Licensing new banks in private sector is a bold step in the path of financial sector reforms. In fact the ball was set rolling after the Union Finance Minister in his Budget Speech 2010-11 made a significant announcement that: “RBI is to consider giving some additional banking licenses to private sector players.” The objective is clear and loud: to extend banking outreach, instill competitive efficiency, bring in new technology and achieve inclusive growth.
RBI issued the final “Guidelines for Licensing of New Banks in the Private Sector” in February 2013 after taking into account the important amendments to the Banking Regulation Act, 1949, feedbacks received from the public, and consultation with the Central Government.
An innovative corporate structure of the promoters of banks is prescribed. Entities / groups in the private sector and entities in the public sector shall be eligible to promote a bank through a Non–Operative Financial Holding Company (NOFHC). The corporate structure is designed to ring-fence the banks from spill-over risks from other entities of the group.
Financial inclusion has emerged as major policy plank of the Centre and RBI. The task is challenging with large population and the geographical spread of our country. The data released from the recent Census of India shows that only 54.4 per cent of rural households have access to banking services
RBI received 26 applications for bank license. On the recommendations of a High Powered Committee headed by Dr Bimal Jalan, former RBI Governor, RBI, issued "in principle" approval to two entities viz IDFC ( an NBFC) and Bandhan( NBFC-MFI) to set up banks. Presently they are functioning as NBFCs; they need to obtain license from RBI under Sec 22 of the Banking Regulation Act, 1949.
. The earlier experimentation of bank licensing infused the much needed competition and technology in the banking sector. Notably, the business models adopted by these banks support class banking, profit maximization and risk-taking. Expectedly, the new generation banks would bring an evolutionary change to meet the “needs of modern economy” and alongside “improve access to banking services” to the lower strata of the society.
Banking Structure in India:
This presentation helps us to understand the basics of banking in India, its initiation, role and growth over the period of time.
Licensing new banks in private sector is a bold step in the path of financial sector reforms. In fact the ball was set rolling after the Union Finance Minister in his Budget Speech 2010-11 made a significant announcement that: “RBI is to consider giving some additional banking licenses to private sector players.” The objective is clear and loud: to extend banking outreach, instill competitive efficiency, bring in new technology and achieve inclusive growth.
RBI issued the final “Guidelines for Licensing of New Banks in the Private Sector” in February 2013 after taking into account the important amendments to the Banking Regulation Act, 1949, feedbacks received from the public, and consultation with the Central Government.
An innovative corporate structure of the promoters of banks is prescribed. Entities / groups in the private sector and entities in the public sector shall be eligible to promote a bank through a Non–Operative Financial Holding Company (NOFHC). The corporate structure is designed to ring-fence the banks from spill-over risks from other entities of the group.
Financial inclusion has emerged as major policy plank of the Centre and RBI. The task is challenging with large population and the geographical spread of our country. The data released from the recent Census of India shows that only 54.4 per cent of rural households have access to banking services
RBI received 26 applications for bank license. On the recommendations of a High Powered Committee headed by Dr Bimal Jalan, former RBI Governor, RBI, issued "in principle" approval to two entities viz IDFC ( an NBFC) and Bandhan( NBFC-MFI) to set up banks. Presently they are functioning as NBFCs; they need to obtain license from RBI under Sec 22 of the Banking Regulation Act, 1949.
. The earlier experimentation of bank licensing infused the much needed competition and technology in the banking sector. Notably, the business models adopted by these banks support class banking, profit maximization and risk-taking. Expectedly, the new generation banks would bring an evolutionary change to meet the “needs of modern economy” and alongside “improve access to banking services” to the lower strata of the society.
Banking Structure in India:
This presentation helps us to understand the basics of banking in India, its initiation, role and growth over the period of time.
In this PowerPoint presentation information about KYC norms are explained briefly which are related to Banking & Insurance Sector.The Concept of Small Accounts is also explained through this Presentation.Those(Small Accounts) are the accounts which can be opened without complying the requirements of KYC.
Banking:- Role - Structure - Public sector and private sector banks - schedul...Mohammed Jasir PV
Banking:-
Role of banks in business
Structure of commercial banking in India
Public sector and private sector banks - scheduled banks
Foreign banks new generation banks
Functions of commercial banks
Changing scenario in commercial Banking.
Principles & Practices of Banking module 1ARUNKUMAR7358
Introduction to Banking System
Financial markets and its segmentation
Financial system overview
Recent developments in Indian financial system
Role and functions of RBI
Introduction to equity and debt markets
Historical aspects of banking in India
Evolution of banking system
Types of banks (Public sector, Regional banks)
Performance of public sector banks
Performance of private sector banks
Commercial banking
Commercial bank’s structure
Commercial bank’s functions (Primary & secondary function)
Role of commercial banks in socio economic development
Services rendered by commercial banks
Credit creation and deployment of funds in commercial banks
Role of RBI & GOI as regulator of banking system
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Banking and Financial Institutions (as per UGC NET syllabus)Abbas Vattoli
a power point presentation on banking and financial institutions convering origin and history of banking in india, commercial banking classification and functions, investment banking role and initiatives, NPA warning signals and mannagement of NPA, NABARD and its rural banking innovations.
Stress Testing and the Impact that Over-Reliance on VaR as a risk metric in t...Conor Cooney
A Presentation on the Development of Stress Testing.
Demonstrating the impact that Risk Management Models had on the Great Recession and what lessons can be learned from it.
There is also a demonstration of an Irish example of a successful stress test, that was one of the fundamental focal points in the lead up to the state's exit from an IMF bailout programme
In this PowerPoint presentation information about KYC norms are explained briefly which are related to Banking & Insurance Sector.The Concept of Small Accounts is also explained through this Presentation.Those(Small Accounts) are the accounts which can be opened without complying the requirements of KYC.
Banking:- Role - Structure - Public sector and private sector banks - schedul...Mohammed Jasir PV
Banking:-
Role of banks in business
Structure of commercial banking in India
Public sector and private sector banks - scheduled banks
Foreign banks new generation banks
Functions of commercial banks
Changing scenario in commercial Banking.
Principles & Practices of Banking module 1ARUNKUMAR7358
Introduction to Banking System
Financial markets and its segmentation
Financial system overview
Recent developments in Indian financial system
Role and functions of RBI
Introduction to equity and debt markets
Historical aspects of banking in India
Evolution of banking system
Types of banks (Public sector, Regional banks)
Performance of public sector banks
Performance of private sector banks
Commercial banking
Commercial bank’s structure
Commercial bank’s functions (Primary & secondary function)
Role of commercial banks in socio economic development
Services rendered by commercial banks
Credit creation and deployment of funds in commercial banks
Role of RBI & GOI as regulator of banking system
Books referred - Dr.Nirmala Prasad, K. Chandrasass j (Banking and financial system)& Mithani, Gordan (Banking and financial systems)
Banking and Financial Institutions (as per UGC NET syllabus)Abbas Vattoli
a power point presentation on banking and financial institutions convering origin and history of banking in india, commercial banking classification and functions, investment banking role and initiatives, NPA warning signals and mannagement of NPA, NABARD and its rural banking innovations.
Stress Testing and the Impact that Over-Reliance on VaR as a risk metric in t...Conor Cooney
A Presentation on the Development of Stress Testing.
Demonstrating the impact that Risk Management Models had on the Great Recession and what lessons can be learned from it.
There is also a demonstration of an Irish example of a successful stress test, that was one of the fundamental focal points in the lead up to the state's exit from an IMF bailout programme
Week-9 Bank RegulationMoney and Banking Econ 311Tuesdays 7 .docxalanfhall8953
Week-9 Bank Regulation
Money and Banking Econ 311
Tuesdays 7 - 9:45
Instructor: Thomas L. Thomas
Capital Adequacy Management
Bank capital helps prevent bank failure
The amount of capital affects return for the owners (equity holders) of the bank
Regulatory requirement – Regulatory Capital – Tier 1 and Tier 2 Basle Rules
Economic Capital - What is this
2
Capital Adequacy Management:
Returns to Equity Holders
3
Traditional Economic Capital Value-At-Risk (VaR) View
Frequency of Occurrence / Probability
Mean/Average Expected Losses (m)
Unexpected Losses @ 99.9% confidence Level (s)
Economic Capital
Reserves
Value-at-Risk
VAR
Before we can develop adequate credit stress testing we need to understand the differences between traditional credit loss measures and what stress tests incorporate.
Aside form standard concentration and coverage analysis, a standard portfolio credit risk analysis typically employs a Value-at-Risk view.
Credit risk in this view generally follows a positive skewed distribution (by definition one cannot have negative defaults and thus a normal distribution is not applicable).
Reserves ALLL generally cover average expected losses over a horizon. In reality these are usually allocated to general reserves since most ALLL have two components: general reserves and specific reserves for known credits that are detraining.
Economic capital functions as a cushion against unexpected loss up to some confidence level. In this case 99.9% or a single “A” rating is the regulatory standard (once every 10,000 years)
In addition to a loss cushion economic capital represents the amount of the firm’s equity that is at risk which requires a return sufficient to cover the associated risk.
The shape of the curve or tail will then reflect the underlying credit risk of the portfolio or product.
However this view has some assumptions that can miss important risk elements.
The distribution is generally based on one variable PD in this case and does necessarily fully account for other correlated factors that when combined either change the tail or increase the likelihood of default.
Second, while the event may be rare, this methodology does not tell how severe or the magnitude of the event when it occurs beyond the confidence level prescribed for economic capital.
4
Old Measure: New Ones
RAROC - Risk Adjusted Return on Capital
EVA - Economic Value Added.
Hurdle Rate – What is it. How is it measured?
5
Time Line of the Early History of Commercial Banking in the United States
6
Historical Development of the Banking System
Bank of North America chartered in 1782
Controversy over the chartering of banks.
National Bank Act of 1863 creates a new banking system of federally chartered banks
Office of the Comptroller of the Currency
Dual banking system
Federal Reserve System is created in 1913.
7
Asymmetric Information and Financial.
Current Trends in Selected Industries: BankingEren Ocakverdi
Conceptual introduction to Banking for the first week of the elective course (AD487). Presentation relies heavily on Frederic Mishkin's textbook: The Economics of Money, Banking and Financial Markets, 9th ed,
Dr Michael Kumhof: "The Chicago Plan Revisited"Global Utmaning
A presentation held by Dr Michael Kumhof, Deputy Division Chief, Modeling Division, Research Department, IMF, organized by the Stockholm based think tank Global Challenge in cooperation with LSE and the Swedish House of Finance on September 12th 2013.
This paper presents two models of key determinants in the evolution of the shadow banking system. First of all, a shadow banking measure is built from a European perspective. Secondly, information on several variables is retrieved basing their selection in previous literature. Thirdly, those variables are grouped in: 1) the base model: real GDP, Institutional investors’ assets, term-spread, banks’ net interest margin and liquidity; and 2) the extended model: the former five plus an indicator of systemic stress, an index of banking concentration and inflation. Finally, regression analysis on those models is conducted for different countries’ samples. Both OLS and panel data analysis is undergone. Results suggest important and consistent geographical differences in relations between shadow banking and key determinant variables’ effects. Thus, this essay provides financial authorities with a valuable benchmark to which they should pay attention before designing optimal policies seeking to reduce the financial risk that shadow banking entails.
Similar to Banking Theories and Macroeconomics Slideshare (20)
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Biological screening of herbal drugs: Introduction and Need for
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How to Make a Field invisible in Odoo 17Celine George
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The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
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The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
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A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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1. Banking Theories and
Macroeconomics
By
A. Bianco and Claudio Sardoni
Sapienza University of Rome
Presented by:
Muhammad Awais Khan- 41050
Muhammad Awais Zameer- 41012
Syed Muhammad Abdul Basit – 41005
Shafqat Rasool- 41015
Nawaz Khan - 41053
Presented to:
Dr. Jahanzaib Sultan
GC. University Faisalabad
2. 1) INTRODUCTION:
• Banks role played in building private debts for money creation before
Great financial Crises 2008.
• The view of renewing interest rate is important in financial market
developments for real economy is new mainstream economics.
• Such developments represent progress in current economic theory,
mostly focused on business & financial cycle.
• There is a long way for common approach to macro financial
modelling.
2
3. Contd..
• Head of monetary and economic department at bank for
international settlements, Claudio Borio “ New models of financial
cycle are based on traditional modelling strategies”.
• The he given some arguments to address issues where mainstream is
failed:
a) Fluctuations in macroeconomy are resulted from endogenous forces.
b) Busts are because of stock disequilibria in the economy
c) Potential output & sustainable output need to be marked out.
3
4. Contd..
• There should be taken methodological changes in macroeconomics:
• The introduction of state-varying risk tolerance.
• The strong decisions on monetary policy of economy.
• According to borio suggestions for banking system is “ the careful
planning of banking regulations.
• Kohn (1986) arguments:
• About Post-Keynesian perspective over banking involves major
adjustments to traditional policy.
4
5. Contd..
• Basic features of Neo-Keynesian DSGE models:
a) Theoretical motivation for embodying credit relation into macro
model.
b) Characterization of function of financial intermediary and banking
institutions.
5
6. 2) Credit, Finance and Banking in recent
Macroeconomics:
2.1) Some Representative Mainstream Models:
• The study of credit markets and their interrelation grew significantly
after GFC 2007-8.
• Now analysts are conscious that their work was failed in giving
attention towards their relation.
• Two significant pre crises contribution were by,
a) Kiyotaki and Moore (1997)
b) Bernanke et al. (1999)
6
7. Contd..
Models:
• New-Keynesian Dynamic Stochastic General Equilibrium(DSGE model)
• A modern method in macroeconomics that attempts to explain economic
phenomena.
• Bernanke et al (1999)
• Studied the role of imperfections in financial markets.
• Their model assumption is that both amount and cost(external finance
premium) of borrowed funds depends upon entrepreneur’s net worth.
7
8. Contd..
• Eggertsson and Krugman (2012)
• Focused on the role of borrower’s frictions.
• This model analyze the effects by changing borrower’s debt limit.
• Decrease in debt limit decreases the borrower’s leverage (interest rate)
• Too much decrease in debt limit can raise to liquidity trap.
• Woodford (2010)
• Gives special importance to financial frictions.
• World without frictions.
• In real world
• Constraints on intermediaries accelerate business cycle.
8
9. Contd..
Now we will consider some models that analyze financial
sector in more detail,
• Boissay et al. (2016)
• Considers banks are heterogenous in efficiency (cost of intermediation) and
are like frictions.
• In the interbank market.
• In frictionless world.
9
10. Contd..
• Carlin and Soskice (2015)
• Carried out analysis of financial sector by considering 2 type of banking
activities in their new edition book.
• Commercial banking
• Connected with risk aversion
• Investment banking
• Connected with risk neutrality.
10
11. Contd..
Other more detailed and
complex contributions:
• Adrian and Shin (2011)
• Shows that how the existence of
levered intermediaries drives the
business cycle, requires different
treatments of monetary policy.
11
12. Contd..
• Gertler et al. (2011)
• Analyze the role of
Shadow Banking.
• They call it Whole Sale
Banking.
• Arguing that it is the
sector that is at center
stage of financial crisis
while retail banks
remain stable here.
12
14. 2.2) Banks as intermediaries and the theory of
loanable funds:
• Retail as well as investment banks play as a role of intermediaries.
• Financial intermediaries borrow from somebody in order to lend.
• Retail bank borrow from household.
• Investment bank borrow from financial institution.
14
15. Contd..
• Tobin’s objective was to reject the idea that banks are able to create
money out of ‘’Thin air’’.
• For Tobin’s saving allocation depends upon the relative yield of
deposit and assets.
• If the yield of non deposit assets falls then investment and lending
opportunity available to bank decline.
• Cost of external finance is higher than the cost of internal finance.
15
16. 3) The IOM Banking Theory:
• Relation of a Money base currency and Central Bank reserve.
• Theory of deposit multiplayer and money multiplayer.
• Loanable funds no one can refuse to accept in either in interbank
transaction and non-interbank transaction.
• Base money is also called a outside money.
16
17. Contd..
• Banks are seen as deposit taking financial institution.
• Banks are obligated to maintain reserve against their liability (vault
cash) at central bank.
• Bank lend out ‘’excess’’ reserve and take possession of a final
borrower ‘s promise to pay called ‘loan’
• Borrowed fund eventually re-borrowed by the bank and a
intermediation cycle start.
17
18. 4) The OIM view of banks:
18
• Deposits are not endowments that precede loan formation.
• Credit creation theory.
19. Contd..
• The process of origination of inside money is the same as outside
money.
• A bank lending transaction consist in the swap.
19
20. Contd..
• Debtor-Debtor relation: mutual indebtedness relation between
“lender and borrower “.
• One can only originate or create her own liabilities.
20
21. Banks can manage the liquidity risk in several
way:
• Bank Mergers
• Interbank borrowing
• Originate to hold deposits
• Originate to distributes debt security
21
22. 5) Theoretical and policy implication:
• Recent experience has given an extraordinary impetus to research on
financial factors at play macroeconomic dynamics.
• The IOM theory rules that out by its root hypothesis that banks can
only make loans out of excess reserves.
• The public confidence in the bank-based payment system is necessary
supply of base money is to be endogenous.
• The central bank is not likely to lose monetary control unless those
assets are so troubled that their value is sufficient only for draining
too little of the reseves created to purchase them.
22
23. Contd..
• Negative interest rates because do not lead to an acceleration of
money circulation velocity.
• Bank are not mere intermediaries that transfer resources from one
sector to another.
• The role of banks contributes better understanding of the aggregate
and sectoral distortion that arise in the real economy.
• Interest rate policies both direct and indirectly monetry policy can
significantly impact on the cost to manage liquidity risk.
23
24. Here SYMMETRY:
• [Balance sheet policies] the central bank keeps asset prices higher
than they would otherwise be and makes bank more liquid then they
would be.
• Monetary policy is generally supposed to channel through the real
economy via the influence on both the cost and the available of loan
funds[bank reserves].
• The demand for deposits depends on services, as well as interest that
the bank may offer and also depend on risk of the bank becoming
insolvent or defaulting.
24