AKTU Financial Credit and Risk Analysis (BMBFM03) Syllabus PDF – MBA 3rd Semester
Financial Credit and Risk Analysis BMBFM03
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- Semester 3
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Syllabus — Financial Credit and Risk Analysis
Download PDFBMBFM03 · 3 credits · L-T-P 3-0-0
Course Objectives
- To understand the fundamentals of risk management, its context, and the prevailing perceptions and stereotypes associated with it.
- To apply risk management principles as an enabler for effective decision-making and business performance.
- To analyze the role of risk culture in integrating risk management into organizational processes.
- To evaluate how effective risk management contributes to sustainable competitive advantage.
- To develop a proactive risk culture that positions risk management as a strategic enabler of business success. Course Outcome: On completion of this course, students will be able to:
- Understand the fundamental principles of credit assessment, creditworthiness evaluation, and risk analysis in financial decision-making.
- Apply quantitative and qualitative techniques to conduct credit appraisal, financial statement analysis, and borrower risk profiling.
- Analyze credit risk models and interpret key indicators for assessing default probabilities and portfolio risk.
- Evaluate credit policies, risk mitigation strategies, and portfolio management practices to enhance financial stability.
- Develop effective credit strategies and sound risk management frameworks toinimize exposure and ensure sustainable financial performance.
UNIT 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.
UNIT 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.
UNIT III : Letter of Credit and Loan Commitments (10 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 IV : Operational Risk Overview (08 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 V : Credit Analysis & Rating (08 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: After successful completion of this course students will be able to
| CO 1: Understand about various types of financial credit. | K2(Understand) |
| CO 2: Understand the credit risk and its rating. | K1(Remember) |
| C0 3 : Use of credit commitments and its application | K3(Apply) |
| CO 4: Evaluate the risk management and corporate governance. | K5 (Evaluate) |
| CO 5: Develop the metrics of Measuring riskiness of a stock or a portfolio position. | K5 (create) |
Suggested Readings
Text Books
- Kotreshwar G -Risk Management: Insurance & Derivatives- 2/e, Himalaya Publishing, Mumbai.
- Chance -Introduction to Derivatives & Risk Management-, Cengage Learning, New Delhi. 4.Saita.F- Value at Risk and Bank Capital Management,1/e- Elsevier Inc., U.K.
- Rejda, George E.-Principles of Risk Management and Insurance- Addison Wesley Longman. 6. McNamara- Principles of Risk Management and Insurance-Addison- Wesley
- Dorfman- Introduction to Risk Management and Insurance- Prentice Hall.
- Williams &Heins - Risk Management and Insurance-McGraw Hill.
- James S. Treischmann, Sandra G. Gustavson - Risk Management and Insurance- South Western Thomson Learning. OPERATIONS MANAGEMENT ELECTIVES
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