Commercial Bank Management Syllabus - BBA-BI (PU)

Course Objectives

The course aims to equip students with knowledge and skills necessary to understand the fundamentals of commercial bank management and acquaint them with tools and methods available to manage commercial banks. Specifically, this course covers the key areas of the commercial bank management process: establishment of a bank, raising funds to run it and evaluate the performance of the bank.

Course Description

This course provides an understanding of the nature of commercial banks and its regulatory environment. Then it describes how a bank and its branches are established. The course offers an opportunity to study bank’s state of financial affairs as represented in balance sheet and income statement, and evaluates bank’s performance using appropriate tools of analysis. Finally, it also discusses how a bank manages capital and raises deposits as sources of funds for its operation.

Learning Outcomes

• On successfully completing this course, students will be able to:
• understand the nature of commercial bank and its regulatory environment;
• identify various structures of commercial banking industry;
• complete formalities for establishing banks and bank branches;
• interpret key items that appear in balance sheet and income statement of banks;
• apply appropriate ratios to evaluate bank performance;
• understand the role of bank capital from the view point of shareholders as well as

regulators;

• identify deposit and non-deposit sources of funds; and
• demonstrate adequate knowledge and skills required for managing commercial bank.

Course Contents

Unit I: Introduction                                                                                                   5 hours

Meaning and types of banks; services provided by banks; bank and its competitors in the

financial system; and key trends affecting banks.

Unit II: The Bank Regulatory Environment                                                            5 hours

The need for regulation, banking regulations – commercial banking act (Banks and Financial

Institutions Act), directives of Nepal Rastra Bank to commercial banks; and the role of Nepal

Rastra Bank in the regulation of commercial banks.

Unit III: Organization and Structure of Commercial Banking Industry    5 hours

The organization and structure of the commercial banking industry; internal organization of

banking firm; types of banking organizations: unit banking organizations, branch banking

organizations, bank holding company organizations; and financial holding companies and

bank subsidiaries.

Unit IV: Establishing Banks and Bank Branches                                        5 hours

Establishing a new bank; factors affecting the decision to establish a new bank; bank

chartering process in Nepal; opening a new branch; branch regulation, changing role of bank

branches; establishing automated limited-service facilities; point-of-sale terminals; automated

teller machines; home and office banking; telephone banking and call centers; internet

banking; and NRB policy on establishing banks and bank branches.

Unit V: The Financial Statements of Banks                                                6 hours

An overview of bank balance sheet and income statement; the balance sheet: the assets of a

bank, liabilities of a bank; off-balance sheet items; income statement and its components;

auditing; and NRB guidelines on bank’s financial statements.

Unit VI: Evaluating Bank Performance                                                       10 hours

A framework for evaluating bank performance; internal performance: bank planning,

technology, personnel development; external performance: market share, regulatory

compliance, public confidence; analyzing bank performance with financial ratios: profit

ratios – return on equity, return on assets, net interest margin; risk ratios – capitalization,

asset quality, operating efficiency, liquidity; and other financial ratios – taxes, interest

sensitivity.

Unit VII: Bank Capital Management                                                           6 hours

Bank capital; equity, long-term debt, reserve; role of bank capital; capital adequacy:

regulator’s viewpoint, capital standards, uniform capital requirements, risk-adjusted capital

requirements; shareholder’s viewpoint; trends in bank's capital; bank regulatory capital and

Basel rules; and NRB directives on capital requirements.

Unit VIII: Liabilities Management                                                   6 hours

Structure of bank liabilities: deposit and non deposit sources of funds; deposit products and

schemes, balance sheet structure of bank liabilities; and managing bank liabilities.

Basic Texts

1. Rose, P. S. & Hudgins, S. C. (2010). Bank management and financial services. New

Delhi: Tata McGraw-Hill Education.

2. Gup, B. E. & Kolari, J. W. (2005). Commercial banking. New Delhi: Willey India.

References

1. McDonald, S. S. & Koch, T. W. Management of banking. The Dryden Press,

Harcourt College Publishers.

2. Gestel, T. V. & Baesens, B. Credit risk management. New York: Oxford University

Press.

3. Chatterjee, A. Credit management: A practical approach. New Delhi: Skylark

Publications.

4. Koirala, P. Essentials of commercial bank management. Kathmandu: Ekta Books.
5. Nepal Rastra Bank. Unified directives latest version. Kathmandu: Nepal Rastra Bank