PMAS – Arid Agriculture University, RawalpindiUniversity Institute of Management Sciences

Course OutlineBBA-VI (A & B)

Course Title : Money and bankingCourse Code : MGT 526Credit Hours : 3Course Instructor: Bushra Nasreen, email: bushra_Uaar@hotmail.com

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Introduction:This course provides students with an overview of the current structure of the Pakistani banking system and its recent evolution. The main objective is to understand the role of money, banking and interest rates in your business life and in your personal life.

Attendance: Your presence in class is MANDATORY. I expect you to respect this course and my time by making a concerted effort to come to class punctually every day. I am most unsympathetic to those who miss class regularly.

Homework: Every Wednesday, you will hand in a short (1 page) report describing the week's relevant economic news (statistical releases, corporate news) and their impact on the stock, bond, and foreign exchange markets. More traditional homework assignments may also be assigned.

Module Content:Week Contents

1 Introduction To Banking, Evolution of banking, early growth, Modern Banking, Types of Banks etc

2 Organization of Money Market in Pakistan, Money market structure, State Bank of Pakistan, Commercial banks, Exchange Banks, Saving banks, Discount houses, micro Finance Institutions, Central bank and its functions, SBP as central bank, Prudential Regulations. Monetary policy, open market operation, discount rate and bank rate policy

3 Commercial banks: Functions, Nationalization of banks, Reorganization of nationalized banks, Pakistan Banking Council and its dissolution, Effects of nationalization, Exchange banks

4 The Banker’s Funds: bank’s capital, reserve funds, liquid assets, deposits, the life blood of a bank, Nature and types of deposits, Credit creation and its process, Remittances, Different modes of remittances

5 Banker - Customer relationship: banker, functions of the banker, Customer and its qualification, Rights and duties of customer towards the banker, general relationship, other relationships, right to lien, right of set off. Banker’s duty of secrecy, termination of relationship

6 Accounts of Customer, General and special customers, Introduction and investigation, individual, joint, partnership and companies account. Problems in accounts, death of customer etc.

7 Cheques and Their Payment: Definition, types of cheque, The requisites of a cheque, parties to a cheque, Payment and dishonour etc. Endorsement, definition, classification, principles, forms and importance of Endorsement

8 Crossing and collection of cheques: Types of crossing and its advantages, Duties of paying bank, protection to a paying bank. Opening of crossed cheque, collection of crossed cheque, duties of a collecting banker

9 Mid Term Exam10 Other Negotiable Instruments: Quasi-negotiable instruments, Defective

title, Promissory Note. Bills of Exchange and parties. Types of bills, Presentation for acceptance, Payment of BOE, Holder and holder in due course, Dishonour of bills

11 Principles and Forms of Lending: Cash Finance, Overdraft, Loans. Bridge and participation loans, purchase and discounting of bills

12 Securities for Advances: Classification of securities, Banker’s lien, Charge, contract of pledge, hypothecation, guarantee, indemnity. Advances against immovable property, mortgage, its kinds, its formation, Rights and liabilities of mortgagor and mortgage.

13 Commercial Letter of Credit: Definition, classes of credit, Documentary L/C, Revocable and irrevocable L/C, revolving credit, red and green clause credit, advantages of L/C, Rights and liabilities of opening banker and negotiating banker

14 Nature and Functions of Money, Barter system, stages in development of money, Money and its functions, role of money, Qualities of good money material, Forms of money, coinage of money, coinage in Pakistan, paper money and its merits and demerits, Monetary standards

15 The value of money: quantity theory of money, Fischer Transaction approach, Cash balance approach to quantity theory of money, modern theory of value of money,

16 Inflation Deflation and stagflation: causes of inflation and remedies, kinds of inflation, inflation in Pakistan. Devaluation of Money. International Monetary System: IMF, world bank, ADB, MNC’s etc.

Method of Assessment:The course objective will be achieved through class lectures, class discussions etc. The special emphasis will be on active class participation. Evaluation Criteria is:

Mid Term 30% 18Terminal Examination 50% 30Quizzes, Assignments, Case Study and Project Report 20% 12Total 100% 60

Essential Reading:

Text Book 1:Practice and Law of banking in Pakistan, 7th Revised edition, by Dr. Israr H. Siddiqi, Royal Book CompanyMoney Banking and Finance by Professor M. Saeed Nasir, updated Edition, 2009-10Money Banking and Finance by Riaz Ahmed Mian, latest editionMoney Banking and Finance by Khadam Hussain, Latest EditionModern Money and Banking, 3rd Edition, Miller and Van Hoose

That the love of money is the root of all evil can, conceivably, be disputed."

- J. K. Galbraith