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SESSION 3

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Assignment

Introduction to ProBanker

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Introduction to ProBanker

ProBanker simulates a banking environment where managers are

expected to make a range of decisions to acquire the best

combination of deposits and long-term capital and distribute them

in the form of loans and investments.

The impact of competition and regulation are both integrated into the

simulation creating a challenging environment for participants to

make carefully coordinated decisions if they wish to maximize the

value of the institution.

Playing the simulation while learning the principles and tools to

manage financial institutions provides for a richer learning

experience.

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ProBanker

Main inputs for the game

 – et reserve requirements and purchase and sell government bonds.

 – et interest rates for retail! installment and mortgage rate loans.

 – et interest rates for "#s! passbook accounts and long$term deposits.

 – Purchase and sell federal funds.

 – et provision for loan losses and corporate loan standards.

 – Pay dividends! sell and repurchase shares.

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Autobank

ProBanker offers two modes% &utosim and "ompetitive.

'n &utosim mode! participants play against the computer to help them

understand the role and impact of each variable in isolation on the overall

bank performance.

'n "ompetitive mode participants play against other teams in a simulated

banking market.

There are () decisions to be made each quarter% many remain the same

and are carried over to next quarter% while some are left blank.

Make sure to save the decisions. *ach team member can overwrite and

save decisions. imulation uses the last saved decisions.

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Decisions Quantities Chosen

+. 'nitial ,eserve &llocation/33401 lakhs,s. 9Pg.++-: 9 &nnual ,eport!

-0+)$+1:

-. ederal unds old 11-+.12 crores9Pg.+(0:

(. ederal unds Purchased

). /0$day "#s to issue +; of Bank<s total liability 9Pg.+)4:

1. +20$day "#s to issue

3. (30$day "#s to issue

4. Bonds purchased+)4/4-- lakhs ,s. 9Pg.++(:

2. Bonds sold

Decisions - Quantities to ChooseExample: PNB

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Decisions Quantities Chosen

/.ixed ,ate "orporate =oans

-/3(3+./- crores9Pg.+(3: >Total assets to bank in corporate banking?

ixed 7 loating 9not given separately:

+0.loating ,ate "orporate pread

++'nstallment =oans

+-. Mortgage =oans

)+30(.1 crorers.9,esidential: Pg.+-2 9-0+)$+1:

+(. ,etail "#s

Total "#s @ +; of Bank<s total liability 9Pg.+)4:

+). Passbook avings+10+//33 lakhrs. Pg.++-9-0+)$+1:

+1. ',&s

+(2411 lakhsrs. Pg.++) 9-0+)$+1:

+3. ,etail#emand #eposits ((12020 lakhs rupees Pg.++- 9-0+)$+1:

+4. "orporate #emand #eposits

9not listed eparately:

Decisions - Quantities to ChooseExample: PNB

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!" #ixed rate Corporate $oans

%" #loating &ate $oan 'pread

(" Installment $oans

)" *ortgage $oans

+" &etail CDs

," Passbook 'a.ings

," I&As

,," &etail Demand Deposits

,/" Corporate Demand Deposits

Rates to Choose

#ecisions 8+1 – 8-( are the interest rates

you charge on loans or pay on deposits.

*nter 4A; as 4.1:.

Decisions&ates to Choose

#escription

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-). &ds! 'nstallment =oans

-1. &ds! Mortgage =oans

-3. &ds! ,etail #emand #eposits

-4. &ds! "orporate #emand

#eposits

-2 . &ds! ,etail "#s

-/. &ds! Passbook avings

(0. &ds! ',&s

#ecisions 8-) $ 8(0 are the quarterly

advertising budgets you wish to direct ateach of the indicated account types.

,emember that the decisions are

expressed in thousand rupees. o enter

fifty thousand as 10.

Decisions - Ad.ertising

#escription

Advertising

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Decisions - Ad.ertising

Example: PNB

Decisions Advertising expenditure

+2. &ds! 'nstallment =oans

 0otal Ads /%( lakhs 1Pg"(2Not listed separatel31,4-!2

+/. &ds! Mortgage =oans

-0. &ds! ,etail #emand #eposits

-+. &ds! "orporate #emand #eposits

-- .&ds! ,etail "#s

-(. &ds! Passbook avings

-). &ds! ',&s

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Decisions 5 *iscellaneous

(+. 5umber of hares to sell

Miscellaneous

 &dCustment to equity capital account. To issue new shares!

enter a positive number. To repurchase shares from the

market! enter a negative number.

(-. Provision for =oan losses

((. "orporate =oan tandard

(). Total #ividends

The amount! in thousand rupees! that you wish to add to

your bankDs =oan =oss &llowance account. This entryreduces your reported net income.

'n making ixed ,ate and loating ,ate corporate loans! you

can choose to have a high credit standard 9indicated by a

decision of 7+:! an average standard 9decision of 0:! or a low

credit standard 9$+:.

The value! in thousands of dollars! of dividends you wish to

pay to all outstanding shares. 9This is not a dividend per

share:.

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Decisions 5 *iscellaneousExample: PNB

(+. 5umber of hares to sell

Miscellaneous

 0otal No" o6 shares1/"/",!2 : )4((4%1'tock spliton +",",427 0otal No" o6 shares1/"/",42 :/!!+4%/(1Pg"42Ad8ustment to e9uit3 capital account" positi.e numberindicates issued ne shares"; I6 repurchased shares 6romthe market< negati.e number=

(-. Provision for =oan losses

((. "orporate =oan tandard

(). Total #ividends

2790 !a"hs rs" Pro.ision toards standard

assets1,4-!2 Pg", 0he amount< added to bank>s $oan $oss Alloanceaccount" 0his entr3 reduces reported net income"

#itch?s Credit &ating :bbPNB>s @iabilit3 &ating" 0hese &atings measurethe intrinsic credit#orthiness o6 a nancialinstitution 1#I2< and reect #itch?s opinion on thelikelihood that the entit3 ill 6ail"

$2%0& croresPg") 1,4-!2

 0he .alue o6 di.idends paid to all outstanding shares"10his is not a di.idend per share 2