Questions With Bullet Point Answers (2)

8/6/2019 Questions With Bullet Point Answers (2)

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QUESTIONS WITH BULLET POINT ANSWERS

Q. 1. What are the macro–economic forces shaping banking operations across the globe?

– Globalization

– Liberalization & deregulation – Privatization

– Disintermediation

– Market orientation

Q. 2. What are the visible features of the global banking space today?

– Customization of products – Customer sophistication

– Heightened competition

– Prudential regulations

– Technological innovation – Banks are on e-superhighway

Q. 3. Which are the capital components of the Banks/ Financials Institutions?

– Financial Capital - own and loan funds

– Human/ Intellectual capital – talent back up

– Physical Capital – infrastructure facilities including technology – Relationship Capital – brands, customers etc

Q.4. Why are Banks as financial intermediaries accorded a special status in the financialsystem?

Banks as financial intermediaries occupy a special status because banks are – a part of the Development process of the country

– instrumental in Life Cycle Wealth mapping of individuals

– reach out to unbanked/ underbanked due to financial inclusion

Q.5. What specific roles Banks as part of the development process of the country play?

– Asset transformation – Money transmission

– Credit Allocation

– Risk Transfer/Mitigation– Intergenerational Wealth transfer

– Denomination intermediation (Mutual Fund)

Q.6. What are the cardinal principles of banking?

– Safety of funds

– Superior Liquidity

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Q.13. RBI has made Risk Management, an integral part of Prudential Regulations, mandatory

for Banks. Why?

– Banks are increasingly speculating in the market for trading gain

– Banks are exposed to a higher degree of risk due to huge Asset–Liability

mismatches – Failure of Banks has wider social and economic spillover effects

– Banks are diversifying into varied range of activities through Private Pool of

Capital (PPC) – Private Equity, Mutual Funds etc.

Q.14. In infrastructure projects being financed through Public Private Partnership (PPP)

routes, risk analysis assumes critical significance because Why?

– Project returns are spread over longer time

– Need to enhance certainty/ predictability of cash flow

– Project parameters NPV, IRR, DSCR are subject to high level of uncertainty – Banks should not finance a bad project or fail to finance a good project

– Projects are capital intensive, highly risky and are of longer gestation period

Q.15. What is financial engineering? What are the financially engineered derivative products?

What is the rationale?

- The process of evolution of different new techniques of financial analyses and new

financial instruments to enable financial market participants to hedge risks and cope

more effectively with the emerging conditions is known as financial engineering.- Swaps, Options, Financial futures, Swaptions ,Forwards etc

- Hedging Risk exposure

Q.16. What are the various ways by which Risk exposure by Banks can be effectively

mitigated?

– Client diversification – Wholesale banking, Retail banking, Investment banking,

Transaction banking, etc

– Geographical diversification – Product innovation

Q.17. Retail banking products have better risk appeal for Banks vis–à–vis wholesale

banking products why?

– Diversification of risk across large volume

– Higher return potential

– Known customer segment

– Branch channels are in close proximity to the customer base

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Q.18. Multilateral Banks like World Bank (IBRD), ADB, AfDB, JBIC etc are increasingly

participating in project financing in emerging market economies. Why?

– Projects are profitable/ socially desirable

– Project risk are mitigated through a bundle of package contracts throughICB (International Competitive Bidding)

– Better security pool

– Projects are backed by Credit enhancement tools like guarantee, standby line of

credit, Escrow mechanism, rollover letter of Credit etc

Q.19. How is IDBI Bank’s Risk profile in the global financing space is primarily determined?

– Depth of pocket due to strong capital base

Q.20. Basel framework for Banking Supervision prescribed by Bank for International

Settlement (BIS), an affiliate of World Bank has provided global regulatory standards for

Banks/ Financial Institutions. What are the key objectives?

– a competitive level playing field for Banks/FIs operating globally

– Preparing Banks as vehicles of development for the emerging globalize era – Healthy competition among countries

– Adoption of common standards of risk mitigation tools

Q.21. What are the Rationale for Bank capital?

– Capital can absorb possible losses by providing a basis for depositors confidence

– Banks bailout packages are socially detrimental due to use of tax payers’ money

Q.22. What are the merits of BASEL II over crude Capital Accord I (BASEL I)?

– Better internal control and governance through supervision and disclosurerequirements

Q.23. Why was it felt to have a relook at BASEL Capital Accord I?

– Higher volatility in financial market across the globe

– Significant degree of financial innovation

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– Collapse of Barings PLC, a 233 year old British Bank in February 1995

– Capital Base of Banks did not match with their true risk profiles

– Global financial crisis, 1997 (Russian crisis 1998)

Q.24. Why BASEL III calibrating the global standards for capital adequacy and Liquidity in

2010 were necessitated?

Mainly to

– avoid another financial crisis

– increase Loss absorbency capacity of Banks

– increase Liquidity Coverage Ratio (LCR) of Banks

– increase Net Funding stable Ratio (NFSR) of Banks

Q.25. Frauds in Retail Banking space can be mainly attributed to

– Lack of core competency to detect fraud – Shallow supporting Credit data

– Lack of culture of credit risk profiling – System deficiency – Legal remedies

– Absence of institutional machinery for Retail Risk pooling

Q.26. Which financial ratio is a better indicator of risk?

– Debt Equity Ratio (DER)

Q.27. What are the sources of Operating Risks in Banks?

– People – Process

– Technology

– Force majeure events

Q.28. Corporate Governance standards were advocated /prescribed in the aftermath of large

scale corporate scands in USA. Who recommended the standards?

– Sir Adrian Cadbury Committee (1992)

– Sir Richard Greenbury Committee (1999)

– Ronnie Hampel Committee (1998) – Blue – Ribbon Committee (1999)

– Nigel Turnbull Committee (1999)

Q.29. Why do you feel you will be useful to the organization?

Ans. Sir, throughout my academic/professional career I have been sincere, dedicated and

committed to my goals. My set of softer skills of communication, motivation, team

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building, negotiation and counseling have been enabling factors for me to deal with

varied temperaments of different situations. I have demonstrated my sincerity in

completing whatever tasks have been assigned to me from time to time. I am confidentthat I will prove to be an asset to any organization that acquires my services.

Q.30. Why do you feel that you deserve placement in our Bank?

Sir, placement in your esteemed Bank will be a definite recognition of my academic and

professional acumen. During the last two years of my management course I have kept

myself abreast with the changing face of global Banking. The role of the Banks as torch- bearers of development process of the countries and particularly in reaching out to the

socially deprived class have impressed me the most. I am committed to making my career

in banking. Sir, given an opportunity, I will contribute my best to the all-round growth of

the Bank.

Q.31 What are your strong points?

- Grounding in management skills with specialization in finance/marketing/HR etc

- Dedication and commitment to work performance- Strong numerical ability

- Strong zest and zeal,

- Ability to work under pressure

- Tremendous patience- Team spirit (set of Complementary skills)

- Leadership skill

- Ability to handle multiple tasks- Punctuality and time management

Q.32. What are your weaknesses?

- I always try to achieve perfection in whatever I do

- Over-seriousness.- Sometimes I find it difficult to delegate to others knowing fully well that

delegation divides the load

- I tend to expect others to work as hard as I work

Q.33. Why Gujarat is ahead in development perspective vis-à-vis other states?

- Priority on economic infrastructure growth like road, port , airport, power ,telecommunication , water utilities which contribute to development of the state

- Strong NRI base

- Government initiative to invite private entrepreneurs from any part of the worldthrough programmes like Vibrant Gujarat.

- Rich endowment of natural resources like minerals, agricultural resources,

petrochemicals, water resources, the state is progressing industrial growth and

employment generation

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- Long stretch of coastline facilitating port sector growth

- Strong entrepreneurial vision

Q.34. What are the strengths of Gijarat’s Economy ?

- minerals, petrochemicals, agricultural resources, marine resources

Q.35. If you are appointed as Chief Minister of Gujarat , what will be your top

priority ?

- Sustained drive for infrastructure development of the state

- Make Gujarat a model for other states to follow

- Industrialization which creates employment opportunities and leads to theeconomic use of the rich resource endowment of the state

- Development of eco-tourism where the state has great potential

- Development of higher education , skill building and health services for the

masses- Reorient the state administration for the development purpose

- Use the potential of the Banks and financial institutions to play a pro-active role

Q.36 If you are promoted as Deputy General Manager, which Department will you

like to be posted ?

Sir , I am indifferent as to the Department to which I may be posted . I will

continue to exhibit superior work performance in any Department that acquires

my services.

Q.37 If you are posted to a hardship center in say Jharkhand , will you go ?

Sir, I am already working in a hardship center. I have no preference for any

particular center . I am willing to go to any center as per Bank’s convenience.

According to me there in no hardship center . Hardship , if any will strengthen myabilities . I am prepared to go to any place in the country.

Q.38. What changes would you like to bring in IDBI Bank ?

Sir , IDBI Bank is already having extensive presence throughout the length and

breadth of the country. IDBI is already a household name . I would like IDBI Bank

to have- more rural penetration

- acquire critical mass by way of branch network through organic/inorganic growth

- better visibility of the channels especially branch channels- customer-centric product mix

- Staff to be innovative in predicting customer needs and seizing market

opportunities

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Q. 39. Are women suitable for banking jobs which require hard skills now a days ?

Sir. In a globalized environment , women better fit into the white collar jobs inBanks . Women by virtue of their set of softer skills are able to match the

customer sophistication of the emerging scenario. Many of the foreign banks and

new generation private banks are seen to be recruiting more women employees aswomen score over men in catering to the emerging banking needs.

Q.40. What value have you learnt from your mother ?

Sir , mother is my first teacher . I have learnt the basic values of life from her. She

was in Government service . The way she was balancing her work and life

without compromising her role as home maker as well as in her officialresponsibilities, had a deep impact on me. By observing her kitchen, I learnt the

basic management skills. Her skill in building children and at the same time

catering to the emotional needs of her in-laws was exemplary.

Q.41. What is your goal in life ?

Sir , to excel as a professional, especially in banking and financial services. I

strongly intend to do something for the poor and marginalised class of the society.

Now a days banks are called upon to play a dynamic role in socio-economic

upliftment of the masses. I cherish to take forward the message of financialinclusion for the greater good of the people in the North-Eastern region.

Q.42. Why did you pursue management as your curriculum ?

Sir, management had great appeal to me as the subjects have relevance to day to

day affairs of the individual as well as the society and the country at large.Individuals, societies and countries are engaged in a large variety of trade and

commerce activities in an exchange economy to maximize human welfare. Trade

is the engine of economic growth. I took up management as my curriculum tokeep myself abreast with the latest in management to optimize welfare of the

society.

Q.43. What was your choicest subject in Management ?

Sir, Personnel Management was my choicest subject and area of specialisation. In

the present day environment, Personnel Management function is known asHuman Resources Development which is a strategic function of a corporate

entity. Human Resources Development function encompasses, acquisition of

human resources(recruitment), utilization of human resources by their proper placement (posting of people to various functional areas), preservation of human

resources through salary and incentive administration and development of human

resources through training and career advancement opportunities. I have a natural

liking for HR function.

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Q.44. How is your knowledge being used in IDBI Bank?

Sir, I find my knowledge of management directly relevant to my desk in the bank.

My management background helps me to grasp and appreciate the corporate

banking function. Accounting , business law and financial managementhavedirect relevance to the day to day corporate banking activities. Knowledge of

marketing helps me to market bank’s products in a competitive market

environment. Knowledge of management has been very handy for my functional

efficiency in the bank especially in MCG.

Q.45. You are working as Cash officer . If I send a bearer cheque with my dog to the

bank , will you pay as bearer cheques are always bearer cheques ?

Sir,Though bearer cheques are always payable to the bearer and necessary

protections are afforded to the paying banker , looking to the Indian Laws, no prudent banker will effect cash payment to the dog because the dog cannot

acknowledge payment of cash. This may happen in UK where laws are very

stringent but not in India.

Q.46. Suppose a customer gets angry and slaps you , how will you handle the situation ?

Sir, the customer is no wrong. We are in business today because of customers.Customer is the king. If the customer slaps me, I will try to analyse the

circumstances which prompted him to slap me whem I am in the bank to help

him. If the dog bites us we will not bite the dog.There will not be any dent to mycommitment to excellence in customer value creation. I will make the customer

realize his mistake. Rather this will be an opportunity to deepen my relation with

him. Patience ultimately pays.

Q.47. What role do banks play in the economy?

Sir, Banks in India have been a part of the development process. The special role played by banks can be summarized as under.

- Asset Transformation – collecting deposits which are unproductive and givingloans for creation of productive assets of the economy

- Banks have definite information cost advantage which individual depositors

donot have- Money transmission as per monetary policy

- Credit allocation as per priority sector lending policies

- Intergenerational wealth transfer – father depositing money in daughter’s name

- Payment system(RTGS)

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- Denomination intermediation – I have Rs.5000. I may not be able to subscribe to

a bond of face value Rs.1,00,000. Mutual funds as a financial intermediary can

pool together small savings and participate in high value denominations. Banksintermediate between small savers and entities issuing high denomination

instruments.

Q.48. Whether you like back office job or front office job? Why?

Sir, I like challenging job assignments. Front office jobs will offer opportunitiesto interact with customers and develop my people handling skills. Front office is a

marketing function. I want to excel in that function.

Q.49. What are the functions of Ralationship Managers in Banking?

Customer Relationship Management (CRM) is an innovation of the present day

banking where the bankers are increasingly required to market themselves. The

real challenge is to attract the customers, retain the customers and translate thesmall value customers to high value customers. The Relationship Managers

nurture existing relationships, deepen the relationships and and create newrelationships.

Q.50. How do you differentiate IDBI Bank from other PSU Banks?

In the liberalized environment, when the development financing institution model

failed in India, IDBI was forced to convert itself into a universal bank in keeping

with the sweeping changes in the working environment. But as a new generationuniversal bank IDBI Bank exhibits the characteristics of private sector efficiency

with public ownership. The continues play role of a development bank with

infrastructure financing on top of the agenda. The Bank is a financial super market offering a basket of products to suit the diverse needs of the customers in

the wholesale as well as retail segments. With Government holding at 65% , IDBI

BANK has a better competitive edge compared to other PSU banks.

Q.51. What is your Hobby ?

Writing poems, Gardening, Reading, Outdoor games, Stamp collection etc

Q.52. Name two women Deputy Governors of RBI .

Smt Usha Thorat;Smt Shyamala Gopinath.

Q.53. Name a few high profile successful women executives in corporate sector

especially in banking sector.

Smt .Naina Lal Kidwai;Smt Chanda Kochhar;Smt Indra Nooyi, Ms Sikha Sharma

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Q.54. What are CRR and SLR ?

CRR:A certain percentage of demand and time liabilities to be deposited by every bank with RBI;SLR:A certain percentage of demand and time liabilities to be

held in liquid investments and approved Government of India securities.

Q.55. What are the names of the Central Banks of India, UK,USA ?

RBI , Bank Of England , Federal Reserve respectively.

Q.56. What is financial inclusion ?

Sir,The spirit of financial inclusion is to bring un-banked and under-banked areas

and people to the banking fold. Banks, both in developed and developingcountries, have realized that reaching out to the poor and marginalized is

profitable. There is a slogan that “ Poor are bankable and rural banking viable”.Recommended by a committee under the chairmanship of Mr. C Rangarajan ,

former Governor of RBI in 2006 , financial inclusion is taking deep roots to reach

the message of banking to the lowest strata of the society.

Q.57. What do you mean by microfinance?

Sir, the world of microfinance refers to banks extending small loans to borrowerswithout bank accounts and credit history. Having achieved widespread

recognition as a development tool, microfinance has been promoted by many

national government and multilateral agencies eager to bridge the financialinclusion gap. Microfinance is seen as an opportunity to help people get out of

poverty in a business way, not to make money out of poor people.

Q.58. What are the various financial markets?

Capital market – primary market (IPOs) and secondary market (Stock Exchanges-

BSE and NSE) . It is regulated by SEBI. Equity Shares, Preference shares,debentures ,bonds etc. are capital market instruments.

Money Market – basically inter-bank market is regulated by RBI. Money market

instruments are call money , notice money , commercial paper, certificate of deposit, treasury bills ,bills discounting etc.

Discount Market

Derivative market – swaps , options, futures and swaptions are instrumentsCommodity Future Market – metals, agriculture goods , power are traded.

NCDEX , Power Exchange are examples of commodities exchanges. Forward

Markets Commission regulates these exchanges.

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Q.59. What are the initiatives being taken by Government for development of Assam?

- Rs.31000 crores was allotted from PM’s fund in 2008 for development of better road and rail links and other infrastructure development

- Rs.550 crorse was allotted for rural electrification of villages in border districts

- Initiative insetting up of hydel power, gas-based power plants and gas-cracker project in different parts of the state for infrastructure development

- Focussed attention on agriculture and rural development for employment

generation

- Institution building for sustainable development of the state- Development of N-E Air corridor for Airlines to increase operations

- Higher education and skill development for employment opportunities

- Dedicated policies for development of the state with focus on people centric

policies aiming at empowerment of the people and self governance.- Rs.17000 crores allotted for development of an Integrated transport comprising

inland waterways , road and port facilities and dedicated rail connectivity withBangladesh.

- Thrust on development of agro-industries( bamboo, wood grass)

- Development of ecotourism for employment

- A number of projects are being thrown to private sector under PPP model for infrastructure development.

- NEDFi is being positioned to play a proactive role in interacting with both

domestic and international financial institutions for development of the state byharnessing local resources and create synergy between Govt and lenders.

- A number of Hydro-power units are being promoted as the state has potential

Q. 60. What is the difference between BPLR and Base rate? Why Base rate was

introduced?

After deregulation of interest rates in mid-1990s, RBI advised the banks to

introduce Board approved Bench Mark Prime Lending Rates in 2003 to act as

bench marks for pricing of loans. The BPLR is arrived at taking into account all

inclusive cost of capital, regulatory cost for CRR and NPA provisioning,operating expenses and profit mark-ups. However, banks in a competitive

landscape in their eagerness to attract customers have been lending at rates much

below the BPLR. AAA rated companies are able to raise funds from the market atrates much lower than the cost of funds of the banks BPLR is meant for prime

borrowers. Effectively, sub-prime borrowers who can not raise money from the

market are forced to borrow from banks at higher rates. Since BPLR frame-work has not stood the test of time, RBI directed banks to switch to Base Rate with

effect from July 01, 2010 so that no Bank can lend at rates below the base rate.

The base rate system was necessitated by the failure of the earlier BPLR system to

produce transparency in lending rates as well as its inability to effectively transmit

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monetary policy signals from the central bank. Banks will determine their actual

lending rates on loans with reference to the base rate and by including such other

customer-specific charges as considered appropriate. With the introduction of the base rate system, all category of loans will be prices only with reference to the

base rate with a few exceptions. However, currently RBI permits dual rates i.e

BPLR linked loans will continue till reset of interest rate or the closure of the loanor the customer voluntarily accepts base rate. Though bankers are insisting for a

sunset clause for switching from BPLR to Base rate, RBI, keeping in view its role

as the watchdog of the financial system, is not agreeable to the demands of the banks. Currently BPLR of IDBI Bank is 13.25% and Base rate is 8%.

Q.61. What is Fund Transfer Pricing(FTP)?What are the advantages?

Aggregate indicators like Net Interest Margin (NIM), Return on Assets (RoA),

Return on Net Worth (RoNW), Cost of funds and Yield on assets are inadequate

to identify individual sources of profit and loss. FTP is mechanism to calculate net

income at individual deal, client, product, segment, branch, regional level. In FTPan internal price is explicitly assigned to each deployment and funding. The

internal price represents the internal value/cost of the transaction on the valuedate. In other words, FTP is the engine to decompose the aggregate margin into

various operating groups who have contributed to the margin. Every deposit

raised/funds lent are internally priced based on FTP for the corresponding

maturity and remain logged till maturity. Net Interest Income (NII):

o For Deposit = FTP on deposit less actual rate paid

o For loans = Actual return on loans less FTP on loans

Business units performance is judged by NII and risk adjusted NII.

NII on deposit + NII on Loans + NII on Investments + NII of Treasury = Bank’s NII.

Advantages:

- Appropriate Pricing of assets and liabilities

- Enables business focus: encourage product/segment/business line which are more

profitable and discourage which are less profitable- Business guidance to operating units are directed through a single parameter i.e

Transfer Price

- Performance measurement of product/segment/unit

- Transfers non-transaction related risks like interest rate risk, portfolio credit risk etc to central ALM unit /CRMG

- Operational units focuses on their respective functions to maximize their Net

Income- Formulation of incentive structure based on objective assessment of performance.

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FINANCIAL STATEMENTS AND RATIOS

Q.62. What does a Balance Sheet represent?

A Balance Sheet depicts the financial position of an entity as on a particular date. Itshows assets owned and liabilities owed as on a particular date.

Q.63. What does a P & L statement represent?

A Profit and Loss Account shows the operating performance of an entity during a period

of time i.e whether an entity has earned profit or incurred loss.

Q.64. What does a Cash/ Fund Flow statement represent?

A Cash/Fund flow statement shows where from cash/funds have come and where gone

during a period. It shows sources and uses of cash/funds from operations, investment andfinancing activities.

Q.65. Define Net Worth or Equity.

Net worth is defined as what remains after outside liabilities are paid off. It is also

defined as total of tangible assets net off outside liabilities. Total of share capital plus reserves

minus intangibles also is called Net Worth or Equity.

Q.66. What do you mean by Leverage or gearing?

Leverage , an American concept or gearing , a British concept , refers to mix of debt and

equity funds. It is a relationship of borrowed funds to owned funds. Owned funds or equity

are costlier than debt or borrowed funds as interest on debt funds are tax deductible anddividend on equity is an appropriation of profit.

Q.67. What is difference between Reserve and Provision?

Reserve means any amount written off or retained by way of providing for depreciation,renewal or diminution in the value of assets or retained by way of providing for any unknown

liability I e. that part of profit which is set aside for any unknown liability. It is an

appropriation of profit. Practically reserve is an undistributed profit retained just to providefor any liability or prospective losses. Reserve may be capital reserve, general reserve,specific reserve or secret reserve.

Provision means any amount written off or retained by way of providing for depreciation,

renewals or diminutions in the value of assets or retained by way of providing for any known

liability of which the amount cannot be determined with substantial accuracy. Provision is a

charge against profit i.e Profit and Loss account should be debited for this purpose and the

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same is created for a known liability as well as known reduction in the value of an asset

which cannot be ascertained properly.

Q.68. What are intangible assets?

Intangibles but valuables like Goodwill, Patents, Copy wrights and fictitious assets likemiscellaneous expenses not written off , Business Loss or Deferred Revenue Expenditure

like Research And Development expenditure.

Q.69. What is the difference between cash flow and fund flow statements?

Cash flow is basically a statement that shows the movement of cash during the year. This

is on actual cash/bank transaction basis. It takes the opening cash balance, adds all cashinflows and deducts all cash outflows to arrive at closing cash flows. The objective of the

cash flow statement is to know where from cash was generated and where applied during the

year.

Fund flow statement on the other hand discloses the movement of funds during the year.This is based on balance sheet basis where all increases/decreases in assets and liabilities are

considered whether on cash basis or credit basis. In this statement the overall increase/

decrease in the total volume of working capital is only considered. The objective of the fundflow statement is to know the increase/decrease in assets and liabilities i.e where from funds

come and where gone.

Q.70. What are contingent liabilities?

Liabilities which are contingent to happening of certain events, are called contingent

liabilities. Deferred Payment /Loan Guarantees , Under Writing Commitment and Letter of

Credit contingent liabilities till devolvement after which these become contingent assets.

Q.71. What is the difference between Financial Accounting, Cost Accounting and

Management Accounting?

Financial Accounting: is a process and set of procedures for recording summarizing,classifying, analyzing and reporting financial transactions. Financial accounting is concerned

with preparation of Balance Sheet, Profit and Loss Account and Cash Flow Statement of the

entities indicating the financial position as on a particular date, the operating results during a period of time and where from funds have come and where gone during the period.

Cost Accounting: The technique and the process of ascertaining the amount of

expenditure incurred in or attributed to particular products, processes or services. Thisinvolves collecting, classifying, processing and analyzing costing data either for productcosting or cost control/reduction purposes.

Management Accounting: The application of financial accounting and cost accounting

data to generate information to aid managerial decision making in its functions or promotingmaximum efficiency and in formulating and coordinating future plans and subsequently in

measuring the efficacy of their execution.

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Q.72. What is capital adequacy Ratio? What is the rationale for capital?

Risk-Adjusted Capital Adequacy Ratio(CAR), a regulatory measure prescribed by

BASLE , Switzerland based Bank for International Settlement(BIS), an affiliate of the WorldBank in 1988 is originally known as Capital Accord I . BIS is the Central Bank of the

Central Banks of the member countries. Governors of Central Banks are members of BIS.

Capital Adequacy Ratio establishes a relationship between capital funds on the liability sideand risk-adjusted assets on the asset side of the bank’s balance sheet and requires banks to

mandatorily adhere to internationally accepted minimum capital standards to contain risk.

The rationale for capital adequacy are given as under:- Expected losses are to be covered by earnings and provisions and hence need to

price risk appropriately

- Unexpected losses or losses beyond normal range of operations have to be met by

capital.Capital Adequacy Ratio as a regulatory measure scores over the conventional Debt

Equity Ratio(DER) followed by RBI due to the following:

- CAR is a holistic measure as it links capital fund on liability side to assets on

the asset side of the balance sheet unlike DER which took into account bothdebt and equity from liability side only ignoring asset side altogether

- It takes into account the quality and composition of the assets on the assetside by attaching risk weights to various category of assets

- It takes into account off-balance sheet exposure items like Deferred

Payment/Loan Guarantee, Under-Writing commitments and Letter of Credit

by attaching proper risk weights as banks in their eagerness to earn fee basedincome take huge exposure in off-balance sheet items.

Rationale for thrust on capital of Banks are as under:

- Capital is a key factor to assess safety and soundness of a bank - Adequate capital serves as a safety net for a variety of risks to which an

institution is exposed in the course of its business

- Capital absorbs possible losses , thus providing a basis for depositor confidence in the bank

- Capital determines the maximum level of assets (loan) of a bank.

Q.73. What is Basel Capital Accord I / BASEL II/ BASEL III norms ? What is the

rationale?

Capital Accord I

In the midst of the progress towards unregulated banking and the internationalization of

financial markets, based on the Cooke Committee recommendations in 1988 , BIS introducedBasel Capital Accord I which prescribed each bank operating in international market to

maintain capital equal to 8% of the risk adjusted assets initially to contain credit risks. In

1996 , the initial accord was extended to include market risk. The capital accord is aninternational unified standard prescribed with the following three objectives:

i) To increase stability of the international banking system and harmonize

competitive conditions between banks

ii) To strengthen the capital bases of the banks which were deemed to be too low

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iii) To restrict both on and off balance sheet activities

However, RBI as an added precaution required the Indian Banks to graduate to a level of

capital equal to 9% of the risk adjusted asset phased over a period of time. The totalcapital would comprise of Tier I and Tier II capital as under:

Bank’s CapitalI

-------------------------------------

Tier I capital Tier II Capital- Equity share capital - Revaluation reserves

- Reserves created out of - Provision and loan

operating profit and loss reserves

disclosed in the Balance Sheet- Perpetual non-cumulative - Subordinated bonds

preference shares

- Hybrid capital instruments

Tier II capital can be upto 100% of Tier I capital

Basel Capital Accord II

Objectives:

- To realign bank’s capital with risk profile (bridge economic capital with

regulatory capital)

- Unlike Capital Accord I which concentrated entirely on capital , need wasfelt to strengthen internal control and governance of the individual banks

- To set universally recognized standards to replace crude minimum capital of

8% for a weighted bundle of bank’s credit risks devised in 1988- To ensure better safety and soundness of the financial system

Need to have a re-look at the Capital Accord was necessitated due to the following:

- Volatility of the financial markets- Significant degree of financial innovation

- Collapse of the Barings plc, a150 year old British Bank in 1995

- Financial crisis (Asia 1997) and (Russia 1998)- Risk for internationally active banks have been complex

- Fear that capital requirement did not match a bank’s true risk profile

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18

BASEL – II – 3 Pillars

Minimum

Capital

Requirement

Supervisory Review

Process

- A system of dialogue between banks and

supervisors on the ground

that not even the most

elaborate rules in the PillarsI can deal with the

peculiarities of each

institution.

Market Discipline

- To ensure that the

investors, depositorsand supervisors are

not blinded by

science, there is a set

of public disclosure

requirement.

WeightedRisks

Definitionof Capital

CreditRisk MarketRisk

OperatingRisk

Standardiz

ed

Approach

(SA)

InternalRating

Based

Approach

(IRBA)

Basic

Indicator

Approach

Standardized

Approach

(SA)

Advanced

Measuremen

t Approach

Foundation

IRB

Advanced

Approach

(AIRB)



Basel Capital Accord III

In the aftermath of global financial crisis, central bankers and bank regulators from across

the globe met at Basel on September 12, 2010 and reached a deal on new capital rules knownas BASEL III in an effort to create a more stable financial system and ensure that the

interconnected global banking system does not face another crisis such as that which led to

tax payer funded bailouts in 2008 and 2009. The BASEL III agreement was reached in

Switzerland by central bank governors and top supervisors from27 countries after a year of horse-trading and lobbying that involved banks and governments seeking to protect their

national interest.The accord requires the banks to hold basic levels of top-quality capital

known as “common equity” equal to at least 7% of the bank’s risk adjusted assets. The new

capital ratio represents a substantial increase from the current requirement of 2% with a phase-in period extending in part to January 2019 ( 4% threshold imposed on US banks after

the 2009 stress test). The 7% component is expected to include a 2.5% “conservation” buffer of capital. If capital levels at a bank dipped below this buffer, it could face tighter restrictions

on its dividend and executive compensation policies. On the other side of the spectrum,

banks whose capital cushions exceed the new requirements are likely to face pressures from

analysts and investors to start repurchasing shares or raising dividend payments, The bankingindustry apprehends that tougher capital requirements may force it to curtail lending as banks

keep more money in reserve, a move that could take a toll on shuttering economies in the

developed world.

Q.74. What are prudential guidelines?

Income Recognition

Asset Classification

ProvisioningRisk-adjusted Capital Adequacy

Transparency and Disclosure

Exposure Limits to individual companies/groups

Compliance of Know Your Customer(KYC) NormsCompliance of Anti-Money Laundering(AML) Guidelines

Q.75. Definition and rationale of Debt Equity Ratio, Current Ratio, Quick Ratio, ROI,

DSCR, FACR, Break Even Point, NPV, IRR, EPS, P/E multiple.

Long Term Debt Total Outside Liabilities (TOL)

Debt Equity Ratio = ---------------------- or --------------------------------------

Equity Equity

19



Debt Equity Ratio indicates the financial condition or financial health of the entity. It

indicates long term solvency of the firm. It is an indication of risk to the banker as debt is a

contractual liability carrying fixed rate where as equity has ownership interest with nomandatory obligation to pay dividend.

Current Assets Quick Assets(CA – inventory)Current Ratio = --------------------- Test Ratio = --------------------------------------

Current Liabilities Current Liabilities

Current ratio and quick ratio are liquidity measures and indicate liquidity or short term

solvency i.e ability to meet short term or immediate obligations.

Return (Gross Profit – Depreciatio)Return on Investment(ROI) = ------------------------------------------

Investment(NFA+CA+Investment +FLR)

FLR = Future Lease Rental Receivable

ROI indicates the earning power of the assets.

Net Profit+Depreciation+Interest+Lease Rental

Debt Service Coverage Ratio = ---------------------------------------------------------

Instalment of Principal + Interest+Lease Rental

Debt Service Coverage ratio (DSCR) indicated the debt service capacity of the borrower.

DSCR indicates how many times the available funds from operation provides a cover for debt obligation . It is a ratio of availability and obligation.

Net Fixed Assets

Fixed Assets Coverage Ratio (FACR) = --------------------

Long Term Liabilities

FACR indicates the security cover for the term liabilities i.e How many times the net fixed

assets provide a cover of security for the term liabilities. Security Margin indicates excess of

net fixed assets over long term liabilities as a percentage of net fixed assets.Net Fixed Assets – Long Term Liabilities

Security Margin(%) = -------------------------------------------------

Long Term Liabilities

Break Even Point(BEP) is the level of activity at which there is no profit or no loss .BEP is

the level of activity at which the unit starts earning profit .

Fixed Cost

BEP = -------------

Contribution

Fixed Cost

Operating Break Even Point = ------------------------- X Capacity Utilisation %

Contribution per unit

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Fixed Cost - Depreciation

Cash Break Even Point = ------------------------------- X Capacity Utilisation %Contribution per unit

Cash BEP is the level of activity at which there is no cash profit or cash loss i.e profit or losswithout taking into account non-cash items like depreciation and amortization of

miscellaneous expenses.

Net Present Value (NPV)

Total of future cash inflows net off cash outflows discounted at the cost of capital.

Internal Rate of Return (IRR)

Internal Rate of Return is the discount rate at which NPV is zero. It is otherwise known

as Break Even Yield or DCF yield or marginal efficiency of capital. IRR is the minimum

desirable rate of return from the view point of stake holders who are internal to the project.

Earning Per Share(EPS)

EPS is generally considered to be the single most important variable in determining thecompany’s share price. It is also a major component used to calculate the P/E valuation ratio.

Net Profit – Dividend on Preference Shares

EPS = ----------------------------------------------------Average Outstanding Shares

EPS serves as an indicator of company’s profitability.

P/E Multiple

Market price per share

P/E multiple = ---------------------------

Earnings per share

P/E multiple shows how many years earnings are reflected in the market price and indicates

the investor’s confidence in the management of the company.

Q.76. What are the potentials/promises/advantages of Retail sector to IDBI ?

A. Retail sector has huge potential for IDBI Bank in the present juncture. The following are the

major perceived benefits.

- Retail sector will help in increasing the share of high yielding assets/advances- Huge potential for fee based income

- Help in pushing up the share of low-cost CASA

- The sector will enable volume growth in business as there is shrinkage of normal

corporate advances due to financial disinter mediation and competition from market

21



(Larger corporates with strong balance sheet tapping market directly for their funds

requirement due to better visibility and cheaper resources)

- The sector offers potential for risk diversification due to volume growth and theconsequential savings in capital which otherwise would have been provided to contain

risk

Q.77. Indian Banks including Foreign Banks are looking at Retail sector as a thrust area. Is it because the Banks have to comply with the priority sector target?

A. No, as loans to corporate sector no longer seem lucrative, the Retail segment is emerging as a promising business segment for Banks. No longer are the Retail advances considered only for

meeting priority sector requirement. Banks both in the public as well as private sector are

chalking out strategies to strengthen their presence in this sector because of the following.

- Small retail loans help Banks to spread credit risks through diversification of asset base- Retail loans provide opportunity for fee based income as predominantly Banks provide

working capital facilities in the nature of cash credit, overdraft and bill discounting apart

from non-fund based limits like Letter of credit, Bank guarantee and foreign exchange

limits- Also there is scope for low cost funds through CASA growth

- The external collaterals are easy to obtain- Mostly assistance is provided based on intimate knowledge of the past financials,

Size, net-worth, resilience, the counter parties with whom they are trading, the current

growth trajectory and the management record

- Banks explore opportunities for trade finance, cash management services, forex advisoryservices and venture capital

- Credit requirements of Retail sector are often predictable. They are often in need of short

term funds at times of a sudden bunching of orders, whenever there is an inventory pileup or when receivables are blocked.

-

Q.78. What are economic merits of Retail sector ?

A. -Generates employment opportunities by adopting labor intensive techniques

-Wider dispersion of economic benefits-Promotes entrepreneurship

-Economic use of available raw material as units are located in close proximity to the source

of raw material

Q.79. How do you perceive growth opportunities in Retail business in IDBI Bank vis-à-vis

other giants in

the Banking space?

• Despite IDBI Bank being a new entrant to the banking business and facing competitive

environment, IDBI Bank perceives huge growth potential in Retail sector which has a

promising potential for a developing country like India.

• IDBI Bank has extensive presence throughout the length and breadth of the country and

known for nurturing industry – tiny, small, medium,large and mega projects .

• Forces of globalization offer tremendous growth opportunities in financing small andmedium enterprises.

22



• IDBI Bank has excellent connectivity and relationship with national and international

agencies engaged in promoting small and medium enterprises.

Q.80. What are the popular trade finance products?The popular trade finance products include

• Letter of Credit

• Guarantee

• Bills Discounting

• Pre-shipment/Post shipment Financing

• Factoring – Banks buying credit sales when the buyer as well as the seller are in the samecountry. SBI and Canara Bank have factoring subsidiaries.

• Forfaiting – Banks buying credit sales when buyer and seller are in different countries.

EXIM Bank is now the only forfaitor.

• Term loan

Q.81. Define Globalization. Whether it is beneficial or detrimental to Banking business?

• Loosely defined, globalization is the convergence of economies and cultures and

harmonization of markets and regulations that is gradually turning the world into a single

economic and cultural place.

• Globalization is definitely beneficial to the banking business as technovation(technological innovation) in communication engineering has linked the major business

centers of the world offering growing business opportunities to the banks.

Q.82. What is your perception of the changing role profile of Indian Banks in the emerging

market environment?

Banks as financial intermediaries play the following important roles

• Asset transformation – mobilizing funds, which are idle assets in the hands of the

depositors and investing in productive industrial assets.

• Information support - Banks are in a better position to provide information on vitalaspects of business by in house Research and Development.

• Dispersion of funds – investing money in those pockets where there is potential for

industrial promotion and resource endowment.

• Intergenerational wealth transfer – parents depositing money/taking insurance policies for the benefit of children.

• Denomination Intermediation – Mutual Funds pooling scattered and small savings and

investing in securities of higher denominations say for example Debenture having facevalue Rs.100000 in which small investors cannot invest.

• Provide a range of advisory and fee based services

• Contribute to the growth and stability of the financial system by regulating the flow of money in tune with the Monetary Policy.

Q 83. You have been in IDBI Bank for a while. What do you know about IDBI?

23



• IDBI was set up as the apex development bank of the country by an Act of Parliament i.e

IDBI Act 1964 to operate in close proximity to the development policy of the country.The predominant functions of IDBI were providing long term loan, coordinating the

activities of the banks and financial institutions engaged in lending money to industry and

promoting industry and institution building for the financial system .Our entire funds

were coming from subsidized sources as IDBI was accorded a special status. IDBI was provided with all necessary protections.

• Liberalization of macro economic policies and diminution of controls and regulations

brought in sea change in our operating environment.

• To cope up with the changing environment, IDBI was converted into a bank to have

critical mass in terms of branch network to mobilize cheaper funds and lend on

competitive terms.

Q.84. What are the challenges IDBI Bank faces?

IDBI Bank, a new generation bank faces the following challenges.

• Access to cheaper funds in absence of critical mass i.e branch network

• Competition in raising deposits and lending money at market rates• Trained manpower for retail, trade finance, RETAIL, Agriculture business

• Attracting, retaining, utilizing and preserving quality manpower in absence of market

related salary.

• Inability to market IDBI Bank as we don’t have necessary marketing skills as IDBI was

never required to market.

• Asset Liability Management as the bank mobilizes short term funds through CASA and

lends to finance long gestation infrastructure projects.

• Risk Management – credit risk, market risk and operating risk stemming from the hazardsof the market economy.

• Wave of disinter mediation as depositors as well as the borrowers prefer to tap the market

directly for better visibility and higher yield/cheaper resources.

Q.85. How do you feel the challenges can be translated into opportunities?

• Organizational redesign in tune with the changing business scenario – we have gone for business vertical system to have focused attention on segmental business growth

• Change in the mind set – we have to reinvent ourselves in response to the demands of the

time

• Global scale product design to suit the customers from across the globe

• Technovation – harnessing technology for better product delivery and customer value

creation – today IDBI is on e-Super Highway offering e-banking , mobile banking ,

anywhere banking , plastic money , digital cash etc• Innovation – predicting the customer needs, hearing the unheard and designing products

accordingly

• Service excellence – rendering value added customer service to differentiate us in thecompetitive market scenario – attracting , retaining and translating small value customers

into high value customers

• Communication – making communication as an organizational culture in translating thevision into action through unified drive

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• Strategic HR Policy – focused attention on acquisition of quality manpower, utilization

thereof by proper placement planning , preservation and development of human resourcesthrough training , market related incentive package , proper retention strategy and talent

management

• Research & Development – creating business intelligent groups for sensing business

opportunities by interacting with business group across the globe / inviting the businessgroup heads to share their vision at periodic intervals – deepening existing relations and

mobilization of new relationships

• Business Mix – strategic thrust on diversification into structured financing , retail banking , fee based business and CASA growth

Q.86. What are the areas you know having growth potential for IDBI Bank ?

I perceive the following areas to have huge potential for growth.

• Infrastructure financing-financing of road, port(sea port and airport), power, telecom,

water utilities, urban infrastructure projects etc

• Trade finance

• Agrifinance

• RETAIL sector • Cluster financing

• Microfinance

• Venture capital and Vulture capital

• Fee based activities – project appraisal, merchant appraisal, loan syndication, businessreengineering, financial engineering, capital structuring, corporate debt restructuring,

forex advisory services, portfolio and wealth management services

• Banc assurance – marketing insurance products of insurance majors.

• IDBI Bank has the depth of pocket and staying power and unique Balance sheet to

compete in the market

Q.87. What transformation have you witnessed in IDBI in the recent past?

• Originally created as an apex Development Financing Institution (DFI), IDBI acted as a

wholesale bank operating in close proximity to the development policy of the countrywith specialization in provision of long-term finance to industry, coordination of

activities of banks engaged in lending to industry, industrial promotion and institution

building. IDBI was provided with protection as a part of the business and entire resources

were coming to us without any effort.

• With liberalization and deregulation of macro economic policies and gradual phasing out

of protectionism in the 1990s, the operating environment for DFIs underwent seachange

forcing them to transform into universal banks.• To have critical mass by way of branch network to mobilize cheaper resources and have

necessary competitive edge, IDBI Bank and subsequently United Western Bank were

merged with IDBI.

• On recommendation of the business reengineering consultants, IDBI Bank was converted

into business verticals – ICG, LCG, MCG, RETAIL, AGRI, PBG etc to have focused

attention on diversified business growth and customer value creation.

25



• From total manual operations IDBI has moved into hitech operations -today our entire

operations are technology driven – IDBI is on e-Super Highway enabling quicker productdesign and delivery.

• We have put in place Asset Liability Management and Risk Management practices as

part of our strategy to cope up with changing business environment

• Treasury operations have been centralized with market driven operations• Funds Transfer Pricing has been introduced to sensitise the operating departments to the

pricing of products so as to optimize NII

• From statutory regulation we have moved to prudential regulation by way of incomeregulation, asset classification, provisioning, capital adequacy, transparency and

disclosure.

• Diversification into Life Insurance (IDBI Fortis Life Insurance) and Private Equity totake advantage of the market opportunities

• Increased customer focus

Proactive and dynamic HR policy with focus on induction of fresh talent from the marketto supplement the required skill profil

Q.88. Why do you aim to be a Business Analyst?

• Sir, I aspire to excel as a Business Analyst as I find the role very

stimulating and challenging. The present day business demands a blendof Technical Skills, Managerial abilities and Domain Knowledge. During my

2.5 years of experience as a Software Testing Engineer I have worked inalmost every aspect of the Software Development Lifecycle. The Software

Development Lifecycle comprises of – Requirements Gathering,Requirements Analysis, Test Planning, Test Execution and Defect Analysis.

Though I enjoy the Test Planning, the Test Execution and the DefectAnalysis phase, I enjoy the Requirements Gathering and the

Requirements Analysis phase of the SDLC the most. It involves:1. Thorough understanding of the needs of the clients.

2. Every person in the team can contribute to the understanding of the requirement. Thus showcasing new possibilities and in turn

expanding the horizon of understanding. Hence brainstormingduring Requirement Analysis.

3. Then documenting the entire process taking into account theminutes of the Requirement Analysis.

4. Conducting a review meeting for sensing the various problems thatmay arise and attempting cost effective solutions to those

problems.5. Last step would be charting the final course of action which would

ensure optimal use of available resources, improve efficiency of operation and ensure the completion of the project on time.

Q.89. What are the functions/duties of a Business Analyst?

• Sir,ultimately the goals of a Business Analyst are –

26



1. Scanning the entire environment for factors that mayaffect business and sensing the various problems the

enterprises are likely to face and attempting cost effectivesolutions.

2. To ensure optimal use of available resources i.e men,money, material and minutes .

3. Ensure that the project is completed as per schedule.Even if the entire project is not completed, the tasks

which merit high priority should be completed on thescheduled delivery date.

4. Improve project efficiency by reducing rework. To ensurethat there is less of rework. One needs to look at thereason why the defects persist and look at various waysto get rid of the defects etc.

Q.90. What do you understand by the concept “Business Analysis?

• Sir,business analysis may broadly be defined as scanning the entire

environment in which the business operates for factors that may affectand sensing the various problems the enterprises are likely to face andattempting cost effective solutions. The scope of business analysis may

encompass analysing the set of tasks, knowledge and techniquesrequired to identify business needs and determine solutions tobusiness problems. Solutions may include Business Process Re-engineering or Business Process Improvement.

• Business Process Re-engineering or Business Process Improvementmay simply be defined as Re-engineering or Improving any existing

Business Process so as to ensure:1. Optimal use of available resources i.e men , money,

material and minutes .2. Project is completed as scheduled. Even if the entire

project is not completed, the tasks which merit highpriority should be completed on the scheduled deliverydate.

3. Improve project efficiency by reducing rework. To ensure

that there is less of rework. One needs to look at thereason why the defects persists and look at the various

ways to get rid of the defects etc.

• Business Process Improvement can be achieved in the following ways:

o Thoroughly understanding the needs of your client.

o Every person in the team can contribute to the understanding of the

requirement. Thus showcasing new possibilities and in turn expandingthe horizon of understanding. Hence brainstorming during

Requirement Analysis.

o Then documenting the entire process taking into account the minutes

of the Requirement Analysis.

o Conducting a review meeting to discuss the problems that would arise

and the solution to those problems.

27



o Last step would be charting the final course of action which would

optimal use of available resources, improve efficiency of operation and

ensure the completion of the project on time.

Q.91. How would your MBA degree help you in achieving this goal?

•

Sir,today’s business enterprises are operating in an excitingly challengingand dynamic environment. The enterprises need man power resources withmulti-tasking abilities. To be successful in the emerging scenario, a business

analyst requires a complete blend of Technical Skills, Managerial abilities andDomain Knowledge. My technical qualification plus 2.5 years of industryexperience as a Software Testing Engineer have contributed in building astrong Technical Background and also introduced me to the Banking Domain.

From PGSEM I look forward to getting a good grounding in managerial skillsand update my knowledge in the related business areas. I am sure the

course would definitely add value to my pursuit of excellence in anyorganization that acquires my services.

Q.92. You have 2.5 years of experience in the IT Industry. With this

experience how would you contribute to the MBA classroom?• Sir,the classroom is a pool of talent and a wide range of Industry experience

ranging from 2 to 14 years. In addition, different individuals bring to the classroom their own uniqueness, knowledge and ethnic culture. It will provide anexcellent platform for exchange of ideas. Learning by experience sharingamongst such people becomes very enriching. My accumulated experience overthe years as a student as well as more than two and half years work experiencein an IT major will enable me to interact with the class meaningfully. Eachperson in the classroom can contribute to my learning process and I cancontribute by being an active learner. I have learnt the basic values of life frommy family. The class will definitely stand to benefit from the values I haveinculcated in my life and the set of softer skills like communication, motivation,

negotiation and team building.

Q.93. What is the do-one-thing-at-a-time mindset?

• Sir,the do-one-thing-at-a-time mindset means focusing on a single task at a

time. Gone are the days when one was expected to be the Master of a Trade.Today it is not only expected but appreciated if an individual is the Jack of All

Trades. Responding to changing scenarios, each one of us has to adorndifferent hats at different times. Also the transition between the roles has to

be done flawlessly and effortlessly. As for me I am playing multiple roles likea daughter, a sister, a team mate, a configuration controller for my team, anambassador of Infosys at the client location and last but not the least an MBA

aspirant. Each role expects me to be a different person at different times. Somany responsibilities have brought to forth my Multitasking Abilities, PeopleManagement Skills and Time Management Skills. Also I have learnt to

prioritise the tasks at hand and harmonise the different roles expected of me.Over all tough and trying times have not only made me more resilient but

also brought out the best in me and made me more responsible for myactions.

28



Q.94. Give one instance where Multitasking Abilities, PeopleManagement Skills and Time Management Skills have helped you

achieve your motive. • Sir, at each and every step of my life it has been expected of me to

showcase qualities like Multitasking Abilities, People Management Skills andTime Management Skills. But it was only recently that I became aware of these expectations. I was in Mumbai, at the client location, for KnowledgeTransitions sessions, when I got to know that I have been short listed for the

Interview process of the IIMB PGSEM. I had to co-ordinate with my teammate to get the Approval letter signed by my DM. Cordial relations with my

team mate made the process absolutely smooth. At the client location Irepresent my company and its values, primarily I am the ambassador for my

company. All eyes are firmly set on how skillfully I perform my tasks anddeliver the best. There is no room for mistakes. At the same time I want tofulfill my personal aspirations, hence need to manage time for preparing forthis interview without letting it affect my work.

Q.94. “Traditionally women are judged by their attire, best fit for homemaking and marriages are their top priority”. What will be yourcomment?

• Sir,today women by virtue of their softer skills better fit into modern day

business environment. Today’s women are multitasking by balancing boththeir personal and professional lives. They should not be judged by theirattire but by their multifarious work performance. For women in today’sworld there is much more to be achieved beyond the realms of marital

existence. Women have excelled in the field of white collar jobs.

Q.95. What did you learn as the Vice-Captain of the Girl’s Baseballteam?

• Sir,the best lesson I have learnt is “ Success is not permanent and failure is

not fatal “. “ United we stand divided we fall “. Team spirit and winning edgeare valuable inputs learnt during the tenure. There is no limit to the limitedpotential of a person. We can stretch to any extent as the situation warrants.Inter-school competitions offered a range of exciting events to test our talent

and tenacity. Also as Vice-Captain of the Baseball team, it was a terrificexperience to build rapport with people from outside our circle of influence.

Q.96. Perfection is an achievement. Why do you consider it a short

coming?

• Sir, achieving perfection is a credo. I always strive to achieve perfection. Butthe world is imperfect. We have to live with imperfection. We should aim atperfection in our vocation, career, pursuit or obsessive passion. But weshould be content with what we achieve within the limitations of available

resources. Never the less relentless pursuit of excellence in what we doshould be our motto.

29



Q.97. There are so many social issues, why did you choose BloodDonation?

• Sir, I have a deep passion for blood donation because the noble activity has

direct link to serving humanity as life saving blood is made available to theneedy patients at a critical time. I find a great challenge in this activity.There is poverty amidst plenty. Patients across the globe need blood. Butthey donot have access to the source and the type of blood available. The

blood donors donot know who needs what type of blood at what point of time. I intend to play a critical role to bring the two groups together. I will

work with some NGOs to create a Blood Bank , a market for blood wheredonors and receivers can operate without inhibition. A data base will be

created for quick reference and future use which will give instant informationabout the availability of blood. I intend to work with media to createawareness among the donors the urgency of pronouncing heir oath to servethe humanity at large.

Q.98.What have you done so far to address this issue?

• Sir,I have started discussion with a few prominent NGOs like Bharat

Sevashrama , The Indian Red Cross Society etc to create a data base aboutavailability and type of blood with each Blood Bank and to network the Blood

Banks. A few of my friends are working on media planning for blood donationdrive in rural areas.

Q.99. Don’t you think this issue is being addressed by NGOs like “The

Red Cross Society”. What is the different thing that you would do tocreate awareness?

• Sir, the issue is being addressed but there is vast scope for improvement.

The facility has not percolated to the village level .I am deeply touched bythe plight of the large rural masses in the villages who have been deprived of

the basic medical facilities. I feel there is scope for setting up Blood Banks atmunicipality level with facilty for storage of blood for local use. I propose toorganize blood donation camps at municipality level to educate the public.

Q.100. How would the experiences in your life so far help you achievethis noble cause?

• Sir, I have been eye witness to large infant mortality and delivery deaths inrural areas. I feel timely availability of blood will definitely save many lives.

Blood donation campaigns organized in school and college havedemonstrated that public are not averse to donate blood. But facilities need

be created in close proximity. I feel international agencies like UNESCO,UNICEF etc should be roped in to share their global experiences in thisregard. Health services being accorded the status of soft infrastructure,Governments across the globe are initiating proactive measures for wider

reach of basic health services.

30



Q.101. What are special features and scope of Transaction Banking ?

Transaction Banking basically refers to the banking operations which culminate in the

transactions in the books of the banks. Under transaction banking commercial banks provide agamut of innovative and customized solutions to meet the diverse needs of the corporate clients.

The range of services include

- Cash Management Services(CMS) to corporate and institutional clients helping in payments, collections, information management, accounts service and liquidity

management solutions for fee based income

- Trade Finance products for import/export operations- opening LC, supply chainfinancing, document handling etc.

- Government Businesses – agency business

- Capital market services – Initial Public Offering(IPO), Follow-on public offer, private

placement, Qualified Institutional Placement(QIP), Book-running Lead Manager,GDR/ADR/ECB/FCCB operations etc.

- Security services- custodial services, broker-dealer services, funding, valuation reports on

portfolio, back office outsourcing etc.

Transaction Banking has huge potential for growth.

Q.102. What is the advantage/disadvantage of Core Banking System?

Core Banking Solution is a departure from branch channel based distributive system to

centralized decision making system. Core Banking Solution is basically a technology driven

response to the growing market orientation and business growth of banks The major advantages

are optimum utilization of available resources, mapping out of products in retail space and prompt response to customer needs. The major disadvantage is inability to provide personalized

service to specific segment of the customers.

Q.103. Now IDBI Bank is working with different business verticals. What are the

advantages/disadvantages ?

In a fiercely competitive environment, to provide focused attention to business growth andcustomized solutions to different business segments, business verticals were created. As the

Indian economy is growing and the banking needs are emerging, the banks have to suitably re-

align their operations to effectively respond to the challenges. Our verticalization is a response tocompetitive banking landscape and the sweeping changes in the operating environment.

Q.104. Banks in India are increasingly resorting to Trade Finance. What are the pre-

requisites for Trade Finance operations?

With globalization of business, countries with differing resource endowments are increasingly

resorting to trade to optimally utilize the resources and increase gains and enhance welfare.

Foreign trade is the engine of economic growth. When the trading operations of a country grow, bankers perceive huge business opportunities – fund based as well as non-fund based, pre-

shipment and post-shipment financing, LC discounting, remittance, payment, collection etc. The

following are necessary for active trade finance operations:- dedicated talent pool conversant with trade finance operations

- knowledge of Uniform Customs and Practices (UCP)

- knowledge of FEDAI Rules

- web-enabled technological platform to provide leading edge trade solutions

31



- suite of trade finance products

- networking and correspondence relationship with banks in different countries

- an active treasury

Q.105. 10 Point recipe for success.

i) Dream – A dream of becoming a successful professional and strategy to execute it

ii) Values – Enduring success is always built in strong foundation of values you

stand for iii) Zest & Zeal – Never lose your zest & zeal for earning

iv) Excellence – Passion for excellence pays

v) Self – Confidence – Build self-confidence

vi) Team Spirit – Ability to become an integral part of a cross culture team isnecessary

vii) Take care of yourselves – Ability to handle stress and deal with emerging

challenges

viii) Perseverance – Perseverance can make miracles happenix) Be innovative and have a broader social vision.

x) Never let success go to your head. Maintain a sense of modesty and humility.

Q.106. On completion to MBA you are appointed as Chief Executive Officer of a growing

company. Spell out your action plan.

Entrepreneurial Vision

– Foreseeing and acting on opportunities – Seeing value where others miss it

– Taking Risk as per company’s risk appetite

– Seize first mover advantages – Unlocking the potential of the people

Thrust on Growth

– Both profitable and sustainable

– A means to delivering value and not an end in itself

– Prosperity and increasing the quality of the life of people.

Achieving Excellence

– Timely completion of projects within time and cost budget

– Optimizing the use of assets

– Striving to be lowest cost producer – Sourcing cheaper resources

32



Building Trust

– Always acting in a competent and responsible manner

– Building a culture of mutual respect based on trust across all stakeholders i.e.

investors, employees, suppliers, customers and community at large

Sustainable Development

– Meeting the needs of the present generation without compromising the needs of

the future generation.

– To be an integral part of business philosophy.

– Providing safe and healthy working environment. – Use of environment friendly technology.

– Concern for socio-economic development of the community.

Q.107. As new age business manager, what are the major challenges you foresee?

– Keeping pace with continuously changing business environment – Cut throat competition

– Working with cross cultural teams

– Meeting deadlines and targets

– Often have to make do with limited recourses – Blend knowledge, skills, ambitions and experience of a diverse work group

– Success depends on other’s work performance.

– Information overload – Do hard work

– Energizing and motivating team

– May have duties that are more clerical than managerial.

GOOD LUCK

Questions With Bullet Point Answers (2)

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