TyroCity: Banking Notes

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)

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?

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?

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.

History of Computer

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

Abacus

The abacus was an early aid for mathematical computations. Its only value is that it aids the memory of the human performing the calculation. A skilled abacus operator can work on addition and subtraction problems at the speed of a person equipped with a hand calculator (multiplication and division are slower).

The abacus is often wrongly attributed to China. In fact, the oldest surviving abacus was used in 300 B.C. by the Babylonians. The abacus is still in use today, principally in the far east.

Napier’s Bone

John Napier In 1617 an eccentric (some say mad) Scotsman named John Napier invented logarithms , which are a technology that allows multiplication to be performed via addition. Ex: log 2 x = 5.

The magic ingredient is the logarithm of each operand, which was originally obtained from a printed table. But Napier also invented an alternative to tables, where the logarithm values were carved on ivory sticks which are now called Napier’s Bones.

Slide Rule

Napier’s invention led directly to the slide rule , first built in England in 1632 and still in use in the 1960’s by the NASA engineers of the Mercury, Gemini, and Apollo programs which landed men on the moon.

Calculating Clock

The first gear driven calculating machine to actually be built was probably the calculating clock , so named by its inventor, the German professor Wilhelm Schickard in 1623. This device got little publicity because Schickard died soon afterward in the bubonic plague.

Blaise Pascal

Fig: 8 Digit Pascaline

Fig: 6 Digit Pascaline (Cheaper)

Fig: Inside Pascaline

In 1642 Blaise Pascal, at age 19, invented the Pascaline as an aid for his father who was a tax collector. Pascal built 50 of this gear-driven one-function calculator (it could only add) but couldn’t sell many because of their exorbitant cost and because they really weren’t that accurate (at that time it was not possible to fabricate gears with the required precision). Up until the present age when car dashboards went digital, the odometer portion of a car’s speedometer used the very same.

Charle’s Babbage

By 1822 the English mathematician Charles Babbage was proposing a steam driven calculating machine the size of a room, which he called the Difference Engine .

Difference Engine
This machine would be able to compute tables of numbers, such as logarithm tables. He obtained government funding for this project due to the importance of numeric tables in ocean navigation. Construction of Babbage’s Difference Engine proved exceedingly difficult and the project soon became the most expensive government funded project up to that point in English history. Ten years later the device was still nowhere near complete, acrimony Babbage.

Analytical Engine
Babbage was not deterred, and by then was on to his next brainstorm, which he called the Analytic Engine . This device, large as a house and powered by 6 steam engines, It was programmable, thanks to the punched card technology of Jacquard. Babbage saw that the pattern of holes in a punch card could be used to represent an abstract idea such as a problem statement or the raw data required for that Hollerith Desk.

Hollerith Desk

Hollerith’s technique was successful and the 1890 census was completed in only 3 years at a savings of 5 million dollars.

IBM

Hollerith built a company, the Tabulating Machine Company which, after a few buyouts, eventually became International Business Machines, known today as IBM.

Hollerith’s Innovation

By using punch cards, Hollerith created a way to store and retrieve information. This was the first type of read and write technology.
Examples of Punch Cards:

Mark I

One early success was the Harvard Mark I computer which was built as a partnership between Harvard and IBM in 1944. This was the first programmable digital computer made in the U.S. But it was not a purely electronic computer. Instead the Mark I was constructed out of switches, relays, rotating shafts, and clutches.

Atanasoff – Berry Computer

One of the earliest attempts to build an all electronic (that is, no gears, cams, belts, shafts, etc.) digital computer occurred in 1937 by J. V. Atanasoff , This machine was the first to store data as a charge on a capacitor, which is how today’s computers store information in their main memory ( DRAM or dynamic RAM ). As far as its inventors were aware, it was also the first to employ binary arithmetic.

Colussus

The Colossus , built during World War II by Britain for the purpose of breaking the cryptographic codes used by Germany. Britain led the world in designing and building electronic machines dedicated to code breaking, and was routinely able to read coded Germany radio transmissions. Not a general purpose, re-programmable machine.

ENIAC

The title of forefather of today’s all electronic digital computers is usually awarded to ENIAC , which stood for Electronic Numerical Integrator and Calculator. ENIAC was built at the University of Pennsylvania between 1943 and 1945 by two professors, John Mauchly and the 24 year old J. Presper Eckert , who got funding from the war department after promising they could build a machine that would replace all the “computers”. ENIAC filled a 20 by 40 foot ENIAC.

EDVAC

It took days to change ENIAC’s program. Eckert and Mauchly’s next teamed up with the mathematician John von Neumann to design EDVAC , which pioneered the stored program . After ENIAC and EDVAC came other computers with humorous names such as ILLIAC, JOHNNIAC , and, of course, MANIAC.

UNIVAC

The UNIVAC computer was the first commercial (mass produced) computer. In the 50’s, UNIVAC (a contraction of “Universal Automatic Computer”) was the household word for “computer” just as “Kleenex” is for “tissue”. UNIVAC was also the first computer to employ magnetic tape.

FIVE GENERATIONS OF COMPUTER

First Generation Computer (1940-1956)

The first computers used vacuum tubes for circuitry and magnetic drums for memory. They were often enormous and taking up entire room. First generation computers relied on machine language. They were very expensive to operate and in addition to using a great deal of electricity, generated a lot of heat. The first electronic computer was designed at Iowa State between 1939 1942 . The Atanasoff Berry Computer used the binary system(1’s and 0’s). Contained vacuum tubes and stored numbers for calculations by burning holes in paper.

Second Generation Computer (1956- 1963)

Transistors replaced vacuum tubes and ushered in the second generation of computers. Second generation computers moved from cryptic binary machine language to symbolic. High level programming languages were also being developed at this time, such as early versions of COBOL Second generation.

Third Generation Computer ( 1964-1971)

The development of the integrated circuit was the hallmark of the third generation of computers. Transistors were miniaturized and placed on siliconchips , called semiconductors. Instead of punched cards and printouts, users interacted with third generation computers through keyboards and monitors and interfaced First Generation Computers. Transistors were replaced by integrated circuits(IC). One IC could replace hundreds of transistors. This made computers even smaller and faster.

Fourth Generation Computer ( 1971- Present)

The microprocessor brought the fourth generation of computers, as thousands of integrated circuits were built onto a single silicon chip. The Intel 4004 chip, developed in 1971, located all the components of the computer. From the central processing unit and memory to input/output controls on a single chip. Fourth generation computers also saw the development of GUIs , the mouse and handheld devices.

Fifth Generation Computers (Present and Beyond)

Fifth generation computing devices, based on artificial intelligence. Are still in development, though there are some applications, such as voice recognition. The use of parallel processing and superconductors is helping to make artificial intelligence a reality. The goal of fifth generation computing is to develop devices that respond to natural language input and are capable of learning and self organization.

Apple 1 Computer – 1976

The IBM PC

Commodore 64

Apple Macintosh

The Amiga

Windows 3

Macintosh System 7

Apple Newton

Standard UNIX

Power PC

IBM OS/2

Windows 95

ICT in Bank Sectors

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

Introduction to Computer Technology
Computer is an electronic machine operating under the control of instructions stored in its memory unit that can:

accept data (inputs)
process data arithmetically and logically
produce results (outputs)

IT and ICT in Banking

Usage of IT and ICT in Bank

Types of Computer
Computers are classified on the basis of work, on the basis of size, on the basis of model and on the basis of brand.

Applications of Computer

Banking and Financial Institutions (BFI)
Education
Industries
Research
Hospital
Data Processing
Science and Engineering
Offices
Advertisement
Communications
Library
Simulation
Weather Forecasting
Hotel Management
Airline Corporation

Computers in Banking

Introduction to ICT

Bank

Banking and Finance

Some Questions

What is Computer? What are the different types of Computer?
What is the use of computer or ICT in Banking industry ?
Define the term Computer. What types of Computer are used in modern banking system?

Internet

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

Introduction
The Internet is the largest computer network in the world, connecting millions of computers. A network is a group of two or more computer systems linked together. Connection of millions of Domain (org, net, gov , mil, edu , com) and Public Network.The Internet is the largest computer network ,The Internet is the largest computer network in the world, connecting millions of in the world, connecting millions of computers. A network is a group of two or computers. A network is a group of two or more computer systems linked together. more computer systems linked together. Internet is defined as international network Internet is defined as international network that integrates the computer to form a that integrates the computer to form a global network structure. So it is also called global network structure. So it is also called the network of various networks. Now a the network of various networks. Now a day, it is very essential for all types of day, it is very essential for all types of business, academic institution, hospitals, business, academic institution, hospitals, banks etc. banks etc.

Business Use of Internet

Information
e-Mail
Communication
Entertainment
Education
Research
Marketing
Training

Intranet
The private network structure is intranet. It may exist as LAN or WAN or other form. But it is secured isolated private network structure.

Benefits of an Intranet

Publishing
Document Management
Training
Workflow
Front-end to corporate systems
Email
Better internal communications
Sharing of resources and best practice
Improved customer service
Reduction in paperwork

What is Extra-net?
An extranet is similar to an intranet but it is made accessible to selected external partners such as business partners, suppliers, key customers, etc , for exchanging data and applications and sharing information. As with an intranet, an extranet can also provide remote access to corporate systems for staff who spend lots of time out of the office, for instance those in sales or customer support or home workers.

e-Mail

“electronic mail,” is the process of sending and receiving messages over the Internet
e-Mail Address contains: Name and Domain Name
For eg. ram@ntc.net.np here, ram is name and ntc.net.np is domain.

Business Application of Computer Networks

Some Questions

What is Internet? What are the different types of services provided by the Internet?
Differentiate between Internet and Intranet?
What is e Mail ? What is the use of e mail in modern days?
What is social media? Why it is important in these days?

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

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.

Banking Notes

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

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?

IT Policy of Nepal and NRB

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

IT Policy of Nepal (2057/2067)
Objectives

To make information technology accessible to the general public and increase employment through this means.
To build a knowledge based society.
To establish knowledge based industries.

IT Policy

To declare information technology sectors a prioritized sector.
To follow a single door system for the development of information technology.
To prioritize research and development of information technology.
To create a conducive environment that will attract investment in the private sector, keeping in view the private sector’s role in the development of information technology.
To provide internet facilities to all Village Development committees of the country in phases.
To render assistance to educational institutions and encourage native and foreign training as a necessity of fulfilling the requirement of qualified manpower in various fields pertaining to information technology.
To computerize the records of each governmental office and build websites for them for the flow of information.
To increase the use of computers in the private sector.
To develop physical and virtual information technology park in various places with the private sector’s participation for the development of information technology.
To use information technology to promote e commerce, e education, e health, among others, and to transfer technology in rural areas.
To establish National Information Technology Centre.
To establish a national level fund by mobilizing the resources obtained from His Majesty’s Government, donor agencies, and private sectors so as to contribute to research and development of information technology and other activities pertaining to it.
To establish venture capital funds with the joint participation of public and private sectors.
To include computer education in the curriculum from the school level and broaden its scope.
To establish Nepal in the global market through the use of information technology.
To draft necessary laws that provides legal sanctions to the use of information technology.
To gradually use information technology in all types of governmental activities and provide legal sanctions to its uses in such activities.

IT Policy of Nepal (2072)

Human Resource
ICT in education, research & development
Promoting public access and content development
Developing the ICT Industry Sector
ICT for Government service innovation and good governance
ICT in SMEs & promotion of e- Commerce
Telecommunications Infrastructure
Convergence of Telecommunications, ICTs and broadcasting
ICT in Agriculture
ICT in Health
ICT in Tourism
Telecommunication and ICTs in mitigating the impact of Climate Change
ICT in Environment and natural resources
Telecommunications/ICTs for natural disaster preparedness, mitigation and relief
Human Exposure to electromagnetic fields and safe disposal of electronic waste
Conformance, Interoperability and Standards
in Telecommunications/ICTs
Cloud Computing
Access to Telecommunications/ICTs for rural and remote areas
Access to Telecommunications/ICTs services for persons with disabilities and specific needs
ICTs for Youth, women and girls
Building Confidence and Security in the use of ICTs

NRB IT Policies (2068)

Ensure efficient, effective and economic IT operation by implementing appropriate IT System
Maintain well structured, secured physical layout of its IT infrastructure with proper documentation
Maintain multilevel security for Information
Implement IT system audit
Develop, implement and maintain data backup and recovery policy
Establish and maintain efficient, effective and economic Disaster Recovery (DR) System as an instrument to “Fail Safe System” with minimum down time. Also, develop and maintain Business Continuity Plan (BCP)
Develop and implement IT Outsourcing and Third Party involvement mechanism
Maintain uniform and legitimate IT infrastructure in all its offices
Provide IT directives to licensed Banks and Financial Institutions
Set a standard for IT procurement and shall be reviewed based on technological development
Promulgate “NRB IT Code of Conduct” for proper usage of NRB IT resources
Strengthen IT capacity building of employee

NRB Guidelines (2012)

IT Governance
Information Security
Information Security Education
Information Disclosure and Grievance Handling
Outsourcing Management
IT Operations
Information Systems Acquisition, Development and Implementation
Business Continuity And Disaster Recovery Planning
IS Audit
Fraud Management

Electronic Transaction Act (2063/2064)
Procedures of Electronic Record and Generation and Security of Digital Signature

To Certify Electronic Record
Verification of Digital Signature
Secured Electronic Signature and Record
Quality Standard Concerning Information Technology to be maintained by the Certifying Authority
Receipt of Acknowledgement of Electronic Record
Time of Receipt of the Electronic Record

Some Questions

What are the major focuses of IT Policy of Nepal Government?
List and explain the IT Guidelines of Nepal Rastra Bank (NRB).
What are the major focuses of IT Policy of NRB ?

Questions & Answers
Explain the development of IT policy in Nepal and highlight the current status of IT in Nepal.

Current Status:

Banking and Tele Communication Industry are moving towards to
Automation
The Government including Ministries are prioritizing usage of IT and ICT
to their daily work
Government has introduced e Governance system to the public like as:
Smart License System, National Identity Card, Digitization of Land and mapping system, etc.
The concept of SMART City is emerging
Universities are prioritized their teaching and learning methodologies
through IT and ICT
In other service sector like as Hospital, Home Ministry, Health Ministry prioritizing to use the IT and ICT.
Software companies are emerged and developed
So on……

What are the significant amendments made in the IT policy 2072 from IT policy 2067.

Explain the major provisions of IT policy in Nepal and suggest some improvement to be done in such policies

Suggestions
i) Deployment
ii) Implementation
iii) Evaluation time to time