Preparation

• MSMED Act
• SMPC

Channel Financing:

•  Present in large industrial areas. Finding the entire supply chain. A large bank would underwrite the corporate bills. “Clusters”
• Myth: SME default more than large enterprises
• Issues in SME: They don’t get timely credit, collateral issue, aweful financial statements
• Issues in large/mid corporates: They don’t give good interest margins.
  Huge fees and commission, syndicate income, advisory, many sources of ‘treasury income’.
• Banks now are pushing wealth management services through SMEs- catch thme young
• NIM of India Banks 2.8% average
• ROA, ROE, etc just know average industry numbers

A. Corporate banking/ Global transaction banking: Simple receipts and payment- just big name

• Cash Management – Technology based services
• Trade finance solutions: ECBs,LCs, etc – relevant for global transactions, knowledge of Forex is helpful
• Trustee and Security services – Mid office work

Note: Financial Statement Analysis and grasp over ratios and interpretation is must

B. Risk Management/Compliance

• Know the Basel accords in and out. Basel I/II/III. Issues and solutions
• What is market risk?How tomeasure market risk- VAR model. How does it work
• What is operational risk? How to manage it? – Mainly for engineers
• Compliance- To prevent fraud etc
• SAS, SPS software knowledge.

FRM course will help in B.

C. Treasury division

• What is treasury role?
• Writing research reports skills in important. Becoming dealer in front office is really about luck.
• Knowledge about fixed income markets, GSECs
• Dealership positions- very lucrative role. Huge stress. Not a good long term career options. Need to need to all time zones.
• Importance of treasury dept has increased a lot in recent years
• Derivatives trader requirements: FLR/CLR/Derivatives/Structured Products/Currency, interest rate swaps.
• In India, swaps are used for speculation instead of using them for hedging- Deutsche Bank controls most of the market
• Fixed income trader: Durations, Yield curve,etc

Read Working capital, trade finance caselets

Study developments in NPAs

• SMA0, SMA1,SMA2 category of NPA
• NPAs in Infra- study reasons, problems
• Debt contractsare no longer obeyed in India
• Detect early warning signals
• Corporate debt recovery cells? What are they doing?
• Speeches of RBI
• Financial Stability Report

Good readings before placement

• Be clear about BASELs
• Nachiket Mor report on Differentiated banking license
• NPAs are not rising because of cycles.
  Develop an opinion
• Financial inclusion- new thrust area of government- impacts retail banking
• Financial stability

Mandatory readings for developing an opinion on Indian Banking issues

• Subbarao speech: Five frontier challenges for Indian Banking
• Gandhi on Interest rate swaps in India
• Raghuram Rajan’s speeches of late on credit, inflation