize are not easy."
Regarding the expectations of corporate executives for simplicity, Williams

noted: "When [a company] sends a comprehensive payments file, [the corporate
treasurer] just wants it to happen. We're focused on providing a seamless, easy
environment [that runs] outside of the U.S. as easily as in the U.S. Our job is to
make it simple."
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14.2 Next-Gen STP?
The reality is that corporates want more than simply transaction processing
proficiency and speed, although those attributes remain critical. However, the "next
big thing" will be about adding insight and intelligence. "The industry has done a
great job on STP [straight-through processing]. There's still some work to do, but
for the most part the vast majority of our processing is now paperless," noted
panelist Patrick Walsh, managing director, global head, client technology services,
Brown Brothers Harriman & Co.
"There are new possibilities and challenges," he added. "We see the growing
complexity in our business. Are we moving into the post-STP era? We need to
define the next generation of STP STP.0, more intelligent, iSTP beyond
transactional, more horizontal. It recognizes that the trade or settlement is part of a
larger transaction, a more intelligent and integrated form of STP."
Yvette Bohanan, director, payments product executive, Bank of America

Merrill Lynch, concurred with this forecast. Banks can play a role of enabling
"intelligent payments and intelligent commerce intelligence all the way back
into the organization. That's where banks have to step up. You're not afraid of
commoditization if it helps you get to differentiation," said Bohanan, who recently
moved into Williams' group from BofA's retail banking organization.
43 | P a g e
15. CONCLUSION
The regulatory reforms are driving banks to strategically review and assess
their businesses, and many are making substantial changes to their business models
shifting out of complex products and exiting businesses and geographies in an
effort to remain profitable. The liquidity and capital regulations have pressured
banks to increase pricing to reflect their costs of complying with the new rules.
This, in turn, has made corporate credit much more expensive, and corporate
financial executives are exploring bond markets and other alternative sources of
funding to avoid higher costs.
Despite these disruptive influences on corporate and banking
interconnections, the executives interviewed emphasized that the traditional
principles of what makes business relationships work mutual commitment,
dedication and trust are, in fact, more important than ever in todays turbulent
environment. Corporate financial executives in the study described their banking
relationships as long-term and stable partnerships. They take their relationship
obligations with the banks very seriously and spend considerable time making
certain that work is dispersed equitably across their banks. In return, they expect
what one executive summarized as dedication, consistency and commitment
from their core banks.
While executives are pleased overall with their current core team of banks,
there are several performance categories that banks need to assess and improve to
continue to effectively manage relationships with their important corporate clients.
Service and product quality, transparency on key risk parameters, and innovation
and technology are important areas where banks fall short of performance
expectations. The banks that successfully address these issues will have a distinct
44 | P a g e
competitive advantage in todays challenging market. The bottom line for the very
sophisticated financial executives interviewed is that managing relationships
through good economic times and bad boils down to the basics: stay close to your
customers, listen to what they want and need, and consistently deliver quality
services.
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16. BIBLIOGRAPHY
Corporate evaluation in banks Development of a new evaluation model

with the special focus on the separation of the value of maturity
transformation Svend Reuse: Masaryk University, Brno / FOM University
of Applied Science Luxemburger Allee 121, 45481 Mlheim, Germany,
Svend.Reuse@gmx.de

Management of Banking & Financial Services, by Justin Paul & Padmalatha
Suresh, (Pearson Education) Commercial Banking, The Management
of
Risk, Benton E Gup & James W Kolari, (Wiley Student Edition)

Modern Banking, Theory & Practice, D.Muraleedharan, PHI,
(Eastern Economy Edition)

Laws & Practices of Banking, The Indian Institute of Bankers, (Macmillan)

Annual Report of the Reserve Bank of India for the Year 2008-09

Report on Trend and Progress of Banking in India 2008-09

Reserve Bank of India Master Circulars

and Finance 2006-08, "The Banking Sector in
Report on Currency
India: Emerging

Issues and Challenges", RBI.

Banks in India, Ed.2002
Prassanna G. Deshmukh,Working of Co-operative
page no. 1 (Kanishka Publishers,New Delhi)

Institute of Co-operative
K.V. Lakum: Reading Materials-National
Management Edi.2002 page no. 21

Dsilva, John (Chief
Editor) Co-operative Banks Dairy 2000 Mumbai,
rd
23 Edition. P1
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UNIVERSITY OF MUMBAI

MAHARSHI DAYANAND COLLEGE OF ARTS, SCIENCE &

This is to certify that MISS/MR. SAURABH SADANAND BAGWE

Course Coordinator Principal

Project Guide/Internal Examiner External Examiner

I am MISS/MR SAURABH SADANAND BAGWE. The student of B.

MR. SAURABH S BAGWE.

Corporate Banking is, in fact, now considered by the Basle Committee on

This report is aimed at presenting the most important principles of corporate

4. Role of Banks in Indian Economy ... 12

6. Corporate Finance Vs. Investment Banking 15

11. Options and Corporate Finance: Extensions and

13. Career Information About Corporate Banking 39

14. Future of corporate Banking .... 43

15. Conclusion ... 45

A social institution including a corporate entity derives its legitimacy from

Corporate Governance is a very broad concept. As Governance is not

It is the system by which businesses are directed and controlled by the

1.1 What Is Corporate Banking?

Corporate banking, also called corporate financing, is a specialized branch

The job of a corporate banker is to enhance the corporate value of the

A corporate banker or financier is expected to make a variety of long-term

o Long-term decisions that a corporate banker would be responsible for

The various short-term responsibilities of a corporate banker can be grouped

o A corporation deals with significantly larger sums of money than

individuals or smaller firms, and as a result there are a number of

1.1.3.1 Theories or Speculation related to Cooperative Banking

o Risk management is a process that involves measuring what risks the

1.1.4 Considerations about Corporate Banking

2.1 Why Banks Are Special?

2.2 The Challenge posed by Bank Holding Companies

According to Akhgbe et al (2004), bank holding companies and financial

The goal of regulating bank and financial holding companies should be to

3. BRIEF DESCRIPTION OF CORPORATE BANKING

Corporate banking typically refers to financial services offered to

3.1 The Services Offered

The services offered by corporate divisions of banks include (a) general

International transactions. International banking services include trade

Investment banking. Large corporations and public institutions are

Insurance. Banks may also sell insurance products, although insurance is

Advisory services. Wholesale banking activities also include financial

Shareholding. Banks can participate in the management of , and own

3.2 Trends & Critical Issues

3.3 CSR Initiatives

4. Role of Banks in Indian Economy

In India , as in many developing countries , the commercial banking sector

An important landmark in the development of banking sector in recent years

5. SIGNIFICANCE OF CORPORATE BANKING

1) Banks have an overwhelming dominant position in developing economy

2) As financial markets are usually underdeveloped banks in developing

3) As well as providing a generally accepted means of payment, banks in

4) Many developing economies have recently liberalized their banking system

6. CORPORATE FINANCE Vs.

6.1 Corporate Finance

Corporate finance consists of tools, strategies and the analytical framework

In the corporate setting, financial activities enable department heads to

Usually a tell-tale sign of moribund sales or poor financial planning, a lack of

6.3 Investment Banking

Investment banking professionals help companies meet their liquidity needs,

A company may raise cash on financial markets or in private transactions.

Investment banking plays an important role in the economy. In addition to

These include mergers, acquisitions and divestitures, which are transactions

Corporate finance is distinct from investment banking, but both concepts