For a banking sector, composite system / software which handles transactions, customer relations, regulatory compliances, MIS/ reports request is the need of the hour. Core Banking Systems (CBS) provide the solution for the same. There are number of Core Banking Software’s available in the market. More prominent and used in India are FINACLE, FLEXCUBE and BaNCS.

BaNCS Financial Package is for Banking Solution offered by Tata Consulting Services (TCS) . The Core Banking solution BaNCS is an integrated solution that automates all aspects of core banking operations across entities, languages and currencies. BaNCS is built on open architecture, component-based product suite to leverage service-oriented and event-driven architectures. Its functionalities includes the Entire range of banking products including savings, checking, overdraft and deposit accounts, Entire range of lending products, Complement of transactional services including remittance, foreign exchange, cards and trade finance, Accessibility through multiple channels, including mobile banking and web, Full integration of front-, middle-, and back-office processes, Accurate, timely and actionable information about customer relations, Single view between bank and customer and “Anytime anywhere” banking. This Financial Package is a popular core banking platform across the world. BaNCS is used by over 280 institutions in more than 80 countries. In India, State Bank of India, Allahabad Bank, Bank of Maharashtra, Central Bank of India , Indian Bank are such banks that use BaNCS Software Packages.

BaNCS OVERVIEW

1. Tran ID, Journal No. and Date

Under BaNCS the transaction number is known as Journal Number.

2. Customer Master Level Configurations

Under BaNCS the customer master details can be reviewed through “Customer Master Details” module.

3. Pointing Type Accounts / Self Reconciling Accounts

Under BaNCS, the outstanding entries are available through offline reports viz. “Audit BGL accounts age wise break up“ and “GL-Outstanding-Accnts” report.

4. Inventory Location

Under BaNCS the set of reports can be generated through VPIS (Valuable Paper Inventory System)

5. Accounts, Customer Master and Inquiry

CBS Package Menu Code / Access path Menu Name Menu Type (Inquiry

/ Report)

BaNCS Customer Management -> Enquiries -> Search by CIF Number To verify all accounts of one Customer Inquiry
BaNCS Customer Management -> Enquiries -> Search by ID Number Search using available information (ID Number) Inquiry
BaNCS Customer Management -> Enquiries -> Search by Name Search using available information (Name) Inquiry
BaNCS Customer Management ->Relationship / Ownership -> Associated Accounts Inquiry on Linked Accounts, Owned Accounts etc. Inquiry

6. Transactions

BaNCS Deposit / CC / OD Accounts & Services -> Enquiries -> Transaction Transaction Enquiry

(Additional options available: Transaction Types: 99 – All Financial, 98 – Cash Transaction, 25 – Repayment Details, 33 –

Message Details

Inquiry
BaNCS -> Branch Accounting (BGL)

-> Enquire -> Transaction

BGL Transaction Enquiry Inquiry
BaNCS Collection and Cheque Purchase -> Enquiries ->

Enquiries

Inquiry for Cheque Purchase / on Collection Inquiry

7. Clearing Transaction

BaNCS Collection and Cheque Purchase -> Enquiries ->

Enquiries

Inquiry for Cheque Purchase / on Collection Inquiry

8. Office Accounts Maintenance

BaNCS -> Branch Accounting (BGL)

-> Enquire -> Account

Enquiry on BGL Account Inquiry
BaNCS -> Branch Accounting (BGL)

-> Enquire -> Account Number Search

Search an Account Number by BGL Name Inquiry
BaNCS -> Branch Accounting (BGL)

-> Enquire -> Transaction

BGL Transaction Enquiry Inquiry

9. Loans & Advances

BaNCS Deposit / CC / OD Accounts & Services -> Enquiries ->

Deposit / CC / OD Account

To verify the Account Master Details Inquiry
BaNCS Deposit / CC / OD Accounts & Services -> Enquiries ->

Statement Print

Printing Statement of Account for a Deposit or CC / OD Report
BaNCS Deposit / CC / OD Accounts & Services -> Enquiries ->

Short

Basic details on Enquiry on Screen on Deposit Accounts Inquiry
BaNCS Deposit / CC / OD Accounts & Services -> Enquiries ->

Long

Additional Details on Enquiry Screen for Deposit Accounts Inquiry
BaNCS Deposit / CC / OD Accounts

& Services ->Interest Rate History

Details of changes in Interest Rate for an account Inquiry
BaNCS -> DL/TL Accounts &

Services -> Loan Tracking -> Operations

Loan account operations Inquiry
BaNCS -> DL/TL Accounts & Services -> Loan Processing

-> Generate Repayment

Schedules ->Action – “E”

To print Repayment schedule for a DL / TL Account Report
BaNCS -> DL/TL Accounts & Services -> Enquiries -> Short -> Option “Balance Breakup Enquiry” To view amount of Arrears & Breakup of Principal, Interest Realized, Charges & Arrear of Interest Inquiry
BaNCS -> DL/TL Accounts & Services -> Security (Primary / Collateral) -> Customer -> Enquiry ->

Enquire Security Summary

Enquire on linked collateral Inquiry

10. DD / PO, Cheque Book maintenance, Stop Payments and Security Stationery maintenance

BaNCS -> Valuable Paper Inventory

System [VPIS] -> Enquiry of VPIS -> General Enquiry

To check inventory status Inquiry
BaNCS -> VPIS -> Lost / Damaged / Cancelled Inventories Location for Lost / Damaged / Cancelled Inventories Inquiry
BaNCS -> VPIS -> Enquiry of VPIS –

>Teller Level Inquiry

Details of Inventory available at Teller level Inquiry

11. Parameters affecting automatic identification of NPAs and re-designing of audit processes

In terms of directives issued by Ministry of Finance and Reserve Bank of India, it is mandatory for banks to identify the bad loans through CBS / Systems instead of conventional methods. CBS like other software work on GIGO principle. Master Data play an important role in correct identification of Bad Loans.

Following are few scenarios wherein incorrect updation in Master Data, manipulation through transactions etc. may impact correct identification of bad loans through CBS.

Parameters Auditors’ Primary Checks BaNCS Support System
Discrepancies in setting up the EMI / Installments Ø Whether EMI correctly setup.

Ø Whether EMI / installment amount is matching with the Sanctioned Terms.

Ø Whether periodicity of Installment is correctly classified as per Sanctioned Terms?

DL/TL Accounts & Services -> Enquiries -> Account

– Deposit / CC / OD Accounts & Services ->

Ø Enquiries -> Deposit / CC / OD Account (Short & Long Inquiry options are available under both menu.)

Multiple sets of EMI / Installments Ø For case of Multiple sets of EMI e.g. For 1-5 years EMI of Rs. 7,000 and after 5 years Rs. 7,500

Ø Whether sets of EMI are properly entered?

Ø Is there any substantial difference between 1st set of EMI and 2nd or other sets (e.g. 1st set Rs. 5,000 and 2ndRs. 1,00,000) which cast doubt on debt serviceability?

– DL/TL Accounts & Services -> Enquiries -> Account

– Deposit / CC / OD Accounts & Services ->

Ø Enquiries -> Deposit / CC / OD Account (Short & Long Inquiry options are available under both menu.)

Manipulation in SL / DP Ø Changes in SL / DP should be cross checked with Sanctioned Letter.

Ø Whether any change in Limit is supported by necessary documentation?

Ø Tailor-made report on Changes in Account Limits
Incorrect moratorium period Ø Based on moratorium period CBS will identify the Loan Installment and will track repayment.

Ø In case the moratorium period / installment start date is erroneously updated system will not show correct result.

Ø Account Master details (Long Inquiry)
Re-phasement without reporting it as reschedule Ø Loan Account Installments are rephased / recalibrated without reporting the same as Re-schedule.

Ø Verify whether any change in Repayment instruction is made through System. Compare the said accounts with list of Restructured Accounts.

Ø Account Master details (Long Inquiry) Report containing details of all the cases wherein EMI / Installment is changed should be sought
Installment Start Date is Future Date Ø Check whether Installment Start Date entered as per sanctioned term?

Ø In case of future date system will not identify installment and any repayment received will be shown as “Overflow”.

Ø Account Master details (Long Inquiry)
Fictitious credit through Office Account/ Inter-branch Account Ø Are there any quarter / year end credits cited in the account?

Ø Check the source of Credit Entries.

Ø Review transactions in Office Accounts / Inter Branch Accounts.

Ø Deposit / CC / OD Accounts & Services -> Enquiries -> Transaction

Ø DL/TL Accounts & Services -> Enquiries –

> Transaction

Round tripping from internal accounts Ø Close scrutiny of transaction and review of chain / series of transaction for accounts with deficiency is required.

Ø Such transactions will inflate the Credit Turnover in the account.

Ø Deposit / CC / OD Accounts & Services -> Enquiries -> Transaction

Ø DL/TL Accounts & Services -> Enquiries -> Transaction

Temporary Overdrafts Ø Check whether the TOD is sanctioned in order to bring the overdrawn limit to base level

additional facility through TOD is sanctioned.

Ø TOD Report
Devolved bills parked in Office Accounts and not in limit account Ø Devolved Bills under LCs are required to be debited to the Limit Accounts only. Assessment of Asset Classification will be based on composite overdrawn portion Limit + LC Devolved amount (if any on devolvement)

Ø Check whether the amount of devolvement of LC backed bills are parked in Office Accounts or any separate account?

Ø Report on Devolved bills under Import LC
Multiple CUST ID to prevent the other account from becoming NPA Ø Check whether multiple CUST IDs have been opened for the borrower with different accounts?

Ø NPA Report and search all the case by few characters of Name.

Ø Customer Management -> Enquiries -> Search by Name

12. Important Interest Parameters

i) OD/CC Accounts-> Interest Rate History ii) DL / TL -> Interest Rate History

13. Audit of Office Account Transactions through CBS

Office accounts are opened for the purpose of parking entries till the time the final effect is not determined. However, at various occasions it has been observed that the entries remain in the said parking accounts for a long period. Moreover, in case of weak monitoring of the said accounts, the Office Accounts are susceptible to fraud and misappropriation.

There are various types of office accounts.

1. Based on Functionality

a. Pointing Type / Self Reconciling Accounts

b. Non Pointing Type Accounts

2. Based on Type of Entry

a. Sundry Accounts, Suspense Accounts

b. EOD/BOD Check Accounts

c. Inter branch Account

d. Mirror Accounts

e. Pool Accounts

Following are few audits actionable for auditor carrying out audit of Office Account Transactions.

Events Audit actionable BaNCS support system
Cash Payment from Office Accounts Authorization of Transaction as per Delegated Authority BGL -> Enquire -> Transaction
TOD through Office Accounts Through ineligible credit originating from a office account, customer can be accommodated.

It also circumvent the number of TODs granted to Customer.

Moreover, interest will not be applied in the said case.

BGL -> Enquire -> Transaction
Parking of Cash Difference in Office Accounts, Clearing / Remittance differences through Office Accounts Difference in Reconciliation, Cash Shortage debited to Office Account and not reversed.

Review ledger account in detailed.

BGL -> Enquire -> Transaction

“Outstanding BGL Transaction” Report

Rotation of entries in Office Accounts To prevent entry being reported as long outstanding entry, a new transaction with debit and credit leg in the same account is posted. Thus, the system considers the new transaction date for reporting as outstanding entries.

Review transactions with same Debit and Credit amount through Ledger Scrutiny.

BGL -> Enquire -> Transaction
Correctness in mapping of reversal transaction to originating transaction If the transactions have not been reversed against the related originating entries the report generated by CBS will show incorrect outstanding items. BGL -> Enquire -> Transaction
Value Dated (Back Dated) Transactions Transaction credited in the Advance type accounts, Operative accounts with a value date (Back date) wherein the clear funds were not available in the office accounts.

Review the transactions from Revenue Leakage perspective.

BGL -> Enquire -> Transaction
Round Tripping Rotation of entry from office account to operative account(s) without any justification / source document.

Review the transactions from the Perspective of inflating credit turnover of account.

BGL -> Enquire -> Transaction
Advance paid for Fixed Assets not capitalized Entries for payment of advance against procurement of Fixed Assets not reversed. BGL -> Enquire -> Transaction

“Outstanding BGL Transaction” Report

Income realized not credited to Revenue Account Loan Installment received from Customer, not adjusted.

Processing Fees received, not credited to Income Account

Charges collected, not credit to Income Account

BGL -> Enquire -> Transaction

“Outstanding BGL Transaction” Report

14. Audit Activity for LFAR and Tax Audit Requirements

Following are few checkpoints for auditors for reporting under Long Form Audit Report along with suggested system support.

Audit Activity / Process

/ Audit Area

Auditors’ Primary Checks BaNCS Support System
Cash Ø Physical verification of Cash Balance

Cash Balance as on the date of Audit Period

Ø -> Reports -> Cash Related -> View Cash Summary (Click on Fetch)

Ø -> Branch Reports -> Cash Officer’s Jotting Book Report

-> Reports -> Printing Reports -> Cashier / Teller Cash Report

Balances with RBI / SBI / Other Banks Ø Balance as on Date

Ø Transactions in Mirror Accounts

Reconciliation Statement (Generally outside of CBS)

-> Branch Accounting (BGL) -> Enquire -> Transaction
Advances Sanction Limit / Drawing Power setup Ø DL/TL Accounts & Services -> Enquiries -> Account

Deposit / CC / OD Accounts & Services -> Enquiries -> Deposit / CC / OD Account

Advances Ø Account & Customer Master parameters setup viz.

Ø Interest Parameters (Regular & Penal Interest)

Ø Repayment Instructions

Ø Standing Instructions (SI) Parameters

Linking of Interest Rates with Benchmark Rates

Ø DL/TL Accounts & Services -> Enquiries -> Account

Ø Deposit / CC / OD Accounts & Services ->

Enquiries -> Deposit / CC / OD Account (Short & Long Inquiry options are available under both menu.)

Advances Transactions in Borrower’s Account Ø Deposit / CC / OD Accounts & Services -> Enquiries -> Transaction

Ø DL/TL Accounts & Services -> Enquiries -> Transaction

Advances Interest Rate History Ø Deposit / CC / OD Accounts & Services -> Interest Rate History

Ø DL/TL Accounts & Services -> Interest Rate History

Advances Ø Conduct of Account and Credit Turnover

Ø Turnover of CC Account based on Borrower’s Business profile

In case of Loan accounts ACTUAL recovery of Instalments and Interest

Ø DL / TL Accounts & Services ->Enquiries –

>Long

Ø Deposit/CC/OD Accounts & Services –

>Enquiries ->Long

Advances Temporary Overdraft Ø Deposit / CC / OD Accounts & Services -> Enquiries -> Interest Rate History -> Select ‘Limit history’ from drop down menu
Advances Ø Non-Performing Asset

Search an Account based on Criteria

Ø DL / TL Accounts & Services ->Enquiries –

>Short -> Select Option “1” – TL / DL

[Long Inquiry for NPA Date]

Ø Deposit/CC/OD Accounts & Services –

>Enquiries ->Short -> Select Option “2” – CC / OD [Long Inquiry for NPA Date]

Ø Common Processing ->Overdue / NPA –

>NPA Enquiry (Risk Grade Inquiry / NPA Status Inquiry)

Advances Interest Report Ø Product Sheets – To be requested from Data Center (if not available through user login)
Advances Primary & Collateral Security Maintenance Ø DL/ TL Accounts & Services -> Security (Primary/ Collateral) ->Customer -> Amend / Enquiry ->Amend / Enquire Security
Advances Lien Marking Ø DL/ TL Accounts & Services -> Security (Primary/ Collateral) ->Customer -> Amend

/ Enquiry ->Amend / Enquire Security (Under BaNCS – Collateral ID is required to be created before setting up limits)

Advances Account Ledger Printing Ø Print Menu available under DL / TL Accounts & Services and Deposit / CC / OD Accounts & Services
Advances Non Fund based Facility (LC, BG) Report generated from Trade module
Stationery Physical Verification of Stationery and confirmation of Balance as per CBS Ø Through Valuable Paper Inventory System [VPIS] module
Office Accounts (Suspense, Sundry etc.) Ø Outstanding entries for reporting

Entries outstanding – Whether any provisioning is required?

Ø Through offline reports viz. “Audit BGL accounts age wise break up “and “GL- Outstanding-Accnts” report.
Office Accounts (Suspense, Sundry etc.) Printing of Office Accounts BGL Accounting Menu
Inter Branch Account Un-reconciled transactions Through offline “Outstanding IBR Report“/ “IBR Summary report”
TDS Related TDS Information and Reports Ø Through offline monthly report on account wise / transaction wise Tax deduction.

Author Bio

Qualification: CA in Practice
Company: N/A
Location: Meerut, Uttar Pradesh, IN
Member Since: 17 Jun 2018 | Total Posts: 113
Author was Member of ICAI- Regional Research Committee 2013-14 and ICAI- Committee For Direct Taxes 2011-12 and can be reached at email [email protected] or on phone Phone: 0 1 2 1-2 6 6 1 9 4 6. Cell: 9 8 3 7 5 1 5 4 3 2 having office at 1 1 5, Chappel Street, Meerut Cantt, UP, INDIA) View Full Profile

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