AKTU Financial Credit and Risk Analysis (BMBF302) Syllabus PDF – MBA (Banking & Financial Services) 3rd Semester

Course Objectives

1. Understand the fundamentals of risk management, its context, and the prevailing perceptions and stereotypes associated with it.
2. Apply risk management principles as an enabler for effective decision-making and business performance.
3. analyse the role of risk culture in integrating risk management into organizational processes.
4. Evaluate how effective risk management contributes to sustainable competitive advantage.
5. Develop a proactive risk culture that positions risk management as a strategic enabler of business success.

Course Content

Module I: Introduction (6 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.

Module II: 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.

Module III: Letter of Credit and Loan Commitments (10 Hours)

Quasi Credit Facilities: Advantages of Non-Fund Facilities; Various Types of NFB Facilities; Various Types of Letters of Credit; 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 Guarantee Limits; Period of Claim under Guarantee.

Module IV: 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.

Module V: Credit Analysis & Rating (8 Hours)

Credit Analysis: 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.

Activities

1. Case Analysis: Students will analyze a loan proposal and assess the borrower's creditworthiness using the principles of credit appraisal.
2. Balance Sheet Analysis: Students will analyze a company's balance sheet to evaluate its financial position, liquidity, solvency, and creditworthiness.
3. Ratio Analysis: Students will calculate and interpret key financial ratios to assess credit risk and repayment capacity.
4. Group Discussion: Students will discuss different types of credit facilities, letters of credit, bank guarantees, and operational risk management practices.
5. Presentation: Students will prepare and deliver a presentation on credit rating methods, operational risk management, or loan pricing and profitability analysis.

Suggested Readings

1. Kotreshwar G.; Risk Management: Insurance & Derivatives (2nd Edition); Himalaya Publishing House, Mumbai.
2. Chance; Introduction to Derivatives & Risk Management; Cengage Learning, New Delhi.
3. Saita, F.; Value at Risk and Bank Capital Management (1st Edition); Elsevier Inc., U.K.
4. Rejda, George E.; Principles of Risk Management and Insurance; Addison Wesley Longman.
5. McNamara; Principles of Risk Management and Insurance; Addison-Wesley.
6. Dorfman; Introduction to Risk Management and Insurance; Prentice Hall.
7. Williams & Heins; Risk Management and Insurance; McGraw-Hill.
8. James S. Treischmann & Sandra G. Gustavson; Risk Management and Insurance; South-Western Thomson Learning.
9. Parthasarathy; Corporate Governance: Principles, Mechanisms & Practice; Wiley Course Outcomes and Bloom’s K-Level Mappings

Course Outcomes