This lesson examines the key performance indicators used to measure bank performance and the regulatory environment governing commercial banking.

8.1 Key Performance Indicators (KPIs)

Bank performance is assessed using a range of KPIs :

  • Profitability Metrics: ROE, ROA, NIM, and efficiency ratio .

  • Asset Quality Metrics: Non-Performing Loans (NPL) ratio and Provision Coverage Ratio.

  • Liquidity Metrics: Loan-to-Deposit ratio and liquidity coverage ratio.

  • Capital Adequacy Metrics: Capital Adequacy Ratio (CAR) under Basel standards.

8.2 Regulatory Compliance

Commercial banks are subject to extensive regulation . The Tennessee Bankers Association programme covers “Establishing Credit Discipline” and “Regulatory Compliance” . Key regulatory frameworks include:

  • Basel Accords: International standards for capital adequacy and risk management .

  • RBI Regulations: A detailed framework for Indian banks covered in the Coursera modules .

  • Consumer Protection: Laws governing fair lending and consumer treatment.

  • Statutory Reserve Requirements: Requirements to hold reserves with the central bank .

8.3 Treasury, Investment, and Payment Systems

Commercial banks also manage investment portfolios, treasury functions, and payment systems. The Coursera module explains “bank investment operations, statutory reserve requirements (CRR & SLR), non-SLR investments, investment classification norms (HTM, AFS, HFT), and treasury management functions including liquidity and foreign exchange operations”

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