Management of Financial Institutions

Overview of financial institutions: Types of financial institutions, Role of financial institutions in the economy; Risks in financial institutions, Development of financial institutions in Nepal.

Interest rate fundamentals; Review of loanable fund theory; Movement of interest rates over the time; Determinants of interest rates for individual securities: Inflation, real risk-free rate, default or credit risk, liquidity risk; Special provision or covenants; Term to maturity; Term structure of interest rates: unbiased expectation theory, liquidity preference theory, market segmentation theory; Forecasting interest rates.

Functions of central bank; Balance sheet of central bank; Monetary tools: Open market operation, the discount rate, and reserve requirements; Effects of monetary tools on various economic variables; Money supply versus interest rate targeting; Central bank and monetary policy in Nepal.

Overview of commercial banks; Size and structure of commercial bank; Functions of commercial banks; Financial statements: Balance sheet, off-balance sheet items, other fee generating activities, statement of profit or loss; Financial statement analysis using a return on equity framework; Regulation of commercial banks; Capital adequacy regulations of Nepalese commercial banks with reference to Basel III.

Concept of microfinance; Microfinance revolution, Rationale of growing microfinance; Key principles of microfinance; Objectives of microfinance institutions; Product and services of microfinance; Designing saving and lending products; Interpreting financial statements of microfinance institutions; Performance evaluation of microfinance institutions.

Meaning, types and structure of cooperatives; Rationale of growing cooperatives, Keyprinciples of cooperatives, Saving and credit cooperatives: Rationale, growth and structure;Product and services of saving and credit cooperatives; Interpreting financial statements ofsaving and credit cooperatives; Performance evaluation of saving and credit cooperatives.

Overview of insurance companies; Life insurance companies; Types of life insurance companies, Fair value computation of annuity insurance policy; Property-casualty insurance companies; Types of property-casualty insurance companies; Measuring costs and overall profitability of property-casualty companies; Insurance company operations: Rate making, underwriting, production, claim settlement, reinsurance, alternative to traditional reinsurance, investments; Financial operations of insurers: Financial statements and performance analysis of life and non-life insurance companies in Nepal; Role and functions of Beema Samiti(Insurance Board) in regulating insurance in Nepal.

Overview of investment companies; Organizational structure of mutual fund; Different typesof mutual funds; Net asset value; Mutual funds costs and returns; Mutual fund balance sheet and recent trends; Performance of mutual fund; Mutual funds and their regulations in Nepal.Hedge funds: meaning, significance and structure.

Overview of pension funds; Types of pension funds: Defined benefit versus defined contribution pension funds, insured versus non-insured pension funds, private versus public pension funds; Retirement benefit calculation using: Flat benefit formula, career average formula, and final pay formula; Return and impact of asset allocation; Pension fund regulation and its management practices in Nepal; Social securities fund in Nepal.

Services offered by investment banks and securities firms; Securities firms and investmentbank activity areas: Regulations of investment banking, securities firms and business persons in Nepal.