Banking and Financial Institution Operations
This domain tests whether you can run a branch or back-office unit safely: cash and vault control, reconciliation, reserve maintenance, clearing and settlement, accounting entries, and continuity. Questions are practical-given balances or an incident, what entry, report, or escalation is correct?
Core rules and controls
- Cash is held under joint custody. Vault keys, combinations, and till cash are separated; teller and vault limits are set in writing and reviewed.
- CRR is maintained on domestic-currency deposits with NRB; SLR is held in specified liquid assets. Both are monitored daily. A shortfall attracts penalty and must be corrected immediately.
- Material entries follow maker-checker and leave an audit trail. Suspense and inter-branch accounts are reconciled and aged, not left to “adjust later”.
- Clearing differences, ATM cash, and nostro accounts are reconciled daily. RTGS handles high-value irrevocable payments; NCHL-ECC handles cheque clearing; connectIPS handles retail credit transfers.
- Segregation of duties separates custody, recording, and authorisation. Backups, BCP testing, and incident logging are operational controls, not IT’s private problem.
Worked example
Assume CRR is 4% and domestic-currency deposits average NPR 10,000 million. Required CRR = 10,000 × 4% = NPR 400 million. The NRB balance at close is NPR 385 million, so the shortfall is NPR 15 million. Correct action: fund the account before the cut-off if possible; if not, report the shortfall, record the penalty, and escalate to treasury and compliance. You cannot treat SLR securities or vault cash as CRR.
Traps
Treating SLR as CRR, netting deposits incorrectly, covering a teller shortage from another till without documentation, backdating entries, and leaving suspense items unexplained at month-end.