Subject Code: ACS 202
Course Title: Accounting for Banking
Course No: ACS 202
Nature of Course: Theory & Practical
Full Marks: 100
Pass Marks: 50
Credit Hours: 3
Unit 1: Introduction (4 LHs)
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: CentralBank, Commercial Banks, Development Banks, Financial Institutions, Micro FinanceInstitutions and Co-operative Banks; Opportunities and Challenges of Nepalese BankingSector; 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), International Accounting Standards (IAS), NepalFinancial Reporting Standard (NFRS) and International Financial Reporting Standard(IFRS), Relative aspects of NAS, IAS, NFRS and IFRS.
Unit 2: Accounting for Deposit 3 LHs
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).
Unit 3: Accounting for Guarantee and Margin Deposit (3 LHs)
Guarantee: Concept, needs and types of guarantee: Bid bond, Performance bond,Advance payment guarantee, Counter guarantee, Financial guarantee, Standby letter ofcredit, Bonded warehouse guarantee; Accounting treatment of guarantee issue (voucherand ledger); Margin deposit: concept, process and evaluation; Service charges andaccounting treatment.
Unit 4: Letter of Credit (LC) (3 LHs)
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.
Unit 5: Accounting for Remittance (3 LHs)
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.
Unit 6: Accounting for Credit and Advances (3 LHs)
Credit: Concepts, importance and types: Cash credit, Overdraft, Secured loan, Microcredit, and other loans: auto, home, credit card, education and social; Evaluation offeasibilitystudy; 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 loansmethod applied and accounting treatment; Credit risk management; Credit creation.
Unit 7: Accounting for Treasury Management (3 LHs)
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).
Unit 8: Banking Technology Products (2 LHs)
Banking software; Card operation; Tele banking; Mobile banking; Internet banking and ebanking; SWIFT (Society for Worldwide Interbank Financial Telecommunication);Branchless banking.
Unit 9: Concept of BASEL Framework (2 LHs)
Concept and importance; Principles of capital measurement and capital standard.
Unit 10: Anti Money Laundering (AML) (2 LHs)
Concept, importance and AML Act; Know your customers (KYC).
Unit 11: Preparation of Financial Statements under NFRS 12 LHs
Bank reconciliation: concept, needs and preparation of BRS; Trail balance: concept,needs and preparation; Transaction list verification and operational procedures; Statementof profit and loss and other comprehensive income (Income statement); Statement offinancial position/balance sheet; Statement of cash flow statement; Statement of changes in equity; Disclosures required for Financial Statement.
Unit 12: Financial Statements Analysis 8 LHs
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, Priceearnings ratio, Market price per share; Liquidity ratios: Net liquid assets, Net liquidityratios, Statutory liquidity ratio (SLR), Cash reserve ratio (CRR); Activity ratios: Cost offund, Base rate, Credit deposit ratio; Staff efficiency (per employee income, peremployee business i.e. deposit plus loan); Gearing and Financial ratios: Total borrowingto shareholder fund, Total assets growth, Net worth growth; Cash Flow ratios: Interestcoverage ratio, Debt coverage ratio; Assets Quality ratios: Non-performing loans to totalloans, Loan loss reserves to gross loan; Earnings ratios: Net interest margin; CapitalAdequacy ratios: Capital fund as a percentage of risk weighted assets.
Accounting Manual of Banks
Bank and Financial Institutions Act, 2063
Circulars issued by NRB (Banks and Financial Institution Regulation department and Foreign
Exchange Management Department)
Indian Institute of Banking and Finance (2008). Accounting and Finance for Bankers. Macmillan
India Ltd.
International Chamber of Commerce and the UCPDC 600
Jain, S. P., & Narang, K. L., (2014). Advanced Accounting, Corporate Accounting. Kalyani Publishers, New Delhi
Negotiable Instrument Act, 2034
Nepal Rastra Bank Act, 2058
Unified Directives issued by NRB
Upadhyay, J. P. (2018). Accounting for Banking. Ashmita Publication.
