Financial Services Business Management

Content

• Executive Summary
• Highlights
• 1. Operation Management
  • 1.1 Fund Management
    • 1.1.1 Benefits of Fund Investment
    • 1.1.2 Fund Manager and Management of Funds
    • 1.1.3 Fund Management Process
      • 1.1.3.1 Identifying The Investor's Objective and Constraints
      • 1.1.3.2 Creating Investment Policy Statement
      • 1.1.3.3 Monitoring and Rebalancing
      • 1.1.3.4 Performance Evaluation
    • 1.1.4 Objectives of Investment
      • 1.1.4.1 Risk Objective
      • 1.1.4.2 Return Objective
      • 1.1.4.3 Tax Concerns
      • 1.1.4.4 Legal and Regulatory Requirements
    • 1.1.5 Role of Fund Manager
    • 1.1.6 Expenses Management in Managing Funds
    • 1.1.7 Fund Management Ratings Process
      • 1.1.7.1 Quantitative Screening
      • 1.1.7.2 Background Verification
      • 1.1.7.3 Qualitative Factface Discussion
      • 1.1.7.4 Rating Committee/Organization
      • 1.1.7.5 Fund Monitoring
    • 1.1.8 Hedge Funds Concept
    • 1.1.9 Regulatory Issues in Allowing Foreign Hedge Funds in India
      • 1.1.9.1 Hedge Funds in India
      • 1.1.9.2 Relevant Provisions of Fii Regulations
    • 1.1.10 Identifying Hedge Funds
    • 1.1.11 Additional Regulatory Concerns
  • 1.2 Asset Liability Management
    • 1.2.1 Evolution of Asseliability Management
    • 1.2.2 Types of Asset Liability Management Risks
      • 1.2.2.1 Liquidity Risk
      • 1.2.2.2 Interest Rate Risk (Irr)
      • 1.2.2.3 Market Risk
    • 1.2.3 Categories of Risk
      • 1.2.3.1 Credit Risk
      • 1.2.3.2 Capital Risk
      • 1.2.3.3 Market Risk
      • 1.2.3.4 Interest Rate Risk
      • 1.2.3.5 Liquidity Risk
    • 1.2.4 Asseliability Management Process
      • 1.2.4.1 Alm Information Systems
      • 1.2.4.2 Alm Organisation
    • 1.2.5 Scope of Alm
    • 1.2.6 Guidelines for Asset Liability Management System in Housing Finance Companies
  • 1.3 Risk Management
    • 1.3.1 Classification of Risk
      • 1.3.1.1 Systematic Risk
      • 1.3.1.2 Unsystematic Risk
      • 1.3.1.3 Other Risks
    • 1.3.2 Why Risk Matters
    • 1.3.3 Credit Risk Management Models
      • 1.3.3.1 Types of Credit Risk Models
    • 1.3.4 Requisites of Credit Model
      • 1.3.4.1 Asset Credit Risk Model
      • 1.3.4.2 Credit Risk Pricing Model
      • 1.3.4.3 Market Risk Pricing Model
      • 1.3.4.4 Exposure Model
      • 1.3.4.5 Risk Calculation Engine
    • 1.3.5 Techniques Used in Building The Credit Risk Models
      • 1.3.5.1 Econometrics
      • 1.3.5.2 Neural Networks
      • 1.3.5.3 Optimisation Models
      • 1.3.5.4 Expert Rule Based Systems
      • 1.3.5.5 Hybrid Systems
    • 1.3.6 Risk Mitigation Approaches
    • 1.3.7 Protection against Risk
      • 1.3.7.1 Market Risk Protection
      • 1.3.7.2 Interest Rate Risk Protection
      • 1.3.7.3 Protection against Inflation
      • 1.3.7.4 Protection against Business and Financial Risk
    • 1.3.8 Basel Ii and Risk Management
  • 1.4 Regulatory Compliance
    • 1.4.1 Securities and Exchange Board of India
    • 1.4.2 The Organisation
    • 1.4.3 Objectives
      • 1.4.3.1 Aligning The Various Intermediaries in The Financial Market
      • 1.4.3.2 Creating Awareness and Education among Investors
      • 1.4.3.3 Conducive Investment Atmosphere
      • 1.4.3.4 Sebi Acts as A Facilitator
      • 1.4.3.5 Effective Law Maker
      • 1.4.3.6 Guidance to Corporates
    • 1.4.4 Functions
      • 1.4.4.1 Protecting The Interest of Investors
      • 1.4.4.2 Monitoring and Regulating The Business in Exchanges
      • 1.4.4.3 Monitoring and Administering The Active Participants in The Market
      • 1.4.4.4 Administering The Mutual Fund Schemes
      • 1.4.4.5 Avoidance of Unfair Practices
      • 1.4.4.6 Imparting Knowledge
      • 1.4.4.7 Auditing by Sebi
    • 1.4.5 Reserve Bank of India (Rbi)
      • 1.4.5.1 to Manage The Monetary and Credit System of The Country
      • 1.4.5.2 to Stabilize Internal and External Value of Rupee
      • 1.4.5.3 for Balanced and Systematic Development of Banking in The Country
      • 1.4.5.4 for The Development of Organised Money Market in The Country
      • 1.4.5.5 for Proper Arrangement of Agriculture Finance
      • 1.4.5.6 for Proper Arrangement of Industrial Finance
      • 1.4.5.7 for Proper Management of Public Debts
      • 1.4.5.8 to Establish Monetary Relations with Other Countries of The World and International Financial Institutions
      • 1.4.5.9 for Centralisation of Cash Reserves of Commercial Banks and to Maintain Balance between The Demand and Supply of Currency
    • 1.4.6 Functions
      • 1.4.6.1 Monetary Authority
      • 1.4.6.2 Manager of Foreign Exchange
      • 1.4.6.3 Issuer of Currency
      • 1.4.6.4 Developmental Role
      • 1.4.6.5 Related Functions
    • 1.4.7 Regulatory Initiatives
  • 1.4.8'kyc' and Antmoney Laundering Measures
    • 1.4.8.1 Written Antmoney Laundering Procedures
    • 1.4.8.2 According to Sebi The Customer Dudiligence Process Consists of The following
    • 1.4.8.3 Policy for Accepting The Clients
    • 1.4.8.4 The Special Category of Clients Defined by Sebi Are as Follows
    • 1.4.8.5 Guidelines Issued by The Rbi for Antmoney Laundering Are as Follows
    • 1.4.8.6 Kyc (Know Your Customer)
  • 1.5 Basel Ii and Its Management
    • 1.5.1 Implementation of Basel Ii in Advanced Countries and Its Impact on Emerging Economies
      • 1.5.1.1 Higcost Lending and Reduced Lending to Emerging Economies
      • 1.5.1.2 Curtailment of Credit to Emerging Economies
      • 1.5.1.3 High Interest Cost and Competitive Advantage for Corporate Borrowers
      • 1.5.1.4 Impact on Infrastructure Development
      • 1.5.1.5 Shorterm Maturity Lending
      • 1.5.1.6 Impact on Capital Flows and Companies
      • 1.5.1.7 Impact on Stock Returns
    • 1.5.2 Implementation of Basel Ii in Emerging Economies
      • 1.5.2.1 External Credit Rating and Standardized Approach
      • 1.5.2.2 Implementation of Internal Ratings Based Risk Management
      • 1.5.2.3 High Cost in IT Spending and Training
    • 1.5.3 Impact of Basel Ii on Emerging Economies
      • 1.5.3.1 Risk Management Improvement and Capital Adequacy
      • 1.5.3.2 Preference for Mortgage Credit to Consumer Credit
      • 1.5.3.3 Advantages for Big Banks
      • 1.5.3.4 Advantage for Indian IT Companies
      • 1.5.3.5 Consolidation among Banks
      • 1.5.3.6 Impact on Sovereign Rating
    • 1.5.4 Criticality of Qualitative Factors
      • 1.5.4.1 Need for Top Management Support
      • 1.5.4.2 Creation of Profile for Chief Risk Officer
    • 1.5.4.3-Degree Appraisal and Feedback Systems
      • 1.5.4.4 Technology and People Development
    • 1.5.5 Three Pillars of Basel Ii
    • 1.5.5.1pillar One
      • 1.5.5.2 Pillar Two
      • 1.5.5.3 Pillar Three
    • 1.5.6 Approach of Rbi towards Basel Ii
    • 1.5.7 Basic Indicator Approach
      • 1.5.7.1 Standardised Approach
      • 1.5.7.2 Advanced Measurement Approach
    • 1.5.8 Comparison of Basel I and Basel Ii
    • 1.5.9 Issues & Challenges in Implementing Basel Ii
    • 1.5.10 Operation Management and Its Importance in The Future
• 2. Microfinance and Its Management
  • 2.1 Definition and Concept of Microfinance
  • 2.2 Models of Microfinance in India
    • 2.2.1 Mfi Model
    • 2.2.2 Shg Bank Linkage Model
  • 2.3 Issues and Challenges of Microfinance
    • 2.3.1 Literacy & Skill Levels of Clientele
    • 2.3.2 High Transaction and Service Cost
    • 2.3.3 Credit Risk
    • 2.3.4 Skewed Regional Distribution of Microfinance
    • 2.3.5 Diversion of Funds to Unproductive Activities
    • 2.3.6 Regulatory Issues
    • 2.3.7 Irregular Flow of Income Due to Seasonality
    • 2.3.8 Uncertainty of Market Conditions
    • 2.3.9 Lack of Tangible Proof for Assessment of Income
    • 2.3.10 Need for Information Sharing & Better Technology
• 3. Customer Acquisition and Servicing
  • 3.1 Customer Relationship Anagement
    • 3.1.1 Meaning of CRM
    • 3.1.2 CRM in Financial Services Industry
  • 3.2 Understanding Investors and Their Needs
    • 3.2.1 Need for Recognition and Social Company
    • 3.2.2 Security Needs
    • 3.2.3 Mutual Trust
    • 3.2.4 Need for Information
    • 3.2.5 Prompt Services
    • 3.2.6 Interdependent Relationship
    • 3.2.7 Friendly Approach
  • 3.3 Developing and Positioning of Financial Instruments
    • 3.3.1 Positioning of Financial Instruments
• 4. Managing Financial Services Organisation
  • 4.1 Scope of Financial Services Management
    • 4.1.1 Banking
    • 4.1.2 Insurance
    • 4.1.3 Capital and Investment Markets
  • 4.2 Functions of Financial Services Management
    • 4.2.1 Marketing and Sales Function
    • 4.2.2 Research
    • 4.2.3 Training and Staffing
  • 4.3 Distribution Channels of Financial Services
    • 4.3.1 Insurance
      • 4.3.1.1 Insurance Agent
      • 4.3.1.2 Corporate Agent
      • 4.3.1.3 Insurance Brokers
      • 4.3.1.4 Bancassurance
      • 4.3.1.5 Distribution Trends for Insurance
      • 4.3.1.6 Distribution Issues & Challenges
    • 4.3.2 Mutual Funds
      • 4.3.2.1 Banks
      • 4.3.2.2 National/Regional Distributors
      • 4.3.2.3 Ifa
      • 4.3.2.4 Direct Selling
    • 4.3.3 Banks Distribution Channel
      • 4.3.3.1 Branch Banking
      • 4.3.3.2 Automated Teller Machine (Atm)
      • 4.3.3.3 Phone and Mobile Banking
      • 4.3.3.4 Internet Banking
      • 4.3.3.5 Direct Selling Agents (Dsa)
  • 4.4 Management Information System
    • 4.4.1 Objectives of Mis
    • 4.4.2 Steps in Developing Mis
      • 4.4.2.1 Identifying and Understanding The Information Need of The Managers/Management
      • 4.4.2.2 Explain The Objectives of The Mis Development and Its Expected Benefits
      • 4.4.2.3 Preparing A Plan for Developing The Mis and Keeping A Schedule of The Task
      • 4.4.2.4 Putting The Mis into Operation
      • 4.4.2.5 Monitor and Maintain The Mis System Developed
    • 4.4.3 Importance of Mis in The Financial Services
      • 4.4.3.1 Benefits of Mis in Financial Organization
  • 4.5 Outsourcing The Financial Services
    • 4.5.1 Investment Banking
    • 4.5.2 Equity Research
    • 4.5.3 Insurance
    • 4.5.4 Banking
    • 4.5.5 Accounting and Taxation
  • 4.6 Infrastructure Management in Financial Services
    • 4.6.1 IT Infrastructure
    • 4.6.2 Payment and Settlement Systems
    • 4.6.3 Electronic Clearing Service
    • 4.6.4 Real Time Gross Settlement System
    • 4.6.5 National Electronic Funds Transfer System
    • 4.6.6 Cheque Truncation System
    • 4.6.7 National Electronic Clearing Service
• 5. Emerging Trends - Issues and Challenges
  • 5.1 Volatility in Global Financial Markets
  • 5.2 Increased Integration of Global Financial Markets
  • 5.3 Increasing Regulatory Supervision
  • 5.4 Changing Investor Needs
  • 5.5 Containing/Reducing The Cost of Administration 121 Bibliography 122 Abbreviations and Acronym
• List of Figures
  • Fig 1.1 Optimal Outputs of Credit Risk Management Model
  • Fig 1.2 Regulatory Authorities of Indian Financial System
• List of Tables
  • Table 1.1 Risk Mitigation Approaches at Firm Level:Risk Mitigation Type