POST GRADUATE PROGRAMME IN MANAGEMENT

AY 2021-22 TERM: III

TITLE OF THE COURSE: Financial Institutions and Markets

CREDITS: 4

Name of the instructor Room Email Extn. No. Consultation time

No.

Prof. Debasish Maitra J block debasishm@iimidr.ac.in 2439484 Weekdays (4 to 4.30 pm)

Mr. Manek Narang maneknarang@gmail.com

(VF)

COURSE DESCRIPTION
Functioning of economy and markets heavily relies on financial institutions (FIs) and markets.
Financial institutions and markets play a crucial and integral role in running the economy with
subject to the strict regulations. Financial institutions are at the heart of any economy’s financial
system. They play crucial roles in channelizing funds to the borrowers and managing our savings,
as well as providing protections during any exigency. However, in today’s world banking and
insurance industry and some of its business activities cannot be compartmented from other
‘nonbanking financial institutions’. The growing linkage between finance, and IT and IT-enabled
services has fostered the development of financial products and their transactions. The integration
of economies across the world in the globalization era raises the importance to study financial
institutions and markets.

COURSE OBJECTIVES
The course is intended to deliver the following objectives;
Understanding the concepts, basic tenets and the role of financial institutions
To understand the classroom concepts through industry analyses
Recognizing the issues of regulatory compliances
To know the concepts and structure of financial markets
To experience practical exposure to various financial products and markets
 PEDAGOGY/TEACHING METHOD
The course employs chapters of the books, various articles as the means to link the theory with
practices. Every theoretical session will be followed by problem-solving exercises to appreciate the
concepts. Data sets for the hands-on exercises are to be provided in a time to time manner. One
session of guest lecture by industry personnel may be arranged to provide practitioner’s view
EVALUATION:
Individual Component Group Component Weightage

Quiz 10%

Comprehensive End Term 40%

Project submission or Presentation 30%

Class Participation 20%

Total 100%

ACADEMIC DISHONESTY:

IIM Indore believes in Academic honesty. Academic dishonesty or misconduct is cheating that
relates to an academic activity. It is a violation of trust between the Institute and its stakeholders.
Plagiarism, fabrication, deception, cheating and sabotage are examples of unacceptable academic
conduct. Please consult the Programme manual for the section on academic dishonesty.

SCHEDULE OF SESSIONS

MODULE 1: Commercial Banks, Non-Banking Financial Companies and Insurance Companies

Module Objective: To review the basic question on the existence of a bank, NBFCs and insurance
companies in any economy. The objective is to make participants aware about the economics of
banking, organization and structure of banks, and role of regulations

SESSIONS AND OBJECTIVE

Session 1: Commercial Banks
Objective: Understanding the structure and overview of banks
Readings: • Rose C and Waggoner S (2010), Note on the Banking Industry, HBS No.9-
311-011, 1-16, Boston, MA: Harvard Business School Publishing
• Frei F and Campbell D (2006), Economics of Retail Banking Note, HBS No. 9-
602-153, 1-13, Boston, MA: Harvard Business School Publishing
Case: Kumta . G., and Kamat, V. (2012), Growth Strategies at SVC Bank, Ivey cases
(9B12M068), 1-13, Ontario: Richard Ivey School of Business Foundation,
113.
Session 2: Regulations
Objective: Understanding the role of central bank, regulations and the nuances of
BASEL-III. Various functions of RBI would be discussed in the class using
Monetary Policy Statement published by RBI.

Reading: Blaylock D (2011), BASEL-III: An Evaluation of New Banking Regulations, IVEY

no. 910n29, 1-15, Ontario: Richard Ivey School of Business Foundation

Session 3, 4 &5: Financial Statements of Banks

Objective: To know the structure of the financial statements of a bank and how they are
analysed.
Reading: Bank Management and Financial Services: Ch 5 & 6
Case: Maitra D and Banerjee P (2016), United Bank of India: Present Fiasco and
Future Plans, Ivey No. 9B15N028, 1-15, Ontario: Richard Ivey School of Business
Foundation
Session 6-7 Bank valuation

Case Federal Bank: Dividend Discount Valuation, HBS: W17123-PDF-ENG, 1-10,

Harvard Business School Publishing
Objective: To know the discount based valuation for banks
Session 8-9: Non-Banking Financial Companies (NBFCs)
Objective: Understanding the structure and overview of NBFCs

Case: Jagadale S and Maitra D (2014), Bandhan Microfinance: Was the

Transformation to Bank Required? Ivey: 9B14N019, 1-19, Ontario: Richard Ivey
School of Business Foundation
Session 10-11: Insurance Companies

Objective: Understanding the structure and overview of insurance companies

Reading: Financial Institutions and Markets, Chapter-11
Exercise: Financial statement analysis of an insurance company

MODULE 2: Financial Markets

Module Objective: To understand the characteristics and operational nuances of financial
markets.

SESSIONS AND OBJECTIVE

Session 12: Small savings, provident fund and pension funds

Objective: To know the structure and overview of the financial markets related to funds
focused on savings

Reading: Financial Institutions and Markets, Chapter-10

 Session 13-14: Mutual Funds, Hedge Funds, Forex and commodities

Objective: To understand and identify key concepts related to mutual funds, hedge
funds, foreign exchange and commodities.

Reading: Financial Institutions and Markets, Chapter-12 & 21

Mitra, S.K. (2011). Note on the Evaluation of Mutual Fund Performance, Ivey:
9B11N020, 1-14, Ontario: Richard Ivey School of Business Foundation

Case: Amaranth Advisors: Burning Six Billion in Thirty Days, HBS: 908N03-PDF-ENG,
Harvard Business School Publishing

Session 15-16 Bond and Debt markets

Objective: To understand the concepts and features bond/debt markets, structure of

interest rates in India, and short-term money markets

Reading: Financial Institutions and Markets, Chapter-15, 16, and 18

Case: HAG's Singapore Note Issue, HBS: W13368-PDF-ENG, 1-13, Harvard Business
School Publishing

Session 17-18 Stock markets

Objective: To know the role and functioning of equity markets. To understand the key
features of primary and secondary markets.

Reading: Financial Institutions and Markets, Chapter-19

Case: Lululemon Athletica: Pitching an IPO, Ivey: 8B11N012, 1-14, Ontario: Richard
Ivey School of Business Foundation

Session 19-20 Derivatives markets

Objective: To know the concepts, different types and the prospects and policy of
financial and commodity derivatives

Reading: Financial Institutions and Markets, Chapter-20

Case: Lufthansa: To Hedge or Not to Hedge, HBS: 900N22-PDF-ENG, 1-3, Harvard

Business School Publishing

Please indicate the changes made in the course outline based on the measurement of assurance of
learning (closing the loop)/student feedback:

Please give the details of the book if students need to buy the book:
Author Title Publisher Edition Remarks, if
any
 Peter Rose and Sylvia Bank Management and Tata 9th Edition
Hudgins Financial Services McGraw

L M Bhole and Jitendra Financial Institutions McGraw 6th Edition

Mahakud and Markets Hill

ADDITIONAL READINGS/ REFERENCE BOOK:

• Management of Banking and Financial Services-2nd Edition, Author- Padmalatha Suresh

and Justin Paul, Publisher-Pearson India.
• Financial Markets and Institutions: An Introduction to the Risk Management Approach ,
Author-Anthony Saunders, McGraw-Hill, India Edition (3rd)
• Financial Markets and Institutions, Author-Jeff Madura, Cengage Learning, 10th Edition

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