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Thursday, April 21, 2016

Discuss the Need of IT Audit

Management employing the use of information systems have objectives and expectations of what they intend to achieve from the large investment made in utilizing technology. Reasons for implementing ICT within the organization include the desire to obtain business value through reduced costs, greater effectiveness, enhanced efficiency and/or increased service delivery. It is against these objectives that an IT auditor is required to provide management assurance. 

Typically, management’s goals and objectives in utilizing technology to support business processes include: 
• Confidentiality; 
• Integrity; 
• Availability; 
• Reliability; and 
• Compliance with legal and regulatory requirements. 
Underpinning these goals and objectives is the need to ensure information technology, and the controls supporting such technology, assists the organization to achieve its business objectives (effectiveness) with appropriate use of resources (efficiency).

• Confidentiality

Confidentiality concerns the protection of sensitive information from unauthorized disclosure. Consideration needs to be given to the level of sensitivity to the data, as this will determine how stringent controls over its access should be. Management need assurance of the organization’s ability to maintain information confidential, as compromises in confidentiality could lead to significant public reputation harm, particularly where the information relates to sensitive client data.

• Integrity

Integrity refers to the accuracy and completeness of information as well as to its validity in accordance with business values and expectations. This is an important audit objective to gain assurance on because it provides assurance to both management and external report users that the information produced by the organization’s information systems can be relied and trusted upon to make business decisions.

• Availability
Availability relates to information being available when required by the business process now and in the future. It also concerns the safeguarding of necessary resources and associated capabilities. Given the high-risk nature of keeping important information stored on computer systems, it is important that organizations gain assurance that the information they need for decision-making is available when required. This implies ensuring that the organization has measures in place to ensure business continuity and ensuring that recovery can be made in a timely manner from disasters so that information is available to users as and when required.

• Reliability
Reliability refers to the degree of consistency of a system or the ability of a system (or component) to perform its required function under stated conditions. Reliability is an important audit objective in order to provide assurance that the system consistently operates and performs its stated functions as expected.

• Compliance with Legal and Regulatory Requirements

Compliance deals with complying with those laws, regulations and contractual obligations to which the business process is subject, that is, externally imposed business criteria. Management and key stakeholders require assurance that necessary compliance procedures have been put in place, as there is a potential risk that the organization could incur penalties should legal and regulatory procedures not be enforced.
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Definition of IT Audit

IT audit is the process of collecting and evaluating evidence to determine whether a computer system has been designed to maintain data integrity, safeguard assets, allows organizational goals to be achieved effectively and uses resources efficiently. An effective information system leads the organization to achieve its objectives and an efficient information system uses minimum resources in achieving the required objectives. IT auditors must know the characteristics of users of the information system and the decision-making environment in the auditee organization while evaluating the effectiveness of any system. Use of computer facilities has brought about radically different ways of processing, recording and controlling information and has combined many previously separated functions.

The potential for material systems error has thereby been greatly increased causing great costs to the organization. The highly repetitive nature of many computer applications means that small errors may lead to large losses. For example, an error in the calculation of income tax to be paid by employees in a manual system will not occur in each case, but once an error is introduced in a computerized system, it will affect each case. This makes it imperative for the auditor to test the invisible processes and to identify the vulnerabilities in a computer information system, as through errors and irregularities, the costs involved can be high.

Increasing use of computers for processing organizational data has added new scope to the review and evaluation of internal controls for audit purposes. The IT internal controls are of great value in any computerized system and it is an important task for an auditor to see that not only adequate controls exist, but that they also work effectively to ensure results and achieve objectives. Also internal controls should be commensurate with the risk assessed so as to reduce the impact of identified risks to acceptable levels. IT auditors need to evaluate the adequacy of internal controls in computer systems to mitigate the risk of loss due to errors, fraud and other acts and disasters or incidents that cause the system to be unavailable.
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Tuesday, April 5, 2016

Types of Computers based on Principles of Operation/performance

There are three different types of computers according to the principles of operation. Those three types of computers are
• Analog Computers
• Digital Computers
• Hybrid Computers

Analog Computers
Analog Computer is a computing device that works on continuous range of values. The results given by the analog computers will only be approximate since they deal with quantities that vary continuously. It generally deals with physical variables such as voltage, pressure, temperature, speed, etc.

Digital Computers
On the other hand a digital computer operates on digital data such as numbers. It uses binary number system in which there are only two digits 0 and 1. Each one is called a bit. The digital computer is designed using digital circuits in which there are two levels for an input or output signal. These two levels are known as logic 0 and logic 1. Digital Computers can give more accurate and faster results. Digital computer is well suited for solving complex problems in engineering and technology. Hence digital computers have an increasing use in the field of design, research and data processing.
 
Based on the purpose, Digital computers can be further classified as,
• General Purpose Computers
• Special Purpose Computers

Special purpose computer is one that is built for a specific application. General purpose computers are used for any type of applications. They can store different programs and do the jobs as per the instructions specified on those programs. Most of the computers that we see today, are general purpose computers. 

Hybrid Computers
A hybrid computer combines the desirable features of analog and digital computers. It is mostly used for automatic operations of complicated physical processes and machines. Now-a-days analog-to-digital and digital-to-analog converters are used for transforming the data into suitable form for either type of computation. For example, in hospital’s ICU, analog devices might measure the patients temperature, blood pressure and other vital signs. These measurements which are in analog might then be converted into numbers and supplied to digital components in the system. These components are used to monitor the patient’s vital sign and send signals if any abnormal readings are detected. Hybrid computers are mainly used for specialized tasks.
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Types of Computers based on Configuration/ construction/ capacity/ size

There are five different types of computers when we classify them based on their performance and capacity. The four types are-
     Super Computers
    Mainframe Computers
    Mini Computers
    Micro Computers
    Micro Processors

Super Computers
When we talk about types of computers, the first type that comes to our mind would be Super computers. They are the best in terms of processing capacity and also the most expensive ones. These computers can process billions of instructions per second. Normally, they will be used for applications which require intensive numerical computations such as stock analysis, weather forecasting etc. Other uses of supercomputers are scientific simulations, (animated) graphics, fluid dynamic calculations, nuclear energy research, electronic design, and analysis of geological data (e.g. in petrochemical prospecting). Perhaps the best known super computer manufacturer is Cray Research. Some of the "traditional" companies which produce super computers are Cray, IBM and Hewlett-Packard. As of July 2009, the IBM Roadrunner, located at Los Alamos National Laboratory, is the fastest super computer in the world.

Mainframe Computers
Mainframe computers can also process data at very high speeds vi.e., hundreds of million instructions per second and they are also quite expensive. Normally, they are used in banking, airlines and railways etc for their applications.

Mini Computers
Mini computers are lower to mainframe computers in terms of speed and storage capacity. They are also less expensive than mainframe computers. Some of the features of mainframes will not be available in mini computers. Hence, their performance also will be less than that of mainframes.

Micro Computers
The invention of microprocessor (single chip CPU) gave birth to the much cheaper micro computers. They are further classified into
• Desktop Computers
• Laptop Computers
• Handheld Computers(PDAs)

a) Desktop Computers: Today the Desktop computers are the most popular computer systems. These desktop computers are also known as personal computers or simply PCs. They are usually easier to use and more affordable. They are normally intended for individual users for their word processing and other small application requirements.

b) Laptop Computers: Laptop computers are portable computers. They are lightweight computers with a thin screen. They are also called as notebook computers because of their small size. They can operate on batteries and hence are very popular with travellers. The screen folds down onto the keyboard when not in use.

c) Handheld Computers: Handheld computers or Personal Digital Assistants (PDAs) are pen-based and also battery-powered. They are small and can be carried anywhere. They use a pen like stylus and accept handwritten input directly on the screen. They are not as powerful as desktops or laptops but they are used for scheduling appointments,storing addresses and playing games. They have touch screens which we use with a finger or a stylus.

Microprocessors

Microprocessors are what you find in DVD players, IPods, and other small devices.
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Monday, April 4, 2016

Discuss the Limitations of Computers



1. The computer can only perform the tasks you ask it to. You cannot expect a computer to be smarter than the person running it, though it can sometimes seem that way. Basically, as the person running it you have to tell the computer what tasks you want it to do. Yes, there are processes in the background, but these run based on preset information built in to the operating system.

2. A computer cannot generate information by itself. You have to give the computer operations, and even new instructions from time to time. Updates for example are a way to get new information to your computer to help streamline its functionality, but you still have to feed it that information by having an internet connection and automatic updates.

3. If you give the computer wrong data it is going to give you wrong information. The computer can only work with what you give it. It is just like giving directions to someone. If you tell someone to go right when they should have gone left, you are giving them the wrong information and they will not be able to find you.

4. Computers are unable to correct wrong instructions. The computer is always going to depend on your instructions, so you have to correct your mistake if you want it to work right.

5. Overall, a computer was built by humans and new technology comes out all the time. Hardware will eventually fade out and deteriorate. Given these properties it can be hard for a computer to remain a primo machine. These are five limitations computers have. There are more, but note most are based on human interaction with the computer, thus humans are part of the limitation a computer will have.
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Explain the Capabilities of a Computer



Capability is that it can do anything, as required and programmed by the programmers, and users. but the major limitation is that we, the Human cannot fill life into it.



Capabilities of computers

a. Its speed because it can process data faster



b. It repetitiveness because it can perform same operation tirelessly


c. Its accuracy because it have specific results



d. It can perform logical operations



e. It can store and recall info because it has data storage capability



f. Its self checking for it can verifies the accuracy of its own



g. Its self operating because its capable of executing instructions
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Sunday, April 3, 2016

Short Notes on Non-Performing Asset

The bank being financial intermediaries are in the business of accepting deposits for the purpose of lending and to augment their resources at times they borrow money from other sources and meet the ever increasing borrowing requirements of their customers. However, most of the business is done by banks with the funds which are collected from the public by way of deposits. They are, therefore, answerable to the public at large, who are keeping their funds with the banks by reposing trust in the ability of banks that they will not put the depositors interest to jeopardy.

A non-performing asset in the banking sector may be termed as an asset not contributing to the income of the bank. In other words, it is a zero yield asset when applied particularly to loan and advances. The actual concept of NPA is that it is an asset which ceases to yield income for the bank and that any income accrued from such asset shall not be treated as income until it is actually realized. Classification of an asset as NPA should be a based on record of recovery. Therefore, an asset is to be classified as NPA when there is a threat of loss for the recoverability is in doubt. In spite of wide ranging reform measures initiated in the banking sector, the problem of non-performing assets assumed a central place in issues relating to banking sector.
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Different Generation of computers with example.

The history of computer development is often referred to in reference to the different generations of computing devices. Each of the five generations of computers is characterized by a major technological development that fundamentally changed the way computers operate, resulting in increasingly smaller, cheaper, more powerful and more efficient and reliable computing devices. These are-

Different Generation of computers with example
First Generation (1940-1956) Vacuum Tubes
The first computers used vacuum tubes for circuitry and magnetic drums for memory, and were often enormous, taking up entire rooms. They were very expensive to operate and in addition to using a great deal of electricity, generated a lot of heat, which was often the cause of malfunctions.

First generation computers relied on machine language, the lowest-level programming language understood by computers, to perform operations, and they could only solve one problem at a time.

The UNIVAC and ENIAC computers are examples of first-generation computing devices. The UNIVAC was the first commercial computer delivered to a business client, the U.S. Census Bureau in 1951.

Second Generation (1956-1963) Transistors
Transistors replaced vacuum tubes and ushered in the second generation of computers. The transistor was invented in 1947 but did not see widespread use in computers until the late 1950s. The transistor was far superior to the vacuum tube, allowing computers to become smaller, faster, cheaper, more energy-efficient and more reliable than their first-generation predecessors.

Second-generation computers moved from cryptic binary machine language to symbolic, or assembly, languages, which allowed programmers to specify instructions in words. High-level programming languages were also being developed at this time, such as early versions of COBOL and FORTRAN. These were also the first computers that stored their instructions in their memory, which moved from a magnetic drum to magnetic core technology. The first computers of this generation were developed for the atomic energy industry.

Third Generation (1964-1971) Integrated Circuits
The development of the integrated circuit was the hallmark of the third generation of computers. Transistors were miniaturized and placed on silicon chips, called semiconductors, which drastically increased the speed and efficiency of computers.

Instead of punched cards and printouts, users interacted with third generation computers through keyboards and monitors and interfaced with an operating system, which allowed the device to run many different applications at one time with a central program that monitored the memory. Computers for the first time became accessible to a mass audience because they were smaller and cheaper than their predecessors.

Fourth Generation (1971-Present) Microprocessors
The microprocessor brought the fourth generation of computers, as thousands of integrated circuits were built onto a single silicon chip. What in the first generation filled an entire room could now fit in the palm of the hand. 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.

In 1981 IBM introduced its first computer for the home user, and in 1984 Apple introduced the Macintosh. Microprocessors also moved out of the realm of desktop computers and into many areas of life as more and more everyday products began to use microprocessors.

Fifth Generation (Present and Beyond) Artificial Intelligence
Fifth generation computing devices, based on artificial intelligence, are still in development, though there are some applications, such as voice recognition, that are being used today. The use of parallel processing and superconductors is helping to make artificial intelligence a reality.


Quantum computation and molecular and nanotechnology will radically change the face of computers in years to come. The goal of fifth-generation computing is to develop devices that respond to natural language input and are capable of learning and self-organization.
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Monday, March 28, 2016

How to Reschedule the Non Performing Loans

Bangladesh Bank in its recent circular vide 08 dated 14.06.2012 has expressed overriding concern over the propensity of prolongation by even renewal of term loan/ extension of validity arbitrarily which has been termed as prolongation/ ever greening may sometime result in overstatement of capital, higher end maintenance of provisions than required though having low probability of repayment but carrie's full value on bank's balance sheet.


To curb this propensity Bangladesh Bank prescribed following instructions in the consideration process of loan rescheduling:

Reschedule
a.    The bank must have a policy approved by its Board defining the circumstances/ conditions under which a loan may be rescheduled but not in contravention of the contents of the Bangladesh Bank circular. The policy must highlight the controlling mechanisms for avoidance of routine rescheduling/ repeat rescheduling wherein lies the doubt of recovery of full amount of loan.


b.    For the unproductive sector such kind of repeat rescheduling should be restricted.


c.    The bank must identify the causes behind the loan becoming non performing.


d.    No consideration will be accorded for rescheduling of the borrower who is a habitual loan defaulters rather legal action should be initiated for recovery.


e.    At the time of applying rescheduling down payment to be realized at a time in cash.


f.    While considering the rescheduling proposal overall repayment capability of the borrower to be assessed properly.


You can read also

Steps for Recovering  

Non Performing Loans

g.    If a bank is satisfied in the due diligence process that there exists acceptable circumstances for rescheduling and the concern/ borrower has the ability to generate required cash flow for repayment in that case rescheduling proposal to be considered positively.


h. Rescheduling of any loan must be justified in right perspective and its positive impacts on the bank's credit portfolio/ long term profitability, capital adequacy, liquidity etc.
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Steps for Recovering Non Performing Loans

There are many Steps for Recovering Non Performing Loans. These are-

a. Bankers must always keep the goal of loan workouts firmly taking into consideration the worst case scenario. 

b. The rapid detection and reporting of any problem with a loan are essential; delay often worsens a problem loan situation.
Non Performing Loans recovery
c. The loan workout responsibility should be separate from the lending function to avoid possible conflict of interest.

d. The concerned credit officer should confer/discuss with the troubled borrower quickly on possible options especially for cutting expenses, increasing cash flow and improving management control. Develop a preliminary plan of action after determining the bank's risk exposure and sufficiency of loan documents, especially any claim against customers’ collateral other than that held by the bank.

e. Estimate what resources are available to collect the troubled loan including the estimated liquidation values of assets and deposits.

f. The bank's credit personnel must evaluate the quality, competence and integrity of the current management and visit the site to assess the borrower's property and operations.

g. Bank's concerned credit specialist must consider all reasonable alternatives for cleaning up the troubled loan, including making a new, temporary agreement if loan problems appear to be short term in nature or finding a way to help/ cooption of strategic partner the customer strengthen cash flow or to inject new capital in to the business. Other possibilities include finding additional collateral, securing guarantees/undertaking/ to initiate the case of foreclosure.
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Sunday, March 27, 2016

Central bank independence has defined a number of types of independence-Explain

Central bank independence has defined a number of types of independence. These are-

Legal independence
The independence of the central bank is enshrined in law. This type of independence is limited in a democratic state; in almost all cases the central bank is accountable  at some level to government officials, either through a government minister or directly to a legislature. Even defining degrees of legal independence has proven to be a challenge since legislation typically provides only a framework within which the government and the central bank work out their relationship.
 
Goal independence
The central bank has the right to set its own policy goals, whether inflation targeting, control of the money  supply,  or  maintaining  a  fixed  exchange  rate.  While  this  type  of  independence  is  more common, many central banks prefer to announce their policy goals in partnership with the appropriate government departments. This increases the transparency of the policy setting process and thereby increases the credibility of the goals chosen by providing assurance that they will not be changed without notice. In addition, the setting of common goals by the central bank and the government helps to  avoid situations  where monetary and fiscal policy are in conflict;  a policy combination that is clearly sub-optimal.
 
Operational independence
The central  bank has the independence  to determine  the  best way  of  achieving  its policy  goals, including the types of instruments used and the timing of their use. This is the most common form of central bank independence. The granting of independence to the Bank of England in 1997 was, in fact, the granting of operational independence; the inflation target continued to be announced in the Chancellor's annual budget speech to Parliament.
 
Management independence
The central bank has the authority to run its own operations (appointing staff, setting budgets, and so on.) without  excessive involvement  of the government. The other forms of independence are not possible unless the central bank has a significant degree of management independence. One of the most common statistical indicators used in the literature as a proxy for central bank independence is the "turn-over-rate" of central  bank governors. If a government is in the habit of appointing and replacing the governor frequently, it clearly has the capacity to micro-manage the central bank through its choice of governors.
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Wednesday, March 23, 2016

Discuss about the types of Markets

A market is a set of all present and potential buyers. We can classify the market according to the nature, objectives, behaviour of the market, which are discussed below.

1. Consumer markets:
This market is constituted by the consumer who buys goods and services for their ultimate consumption. They do not process it to produce another goods and services or resell it to another customer. Their buying behaviour is mostly emotional and they are not well informed about goods and services. Producer or marketer requires to getting a clear sense about their target customers. Most of the product’s strength depends on developing a superior product and packaging and backing it with continuous advertising and reliable service. Consumer marketers decide on the features, quality level, distribution coverage and promotional activities that will help their product or service to achieve the best position in the market.

2. Business markets:
This market is constitute by the business men or professionals who buys goods and services to produce another goods and services or resell it to another customer. They are well - trained and well – informed professional buyers who have the skill to evaluate the competitive offerings.

The business buyer purchase products to make profit. Their buying behavior is purely rational. Business marketers must demonstrate how their products will help business customer to achieve their profit goals. In this market advertise has very small role, but stronger role is played by sales force, price and company’s reputation for reliability and quality.

3. Global markets:
The Company selling their goods and services in the global market place and face additional decision and challenges. Marketer must be decide which countries to enters, how to enter each country, how to adapt their product and service features to each countries, how to price their product in different countries. In the global market, marketer must have to take other decisions, such as how to adapt their communication to fit the cultural practices of each country. These decisions must be made on different legal system, different styles of negotiation, different type of requirements for buying, owning and disposing of property and so on.

4. Non - profit and governmental markets:
Companies selling their goods to non - profit organizations such as churches, Universities, Education boards, charitable organizations or government agencies. In this market, company must be careful to set price for their goods, because these organizations have limited purchasing power. Lower prices can be affect the features and quality of the goods. In this market, different types of formalities are needed to make sales.
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Sunday, March 20, 2016

Marketing Short Notes on- 'Customer loyalty'

Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring one even more customers. However, that focus is not how one builds customer loyalty. 

One builds loyalty by- 
1. Keeping touch with customers using email marketing, thank you cards and more. 

2. Treating your team well so they treat your customers well. 

3. Showing that you care and remembering what they like and don’t like. 

4. You build it by rewarding them for choosing you over your competitors. 

5. You build it by truly giving a damn about them and figuring out how to make them more success, happy and joyful. 

In short, one builds customer loyalty by treating people how they want to be treated.
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Tuesday, March 15, 2016

Inter Bank reconciliation- Short Note of IT-DAIBB

An accounting process used to compare two sets of records to ensure the figures are in agreement and are accurate. Reconciliation is the key process used to determine whether the money leaving an account matches the amount spent, ensuring the two values are balanced at the end of the recording period.Inter company reconciliation is reconciling among the two branches of the same company located in multiple locations. Where as one branch acts as seller to other branch when some product is moved from Branch A to B branch.

Eg:-when Branch A sends some products to Branch B then in this case. Branch A becomes the seller and Branch B becomes the purchaser.

Hence we require to reconcile between these two branches to make sure the right figures appear on the financial statements to the management.
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Spyware - Short Note of IT-DAIBB

Spyware is software that aims to gather information about a person or organization without their knowledge and that may send such information to another entity without the consumer's consent, or that asserts control over a computer without the consumer's knowledge.

"Spyware" is mostly classified into four types: system monitors, trojans, adware, and tracking cookies.[2] Spyware is mostly used for the purposes of tracking and storing Internet users' movements on the Web and serving up pop-up ads to Internet users.

Whenever spyware is used for malicious purposes, its presence is typically hidden from the user and can be difficult to detect. Some spyware, such as keyloggers, may be installed by the owner of a shared, corporate, or public computer intentionally in order to monitor users.
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Encryption - Short Note of IT-DAIBB

In cryptography, encryption is the process of encoding messages or information in such a way that only authorized parties can read it.[1] Encryption does not of itself prevent interception, but denies the message content to the interceptor.

In an encryption scheme, the message or information, referred to as plaintext, is encrypted using an encryption algorithm, generating ciphertext that can only be read if decrypted.[2] For technical reasons, an encryption scheme usually uses a pseudo-random encryption key generated by an algorithm. It is in principle possible to decrypt the message without possessing the key, but, for a well-designed encryption scheme, large computational resources and skill are required. 

An authorized recipient can easily decrypt the message with the key provided by the originator to recipients, but not to unauthorised interceptors.
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Mobile Apps - Short Note of IT-DAIBB

A mobile app is a computer program designed to run on smartphones, tablet computers and other mobile devices.

Apps are usually available through application distribution platform, which began appearing in 2008 and are typically operated by the owner of the mobile operating system, such as the Apple App Store, Google Play, Windows Phone Store, and BlackBerry App World. Some apps are free, while others must be bought. 

Usually, they are downloaded from the platform to a target device, but sometimes they can be downloaded to laptops or desktop computers. For apps with a price, generally a percentage, 20-30%, goes to the distribution provider (such as iTunes), and the rest goes to the producer of the app.[1] The same app can therefore cost the average Smartphone user a different price depending on whether they use iPhone, Android, or BlackBerry 10 devices.
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Personal identification number(PIN)- Short Note of IT-DAIBB

A personal identification number (PIN, pronounced "pin"; often redundantlyPIN number) is a numeric password shared between a user and a system, that can be used to authenticate the user to the system. Typically, the user is required to provide a non-confidential user identifier or token (the user ID) and a confidential PIN to gain access to the system. Upon receiving the user ID and PIN, the system looks up the PIN based upon the user ID and compares the looked-up PIN with the received PIN. The user is granted access only when the number entered matches with the number stored in the system. Hence, despite the name, a PIN does not personally identify the user.

PINs are used with banking systems (where the identifying token is a card), but are also used in other, non-financial systems.The PIN is not printed or embedded on the card but is manually entered by the cardholder during automated teller machine (ATM) and point of sale (POS) transactions (such as those that comply with EMV), and in card not present transactions, such as over the Internet or for phone banking.
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