Three roles for a CA, in CORPORATE BANKING

1. Three roles for a CA, in CORPORATE BANKING “Star Limited gets INR 120 crore loan from XYZ bank! Plans expansion to the Middle East” We see similar news items, often. Which division of a bank does such work? It‟s the division called „CorporateBanking‟. Let‟s look at the roles in corporate finance course, and where CAs best fit in. Corporate Banking, also called Wholesale banking, covers a range of products and services offered to – you guessed it – Corporates, or large businesses. Note that, very small businesses (proprietorships/small partnerships) are grouped under the Retail Banking unit, and SMEs may be serviced by a separate business unit. Corporate banking customers generally have a turnover of INR 500 crore upward. What are the range of products and services that the Corporate Bank offers? Well, the main ones obviously, are loans – both short term and long term. Then, a bank facilitates export and imports for a corporate, through a sub-division called Trade Finance. A bank also offers services like Bank Guarantees and Cash Management. In Cash Management Services („CMS‟), a bank manages a corporate‟s receivables and payables. For example, a large telecom company has to manage bill payments across millions of customers. Its bank steps in to ensure various ways of collecting the payments and ensuring quick credit to the company‟s account. Note that Trade Finance and Cash Management are together often called „TransactionBanking‟. Broadly, the services can be classified as „funded‟ and „non-funded‟– that is, where a bank actually gives out money – as in a loan – or gives a service, as in a Bank Guarantee or CMS. Note that, Non-Banking Finance Companies (NBFCs) – such as Tata Capital, Reliance Capital, Edelweiss, Religare, etc. also lend to corporates, though they cannot, of course, offer any deposit related facilities; so, the roles mentioned below, are relevant to both banks and NBFCs.

2. a. Relationship Manager (‘RM’): As the title suggests, an RM is responsible for the revenues generated through the customer – s/he is the single point of contact between the Corporate and the bank. S/he looks for various business opportunities – such as salary accounts from the employees, short and long term loans, cash management, etc. A person needs strong customer facing skills. While a CA would definitely fit in well here, the role will not best utilize his/ her analytical skills, or comfort with financial statements. Note that, a fresher will not join as an RM for a large corporate, but would start off as a junior/assistant RM. However, s/he could be an RM for an SME (Small/Medium Enterprise). b. Credit Analyst/Manager: Who evaluates whether, a particular loan application, meets the credit risk guidelines of the lender? It is the Credit Manager. She visits the business premises, meets the management and studies the industry and economic environment and also importantly, the best finance courses in India. She then evaluates the projected revenues and profits, basis her understanding of the company and economic environment. She then decides how much of a credit risk the bank can take on the customer, or whether it should take a risk at all. For example, one company may not get approved at all, while another may get a „limit‟ of INR 50 crore against an application of INR 65 crore. Here, we see that a Chartered Accountant‟s rigorous analytical skills will be best utilized – also, his/her strong foundation in financial statements is very valuable in understanding and interpreting them.

3. c. Product Managers: – Trade Finance, Cash Management, etc. These Managers have an in depth understanding of the regulations, pricing etc. of each of the Trade Finance and CMS services the bank will offer. Note that, this division is a purely banking service – NBFCs cannot offer such services. These Product Managers work with the Relationship Managers, to answer any customer queries and structure the product as per the customer‟s requirement. Again, while a CA will fit in here also, it‟s not a complete utilization of his/her skills. Corporate Banking is a stable and large part of the business of a bank. Every private sector bank is also focusing on the SME sector and hiring aggressively there. How can a CA prepare for such a career? The best way is, to take up a practical course, with a recognized certification; this will give you the required knowledge, as well as showcase your interest and initiative, to the recruiter. Certifications in Corporate Banking are not common. The one which best fits the bill is FLIP’s Corporate Banking, RM & Credit Analysis . This certification will help for both RM and Credit Manager Roles, in a bank or NBFC. For the more specialized Trade Finance and CMS area, check out The Indian Institute of Banking and Finance‟s (www.iibf.org.in) certification program in Trade Finance; as well as FLIP‟s online certification program in International Trade and CMS.