Foundation of Financial Systems

Concept of financial system; Components of financial system with reference to Nepalese financial system; Size of overall Nepalese financial system; Structure of Nepalese financial sector; Process of funds transfer from surplus units to saving units; Functions and role of financial intermediaries in the financial systems.

Concept of financial instruments; Functions and types of financial instruments: money market and capital market instruments, derivative securities, mutual fund units; Financial instruments available in Nepalese financial system; Loanable funds theory of interest: Supply and demand of loanable funds, equilibrium interest rate, factors affecting the interest rate; Components of interest rate; Terms structure of interest rate; Determination of interest rate in Nepalese financial markets; Base interest rate, interest rate spread, interest rate corridor; Implication of inflation and tax on interest rate

Concept of depository institutions; Fundamental functions of depository institutions; Classification of depository institutions in Nepal; Major products of depository institutions; Financial statements and major indicators of performance of depository institutions; Supervision by Nepal Rastra Bank: Onsite and offsite supervision and supervisory tools; Saving and credit cooperatives in Nepal: role, structure and size and monitoring and regulation.

Concept and types of non-depository institutions; Risk management industry: types of risk management industry, fundamentals of risk management industry, and role of risk management industry in the mobilization of saving and protection of individual and social wealth; Mutual fund industry in Nepal: types, size, and structure; Pension funds: Concept, fundamentals of provision for pension; Types and practices of pension fund in Nepal; Social welfare funds and other retirement schemes.

Investment banking industry: concept and functions, the structure of investment banking in Nepal; CDS & Clearing Ltd.: role and functions; Depository participants: concept and functions; Securities dealer and broker; Credit rating agencies: Concept, functions and credit rating agencies in Nepal; Deposit and Credit Guarantee Fund: role and functions; Credit Information Bureau of Nepal: its products and services.

Concept and role of primary markets; Legal provision regardingthe issue of stocks and debenture in Nepal; Process of initial public offerings; Further public offering and rights issue; Application and allotment process of securities in Nepal

Concept, functions and role of secondary markets; Buying and selling the securities in the secondary markets and settlement of the transactions; Stock market Index: NEPSE, float, sensitive index; Construction and interpretation of NEPSE Index; Market capitalization and market return.

Major provisions of relevant Acts: NRB Act, Bank and Financial Institution Act, Foreign Exchange Act, Bank Offensive Act and Anti-money Laundry Act; Insurance Act, and Securities Act; Role and power of Nepal Rastra Bank, Insurance Board, Nepal Securities Board as regulatory authoriti

Exchange rate system in Nepal; Concept and components of foreign reserves; Concept of balance of payments and balance of trade; Structure of balance of payment of Nepal; Funds flows as foreign direct investment of multinational companies and international financial institutions in Nepal