Counter Se Core Banking – Accounts, KYC, Cheques, Remittance and Digital Payments

Banking Taiyari Nepal: From Zero to Expert

Banking Taiyari Nepal, Part 2 of 5

A plain-language guide for Nepal banking job preparation. Every term comes with its meaning and the reason banks use it. Figures and limits change often, so confirm current numbers on the NRB website.

Sita Opens Her First Account

Sita walks to the customer service desk with her citizenship certificate, two passport photos and her shop registration papers. The officer smiles, hands her a form, and says, "Madam, we will do your KYC first."

Sita thinks, "I only want to keep my money. Why so many questions?" The officer explains: "Because the bank must know who you are before it accepts your money. It is the law, and it also protects you."

That small conversation holds the most important idea of daily banking: a bank never deals with a stranger. Everything in this post, from accounts to cheques to digital payments, rests on this idea. First know the customer, then serve the customer.

The Four Faces of a Bank Account

Banks offer many account names, but most of them are variations of four basic types.

1. Savings Account (Bachat Khata)
For individuals who want to keep money safe and earn a small interest. You can deposit and withdraw anytime. Interest is calculated on your balance and added to your account periodically. Banks keep a minimum balance rule for many savings products. Why? Because running an account costs money, and a very small balance does not cover it.

2. Current Account (Chalti Khata)
For businesses that make many transactions daily. It usually pays little or no interest and allows frequent withdrawals and cheque use. Sita, with her momo shop, needs a current account because suppliers, staff and customers all move money every day. Some current accounts allow an overdraft (we will meet it in Post 3).

3. Fixed Deposit / Term Deposit (Madhdhi Nikshep)
You lock your money for a fixed period, like six months or three years, and in return the bank pays a higher interest rate. Why higher? Because the bank can use that money safely for a known period. If you break it early, you may lose some interest. This is the bank's way of saying, "You gave me certainty, so I give you a better price."

4. Call Deposit
A special kind of savings or deposit that pays a higher rate if you maintain a larger balance, but you can still withdraw easily. Banks use it to attract bigger balances without locking them for long.

There are also special accounts: minor accounts for children (operated by a guardian), joint accounts (two or more holders), institutional accounts (companies, schools, NGOs), women's savings accounts with special benefits, and recurring deposit schemes where you deposit a fixed amount every month, like a modern dhukuti you do not have to chase.

Why banks have so many account types: Different customers have different needs. A student wants zero fees, a trader wants speed, a retiree wants safety. By designing accounts for each group, the bank collects cheap deposits and keeps customers happy.

KYC: The Three Letters Every Banker Respects

KYC means Know Your Customer. It is a set of checks that every bank must do before opening an account and keep updating afterwards.

A normal KYC for an individual asks for:

Full name, date of birth, address (permanent and current)
Citizenship certificate or National ID (Rastriya Parichaya Patra), passport for foreigners
Photographs and signature
Occupation and source of income
Expected monthly transactions
Nominee details (who gets the money if the holder dies)

For businesses or companies, the bank also asks for registration certificate, PAN / VAT registration, company documents, board resolution, and, importantly, who truly owns the company.

Why is KYC so strict? Three reasons:

To stop money laundering (turning illegal money into clean-looking money).
To stop terror financing.
To protect the customer from fraud and from other people misusing their name.

Customer risk rating. Banks sort customers into low, medium and high risk. A salaried teacher with a small, regular income is low risk. A foreign-funded organisation or a person in a politically sensitive position is high risk, and gets extra attention. This is called risk-based approach, and it is the modern backbone of compliance.

Important KYC words:

CDD (Customer Due Diligence): Normal checks done on every customer.
EDD (Enhanced Due Diligence): Extra, deeper checks for high-risk customers.
PEP (Politically Exposed Person): A person who holds or held a prominent public position, and their close relatives or associates. They are not "bad," but because of their position they carry higher corruption risk.
Beneficial Owner: The real person who finally owns or controls a company, even if the name on paper is someone else.
KYC update: Periodic refreshing of customer information. Old or missing KYC can lead to restrictions on the account.

Taiyari Tip: If an interviewer asks, "What is the most important document in banking?" a smart answer is: "The KYC form, because every transaction afterwards depends on knowing the customer."

The Daily Rhythm: A Day Inside a Branch

Let us follow one ordinary day, so that the words stop feeling abstract.

9:30 AM – Opening. The branch opens the vault in the presence of two staff (never one). The cash in the vault is counted. This is the first example of a golden rule you will see again and again: dual control. No important key or access is held by one person alone.

10:00 AM – Counters open. Tellers receive their working cash from the vault. Their opening cash is written in the system. Customers come for deposits, withdrawals, account opening, cheque deposits and remittance pickup.

Midday – Peak hour. Cash deposits of businesses, utility payments, salary withdrawals and cheque clearing requests pile up.

3:00 PM – Cut-off time. For many services, the bank has a cut-off time. A transaction received after the cut-off is processed the next working day. Why? Because interbank settlement, clearing and reporting follow fixed schedules.

Closing – End of day (EOD). Tellers count their cash and match it with system balances. The system runs end-of-day processing: interest is calculated, entries are summed and the day is closed. If there is even a small difference, the branch must find it and explain it. That process is called reconciliation.

Notice what the bank cares about: matching. The cash in the drawer must match the system. The system must match the ledger. The ledger must match the other bank's records. A banker's brain is a matching brain.

Maker-Checker: The Rule That Saves Banks

If you remember only one control principle, make it this one.

Maker-Checker (also called the four-eyes principle) means one person makes an entry and a different person checks and approves it. For example, a clerk enters a large payment, and a supervisor approves it before it goes through.

Why? Because fraud and mistakes are most likely when one person controls everything. If two independent people must agree, the chance of error or fraud falls sharply.

You will hear similar ideas:

Dual control for vault keys
Segregation of duties: The person who handles cash does not also reconcile the books.
Authority limits: Each staff level can approve only up to a certain amount.

Debit and Credit: The Part That Confuses Everyone

When the SMS says "Your account has been credited with Rs 5,000," you are happy. When it says "debited," you are sad. So in daily life, credit means money coming in and debit means money going out of your account.

The confusion starts in accounting. In the bank's books, your deposit is a liability for the bank. When you deposit, the bank credits your account (increasing the liability it owes you). When you withdraw, the bank debits it. At the same time, the bank's cash (an asset) goes up when you deposit, which is a debit to cash.

A short memory trick for beginners:

Customer deposit → customer account is credited, bank's cash is debited.
Customer withdrawal → customer account is debited, bank's cash is credited.

Every transaction in banking has two sides. This is double-entry bookkeeping: every debit has an equal credit. That is why a bank's books always balance, and why a mismatch signals an error or fraud.

Cheques: Paper That Moves Money

Even in the digital age, cheques remain a favourite topic in banking exams. A cheque is a written order from an account holder (the drawer) asking the bank (the drawee) to pay a certain sum to a named person (the payee).

Types and features to know:

Bearer cheque: Payable to whoever holds it. Convenient but risky if lost.
Order cheque: Payable to a named person or their order.
Crossed cheque: Two parallel lines on the face. It cannot be cashed over the counter; it must be deposited into an account. This reduces theft risk.
Account payee cheque: Crossing that says the money must go to the payee's account only.
Post-dated cheque: Dated in the future. Not payable before that date.
Stale cheque: A cheque presented after the validity period (commonly six months). Banks refuse it.
Self cheque: Written to oneself, for cash withdrawal.

Cheque bounce (dishonour). If the drawer's account lacks enough balance or the signature does not match, the cheque is returned unpaid. The bank gives a return memo with the reason. A bounced cheque can lead to penalties and legal trouble for the drawer under Nepal's law on negotiable instruments and banking offences.

Why a bank checks a cheque carefully: the bank is the one paying out. It checks signature, date, amount in words and figures, the account balance and any alteration or overwriting. A mistake could make the bank liable.

Clearing. When Sita deposits a cheque drawn on another bank, the money does not teleport. Banks exchange cheques and settle the net amounts. This process is called clearing, handled today through electronic systems run by the national clearing infrastructure (Nepal Clearing House Limited, NCHL, plays a major role).

Interest, Tax and Other Small Words

Interest accrual: Interest builds up daily on your balance, even if it is credited to your account only every quarter or month. Why "accrual"? Because the bank must record the expense every day, not only on payment day.
TDS on interest (Tax Deducted at Source): The bank cuts tax from your interest and sends it to the government. For individuals the rate has usually been lower than for institutions; confirm the current rate. Why at source? It makes tax collection simple and hard to avoid.
Lien: A bank's right to hold your money or asset until a debt is paid. If Sita takes a loan against her fixed deposit, the bank puts a lien on the deposit, so she cannot withdraw it.
Freeze / hold: Account restriction because of a court order, a regulator's instruction, unpaid dues or KYC problems.
Dormant account: An account with no customer transactions for a long time (the period is set by bank policy and NRB rules). Why do banks watch dormant accounts? Because fraudsters like them: nobody checks, so misuse goes unnoticed. Reactivation needs fresh KYC.
Nominee: The person who receives the account balance if the holder dies.
Specimen signature: The signature on file, used to verify cheques and withdrawals.
Mandate: The written authority that says who can operate an account and how (singly, jointly, either-or).

Cards, ATMs and Mobile Banking

Sita soon asks, "Do I have to come to the branch every time?" No.

Cards

Debit card: Spends money you already have in your account. Most common in Nepal.
Credit card: Lets you spend the bank's money up to a limit and repay later, with interest if you delay. In Nepal, credit cards exist but are less widespread.
Prepaid card: You load money first, then spend. Often used for travel or by teenagers.
Card networks: International ones such as Visa, Mastercard and UnionPay, and Nepal's own domestic switch network that connects local ATMs.

Channels

ATM: Cash and balance services anytime.
POS (Point of Sale) machine: Card payments at shops.
Mobile banking and internet banking: Check balance, transfer funds, pay bills.
QR payments: Scan a QR code and pay from your bank or wallet. Services like Fonepay have made this common even at small tea stalls.
Wallets: Digital wallets like eSewa and Khalti are run by licensed payment companies. You load money from a bank and spend or send it.

Why banks push digital channels: A transaction at a counter costs the bank real money (staff, space, paper). A digital transaction costs very little. Digital is also faster and leaves a clear electronic trail, which helps against fraud and money laundering.

Interbank transfers. Services like ConnectIPS (run by NCHL) allow you to move money from one bank account to another, even across banks. Large-value urgent transfers between banks are handled through the central bank's RTGS (Real Time Gross Settlement) system, where each payment is settled individually and immediately. Why "gross" and "real time"? Because large payments cannot wait for netting at day-end; the risk is too big.

Payment regulation. Payment companies (wallets, switches) are licensed under the Payment and Settlement Act, and NRB supervises them. So "digital payment" in Nepal is not a Wild West; it has a rulebook.

Remittance: Nepal's Lifeline

No Nepal banking series is complete without remittance. Millions of Nepalis work abroad, and the money they send home is a major part of the national economy. For banks, remittance is both a service and a deposit source.

How it works (simple version):

A worker in Qatar pays a licensed money transfer operator abroad.
The operator informs its partner in Nepal (a remittance company or a bank).
The family collects cash or receives the money directly in their bank account.

Words you will meet:

Inward remittance: Money coming into Nepal.
Outward remittance: Money going out of Nepal for allowed purposes (education, medical, business, with documents and limits).
Remittance company: Licensed entity that handles transfers. Many Nepali banks partner with them.
Beneficiary / Sender: The receiver and the sender.
Hundi / Hawala: Informal, unlicensed money transfer systems. They are cheap and fast but illegal in Nepal's regulated system, because there is no record and no KYC. This is why banks and NRB fight them.
Pay-out: The act of giving the money to the receiver.
Remittance-linked products: Special deposit or loan products that reward customers who receive remittance through the bank.

Why banks love remittance: it brings in foreign currency (which Nepal needs for imports), builds long-term customers, and earns commission.

Term Box: Post 2 Glossary

KYC – Know Your Customer. Why: No customer, no account; it blocks fraud and laundering.
CDD / EDD – Normal and enhanced checks. Why: Higher risk needs deeper checks.
PEP – Politically Exposed Person. Why: Higher corruption risk, so extra attention.
Beneficial Owner – The real owner of a company. Why: Criminals hide behind company names.
Maker-Checker – Two persons for one important entry. Why: Stops fraud and error.
Dual control – Two persons hold access to the vault. Why: No single point of trust.
Reconciliation – Matching two records. Why: Differences reveal mistakes.
EOD – End-of-day processing. Why: Closes the books and calculates interest.
Cut-off time – Last time to process a transaction for the same day. Why: Settlement runs on schedule.
Clearing – Exchange and settlement of cheques between banks. Why: Money must move between banks safely.
RTGS – Real-time settlement for large payments. Why: Speed and risk control.
Lien – Hold on money or asset. Why: Security for a loan.
Dormant account – Inactive account. Why: Higher fraud risk.
TDS – Tax cut at source. Why: Easy, reliable tax collection.
Hundi – Informal money transfer. Why it matters: A key money-laundering and regulatory concern.

Taiyari Tip: How to Study This Topic

Learn the four account types and one-line reasons why each exists.
Practise writing a KYC checklist from memory.
Draw a simple picture of a cheque and label each part and each type of crossing.
Make a table: debit/credit effect on customer account vs bank cash.
Open the websites of two Nepali banks and read their account product pages. Compare them. Interviewers love candidates who know real products.
Learn the names of the big payment players: NCHL, ConnectIPS, Fonepay, eSewa, Khalti.

Interview Corner

Q1. Why do banks ask so many questions in KYC?
Model answer: "Because the bank must know who the customer is, where the money comes from and what activity is expected. This protects the bank and the country from fraud, money laundering and terror financing, and it also protects the customer."

Q2. What is maker-checker and why is it important?
Model answer: "It means one person prepares a transaction and another independent person verifies and approves it. It reduces errors and prevents one person from committing fraud alone."

Q3. What is a crossed cheque?
Model answer: "A cheque with two parallel lines on its face. It cannot be paid in cash across the counter; it has to be credited to a bank account. This lowers the risk of a stolen cheque being encashed."

Q4. A customer's cheque bounced. What reasons can there be?
Model answer: "Insufficient balance, signature mismatch, overwriting or alteration, stale or post-dated cheque, stop-payment instruction, account frozen or closed."

Q5. Why are fixed deposits paid higher interest than savings accounts?
Model answer: "Because the money is locked for a fixed time, so the bank can use it with more certainty and for longer-term lending. The customer is rewarded for giving up liquidity."

Q6. Why does the bank watch dormant accounts?
Model answer: "Because inactive accounts can be misused without the owner noticing. The bank restricts them and asks for fresh KYC to reactivate."

Quick Recap of Post 2

Main account types: savings, current, fixed/term, call; plus special accounts.
KYC, CDD, EDD, PEP and beneficial owner are the compliance language you must master.
A branch day runs on dual control, maker-checker, cut-off time, EOD and reconciliation.
Cheques have types (bearer, order, crossed, account payee, post-dated, stale) and can be dishonoured.
Digital payment in Nepal runs through cards, QR, wallets and interbank rails, regulated by NRB.
Remittance is both a banking service and a foreign-currency source; hundi is the illegal rival.

Sita's momo business is booming. She wants a bigger steamer, a second outlet and a delivery bike. She does not have enough cash. In Post 3, she asks the bank for money, and discovers the most exciting, and most dangerous, part of banking: lending.

Next in the series: Post 3, Loan Ko Khel: How Banks Lend, Take Security, Price Loans and Handle Bad Loans

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