AKTU Financial and Credit Risk Analytics (BMBAFM03) Syllabus PDF – MBA (Business Analytics) 3rd Semester

Course Objectives

1. Introduce credit risk fundamentals and types of credit facilities.
2. Evaluate trade credit risks and regulatory frameworks.
3. Understand non-fund-based facilities, letters of credit, and loan commitments.
4. Analyse and manage operational risks in credit processes.
5. Apply credit risk analysis and credit rating methodologies.

UNIT 1: Introduction (8 hours)

Financial Credit: Meaning & Objectives, Credit Risk, Credit Analysis, Seven C’s, Credit Analysis Process, Credit Process, Documentation, Loan Pricing and Profitability Analysis.

Regulations, Types of Credit Facilities: Various types of Credit Facilities- Cash Credit, Overdrafts, Demand Loan, Bill Finance – Drawee Bill Scheme, Bill Discounting. Cash Delivery: Types of Facilities, Modes of Delivery.

UNIT 2: Trade Credit Risk (8 hours)

Sole -Banking Arrangement, Multiple Banking Arrangement, Consortium Lending, Syndication. Credit Thrust, Credit Priorities, Credit Acquisitions, Statutory & Regulatory restrictions on Advances. Credit Appraisal: Validation of proposal, Dimensions of Credit Appraisals, Structuring of Loan documents, Credit Risk, Credit Risk Rating, Credit Worthiness of Borrower, Purpose of Loan, Source of Repayment, Cash Flow, Collateral.

UNIT 3: Letter of Credit and Loan Commitments (8 hours)

Quasi Credit Facilities: Advantages of Non-Fund Facilities, Various types of NFB Facilities, Various types Letter of Credits, Assessment of LC limits, Bills Purchase/ Discounting under LC. Loan commitments, Un-funded lines of credit and their characteristics, Various types of Bank Guarantees: Performance Guarantee, Financial Guarantees, Deferred Payment Guarantees, Types of Performance and Financial Guarantees, Assessment of Bank Guarantees Limit, Period of Claim under Guarantee.

UNIT 4: Operational Risk: Overview (8 hours)

Risk & Uncertainty, Financial Sector, Risk Types, Operational Risk Management- Recruitment & Training, Work flow Design, Work Flow Documentation, Delegation of Authority, Independent Internal Audit, Independent Compliance Function, Independent Risk Management Function, System Audit, Corporate Governance, Whistle Blower Policy, Risk Management Culture.

UNIT 5: Credit Analysis & Rating (8 hours)

Importance of credit analysis, Stages of credit analysis profitability analysis and pricing of loans, Credit risk analysis (Debt ratios and risk of leverage), Analysis of working capital, liquidity, operating and cash cycle risk.

Credit Rating: Measurement of Risk, Objective of Rating, Internal & External Rating, Model Credit Rating, Methodology of Rating, Internal & External Comparison, Model Rating Formats.

Course Outcomes

Suggested Readings

1. Fundamentals of Credit and Credit Analysis: Corporate Credit Analysis Kindle Edition by Arnold Ziegel (Author), Ronna Ziegel (Editor)
2. Credit Appraisal Risk Analysis & Decision Making by V.Rajaraman (Author)
3. Financial Engineering, Risk Management & Financial Institutions (English, Paperback, Rao S.S. Prasada)
4. The Bank Credit Analysis Handbook: A Guide for Analysts, (Wiley Finance) Hardcover by Jonathan Golin (Author), Philippe Delhaise (Author)
5. Credit Risk Measurement: New Approaches to Value at Risk and Other Paradigms (Wiley Finance) by Anthony Saunders (Author), Linda Allen (Author)
6. Credit Risk Analytics: Measurement Techniques, Applications, and Examples in SAS (Wiley and SAS Business Series) Hardcover – by Daniel Roesch (Author), Harald Scheule (Author), Bart Baesens (Author)
7. Credit Risk Modeling Theory And Applications by David Lando, New Age International (P) Ltd., Publishers