Lovely Professional University,Punjab

Format For Instruction Plan [for Courses with Lectures and Tutorials

Course No Cours Title Course Planner Lectures Tutorial Practical Credits

COM380 RISK MANAGEMENT IN BANKING 12512 :: Anoop Mohanty 3 1 0 4

Text Book: 1 Ajay Kumar,D.P.Chaterjee,C.Chandrashekhar,D.G.Patwardhan, Risk Management by M/s MacMillan Publishers `India.

Other Specific Book:

2 K.M.Bhattacharya, Risk Management in Indian Banks, Himalaya Publication

3 SB Verma, Y.Upadhyay, R.K Shrivastawa, Risk Management in Banking & Insurance , M/s Deep & Deep Publication, 2007.

4 Joel Bessis, Risk Management in Banking, Paperback Publication, 2nd Edition

Other Reading

Sr No Jouranls atricles as compulsary readings (specific articles, Complete reference)

5 Not James Stewart? Then you need a liquidity plan, Brian J Blaha, American Bankers Association. ABA Banking Journal; Nov 2009; 101, 11; ABI/INFORM
Global (Proquest)
6 The Importance of Currency Fluctuations, Duncan, Joseph W., Dun and Bradstreet, Inc. D & B Reports; Nov/Dec 1991; 39, 6; ABI/INFORM Global (Proquest)
7 Benefits of Basel II, Asia Risk; August, 2009. (Proquest)
8 How the Capital Quest Is Reshaping Banking, Institutional Investor; Mar 1991; 25, 3; ABI/INFORM Global (Proquest)
9 Deregulation and the Financial Crisis, Anonymous, Multinational Monitor; May/Jun 2007; 28, 3; ABI/INFORM Global. (Proquest)
10 Credit-risk measurement and management: The ironic challenge in the next decade, Edward I Altman; John B Caouette; Paul Narayanan Financial Analysts
Journal; Jan/Feb 1998; 54, 1; ABI/INFORM Global (Pr
11 Countering the Biggest Risk of All,Adrian J. Slywotzky and John Drzik, Harvard Business Review,April 2005.

Relevant Websites

Sr. No. (Web adress) (only if relevant to the courses) Salient Features
12 http://secure.kesdee.com/ksdlms/GlossaryFrame.html Online glossary for Banking terminologies.

1 Approved for Spring Session 2010-11

 13 http://www.rbi.org.in/scripts/NotificationUser.aspx Latest circular up-dations from the market regulator.
14 http://proquest.umi.com/pqdweb Articles on various topics.
15 List Attached. Videos.

Detailed Plan For Lectures

Week Number Lecture Number Lecture Topic Chapters/Sections of Homework to be Assigned Pedagogical tool
Textbook/other to students Demonstration/case
reference study/images/anmatio
n ctc. planned

Part 1
Week 1 Lecture 1 Introduction to Asset liability management. ->Reference Video on ALM
:1,Ch.1/Module A / text (No.1,2,3,7,22)
1/ ref.12-13
Lecture 2 Liquidity management: Introduction & significance. ->Reference :1,Ch.1/ Video No.(23,24,25)
Module A /text1
Lecture 3 Purpose & objective of Liquidity Management. ->Reference :1,Ch.1/ Case:1 Karnataka Bank
Module A / text 1 Improves Risk
Management through
Regular Performance
Analysis.
Week 2 Lecture 4 Role of Liquidity Risk Management in ALM. ->Reference :1,Ch.2/ Video on liquidity risk
Module A/ text 1 (No.12,14)
Lecture 5 Interest rate management: Factors affecting Interest ->Reference :1,Ch.3/ HomeWork 1 Allocation
rates. Module A / text 1
Lecture 6 Effects of Interest rate risk & measurement.

Week 3 Lecture 7 Management of Interest rate risk. ->Reference :1,Ch.3/ Video on Interest rate
Module A /text1 risk (No.5,6,11)
Lecture 8 Introduction of Exchange Risk: nature. ->Reference :1,Ch.4/ Case:2 El Salvador and
Module A /text 1/ the US Dollar.
Lecture 9 Management of Exchange rate risk. ->Reference HomeWork 1 Submission Video on exchange risk
:1,Ch.4/ModuleA text1 (No.4,9,10,13,15,21) /
Case:3 3M and its
Foreign Exchange Risk
Management Strategy.
Week 4 Lecture 10 A-L Management system in Banks : RBI guidelines ->Reference :1,Ch.5/
Module A / text 1

2 Approved for Spring Session 2010-11

 Part 2
Week 4 Lecture 11 Concepts: Banking risks, return, risk mitigation ->Reference :1,Ch.6/ HomeWork 2 Allocation
Module B / text 1
Lecture 12 Risk diversification, portfolio risk Case:4 Bank Mgt &
Portfolio Selection (
GCCC)
Week 5 Lecture 13 Risk identification, risk pricing & monitoring ->Reference :1,Ch.6/ Term Paper 1 Allocation Case:5 Risk exposure
Module B / text 1 and Risk Management
at Korea First Bank
Lecture 14 Market risk: Introduction & types. ->Reference :1,Ch.8/ Video on Market Risk
Module B /text1 No. (45, 48)
Lecture 15 Market risk: measurement & management.Value at
risk: definition
Week 6 Lecture 16 Credit risk: Introduction, Credit spread, credit ->Reference :1,Ch.9/ Video on Credit Risk
mitigation. Module .B /text1 (No.31,32)
Lecture 17 Credit rating system, Counterparty risk & exposure ->Reference :1,Ch9/
Module B / text1
Lecture 18 Credit risk measurement & management techniques ->Reference :1,Ch.9/ HomeWork 2 Submission Case:6 Stress testing in
Module B /text1 Nigerian banks.
Week 7 Lecture 19 Operational Risk: Introduction & Management. ->Reference :1,Ch.10/ Quiz 1 Video on operational
Module B/text 1 risk No.(16,17,18)
Lecture 20 Operational risk Classification. Case:7 Integrated
Operational Risk
Management Beyond
Basel II
Lecture 21 Revision before MTE

MID-TERM
Part 3
Week 8 Lecture 22 Management of Operational risk ->Reference :1,Ch.10/
Module B/text 1
Lecture 23 Integrated Risk management. ->Reference :1,Ch.10/
Module B/text1
Lecture 24 Treasury management: Concept ->Reference :1,Ch.11/ HomeWork 3 Allocation Video on TM No.(37,42)
Module C/text 1
Week 9 Lecture 25 Treasury products: Money market products, Security ->Reference :1,Ch.12/
market products & Global markets. Module C/text 1
Lecture 26 Funding & regulatory aspects ->Reference :1,Ch.13/ Video No. (27,28,29,30)
Module C/text 1
3 Approved for Spring Session 2010-11
Week 9 Lecture 27 Process of globalisation, Role of treasury as Profit ->Reference :1,Ch.11/ Case:8 ‘Cost Volume
center. Module C/text 1 Profit Analysis and
banks’ (A Case
study of public sector
banks)
Week 10 Lecture 28 Treasury & ALM. ->Reference :1,Ch.16/ HomeWork 3 Submission
Module C/text 1
Lecture 29 Use of derivatives in Risk Management. ->Reference :1,Ch.15/ Case:9 The Basics of
Module C/text 1 Financial Derivatives

Part 4
Week 10 Lecture 30 Capital adequacy: Introduction ->Reference HomeWork 4 Allocation Video on Basel II
:1,Ch.17/ModuleD / (19,20,35)
text 1
Week 11 Lecture 31 Pillar 1: Minimum Capital required. ->Reference Case10 Benefits of
:1,Ch.18/ModuleD/text Basel II.
1
Lecture 32 Pillar 2: Supervisory Control. ->Reference :1,Ch.20/ Term Paper 1 Submission
Module D/text 1
Lecture 33 Pillar 3: Market Discipline

Week 12 Lecture 34 Asset Classification. ->Reference :1,Ch.21/

Module D/text 1
Lecture 35 NPA and its management HomeWork 4 Submission Case:11 ‘Cost
Volume Profit Analysis
and banks’ (A Case
study of public sector
banks)
Lecture 36 Provisioning Norms for assets.

Week 13 Lecture 37 Profit Planning in Indian Banks. ->Reference :1,Ch.22/ Quiz 2

Module A/text 1
Lecture 38 Transfer Pricing in Treasury Management . ->Reference
:1,Ch.16/Module C/text
1
Lecture 39 Revision of Syllabus ->Reference :1,

Spill Over
Week 14 Lecture 40 EVA Profit Planning ->Reference
:1,Ch.22/Module D

4 Approved for Spring Session 2010-11

 Week 14 Lecture 41 Hedging Instruments ->Reference Case:12 The mechanics
:1,Ch.16/Module C/ of Interest Rate Swaps
Text 1
Lecture 42 Securitisation & Forfeiting ->Reference Video No. ( 38,39,40,
:1,Ch.16/Module C / 41, 44)
Text 1.
Week 15 Lecture 43 Development of new financial products ->Reference :1,Ref.No Video on Instruments
15 No.(49,50,51)

Details of homework and case studies

Homework No. Topic of the Homework Nature of homework
(group/individuals/field work
Homework 1 Balance Sheet Analysis:Students are required to select one bank of their own choice (approved by Class Group
teacher) for i) Studying various components of the Balance sheet so as to analyze/ study the concept of
the Asset Liability management
& ii) Concept of Liquidity Management in Indian Banking System.
Students will frame the liquidity mgt/ profit planning strategies for the next quarter.
Assignment evaluation criteria:evaluation are as follows:
1. Presentation in group and Question handling will be individual: 10 marks.
2. Research: Soundness of interpretation; quality of material (PPT); effort expended to gather information:
Primary & Secondary data collection and analysis. 5 Marks.

Homework 2 Market Risk / Credit Risk.Students will be assigned a bank to analyze Group
i) Different risks that affected the concerned bank in past &
ii) Strategies followed by the said Bank to counter the situation.
iii) Report on risk mitigation techniques used by their respective Banks

Assignment evaluation criteriaevaluation are as follows:

1. Presentation in group and Question handling will be individual: 10 marks.
2. Research: Soundness of interpretation; quality of material (PPT); effort expended to gather information:
Primary & Secondary data collection and analysis :5 Marks.
3. Each group consists of three/ four students.

Homework 3 Articles related with the Operational risk and treasury management will be assigned to all the students. Individual
Students will be required to prepare a report on the summary of the articles . 5 Marks. Viva / presentation
based on the write up and articles assigned: 10 Marks.

Homework 4 Cases on Capital Adequacy Norms / NPA Management.Students will be allotted Assignment evaluation Group
criteria: a. 10 marks: Case Based presentation ( individual / group) depending upon the strength of class.
b. 5 marks: Written report on case allotted i.e. summary of concepts raised in the case. All these
presentation are to be conducted in the tutorials as per the feasibility of the course.

5 Approved for Spring Session 2010-11

 Scheme for CA:out of 100*
Component Frequency Out Of Each Marks Total Marks
Homework 3 4 15 45
Quiz 2 15 30
Term Paper 1 25 25

Total :- 55 100

* In ENG courses wherever the total exceeds 100, consider x best out of y components of CA, as explained in teacher's guide available on the
UMS

List of suggested topics for term paper[at least 15] (Student to spend about 15 hrs on any one specified term paper)

Sr. No. Topic

1 Study the Dubai crisis and its impact on Foreign exchange reserves/ earnings in India.
2 Study the deregulation of financial sector and the impact of worldwide financial crisis with special reference to Cuban Economy.
3 Criticism of Basel’s II implementation.
4 Study and identify the factors that helped Indian banking sector digested the Sub Prime shocks?
5 Discuss the Interest rate differential between International market and that of the domestic market.( LIBOR Vs. MIBOR)
6 Study the performance of various money market instruments in terms of their return & risk weight age
7 Compares the Banking regulatory framework of US with that of India?
8 Study the treasury management of a commercial bank and its impact on the Bank’s profitability.
9 Study the factors that helped the Islamic banking System to flourish & sustain itself from waves of subprime mortgage.
10 Study the data of any commercial bank & analyze the asset quality, provisioning requirement, capital enhancement acting as hurdle for the fast growing
banking business.
11 Study the appreciation/ depreciation mechanism of domestic currency towards the growth of GDP of the developing counties like BRIC countries with special
reference to the central bank’s policy to counter adverse situations
12 Study the factors/ circumstances/ weakness of BASEL I that led to the development / implementation of BASEL II.
13 Study the concept of centralised pool of database for bad debts/ defaults. Also study the factors responsible for the non implementation or failure of this
concept on a larger scale.
14 Study the various types of banking risks involved in priority sector advances.
15 Study the investment portfolio of commercial banks which is offering the highest rate of interest on retail deposits / bulk deposit i.e. Capital Local Area Bank in
Punjab.

6 Approved for Spring Session 2010-11

Plan for Tutorial: (Please do not use these time slots for syllabus coverage)
Tutorial No. Lecture Topic Type of pedagogical tool(s) planned
(case analysis,problem solving test,role play,business game etc)

Tutorial 1 Student presentation and problem solving for topic No.1 Problem solving
-3
Tutorial 2 Student presentation and problem solving for topic No 4 Problem solving
-6
Tutorial 3 Problem solving for topic No7-9/ ABT No.1 Problem solving,Test
Tutorial 4 Student presentation and problem solving for topic No Problem solving
10-12
Tutorial 5 Problem solving for topic No 13-15/ Term paper review I Problem solving
Tutorial 6 Problem solving for topic No 16-18/ ABT No2 Problem solving,Test
Tutorial 7 Student presentation and problem solving for topic No Problem solving
19 -21
After Mid-Term
Tutorial 8 Student presentation and problem solving for topic No Problem solving
22- 24
Tutorial 9 Student presentation and problem solving for topic No Problem solving
25-27
Tutorial 10 Problem solving for topic No 28 -30/ ABT No.3 Problem solving,Test
Tutorial 11 Problem solving for topic No 31 -33 & Term paper Problem solving
review II
Tutorial 12 Problem solving for topic No 34- 36/ ABT No.4 Problem solving
Tutorial 13 Student presentation and problem solving for topic No Problem solving
37-39

7 Approved for Spring Session 2010-11