CAIIB (2010) (compulsory)-paper II BANK FINANCIAL MANAGEMENT
MODULE A: International Banking
Forex Business; factors determining exchange rates, Direct and indirect quotations, spot/forward rates, premium and discount, cross rates.
Basics of forex derivatives ;forward exchange rates, contracts, options , swaps. Correspondent banking, NRI accounts
Documentary letters of Credit-UCPDC 600, various facilities to exporters and importers. Risks in foreign trade, role of ECGC, types of insurance and guarantee cover s or ECGC.Role of Exim Bank-Role of RBI and exchange control-Regulations in India, Role of FEDAI and FEDAI rules.-Role of FEMA and its rules
MODULE B: Risk Management
Risk—Concept- Risk in Banks- Risk Management Framework-Organisational Structure-Risk Identification-Risk Measurement Sensitivity -Basis Point Value (BPV)- Duration-Downside Potential- Value at Risk, Back Testing- Stress Testing-Risk Monitoring and Control-Risk Reporting – Market Risk identification, Measurement and management , rating methodology, risk weights, eligible collateral for mitigation, guarantees; credit ratings, default probabilities, Credit risk spreads, risk migration, transition matrices and credit metrics , Counterparty risk.
Credit exposures, recovery rates, risk mitigation techniques,.-Operational and integrated Risk Management-Risk management and capital Management- Basel II – Current guidelines on risk management
MODULE C: Treasury Management
Concepts and function; instruments in the treasury market, development of new financial products, control and supervision of treasury management, linkage of domestic operations with foreign operations. Interest rate risk, interest rate futures Mix/Pricing of Assets, Liabilities -On-Balance Sheet Investment and Funding Strategies – Stock options, debt instruments, bond portfolio strategy, risk control and hedging instruments. Investments-Treasury bills ,money market instruments such as CDs, CPs , IBPs Securitisation and Forfaiting ; refinance and rediscounting facilities. Derivatives- Credit Default Swaps/ Options
MODULE D: Balance Sheet Management
Prudential norms-Capital Adequacy. Implementation of Basel II guidelines: RBI guidelines .Banks Balance Sheet- Components of assets/Liabilities ALM Implementation – RBI Guidelines – Gap Analysis-Mechanics, Assumptions, and Limitations-Illustrations of Actual Gap Reports-The Relationship Between Gap and Income Statement-Funding Liquidity-Trading/ Managing Liquidity-Contingency Funding-Business Strategies: Profit and profitability analysis, Asset Classification- provisioning-effect of NPA on profitability, Shareholder value maximization & EVA-profit planning-measures to improve profitability. Disclosure guidelines.