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This document contains information for students taking the Credit Management course at Allama Iqbal Open University for the Spring 2019 semester. It includes a checklist of course materials, the course outline detailing the units that will be covered, guidelines for the two assignments, and details of the assignments themselves. Assignment 1 involves answering questions related to the first four units, while Assignment 2 requires students to write a report on a topic related to their student number. Students will also present their Assignment 2 reports in workshops.

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8544

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Final: 1-4-2019

ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD

(Department of Business Administration)

CREDIT MANAGEMENT (8544)

CHECKLIST

SEMESTER: SPRING 2019

This packet comprises following material:

1. Textbook (One)
2. Course Outline
3. Assignment No. 1, 2
4. Assignment Forms (2 sets)

In this packet, if you find anything missing out of the above-mentioned material,
please contact at the address given below:

Mailing Officer
Services Block No. 28
Allama Iqbal Open University
Sector H-8, Islamabad.
Phone: 051-9057611-12
(Sadar Ayub Khan)
Course Coordinator
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Department of Business Administration)
WARNING
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE
ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF
DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENT(S) BORROWED OR STOLEN FROM
OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN
“AIOU PLAGIARISM POLICY”.

Course: Credit Management (8544) Semester: Spring, 2019

Level: MBA (3½ Years) /MBA (1½ Years) Total Marks: 100
Pass Marks: 50

ASSIGNMENT No. 1
(Units: 1–4)

Note: Attempt all the questions.

Q. 1 Explain commercial bank. How performance of a commercial bank can be

evaluated? Discuss with examples. (20)

Q. 2 Critically discuss the various Alternative Non-Deposit Sources of Bank Funds

with examples. Which source is the most beneficial for the bank in your view?
Discuss with arguments. (20)

Q. 3 What are the various factors determining loan policy for a bank? Discuss with
examples. (20)

Q. 4 Make a comparison of Cost-Plus Loan Pricing Model and Price Leadership

Model. Which model is better in your view? Discuss with arguments. (20)

Q. 5 Explain and evaluate various sources of information about loan customers

with examples. (20)

GUIDELINES FOR ASSIGNMENT No. 1

You should look upon the assignments as a test of knowledge, management skills, and
communication skills. When you write an assignment answer, you are indicating your
knowledge to the teacher:
 Your level of understanding of the subject;
 How clearly you think;

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 How well you can reflect on your knowledge & experience;
 How well you can use your knowledge in solving problems, explaining situations,
and describing organizations and management;
 How professional you are, and how much care and attention you give to what you do.

To answer a question effectively, address the question directly, bring important related
issues into the discussion, refer to sources, and indicate how principles from the course
materials apply. You must also be able to identify important problems and implications
arising from the answer.

For citing references, writing bibliographies, and formatting the assignment, APA format
should be followed.

ASSIGNMENT No. 2
(Units: 1–9) Total Marks: 100
Pass Marks: 50

This assignment is a research-oriented activity. You are required to obtain information

from a business/commercial organization and prepare a report of about 1000 words on the
issue allotted to you to be submitted to your teacher for evaluation.

You are required to select one of the following issues according to the last digit of your
roll number. For example, if your roll number is P-3427174 then you will select issue No.
4 (the last digit):-

List of Issues/Topics
0. Bank off Balance Sheet Items
1. Management of Bank Capital
2. Determinants of Growth and Mix of Bank Loans
3. Types of Long-term Loans to Business Firms
4. Issuance Process of Real Estate Loan
5. Investment Maturity Strategies
6. Different Sources of Bank Reserves
7. Management of Duration Gap
8. Management of Credit Derivatives
9. International Banking Deposit Strategies

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The report should follow the following format:
1. Title page
2. Acknowledgements
3. An abstract (one page summary of the paper)
4. Table of contents
5. Introduction to the issue (brief history & significance of issue assigned)
6. Practical study of the organization (with respect to the issue)
7. Data collection methods
8. SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the issue
assigned
9. Conclusion (one page brief covering important aspects of your report)
10. Recommendations (specific recommendations relevant to issue assigned)
11. References (as per APA format)
12. Annexes (if any)

GUIDELINES FOR ASSIGNMENT No. 2:

 1.5 line spacing
 Use headers and subheads throughout all sections
 Organization of ideas
 Writing skills (spelling, grammar, punctuation)
 Professionalism (readability and general appearance)
 Do more than repeat the text
 Express a point of view and defend it.

WORKSHOPS:
The workshop presentations provide you opportunity to express your communication
skills, knowledge & understanding of concepts learned during practical study assigned in
assignment No. 2.

You should use transparencies and any other material for effective presentation. The
transparencies are not the presentation, but only a tool; the presentation is the combination of
the transparencies and your speech. Workshop presentation transparencies should only be in
typed format.

The transparencies should follow the following format:

1) Title page
2) An abstract (one page summary of the paper)
3) Introduction to the issue (brief history & significance of issue assigned)
4) Practical study of the organization (with respect to the issue)
5) Data collection methods
6) SWOT analysis (strengths, weaknesses, opportunities & threats) relevant to the issue
assigned
7) Conclusion (one page brief covering important aspects of your report)
8) Recommendations (specific recommendations relevant to issue assigned)

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GUIDELINES FOR WORKSHOP PRESENTATION:
 Make eye contact and react to the audience. Don't read from the transparencies or
from report, and don't look too much at the transparencies (occasional glances are
acceptable to help in recalling the topic to cover).
 A 15-minute presentation can be practiced several times in advance, so do that until
you are confident enough. Some people also use a mirror when rehearsing as a
substitute for an audience.

WEIGHTAGE OF THEORY & PRACTICAL ASPECTS IN ASSIGNMENT No. 2

AND WORKSHOP PRESENTATIONS:
Assignment No. 2 & workshop presentations are evaluated on the basis of theory & its
applicability. The weightage of each aspect would be:

Theory: 60%
Applicability (practical study of the organization): 40%
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CREDIT MANAGEMENT (8544)
Course Outline
Unit–1 Introduction to the Business of Banking
1.1 Services Banks Offer to the Public
1.2 Impacts of Government Policy and Regulation on Banking
1.3 An Overview of Bank Balance Sheet and Income Statement
1.4 Expansion of off-Balance-Sheet items in Banking
1.5 Major Banking Laws
1.6 Measuring and Evaluating Bank Performance

Unit–2 Managing Bank Sources of Funds

2.1 Types of Deposits and Pricing Deposit-Related Services
2.2 Pricing Deposits at Cost Plus Profit Margin
2.3 Using Marginal Cost to Set Interest Rates on Deposits
2.4 Basic (Lifeline) Banking and Liability Management
2.5 Alternative Non-Deposit Sources of Bank Funds
2.6 Management of Capital
Unit–3 Providing Loans to Business and Consumers
3.1 Types of Loans Made by Banks
3.2 Factors Determining the Growth and Mix of Bank Loans
3.3 Regulation of Lending (Relevant Prudential Regulations(PR) by
SBP)
3.4 Establishing a Written Loan Policy and Steps in the Lending process
3.5 Credit Analysis and Sources of Information about Loan Customers
3.6 Handling Problem Loan Situations
Unit–4 Lending to Business Firms
4.1 Short-Term and Long term Loans to Business Firms
4.2 Analyzing Business Loan Applications
4.3 Preparing Sources and Uses of Funds Statements from Business
Financial Statements
4.4 Pricing Business Loans
4.5 Cost-Plus Loan Pricing Method and Price Leadership Model
Unit–5 Consumer and Real Estate Lending
5.1 Types of Loans Granted to Individuals and Families
5.2 Characteristics of Consumer Loans
5.3 Evaluating a Consumer Loan Application and Credit Scoring
5.4 Relevant Prudential Regulations of SBP For Consumer Loans
5.5 Real Estate Loans

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Unit–6 Managing the Bank's Investments Portfolio and Liquidity Position
6.1 Investment Instruments
6.2 Factors Affecting the Banker's Choice Among Investment Securities
6.3 Investment Maturity Strategies and Maturity Management Tools
6.4 Demand and Supply of Bank Liquidity
6.5 Factors in Choosing Among the Different Sources of Reserves

Unit–7 ALM, Hedging against Interest Rate and Credit Risk-I

7.1 Asset-Liability Management (ALM) Strategies
7.2 Interest Rate Risk: One of the Banker's Greatest ALM Challenges
7.3 One of the Goals of Interest Rate Hedging
7.4 Using Duration to Hedge against Interest Rate Risk
7.5 Limitations of Duration Gap Management

Unit–8 ALM, Hedging against Interest Rate and Credit Risk-II

8.1 Securitizing Bank Loans and Other Assets
8.2 Beginnings of Securitization—Home Mortgage Market
8.3 Concept of Factoring
8.4 Standby Credit Letters
8.5 Credit Derivatives

Unit–9 Special Categories of Lending and Other Topics in Credit Management

9.1 Priority Sector Lending
9.2 Advances to Small and Medium Enterprises and Agriculture
9.3 Relevant Prudential Regulations by SBP for Small and Medium
Enterprises
9.4 Supervision, Control of Advances and Recovery of Advances
9.5 International Banking and Future of Banking and Financial Services.

Recommended Books:
Peter, R., S. and Sylvia, H., C. (2010). Bank Management & Financial Services. The
McGraw-Hill Companies.