Short Notes on Correspondent banking

Correspondent banking is an arrangement under which one bank (correspondent) holds deposits owned by other banks (respondents) and provides payment and other services to those respondent banks. Such arrangements may also be known as agency relationships in some domestic contexts. 

In international banking, balances held for a foreign respondent bank may be used to settle foreign exchange transactions. Reciprocal correspondent banking relationships may involve the use of so-called nostro and vostro accounts to settle foreign exchange transactions.

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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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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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Audit Trail- Short Note of IT-DAIBB

An audit trail (also called audit log) is a security-relevant chronological record, set of records, and/or destination and source of records that provide documentary evidence of the sequence of activities that have affected at any time a specific operation, procedure, or event. Audit records typically result from activities such as financial transactions, scientific research and health care data transactions, or communications by individual people, systems, accounts, or other entities.

The process that creates an audit trail is typically required to always run in a privileged mode, so it can access and supervise all actions from all users; a normal user should not be allowed to stop/change it. Furthermore, for the same reason, trail file or database table with a trail should not be accessible to normal users. Another way of handling this issue is through the use of a role-based security model in the software. The software can operate with the closed-looped controls, or as a 'closed system,' as required by many companies when using audit trail functionality.

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Management Accounting Short Note-'Industrial sickness and its causes'

Industrial sickness is defined as"an industrial company which has, at the end of any financial year, accumulated losses equal to, or exceeding, its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year".

Internal causes for sickness:

1) Lack of finance; 

2) Bad production policies; 

3) Marketing and Sickness; 

4) Inappropriate personnel management; 

5) Ineffective Corporate management

External causes for sickness:
1) Personnel Constraint; 

2) Marketing Constraint; 

3) Production Constraint; 

4) Finance Constraint;

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Management Accounting Short Note-'Project Profile'

A project profile is a simplified description of an eventual project. In addition to defining the purpose and ownership of the project, it presents a first estimate of the activities involved and the total investment that will be required, as well as the annual operating costs and, in the case of income generating projects, the annual income.


It is simplified in a number of senses; costs may still not be well defined, minor items may be excluded, and assumptions as to the demand for the output of the investment, whether it be a childcare facility, a bridge, or canned vegetables, are probably just that – assumptions.

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MFI Short Notes on-'Bangladesh Automated Clearing House (BACH)'

Bangladesh Automated Clearing House (BACH), the first ever electronic clearing house has started live operation in Dhaka from 7 October 2010. It has two components
1. Bangladesh Automated Cheque Processing System (BACPS) and
2. Bangladesh Electronic Funds Transfer Network (BEFTN).

Bangladesh Automated Cheque Processing System (BACPS) is the electronic cheque processing of paper based instruments, uses Cheque Imaging and Truncation (CIT) technology. The system supports both intra-regional and inter-regional clearing and is based on a centralized processing centre located in Dhaka and in designated clearing regions.
BACPS participants are all commercial banks and related Government offices.
Country wide use of MICR encoded standardized instruments. These instruments include Cheques, Drafts, Pay Orders, Dividend and Refund Warrants, etc. has been ensured. At present 15,00,000 (approx.) regular and 90,000 high value cheques and other instruments are cleared through BACPS per month.
Almost 90 percent of all the clearing instruments are now being cleared through BACH.

BEFTN is the maiden initiative for electronic (credit and debit) transfer of funds. This network facilitates the transmission of funds between the banks electronically, which makes it faster and efficient means of inter bank clearing over the existing paper based system.

BEFTN is able to handle a wide variety of credit transfer applications such as payroll, foreign and domestic remittances, social security, company dividends, retirement, expense reimbursement, bill payments, corporate payments, government tax payments, veterans’ payments, government license fees and person to person payments as well as debit transfer applications such as mortgage payments, membership dues, loan payments, insurance premiums, utility bill payments, company cash concentration, government tax payments, government licenses and fees.

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Management Accounting Short Note-'Production and Operating Cycle'

The period during which the objects of labor (raw products and materials) remain in the production process, from the beginning of manufacturing through the output of a finished product. In addition to the working time, the production cycle includes interruptions in production owing to physical, chemical, and biological (natural) processes (for example, the period required for tanning leather); the character of the objects of labor; or the technology and organization of production.

 

An operating cycle is the length of time between the acquisition of inventory and the sale of that inventory and subsequent generation of a profit. The shorter it is, the faster a business gets a return on investment (ROI) for the inventory it stocks. As a general rule, companies want to keep their operating cycles short for a number of reasons, but in certain industries, a long one is actually the norm. These cycles are not tied to accounting periods, but are rather calculated in terms of how long goods sit in inventory before sale.

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Management Accounting Short Note-'Planning for profits'

Profit planning is the process of developing a plan of operation that makes it possible to determine how to arrange the operational budget so that the maximum amount of profit can be generated. There are several common uses for profit planning, with many of them focusing on the wise use of available resources. Along with the many benefits of this type of planning process, there are also a few limitations.

The actual process of profit planning involves looking at several key factors relevant to operational expenses. Putting together effective profit plans or budgets requires looking closely at such expenses as labor, raw materials, facilities maintenance and upkeep, and the cost of sales and marketing efforts.

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Management Accounting Short Note-'Cash Flow Statement Vs. Cash Budget'

The cash flow statement looks at the past while the cash budget is for planning for the future.

Cash Flow: 1) Cash flow statement shows the cash inflow 2) Preparation done of the past events 3) Use as a tool of analysis & determine likely flow of cash 4) It starts with cash & cash equivalents & end with cash & cash equivalents. 5) Basically, it prepared for financial accounting period.

Cash Budget: 1) All expected cash receipts & estimates 2) Presentation done on forthcoming events 3) Surplus cash receipts planned for profitable investments 4) It starts with cash on hand & banks 5) It may prepared for a month, quarter, half year or annual.

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Management Accounting Short Note-'Cost-Volume-Profit relationships'

Cost volume profit analysis is one of the most powerful tools that managers have at their command. It helps them understand the interrelationship between cost, volume and profit in an organization by focusing on interactions among the following five elements:

1. Prices of products; 

2. Volume or level of activity; 

3. Per unit variable cost; 

4. Total fixed cost; and

5. Mix of product sold.

Because cost-volume-profit (CVP) analysis helps managers understand the interrelationships among cost, volume, and profit it is a vital tool in many business decisions. These decisions include, for example, what products to manufacture or sell, what pricing policy to follow, what marketing strategy to employ, and what type of productive facilities to acquire.

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Management Accounting Short Note-'Hire Purchase finance'

A hire purchase, also known as a lease purchase, closed-end lease, lease-to-own or rent-to-own, is a business arrangement between a seller and a customer where the customer gets possession and use of the goods in return for a fixed number of specified monthly payments, but the seller retains ownership title rights until the customer has made the final payment. At that point, ownership title passes to the customer.

A hire purchase resembles an installment purchase, but with the crucial difference that title to the property stays with the seller during the hire term. The customer enjoys the economic benefits of ownership but also assumes the risks of damage or loss. The seller is able to account for the hire purchase as the equivalent of a sale. Normally, title to the property passes to the customer at the end of the agreement's term, but a hire purchase also can be structured so the customer takes ownership after a final balloon payment.

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SME short notes on Common Misconceptions in Pricing

The value of your property is determined by what a BUYER is willing to pay and a SELLER is willing to accept in today’s market. Buyers make their pricing decision based on comparing your property to other property SOLD in your area.
Pricing Misconceptions:

NOT ..... What you paid.
NOT..... What you want.
NOT..... What you need.
NOT..... What your neighbor says.
NOT..... What it costs to rebuild.
It is very important to price your property at competitive market value at the signing of the listing agreement. Historically, your first offer is usually your best offer.

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SME short notes on Performance budgeting

Performance budgeting is a budget that reflects the input of resources and the output of services for each unit of an organization. This type of budget is commonly used by the government to show the link between the funds provided to the public and the outcome of these services.

Performance budgeting was designed as an improvement on incremental budgeting. It is based on incremental line-item budgeting but incorporates efficiency measures into the budgetary process. Middle managers must list not only the specific expenditures on various line items but also basic operational activities in relation to money spent.
The benefits of performance budgeting are that it provides information to managers on the activities of a given unit enables managers to assess the efficiency of a given department/agency or office/branch over different years enables managers to compare the efficiency of different bureaucratic units and apportion funding accordingly.

The main weaknesses of performance budgeting are that efficiency ratings are rudimentary because they measure bureaucratic activity quantitatively rather than qualitatively not all bureaucratic activities are easily quantifiable.

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SME short notes on Financial Projection

Financial Projection is the predictions for future profit and expense for an organization or country. History, internal information, cost data, and other things are considered to get this figure. It generates a picture of where the company will be in the future as well.
 

In other word, A forecast of future revenues and expenses for a business, organization, or country. A financial projection will typically take into account both internal information such as historical income and cost data, and estimates of the development of external market factors, providing estimated figures in addition to projections of the general financial condition of the company in the future.
 

Essential element of planning that is the basis for budgeting activities and estimating future financing needs of a firm. Financial projections (forecasts) begin with forecasting sales and their related expenses. 

The basic steps in financial Projection are:
(1) Project the firm's sales;
(2) Project variables such as expenses and assets;
(3) Estimate the level of investment in current and fixed assets that is required to support the projected sales; and
(4) Calculate the firm's financing needs.
 

The basic tools for financial forecasting include the percent-of-sales-method, regression analysis, and financial modeling.

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SME short notes on Retail banking

Retail banking is when a bank executes transactions directly with consumers, rather than corporations or other banks. Services offered include savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards. The term is generally used to distinguish these banking services from investment banking, commercial banking or wholesale banking. It may also be used to refer to a division of a bank dealing with retail customers and can also be termed as Personal Banking services.

In the US the term Commercial bank is used for a normal bank to distinguish it from an investment bank. After the great depression, through the Glass–Steagall Act, the U.S. Congress required that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. This separation was repealed in the 1990s. Commercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or large businesses, as opposed to individual members of the public (retail banking).

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