Accounting for Banking

Concept of bank account; Accounting assumptions, principles and conventions;Evolution of banking industry, Development of banking industry in Nepal; Banks: Meaning, nature, objectives, importance and functions of banks; Types of Banks: Central Bank, Commercial Banks, Development Banks, Financial Institutions, Micro Finance Institutions and Co-operative Banks; Opportunities and Challenges of Nepalese Banking Sector; Legal provisions under Banking and Financial Institutions Act (BAFIA), 2063;Unified directives issued by Nepal Rastra Bank; Concept and importance of GAAP, Nepalese Accounting Standards (NAS), InternationalAccounting Standards (IAS), Nepal Financial Reporting Standard (NFRS) and International Financial Reporting Standard(IFRS), Relative aspects of NAS, IAS, NFRS and IFRS.

Account Opening, operations and closure of bank account; Concept and types of deposit:current, saving, time or fixed account, hybrid or flexi deposit, calls deposit account,margin account, foreign currency account, special foreign currency account; Process ofopening accounts; Inter bank borrowing from other banks and short term borrowing fromNRB; Substitutes for vouchers: pay in slip and its meaning; Cheques: meaning and typesof cheques; Electronic cheque clearing (ECC).

Guarantee: Concept, needs and types of guarantee: Bid bond, Performance bond ,Advance payment guarantee, Counter guarantee, Financial guarantee, Standby letter of credit, Bonded warehouse guarantee; Accounting treatment of guarantee issue (voucherand ledger); Margin deposit: concept, process and evaluation; Service charges and accounting treatment.

Letter of credit: concept, needs and types of LC; Parties involved in LC; Documents inLC; Trade finance; International Chambers of Commerce and Universal Custom andPractices (UCP) for documenting credit; NRB regulations for LC; Accounting treatment.

Remittance: concept, importance and types; Services rendered by remittance; Partiesinvolved in remittance; Demand draft, accounting for advice received and un-received demand draft; Account payee draft; Books of original entry for advice received and unreceived; Telegraphic transfer and mail transfer; Branch reconciliation.

Credit: Concepts, importance and types: Cash credit, Overdraft, Secured loan, Microcredit, and other loans: auto, home, credit card, education and social; Evaluation off easibility study; Industry risk analysis and Business risk analysis (using six C’s ofcredit); Accounting treatment of different types of credit; Loan processing charges,interest and commission and their accounting treatment; Collection and recovery of loans\method applied and accounting treatment; Credit risk management; Credit creation

Concept of treasury management; Dimensions of treasury management; Market riskmanagement; Liquidity management; Investment portfolio management; Foreignexchange risk management; Assets and liabilities management; Maintenance of agencyledger (NOSTRO and VOSTRO).

Banking software; Card operation; Tele banking; Mobile banking; Internet banking and ebanking; SWIFT (Society for Worldwide Interbank Financial Telecommunication);Branchless banking.

Concept and importance; Principles of capital measurement and capital standard.

Concept, importance and AML Act; Know your customers (KYC)

Bank reconciliation: concept, needs and preparation of BRS; Trail balance: concept, needs and preparation; Transaction list verification and operational procedures; Statement of profit and loss and other comprehensive income (Income statement); Statement of financial position/balance sheet; Statement of cash flow statement; Statement of changesin equity; Disclosures required for Financial Statement

Concepts and importance; Ratio Analysis: concept, importance and limitations; Types of ratios: Profitability ratios: Net interest income growth (NII growth), Operating profit growth; Shareholder ratios: Return on equity, Return on assets, Earning per share, Price earnings ratio, Market price per share; Liquidity ratios: Net liquid assets, Net liquidity ratios, Statutory liquidity ratio (SLR), Cash reserve ratio (CRR); Activity ratios: Cost offund, Base rate, Credit deposit ratio; Staff efficiency (per employee income, per employee business i.e. deposit plus loan); Gearing and Financial ratios: Total borrowing to shareholder fund, Total assets growth, Net worth growth; Cash Flow ratios: Interest coverage ratio, Debt coverage ratio; Assets Quality ratios: Non-performing loans to total loans, Loan loss reserves to gross loan; Earnings ratios: Net interest margin; Capital Adequacy ratios: Capital fund as a percentage of risk weighted assets.