TyroCity: Banking Notes

IT and ICT in Banking

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

IT and ICT in Banking

ICT has become an indispensable factor in the modern life of every individual. The elements of information and communication technology related sources are perceived as essential parameters in day today operation of banking both in private and public nature while deal with customers and stakeholders. The applications of ICT are augmenting in every sphere of our action includes both consumption and services. In this aspect the banking service is an intangible element which requires an effective quality delivery process from the ends of both provider and taker. In order to enhance the quality of banking services both in private and public categories, the application of ICT becomes an imperative element. But today banking organization from both private and public background aims to offers better and enhanced services to the customer in the given sphere of competition. Due to the level of service extended by bank differs based on the customer and type of services with respect to availability of infrastructure. Even though the banks from private and public base aims to elevate sophisticated services towards the perception of customers and employees in order to identify the role of ICT towards effective services of banking sectors. The present survey has been conducted from 3 private and 4 public banks situated in Kanchipuram Town. The results have been evaluated using SPSS 18.0 and suggestions provided to improve the better applications of ICT resources.

Role of Information Technology (IT) in the Banking Sector

Banking environment has become highly competitive today. To be able to survive and grow in the changing market environment banks are going for the latest technologies, which is being perceived as an ‘enabling resource’ that can help in developing learner and more flexible structure that can respond quickly to the dynamics of a fast changing market scenario. It is also viewed as an instrument of cost reduction and effective communication with people and institutions associated with the banking business.

The Software Packages for Banking Applications in India had their beginnings in the middle of 80s, when the Banks started computerising the branches in a limited manner. The early 90s saw the plummeting hardware prices and advent of cheap and inexpensive but high powered PC’s and Services and banks went in for what was called Total Branch Automation (TBA) packages. The middle and late 90s witnessed the tornado of financial reforms, deregulation globalisation etc. coupled with rapid revolution in communication technologies and evolution of novel concept of convergence of communication technologies, like internet, mobile/cell phones etc. Technology has continuously played on important role in the working of banking institutions and the services provided by them. Safekeeping of public money, transfer of money, issuing drafts, exploring investment opportunities and lending drafts, exploring investment being provided.

Information Technology enables sophisticated product development, better market infrastructure, implementation of reliable techniques for control of risks and helps the financial intermediaries to reach geographically distant and diversified markets. Internet has significantly influenced delivery channels of the banks. Internet has emerged as an important medium for delivery of banking products and services.

The customers can view the accounts; get account statements, transfer funds and purchase drafts by just punching on few keys. The smart card’s i.e., cards with micro processor chip have added new dimension to the scenario. An introduction of ‘Cyber Cash’ the exchange of cash takes place entirely through ‘Cyber-books’. Collection of Electricity bills and telephone bills has become easy. The upgradeability and flexibility of internet technology after unprecedented opportunities for the banks to reach out to its customers. No doubt banking services have undergone drastic changes and so also the expectation of customers from the banks has increased greater.

IT is increasingly moving from a back office function to a prime assistant in increasing the value of a bank over time. IT does so by maximizing banks of pro-active measures such as strengthening and standardising banks infrastructure in respect of security, communication and networking, achieving inter branch connectivity, moving towards Real Time gross settlement (RTGS) environment the forecasting of liquidity by building real time databases, use of Magnetic Ink Character Recognition and Imaging technology for cheque clearing to name a few. Indian banks are going for the retail banking in a big way

The key driver to charge has largely been the increasing sophistication in technology and the growing popularity of the Internet. The shift from traditional banking to e-banking is changing customer’s expectations.

E-Banking:

E-banking made its debut in UK and USA 1920s. It becomes prominently popular during 1960, through electronic funds transfer and credit cards. The concept of web-based baking came into existence in Eutope and USA in the beginning of 1980.

In India e-banking is of recent origin. The traditional model for growth has been through branch banking. Only in the early 1990s has there been a start in the non-branch banking services. The new pribate sector banks and the foreign banks are handicapped by the lack of a strong branch network in comparison with the public sector banks. In the absence of such networks, the market place has been the emergence of a lot of innovative services by these players through direct distribution strategies of non-branch delivery. All these banks are using home banking as a key “pull’ factor to remove customers away from the well entered public sector banks.

Many banks have modernized their services with the facilities of computer and electronic equipments. The electronics revolution has made it possible to provide ease and flexibility in banking operations to the benefit of the customer. The e-banking has made the customer say good-bye to huge account registers and large paper bank accounts. The e-banks, which may call as easy bank offers the following services to its customers:

Credit Cards/Debit Cards
ATM
E-Cheques
EFT (Electronic Funds Transfer)
DeMAT Accounts
Mobile Banking
Telephone Banking
Internet Banking
EDI (Electronic Data Interchange)

Benefits of E-banking:

To the Customer:

Anywhere Banking no matter wherever the customer is in the world. Balance enquiry, request for services, issuing instructions etc., from anywhere in the world is possible.
Anytime Banking – Managing funds in real time and most importantly, 24 hours a day, 7 days a week.
Convenience acts as a tremendous psychological benefit all the time.
Brings down “Cost of Banking” to the customer over a period a period of time.
Cash withdrawal from any branch / ATM
On-line purchase of goods and services including online payment for the same.

To the Bank:

Innovative, scheme, addresses competition and present the bank as technology driven in the banking sector market
Reduces customer visits to the branch and thereby human intervention
Inter-branch reconciliation is immediate thereby reducing chances of fraud and misappropriation
On-line banking is an effective medium of promotion of various schemes of the bank, a marketing tool indeed.
Integrated customer data paves way for individualized and customized services.

Impact of IT on the Service Quality:

The most visible impact of technology is reflected in the way the banks respond strategically for making its effective use for efficient service delivery. This impact on service quality can be summed up as below:

With automation, service no longer remains a marketing edge with the large banks only. Small and relatively new banks with limited network of branches become better placed to compete with the established banks, by integrating IT in their operations.
The technology has commoditising some of the financial services. Therefore the banks cannot take a lifetime relationship with the customers as granted and they have to work continuously to foster this relationship and retain customer loyalty.
The technology on one hand serves as a powerful tool for customer servicing, on the other hand, it itself results in depersonalising of the banking services. This has an adverse effect on relationship banking. A decade of computerization can probably never substitute a simple or a warm handshake.
In order to reduce service delivery cost, banks need to automate routine customer inquiries through self-service channels. To do this they need to invest in call centers, kiosks, ATM’s and Internet Banking today require IT infrastructure integrated with their business strategy to be customer centric.

Impact of IT on Banking System:

The banking system is slowly shifting from the Traditional Banking towards relationship banking. Traditionally the relationship between the bank and its customers has been on a one-to-one level via the branch network. This was put into operation with clearing and decision making responsibilities concentrated at the individual branch level. The head office had responsibility for the overall clearing network, the size of the branch network and the training of staff in the branch network. The bank monitored the organisation’s performance and set the decision making parameters, but the information available to both branch staff and their customers was limited to one geographical location.

Traditional Banking Sector

The modern bank cannot rely on its branch network alone. Customers are now demanding new, more convenient, delivery systems, and services such as Internet banking have a dual role to the customer. They provide traditional banking services, but additionally offer much greater access to information on their account status and on the bank’s many other services. To do this banks have to create account information layers, which can be accessed both by the bank staff as well as by th customers themselves.

The use of interactive electronic links via the Internet could go a ling way in providing the customers with greater level of information about both their own financial situation and about the services offered by the bank.

The New Relationship Oriented Bank

Impact of IT on Privacy and Confidentiality of Data:

Data being stored in the computers, is now being displayed when required on through internet banking mobile banking, ATM’s etc. all this has given rise to the issues of privacy and confidentially of data are:

The data processing capabilities of the computer, particularly the rapid throughput, integration, and retrieval capabilities, give rise to doubts in the minds of individuals as to whether the privacy of the individuals is being eroded.
So long as the individual data items are available only to those directly concerned, everything seems to be in proper place, but the incidence of data being cross referenced to create detailed individual dossiers gives rise to privacy problems.
Customers feel threatened about the inadequacy of privacy being maintained by the banks with regard to their transactions and link at computerized systems with suspicion.

Aside from any constitutional aspect, many nations deem privacy to be a subject of human right and consider it to be the responsibility of those who concerned with computer data processing for ensuring that the computer use does not revolve to the stage where different data about people can be collected, integrated and retrieved quickly. Another important responsibility is to ensure the data is used only for the purpose intended.

THE IMPACT OF INFORMATION AND COMMUNICATIONS TECHNOLOGY IN BANKING SECTOR INTRODUCTION There are so many definitions of a bank given by various authorities.But,summarizing all the definitions,a bank is simply a financial institution that accepts deposits from surplus economic units of the society and advances it to deficit units through the process of financial intermediation.Banks are the institutions that assist in managing financial system of a country.The financial systems are the totality of financial arrangement,agents,institutions etc that interact with each other and the rest of the world to develop,foster and enhance economic growth and development of a country.A robust financial sytem is very vital to the health of any economy.(Ekezie,1997).So the role banking institutions play cannot be over emphasized.And that is why any thing that affects the institution has both local and international consequences.The effective regulation of this institution helps the government to manage the monetary,political,and fiscal policies of the nation. There are divergents views on the impact of Information,Communication and Technology (ICT)in the banking sector as we have seen in our earlier discussions.Some of my colleaques agreed with me that ICT have impacted greatly the banking sector,while others disagree on the grounds that ICT have created some distortions by replacing human capital with machine capital so to say(example in comments made by Anthony). Some believe that the advantages far out weigh the disadvantages(example in comments made by Segun).Much as it has put a lot of people out of job,at the same time it has contributed significantly to creation of jobs.One can easily see examples among the likes,of VODACOM,MTN,AIRTEL,ETISALAT,IBM,FACEBOOK,MICROSOFT,HP,APPLE,SAMSU

NG,etc. Again many agreed that other employment opportunities abound in other sectors like agriculture,manufact uring,construction,etc,can be exploited by those affected(example in comments made by Loretta).The botton line being that one should equip himself or herself with others skills and knowledge as adaptive measures. Some believe that ICT is a welcome development in the banking industry or sector and there is no going back.That was why Paul O’Neil Chairman and CEO of Alcoa once said that “I don’t see information technology as a stand alone system.I see it a great facilitator.”(Bill,1999) LITERATURE REVIEW The arguments or controversies whether the ICT have made impact in the banking sector or not is still on going.While some agree,some others disagree each school of thoughts have their own points to back up their claims.Bill Gates in his book ‘Businees @ the speed of thought ‘likened the way businesses are carried out in this generation like digital nervous system.At the click of a botton,the response rate is unimaginable.(Bill,1999).In the banking sector,the speed of revolution in bank processes via ICT is such that people are wondering whether robots will not take over the banking operations soonest. A lot of research is still going on and the kind of competition taking place in telecommunications sector is amazing.A new invention quickly become obsolete in just a matter of two(2) to three(3) years as a result of fast development.Many banks are constantly upgrading their software.A case in point is First Bank Plc which recently upgraded their software from finnacle 7 to finnacle 10.This development disrupted the normal banking operation for 3 days.About four(4)years ago finnacle 7 was taken to be a robust software capable of supporting any large data base.Other banks are equally upgrading their various softwares every now and then.Nigeria like many countries have been making effort through many policies and strategies to accelerate the pace of economic and infrastructural development.To achieve this,a number of factors are involved including entrepreneurship,good corporate governance,competent management systems, modern techniques and application of information and communications technology(ICT).(Ekezie,1997). DISCUSSION The banking industry or sector provides financial services to individuals,organizations,institutions etc and have been totally revolutionized by the impact of Information and Communications Technology(ICT) in virtually all areas of its operations.Many years ago a lot of tasks were carried out manually.These include,preparation of cashbooks,journals,general ledgers,final accounts and reports.These however accounted to greater extent the long delays in providing financial services to customers,long queues experienced in banking halls,long turnaround time in meeting customers requests like cheque books requisition, raising drafts, processing of loan requests,withdrawal/deposit of cash,trade payments etc But today,the story have changed significantly due to the impact of Information and Communication Technology.Unlike before where you have many paying and receiving tellers in the banking hall, you have fewer tellers nowadays and many Automated Teller Machines(ATM) in many strategic locations both within and outside bank premises.These days many banks even have e-branches and ATM galleries with highly reduced human activities.Loan processing have equally improved.Approvals can be obtained from various approving authorities via computer system. The clearing system of bank instruments like,cheques,managers cheque,bank drafts, etc have been reduced from four(4) working day to two(2) with chances of further improvement.In security area, electronic revolving doors have practically replaced the manually operated types.Surveillance cameras of various types are in vogue.Computerized system of monitoring custom duties,excise duties,import duty,movement and payment of goods,taxes is now the order of the day.Today in Nigeria financial inclusion strategy appears to be gaining ground.These involves using electronic means including handsets to facilitate payment of goods and services especially in areas that were not exposed to bank services.This strategy assists in mobilizing money that was not in the banking system.Thus improving the workability of monetary policy of the government.The various banking software being used in the banking system have further improved the processes of generating reports ,accounting,internal controls,human resource management,corporate governance and other processes in the system.The notable softwares include finnacle,globus,phoenix,bankmaster,etc.Internet banking services have greatly contributed in revolutionizing the banking sector.The internet creates a new universal space for information sharing,collaboration,and commerce.(Bill,1999).Today through the platform(internet) you can easily pay your utility bills,recharge your cards,transfer funds to various accounts,make payments with your electronic cards in commercial websites and you can even open accounts without necessarily going to the banking hall (GTB).Also,you can request for cheque books and stop your cheques through the internet and using your internet enabled handsets a good number of banking applications can be done.The list is endless so to say and more innovations are still on their way. However,the impact of information and communications technology have not been without its challenges.So many people have lost their jobs because of the replacement of some tasks and services by machines and computer systems.The unemployment situation have worsened such that,the percentage of unemployed youths have risen to worrisome level.Some banks have reduced the number of their branches as a result of improvement in technology.Banks like GTbank Plc and Zenithbank Plc have some branches with greater part of their operations carried out by machines and computer system.The cost of deploying the technology have impacted negatively to the profitability figures of many banks.As at today some banks are still behind others in competition because of associated cost of deploying some of the machines,computer systems and other electronic channels.The structure of banking halls are now different from what we used to know before.The computer systems,machines and other tools used are now more effectively, efficiently and strategically deployed to enhance banking operations. Many changes are still very much on their way and the impact will continue. SUMMARY Summarising the discussion above,one can see that ICT have totally revolutionized the banking industry or sector and thereby changing the manner business is conducted nowadays.There is virtually no unit that does not have ICT innovations.And the situation will continue many years to come.The effect or impact have the positive side of it as well as the negative side as we can deduced from the discussion.Whichever school of thought you belong,it is obvious that there is a cause and effect situation.No doubt,the arguments,discussions,debates etc will still continue because researches,experiments etc are still on and the results will in one way or the order affect the sector positively or negatively.The solution to its negative impact still remain in my own mind in development of oneself in other skill of human endeavour by way of seminars, training, workshops,formal and non formal education,specialized training programs,conferences etc such that you can easily adapt to changes when the need arise. CONCLUSION In conclusion, the impact of Information and Communications Technology in banking sector is enormous and has global impact.It has equally affected leading organizations all over the world.The effect is not only in the banking sector because virtually all sectors of human endeavour have experienced the revolution.Again,the speed of change is fast and in many years to come the impact will continue to cut across all areas of human endeavour going by the Research and Development(R&D) taking place all over the world presently.Change is a constant phenomenon and banking sector is not exempted.As such one needs to prepare himself or herself to such changes whenever the situation calls for it.

Information System

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

Introduction

An Information System is a man made system that facilitates an organization’s operational functions and supports management decision making by providing information that managers can use to plan and control the activities of the firm.

Components of Information System

Management Information System

Functional Areas

Kinds of Information System

Operational Support

Some Questions

What is Information System? Explain with its components.
What is the use of IS in Bank?
Define the term MIS. What are the different types of MIS used in banking system to automate the banking activities?

High Power Money

Banking Notes — Sun, 08 Apr 2012 05:41:42 +0000

The total amount of currency held by the public, as well as cash in the vaults of financial institutions, and bank deposits at the Federal Reserve. The Federal Reserve Bank maintains close Control over the amount of high powered money that can influence its monetary policy decisions. also called the monetary base.

In simple terms High Powered Money (HPM) is the net or total liability of the monetary authority of any nation……in Nepal it is the liability of NRB.

It is simply the sum of all currency in circulation with the people of the country, cash kept in the commercial bank vaults along with the deposits of govt. of the country and commercial banks. The term liability basically means that when people/govt/commercial banks produce the currency/claims….the NRB has to pay value equal to currency/claim.

The NRB uses this H.P.M. for regulation of money supply in the economy. By controlling the money supply NRB regulates (i.e tries to regulate) the inflation in eco.

NRB uses the H.P.M for the process of money creation. Money creation will increase the supply of money in eco.

When NRB needs to pump extra money in eco. it injects a certain amount of high powered money (Say H) into the economy (by the purchase of govt bonds/assets etc).

NRB may purchase government bond worth 500 million. Then, total money supply will not only increase by 500 million but it goes on multiplying.

This money injected into the economy through purchase of government bonds and so on will increase the total money supply. But the actual amount increase will not be determined

This money injected into the economy through purchase of government bonds and so on will increase the total money supply.
But the actual amount increase will not be determined

NRB may purchase government bond worth 500 million. Then, total money supply will not only increase by 500 million but it goes on multiplying

This increased addition of money supply (over the injected value of H) is due to the factor called Money Multiplier!

Mathematical relationship between the monetary base and money supply of an economy. It explains the increase in the amount of cash in circulation generated by the banks’ ability to lend money out of their depositors’ funds. When a bank makes a loan, it ‘creates’ money because the loan becomes a new deposit from which the borrower can withdraw cash to spend. This money-creating power is based on the fractional reserve system under which banks are required to keep at hand only a portion (between 10 to 15 percent, typically 12 percent) of the depositors’ funds. The rest may be converted into loans, thereby increasing the available cash by a factor that is a multiple of the initial deposit.

Monetary multiplier means the influence a central bank has over the money supply by altering the required banking reserve rate.

Compiled and collected by
Krishna Prasad Aryal
Assistant Branch Manager
Rastriya Banijya Bank
Branch Office Parasi

Hardware

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

Hardware
It is Physical Component of a System.

Main Computer Components

Hardware Components

We can categorize hardware components into three broad categories:
Input devices
CPU, the Central Processing Unit and
Output devices
Storage devices or Secondary Memory [For Backup]

Types of Storage devices
i) Primary Storage

Read-only Memory (ROM)
Random Access Memory (RAM)

ii) Secondary Storage

Punching Device
Magnetic Tape
Floppy Disk
Optical Disk
Hard Drive
Flash Disk

RAM and ROM

Main Memory
The Main memory of a computer is used to store programs and data. The processor cannot store the whole program and needs its main memory to store the parts of the program.

Types of Main Memory

Random Access Memory
The program is stored Temporarily while the computer is on. The contents of RAM is lost when the computer is switched off.

Read Only Memory

The data and programs are stored Permanently.

Secondary Memory/External Memory
Floppy Disk, Hard disk, CD ROM, DVD, Zip Disk, Jaz Drive, WORM, magnetic tapes etc are secondary memories used to store data. These memories are also called backup memory because these memories are used to store data for future application. Nowadays, operating system, and other software, business data and information are stored in CD ROM.

Some Questions

What do you mean by hardware? What types of devices are used in bank to keep the record of customer?
Differentiate between primary memory and secondary memory.
What is the use of secondary memory in bank?

वित्त नीति

Banking Notes — Sun, 08 Apr 2012 05:41:42 +0000

वित्तीय नीति भनेको पूर्व निर्धारित उद्देश्यहरु हासिल गर्न प्रयोग गरिने राजश्व, सार्वजनिक व्यय तथा सार्वजनिक ऋणसंग सम्बन्धित सरकारी नीति हो । विकासशील देशहरुमा वान्छनीय स्तरको रोजगारी, उच्च आर्थिक वृद्धिदर, आर्थिक स्थिरता, आय र धन सम्पत्तीको समानता जस्ता उद्देश्य प्राप्ति र विकशित देशहरुमा आर्थिक स्थिरताको मुख्य उद्देश्य राखी योजनाबद्ध ढंगले तर्जुमा र कार्यान्वयन गरिने वित्तीय क्रियाकलापहरु जस्तैः– (करारोपण, सार्वजनिक व्यय र सार्वजनिक ऋण) लाई वित्तीय नीति भनिन्छ । वित्तीय नीति अर्थतन्त्रको उत्पादन तथा रोजगारमा सरकारको आय तथा व्ययले पार्ने कुल प्रभावसंग सम्बन्धित हुन्छ ।

वित्त नीतिका उद्देश्यः

आर्थिक वृद्धि
आर्थिक स्थिरता
सामाजिक न्याय वा समानता
पूँजी निर्माण
साधन परिचालन
रोजगारीको अवसर वृद्धि
मुल्य स्थिरता
प्रतिकुल भुक्तानी सन्तुलन सच्याउन ।

सरकारी वित्त नीतिले सरकारको आय तथा व्यय निश्चित सिद्धान्त, नीति र प्रक्रियाको आधारमा हुनुपर्दछ भन्ने मान्यता राख्दछ । यसले देश भरीका साधन परिचालन गर्ने र समग्र देशलाई प्रभावित पार्ने गरी खर्च गर्ने विषयको अध्ययन गर्दछ । यसको कार्यान्वयनबाट देशको सम्पूर्ण अर्थव्यवस्थालाई प्रभावित पार्छ । सरकारले सरकारी वित्तको कार्यान्वयन दीर्घकालीन लक्ष्य राखेर गर्ने गर्दछ तापनि यसको कार्यान्वयन बार्षिक आधारमा वा बर्ष वर्षको आधारमा बार्षिक बजेट तयारगरी गर्ने परम्परा रहेको छ । जसलाई सरकारको वार्षिक बजेट भनिन्छ । वित्तनीतिको उद्देश्य यसका निम्न उपकरणहरु प्रयोग गरेर हासिल गरिन्छ ।

आन्तरिक राजश्व आन्तरिक ऋण वैदेशिक अनुदान वैदेशिक ऋण वित्त नीति तयार गर्दा ध्यान दिनुपर्ने कुरा :

देशको औद्योगिकीकरणको अवस्था, देशको विद्यमान आर्थिक अवस्था, सरकारको आर्थिक उद्देश्य, निजी क्षेत्रको अवस्था, गरीबीको अवस्था, भौतिक पूर्वाधारको अवस्था, मुद्रा तथा पूँजी बजारको अवस्था, नेपालले हाल अंगीकार गरेका वित्तीय नीतिको उद्देश्यहरु र प्रमुख नीतिहरु यस प्रकार छन् ।

उपलब्ध श्रोत साधनको अधिकतम उपयोग गर्ने, व्यापक आधार भएको दीगो र उच्च आर्थिक वृद्धिदर हासिल गर्ने, आर्थिक वृद्धिको प्रतिफल वितरणमा साधनहिन र विपन्न वर्गको पहुँच बढाउने, मानविय विकास एवं रोजगारीका अवसरहरुको सिर्जनामा जोड दिने, सामाजिक न्याय र सुरक्षा प्राप्त गर्ने, लगानीको वातावरणमा सुधार ल्याउने (खास गरी प्राथमिकता प्राप्त क्षेत्रमा लगानी बढाउने), वित्तीय क्षेत्रमा गतिशिलता ल्याउने, सार्वजनिक खर्च धान्न सकिने सिमा भित्र राख्ने, सुशासन एवं विकेन्द्रिकरण पक्ष मजवुत पानर्,े रुग्ण उद्योगको पुनःस्थापना र निर्यात प्रवद्र्धनमा जोड, वित्तीय क्षेत्रको सुधारबाट स्वस्थ, प्रतिस्पर्धी एवं दीगो वित्तीय प्रणालीको विकास, छिटो प्रतिफल दिने र छिटो सम्पन्न गर्न सकिने आयोजनाहरुमा लगानी गर्न जोड दिने, बहुवर्षिय बजेट प्रणालीको कार्यान्वयन (३ वर्षिय), सवै प्रकारको आर्थिक क्रियाकलापलाई आयकरको दायरा भित्र ल्याई राजश्व प्रशासनलाई समयानुकूल गतिशिल र प्रभावकारी बनाउने, मू. अ. कर कार्यान्यवनमा देखिएका कमी कमजोरी हटाई आन्तरिक राजश्वको मेरुदण्डको रुपमा विकशित गर्ने, वैदेशिक सहायतालाई बढि भन्दा बढि आर्थिक एवं सामाजिक प्रतिफल प्राप्त गर्ने क्षेत्रहरुमा परिचालन गरिने, सरकारी संलग्नता आवश्यक नदेखिएका एवं निजी क्षेत्रका लगानी आकर्षित हुन सक्ने संस्थानहरुमा निजी क्षेत्रको लगानी बढाउन निजीकरण कार्यक्रमलाई निरन्तरता दिने, सामाजिक क्षेत्रको विकास, गरीबी निवारण तथा रोजगार प्रवद्र्धन गर्ने, आधारभूत सामाजिक सेवामा सवैको पहुँच बढाउन प्राथमिक शिक्षा, स्वास्थ, खानेपानी र सरसफाईको क्षेत्रमा लगानी बढाउने, गरीबी घटाउने तर्फ लक्षित सम्पूर्ण कार्यक्रम एउटै छातामुनी (गरीबी निवारण कोष) एकीकृत गरी संचालन गरिने, बाणिज्य बैंकहरुलाई अधिक स्वायत्तता दिइने, वित्तीय सेवाको लागि वैदेशिक वैंकहरु स्थापना गर्न दिइने, ऋणपत्रको माध्यामिक बजार विस्तार गर्दै लैजाने, विदेशी विनीमयमा पूर्ण परिवत्र्यता दिइने, देशमा पूँजी बजारको विकास तर्फ जोड दिने, नेपाललाई अन्तर्राष्ट्रिय वित्तीय केन्द्रको रुपमा विकशित गर्न प्रयत्नशील रहने, वित्तीय बजार विकास तथा विस्तार गरी लगानीका अवसर बढाउँदै जाने, आन्तरिक ऋणलाई न्म्ए को वान्छित सीमाभित्र राखिने, मुद्रास्फीतिदरलाई न्यूनतम स्तरमा राख्दै बचत परिचालनलाई प्रोत्साहित गरिने, नेपाल अधिराज्यमा स्टक एक्स्चेन्ज सेवा विकास तथा विस्तार गर्ने, बिमा कम्पनीहरुको विकासमा जोड दिने, करको दर न्यूनतम गरी आर्थिक वृद्धिदर उच्च पार्ने, विभिन्न प्राथमिकतामा परेका र सरकारले प्रोत्साहित गर्न चाहेका (निर्यातमूलक उद्योग) आर्थिक क्रियाकलापहरुलाई कर छुट र अन्य सुविधाहरु दिने, साधारण खर्चमा ऋण रकम खर्च नगर्ने, विकास बजेटमा राजश्वको योगदान बढाउन प्रयास गर्ने ।

Compiled and collected by
Basudev Sharma Poudel(PHD)

Information Security

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

5 Challenges of Internet of Things ( IOT )

Security
Privacy
Standards
Regulation
Development

Security Threats in Bank

Mobile Banking Risks
Social Networks and Web 2.0
Malware, Botnets and DDoS Attacks
Phishing
ACH Fraud: Corporate Account Takeover
Cloud Computing
Inside Attacks
First-Party Fraud
Skimming

Information Security
Information Security refers to the processes and methodologies which are designed and implemented to protect print, electronic, or any other form of confidential, private and sensitive information or data from unauthorized access, use, misuse, disclosure, destruction, modification, or disruption.

Techniques

Encryption
Authentication
Firewall
Other Security

Encryption

Encryption is the conversion of electronic data into another form, called cypher text , which cannot be easily understood by anyone except authorized parties.

Authentication
The process or action of proving or showing something to be true, genuine, or valid .

Types:

User Authentication
Machine Authentication

Firewall

A firewall is a network security system, either hardware or software based, that uses rules to control incoming and outgoing network traffic.

Data Center Security Design

Data Centers

Some Questions

What is Information Security? What are the techniques of Information Security?
Why it is required to maintain multilevel security in bank?

Computer Basics Terminology

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

COMPUTER BASICS – TERMINOLOGY

Application– A computer program that does specific tasks such as word processing or spreadsheets.

Bit – Represents a binary digit which is the amount of information obtained by asking a ‘yes’ or ‘no’ question. This is also the smallest unit of information stored on a computer as a 0 or 1.

Blinking Cursor – This is a vertical blinking bar that locates the position on the screen where text can be inserted or deleted. This appears most frequently in text or dialog boxes.

Byte – Data is stored on a computer in Bytes. A byte is one character, which may be a number or letter. A byte is composed of 8 consecutive bits.
1,000 bytes = 1 kilobyte (K or KB)
1,000 KB = 1 megabyte (MB)
1,000 MB = 1 gigabyte (GB)
1,000 GB = 1 Terabyte (TB)

Cache - This is a type of memory and is similar to RAM. Cache is used by the computer to move data between the RAM and CPU.

CD-ROM – A removable disk that stores data. A CD-ROM can only be read. You cannot record (save) data onto one. You may however record (save) onto a CD-Rewritable disk. This is most often called a CD. A CD looks like a music CD, but contains data instead of music.

Computer – A collection of electronic parts that allow software programs to run that perform certain tasks. A computer can accept input, change data, store data and display data.

CPU – The CPU (central processing unit), is the brain of the computer. New Windows-based programs use a Pentium processor primarily.

Cursor – A synonym for the pointer, which is controlled by the mouse. The cursor may take different shapes.

DVD (Digital Versatile Disc) – Technology that store more information than a CD-ROM and can be written upon. The disk resembles a CD-ROM but has approximately seven times the storage capacity.

File – A collection of data with a name.

Flash Drive – This is a small portable hard drive that plugs into a USB port and allows you to transport files between different computers. Also called a thumb drive.

Graphical User Interface (GUI) - A program that helps you more easily work with you operating system and application programs by providing pictures and visual clues to help you work. Windows is the GUI on PCs.

Hand Pointer – The cursor changes into a pointing hand when it passes over a hypertext link. This allows connecting directly to the link.

Hard Drive – The place where programs and files are stored in a computer. Also called the Hard Disc. On PCs this is often the c:// drive.

Hard Disc Space – The amount of permanent storage of data measured in bytes. This storage exists whether the computer is on or off.

Hardware – The physical components of the computer. They usually include the; monitor, printer, mouse, keyboard and modem.

Hourglass – This is the symbol that indicates the computer is working to retrieve or send data or locate a webpage.

Hypertext Link – These links are clicked on as text, images or files that open another web page.

Text Hyperlinks are often a different color than the words around them.

I Beam – As the cursor moves over text, the pointer will change into an ‘I.’ This facilitates word processing and copying text. See Blinking Cursor.

I or │

Keyboard – Similar in part to a typewriter keyboard, this is used to key (type) in commands, text and data.

Memory (RAM) – The amount of temporary storage that you can use at one time. Memory stores ends when the computer is shut down. This is the reason that you save work before turning off the computer. Data is saved from RAM to the computer or onto a storage unit, such as a CD.

Modem – This is a way to transfer data through a telephone or cable line generally by the Internet. It may be internal or external. Some modems are used to fax or act as answering machines.

Monitor – Similar to a television screen, the monitor allows you to see the data on your computer.

Motherboard – The circuit board that functioning parts of the computer connect to is the motherboard. The CPU, RAM and cache all plug into the motherboard.

Mouse – A hand-operated device to control the cursor on the screen. The mouse for PCs has two buttons. The button is usually clicked once to select an item on the screen. Double-clicking the left button opens windows or programs.

Multitasking – This describes the ability to do more than one thing at a time. For computer use this means that you may have more than one program open at time in the memory, but only one program can actually be fully active. Inactive programs can be processing data or doing other tasks in the background.

Network – A group of two or more computers linked together.

NIC (Network Interface Card) – A card is put in the computer allowing connection to a network.

Operating System – Directs the computer how to operate. It acts as a mediator between the hardware and the application programs that are used for work. This allows access to computer files, loads application programs into memory and closes programs.

Peripheral – This describes anything that can be attached to the computer input ports, such as; the keyboard, printer, mouse, external modem, scanner or external hard drive.

Pointer – The cursor is a symbol that moves across the screen to identify location. The cursor appears as a pointer when it is moving across a page and not on text.

Port – Connection on the computer that allows input devices like monitors, disk drives, the mouse, or keyboards. Common ports are serial for connecting a modem or a mouse, USB for connecting a scanner, digital camera, Ethernet ports for connecting to a network, and audio in/out ports for connecting to headphones or a microphone.

RAM – See Memory

Resolution – The degree of sharpness, or clarity or what is seen on a computer screen. The resolution is measured by the number of dots (pixels) of color that are displayed across and down the screen. As resolution increases, the size of the characters and images gets smaller, but sharper.

Scanner – A peripheral device that can copy documents, pictures or photographs directly into the computer converting the images into digital files. Images may then be stored or manipulated (changed).

Software – These are the programs (applications) that allow the computer to operate or do certain tasks.

Sound Card – This device allows the computer to reproduce music, sounds and voices. The computer needs a sound card to hear the audio portion of web sites or often to play multimedia games.

Thumb Drive – See Flash Drive

USB Port – The Universal Serial Bus is accessed through small rectangular port on the front or back of computer that allows peripheral devices such as digital cameras and external hard drives to connect to the computer. See Ports for other types of connections.

Video Card – This allows images to be sent to the monitor.

Database

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

Database
A database is a collection of information that is organized so that it can easily be accessed managed, and updated. In one view, databases can be classified according to types of content: bibliographic, full-text, numeric and images.

Data Storage Hierarchy

Level 0	Bit A	Single binary digit (0 or 1)
Level 1	Character	Multiple related bits are combined to form a character (byte)
Level 2	Field	Multiple related characters are combined to form a field
Level 3	Record	Multiple related fields are combined to form a record
Level 4	Table	Multiple records are combined to form a table
Level 5	Database	Multiple related tables are integrated to form a database

Components of Database System
Users- People who interact with the database:

Application Programmers
End Users
Data Administrators

Software- Lies between the stored data and the users:

DBMS
Application Software
User Interface

Quality of Information

Accuracy
Times
Relevancy
Completeness

Database Application

MS – Access
My-SQL
SQL
Oracle

Why to use DBMS?

Data Independence
Efficient Data Access
Data Integrity
Data Administration
Concurrent Access and Crash Recovery
Reduced Application Development Time

Database Management System

A database management system (DBMS ) is a collection of software programs that allow a user to define the data types, structures, and constraints for the data; construct permanent storage for the data; and manipulate data by query and update operations. In the specific case of relational databases, the database management software is known as a relational database management system RDBMS.

Database Model
A database model is a type of data model that determines the logical structure of a database and fundamentally determines in which manner data can be stored, organized and manipulated. The most popular example of a database model is the relational model, which uses a table based format.

Hierarchical Model
In a hierarchical model, data is organized into a tree like structure , implying a single parent for each record. A sort field keeps sibling records in a particular order. Hierarchical structures were widely used in the early mainframe database management systems.

Network Model
The network model expands upon the hierarchical structure, allowing many to many relationships in a tree like structure that allows multiple parents. It was most popular before being replaced by the relational model.

Relational Model
A relational database contains multiple tables, each similar to the one in the “flat” database model. One of the strengths of the relational model is that, in principle, any value occurring in two different records (belonging to the same table or to different tables), implies a relationship among those two records. A key that can be used to uniquely identify a row in a table is called a primary key. Keys are commonly used to join or combine data from two or more tables.

Object Oriented Model
The object oriented programming paradigm was applied to database technology, creating a new database model known as object databases for storing objects in a database.

Advantages of DBMS

Make an easy to add new data.
Make easy to modify (change) the database.
Make easy to delete existing data.
Organized the data in proper sequence.
It reduces the data redundancy to a large extent.
It can control data inconsistency to a large extent.
Make easy to access the data for the user.
Allow multiple users to be active at one time; data in the database may be shared among several users.
Protecting data against unauthorized access (security).
Allow for growth in the database system.

Disadvantages of DBMS

Complex to understand and implement
Costly
Too many rules
Fast changing technology
Chance of losing the data
Chance of data leakage and hacking
Unavailability of trained manpower.

Data Security

Encryption
Strong User Authentication
Backup Solutions
Firewall

Some Questions

What is Database? What is the use of Database in Bank?
What is Database Management System? What are the different types of Database model?
What types of database model is used on modern banking system? Justify your answer.

Fiscal Policy

Banking Notes — Sun, 08 Apr 2012 05:41:42 +0000

Fiscal policy plays an increasingly important role in many developing countries. Decisions on fiscal policy, especially if properly synchronized with monetary policy, can help smoothen business cycles, ensure adequate public investment and redistribute incomes. The four main components of fiscal policy are:

expenditure, budget reform
revenue (particularly tax revenue) mobilization,
deficit containment/ financing and
determining fiscal transfers from higher to lower levels of government.

Fiscal policy works through both aggregate demand and aggregate supply channels. Changes in total taxes and public expenditure affect the level of aggregate demand in the economy, whereas, the structure of taxation and public expenditure affect, among others, the incentives to save and invest (at home and abroad), take risks, and export and import goods and services.

Government’s revenue (taxation) and spending policy designed to

counter economic cycles in order to achieve lower unemployment,
achieve low or no inflation, and
achieve sustained but controllable economic growth.

In a recession, governments stimulate the economy with deficit spending (expenditure exceeds revenue). During the period of expansion, they restrain a fast-growing economy with higher taxes and aim for a surplus (revenue exceeds expenditure). Fiscal policies are based on the concepts of the UK economist John Maynard Keynes (1883-1946) and work independently of monetary policy which tries to achieve the same objectives by controlling the money supply.

Objectives of fiscal policy

Full employment
Price stability
Accelerating the rate of economic development
Optimum allocation of resources
Equitable distribution of income and wealth
Economic stability
Capital formation and growth
Encouraging Investment

Contractionary fiscal policy is when the government either cuts spending or increases revenue through higher taxes. The purpose is to slow growth to a healthy economic level. Although you may think that there’s no such thing as an economy that’s growing too fast, an overheated economy has a lot of negative repercussions. First, it usually creates an asset bubble, similar to what happened to housing industry in 2006. Second, it lowers unemployment to below the natural rate of unemployment. This makes it difficult for employers to find enough workers to meet market demand.

Third, it can create inflation. That’s when prices, and often wages, rise higher and higher. This can destroy savings and your standard of living. Fourth, an economy that’s growing too fast will inevitably burn out, leading to a recession. For more, see Business Cycle.

Contractionary fiscal policy is so named because it actually contracts the economy by reducing the amount of money available for businesses and consumers to spend.

The purpose of contractionary fiscal policy is to cool off growth and prevent inflation. That’s only needed during the peak phase of the business cycle. That’s the only time the government should increase spending beyond the level of revenue it receives. It’s also the only time it should cut taxes below the level needed to support spending.

Expansionary fiscal policy is when the government uses its budgeting tools to provided consumers and businesses with more money. These tools include increased spending, including transfer payments, or tax cuts. It usually uses a combination of all three. In the United States, Congress must generally approve these measures.

Expansionary fiscal policy is so named because it expands the amount of money available for consumers and businesses to spend.

It puts more money into consumers’ hands to give them more purchasing power. It uses subsidies, transfers payments including welfare programs, and income tax cuts. It reduces unemployment by contracting public works or hiring new government workers. All these measures increase demand. That boosts business profit. They use it for new investment and hiring to meet the increased demand.

Fiscal policy is used by elected officials to change the business cycle. Although it can be more powerful than monetary policy, it is rarely used as effectively. That’s because elected officials have different opinions on the best ways to use fiscal policy.

Expansion: When the economy is in the expansion phase, politicians are happy because their constituents are happy. They will pursue other goals, such as foreign policy, defense, or immigration.

Peak: During the irrational exuberance phase, politicians will also ignore fiscal policy. However, this is they should pursue a contractionary fiscal policy to avoid the peak. That means raising taxes and cutting spending. However, since the budget cycle is usually 18 months in the making, by the time the economy reaches the peak, it’s probably too late. In addition, politicians don’t get re-elected by doing either of those things.

Contraction: This is when expansionary fiscal policy is desperately needed. That means cutting taxes and increasing spending to create jobs, demand, and confidence. Find out what are the best unemployment solutions.

Compiled and collected by
Basudev Sharma Poudel(PHD)

IT Policy and Development

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

IT Policy Development in Nepal

Introduce Computer in 2028 BS
Establishment of High Level Commission for Information Technology (HLCIT) in 2051 BS and terminated by Prime minister Baburam Bhattarai
Establishment of National Information Technology Center (NITC) in 2059
IT Policy 2057
IT Policy 2067
IT Policy 2072

Introduction of HLCIT

High Level Commission for Information Technology (HLCIT) is an apex body formed under the chairmanship of Rt. Hon. Prime Minister of Nepal with a view to providing crucial strategic direction and helping formulate appropriate policy responses for the development of ICT sector in the country as well as harnessing these technologies to meet key developmental challenges including governance reform and catalyzing economic growth for poverty reduction. The government of Nepal strongly believes that its efforts in macro economic and governance reform arena stand to benefit immensely from proper harnessing of recent advances in the technological domain notably, Information and Communication Technologies (ICTs). The fact remains however that the technologies on their own devoid of enabling institutional, policy, and regulatory environment will fall short of producing intended developmental outcomes. This clearly defines the context within which National IT Policy and Strategy of the Government of Nepal was announced in the year 2000. These policy provisions lay down a comprehensive framework for the development of IT sector in the country. Among others, the policy envisages the creation of a number of high level institutional entities to provide a direction and leadership for the development of ICT sector in the country.

Functions and Duties of National Information Technology Center

To implement information communication technology related plans and policies.
To assist Nepal Government in all forms of computer related tasks.
To design and launch websites for all Government organizations, and assist in timely manner in maintaining and operating of the same
To administer the development of required coding and standards to engender uniformity in information technology, abide by the same and put it into operation.
To assist in research and development of information communication technology in the country.

Telecom History

A line between Kathmandu and the Indian border was opened in 1914
Major growth in telecom sector in Nepal has occurred after 1995 with World Bank Assistance.
An important milestone was reached in 1999 when tele-density reached one line per 100 inhabitants
Nepal’s pioneer telecommunication’s operator Nepal Telecom has made significant progress in the growth and development of the national public switched telecommunications network (PSTN) during Nepal’s Fifth Phase Telecom Project (1992 97).
Until few years back monopoly of state owned Nepal Telecom (NTC) in all types of telecom service
NTC also started providing GSM mobile service from May 1999
United Telecom Ltd. (UTL) is providing Wireless Local Loop based telecom service inside Kathmandu Valley and other few cities
Spice Nepal (P) Ltd. is providing cellular mobile telephone connections based on GSM from Mid September 2005 inside Kathmandu Valley and other major cities

History of Internet

The Internet was first introduced into Nepal in 1993 in a venture of the erstwhile Royal Nepal Academy of Science and Technology (RONAST) and Mercantile Office Systems (MOS).
Now almost all big cities have Internet facilities with local ISP

IT Policies

IT Policy of Nepal (2057/2067)
IT Policy of Nepal (2015)
NRB Guidelines
NRB IT Policies
Electronic Transaction Act

Windows

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

Introduction
Windows is a personal computer operating system from Microsoft, with some common business applications such as Microsoft Word and Excel has become a de facto “Standard” for individuals in most corporations and home.

Components of Windows

Desktop
Desktop Icons
Start Menu Program
Taskbar
Control Panel
User Management
Device Manager
Programs, etc.

Interface

Some Keyword
Windows Key + R = Run

Windows Key + E = Explorer

Alt + F4 = Close

Run: winword (To open MS Word)

Run: excel (To open MS Excel)

Run: powerpnt (To open MS Power Point)

Run: control (To open Control Panel)

Run: fonts (To open fonts)

Run: dxdiag (To view System Information)

Run: C: (To open C:>)

Run: temp or %temp% ( To view temp. file)

MS-DOS
Run: cmd (To go on Command Mode)

C:> dir (To display the files and folders)

C:> dir/ah (To Display the hidden files and folders)

C:> Date (To View Current Date)

C:> Time (To View Current Time)

C:> MD DN (DN=Directory (Folder) Name, To Create Folder)

C:> CD DN (To Enter inside folder)

C:> CD.. (To exit from folder)

C:> RD DN (To Delete folder)

C:> Copy Con FN (FN=File Name, To Create File) : add some content and save it by pressing ctrl+z and do Enter

C:> Type FN (To open the file)

C:> Edit FN (To edit file)

C:> Del FN (To Delete file)

C:> CLS (To Clear Screen)

C:> ipconfig (To view IP address)

C:> ipconfig/all (To view details of IP address)

C:>D:(To change the drive or path from C:> to D:>)

C:> Exit (To Close Command Mode)

Difference Between GUI and CUI

Some Questions

What do you mean by Windows? What are the components of Windows?
Differentiate between CUI and GUI.

Core Banking System

NRB Computer Notes — Sun, 08 Apr 2012 05:41:42 +0000

Introduction
A core banking system is the software used to support a bank’s most common transactions. Elements of core banking include: Making and servicing loans. Opening new accounts. Processing cash deposits and withdrawals.

Core Banking Software
Banking and financial sectors all around the world have embraced ICT to facilitate their customers with efficient services and innovative products through multichannel. The central engine that runs the core operations of the banking and financial institution is the Core Banking Software (CBS).

Overview

The CBS evolved in the 1970s and has gone through different significant changes over time; the recent CBS has the capacity of real time processing and multi channel integration (Kreća & Barać, 2015). The fundamental function of CBS is to perform deposit and lending in a bank (Chairlone, 2009). Abbate (1999) defined a core banking system as “a back end system that processes daily banking transactions, and posts updates to accounts and other financial records.”

Level of Core Banking Software

CORE BANKING

Sum total of all information technology components that enable a bank to manage its core business activities in a centralized model
Round the clock processing of all the products, services and information of a bank.
24/’7/365 Model

Basic Components

Banking Application Software
Hardware Components
Network Infrastructure
Centralized Data Processing

Application Areas

Balance of payments and withdrawal are done.
Mobile banking
Internet banking
ATM’s
Recording of transactions
Passbook maintenance
Interest calculations on loans and deposits
Customer records

Need of CBS

To meet the regulations.
To meet the changing market dynamics
To meet the demands of customers
To enhance efficiency and effectiveness
To provide better and fast service
To increase the value of bank on the market
To increase customer satisfaction
To increase profit

Challenges and Barrier
1.Cost

Software
Technology
Training
Implementation

2.Change Accept

Challenges of CBS Implementation

Functionality (Capability of software to meet requirements and expectations)
Reaching unanimity within the organization on what is needed
Cost and Financial Terms
Ability of the business to adjust to the new system
Availability of skilled personnel
Vendor capabilities and credentials
System Flexibility
Data migration
User-friendliness of User Interface

Managerial Implications
The managers need to consider all three sources of challenges while choosing, implementing, and upgrading CBS. In the case of software, the most challenging part is CBS’ user interface and user-friendliness. If the user interface is complex and non-user friendly, it may result in poor performance of the users and virtually of the CBS. The second essential factor is the CBS’ functionality; whether it is meeting all the needs of the bank it promised to meet. The most important vendor related challenge is vendor capability and credential. As most of the Banks use the foreign CBS, which is very complex. Vendor support is essential to fix bugs, training, and maintenance. In the case of management related challenges, the managers always need to look for skilled personnel, who knows and can run the CBS.

List of CBS Applications

Infosys Finacle
Oracle Financial Services Software by Oracle Corporation
Fiserv Banking Solutions
Canopus EpaySuite by Canopus Innovative Technologies
Fidelity National Information Services (FIS)

Some Questions

What is Core Banking System (CBS)? What are the components of CBS?
What is the use of CBS in bank?
What do you mean by CBS? What are the components of CBS? What are the challenges to implement CBS in the context of Nepalese banking sector?