Banking Software and Selection

Banking Software Selection & Use
1 | P a g e
Hailey College of Banking & Finance
TYPES OF SOFTWARE USED IN BANKS
1. CORE BANKING
Core banking is services provided by a group of networked bank branches. Bank customers may
access their funds and other simple transactions from any of the member branch offices.
Core Banking is normally defined as the business conducted by a banking institution with its
retail and small business customers. Many banks treat the retail customers as their core banking
customers, and have a separate line of business to manage small businesses. Larger businesses
are managed via the corporate banking division of the institution. Core banking basically is
depositing and lending of money.
Nowadays, most banks use core banking applications to support their operations where CORE
Banking stands for "centralized online real-time electronic banking". This basically means that all
the bank's branches access applications from centralized datacenters. This means that the
deposits made are reflected immediately on the bank's servers and the customer can withdraw
the deposited money from any of the bank's branches throughout the world. These applications
now also have the capability to address the needs of corporate customers, providing a
comprehensive banking solution.
A few decades ago it used to take at least a day for a transaction to reflect in the account
because each branch had their local servers, and the data from the server in each branch was
sent in a batch to the servers in the datacenter only at the end of the day (EoD).
Normal core banking functions will include deposit accounts, loans, mortgages and payments.
Banks make these services available across multiple channels like ATMs, Internet banking, and
branches.
2. CREDIT CARD
A small plastic card issued by a bank, allowing the holder to purchase goods or services on
credit.
Credit Card software manages end to end process starting from application/request, Issuance
and Activation, Management of PIN, Transaction Processing and Statement Generation,
Recovery of Charges, till settlement of transactions coming from various channels like POS, ATM,
and Internet etc. Credit Card software maintains all the static details as well as financial details
of the credit card.

2 | P a g e
3. DEBIT CARD
A card allowing the holder to transfer money electronically and withdraw cash through ATM
from their bank account when making a purchase
Debit/ATM Card software is integrated with the CORE banking solutions. Interface is designed
between these softwares for communication. Debit Card software manages information
capturing, linkage of debit card with CORE banking account, card generation and activation,
Management of PIN, Transactions routing to CORE banking and confirmation till settlement of
transactions coming from various channels like POS, ATM and Internet etc. Only static details
and transaction logs are maintained in the Debit Card application, whereas financial entries are
passed in the CORE banking.
4. PREPAID CARD
A card issued by a financial institution that is preloaded with funds and is used like a normal
credit card. A prepaid credit card works in the opposite way of a normal credit card, because
instead of buying something with borrowed funds (through credit), you buy things with funds
that have already been paid. This card functions like a gift card.
Prepaid Card software manages end to end process starting from application/request, Issuance
and Activation, Management of PIN, Transaction Processing, Recovery of Charges, till settlement
of transactions coming from various channels like POS, ATM, and Internet etc. Prepaid Card
software maintains all the static details as well as financial details of the credit card.
5. CONSUMER LENDING APPLICATIONS
Consumer lending software platform is uniquely positioned to enable financial institutions to
quickly configure a solution that provides complete end-to-end loan origination processing for
all types of consumer lending applications, including personal loans, home loans, revolving line
of credit, and auto loans. These also serve as workflow application.
6. WORKFLOW APPLICATIONS
A workflow application is a software application which automates, to at least some degree, a
process or processes. The processes are usually business-related but can be any process that
requires a series of steps to be automated via software. Some steps of the process may require
human intervention, such as an approval or the development of custom text, but functions that
can be automated should be handled by the application. Advanced applications allow users to
introduce new components into the operation.
For example, consider a purchase order that moves through various departments for
authorization and eventual purchase. The order may be moved from department to department
for approval automatically. When all authorizations are obtained, the requester of the purchase
3 | P a g e
order is notified and given the authorization. A workflow process may involve constant change
and update. For example, the normal approver of purchase orders may be on vacation, in which
case, the application will request approval from alternate approvers.
7. HUMAN RESOURCE MANAGEMENT SYSTEM
A Human Resources Management System (HRMS) or Human Resources Information System
(HRIS), refers to the systems and processes at the intersection between human resource
management (HRM) and information technology..
The function of human resources (HR) departments is generally administrative and common to
all organizations. Organizations may have formalized selection, evaluation, and payroll
processes. Efficient and effective management of "human capital" progressed to an increasingly
imperative and complex process. The HR function consists of tracking existing employee data
which traditionally includes personal histories, skills, capabilities, accomplishments and salary.
To reduce the manual workload of these administrative activities, organizations began to
electronically automate many of these processes by introducing specialized human resource
management systems. Currently human resource management systems encompass:
1. Payroll
2. Time and Attendance
3. Performance appraisal
4. Benefits administration
5. HR Management Information System
6. Recruiting/Learning management
7. Employee self-service
8. Absence management
9. Analytics
8. REPORTING ENGINES
Banks acquire dedicated reporting engines to meet their reporting requirement. Due to the huge
data volumes, banks dont take risk for generation of reports on their production servers as it
may result in performance issues which may hamper the customer service and eventually result
in operations and reputational loss to the bank. Data from multiple systems can be combined in
one Reporting Engine database. Reporting engines support development of complex reports
using data extracted from different banking systems to meet Management and Financial
reporting requirements including budgeting & forecasting, profitability analysis, product
development analysis etc.
Output of the data can be extracted in different report formats like pdf, excel, csv. Customized
report layouts can be designed to have presentable analytical reports showing graphs and data
etc.
1 | P a g e
Hailey College of Banking & Finance, University of the Punjab


TOPIC: Functions in Banking Software

2 | P a g e
NON FINANCIAL TRANSACTIONS
CUSTOMER
Centralized Core Banking software are customer centric software, descriptive details of customer
are all stored at one place in customer record. All other applications get linked to this and the
subsequent account opening when formal banker-customer relationship is established is also based
on customer profile thus created. All accounts, deposit contracts, limits and other facilities are
linked / tagged with a unique customer number, allotted invariably to all customers. Customer
record fetches values from various static tables which are pre-defined to suit individual banks way
of reporting or recording information. Reports, even when designed to pick information from
business applications, can always get relevant information from underlying customer records.
There are separate codes allotted to all professions / occupations viz. doctor, journalist, banker,
politician, house-wife, lawyer, teacher, etc. Based on these professions / occupations, MIS can be
generated.
CUSTOMER TYPES
Individual
o Details of Individual Customers Captured like Name, Father Name, Mother Name,
NIC details, Gender, DoB, Employment Details, Residential / Office Addresses etc
o Uniqueness based on NIC No.
Corporate
o Details of Company/Business Captured like Business Name, Registration No.,
Registration Date, Industry, Sector, Details of Partners / Directors / Office Bearers /
Trustees, Business Address etc
o Uniqueness based on Registration No.
ACCOUNT OPENING
One of the salient features of Customer Centric software is; customer account cannot be opened
unless a customer profile is created. All accounts of a customer are linked with one Customer No.
that is unique in the database.
Most common accounts opened in Core Banking Software are;
Current Account
Saving Account
Loans Account
Collection Account
3 | P a g e
Following the details which are part of the Account Record
Title of Account
Nature of Account (Single / Joint)
Type of Account (Personal / Business)
Category / Product *
Currency
Tax Details (Tax on Profit & Cash Withdrawals)
Zakat Details (For PKR Saving Accounts only)
Account Maintenance Charges Details
Account Status (Active, Dormant, Unclaimed, Debit Block etc.)
*based on the Category / Product, system automatically applies Interest Rate, Calculation Balance
Type (Daily, Monthly Average, and Monthly Minimum) and Interest Capitalization Frequency (Daily,
Monthly, Quarterly and Half Yearly).
Account Status Management
Status Details
Active All type of transactions allowed.
Dormant After lapse of 12 Months with no activity, account is classified as
Dormant. Withdrawals are restricted; customer has to appear in
person to Activate the account. However Deposit transactions are
allowed.
Unclaimed After passing subsequent 9 years in the dormancy status, i.e., if an
account is not operated upon by a customer for a continuous period
of ten years, it will be classified as unclaimed deposit account and
will be surrendered to SBP.
Operations Blocked
by Bank
Banks seize / block the operations in the account in case of
suspicious behavior on the part of account holder / any other valid
reason to restrict deposits & withdrawals in the accounts.
Operations Blocked
on Instructions of
External Agency
Banks seize / block the operations in the account based on the
instruction of some external agency like FBR, SBP, FIA etc.

CHEQUE BOOK MANAGEMENT
End to End (E2E) Cheque Book Management is done in the Core Banking Software. Follows are the
list of functions performed in Cheque Management Module of Core Banking Software.
Request Capturing: Customer fills in the request for cheque book and submits to branch official.
Branch official after verification of signatures, input the request in Core Banking System for New
Cheque Book.
Generation of file for Printer: A file is generated at the end of the day containing the cheque
books requests captured across the bank during the day and the same file is sent to Printer/Vendor
for printing.
4 | P a g e
Cheque Book receiving at Branch and Recording: Once the cheque book is printed, it is handed
over to Courier Company, the same is received at branch. Branch official mark the cheque book as
Received in Branch in system and holds it until account holder demands for issuance.
Cheque Book Issuance to Customer: As the account holder approaches the bank and demands
physical cheque book, branch official hands over the physical cheque book to account holder and
marks it Issued to Customer in system thus cheque book is treated as activated. System doesnt
accept cheque no. unless it is marked as Issued to Customer and rejects the transaction.
Cheque Leaves Management: Banks offer different sizes of cheque book based on the nature of
the account and requirement of the customer. Sample given below;
o Current (50 Leaves)
o Loan (50 Leaves)
o Saving (25 Leaves)
o Minor Accounts (10 Leaves)
Stop Payment Marking: In case the cheque / cheque book is stolen, lost or damaged by the
account holder, he approaches the bank for marking of stop payment of cheque(s) so that
unauthorized use of the cheque(s) can be avoided. Branch official marks stop payment in the
system. Once the cheque is marked as Stopped, system doesnt allow transactions against the
same cheque no. However option to withdraw the Stop Payment instruction remains available
and can be utilized. Once the Stop Payment instruction is removed, system allows transactions
against the same cheque no.
Following are the options available to mark the Stop Payment of Cheque(s);
o Individual Cheque(s) i.e. 9876078
o Range of Cheques i.e. 9876001 to 9876025
Cheque Utilized Marking: System marks the cheque as used/utilized once a financial transaction
(Cheque withdrawal, Clearing Debit, Transfer Debit against Cheque) is posted against the same.
System doesnt allow multiple financial transactions against one cheque number.

DORMANT / UNCLAIMED MARKING:
Dormant Account: All depository accounts like Current/Saving etc., which are not operated upon
by the account holders for a period of one year, are classified and marked as dormant in the Core
Banking System. This entails certain restrictions on the operation of such accounts. Credit entries
are allowed without changing the dormancy status of such accounts. Debit transactions/
withdrawals are not allowed until the account holder requests for activation of account.
Unclaimed Account: After passing subsequent 9 years in the dormancy status, i.e., if an account is
not operated upon by a customer for a continuous period of ten years, it will be classified and
marked as unclaimed deposit account in the Core Banking System and subsequently balance will be
surrendered to SBP.
5 | P a g e
FINANCIAL TRANSACTIONS

CASH DEPOSIT & WITHDRAWAL:
Cash Deposit & Withdrawal are the basic transactions done in banking in which customer deposits
cash in its account or withdraw funds against a valid cheque. These transactions can be Local
Branch or Interbranch transaction as well. Banks may charge some amount on account of providing
service to account holder at a remote branch for Interbranch Cash Deposit and Withdrawal
transactions.
Financial Entries
Cash Deposit (Inter Branch) Cash Deposit (Same Branch)
Charges Applicable (100 + 16% FED) No Charges
Dr. Cash in Hand 100,116.00 Dr. Cash in Hand 100,000.00
Cr. Customer Account 100,000.00 Cr. Customer Account 100,000.00
Cr. Income 100.00
Cr. FED 16.00

Cash Withdrawal (Inter Branch) Cash Withdrawal (Same Branch)
Charges Applicable (100 + 16% FED) No Charges
Dr. Customer Account 10,000.00 Dr. Customer Account 10,000.00
Cr. Cash in Hand 9,884.00 Cr. Cash in Hand 10,000.00
Cr. Income 100.00
Cr. FED 16.00

ACCOUNT TRANSFER
Transfer between accounts is amongst the most frequent and commonly used transactions
performed in banking. This transaction can be performed through various channels including
Branch, ATM and Internet Banking.
This transaction is intended to make internal transfers in the same branch or inter branch.
Following are the two mode of debits which are used;
Cheque: Customer Issues a Cheque and bank official debit customer account against a valid cheque
no. and remit/transfer funds in beneficiary account.
Debit Authority: This mode is used where customer doesnt issue a cheque, rather passes written
instructions to the bank to transfer specified amount to specified account on single event or at some
specified frequency.

6 | P a g e
Financial Entries
Dr. Customer A Account
Cr. Customer B Account

PAY-ORDER / BANK DRAFT MANAGEMENT

Remittance is the transfer of funds which is one of the major functions / service rendered by the
Bank to its customers.
Remittance of funds through Bank is regarded as the most popular, safe, prudent and acceptable
form of settlement of payments as physical movement of cash is fraught with risk and can also be
quite costly, for obvious reasons.
As stated above, this service is rendered by the Bank through its various products viz. Demand
Drafts / Bankers Cheques, Pay / Cash Orders, Cheques, Travelers Cheques, Telegraphic Transfers,
Mail Transfers, etc.
Issuance process:
Customer fills a Pay-order / Draft Issuance form and hands it over to bank official who after manual
scrutiny post transaction in the following manner in the relevant screen;
Place the Cheque in MICR
Update Account No.
Update Cheque No.
Input Instrument No.
Input Instrument Amount
Capture Beneficiary Details
Capture Applicant Details
Mode of Issuance (Cash / Transfer)
Complete the Transaction
Cheque Marking as Utilized
Instrument record created with Issue Status
Generation of Financial Entries
Updation of Balances in respective Account/GL
Generation of Deal Slip / Endorsement through FBP
Printing of Instrument

Financial Entries
Dr. Customer Account 9,232.00
Cr. Instrument Payable Account 9,000.00
Cr. Commission on Issuance 200.00
Cr. FED 32.00

7 | P a g e
Payment process:
Customer presents the pay-order / draft in transfer / clearing modes. After manual scrutiny, bank
official post following transaction in the system;
Place Instrument in MICR
Instrument No. Updation
Instrument Amount
Beneficiary Verification
Complete the Transaction
Status Changed to Paid
Generation of Financial Entries
Updation of Balances in respective Account/GL
Generation of Deal Slip / Endorsement through FBP

Financial Entries
Dr. Instrument Payable Account
Cr. Customer / Clearing

INTEREST CALCULATION & ACCRUALS:
Interest Rate is the rate of return for the lender. Lenders charge fixed/variable Interest on the
amount given as Loan. Banks pay Profit/ Credit Interest on the saving products i.e. Saving Accounts
and TDRs and charge Mark-up / Debit Interest on the loans accounts and contracts.

Interest rates defined as per annum rates. Per annum = per year. ALL interest rates are expressed
as annual rates.

Following formula is used to calculate the Interest Amount

Interest Amount = [Balance] x [Per Annum Interest Rate] x [No of Days] / [Days in the Year]

Type of Interest Calculation
Monthly Average: Average of daily closing balance for the whole month is calculated and profit
is paid on monthly average of the account.

Monthly Minimum: Minimum daily closing balance for the whole month is located and profit is
paid of the minimum balance of the account during the month.

Daily Ending Balance: Profit is calculated on the daily closing balance irrespective of the
monthly minimum or monthly average. Day end balance is taken for the calculation and profit
payment.

Core Banking software post daily accrual entries so that actual picture of Interest Expense and
Interest Income is available all the time.
8 | P a g e
Accrual Entry for Profit / Credit Interest:
Dr. Profit / Interest Expense
Cr. Profit / Interest Payable Account

Accrual Entry for Mark-up / Debit Interest
Dr. Mark-up / Interest Receivable
Cr. Mark-up / Interest Earned

INTEREST CAPITALIZATION
As per the product features, interest is capitalized in the accounts on the specified frequency. i.e.
Profit / Interest Payable is credited in against the Savings Accounts / TDR and Mark-up / Interest
Receivable is debited against the Loans from the Customer Loan Repayment Accounts.
Capitalization Entry for Profit / Credit Interest:
Dr. Profit / Interest Payable Account
Cr. Customer Account
Capitalization Entry for Mark-up / Debit Interest
Dr. Customer Loan Repayment Account
Cr. Mark-up / Interest Receivable

ZAKAT DEDUCTION
Zakat is deducted on the Valuation Date (First Ramadan) on Pak Rupees Savings and Profit & Loss
Sharing Accounts and Term Deposits if the credit balance in these accounts is greaten than or equal
to Nisab Amount declared by Ministry of Religious Affairs (Nisab Amount 41872.00 for 1434H) as
per Zakat and Ushr Ordinance, 1980. An automated process is designed in the Core Banking
Software to accommodate this requirement as humanly it is not possible to perform this activity on
millions of accounts.
A program is designed which is executed on the valuation day (First day of Ramadan) to deduct
zakat from accounts meeting following criteria;
Currency Pak Rupee
Saving Accounts
Balance greater then or equal to Nisab Amount
Account Holders not submitted Declaration for Zakat Exemption
CUSTOMER CHEQUING ACCOUNTS

Current Account (CA): A checking account offers easy access to your money for your daily
transactional needs and helps keep your cash secure. Customers can use a debit card or cheques to
make purchases or pay bills. Accounts may have different options or packages to help waive certain
monthly service fees. To determine the most economical choice, compare the benefits of different
checking packages with the services you actually need.

This account was introduced by the Goldsmiths of England. Due to advantages of this account
almost all the commercial banks open this account as the part of their functions. This account is
suitable for businessmen who are very often in need of money for making payments. In this account
the customer is authorized to deposit or withdraw money any time in or from the bank. The bank
does not pay any interest, rather it charge from the depositors its services which are called
"Incidental Charges or Service Charges". The cheque book is issued to the customer and can be
withdraw money any time.

Savings Account (SA): A savings account allows you to accumulate interest on funds youve saved
for future needs. Interest rates can be compounded on a daily, weekly, monthly, or annual basis.
Interest calculations are done on balance as per the product features i.e. Daily Closing Balance,
Minimum or Average Balance. Savings accounts vary by monthly service fees, interest rates, method
used to calculate interest, and minimum opening deposit. Understanding the accounts terms and
benefits will allow for a more informed decision on the account best suited for your needs.

Following the examples of Saving Accounts product having different features;

Product Minimum
Balance
Slab Interest
Rate
Calc
Balance
Profit
Payment
Freq
Other Features
Saving Gold PKR 50,000 Upto 500K 7.00% Average Monthly Free Cheque Book - No
Above 500k - Upto 10M 7.25% Free ATM - No
Above 10M - Upto 50M 7.50%
Above 100M 8.00%

Product Minimum
Balance
Slab Interest
Rate
Calc
Balance
Profit
Payment
Freq
Other Features
Saving
Platinum
0.00 Upto 500K 6.00% Minimum Half Yearly Free Cheque Book Yes
Above 500k - Upto 10M 6.25% Free ATM Yes
Above 100M 7.00%

Running Finance Accounts(RF)
Running finance is the finance offerings by financial institutions/bank against securities/collateral. It
works under the working capital finance. Specifically, the running finance is a credit facility established
for a specific time limit at variable interest rates. The running finance is implemented by means of
allowing the over-draft facility on account and the corresponding amount is determined by the repaying
capacity of the borrower. Its a Chequing Account and customers can avail transactional facilities from
various channels like in Current or Saving Accounts.

Overdraft is one sort of offering credit by the account providers, in that withdrawals are permitted
exceeding available balance of the bank account. It is nothing but an over-drawing leading to a negative
balance. For enjoying overdraft facility, there should be some agreement or approval in advance with
the account provider. Generally, the over-draft facility is offered by the banks for some maximum
amount and the same is required to be returned to them (in the respective account) within some
specified time limit.

CUSTOMER NON CHEQUING ACCOUNTS

Non Chequing Accounts (NCA): A non chequing account is the account in which cheque
book is not issued like accounts opened for collection of funds, for disbursement and repayment of
loan etc. These accounts are generally linked to main customer account and are opened for specific
reasons.

Term Deposit (TD): Term deposits, or TDs, allow you to invest your money at a set interest
rate for a pre-set period of time. TDs often have higher interest rates than traditional savings
accounts because the money you deposit is tied up for the life of the certificate which can range
from a few months to several years. Be sure you do not need to draw on those funds before you
open a TD, as early withdrawals may have financial penalties. No cheque book / ATM card is issued
against TD and funds can only be withdrawn at maturity or at request for pre-maturity subject to
penalties.


CENTRALIZED OPERATIONS

To relieve the branches of work load of various processes, centralized operations help in productivity
gain, also it minimizes the operational errors and ensures compliance of institutional and regulatory
requirements within the mandated time frame. The approach of centralization of processes helps in
achieving improved controls and process efficiency.

KEY FEATURES

Reduce Burden at Branch: Activities involving huge volume of transactions and consuming higher
amount of time are proposed to be centralized. It helps in reducing work-load / burden at branch user.

Productivity Gain: Branch users are left with more time to perform other routine activities with more
ease & comfort ensuring accuracy & completeness.

Dedicated & Specialized Staff: Dedicated and specialized staff performs functions at centralized location
that are given dedicated and extensive training to perform such activities. These users can perform
these functions more efficiently with effectiveness resulting in improved quality of work in less time.

Improved Customer Service: Branch users can better serve and guide the customer to offer them higher
level of comfort helping in achieving higher customer satisfaction.

Minimize the Operational Errors: Since these users are trained enough to perform their task and there
is no customer interaction, risk of operational errors is reduced if not eliminated.

Improved Controls & Risk Mitigation: In centralized environments, controls are more effectively
implemented. When dedicated teams are performing activities sitting at a centralized location, the
implementation of controls is more effective comparing them to users sitting in scattered remote
locations.

Compliance of Institutional & Regulatory Requirements: Resources at centralized departments are
more familiar and well-informed with the policies and regulations of the bank and the one imposed by
the regulator (SBP).

Quick Impact of Change: Since activities are centralized and performed by group of employees,
informing/updating them with any change in process, policy or regulation is easily achievable comparing
it to implement this down the line to all employees.


CENTRALIZED PROCESSES

Following are the processes which are commonly centralized;

Account Opening
Account Opening is amongst the most sensitive functions performed in branch banking. This
function is centralized to ensure that all requirements related to account opening are fulfilled,
relevant supporting documents are obtained meeting all the internal as well regulatory
requirements.

Clearing
Clearing processing is centralized as it involves huge number of transactions. In branch banking,
users are already engaged in multiple activities like transactions processing as well as in
customer dealing, thus this function is performed centrally to share the burden of work which
enhances productivity at branch level also minimizes the chances of operational errors.

Bulk Salary Processing
Branches maintaining salary accounts become overburdened in salary days when salary of the
account holders is processed in system and also there is long queue of people waiting to
withdraw funds, also branches have to perform routine activities thus the higher volume of
transactions and rush of work often results in errors and reconciliation issues. Core Banking
software support centralized processing of salary files, companies provide salary data in soft
form and same is processed in system through file upload. In this automated process, human
intervention is minimized which results in accurate posting, logs are maintained for accepted
and rejected transactions which helps in resolving the reconciliation issues.

Credit Review, Loan Approvals and Limit Set-up
Before the disbursement of loan, banks take care of all factors in borrowers fact sheet like
business details, need of loan, customer expertise in that business, duration since he is doing
this business, customer repayment capacity, type of property given as security/collateral,
customer credibility etc. There are specialized positions of credit & risk analysts who review all
of the above mentioned details and accept / reject loan proposals, also they take care of all of
the internal as well as regulatory requirements to avoid financial loss in future.

Statement Rendition
As per instructions of State Bank of Pakistan, banks are required to send Statement of Account
to account holders on specific frequency (for Current and Saving Account on Half Yearly basis
and Basic Banking Accounts on annual basis). If this regulatory requirement is not complied, SBP
charge penalty on per instance basis. Branches operating in big cities as well as in remote areas
often fail to comply 100% thus banks have to bear heavy penalties. As the data is placed at
central location, now its possible to extract data centrally, generate account statements and
dispatch it to customer through approver courier. Courier companies share the details of
successfully delivered Statement of Accounts in soft form which includes shipment no, account
no., recipient name, date & time which are kept in record for future reference and addressing
customer & SBP queries.

Notices & Reminder Letters
Banks issue notices and reminder letters to account holders on a particular event for
information and reminding purpose like NIC Expiry Letter, Locker Overdue Letter, Dormant
Account letters etc. In de-centralized model, branches were sending these letters to account
holders which had certain flaws and failures resulting in audit objections and related queries.
With the support of Core Banking Software, now data can be extracted at a centralized location
and letters can be sent centrally through courier and later can be tracked through the
confirmation provided by the courier company.

Centralized Payment of Tax to Tax Authorities
Banks collect tax from the account holders on behalf of tax authorities and submit it on a
specific frequency like tax on profit, tax on cash withdrawal, tax/duties on imports and exports
etc. which are later deposited to relevant federal and provincial tax authorities. In is compulsory
to deposit tax on the specified frequency failing which results in audit queries and objections.
Branches some time fails to do so, to handle this, tax collected by all the branches is being
deposited centrally through designated department like Finance Group.

Centralized Payment of Zakat to MORA
Banks collect zakat from account holders on 1
st
day of Ramadan from Pak Rupee Saving accounts
having balance greater or equal to the Nisab amount. In core banking software, a program is
designed to deduct zakat through automated process and later collective amount is surrendered
to Ministry of Religious Affairs (MORA) centrally.

Budget Allocation and Monitoring
Bank allocate budget of relevant heads keeping in view the historical trend and operational
requirements to its branches/offices. It is the responsibility of the respective branch/office to
ensure that the expenses for the year remain within the budget. Centralized department
monitor the expense position regularly to ensure that expenses remain within the allocated
budget and in case of any exception, budget is revised and relaxation is given based on genuine
reasons.

Vendor Payments
Vendor payments are done centrally to avoid fake payments, over billing etc keeping in view the
budget allocations and consumptions.

Banking Software and Selection

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Banking Software and Selection

Uploaded by

Copyright:

Available Formats

Banking Software Selection & Use

You might also like