INDIAN INSTITUTE OF BANKING & FINANCE

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1 INDIAN INSTITUTE OF BANKING & FINANCE DIPLOMA IN TREASURY, INVESTMENT AND RISK MANAGEMENT 1. ABOUT THE INSTITUTE: 1.1 GENESIS: RULES/ SYLLABUS which is a body of professionals of Banking and Finance Institutions in India was established at the initiative of few eminent bankers, businessmen and industrialists of India on 30 th April 1928, as a Limited Company under the Indian Companies Act, MISSION: The mission of the Institute is to develop professionally qualified and competent bankers and finance professionals primarily through a process of education, training, examinations, consultancy/ counselling and continuing professional development programmes. 1.3 OBJECTIVES: To facilitate study of theory & practice of banking and finance To test and certify attainment of competence in the profession of banking and finance To collect, analyze and provide information needed by professionals in banking and finance To promote Continuous Professional Development To promote and undertake research relating to Operations, Products, Instruments, Processes, etc., in Banking and Finance and to encourage innovation and creativity among finance professionals so that they could face competition and succeed. 1.4 VISION: The vision of the Institute is To be the premier Institute for developing and nurturing competent professionals in banking and financial field. 1.5 ACTIVITIES: i) Design, develop and conduct examinations to test the proficiency of bank/ financial sector employees in various finance-related subjects. ii) Award certificates/ diplomas to successful candidates. iii) Provide necessary educational support services such as tutorial classes, contact programs and study material. iv) Dissemination of knowledge on banking and financial services through publication of quarterly journal - Bank Quest, a monthly - IIB-Vision and e-newsletter called Fin@quest, by organizing lectures/ seminars, workshops as a part of continuing professional development programmes. v) Organizing and managing efficient library facility at Mumbai and at few other selected centres. vi) Any other activity incidental to and facilitating the achievement of basic objectives of the Institute. 2. EXAMINATIONS: The Institute conducts following examinations : A) For Members Associate Examination: JAIIB/ CAIIB Banking Oriented Paper in Hindi (BOPH) B) For Non-Members: Diploma in Banking & Finance C) For Members/ Non-Members: a) Diploma in Treasury, Investment and Risk Management (DTIRM) b) Diploma in Banking Technology (DBT) c) Diploma in International Banking and Finance (DIBF) 1 2

2 d) Post Graduate Diploma in Financial Advising (PGDFA) e) Certified Information System Banker (CeISB) f) Certificate in Trade Finance (CTF) D) Insurance Sector (Pre-Licencing): a) Certificate Examination in Life Insurance b) Certificate Examination in General Insurance c) Certificate Examination in Bancassurance (Life) d) Certificate Examination in Bancassurance (Non-Life) E) I.T./ BPO Companies in Banking and Finance Sector: a) Certificate in Basics of Banking (CBB) b) Certificate in Functions of Banks(CFB) c) Certificate in Card Operations (CCO) The Syllabi, Rules/ Regulations, Examination forms and other information pertaining to examinations are available with the Institute s offices at Mumbai, Chennai, New Delhi, Kolkata and also at such other centres/ offices as may be notified from time to time. The same is also available at FIXED INCOME MONEY MARKET & DERIVATIVES ASSOCIATION OF INDIA The Fixed Income Money Market and Derivatives Association of India commonly known as FIMMDA was incorporated on June 3, 1998 as a Company under the Indian Companies Act;, It is a 90 member strong representative body for the bond, money and derivatives markets players in India. Its membership includes the State Bank of India, its Associate Banks, all Nationalized Banks, Indian Financial Institutions, Primary Dealers and Life Insurance Corporation of India. FIMMDA as a voluntary association of banks, financial institutions and primary dealers, has been working on the following areas, since its inception: Standardization of market practices. Introduction of securities benchmarks as required by the financial markets. Valuation of securities on a regular basis. Interaction with market regulators on all pertinent issues. Training programmes and certification for the benefit of members. In order to effectively discharge its role, FIMMDA has established several working groups / committees in areas of Market Practices, Legal Practices, Accounting Practices, Primary Markets, Infrastructure, Product Development, Education & Training, Risk Management and Valuation. Each of these committees is headed by a Director on the Board of FIMMDA and constitutes eight to ten experts from related fields from member organizations. FIMMDA has been instrumental in organizing a number of conferences/seminars on subjects of topical interest to members, such as Negotiated Dealing System, Guaranteed Trade Settlement, Real Time Gross Settlement ISDA Documentation, Monetary Policy Implications, etc. For the benefit of its members, FIMMDA had organized an Asian Conference at Bangkok in March 2002 and invited speakers from Thailand, Singapore, Malaysia, Indonesia and Sri Lanka. FIMMDA plays a pivotal role in lobbying for issues with various Government bodies concerning sustained growth of the financial markets and its players. DIPLOMA IN TREASURY, INVESTMENT AND RISK MANAGEMENT 2.2 Preface: With the advent of market oriented approach to banking, globalization, financial sector reforms and competition in the financial sector, 3 4

3 finance/banking professional face the challenge to continuously innovate and improve their products and services. This calls for excellence in the performance and specialization. One of the areas which is crucial to banks performance and profits is Treasury, which Bank has to educate and train a number of staff. The Institute has therefore introduced the Diploma in Treasury, Investment and Risk Management to help the staff of financial institutions to acquire the required competence. 2.3 Objectives: This diploma is designed to enable the candidate to acquire advanced knowledge in the field of Treasury and Risk Management. After passing this diploma examination, the candidate will be in a position : 1. To understand and appreciate the instruments and intricacies of operation in the money market, capital market and foreign exchange market including risk management. 2. To acquire proficiency in management of funds in relation to short-term, medium term and long term investment operations with liquidity/ maturity planning. 3. To manage foreign exchange (front and back offices) in the context of regulatory framework and recent liberalization and autonomy given to banks. 4. To acquire skills for Asset Liability Management in the context of risk, control and hedging operations. 2.4 DELIVERY: Comprehensive Courseware - Self study through recommended books including published by the Institute On-line Tutorial (Total 150 hours of e-learning specially designed for the course) Contact classes - lectures (need based) 2.5 PATTERN: Questions will be put to test: a) Conceptual grasp b) Problem solving and decision making ability c) Analytical / logical development / application of theoretical foundations 2.6 PERIODICITY OF EXAMINATION: The examination will be held normally twice a year in the months of June/July and Nov./Dec. on two Sundays (two papers on first Sunday and the remaining one on the next Sunday).The examination will be held at all metropolitan centres and State Capitals. 2.7 ELIGIBILITY: The above examination is open to the members of the Institute. The examination is also open to persons intending to develop a career in financial service industry, though they may not be members of the Institute. 2.8 TIME LIMIT : The candidates appearing for the Examination will be allowed a time limit of 3 years subject to maximum of six attempts to pass the said examination. If a candidate fails to pass the examination within the stipulated time limit as mentioned above, he/she may have to register afresh for the examination. 2.9 MEDIUM OF EXAMINATION : The Examination will be conducted through the medium of English only PROCEDURE FOR APPLYING FOR THE EXAMINATION : Examination Application Forms will be available at the Institute s zonal offices and Corporate Office. It will also be available at the Institute s web site 5 6

4 2.11 EXAMINATION FEES The total cost of the programme is Rs. 21,000/- (Rs. 15,000/- for eight e-learning courses as mentioned below and Rs. 6,000/- as examination fee) payable to IIBF by way of a demand draft drawn in favour of and made payable at the place of the Institute s zonal office. Non-members should pay an additional amount of Rs. 300/- towards Registration Fees. The Diploma will consist of three papers, namely: 1) Financial Markets - an Overview 2) Treasury Management 3) Risk Management 2.12 E-Coach : In order to enhance the practical utility of the course to the bankers we have also tied up with KESDEE Inc. a leading e learning and reference solutions provider for the global finance professionals located in USA to offer 8 e-learning courses/calculators as part of the Diploma examination. The following are the calculators/courses intended to be included : 1. Financial Mathematics 2. Futures & forwards 3. Swaps 4. Options 5. Money Markets 6. Fixed Income Markets 7. Foreign Exchange Markets 8. Treasury Analytics KESDEE will host the e-learning materials in its website with a separate window for the Institute. Candidates will be given a separate login number with 150 hours in all for the above courses ADMIT CARD / MEMBERSHIP IDENTITY CARD PHOTO - IDENTITY CARD The Institute will be issuing Examination Admit Card including examination vene, date, time etc. to candidates who apply for the Examination. The Admit Card alongwith the Permanent Membership Identity Card (for members) / Photo - Identity Card (for non-members) should be produced to the examination authority each time in the examination hall for identification. In absence of the Admit Card / Permanent Membership Identity Card / Photo-Identity Card the candidate is liable to be denied permission in the examination hall. PHOTO - IDENTITY CARD (FOR NON-MEMBERS) In case of candidates being Non-members, they will be issued a Photo - Identity Card. This card will be valid for the period as mentioned on the card CONDUCT AND DISCIPLINE IN THE EXAMINATION HALL 1) No candidate shall be permitted to enter the examination hall after the expiry of 15 minutes from the commencement of the examination and no candidate shall be permitted to leave the hall before the expiry of one hour from the commencement of the examination. The candidates shall be at the examination venue at least 15 minutes before the commencement of the examination. 2) Candidates should ensure that he/she signs the Attendance Sheet. 3) Candidates should not possess and/or use books, notes, periodicals etc. in the examination hall at the time of the examination /or use mathematical tables, slide rules, stencils etc. during the examination. A candidate found in possession of such unauthorised material during the examination is liable to be proceeded against for adoption of unfair means in the examination in addition to reporting the matter to his/her employer for disciplinary proceedings for the misconduct. They should hand them over to the Hall Superintendent before the commencement of the examination. 4) Candidates will be permitted to use calculators while appearing for the examination subject to the following: 7 8

5 The Calculator should : a) be pocket size and fully portable b) be silent while operation c) be battery operated d) not be capable of being programmed by the insertion of tapes or otherwise e) Not have print out facilities f) be of the type upto 6 functions and 12 digits g) not be capable of retaining/storing data in memory when the calculator is switched off Calculators which do not comply with the above conditions and found in possession of the candidates during the examination will be confiscated by the Examination Supervisors and returned to the candidates at the end of the examination. In case a candidate is found using the calculator not complying with the above conditions in the course of the examination, it would amount to adoption of unfair practice at the examination by the candidate concerned and the Institute shall take such action against the candidate as may be deemed appropriate. 5) Candidates are not permitted to carry mobile phone in the examination hall. 6) Communication of any sort between candidates or with outsiders is not permitted and complete silence should be maintained during the examination. 7) Copying answers from the answer books of other candidates or permitting others to copy from one s answer book will attract the rules relating to unfair practices in the examination. 8) No candidate should leave the examination hall without handing over the answer books to the Hall Supervisor / Invigilator. Once the answer book is handed over to the Supervisor / Invigilator the same cannot be taken back by the candidate. 9) No candidate shall impersonate others or allow others to impersonate himself at the examination. 10) No candidate shall misbehave, argue with examination conducting authorities at the centre / venue. 11) If any candidate violates any of the above rules it will be considered to be an act of misconduct and he/she will be liable for punishment mentioned hereinunder PENALITIES FOR MISCONDUCT / UNFAIR PRACTICES The Institute shall have the right to impose penalties on any member / candidate for committing an act of misconduct/ unfair practice in respect of any matter affecting the Institute or at or in respect of any examination conducted by the Institute or disqualifying any candidate who, they have reason to believe has received or given unfair assistance at the examination and a) to cancel the result of such candidate of the examination at which he/she may have appeared; b) to exclude him/her from future examinations either permanently or for a specified number of examinations; c) to report his/her name to his/her employer and; d) to take such other action against him/her as the Institute shall in their sole discretion deem fit and the decision of the Institute shall be final and binding on the candidates concerned. The Institute shall also have a right to cancel the results of any subsequent examination at which the candidate may have appeared if such examination falls within the exclusion period in the penalty, as by reason of imposition of such a penalty of exclusion from the future examination, the candidates would not have been eligible to appear at such subsequent examinations. In case any member / candidate including former member, desires to institute any legal proceedings against the Institute in respect of anything done or proposed to be done by the Institute in relation to 9 10

6 him/her such legal proceedings shall be instituted only in the courts at Chennai, Kolkata, New Delhi and Mumbai in whose jurisdiction the application is submitted by him / her and not in any other court PASSING CRITERIA: a) Pass: Minimum 50% or more marks in each subjects b) First Class with Distinction: 75% or more marks in any individual subject and 60% or more marks in the aggregate and pass in all subjects in the first attempt. c) First Class: 60% or more marks in aggregate and pass in all the subjects in the first attempt. d) Candidates will be allowed to retain credits for the subject he/ she has passed in one attempt till the expiry of the time limit DECLARATION OF RESULTS: The results of the examination along with the marks secured for each subject of the examination will be communicated to the candidates by letter, two months after conduct of the examination FACILITY FOR VERIFICATION OF MARKS: The decision of the examiners with regard to marks shall in every case, be final and no request for re-valuation of the candidate s paper will be entertained. If, however, any candidate requires his/her marks to be verified, he/she may request the Chief Executive Officer accordingly. Such verification will cover the following: i) all answers have been valued ii) the marks awarded for all the answers have been carried forward correctly to the cover-page for totalling iii) the total arrived at is arithmetically correct. The request for verification of marks must be received in the Institute s Zonal office within one month from the date of the declaration of the examination results. The members will have to pay a sum of Rs.80/- and non-members Rs 100/- for verification of marks for each subject of the diploma examination. The payment should be made by means of MICR crossed Demand Draft drawn in favour of INDIAN INSTITUTE OF BANKING & FINANCE and made payable at the place of the Institute's Zonal Office. The candidates should write their membership number / Registration number on the reverse of the draft ISSUE OF CERTIFICATES : Candidates who complete the Diploma Examination will receive the Diploma in Treasury, Investment and Risk Management. (DTIRM) 3. SYLLABUS DIPLOMA IN TREASURY, INVESTMENT AND RISK MANAGEMENT PAPER- I FINANCIAL MARKETS: AN OVERVIEW A) Money Market Need for the market Participants Instruments of Money Market, their characteristics, Direct/ Indirect Instruments Repurchase Agreements (REPOS) Types of interest rate quotations B) Fixed Income Securities-Bonds-valuation-Govt. Securities C) Capital Markets [as it pertains to Bonds, etc] Broad Trends Primary & Secondary market Regulations of the capital market Principles of valuation Settlements of Transactions GDRs/ADRs Brief outline of Equity Market D) Foreign Exchange Markets Foreign markets Role of banks in the market 11 12

7 Spot and Forward mechanism, Swap, outright deals and dealer operations/other deals Premium and discount New Instruments E) Brief Outline on Derivative Markets Futures, options, swaps Annexure Price calculation of various instruments PAPER- II TREASURY MANAGEMENT A) Treasury i) Objectives of Treasury ii) Structure and Organization iii) Functions of a Treasurer iv) Responsibility of a Treasurer B) Cost Centre/ Profit Centre, Integrated Treasury, Planning & Control, Risk Analysis C) Liquidity Management- CRR/CCIL/RTGS Objectives, Sources and deployment Internet control, Netting D) Implications of Treasury on International Banking Global scenario & treasury operation Exchange rate mechanism Structure: Front, Back & Mid office Dealing and trading operations: Control and orderly conduct, moral and ethical codes, checks of balances Revaluation: Mark to market and profit calculations, VaR (Value at Risk) E) Regulation, Supervision and Compliance of Treasury Functions Internal & External Audit Role of Reserve Bank of India F) Integrated Treasury G) Bond Dynamics H) Role of Information Technology in treasury management and Bond Dynamics I) Accounting Valuation and Elimination of Exposures PAPER - III RISK MANAGEMENT A) Risk: Definition Risk Process- Risk Organization Key Risks Interest Rate Risk, Market Risk, Currency Risk, Credit Risk, Liquidity Risk, Legal and operational Risk B) Risk Measurement and Control: Calculation Risk Exposure Analysis Risk Management/ Mitigation policy Risk Immunization Policy/ Strategy fixing exposure limits: Delegation with accountability i) Open position ii) Asset position limit iii) Deal size iv) Individual dealer s limit v) Stop loss limits C) Asset Liability Management Components: Multi currency balance sheet Organizational Structure Risk Management policy & procedure Risk adjusted return on capital Capital adequacy norms ALCO techniques/ tools GAP Analysis Simulation, Duration Analysis, Linear and other statistical methods of Internal Control 13 14

8 D) Risk Hedging Instruments & Mechanism: Forward, Futures, options Strategies and Arbitrage opportunities E) Challenges of BASLE II: Implications to hedge and position through derivative products: F) Role of Mid office/ Risk management Dept: Operational clarity and documentation and monitoring G) System Audit significance in risk management/ mitigations 4. CONTACT DETAILS Corporate Office Director of Examinations The Arcade, Second Floor, East Wing, World Trade Centre, Cuffe Parade, Mumbai Tel: /04/05 Fax: Western Zonal Office Deputy Director Maker Tower, F Wing, 19th Floor, Cuffe Parade, Mumbai Tel: / Fax: iibwz@iibf.org.in Eastern Zonal Office Deputy Director Anandlok, 3rd Floor, 227, Acharya J. C. Bose Road, Kolkata Tel: /82/83 Fax: iibez@iibf.org.in Northern Zonal Office Deputy Director 11th Floor, Atmaram House, 1, Tolstoy Marg, New Delhi Tel: / Fax: iibnz@iibf.org.in Southern Zonal Office Deputy Director 76, Arya Gowda Road, West Mambalam, Chennai Tel: , Fax: iibchen@vsnl.net 15 16

9 CONTENTS Page No. 1. ABOUT THE INSTITUTE Genesis Mission Objectives Vision Activities EXAMINATIONS About FIMMDA Preface Objectives Delivery Pattern Periodicity and Examination Centres Eligibility Time limit for passing the examination Medium of Examination Procedure for applying for examination Examination fees E-Coach Admit Card Conduct and Discipline in the Examination Hall Penalties for unfair practices Passing Criteria Declaration of results Facility for verification of marks Issue of Certificates DTIRM Rules and Syllabus SYLLABUS FOR DTIRM CONTACT DETAILS INDIAN INSTITUTE OF BANKING & FINANCE World Trade Centre, Cuffe Parade, Mumbai

INDIAN INSTITUTE OF BANKING & FINANCE

INDIAN INSTITUTE OF BANKING & FINANCE (An ISO 9001-2008 CERTIFIED ORGANISATION) Kohinoor City, Commercial-II, Tower-1, 2 nd Floor, Kirol Road, Kurla (West), Mumbai - 400 070 Web-site : www.iibf.org.in