Course Number : BA (BS) – 312
Credit Hours: 03


The course aims at providing basic understanding about the principles and practices in money and banking field. The course reviews definitions, functions and theories of money classical, Keynsian and modern viewpoints, central and commercial banking, examination of monetary policy. The course also discusses the principles of international finance and financial institutions.

Course Contents

    1. Evaluation, Function and Forms of Money

      1.1. Need for Money. Origin of Money. Commodity Money and Commodity Standards, Rise of Fiat Money. Seigniorage
      1.2. Functions of Money. Types of Money (M1, M2, M3 and L)
      1.3. Approaches to Defining and Measuring Money
    2. Techniques of Money Management and Role of Central Bank

      2.1. Definition of Money Policy
      2.2. Monetary Policy Operation Procedures
      2.3. Rules versus Discretion in Monetary Policy
      2.4. Role of State Bank of Pakistan as the Coordinator of Monetary Policy of the Country
    3. Introduction to International Monetary System

      3.1. International Accounting Identities: Balance of Payment. The Current Account. The Capital Account. Settlement of Balances
      3.2. Fixed Exchange Rate System: Gold Standard. Brettan Woods System
      3.3. Floating Exchange Rate System
    4. Monetary and Fiscal Policy Coordination

      4.1. Basic International Policy Relationship
      4.2. Regulation of Banking and Financial Markets
      4.3. Basle Agreements I and II
    5. Financial Markets, Financial Institutions and Instruments

      5.1. Capital Markets: Debt and Equity Markets
      5.2. Money Markets: Financial Service Markets
      5.3. Financial Institution: Depository Institution, Commercial Bank, Savings and Loans Associations, Mutual Saving’s Bank and Credit Unions
      5.4. Non-Depository Institutions: Mutual Funds, Insurance Companies and Pension Funds etc.
    6. Financial Instruments

      6.1. Certificate of Deposits
      6.2. Treasury Bills
      6.3. Purchase Agreements
      6.4. Banker’s Acceptances
      6.5. Federal Funds
      6.6. Corporate Stocks
      6.7. Corporate Bonds
      6.8. Mortgages
      6.9. Government Securities
      6.10. Consumer and Commercial Loans
      6.11. Municipal Bonds
    7. Banking

      7.1. Origin
      7.2. Evolution
      7.3. Types and Functions
      7.4. Sources of Funds in Relation to Legal, Economic and Social Factors Involved in Pakistan
    8. Prudential Regulations for Banks, DFIs etc.
    9. Funds Management

      9.1. Investment and Lending
      9.2. Statutory and Liquidity Requirements in Pakistan
    10. Banker Customer Relationship
      10.1. Primary and Others
    11. Customer’s Accounts

      11.1. Individual
      11.2. Institutional and Corporate
      11.3. Requirement of KYC
    12. Negotiable and Other Instruments

      12.1. Promissory Notes
      12.2. Bill of Exchange
      12.3. Cheque
      12.4. Drafts
      12.5. Receipt

      12.6. Bonds
      12.7. Coupons
      12.8. Dividend Warrants
      12.9. Letter of Credit
      12.10. Travellers Cheques
      12.11. Credit and Debit Cards
    13. Payment of Cheques and Other Instruments by Banks
    14. Collection of Instruments by Banks

      14.1. Crossing and Endorsements
      14.2. Principles of Bank Lending
      14.3. Control of Credit in Pakistan
      14.4. Security of Bank Advances
    15. Interest Free Banking

      15.1. Relation and Methods

Recommended Books

  1. Luckett D. G., Money and Banking, McGraw Hill, New York, (3rd Edition), 1998.
  2. Miller Roger LeRoy and VanHoose’ David D., Modern Money and Banking, McGraw Hill Book Co., Singapore, (3rd Edition), 2000.
  3. Siddiqi Asrar H., Practice and Law of Banking in Pakistan, Royal Book Company, Karachi, (7th Edition), 2004.