diploma in islamic banking examination, april 2020 part-ii

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Diploma in Islamic Banking Examination, April 2020

PART-II

201: Investment Management

Time: 3 hours

Full Marks: 100

Pass Marks: 45

(N.B.: Answer any 5 (five) of the questions given below.

The figures in the right margin indicate full marks.)

1) a. What are the risk factors in investment and how risk can be reduced in line with CRM

guidelines of Bangladesh Bank? 7

b. What are the reasons for decrease in the practice of Sharing Modes in Islamic Banks? 6 c. Briefly discuss Islamic financial modes and Islamic financial instrument. 7 2) a. Briefly discuss the investment schemes of your bank which facilitates the consumers. 8

b. Mention the Internal Investment Risk Rating System for a Bank. 6 c. State the issues of consideration for enhancement of investment limit. 6 3) a. What is Classification of Investment? Explain the accounting process for profit of

classified investment. 7

b. Discuss the steps to improve the default culture of investment in your bank. 6 c. Explain the significance of provision against classified investment with present

provisioning system. 7

4) a. Mention the objectives of pricing. Discuss the general pricing approach. 8 b. Evaluate the advantages of single digit rate of investment in banking sector. 6 c. Calculate Profit & Loss sharing ratio considering expected RR of 16% with adjustment

period 06 months from following data: 6

Bank Investment : Tk.2,000,000.00 Client Equity : Tk.1,000,000.00 Estimated Profit : Tk.4,00,000.00

5) a. How does documentation secure Bank’s Investment? Discuss the procedures. 7

b. What are the methods of creating charges on security? 6

c. What are the importances of valuation of mortgage property? Describe the policy of

valuation as per BB Guidelines. 7

6) a. Discuss the discounting and non discounting techniques of capital budgeting. 6

b. What are the relationships between Net Present Value (NPV) and Profitability Index

(PI). 6

c. Smart Apparels Ltd. is considering a project which requires an investment of

Tk.4,000,000.00. The estimated salvage value zero. Tax rate 50%. Cost of Capital 10%.

The company uses straight line depreciation method and projected Cash Flows Before

Tax (CFBT) are as follows :

8

(Figure in Taka)

Year CFBT

1 1,000,000.00

2 1,000,000.00

3 1,500,000.00

4 1,500,000.00

5 2,500,000.00

of 2

Determining the following:

a. Payback Period 7

b. Average Rate of Return

c. Return on Investment

d. Net Present Value

7)

a.

Year 1 2 3 4 5

Present value of Tk.1 at 10% 0.909 0.826 0.751 0.683 0.621

What is Syndicate Financing? What are the importances of Syndicate Financing?

7

b. What do you mean by Project Finance? Differentiate between gross working capital

and net working capital. 6

c. Describe various factors to be taken into consideration in determining the working

capital needs of a firm. 7

8) Write short notes on any 05 (five) of the following: 4X5=20

a. Pari Passu Charge.

b. Risk Weighted Assets.

c. External Credit Assessment Institutions.

d. Working Capital Cycle.

e. Venture Capital Finance.

f. Investment Restructuring.

g. Gestation and Moratorium Period.

The End

of 2


PART-II

202: International Trade and Finance

Time: 3 hours

Full Marks: 100

Pass Marks: 45



1. a)

b)

c)

What is International Trade?

How International Trade can develop the economy?

Discuss the following trade payment methods:

i) Open Account ii) Cash in Advance iii) Documentary Collection

iv) Documentary Credit.

2

6

12

2. a)

b)

c)

What is Dealing Room? Describe the function of Dealing Room?

What are the roles of dealing room to boost up the foreign exchange business?

Describe the activities and responsibilities of Treasury Back Office as per

Bangladesh Bank Foreign Exchange Risk Management Guidelines.

10

5

5

3. a)

b)

c)

What do you mean by Foreign Remittance?

What are the procedures to disburse Inward Foreign Remittance?

How many types of FC account opened by Islamic Banks? Briefly describe

about operational procedures.

2

8

10

4. a)

b)

c)

d)

What is Letter of Credit?

How many parties are involved with Letter of Credit?

What are the preparatory steps for opening a Back to Back L/C?

What are the mandatory fields in the SWIFT message for opening a L/C?

2

6

6

6

5. a)

b)

Discuss about Pre-Shipment and Post-Shipment Finance practices in Islamic

Banking.

Describe Factoring and Forfeiting with its operational procedures.

10

10

6.

Explain the following terms as per UCP-600:

i) Complying Presentation;

ii) Negotiation;

iii) Commercial Invoice;

iv) Nominated Bank;

v) Beneficiary;

vi) Clean Transport Documents;

vii) Confirmation;

viii) Banking Day;

ix) Presenter;

x) Claiming Bank.

10x2=20

of 2

7. a)

b)

c)

What is Cross Rate? How do you calculate it?

Discuss the Direct Quotation and Indirect Quotation with examples.

A customer wants to remit EURO 5000 through FTT for his son studying

abroad. From the following information calculate what the rate for per EURO

against BDT and how much amount you will charge from the customer?

i) Rate available : EURO/USD : 1.1180-1.1190

USD/BDT : 84.9000-84.9500

ii) FTT Charge : @ 0.20%

iii) Fixed Administrative Cost : Tk.0.15 (Per EURO)

iv) Profit Margin : 0.12%

v) Rebate to be allowed for the customer 0.25% for a period of 14 days

(360 days in a year)

4

4

12

8. Write short notes on any 5 (Five) of the following:

a) Open Position b) EDF

c) Nostro Account and Vostro Account d) Terms of Trade

e) IDB f) SWIFT

g) Cash Incentive for wage earners remittance h) Financial Engineering

The End

5x4=20


PART-II

203: Ethics in Banking & Legal Environment

Time: 3 hours

Full Marks: 100

Pass Marks: 45



1. a)

b)

c)

What is Ethics? Why ethics is important in a financial institution?

What is Ethical Banking?

What are the moral principles of trade and finance in the light of Islamic

Shari’ah?

6

4

10

2. a)

b)

c)

What do you mean by Contract? Who are competent to make a contract? Can a

minor enter into a contract?

What do you mean by Sound Mind and Fraud?

Define Undue Influence and Coercion.

10

5

5

3. a)

b)

c)

d)

What is KYC? What do you mean by CDD?

What are the duties of BAMLCO?

What is predicate offence? Write the means of some predicate offences.

What do you mean by credit backed money laundering?

5

5

6

4

4. a)

b)

“Auction notice for sale of mortgaged property is mandatory under section 12(3)

of Artha Rin Adalat Ain-2003”- Explain.

What is Primary Security? Distinguish between Pari Passu Charge and Second

Charge.

10

10

5. a)

b)

c)

d)

Distinguish between Guarantee and Indemnity.

What do you mean by Good faith and Without negligence?

Who is a Walk-in Customer?

What is Holder in due course?

5

5

5

5

6. a)

b)

c)

Good Governance is the core parameter for the strength of a bank- Explain.

What is the procedure for conversion of a Private Limited Company into Public

Limited Company?

What is Code of Conduct? What are the basic codes of conduct for the banker?

6

4

10

7. a)

b)

c)

What are the sources of Shari’ah? Explain.

What are the basic principles of HPSM investment?

Discuss the relationship among the Ethics, Religion and Law.

7

6

7

8. Write short notes on any 5 (Five) of the following:

a) FATCA b) Clients Rating c) EDD

d) PEPs e) Sub-Branch f) Corporate Culture

g) CRR & SLR h) BFIU

The End

5x4=20

Page- 1 of 3


PART-II

204: Management Accounting & Financial Management

Time: 3 hours

Full Marks: 100

Pass Marks: 45

(N.B.: Answer any 5 (five) questions selecting at least 2 (two) questions from each section. The

figures in the right margin indicate full marks. Answer to the question must bear workings, notes,

and formula where necessary.)

Section-I : Management Accounting

1.

2.

a)

b)

c)

a)

b)

How does management accounting help in planning, controlling and making decision of a bank?

Distinguish between Financial Accounting and Management Accounting and their implications

on banking business.

Following data are collected from the record of a manufacturing concern:

Particulars Amount

Raw Materials Used Tk.25,000

Work in Process (01.06.2019) Tk.40,000

Work in Process (30.06.2019) Tk.60,000

Finished Goods (01.06.2019) Tk.150,000

Finished Goods (30.06.2019) Tk.75,000

Direct wages 1,300 Hours@30 per hour

Direct expenses Tk.82,000

Factory indirect material Tk.52,000

Factory labor Tk.80,000

Administrative expenses:

Fixed Tk.50,000

Variable Tk.10% of Prime cost

Selling expenses:

Fixed Tk.30,000

Variable Tk.5% of Cost of goods manufactured

Profit 10% on sales

Requirements: Calculate Prime cost, Factory manufacturing cost, Cost of goods manufactured,

Total cost, Cost of goods sold and Sales.

What are basic differences between absorption costing and direct costing?

Daffodil company produces and sells a single product, a Wooden Toy Box. Selected cost and

operating data relating to the product is given below:

Selling price per unit Tk.50

Manufacturing costs:

Variable cost per unit produced:

Direct materials Tk.11

Direct labor Tk.6

Variable overhead Tk.3

Fixed cost per year Tk.1,20,000

Selling and administrative costs:

Variable per unit sold Tk.5

Fixed per year Tk.70,000

7

5

8

5

15

Page- 2 of 3

3.

4.

a) b)

a)

b)

c)

Units Details Year 1 Year 2

Beginning inventory -0- 2,000

Product produced during the year 10,000 6,000

Product sold during the year 8,000 8,000

Ending inventory 2,000 -0-

Required:

i. Compute an income statement for each year assuming that the company uses absorption

costing.

ii. Compute an income statement for each year assuming that the company uses direct costing.

iii. Reconcile the direct costing and absorption costing net income figures.

What are the purposes of preparing cash budget?

From the following forecasts of income and expenditure, prepare a cash budget for the months

January to April 2020.

Months Sales (Credit)

Purchase (Credit)

Wages Manufacturing Expenses

Administrative Expenses

Selling Expenses

Nov’19 Tk.30,000 Tk.15,000 Tk.3,000 Tk.1,150 Tk.1,060 Tk.500

Dec. 35,000 20,000 3,200 1,225 1,040 550

Jan’20 25,000 15,000 2,500 990 1,100 600

Feb. 30,000 20,000 3,000 1,050 1,150 620

March 35,000 22,500 2,400 1,100 1,220 570

April 40,000 25,000 2,600 1,200 1,180 710

Additional information:

i. The customers are allowed a credit period of two months.

ii. A dividend to Tk.10,000 payable in April.

iii. Capital expenditure of Tk.5,000 will be incurred on 15th January for buying a machine. In

March, the firm will buy a motor car on loan and its payment will be done with a monthly

installment of Tk.2,000. The payment will start from the month of buying the motor car.

iv. The creditors are allowing a credit of two months.

v. Wages are paid on the 1st day of the next month.

vi. Lag in payment of other expenses is one month.

vii. Balance of cash in hand on 1st January 2020 is Tk.15,000.

How do financial ratios help to evaluate long term solvency of a firm? What is meant by Liquidity? Why acid test ratio is considered as a better indicator of liquidity of

a firm?

Selected financial ratios for XYZ company and the industry averages are as follows:

Ratio Firm Industry

Current ratio

Acid test ratio

Debt to assets Inventory turnover

Average collection period

Net profit margin Return on investment

3.2 times

1.75 times

23% 8.7 times

33 days

3.8% 11.5%

2.5 times

1.9 times

33% 5.5 times

40 days

3.5% 9.75%

Requirements:

i. Evaluate the financial health of the firm as regards to liquidity, solvency, activity, and

profitability in particular. ii. Give your suggestions to the firm for improvement of financial health in future.

4

16

4

3

13

Page- 3 of 3

5.

a)

b)

c)

Section-II

(Financial Management)

What is effective annual rate? Why is it different from nominal rate?

Define the concept of annuity? How is it different from perpetuity?

Mr. X wishes to purchase an annuity contract that will pay him Tk.7,000 a year for the rest of

his life. The Delta Life Insurance Company figures that his life expectancy is 20 years, based on

actuary tables. The company imputes a compound annual profit rate of 6% in its annuity

contract.

i. How much will he have to pay for the annuity?

ii. How much would he have to pay if the profit rate were 8%?

4

4

6

6

6.

a)

ABC company is considering a new product line to supplement its range line. It is anticipated

that the new product line will involve cash investment of Tk.6,00,000 initially. After tax cash

inflows of the project are expected as per following table although the cash flows do not

consider the depreciation. The company follows straight-line depreciation method. Its estimated

useful life is 5 (Five) years with salvage value of Tk.1,00,000. Cost of Capital is 10%.

End of the year Amount of cash flow (in Tk.)

1 2,50,000

2 1,75,000

3 1,50,000

4 2,25,000

5 1,95,000

Requirements: Calculate i. Payback Period ii. NPV iii. Discounted Payback Period iv. IRR

v. Profitability Index.

Year 1 2 3 4 5

Present value of Tk.1 at 10% 0.909 0.826 0.751 0.683 0.621

20

7. a)

b)

c)

Distinguish between Primary and Secondary Markets for shares.

Explain the term Weighted Marginal Cost of Capital.

RB fashion has the following capital structure on December 31, 2019:

Ordinary share capital (4,00,000 Shares) Tk.80,00,000

10% Preference shares Tk.20,00,000

14% Debenture Tk.60,00,000

The share of the company sells for Tk.20. It is expected that company will pay next year a

dividend of Tk.2 per share which will grow at 5% forever. Assume a 40% tax rate.

You are required to:

i. Compute a weighted average cost of capital based on the existing capital structure.

ii. Compute the new weighted average cost of capital if the company raises an additional

Tk.40,00,000 debt by issuing 15% subordinated bond. This would result in increasing the

expected dividend to Tk.3 per share with same growth rate.

4

4

12

8.

Write short notes on any 05 (Five) of the following:

a) Hire Purchase under Shirkatul Melk b) Capital Rationing

c) Stable Dividend Policy d) Working Capital Financing Methods

e) Diluted Earnings Per Share f) Stock Splits

g) Preferred Stock

The End

5x4=20


PART-II

205: E-Banking

Time: 3 hours

Full Marks: 100

Pass Marks: 45



1. a)

b)

c)

What do you mean by Data Encryption? Write down the purpose of data encryption.

What is Operating System? Name some of OS used in banking operations.

Why BIOS (Basic Input Output System) is used in computer system?

7

6

7

2. a)

b)

c)

Write short notes on the following

i) EMV Card ii) Ransomware iii) Spyware iv) Hacking v) Pirated Software

How does social engineering act as a threat of information security?

Describe the desktop policy of your bank.

5x2=10

5

5

3. a)

b)

c)

What is storage device of a computer? What are common types of storage device?

Mention the services available in iBanking.

Define BCP? How does a bank implement BCP?

6

6

8

4. a)

b)

c)

What is Payment Gateway? What are the roles of payment gateway in e-commerce?

What are the main components of a PC? Write the differences between Server &

PC.

How does CBS security maintain user privileges through Central Authentication

Security Module (CASM)?

6

6

8

5. a)

b)

c)

Define the ADC system of a bank. What are the major products & services of ADC

system?

What are the differences between Multitasking and Multiprocessing?

Write a short note on Digital Wallet Services.

10

4

6

6. a)

b)

c)

“Future banking is transforming towards Virtual Banking” justify it.

What is NPSB? Who are the members of NPSB? How is NPSB system working?

Describe interbank settlement and dispute resolution process in NPSB.

How data backup is performed through DC & DRS?

8

8

4

7.

Write Standard Operating Procedure (SOP) for the following any 5 (five)

i) SWIFT Operation ii) Agent Banking iii) Sub-Branch iv) eKYC

v) ISS (Integrated Supervision System) vi) Green Pin

5x4=20

8. a)

b)

c)

What is LAN & WAN? What are the differences between LAN & WAN? Where

Firewall and Router are used? Write purpose of Firewall and Router.

What is the meaning of financial inclusion? What are the tools of financial

inclusion?

How Agent Banking and Mobile Banking are playing vital roles for financial

inclusion to reduce poverty?

The End

10

4

6


PART-II

206: Micro Finance & Rural Banking: Conventional & Islamic

Time: 3 hours

Full Marks: 100

Pass Marks: 45



1. a)

b)

c)

d)

Define Microfinance and Microcredit.

What are the differences between Microfinance and Microcredit?

What are the advantages of Microfinance? How does it work?

RDS- an integrated approach to Microfinance- Explain.

4

4

4

8

2. a)

b)

State the differences between Conventional and Islamic Microfinance.

How does Islamic Microfinance help to achieve Maqasid-al-Shari’ah?

10

10

3. a)

b)

Distinguish between “Individual Lending and Group Lending”.

What are the risks involved in Individual Lending and Group Lending?

10

10

4. a)

b)

What is Risk Management? Discuss the risks involved in microcredit operation.

Discuss the ways to mitigate investment risk under the purview of Islamic

Microfinance.

10

10

5. a)

b)

Discuss the historical development of Microcredit and Microfinance in Bangladesh.

Analyze the impact of ‘Microcredit Regulatory Authority Act 2006’ on microfinance

industry in the country.

10

10

6. Discuss in brief the role of following:

i) RAKUB ii) BRAC iii) RDS iv) BKB

20

7. a)

b)

c)

Define Supervision. Discuss the purpose and importance of microcredit supervision.

What are the essential characteristics of successful supervision?

Discuss the differences between traditional security based microcredit and

supervised microcredit.

6

4

10

8. Write short notes on any 5 (five) of the following:

i) SME Finance;

ii) Sustainable Development;

iii) Obstacles of Islamic Microfinance;

iv) Empowerment of women through microfinance;

v) Hardcore Poor;

vi) Target Market;

vii) Collateral Substitutes;

viii) Overlapping of Microfinance.

The End

5x4=20