Case 1

Aman is the e branch manager of the Dibrugarh Main Branch. Dibrugarh has two more
extension which are spread across the city. The branch was doing very well til i l l the time
another branch was opened nearby by the competitor. In three months’, time e, the
pro fitability of the branch went down and the branch manager was questioned by the
management about the drop in the performance of the team. Nostaff has changed at
the branch. The customer base is the same and most of them are loyal lto the bank. The
branch has 150 HNls at its customer list and 25 corporates who are into mining and
other businesses. All the market conditions are still the same as the y were three months
back.

As a group discuss the following:

• Reasons fo r drop in profitability

• Suggest a strategy for the BM to bring the profits up.

Solution 1st : As the profitability decreases when the new branches are opened
near the competitors so , there might be the better offerings given by the competitor so
that new customer are preferring the competitor bank and it actually gives an
opportunity for comparison with our offerings with the competitor .

Solution 2nd Aman should have to promote offerings of the bank by the various
channels and show that they are the far better than their competitors in terms of various
factors. If there is a possibility then Aman should also talk to higher authorities to
increase the bank offers so that then can again back on the track.
 CASE 2
Amit is relationship manager in Smart bank and is doing quite well in the Project finance
division. He has cracked a lot of deals with major corporates and his projects give good
return s to the bank.
Case 2
Amit struck a deal with Construction Co., a major construct ion firm, for financing them for
constructing a 30-story building at a prime location in Delhi. It was one of the biggest deals
for Amit as Construction Co. was going to come up with a number of such big project s
in the near future. The Construction Co. had "managed" the project with the local State
Development Authority as the number of floors permissible in Delhi was 28. Amit took
a deviation from his boss saying that the Construction Co has offered a guest house for
the bank in the same building free of cost for a period of 3 years. The financing was
approved with the go ahead of Amit's boss.

Two years hence when the Auditors for the bank noticed the deviation, they questioned
the Bank authorities. However, Amit's boss had left the bank & the new boss had no clue.

As a group discuss if Amit & his boss were correct in financing the project, even though
the state development authority had approved the venture.

Solution: Yes, Amit and his boss were correct here in financing the project because they
got the permission from the state development authority to construct 28 floor building
so there is no any unlawful act were done by the Amit and boss, even it helps the bank
to bring the future business in the long run and at the same time they are also getting
free building for 3 years so there is no harm in giving the approval.
 CASE 3
New Age bank was working very aggressively on its microfinance projects. It had
invested ed Rs150 Cr as crop loans and other borrowings for investment purposes in this
sector and was expecting major returns as the business seemed to be very promising.
Case 3
The funds were designed to start giving returns by the end of the last quarter of
the current financial year. The farmers were expecting a good crop as rainfall was
expected to be good and the meteorological department also predicted the same, but
'the rains failed. The government also could not support the drought hit areas,
specially the southern and western parts of the country, where more than 80% of
the Bank 's investment was done. As a result, cases of suicides by debt -ridden farmers
started being the headlines in the ne spapers.

To counter this problem, the _go ernment came out with the decision of writing off all out-
stan din g loans of farmers no matter whether they are short term crop loans or borrowings
for investment purposes.

As a group discuss the following points.

• The bank is under serious pressure to recover its funds/ manage its losses.
• Farmers who have already paid some amounts of loan are not happy with this
decision as it is interpreted as penalizing them for paying off their debts even
though they suffered difficulties. They want the repaid amount back as it has
been waived off by the government.
• No support from the government has been given to the bank for its losses. The
bank interprets this as deteriorating the credit system for the banking industry

Solution: Govt should have to compensate the farmers on the basis of

their losses if the farmers are not capable of paying off their debts. Writing
of loan outstanding will be done on the basis of financial capability of the
farmer because if Govt waive off the loan amount of all the farmers then it
will be directly deteriorating the bank credit policy so Govt should also
look after the bank by giving them revival package which will make the
smooth floatation of Credit system of the bank.
And for the people who already pay the debt Govt should issue a scheme
where there paid amount will be again given them as a loan if they needed
in the future at a very low interest rate with the people who don’t clear
their debts so this gives at a sense of security to the people who already
clear their debts.
Case 4