Banking and financial services have been written about, debated and discussed so much over the years that one would wonder what unique contribution another book would have to make to the subject. A few years ago, even we would have found another book on this subject unnecessary. However, after teaching the subject for over six years at various management schools, we found that we could make a valuable contribution to the existing presentation of the subject by bringing together a distinctive conceptual and managerial flavor to understanding this dynamic industry. Our long years as practitioners in the industry also helped us tremendously in this venture.
Today, the winds of change are sweeping through the landscape of the banking and financial services in the country. The industry is simultaneously consolidating and diversifying in an increasingly deregulated environment. Multiple pressures fuelled by rapid globalization, competition nurtured by customer awareness and expectations of the highest levels of service aided by sophisticated tools and techniques of analysis, threats of security invasion and fraud in an era dominated by technology, demands for transparency and the regulators’ overdrive to capital efficiency or asset quality, and the complexity of issues in managing financial institutions have grown exponentially. These issues have been addressed in this book.
This book is divided into six parts. Part I provides an overview of the environment in the banking and financial services sector. Part II describes the banking structure, dealing extensively with analysing banks’ financial statements, sources and uses of bank funds, with a comprehensive coverage of the leading function. Part III details risk management in banks—credit risk, market risk, capital adequacy and risk measurement techniques. Part IV introduces international banking, while Part V deals with some contemporary issues in bank management such as high-tech banking, cash management and consolidation of the financial sector through mergers and acquisitions. Part VI and the appendices contain useful pedagogical tools—case studies and multiple-choice questions. This book is also special in that each chapter has sections on basic concepts and the application of these concepts in banking practice. An instructor’s tool kit for teaching each chapter is also available on the Web site.
Through this book, we aspire to provide valuable takeaways for all segments of readers: for practitioners, the book will help evaluate the overall impact of their decisions on the organization as a whole, as also the critical trade-offs between risk and return; students will find the book useful to build a conceptual and practice-oriented foundation at one go; academics would find the book a useful reference guide.
We express our heartfelt gratitude to the Pearson Education team, without whom the book would have remained a dream.