Banking Certificate Course:
Banking Operations & Quantitative Analysis
Learning Objectives

At the end of the subject coverage, candidates will be able to:

- To equip the student with basic arithmetic skills essential to successful banking.
- To practice the basic skills of banking operations
- To adopt the fundamental principles of good lending
- To interpret financial statements for purpose of lending to various types of borrowers
Syllabus Contents
MODULE 1: QUANTITATIVE ANALYSIS:
This section should account for 30% of the total in this subject).
1. Importance of Business Calculation; Annual Percentage Rates (APR), Accounts of customers, computerisation, statistics, use of calculators.
2. Percentages
What is a percentage? Common percentage groups, the relationship between percentages, fractions and decimals. Percentages and discounts. Gross up.
3. Interest computations
Simple interest, interests in bills of exchange (bill discounting) treasury bills and treasury bill rate, nature of compound interest; compound interest by 1% method; compound interest by the formula method. Compound interest tables. Annual percentage rates.
4. Ratios and proportions
The use of ratios, proportional parts, ratios to assess profitability, (gross profit and net profit, percentages, expenses ratios, return on capital employed, return on capital invested). Ratios to assess liquidity (Acid test ratio, working capital ratio, borrowing ratio and debt repayments cover, average credit given, average credit taken). Ratios to assess business efficiency. The rate of stock turnover, intermediation costs.
5. Dealing with Statistics
Conducting a statistical inquiry, samples, classification and tabulation of data, frequency distribution, presentation of statistics including graphs and charts.
6. Averages
Definition. The Arithmetic mean, weighted average calculations, the average of large numbers. The median and its features.

MODULE 2: LENDING:
(This section should account for 40% of the total in this subject)
1. Lending Environment:
(a) Analysis of local environment effecting lending activities
(b) Lending Policies
(c) The canons of lending
(d) The fundamental principles of good lending practice recognising;
• Approach to handling of a lending proposition
• Safety
• Purpose
• Viability of project; and
• Controlling techniques
2. Loan/Credit Application;
Procedure for handling a lending proposition;
• Interviewing a customer
• Factors to be considered while undertaking an interview (CAMPARI)
C = Character, Customer, Capacity
A = Ability
M = Margin + Marketing (Cross Selling)
P = Purpose
A = Amount
R = Repayment
I = Insurance/Security
3. Credit Analysis;
(a) Types of credit facilities available from a commercial bank:
  (i) Overdraft Facilities
(ii) Personal Loans
(iii) Term Loans
(iv) Discount of Bills
(v) Invoice Discounting
(vi) Guarantees and Indemnities
(vii) Letters of Credit
(viii) Bills of Negotiation
(ix) Acceptance Facilities
(b) Types of Borrowers
  (i) Personal
(ii) Clubs
(iii) Associations
(iv) Trustees
(v) Sole traders
(vi) partnerships
(vii) Companies
Special considerations needed for each type of borrower:
(c) Financial aspects subject for analysis: Interpretation of Financial Statements
(d) Documentation for Lending Proposition.
(e) Relevance of memorandum and articles of associations to the lending banker.
(f) Guiding premises for a decision to lend or not to lend.
(g) Protections available to the lending banker.
4. Credit Risk Protection

Security for Bank Lending;
(i) Attributes of a good security
(ii) Securities commonly accepted by a lending banker
(iii) Types of charges and the common charge from clauses which protect the position of a lending banker
(iv) Conditions for taking charges over customer’s property
(v) Local procedure (in Tanzania) for taking security
(vi) Technical points to be considered when taking security in the light of protecting the bank interest
(vii) Procedure for security realisation (in Tanzania)
(viii) Procedure for discharge and release of a security
MODULE 3: INTERNATIONAL BUSINESS
(This section should account for 30% of total in this subject.
1. Inter-bank Nostro and Vostro Accounts
- Importance of interbank accounts
- Accounting methods used by banks in effecting interbank transfers of funds in other countries
- Operations of Nostro and Vostro accounts
- Reconciliation of interbank accounts
2. Remittance and Receipt of Funds
- Ways (various) of transferring funds
- Procedure of handling methods of transferring funds
- Controls of methods of handling funds
3. Rate of Exchange
- Fundamental factors affecting foreign exchange rates
- Systems and procedures for buying and selling foreign currency
- Methods of exchange risk protection
- Types, benefits and operation of forward exchange contracts
- Foreign currency dealings
- Method of operating foreign currency accounts
- Benefits and problems to customers maintaining foreign currency accounts
4. International Trade for Exporters and Importers
- Terms used in International Trade
- Documents used
- Risks and problems encountered
- Methods of settlement, procedures, and documentation
- BOT export Guarantee Scheme
- Some impact of exchange control restrain
- Sources of advice for exporters and importers and available methods of financing.
5. Acceptance Credits
- Types of Acceptance Credit (Local Acceptance and Foreign Acceptance)
- Acceptance Credit Accounts and their purpose
- Method of Operation of Acceptance Credit Account
EXAMINATION

Time Allowed: Three hours
Examination Format: The paper is divided into three sections:
Section A: Quantitative Analysis
Section B: Banking Operations and Lending
Section C: International Business Operations. Each question is worth 20 marks.

Recommended Reading

1. Tanzania Institute of Bankers (2003) Banking Operations: Colour Print, DSM.
2. CIB Study Text
3. CIB Practice & Revision Kit - Lending
4. L. S. Dyer - A Practical Approach to Bank Lending
5. Wright & Valentine - Business of Banking
6. CIB - Study Text - International Trade Finance
7. H. V. Coult Business Calculations for Bankers (Pitman/CIB)