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Unit 3: Financial Institutions

5. What do you think are the benefits of asset liability management by the banks for Notes
(a) themselves
(b) their customers?
6. What do you mean by financial institutions? Discuss various types of financial institutions.

7. Discuss various strategies which have been used by the commercial banks to control
rapidly increasing NPAs in the last few years.
8. Every fourth co-operative in India is a primary credit society. Why so?

9. How is GAP analysis useful in asset liability management of banks?
10. Is "Financial Innovation" Good for Bank Profitability? Why/ why not?
11. Find out if Deutsche Bank AG, India has a comprehensive 'Financial Planning' module.
What are its benefits?
12. Why would an ALM department need to deal with instruments generating credit spread
risk?

13. What do you analyse as the impact of 1991 policy reforms on India's private banks?
14. “The financial institutions play an important role in complementing the facilities offered
by the banks in an economy.” Comment.

Answers: Self Assessment

1. asset sensitive 2. liquidity, interest rate, credit, operational

3. Money market mutual 4. Fractional-reserve
5. HDFC 6. economic development, financial stability
7. Equipment leasing company 8. Investment company

9. Specialised Financial Institutions 10. private equity
11. capital commitment 12. Mutual fund
13. production, productivity 14. NBFCs
15. Regional Rural Banks

3.12 Further Readings

Books Banerjee, Abhijit, V. and Esther Dufflo, 2003, Bank Fiancé India, MIMEO, MIT.

Banerjee, Abhijit, V., Shawn Cole and Esther Duflo, 2004, Banking Reforms in India,
MIMEO, MIT.
Koeva, Petya, 2003, The Performance of India Banks during Financial Liberalization,
IMF Working Paper No.03/50.
Miniappan G.P: 2002, "The NPA Overhang Magnitude, Solutions, Legal Reforms",
Address at CII Banking Summit 2002, Mumbai, April 2002.
Ministry of Finance (993b), Public Sector Commercial Banks and Financial Sector Reforms:
Rebuilding for a Better future, New Delhi, Government of India.

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