NMIMS Semester 3 April 2024 Banking & Finance Assignment

Marketing of Financial Services

Q.1) Develop a services marketing mix for a credit card company of your choice.

Q.2) Elaborate on the concept of Online Marketing for financial services and its transformative impact on the sale of financial products and services in India. Also, provide an example of a financial services company that has effectively leveraged online marketing.

Q.3) As a Financial Planner, you have been consulted by Ravi Sharma, a 32-year-old professional working in the media industry with an annual income of Rs. 20 lakhs. His wife, Neha is 30 years old and currently a homemaker. They have a 3-year-old daughter named Riya. Ravi and Neha seek your expert assistance to make informed financial decisions. You may make reasonable assumptions to further elaborate on your recommendations.

a) Ravi wants to buy a pure risk life insurance cover. He is confused whether he should buy a ULIP or a Term Plan. Recommend the product best suited for him giving valid reasons.

b) Ravi is contemplating the idea of purchasing a holiday home by liquidating his retirement savings and taking a home loan for the next 10 to 15 years. He is seeking your opinion on whether this strategy aligns with his Retirement Plan. Kindly offer your expert advice and recommendations.

Retail banking

1) Retail banking is an important arm of growth and development in the economy. Explain three each asset and liability product of Retail Banking. NRI banking is another extended arm of retail banking. Explain its contribution in the economy from the perspective of foreign currency.

2) Monetary policy is one of the important tool available with RBI to check inflation in the economy. Discuss five monetary tools frequently used to bring stability and price decrease in the economy.

3) For an asset to be classified as NPA, it has to undergo different stages of classification till it is finally classified as loss asset.

a) Highlight different stages of NPA.

b) Banks also makes provisions for NPAs. Explain different provisions made by the bank.

Cost & Management Accounting

Q1. In a particular month, 1,000 units were introduced in Process A. The normal loss is estimated at 5% of input. At the end of the month, 700 units were produced and transferred to Process B, 230 were incomplete units and 70 units were scrapped at the end of the process. The incomplete units had the following degree of completion: materials 75%, labor 50%, overheads 50%. Additional details of process A are as follows:

The scrapped units were sold at Rs. 10 per unit.

Compute:

1. Statement of Equivalent Production
2. Statement of Cost
3. Statement of Evaluation 4. Process A account

Q2. The following information in respect of a production process is available for the month of April 2023.

Compute the relevant overheads variances.

Q3. In the course of developing the global accounting standards, the International Financial Reporting Standards are widely recognized over 100 countries. Therefore, more and more companies are presenting their financial information in the International Financial Reporting Standards to their internal and external users. As one of the largest retailers in the world, Mil Ltd. has its business over 10 countries and employed almost 3,20,000 people. It is very interesting to see how its accounting information supports its operations. To show how the business is running, the accounting information are provided to all users as managers, customers, suppliers, associations and government. As a retailer, it is very important for Mil Ltd. to provide a positive financial statement to its accounting information users.

a. In the context of the above case study, identify and explain the relevance of Management Accounting Information to the employees.

b. Explain in what way management accounting practices in global perspective are relevant to shareholders?

Commercial Banking System & Role of RBI

1) Banking plays an important role in growth of trade and commerce in the economy. Bank is also known as Financial Intermediary, explain this role of bank. The success of any bank depends on customer service, what types of products and services will you design to attract young millennial customers.

2) Banks today are focusing more on non-fund based loans than traditional fund based loans. What are the reasons for such steps by banks? Explain three fund based and three non-fund based loans.

3) Banking is risky business and it needs different skill sets to negotiate the business, Banks are exposed to different types of risks due to diverse business they handle, Though 100% risk cannot be eliminated but definitely by prudent management, experience and skills risks can be reduced and controlled:

a) Explain reputation risk and credit risk and ways to reduce these risks.

b) How banks handle interest rate risk and market risk?

Corporate Finance

1. With the following information, calculate Degree of Operating, Financial and Total Leverage.

Sharma & Co. had a sales of Rs. 25, 00,000 in their jewellery making business. That year they sold 15,000 units. The cost of production was as follows:

Raw Material 450000

Labour 750000

Factory Overheads

Fixed 120000

Variable 85000

Further the company incurred Selling and Distribution expenses of Rs. 90,000, towards advertising and other marketing overheads. The company also had borrowed Rs. 12,00,000 @ 8% interest rate.

2. Parag is evaluating 3 options for investment of his surplus money of Rs. 5,00,000/- for a period of 5 years.

i. Invest it in a FD which gives him a return of 8% compounded quarterly.

ii. Invest in a Corporate Deposit at a rate of 7% compounded monthly.

iii. Invest it in a Business Proposal which gives him the following returns.

Considering the risk involved, the discounting factor is considered @10%.

As his finance advisor which option would you suggest him. Provide reasons.

Year CF

1 1,50,000

2 3,20,000

3 3,45,000

4 2,75,000

5 2,15,000

3. a. A project is started with an initial investment of Rs. 6,00,000. The cash flows generated over the next 4 years are Rs. 1,00,000 ; Rs. 2,50,000 ; Rs. 4,56,000 ; Rs. 5,74,000.

Calculate the NPV of the project at discounting rate of 11% Also calculate the real discounting rate, when inflation is at 6%

b. M/s Tridev Limited issues bonds of Rs. 25,000/- at 10% interest rate for 10 years. Calculate its YTM is the bonds are issued:

1. At Par
2. At Discount of 8%
3. At premium of 12%

Make your inferences about the YTM for each option.

Financial Institutions and Markets

Q1. Ms. Vijaya, after completing her graduation, has recently joined a bank. With a steady income now and good growth prospects for her career, she intends to save regularly and increase the amount of savings gradually over the years. Her colleagues in the bank have advised her investing in Mutual Funds (MFs), as a suitable option for her. However, Ms. Vijaya is not at all familiar with MFs .You are required to help her with basic information on MF ,the various types of MF and why should she be investing through mutual fund? Prepare a detailed answer for her queries.

Q2. Mr. Rajiv Kumar, after completing his MBA from a prestigious management institute, has joined the treasury department of a leading Indian bank in Mumbai. He is assigned to the team responsible for managing the day-to-day liquidity of the bank. Explain in detail the need for liquidity management in banks and explain any three money market instrument.

Q.3 (a) LMH Ltd. has floated an Investment Company. You are appointed as the manager to spread the investment in secondary market. In order to initiate these investments, explain the steps that you will follow in the trading mechanism in the secondary market.

Q.3 (b). “State intervention is vital for any economic progress of a nation” In view of the above statement highlight the importance of state intervention in Indian context.