Tribhuvan University
Faculty of Management
Office of the Dean
Bachelor of Business Management (BBM)
Course Description
:This course contains conceptual foundation of different banking activities . It also comprises banking rules and regulation, accounting for deposit, guarantee, letter of credit, remittance, credit and treasury management etc. Similarly, it focuses on new banking technologies, BASEL, anti-money laundering, financial statement and its analysis.
Course Objective
:The objectives of the course are to provide the students with the basic knowledge required to handle the accounting functions of banks. On completion of this course the students will be able to gain the knowledge of total banking accounting practices of the banks. The course further aims at providing knowledge required to analyze financial statements of banks. Course Description This course contains conceptual foundation of different banking activities . It also comprises banking rules and regulation, accounting for deposit, guarantee, letter of credit, remittance, credit and treasury management etc. Similarly, it focuses on new banking technologies, BASEL, anti-money laundering, financial statement and its analysis.
Course Contents:
Lecture hours show the approximate classroom time allocated to each unit.
Unit 1. Introduction
- Concept of bank account
- Accounting assumptions, principles and conventions
- Evolution of banking industry, Development of banking industry in Nepal
- Banks:
- Meaning, nature, objectives, importance and functions of banks
- Types of Banks:
- Central Bank, Commercial Banks, Development Banks, Financial Institutions, Micro Finance Institutions and Co-operative Banks
- Opportunities and Challenges of Nepalese Banking Sector
- Legal provisions under Banking and Financial Institutions Act (BAFIA), 2063
- Unified directives issued by Nepal Rastra Bank
- Concept and importance of GAAP, Nepalese Accounting Standards (NAS), International Accounting Standards (IAS), Nepal Financial Reporting Standard (NFRS) and International Financial Reporting Standard (IFRS), Relative aspects of NAS, IAS, NFRS and IFRS
Unit 2. Accounting for Deposit
- Account Opening, operations and closure of bank account
- Concept and types of deposit: current, saving, time or fixed account, hybrid or flexi deposit, calls deposit account, margin account, foreign currency account, special foreign currency account
- Process of opening accounts
- Inter bank borrowing from other banks and short term borrowing from NRB
- Substitutes for vouchers: pay in slip and its meaning
- Cheques:
- meaning and types of cheques
- Electronic cheque clearing (ECC)
Unit 3. Accounting for Guarantee and Margin Deposit
- Guarantee: Concept, needs and types of guarantee: Bid bond, Performance bond, Advance payment guarantee, Counter guarantee, Financial guarantee, Standby letter of credit, Bonded warehouse guarantee
- Accounting treatment of guarantee issue (voucher and ledger)
- Margin deposit: concept, process and evaluation
- Service charges and accounting treatment
Unit 4. Letter of Credit (LC)
- Letter of credit: concept, needs and types of LC
- Parties involved in LC
- Trade finance
- International Chambers of Commerce and Universal Custom and Practices (UCP) for documenting credit
- NRB regulations for LC
- Accounting treatment
Unit 5. Accounting for Remittance
- Remittance: concept, importance and types
- Services rendered by remittance
- Parties involved in remittance
- Demand draft, accounting for advice received and un- received demand draft
- Account payee draft
- Books of original entry for advice received and un-received
- Telegraphic transfer and mail transfer
- Branch reconciliation
Unit 6. Accounting for Credit and Advances
- Credit: Concepts, importance and types: Cash credit, Overdraft, Secured loan, Micro credit, and other loans: auto, home, credit card, education and social
- Evaluation of feasibility study
- Industry risk analysis and Business risk analysis (using six C’s of credit)
- Accounting treatment of different types of credit
- Loan processing charges, interest and commission and their accounting treatment
- Collection and recovery of loans method applied and accounting treatment
- Credit risk management
- Credit creation
Unit 7. Accounting for Treasury Management
- Concept of treasury management
- Dimensions of treasury management
- Market risk management
- Liquidity management
- Investment portfolio management
- Foreign exchange risk management
- Assets liability management
- Maintenance of agency ledger (NOSTRO and VOSTRO)
Unit 8. Banking Technology Products
- Banking software
- Card operation
- Tele banking
- Mobile banking
- Internet banking and e banking
- SWIFT (society for worldwide interbank financial telecommunication)
- Branch less banking
Unit 9. Concept of BASEL Framework
- Concept and importance
- Principles of capital measurement and capital standard
Unit 10. Anti Money Laundering (AML)
- Concept, importance and AML Act
- Know your customers (KYC) Unit11: Preparation of Financial Statements under NFRS 12 LHs Bank reconciliation: concept, needs and preparation of BRS Trail balance: concept, needs and preparation
- Transaction list verification and operational procedures
- Statement of profit and loss and other comprehensive income (Income statement)
- Statement of financial position/balance sheet
- Statement of cash flow statement
- Statement of changes in equity
- Disclosures required for Financial
- Statement
Unit 12. Financial Statements Analysis
- Concepts and importance
- Ratio Analysis: concept, importance and limitations
- Types of ratios: Profitability ratios: Net interest income growth (NII growth), Operating profit growth
- Shareholder ratios: Return on equity, Return on assets, Earning per share, Price earnings ratio, Market price per share
- Liquidity ratios: Net liquid assets, Net liquidity ratios, Statutory liquidity ratio (SLR), Cash reserve ratio (CRR)
- Activity ratios: Cost of fund, Base rate, Credit deposit ratio
- Staff efficiency (per employee income, per employee business i.e. deposit plus loan)
- Gearing and Financial ratios: Total borrowing to shareholder fund, Total assets growth, Net worth growth
- Cash Flow ratios: Interest coverage ratio, Debt coverage ratio
- Assets Quality ratios: Non-performing loans to total loans, Loan loss reserves to gross loan
- Earnings ratios: Net interest margin
- Capital Adequacy ratios: Capital fund as a percentage of risk weighted assets
Suggested Readings:
Accounting Manual of banks Bank and Financial Institutions Act, 2063 Circulars issued by NRB (Banks and Financial Institution Regulation department and Foreign Exchange Management Department) Indian Institute of Banking and Finance, (2008), Accounting and Finance for Bankers, Macmillan India Ltd. Chennai India International Chamber of Commerce and the UCPDC 600 Jain, S. P. & Narang, K. L., (2014), Advanced Accounting, Corporate Accounting, Vol. 11, Kalyani Publishers, New Delhi Negotiable Instrument Act, 2034 Nepal Rastra Bank Act, 2058 Unified Directives issued by NRB Upadhyay, J. P. (2018), Accounting for Banking, Ashmita Publication