SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II
Paper – 1
(Marks - 100)
201: Investment Management

1. Investment Portfolio Management: Importance of Investment; Different Investment Modes under

Islamic Shariah, Different Sectors of Investment & Different Investment Schemes, Different Types of
Investment Clients & Investment A/Cs; Impact of Interest Factor on Portfolio Management in Banks..
2. Investment Policy Guidelines: Bank Investment Policy, 5 Years Perspective Plan, Investment
Manuals, Regulatory Policy Guidelines of Bangladesh Bank; Maqasid al - Shariah; Impact of
Government Policy & Regulations.
3. Investment Proposal Processing & Appraisal: (a) Selection of Good Investment Client
(b) Investment Appraisal: (i) Commercial Investment: Sanction, Disbursement & Recovery Process (ii)
Term Investment: Appraisal of Term Investment Cases, Marketing Aspect, Technical Aspect, Financial
Aspect, Management of Organizational Aspect, Socio Economic & Shariah Aspect, Economic Rate of
Return (ERR), Program Evaluation & Review Technique (PERT), Critical Path Method (CPM),
Investment Sanctioning & Recovery Process, IRG, CIB, Induction, RM, Investment Appraisal, NPV,
BEP, BCR, IRR, CVP, PBP, FSS, Ratio Analysis etc.
4. Working Capital Investment: Requirement – Estimation & Techniques of Funded / Non Funded
Working Capital under Islamic principles.
5. Investment Risk management: Concepts & techniques – Investment Risk analysis – Investment
Selling – Investment Syndication – Ethics in Risk Management of Investment – Bangladesh Bank
Guidelines on Investment Risk Management.
6. Investment Structuring & Pricing: Mechanisms.
7. Investment Documentation: Procedures of Documentation to secure Bank Investment, Creation of
Charge on Securities - Concept, Methods & Techniques; Verification & Valuation of Security &
Mortgage Properties.
8. Follow up, Repayment & reporting: Early alert Signal – Counseling – Motivation - Task Force
Activities – Legal action.
9. Non Performing Investment (NPI): Concepts, Causes, Impacts on Banking Business, Investment
Classification & Provisioning, Rescheduling, Write off, Waiver, Recovery, Disposal Security/ Mortgage
Properties.

Books Recommended
1. Morsman, Jr. Edgar M. Commercial Loan Portfolio Management. Robert Morris Associates, U.S.A.
2. Ruth, George E. Commercial Lending. American Bankers Association, U.S.A.
3. Bedi, H.L. and V.K. Hardikar. Practical Banking Advances. Institute of Banking Studies, New Delhi.
4. Signoriello, Vincent J. Commercial Loan Practices and Operations. Bankers Publishing Company, U.S.A.
5. Chandra, Prasanna. Projects: Preparation, Appraisal, Budgeting and Implementation. Tata McGraw Hill, New
Delhi.
6. IDB, Principles of Islamic Financing.
7. IDB, Islamic Banking State of the Art.
8. M. Kabir Hassan, Text Book on Islamic Banking, IERB, Dhaka.
 2

SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II
Paper – 2
(Marks - 100)
202: International Trade and Finance

1. Basis of International Trade: Theories of International Trade, Absolute Advantage & Comparative
Advantage, Islamic Approach to International Trade, Balance of Trade & Balance of Payment.

2. Concept & Sources of International Finance: International Financial Markets & Instruments,
International Monetary & Financial System, Financial Engineering, Financial Derivatives, Islamic
Perspective of International Financial System, Off Shore Banking.
3. International Trade Payment Methods: Advance Payment, Open A/C, Documentary Collection &
Documentary Credit, Consignment Sale, Islamic View point of International Trade Payment Methods,
Cross Border Fund Transfer Tools, cheque, TC, Drafts, TT, SWIFT & Other Forms of Electronic Fund
Transfer Tools.
4. Documentary Credits: Definition, Classification, Opening, Advising & Operational Procedures,
Different Types of Document: Financial, Commercial, Transport, Insurance & Other Documents,
Handling of L/C Documents in Import & Export..
5. Legal Framework of International Trade Payment: FER Act - 1947, UCP – 600, Inco Terms - 2010,
Guidelines for Foreign Exchange Transactions, Import & Export Policy Order etc.
6. Foreign Exchange Market: Exchange Rate, Spot & Forward Rate, Future & Forward Rate
Agreements, Option Contracts, Swaps, Exchange Arithmetic, Roll Over Contracts, Arbitrage, Short &
Long Position, Dealing Room Operations, Nostro – Vostro – Lorro A/Cs..
7. Foreign Exchange Risk Management: Objectives & Strategies, Bangladesh Bank Guidelines..
8. International Trade Financing Techniques: Import & Export Finance under Islamic Principles, Pre &
Post Shipment Finance, Account Receivables, Factoring, Forfeiting, Islamic View of Foreign Exchange
Pricing, Foreign Investment in Bangladesh, EPZ & Export Incentives – Cash Assistance, Duty Draw
Back, GSP, EDF..
9. Foreign Remittance & FC Accounts: Inward & Outward Remittance, different types of FC A/Cs –
Opening & operational Procedures.
10. International Institutions: WTO, IMF, World Bank Group, EU, ACU, European Monetary System, IDB
& its System of Investment under different Islamic Modes.
Books Recommended

1. Ali, Sayed Ashraf: “Foreign Exchange and Financing of Foreign Trade” Dhaka, Bangladesh.
2. Husted, Steven and Michael Melvin: International Economics. Harper Collins.
3. Awasthi, G.D.: Trade Payments, Academy of Business Studies. Different ICC Publications.
4. Pibeam, Keith. International Finance. Macmillan Press Ltd. U.K.
5. Apte, P.G. International Financial Management. Tata McGraw-Hill, New Delhi.
6. Walmsley, Julian. Foreign Exchange and Money Market Guide. John Wiley & Sons.
7. M. Kabir Hassan, Text Book on Islamic Banking, IERB, Dhaka.
8. BB Manual on Foreign Exchange Transaction Guidelines and Foreign Exchange Risk Management Guidelines.
9. L.R. Chowdhury, A Text Book on Foreign Exchange, Fair Corporation, 2000.
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 3

SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II

Paper - 3

(Marks - 100)

203: Ethics in Banking & Legal Environment

1. Introduction: Concepts of Law, Order, Ordinance, Act, Rules, Practice etc; Legal
Framework & Laws for Islamic Banking in Bangladesh & different countries.

2. Ethics in Banking: Concepts & Nature; Ethics, Religion & law; Principles of Trade,
Commerce & Finance; Business Ethics & Corporate Culture.

3. Financial Institution Related Laws: Bank Company Act 1991, Bangladesh Bank
Order 1972, Artharin Adalat Ain 2003, Financial Institution Act -1993, Public Demand
Recovery Act - 1987, Bankers Book Evidence Act 1891.

4. Financial Instrument Related Laws: Negotiable Instrument Act 1881, Money

Laundering Prevention Act - & Anti Terrorism Act .
5. Business Related Laws: Contract Act - 1872, Company Act 1994, Transfer of
Property Act 1882, Limitation Act 1908, Stamp Act - 1899, Sale of Goods Act 1930,
Bankruptcy Act 1997, Partnership Act 1932, Registration Act 1908, Securities &
Exchange Commission Act 1993, Merchant Banking & Port Folio Managers Rules
2001, Customs Act-1969, Shariah Rules regarding different types of Contract –
Shariah Rules for Al-Mudarabah and Al-Musharaqua Companies.

Books Recommended

1. Bhuiyan, M.A. Bashar. Bangladesh Laws on Banks and Banking. Dhaka.

2. Metzger, Mallor, Barnes, Bowers, Phillips. Business Law and the Regulatory Environment. IRWIN.
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 4

SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II
Paper – 4
(Marks - 100)
204: Management Accounting & Financial Management
Management Accounting (Marks- 50)
1. Introduction: Definition of Management Accounting; Relationship and distinction between Financial Accounting
and Management Accounting; Relationship between Management Accounting and Cost Accounting; Role of
Management Accounting, Characteristics of Management Accounting Information; The task of management
accountant- Analysis and interpretation of financial statements.
2. Cost-Volume - Profit Analysis - Uses of Cost-Volume-Profit (CVP) Analysis; Break-even Analysis and Shut-
down Point; Graphical Approach of CVP Analysis in a Multi-product Environment; Assumptions and Limitations of
CVP Analysis..
3. Financial Analysis and Planning - Sources of Financial Information- Income Statement and Balance Sheet,
Statement of Changes in Financial Position- Fund Flow and Cash Flow Statement - Ratio Analysis. Financial
Spread Sheet
4. Absorption and Variable Costing- Concept of Absorption and Variable Costing, Variable Costing and
Absorption Costing Income Statements, Reconciliation of Absorption Costing Income with Variable Costing
Income; Advantage and Disadvantages of Absorption Costing and Variable Costing; Variable Costing and the
theory of Constraints; Impact of JIT Inventory Methods..
5. Budgeting For Planning And Control -Basic Framework of Budgeting, Purposes, Advantages, Planning and
Control, Budgeting Process- Committee, Period, Guidelines, Review and Approval. Master Budget
Interrelationships - Seles Forecasts, Production-Related Budgets; Marketing and Administrative Budgets, Cash
Budgets; Budgeted Income Statement, Budget Statement of Financial Position. Limitations of Performance
Evaluation with Static Budgets; Preparation of Flexible Budget.
Financial Management (Marks-50)
1. Time Value of Money - Concept and Methods of Time Value of Money - Future and Present Value- Future and
Present Value Under Annuity, Perpetuity and Compounding Intervals -Determining the Yield on Investment -
Islamic concept of Time Value of Money.
2. Capital Budgeting - Method of appraisal - shortcoming of appraisal method- Capital Budgeting Process --
Estimating Cash Flow - Purpose of Capital Budgeting Decision - Asset Expansion, Replacement etc. - Techniques
of Capital Budgeting- Traditional: Pay Back Period and Accounting Rate of Return (ARR), Discounted: Net
Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index - Ranking of Investment Proposals -
Capital Rationing - Risk and Capital Budgeting Decision - importance of capital budgeting to the lending bankers.
3. Working Capital Management - Factors Determining Working Capital requirements - Current Asset
Management - Determining the Financing. Mix - Methods of financing working capital - Different types of bank
investment.
4. Short Term, Intermediate and Long Term Financing - Characteristics and Sources of Short Term Financing -
Trade financing - Use of Collateral in Short Term Financing - Hedging- Characteristics and Sources of Long Term
Financing - Issue of Common and Preferred Stock.
5. Lease Financing- Forms of lease financing - Relative merits of leasing finance and Hire Purchase under Shirkatul
Melk - Various Types of Ijara Financing.
6. Cost of Capital- Different components of Cost of Capital - Cost of Debt- Cost of Preferred Stock and Cost of
Common Equity - Weighted Average and Marginal cost of Capital - Concept of cost of capital in Islam.
7. Dividend Policy and Retained Earnings- Forms of Dividend - Factors Influencing Dividend Policy - Dividend
Stability - Rationale of Low and High Pay-Out Ratio - Irrelevance of Dividend Policy - MM Hypothesis.
Books Recommended
1. Block, Stanley B. & Geoffrey A. Hirt. Foundations of Financial Management. (Eighth Edition), RWIN, USA, 1997.
2. Van Horne, James C. Financial Management and Policy.
3. Syed Hamed Abdul Rahman Alkaff, Does Islam Assign Any Value/Weight to Time Factors in Economic and
Financial Transactions?, Islamic Research Academy, Karachi, 1998.
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 5

SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II
Paper – 5
(Marks - 100)

205: E-Banking
1. Introduction
 History and development trends of Computer, Types of Computer
 Computer Hardware: Central Processing Unit (CPU), Main Memory, Computer Peripherals: Peripheral
Controllers, Terminal, Printer, Floppy Drive, Disk Drive, Compact Disk, Tape Drive, Cartridge, Tape
Drive Graph Plotter, Mark Sense Readers, Etc.
 Computer Software: Definition and Applications of Software, Types of Software: Systems Software
(Operating Systems), Application Software: Programming Language, Data Base Management
Systems (DBMS) etc.
 Information of Communication Technology (ICT): Concept and Importance of Information and
Communication Technology, Role of ICT in Financial and Business World.
 Management Information System (MIS) and role of MIS in Banks and Financial Sectors.
 Concept of Electronic Banking and Electronic Commerce.

2. Database Management System

 Definition of Database, Database Management System
 Distributed and Centralized Database Systems : Advantages and Disadvantages

 Database Application in Banking: Role for recording transaction, Use of Redundant Database System,
Disaster Recovery and Data restoring System.
3. Network and Security Issues
 Computer network: Wired and Wireless Network, Fiber Optic, Radio and Satellite Network, Personal
Area Network (PAN), Local Area Network (LAN), Metropolitan Area Network (MAN), Wide Area
Network (WAN), Intranet, Extranet, The Internet: World Wide Web (WWW), Uniform Resource Locator
(URL), Hyper-Text Transfer Protocol (HTTP), Hyper-Text Markup Language (HTML), Extensive
Markup Language (XML) and Internet Protocol (IP).
 Email: Definition, importance, advantages and disadvantages, communication and Banking
transactions through Email
 Data Security: Secured Data Transfer System, Data Encryption and Decryption, Hacking and
Prevention of Hacking, Prevention of Data Stolen and Data Modification
 Internet Security: Virus and Anti-virus, Spy-ware and Anti-Spy-ware, Mal-ware, Disaster Recovery and
Data restoring System.
4. Different Approaches to Bank Mechanization
 Stand Alone Computer System, Local Processing with Batch Updates, Online transactions and offline
transactions with Shadow Posting, Remote Computing Facility with Batched Input, Online Systems
with Mini Computer Networking and with Mainframe Computer, Duplication of Databases at Different
Levels.
 6

5. Electronic Payment Systems & Funds Transfer Systems

 ATM: Teller Machines, Cash Dispensers, Stand Alone ATM, ATM with On-Line Inquiry and Update
Facilities, Fund Transfer and Payment through ATM

 Internet Banking: Definition, Features, Advantages & Disadvantages, SMS Banking, Phone and Mobile
Banking.
 Plain Messages (Data Communication), Structured Messages (SWIFT Etc.), Direct Fund Settlement
Systems (CHIPS, Etc.), two Level Funds Transfer Settlement (FEDWIRE, BANKWIRE, Point-of Sale
Systems).

6. Instrument Handling Systems, Additional Banking Applications & Other Aspects

 Cheque Sorting and Balancing Systems (MICR, OCR, Etc.), Automated Clearing House, BACH
Operation, Document Storage and Retrieval Systems (Microfilming), Document Transmission Systems
(FAX).
 Inter-Branch Reconciliation, Foreign Exchange Dealing, Investment Management Systems, Cash
Management Systems, Statistical Analysis through e-Banking.
 Personal Identification Numbers and their Use in Conjunction with Magnetic Cards of Both Credit and
Debit Types, SMART Cards, Signature Storage and Display by Electronic Means, Cheque Truncation,
Point of Sale(POS), Microfiche, Note and Coin Counting Devices.

7. Monitoring Security and Auditing of IT Operations

 Monitoring of IT Security System, IT Auditing System, Advantages of IT Auditing over conventional
Auditing System, Effective Managerial Decisions from IT Auditing
8. Risk Management and Legal Framework in ICT
 National ICT Policy: 2002
 ICT Act-2006
 Bangladesh Bank Guidelines
 Cyber Law
References
1. Bajwa K.S. Bank Mechanisation Skylark Publication.
2. Different journals and periodicals on computer.
3. Hunt R. and Shelley J. Computer and Common Sense Prentice-Hall of India Private Limited, Latest
Edition.
4. Lipis, Marschall, Linkers Electronics Banking John Wiley and Sons.
5. Rangarajan Committee Report Mechanisation and Automation in the Banking Industry, Reserve Bank
of India 1984.
6. Rajgopalan R. Understanding Computer.
 7

SYLLABUS OF THE DIPLOMA IN ISLAMIC BANKING

EXAMINATION, PART-II
Paper – 6
(Marks - 100)
206: Micro Finance and Rural Banking : Conventional & Islamic
A. Conventional Micro Finance:
1. Introduction: Historical Development of Micro Credit - Micro Credit and Micro Finance - Micro Financial
Institutions and their Objectives - Target Market and Impact Analysis - Micro Credit and Poverty.
2. Policy and Legal Framework - Micro credit Regulatory Authority ACT 2006 - Government Policy and
Legal Framework Regarding Micro Finance in Bangladesh - Role of Government and Central Bank in the
provision of Micro Credit

3. Micro and Rural Financial Products and Services – Credit - requirements of collateral security -
collateral substitutes - savings - compulsory deposit system- Risk Management and Formal and Informal
Insurance - Payment services - Social Intermediation - Enterprise development services - Social services
of the MFIs.

4. Micro Financial Institutions (MFIs) - Formal, Semi-formal and Informal financial institutions-
Institutional growth and transformation - Linkages among different types of MFIs and between Banks and
MFIs..

5. Performance Assessment – Repayment rates - Financial viability – Profitability - Leverage and capital
adequacy - Borrowers viability and poverty alleviation.

6. Monitoring and Supervision of Micro Credit - Meaning of Supervision – Purpose and Importance of
Micro Credit Supervision - Essential Characteristics of Successful Supervision – Prevailing Supervision of
Different Micro Credit institution in Bangladesh.
7. Role of MFIs in Rural Finance and Poverty alleviation in Bangladesh - BKB, RAKUB, Grameen
Bank, BRAC,BARD, ASA, Prashika, BRDB and PKSF as micro / rural financial institutions.
B. Islamic Micro Finance:
8. Introduction: Background and Objectives of Islamic Micro Finance – Key Shariah Principles and
Prohibitions Relevant to Finance – Shariah Complaint Financing Products and Structure – Different Types
of Investment Scheme.
9. Conventional vs. Islamic Micro Finance: Goal & Objectives - Fund Mobilization – Modes of
Financing – Target Group – Fund Transfer – Liabilities of Investment – Dealing with Defaulters – Social
Development Programs.
10. Role of Islamic Micro Finance in the Society – AFAUAS (Dinajpur)- NOBLE (Bogra) – ALW
(Natore) – Rabita al-alam al-islami- ASEAB(Pabna) – Muslim Aid Bangladesh – AMWAB(Apex body of
Islamc Micro Finance Institutes).
11. Role of IBBL in Rural Banking and Micro Finance – RDS, SBIS, SME, WEIS etc.

Books Recommended
1. Ledgerwood, Joanna, Micro Finance Handbook - An Institutional and Financial Perspective, the
World Bank, Washington D.C.
2. Wood, Geoffrey D and Sharif, Iffath A, (Ed) “Who Needs Credit-Poverty and finance in Bangladesh”,
UPL, Dhaka.
3. M. Kabir Hassan, Text Book on Islamic Banking. IERB, Dhaka.
4. RDS Guidelines/Manuals of IBBL.
5. http://www.amwab.org/ (AMWAB)
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