The Bank Financial Management (BFM) is one of the compulsory papers in the CAIIB exam. It tests your understanding of financial management, risk management, international banking, and more. The CAIIB BFM Syllabus is divided into four comprehensive modules, covering critical aspects of banking and financial management. Understanding the syllabus thoroughly will help candidates prepare effectively for the exam.
CAIIB BFM Syllabus 2025
To succeed in the BFM Paper, it is important to follow a structured approach. Start by thoroughly understanding the CAIIB BFM syllabus and exam pattern. Break the BFM syllabus into manageable sections and focus on key areas like risk assessment and treasury management. Regular practice of CAIIB mock tests and solving previous years’ question papers can help improve time management and accuracy. With a mix of effective preparation strategies and consistent effort, candidates can excel in the CAIIB BFM paper and advance their banking careers.
CAIIB BFM Exam Pattern 2025
Candidates appearing for the CAIIB BFM exam should note that the exam consists of Multiple Choice Questions (MCQs), including case studies and problem-solving questions. There is no negative marking in the exam. The exam pattern is as follows:
| Subject | No. of Questions | Total Marks | Duration |
|---|---|---|---|
| Bank Financial Management | 100 | 100 | 2 Hours |
CAIIB BFM Detailed Syllabus
Bank Financial Management (BFM) Paper is one of the compulsory papers of the CAIIB and consists of four modules. Candidates must be aware of the detailed syllabus to have a better understanding of the examination.
| Module | Topics Covered |
| Module A | International Banking |
| Module B | Risk Management |
| Module C | Treasury Management |
| Module D | Balance Sheet Management |
CAIIB BFM Module Wise Syllabus
The CAIIB BFM Syllabus is structured into four key modules that provide a comprehensive understanding of financial management in banking. Below is the detailed syllabus:
Module A – International Banking
This module is essential for understanding the complexities of global banking operations.
| Topic | Details |
|---|---|
| Exchange Rates and Forex Business | – Foreign Exchange: Definition and Markets – Factors Determining Exchange Rates – Exchange Rate Mechanism – Forex Dealing Room Operations – Derivative Products – RBI / FEDAI Guidelines – Foreign Exchange Arithmetic: Concepts and Examples |
| Liberalized Remittance Scheme (LRS) and Other Remittance Facilities for Residents | – Capital Account and Current Account Transactions – Key FEMA Sections Related to LRS – Permissible / Non-permissible Remittances under LRS – Operational Guidelines – Remittances for Current Account Transactions – Tax Collected at Source (TCS) – LRS vs Capital Account Transactions – Reporting Requirements under LRS |
| Correspondent Banking and NRI Accounts | – Correspondent Banking: Accounts and Services – Nostro, Vostro, and Loro Accounts – Electronic Transmission / Payment Gateways: SWIFT, CHIPS, CHAPS, RTGS, etc. – NRI Banking: Rupee and Foreign Currency Accounts – Facilities to NRIs – Advances to Non-Residents against NRO/NRE Deposits – Housing Loans to NRIs |
| Documentary Letters of Credit (LC) | – Definition and Types of LC – Operations of LC – UCP 600 and Important Articles – Liabilities, Rights, and Responsibilities of Parties – Documents under LC: Scrutiny, Crystallization, Follow-up – Risks in LC Transactions – Standby LC (Similar to Guarantees) – URR–725: Bank-to-Bank Reimbursements – ISBP 745: International Standard Banking Practice – Incoterms – Case Studies |
| Facilities for Exporters and Importers | – Exchange and Trade Control Guidelines – Export Finance, Gold Card Scheme – Export Data Processing and Monitoring System (EDPMS) – Factoring and Forfaiting – Import Finance, Import Data Processing and Monitoring System (IDPMS) – Trade Credit: Supplier’s and Buyer’s Credit – Case Study on Export Finance |
| External Commercial Borrowings and Foreign Investments in India | – ECB: Concepts, Operational Guidelines, Reporting, Conversion to Equity – Foreign Investments: Key Concepts, Eligible Investors, Investee Entities, Investment Instruments, Prohibited Sectors, Operational Guidelines – Snapshot of Non-Debt Instruments (NDI) Rules – Documentation for Obtaining and Refunding Foreign Investments – Risks in Foreign Trade: Role of ECGC – Country Risk, Export Credit Insurance, ECGC Policies, Products for Banks, Claims |
| Role of EXIM Bank, RBI, Exchange Control in India – FEMA, FEDAI, and Others | – EXIM Bank: Role, Functions, Facilities – RBI: Role and Exchange Control Regulations – FEMA 1999 Overview – FEDAI and FEDAI Rules – Short Notes: ECB, ADR/GDRs, FCCB |
| International Financial Service Centres (IFSC), GIFT City | – Scope of IFSC in India – Opportunities at GIFT City – Guidelines for Setting up IFSC Banking Units (IBUs) – Role of IFSCA and Regulatory Framework – Permissible Activities at IBUs – Relaxations for FPIs at GIFT City |
| Technology in International Banking | – Introduction to Digitization in International Banking – Evolution and Benefits of Technology – Digital Platforms and FINTECH in International Banking – Delivery Channels under FINTECH – Sample Process of International Trade Using Blockchain – Challenges in FINTECH |
Module B – Risk Management
Module B focuses on identifying and managing risks, crucial for the stability of banking institutions.
| Topic | Details |
|---|---|
| Risk and Basic Risk Management Framework | – What is Risk? – Linkages among Risk, Capital, and Return – Why Risk Management? – Basic Risk Management Framework |
| Risks in Banking Business | – Risk Identification in Banking Business – The Banking Book – The Trading Book – Off-Balance Sheet Exposures – Definitions of Banking Risks |
| Risk Regulations in Banking Industry | – Regulation of Banking Industries: Necessities and Goals – Need for Risk-Based Regulation in a Changed World Environment – Basel I: Capital Accord – 1996 Amendment: Inclusion of Market Risk – Basel II Accord: Need and Goals – Basel II Accord Overview – Towards Basel III – Capital Charge for Credit Risk, Market Risk, Operational Risk – Credit Risk Mitigation – Pillar 2 – Supervisory Review Process – Pillar 3 – Market Discipline – Capital Conservation Buffer – Leverage Ratio – Countercyclical Capital Buffer – Systemically Important Financial Institutions (SIFIs) – Risk-Based Supervision (RBS) |
| Market Risk | – Concept of Market Risk – Market Risk in Banks – Market Risk Management Framework – Organisation Structure – Risk Identification – Risk Measurement – Risk Monitoring and Control – Risk Reporting – Managing Trading Liquidity – Risk Mitigation |
| Credit Risk | – Overview of Credit Risk – Credit Risk Management Framework – Organisation Structure – Risk Identification – Risk Measurement – Credit Risk Control and Monitoring – Policies and Guidelines at Transaction Level – Portfolio Level Control and Monitoring – Active Credit Portfolio Management – Loan Review Mechanism (LRM) – Credit Risk Mitigation – Securitisation – Credit Derivatives (CDs) |
| Operational Risk and Integrated Risk Management | – Overview of Operational Risk – Classification of Operational Risk – Operational Risk by Event Type – Definitions – Operational Risk Management Practices – Organisational Structure – Processes and Framework – Risk Monitoring and Control Practices – Operational Risk Qualification – Operational Risk Mitigation – Scenario Analysis – Integrated Risk Management: Necessity, Challenges, and Approach |
| Liquidity Risk Management | – Need and Importance of Liquidity Risk Management – Potential Liquidity Risk Drivers – Types of Liquidity Risk – Principles for Sound Liquidity Risk Management – Governance of Liquidity Risk – Liquidity Risk Management Policy, Strategies, and Practices – Management of Liquidity Risk – Ratios for Liquidity Risk Management – Stress Testing – Contingency Funding Plan – Overseas Operations of Indian Banks and Foreign Bank Branches in India – Broad Norms for Liquidity Management – Liquidity Across Currencies – Management Information System – Reporting to RBI – Internal Controls |
| Basel III Framework on Liquidity Standards | – Liquidity Coverage Ratio (LCR) – Liquidity Risk Monitoring Tools – Net Stable Funding Ratio (NSFR) |
Module C – Treasury Management
This module covers the operational aspects of treasury functions within banks.
| Topic | Details |
|---|---|
| Introduction to Treasury Management | – Concept of Treasury Management – Functions of Integrated Treasury – Process of Globalisation – Evolving Role of Treasury as a Profit Centre – Organisation of Treasury |
| Treasury Products | – Foreign Exchange Market Products – Money Market Products – Securities Market Products – Domestic and Global Market Products |
| International Equity and Debt Products | – Regulatory Environment – Global Depository Receipts (GDRs) – Indian Depository Receipts (IDRs) – External Commercial Borrowings (ECBs) – Trade Credits – Rupee-Denominated Bonds |
| Funding and Regulatory Aspects | – Reserve Assets: CRR and SLR – Liquidity Adjustment Facility (LAF) – Payment and Settlement Systems |
| Treasury Risk Management | – Supervision and Control of Treasury – Market Risk and Credit Risk – Risk Measures: Value at Risk (VaR) and Duration – Use of Derivatives in Risk Management |
| Derivative Products | – Derivatives and the Treasury – OTC and Exchange-Traded Products – Forwards, Options, Futures, and Swaps – Interest Rate and Currency Swaps – Developments in Indian Markets and RBI Guidelines on Risk Exposure |
| Treasury and Asset-Liability Management (ALM) | – Meaning of ALM – Liquidity Risk and Interest Rate Risk – Role of Treasury in ALM – Use of Derivatives in ALM – Credit Risks and Credit Derivatives – Transfer Pricing – Policy Environment |
Module D – Balance Sheet Management
This module focuses on managing a bank’s assets and liabilities for effective financial performance.
| Topic | Details |
|---|---|
| Components of Assets and Liabilities in Bank’s Balance Sheet and their Management | – Components of a Bank’s Balance Sheet – What is Asset-Liability Management (ALM)? – Significance of ALM – Purpose and Objectives of ALM – ALM as Coordinated Balance Sheet Management |
| Capital Adequacy – Basel Norms | – Scope of Application – Pillar 1: Minimum Capital Requirements – Pillar 2: Supervisory Review Process – Pillar 3: Market Discipline |
| Asset Classification and Provisioning Norms | – Asset Classification – Provisioning Norms |
| Liquidity Management | – Definition of Liquidity Management – Dimensions and Role of Liquidity Risk Management – Measuring and Managing Liquidity Risk |
| Interest Rate Risk Management | – Essentials of Interest Rate Risk – Sources and Effects of Interest Rate Risk – Measurement of Interest Rate Risk – Interest Rate Risk Measurement Techniques – Strategies for Controlling Interest Rate Risk – Controls and Supervision – Sound Practices – RBI Draft Guidelines on Interest Rate Risk in Banking Book |
| RAROC and Profit Planning | – Profit Planning – Risk Aggregation and Capital Allocation – Economic Capital and RAROC |
CAIIB BFM Syllabus – FAQs
The CAIIB BFM (Bank Financial Management) exam is a compulsory paper in the CAIIB certification, focusing on financial management, risk analysis, and treasury operations in banking..
The CAIIB BFM syllabus is divided into four modules: International Banking, Risk Management, Treasury Management, and Balance Sheet Management.
The exam consists of 100 MCQs, including case studies and problem-solving questions, with no negative marking. The duration of the exam is 2 hours.
The Risk Management module includes credit risk, market risk, operational risk, Basel norms, and risk mitigation strategies, etc
Focus on conceptual clarity, solve previous year papers, practice mock tests, and revise important financial concepts regularly.
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