Banking Awareness Capsule by Affairscloud Newww

AC Banking Awareness Capsule

Hello Dear AC Aspirants, Aspirants, Here we are providing best AC Banking Awareness Capsule keeping in mind of upcoming Banking exams which cover important banking institutions & its activities . The content of this capsule based on previous main exams held for POs, Clerks, Officers and Assistants positions. In this capsule c apsule we covered almost all the important banking institutions, process, terms & definitions and abbreviations. It is in the short manner. PLS find out the links of AffairsCloud Exam Capsule and monthly CA Capsule all also the Static GK Capsule which cover almost all questions of GA section for competitive exams. All the best for upcoming Exams with regards from AC Team.

Help: If You Satisfied with our Capsule mean kindly donate some amount to BoscoBan.org (Facebook.com/boscobengaluru ) or Kindly Suggest this site to your family members & friends !!!

Banking Awareness Capsule

Banking Awareness Capsule Contents First In Banks In India ............................................................................................................................................. ............................................................................................................................................. 2 Indian Currency ............................................................................................................ ......................................................................................................................................................... ............................................. 3 Reserve Bank of India ........................................................................... ............................................................................................................................................. .................................................................... 4 RBI Committees In Recent Times................................................................. Times......................................................................................................................... ........................................................ 7 Some Important Banking Institutions .............................................................................................................. ................................................................................................................ 8 The Emergence of Small Finance and Payment Banks .......................................................... ............................................................................... ..................... 16 Credit Rating Agencies in India .......................................................................................................................... ..........................................................................................................................18 Know Your Customer Guidelines .................................................................................................. ....................................................................................................................... ..................... 19 Types of Accounts, Deposits, Cheques, DDs & BSBDS ................................................................................. ................................................................................. 20 Types of Payments & Money Transfer ............................................................................................................. .............................................................................................................22 Balance Sheet ............................................................................................................................................................ ............................................................................................................................................................27 NPA and Recovering NPA .......................................................... ............................................................................................................................ ............................................................................ .......... 28 Basel Accords ............................................................................................................................................................ ............................................................................................................................................................29 Various Types Of Risks ..................................................................................................................... .......................................................................................................................................... ..................... 30 Inflation and its types ................................................................................................. ............................................................................................................................................ ...........................................30 Financial Inclusion Schemes .............................................................. ............................................................................................................................... .................................................................31 Financial Market ...................................................................................................................................................... ......................................................................................................................................................33 Priority Sector Lending ......................................................................................................................................... .........................................................................................................................................37 Miscellaneous ......................................................... ........................................................................................................................... .................................................................................................. ................................39 Banks Head Quarters & Taglines .................................................................................................. ....................................................................................................................... ..................... 44 Important Banking Abbreviations .................................................................................................................... .................................................................................................................... 45 Version 1 – Updated on June 2017 .................................................................................................................... 51 Apps launched by Various Banks(2016-2017 May) ............................................................... .................................................................................... ..................... 57

First In Banks In India 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

The First Bank in India – Bank of Hindustan (1770- Calcutta ) First Governor of RBI – Mr. Osborne Smith First Indian governor of RBI – Mr. C D Deshmukh First Bank to Introduce ATM in India – HSBC First Bank to introduce saving Bank in India – Presidency bank in 1830 First Bank to Introduce Cheque system in India – Bengal Bank 1784 First Bank to introduce Internet Banking – ICICI BANK First Bank to introduce Mutual Fund – State Bank of India First Bank to introduce Credit Card in India – Central Bank of India First Foreign Bank in India – Comptoire d’Escompte de Paris of France in 1860 First Joint Stock Bank of India – Allahabad Bank 2|Page

Banking Awareness Capsule 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44.

First Indian bank to open branch outside India in London in 1946 – Bank of India First Indian Bank started with Indian capital indigenous Bank -- Punjab National Bank First Regional Rural Bank - Prathama Grameen Bank ( Sponsoring Bank- Syndicate Bank) First Universal Bank in India – ICICI Bank First bank in India listed in New York Stock Exchange (NYSE) – ICICI Bank First Bank in India to launch Talking ATMs for differently able person – Union Bank of India First Bank in India to launch its own Payment Aggregators – State Bank of India. (SBIePay) Country’s first all woman bank – Bhartiya Mahila Bank First Indian private sector bank to open a branch in the African continent – ICICI Bank First private sector bank to open dedicated branch for Startups - RBL First Aadhaar-based ATM launched by – DCB Bank First bank to sell Indian gold coins - IOB First India bank Got ISO – Canara Bank First Bank to introduce Internet Banking – ICICI BANK First Payment Bank – Airtel m commerce, Rajasthan First small finance bank - Capital Small Finance Bank Limited, Punjab First ‘contactless’ credit cards for small and mid-sized enterprises – ICICI First certified green bond at London Stock Exchange – Axis Bank India’s first small and medium enterprises (SME) Bank - HDFC First issurer of Masala Bonds – HDFC First domestic bank to open branch in Yangon – SBI India’s First Transaction On Blockchain executed by – ICICI Bank First firm to get debt recast under RBI’s S4A Scheme – HCC First Humanoid Banking Assitant introduced by HDFC Bank First life insurance Chatbot introduced by HDFC Bank Manipur's Karang is India's first cashless island IDFC launches Aadhaar Pay, becomes the first to launch biometric based payment system Odisha becomes first state to bring banking to remote rural areas through SHG ICICI Bank data centre becomes country's first CII-IGBC Platinum rated project Edelweiss Tokio launches India's first insurance that can be bought at PoS IDBI initiated insolvency proceeding against Lanco, first among 12 accounts identified by RBI Axis Bank, Kochi Metro launches India's first single-wallet contactless, Open Loop Metro Card DCB bank launches Aadhaar based iris eye scan customer verification service

Indian Currency The Indian currency is called the Indian Rupee (INR) and the coins are called paise. One Rupee consists of 100 paise. The Reserve Bank manages currency in India. The Government, on the advice of the Reserve Bank, decides on the various denominations. The Reserve Bank can also issue notes in the denominations of one thousand rupees, five thousand rupees and ten thousand rupees, or any other denomination that the Central Government may specify. There cannot, though, be notes in denominations higher than ten thousand rupees in terms of the current provisions of the Reserve Bank of India Act, 1934. Coins can be issued up to the denomination denomination of Rs.1000. •

•

Soiled and Mutilated Notes Soiled notes are notes, which have become dirty and limp due to excessive use. Mutilated notes are notes, which are torn, disfigured, burnt, washed, eaten by white ants, etc. A double numbered note cut into two pieces but on which both the numbers are intact is now being treated as soiled note.Soiled notes can be tendered at all bank branches for and exchange obtained. of mutilated Soiled or mutilated notes are fully payable against such notes. Payment of exchange value of notes is governed by the RBI under refund Rules, 1975. In order to increase the life of currency notes, Reserve Bank of India (RBI) issued Clean Note Policy in 2001. These Rules have been framed under Section 28 of the Reserve Bank of India Act, 1934. The public can get value for these notes as laid down in the Rules, after adjudication. Currently, provisions exist for paying either full, half or no value as far as notes in the denomination for Rs.10 and above are concerned; as regards Re.1, Rs.2 & Rs.5, a tenderer can get either full or no value depending upon the condition of the note. •

•

•

•

3|Page

Banking Awareness Capsule Coin Minting: The Union Government has the sole right to mint the coins and one rupee note. The responsibility for coinage comes under the Coinage Act, 1906 which is amended from time to time. The designing and minting of coins in various denominations is also the responsibility of the Government of India. The coins are issued for circulation only through the Reserve Bank in terms of the RBI Act. Coins are minted at the four India Government Mints. 1. Mumbai, 2. Alipore (Kolkata), 3. Saifabad (Hyderabad), Cherlapally (Hyderabad) 4. NOIDA (UP).

Currency Notes: The design of banknotes is approved by the central government, on the recommendation of the central board of the Reserve Bank of India. The current series of banknotes (which began in 1996) is known as the Mahatma Gandhi series. Banknotes are issued in the denominations of Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.2000. 1. Currency notes are printed at the Currency Note Press in Nashik, 2. Bank Note Press in Dewas, 3. Bharatiya Reserve Bank Note Mudran (P) Ltd at Salboni and Mysore and at 4. The Watermark Paper Manufacturing Mill in Hoshangabad.

Demonetisation in India The largest note ever printed by the Reserve Bank of India was Rs.10000 which was introduced in 1938 by the British India government and subsequently again by Independent India in 1954. The notes introduced in 1954 were Rs.500, Rs.1000, Rs.5000 and Rs.10000. These notes were withdrawn in 1946 by the RBI under the British Indian Government to curb the black money menace in India. Indi a. These notes were exchanged for Rs.100 or lower denomination The notes were re-introduced in 1954 by the RBI, which was subsequently demonetized in 1978 by the Morarji Desai-led Janta Parivar government(first non government congress in Independent India) just after the downfall of o f the Indira Gandhi government gove rnment in 1977 due to Emergency crisis cr isis the country faced. 3 times demontisation occur in India Since 1935(1946, 1978, and 2016) • •

• •

•

Reserve Bank of India RBI was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central bank was formed under the recommendations from John Hilton Young Commission 1926-also called Royal Commission of Indian Currency and Finance. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved to Mumbai in 1937. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India. The Reserve Bank's affairs are governed by a central board of directors. The board is appointed by the Government of India in keeping with the Reserve Bank of India Act. Appointed/nominated for a period of four years •

•

•

Constitution Official Directors Full-time: Governor and not more than four Deputy Governors Non-Official Directors Nominated by Government: ten Directors from various various fields and two government Official Others: four Directors - one each from four local boards.

Functions of RBI: •

•

Monetary Authority: Formulates, implements and monitors the monetary policy. Objective: maintaining price stability and ensuring adequate flow of credit to productive sectors. Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the country's banking and financial system functions. Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking services to the public. 4|Page


Manager of Foreign Exchange Manages the Foreign Exchange Management Act, 1999 . Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign exchange market in India. Issuer of currency : Issues and exchanges or destroys currency and coins not fit for circulation. Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality. Developmental role Performs a wide range of promotional functions to support national Objectives. Related Functions Banker to the Government : performs merchant banking function for the central and the state governments; also acts as their banker. RBI under the Section 20 of the RBI Act 1934 has the obligation to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union. Further, as per Section 21 of the said Act, RBI also has the right to transact Government business of the Union in India. State Government transactions are carried out by RBI in terms of the agreement entered into with the State Governments in terms of section 21 A of the Act. As of now, such agreements exist between RBI and all the State Governments except Government of Sikkim. Banker to banks : maintains banking accounts of all scheduled banks. Offices Has 19 regional offices, most of them in state capitals and 11 Sub-offices. Currency Circulation: In India we follow Minimum Reserve System. Under this system, Reserve Bank of India (RBI) maintains gold and foreign exchange reserves of Rs. 200 crores. Out of Rs. 200 crores, at least 115 crores must be in the form of gold and Rs85crores of foreign exchange in its holding totaling the sum. Fully Owned RBI Subsidiaries: 1. National Housing Bank (NHB) 2. Deposit Insurance and Credit Guarantee Corporation of India(DICGC). 3. Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL), •

•

•

•

•

•

•

•

RBI -Monetary Policy RBI regulates liquidity in a manner that balances inflation and help in GDP growth and development. The tools that RBI uses to manage monetary policy are, Bank rate: Bank rate is the interest rate at which central bank lends money to domestic banks. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate. In bank rate there is no need for collateral collateral security. Repo rate: As on 25-06-2017 When banks sell security, banks promise to buy back the same security from Bank Rate 6.50% RBI at a predetermined date with an interest at the rate of REPO. It is Repo Rate 6.25% actually a repurchase agreement. When RBI reduces the Repo Repo Rate, the Reverse Repo Rate 6.00% banks can borrow more at a lower cost. MSF 6.50% Reverse repo rate: CRR 4% In case RBI borrowing money from banks and the interest paid by RBI to SLR 20 % banks on such borrowing is known as Reverse Reverse Repo Rate. It is opposite of Repo rate. An increase in this rate can cause the banks to transfer more funds to RBI due to their attractive interest rates. Hence RBI uses this way to drawn out excess money from the banks. Cash reserve ratio: All the commercial banks has to keep certain minimum amount of cash reserves with RBI. It uses CRR as a tool to increase or decrease the reserve requirement depending on whether RBI wants to increase or decrease in the money supply. RBI can vary Cash Reserve Ratio (CRR) rate between 3% and 15%. 5 | P a g e

Banking Awareness Capsule SLR: Amount of liquid assets such as Gold or other approved securities that a financial institution must maintain as reserves other than the cash. MSF: Marginal standing facility (MSF) created by Reserve Bank of India in its credit policy of May 2011 which is a frame for banks to borrow from the RBI in an emergency situation when inter-bank liquidity dries up completely. Liquidity Adjustment Facility: Liquidity adjustment facility (LAF) is a monetary policy toolwas introduced by RBI during June, 2000which allows banks to borrow money through repurchase agreements. LAF is used to aid banks in adjusting the day to day mismatches inliquidity. This tool used for absorbing liquidity and injecting the same with banks through agreement with the Cap of 0.25% of NDTL as on April 2014 . •

Monetary Policy Committee The Reserve Bank of India Act, 1934 (RBI (RBI Act) has been amended by the Finance Act, 2016, 2016, to provide for a statutory and institutionalized framework for a Monetary Policy Committee, for maintaining price stability, while keeping in mind the objective of growth. As per the provisions of the RBI Act, out of the six Members of Monetary Policy Committee, three Members will be from the RBI and the other three Members of MPC will be appointed by the Central Government. 1. The Governor of the Bank—Chairperson, ex officio; 2. Deputy Governor of the Bank, in charge of Monetary Policy—Member, ex officio; 3. One officer of the Bank to be nominated by the Central Board—Member, ex officio; 4. Shri ChetanGhate, Professor, Indian Statistical Institute (ISI) —Member 5. Professor PamiDua, Director, Delhi School of Economics (DSE) — Member 6. Dr. Ravindra H. Dholakia, Professor, Indian Institute of Management (IIM), Ahmedabad The Members of the Monetary Policy Committee appointed by the Central Government shall hold office for a period of four years, with immediate effect or or until further orders, whichever is earlier. •

•

Acts administered by Reserve Bank of India Reserve Bank of India Act, 1934 Public Debt Act, 1944/Government Securities Act, 2006 Government Securities Regulations, 2007 Banking Regulation Act, 1949 Foreign Exchange Management Act, 1999 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Chapter II) Credit Information Companies(Regulation) Act, 2005 Payment and Settlement Systems Act, 2007 Payment and Settlement Systems Regulations, 2008 and Amended up to 2011 and BPSS Regulations, 2008 The Payment and Settlement Systems (Amendment) Act, 2015 - No. 18 of 2015 Factoring Regulation Act, 2011 Other relevant Acts Negotiable Instruments Act, 1881 Bankers' Books Evidence Act, 1891 State Bank of India Act, 1955 Companies Act, 1956/ Companies Act, 2013 Securities Contract (Regulation) Act, 1956 State Bank of India Subsidiary Banks) Act, 1959 Deposit Insurance and Credit Guarantee Corporation Act, 1961 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 Regional Rural Banks Act, 1976 Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 National Bank for Agriculture and Rural Development Development Act, 1981 National Housing Bank Act, 1987 Recovery of Debts Due to Banks and Financial Institutions Act, 1993 Competition Act, 2002 Indian Coinage Act, 2011 : Governs currency and coins • • • • • •

• • • • •

• • • •

• • • • • • • • • • •

6|Page

Banking Awareness Capsule • • •

Banking Secrecy Act The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993

RBI Committees In Recent Times Committee

Date

Oversight committee

Headed by Pradeep Kumar

Mundra Committee-To Committee-To Speed up the Process of Recalibration of ATMs To study the regulatory issues relating to Financial Technology (Fintech) and Digital Banking in India PJ Nayak Committee -To Review Governance of Boards of Banks in India. To look at the various facets of household finance in India and to benchmark India’s position Working Group on Import Data Processing and Monitoring System Working Group on Interest Rate Options Advisory Committee on Ways and Means Advances to State Governments January 2016 Sumit Bose Committee on Mediumterm Path on Financial Inclusion Committee on Differential Premium System for Banks in India Working Group on Compilation of Flow of Funds Accounts for Indian Economy August 2015 D. K. Mohanty Compilation of Flow of Funds Accounts of the Indian Economy High Powered Committee on Urban Co operative Banks (UCBs)

November 2016

S.S .Mundra

June 2016

SudarshanSen

June 2016

P J Nayak

August 2016

Dr. TarunRamadorai

April 2016

A. K. Pandey

February 2016 December 2015

P. G. Apte Deepak Mohanty

September 2015

Jasbir Singh

August 2015

D. K. Mohanty

June 2015

R. Gandhi

Committee on Data Standardization

March 2015

LP. Parthasarathi

Internal Working Group (IWG) to Revisit the Existing Priority Sector Lending Guidelines Committee on Capacity Building in Banks and NonBanks Committee on Implementation of Countercyclical Capital Buffer Committee on Data and Information Management in the Reserve Bank of India. Committee on Productivity Growth for the Indian Economy Committee to Review Governance of Boards of Banks in India Working Group on Resolution Regime for Financial Institutions GIRO Advisory Group - UmeshBellur Group on Enabling PKI in Payment System Applications Committee on Licensing of New Urban Cooperative Banks Committee on Issues and Concerns in the NEFC Sector

March 2015

Lily Vadera

September 2014

G. Gopalakrishna

July 2014

B. Mahapatra

July 2014

D. K. Mohanty

June 2014

B. N. Goldar

May 2014

P. J. Nayak

May 2014

Anand Sinha

April 2014

Anil Kumar Sharma

September 2011

Malegam Committee

August 2011

Usha Throat

7|Page

Banking Awareness Capsule Some Important Banking Institutions IMF & WORLD Bank First of all history behind the establishment of these two institutions World bank and IMF are called the "Bretton wood institutions". In July 1944 during the United Nations Monetary and Financial conference in Bretton woods, New hampshire, representatives of 45 governments agreed to set up the World bank (which came into existence during the conference) and IMF (which came into existence in 1945). Reasons: Great Depression in the 1930s. Countries tried to protect their domestic economy by putting barriers on foreign foreig n trade and devaluing their th eir currency to gain market share in export markets. These led le d to decline in world trade and living standards fell sharply. By 1940s it was clear that the world needed global institutions for economic cooperation. IMF(International Monetary Fund) World Bank Stability Growth Objective: To deal with all the issues related to the Objective: To lessen poverty and promote the financial sector and macroeconomics. long term development of the economy. IMF is about balancing the international financial World Bank is for development projects in the system in both rich and poor countries (Greece is a developing world. recent recipient). You go to the IMF when you are so messed up that You go to the World Bank when you want to your currency is dropping like crazy. IMF comes build a dam or power plant or a road. road. and usually fixes stuff along with advice. IMF is a fund. Meaning it has a pool of money World Bank is a bank. Meaning it borrows money given to it by 188 member countries in the past from investors around the world and then lends to and lends out of that fund. It doesn't usually the poor governments. borrow new money.

World Bank is a much bigger institution and has two arms: •

•

IBRD (International Bank for Reconstruction and Development): Charges a slightly higher interest rate than it borrows and it is mainly for profitable commercial projects [such as roads and dams]. IDA(International Development Association):This is a grant body. No interest and usually countries are given long periods for repaying. The focus is on social projects such as immunization and education, open only for the poorest nations.

Banks In India There are currently 27 public sector banks in India out of which 19 are nationalised banks and 6 are SBI and its associate banks, and rest two are IDBI Bank and Bharatiya Mahila Bank, which are categorised as other public sector banks. There are total 93 commercial banks in India.

Commercial Banks: They are refers to both scheduled and non-scheduled commercial banks which are regulated under Banking Regulation Act, 1949. Scheduled Commercial Banks: Listed on second schedule of RBI Act 1934. Minimum Paid up capital should be Rs 5.00 Lac. These Banks have to maintain stipulated CRR, SLR and other instructions issued from time to time fixed by the Central Bank. •

• •

The Indian banking sector is classified into scheduled banks and non-scheduled banks. All banks which are included in the Second Schedule to the Reserve Bank of India Act, 1934 are Scheduled Banks. These banks comprise Scheduled Commercial Banks and Scheduled Co-operative Banks. Scheduled Co-operative Banks consist of Scheduled State Co-operative Banks and Scheduled Urban Cooperative Banks. •

8|Page


Scheduled Commercial Banks in India are categorized into five different groups: State Bank of India and its Associates ● Nationalised Banks ● Private Sector Banks ● Foreign Banks ● Regional Rural Banks ● What are Public Sector Banks? PSBs in India are banks where a majority stake i.e. more than 50% is held by a government. Thus at present all the nationalised nati onalised banks are Public Sector Secto r banks. In addition to these, these , IDBI Bank Ltd and SBI are too Public Sector Bank (though not nationalised bank) as GoI has over 50% stake in these banks too. What are Private Sector Banks? Private Banks are banks that do not have any government stakes. Private Banks have gained quite a strong foothold in the Indian banking industry over the last few years especially because of optimum use of technology. The Private Banks are accountable for a share of 18.2 percent of the Indian banking industry. IndusInd Bank was the first private bank in India and among the fastest growing Bank Private Banks in the country. Comparison between Private and Public Sector Banks

Private sector banks introduced the concept of online banking in India. This was mostly because the private banks were technologically well equipped. ● Private sector banks were using state of the art technology and fully computerized systems since the time they entered the Indian market whereas the Public sector banks were not. ● However despite the technological challenges the public sector banks in India are still the preferred destinations for many as they are considered as safer options for money deposit. What are Foreign Banks? A foreign bank is a bank with head office outside the country in which it is located. e.g. Standard Chartered Bank. What are Regional Rural Banks? After nationalization, of banks in 1960 there were problems which made it difficult for commercial banks even under government ownership to lend to farmers. Government set up Narasimham Working Group in 1975. On the basis of this committee’s recommendations, a Regional Rural Banks Ordinance was promulgated in September 1975, which was replaced by the Regional Rural Banks Act 1976. First RRB: PrathamaGrameen Bank 9|Page


The RRBs were owned by three entities with their respective shares as follows: ● Central Government → 50% ● State government → 15% ● Sponsor bank → 35 NABARD NABARD is an apex development bank, established est ablished in 1982 by a Special Act of the Parliament, with a

mandate to uplift rural India by facilitating credit flow in agriculture, cottage and village industries, handicrafts and small-scale industries. NABARD functions to promote sustainable rural development for attaining prosperity of rural areas in India. RBI has sold its own stake to the Government of India. Therefore, Government of India holds 99% stake in NABARD. ● It has power to deal with all matters concerning policy, planning as well as operations in giving credit for agriculture and other economic activities in the rural areas. ● A refinancing agency for those institutions that provide investment and production credit for promoting the several severa l developmental programs progr ams for rural development. ● Improving the absorptive capacity of the credit delivery system in India, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, and training of personnel. ● Co-ordinates the rural credit financing activities of all sorts of institutions engaged in developmental work at the field level. ● Prepares rural credit plans, annually, for all districts in the country. ● Promotes research in rural banking, and the field of agriculture and rural development. IDBI Industrial Development Bank of India (IDBI) came into being on 1st July, 1964 as a Development Financial Institutions under IDBI Act 1964.It is headquartered at Mumbai. *Key points: ● Regarded as a Public Financial Institution in terms of Companies Act. It continued as DFI till 2004 when it was transferred into a Bank. To transform this into Bank Industrial Development Bank Act 2003 was passed. ● A new company under the name of Industrial Development Bank of India Ltd. was incorporated as a Govt company under the Companies Act on 27th September, 2004, and thus now it 10 | P a g e

Banking Awareness Capsule came to be known as IDBI Ltd wef 1st October 2004 but it also worked as a Bank in terms of the Repeal Act. ● W.e.f. 2nd April, 2005, IDBI Bank Ltd. was finally amalgamated with IDBI Ltd. and was known as IDBI Ltd. It is a Public Sector Bank as GoI has above 70% shareholding in this Bank. DICGC: BANKS CAPITALS Deposit Insurance and Credit Guarantee Corporation New bank license 500 crores (DICGC) is a subsidiary of Reserve Bank of India. The Private banks 500 crores authorized capital of the Corporation is 50 crore, which is Foreign bank 500 crores fully issued and subscribed by the RBI. It is headquartered Urban cooperative banks 100 crores in Mumbai. State cooperative banks 100 crores It was established on 15 July 1978 under Deposit Small bank & payment 100 crores Insurance and Credit Guarantee Corporation Act, EXIM bank 8500 crores 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities. SIDBI 1000 crores Authorised Regional 2000 crores DICGC insures all bank deposits, such as saving, fixed, current, recurring deposits for up to the limit MUDRA BANK 20000 crore of Rs. 100,000 of each deposits in a bank.The NABARD 500 crores insurance covers principal and interest up to a maximum amount of 1 lakh. All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC. •

•

•

SIDBI Small Industries Development Bank of India (SIDBI) was set up under an Act of Parliament in 1990. Though it was a wholly owned subsidiary of Industrial Development Bank of India, presently the ownership is held by 33 Government of India owned / controlled institutions. It is headquartered in Lucknow Functions: ● To initiate steps for technological upgradation and modernisation of existing units. ● To expand the channels for marketing the products of SSI sector in domestic and international markets. ● To promote employment oriented industries especially in semi-urban areas to create more employment opportunities and thereby checking migration of people to urban areas. IFCI Government of India set up the Industrial Finance Corporation of India (IFCI) in 1948 under a special Act. This is the first financial institution set up in India with the mainobject of making medium and long term credit to industrial needs. It issue bonds and debentures in the open market , to borrow foreign currency from the World Bank and other organisations, accept deposits from the public and also borrow from the Reserve Bank. Functions ● Grants loans and advances to industrial concerns. ● Granting of loans both in rupees and foreign currencies. ● Underwrites the issue of stocks, bonds, shares etc. ● Grant loans only to public limited companies and co-operatives but not to private limited companies or partnership firms. EXIM Export-Import Bank (Exim bank) was set up in 1982 to take over the operations of international finance wing of the IDBI and to provide financial assistance to exporters and importers. The authorised capital of Exim bank is Rs. 200 crore and paid-up-capital is Rs. 100 crorewholly subscribed by the Central Government. Government . 11 | P a g e

Banking Awareness Capsule Functions ● Provides direct financial assistance to exporters of plant, machinery and related service in the form of medium-term credit. ● Provides rediscount of export bills for a period not exceeding 90 days against short-term usance export bills discounted by commercial banks. ● Gives overseas buyers credit to foreign importers for import of Indian capital goods and related services. ● Developing and financing export oriented industries. ● Collecting and compiling the market and credit information about foreign trade. NHB National Housing Bank(NHB), a wholly owned o wned subsidiary of Reserve Bank of India (RBI), was set up by an Act of Parliament in 1987. NHB is an apex financial institution insti tution for housing. It commenced c ommenced its operations in i n 1988. Objective: ● To promote housing finance institutions both at local and regional levels and to provide financial and other support incidental to such institutions and for matters connected therewith sup ervises Housing Finance Company (HFCs), keeps ● NHB registers, regulates and supervises surveillance through On-site & Off-site Mechanisms and coordinates with other Regulators. SEBI Securities Exchange Board of India was set up in 1988 to regulate the functions of securities market. It promotes orderly development de velopment in the stock market marke t but initially it was not able abl e to exercise complete control con trol over the stock market transactions. It was left as a watchdog to observe the activities but was found ineffective in regulating and controlling them. So in 1992, SEBI was granted legal status. i.Reason for establishment: With the growth in the dealings of stock markets many malpractices started in stock markets such as price rigging, and delay in delivery of shares, violation of rules and regulations of stock exchange. ii.Due to these malpractices the customers started losing confidence in the stock exchange. So government of India decided to set up an agency or regulatory body known as Securities Exchange Board of India (SEBI). Functions: ● Checks Price Rigging ● Prohibits Insider trading ● Prohibits fraudulent and Unfair Trade Practices ● Registers and regulates the working of stock brokers, sub-brokers,share transfer agents, trustees, merchant bankers and all those who are associated with stock exchange in any manner. ● ●

Registers and regulates the working of mutual funds etc. Regulates takeover of the companies

MUDRA Bank Micro Units Development and Refinance Agency Bank (MUDRA Bank), is a new institution setup in 8 April 2015 by the Government of India for development of micro units and refinance of MFIs to encourage entrepreneurship in India & provide the funding to the non-corporate small business sector. It was announced by the Finance Minister while presenting the Union Budget for FY 2016.MUDRA has a corpus of Rs 20,000 crore, and creditguarantee corpus of Rs 3,000 crore. Products and Offerings: The initial products and schemes under this umbrella have already been created and the interventions have been named ‘Shishu’, ‘Kishor’ and ‘Tarun’ to signify the stage of growth of the beneficiary micro unit / entrepreneurs. Shishu : covering loans upto Rs. 50,000/Kishor: covering loans above Rs. 50,000/- and upto Rs. 5 lakh Tarun: covering loans above Rs. 5 lakh and upto Rs. 10 lakh Indian Postal payment Bank: The India Post Payments Bank (IPPB) was a Public Limited Company under the Department of Posts with 100% GOI equity. IPPB will offer demand deposits such as savings and current accounts upto a balance of Rs 1 Lac The corpus of the payments bank is of Rs 800 crore (650 branches) •

• • •

•

•

•

12 | P a g e

Banking Awareness Capsule Various Types of Banking •

•

•

•

•

Investment Banks Investment banking is a special segment of banking operation that helps individuals, corporations, and governments such as raising financial capital by underwriting or acting as the client's agent in the issuance of securities. Universal Banking: A universal bank participates in both investment banking with commercial banking under one roof and reaping synergies. Retail Banking: Retail banking or Consumer Banking is refers to the division of a bank that deals directly deals individual consumers, rather than to companies, corporations or other banks. Services offered include savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards. Wholesale Banking: This Banks provides banking solutions to corporate and institutional and other financial institutions such as large corporations and other banks, whereas retail banking focuses more on the individual or small business. Islamic or Sharia banking Islamic or Sharia banking is a finance system based on the principles of not charging interest, which is prohibited under Islam. Islamic Banks are providing sharia compliant finance. The Reserve Bank of has proposed opening of “Islamic window” in conventional banks for “gradual” introduction of Sharia-compliant or interest-free banking in the country.

Financial Insitutions In India Regulator

Constitution

Sectors

Reserve Bank of India (RBI)

The Reserve Bank of India was conceptualized based on the guidelines presented by the Central Legislative Assembly passed these guidelines as the RBI Act 1934 In April 1988 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.

Securities and Exchange Board of India (SEBI)

Insurance Regulatory and Development Authority (IRDA) Forward Markets Commission

It was constituted by an Act of Parliament called the Insurance Regulatory and Development Authority Act, 1999 On 28 September 2015 the FMC was merged with the Securities and Exchange Board of India (SEBI).

Chairman

Headquarter

Financial system and monetary policy, Money Market

Urjit Patel

Mumbai Founded: April 1, 1935 (Kolkata)

Security & Capital Market, stock broking & Merchant Banking, Nidhis, Chit Fund Companies Insurance industry

Ajay Tyagi

Mumbai Formed : 12 April 1992

T. S. Vijayan

Hyderabad

Ramesh Abhishek

Mumbai Formed : 1953

Commodity Market

13 | P a g e

Committee Recommend ation Hilton Young Commission

Malhotra Committee

Banking Awareness Capsule PFRDA has set up a Trust Pension Fund Regulatory and under the Indian Trusts Act, 1882 to oversee the functions of Development the Pension Fund Managers Authority (PFMs). (PFRDA) NABARD was established on NABARD (National Bank the recommendations of for Agriculture Shivaraman Committee, (by Act 61, 1981 of Parliament) on and Rural 12 July 1982 to implement the Development) National Bank for Agriculture and Rural Development Act 1981.

Pension sector

Hemant Contractor

New Delh

G N Bajpai

Agriculture Development Bank

Dr. Harsh Kumar Bhanwala

Mumbai, Maharashtra 12 July 1982

Shivaraman Committee

Nationalization of Banks in India The nationalization of banks was an important move undertaken by the Union Government for the development of the country. Firstly, it instilled public confidence in the banking system encouraging the masses to save and invest. By the early 1960s, the Government realized that a significant share of deposits coming from the masses of India was controlled by 14 privately owned commercial banks. Acquisition of the Imperial Bank of India in 1955 was the next big step. 1770: First Bank of Hindustan. 1949: RBI was nationalized (RBI was state owned at the time of Indian independence). 1955: Control of Imperial Bank of India was acquired by RBI 1969: 14 Indian private banks were nationalised 1972: 106 insurance companies were nationalised into four insurance companies 1980: 6 more Indian private banks were nationalised 1993: New Bank of India Merged into Punjab National Bank •

• •

• • • •

•

The Story behind SBI and IDBI:

The State Bank of India was set up as the Imperial Bank of India in January 1921 through the merger of Bank of Calcutta, Bank of Bombay and Bank of Madras. In 1955, the RBI fall for a 60-percent stake in the bank and renamed it State Bank of India (under SBI Act, 1955). During the nationalisation of banks in 1969, and again in 1980, SBI was not added to the list of the ‘nationalised banks’ since it was already a state-owned financial institution. In 2008, the Government of India took over the RBI's stake in the bank to avoid any conflict of interests within the RBI (which both owned and regulated the SBI). Now though the SBI and its subsidiaries are often referred to as a nationalised bank, it is a Public Sector Undertaking (PSU) and not one of the nationalised banks of India. In the same way, IDBI Bank is also a public sector bank but not one of the nationalised banks of India. IDBI Bank was established in 1964 (under IDBI Act, 1964) to support developmental finance in the country. Initially, it was a financial institution and did not participate in core banking activities. •

•

•

Draft Guidelines for ‘on tap’ licensing of Universal Banks in the Private Sector Eligible Promoters: Existing non-banking financial companies (NBFCs) that are ‘controlled by residents’ and have a successful track record for at least 10 years. Individuals / professionals who are ‘residents’ and have 10 years of experience in banking and finance. Entities / groups in the private sector that are ‘owned and controlled by residents’ [as defined in FEMA Regulations, as amended from time to time] and have a successful track record for at least 10 years, provided that if such entity / group has total assets of Rs.50 billion or more, the non-financial business of the group does not account for 40 per cent or more in terms of total assets / in terms of gross income. •

• •

14 | P a g e


Minimum capital requirement & foreign shareholding: The initial minimum paid-up voting equity capital for a bank shall be Rs.5 billion. Thereafter, the bank shall have a minimum net worth of Rs.5 billion at all times. The foreign shareholding in the bank would be as per the existing foreign direct investment (FDI) policy subject to the minimum promoter shareholding requirement indicated in paragraph (IV) above. At present, the aggregate foreign investment limit is 74 per cent. •

•

Business plan & Conditions: The business plan submitted by the applicant should be genuine and viable and address how the bank proposes to achieve financial inclusion. The bank shall get its shares listed on the stock exchanges within six years of the commencement of business by the bank. The bank shall open at least 25 per cent of its branches in unbanked rural rural centres (population up to 9,999 as per the latest census). The bank shall comply with the priority sector lending targets and sub-targets as applicable to the existing domestic scheduled commercial banks. The board of the bank should have a majority of independent directors. •

•

•

NBFC(Non-Banking Financial Company) It is engaged in the business of loans and advances, acquisition of bonds/debentures/securities issued by Government or local authority or other marketable securities, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods or providing any services and sale or purchase of immovable property. Difference between Banks & NBFCs ● NBFC cannot accept demand deposits settlement system and cannot issue cheques drawn on ● NBFCs do not form part of the payment and settlement itself ● deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks. NBFCs but exempted from the requirement of registration ● Housing Finance Companies ● Merchant Banking Companies ● Stock Exchanges ● Companies engaged in the business of stockbroking/sub-broking ● Venture Capital Fund Companies ● Nidhi Companies ● Insurance companies ● Chit Fund Companies *Key point: There is no Ombudsman for hearing complaints against NBFCs. In respect of credit card operations of an NBFC, which is a subsidiary of a bank if a complainant does not get satisfactory response from the NBFC within a maximum period of thirty 30days from the date of lodging the complaint, the customer will have the option to approach the Office of the concerned Banking Ombudsman for redressal of his grievances.

Self Help Groups(SHG) Self help groups refer to group of 15-20 people (generally women) , who pool or collect their resources like money so as to help each other in times of need. Self help groups give loans to its members at a general interest rate which is less than interest rate of moneylenders.Self help groups are also able to take loans from bank when they have pooled good amount of money. Also SHG act as building groups of village and provide platform to discuss village issues. 15 | P a g e

Banking Awareness Capsule Women's Self-Help Groups (WSHGs) Formed under the state government's Nava Jatan programme to address malnourished children. WSHGs adopt malnourished children in their area and provide them food with the help of Anganwadi centres. Cooperative Banks Banks in India can be broadly classified under two heads — commercial banks and co-operative banks. While commercial banks (nationalised banks, State Bank group, private sector banks, foreign banks and regional rural banks) account for an overwhelming share of the banking business, co-operative banks also play an important role. The structure of cooperative network in India can be divided into 2 broad segments ● Urban Cooperative Banks ● Rural Cooperatives Urban Cooperatives are scheduled and non-scheduled. Banking activities of Urban Cooperative Banks are monitored by RBI. Registration and Management activities are managed by Registrar of Cooperative Societies (RCS). These RCS operate in single-state and Central RCS (CRCS) operate in multiple state. Rural Cooperatives are short-term and long-term structures. Short-term cooperative banks are three tiered operating in different states. ● State Cooperative Banks: Operate at the apex level in states ● District Central Cooperative Banks: Operate at the district levels ● Primary Agricultural Credit Societies: Operate at the village or grass-root level. Long-term structures State Cooperative Agriculture and Rural Development Banks (SCARDS): Operate at state-level. Primary Cooperative Agriculture and Rural Development Banks (PCARDBS): Operate at district/block level. Banking Codes and Standards Board of India (BCSBI) Under the recommendations from RBI constituted the Committee on Procedures and Performance Audit of Public Services under the Chairmanship of Shri S.S.Tarapore Banking Codes and Standards Board of India (BCSBI) was set up in February 18, 2006. The Independent banking industry watchdog is based in Mumbai, Maharashtra, It functions as an independent and autonomous body. Banking Industry Watchdog:  BCSBI was envisaged to ensure that the common person as a consumer of financial services from the banking Industry is in no way at a disadvantageous position and really gets what he/she has been promised.  The Banking Codes and Standards Board of India was registered as a society under the Societies Registration Act, 1860 in February 2006.  Membership of BCSBI is voluntary and open to scheduled banks. Initially the membership of BCSBI was open to scheduled commercial banks and has now been extended to include Regional Rural Banks and select Urban Co-operative Banks.

The Emergence of Small Finance and Payment Banks With a need of financial inclusion in the country, RBI and government has taken many steps at different times. Taking a further step, RBI gave differentiated licenses for specific activities to new set of banks named Payment Banks and Small Banks.

16 | P a g e

Banking Awareness Capsule Payment Banks: Payments banks are a new model of banks conceptualised by the Reserve Bank of India (RBI). These banks can accept a restricted deposit which is currently limited to INR 1 lakh per customer.  Initial Capital - 100 crore  Payments Banks Formation - Nachiket Mor Committee  For the first five years, the stake of the promoter should be 40% minimum. Foreign share holding will be allowed in these banks as per the rules for FDI in private banks in India On 19 August 2015, the Reserve Bank of India gave "in-principle" licences to eleven entities to launch payments banks Out of these, three have surrendered their licenses. First one being "Chalomandalam Distribution Services", then "Dilip Shanghvi, Sun Pharmaceuticals" and the latest, "Tech Mahindra". The "in-principle" license is valid for 18 months within which the entities must fulfill the requirements.They are not allowed to engage in banking activities within the period. The RBI will consider grant full licenses under Section 22 of the Banking Regulation Act, 1949, after it is satisfied that the conditions have been fulfilled. Airtel Payments Bank Limited or Airtel Bank, a subsidiary of Bharti Airtel Limited rolled out India’s first Payment Bank in Rajasthan with massive 7.25% interest on savings accounts. Airtel Bank’s services can be accessed by Airtel customers on their mobile phones through the Airtel Money app, through USSD by dialing *400#; or via a simple IVR by dialing 400. •

•

•

Features: 1. Digital Banking: Quick and paperless account opening using Aadhaar based e-KYC. This requires no documents at all, only the customer’s Aadhaar number is needed 2. Customer’s Airtel mobile number will be his/her bank account number 3. Interest rate of 7.25 % p.a. on deposits in savings accounts 4. Money transfer to any bank account in India (Free money transfer from Airtel to Airtel numbers within Airtel Bank) 5. Personal Accidental Insurance of Rs 1 Lakh with every Savings Account 6. Deposit and withdrawal facility across a network of Airtel retail outlets. 7. Airtel payments bank offers 1 minute talktime for every Rs 1 deposit.

Small Finance Bank

Payment Bank

Capital requirement is Rs 100 crore Paid-up equity capital requirement of Rs 100 crore The bank shall primarily undertake basic banking activities Payment Banks will initially be restricted to holding of accepting deposits and lending to small farmers, small a maximum balance of 1 lakh rupees per individual businesses, micro and small industries, and unorganised customer. It can issue ATM or debit cards but not sector entities. It cannot set up subsidiaries to undertake credit cards. non-banking financial services activities. a) Professionals with 10 years in financial services or Card Issuers, Finance Companies, Business promoter group with 5 year track record. record. Correspondents, Telecom Companies, Retailers etc b) Existing Non-Banking Finance Companies Companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter’s initial contribution should be 40% lowered to Promoters should retain a 40% stake for first five 26% in 12 years. years. *The maximum loan size and investment limit exposure to No credit lending is allowed single/group borrowers/issuers would be restricted to 15 per cent of capital funds * Loans and advances of up to Rs 25 lakhs, primarily to micro enterprises, should constitute at least 50 per cent of the loan portfolio. For the first three years, 25 per cent of branches should be No such Rules in unbanked rural areas. The small finance banks will be required to extend 75 -do percent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending 17 | P a g e

Banking Awareness Capsule (PSL) by the Reserve Bank. The foreign shareholding in the small finance bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time. These banks will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions.

These Banks can offer all types of Deposits as like commercial Banks be it savings, Current, Fixed as well as Recurring. Small Finance Banks:

The foreign shareholding in the should be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time. These banks also should maintain CRR with the Reserve Bank, it will be required to invest minimum 75 percent of its demand deposit balances in Statutory Liquidity Ratio (SLR) with maturity up to one year and hold maximum 25 per cent in current and time or fixed deposits with other scheduled commercial banks for operational purposes and liquidity management. Payments banks can only offer Savings and Current accounts. Payment Banks :

1. Ujjivan 2. Janalakshmi 3. Equitas 4. AU Financiers 5. Capital LAB 6. Disha 7. ESAF 8. RGVN 9. Suryoday 10. Utkarsh

1. Aditya Birla Nuvo 2. Airtel M Commerce Services 3. Cholamandalam Distribution Services 4. Department of Posts 5. FINO PayTech 6. National Securities Depository Deposi tory 7. Reliance Industries 8. Sun Pharmaceuticals 9. Paytm 10. Tech Mahindra 11. Vodafone M-Pesa

Banks Board Bureau (BBB) The main aim of Banks Board Bureau is to recommend appointment of directors in Public Sector Banks (PSBs) and advice on ways of raising funds and dealing with issues of stressed assets. Besides this task, the BBB will also be a link between the government and banks and will be engaged with banks to evolve strategies for them. The first chairman of Banks Board Bureau selected is Vinod Rai who is former CAG. •

•

Credit Rating Agencies in India A credit rating agency is a company which rates the debtors on the basis of their ability to pay back the debt in timely manner. There are three big credit rating agencievvs in the world which are 1. Standard & Poor's (S&P) – Headquarter – New York, US 2. Moody's – Headquarter - New York, US 3. Fitch Ratings- New York, US There are mainly 5 credit rating agencies in India which are CARE (Credit CRISIL (Credit ICRA ( Investment SMERA( SME ONICRA Analysis and Rating Information information and Rating Agency of Research) Services of India credit rating India Ltd) Limited) agency) Founded: 1993

Founded:1987

Founded 1991

Founded:2005

Mumbai

Mumbai

Gurgaon

Mumbai

Gurgaon, India

It is the second-largest

*CRISIL is the

*It is a public

*SMERA is a full

*It is a private

18 | P a g e

Banking Awareness Capsule credit rating agency in India.

largest credit rating agency in India, with a market share of greater than 60%. *CRISIL’s majority shareholder is Standard & Poor’s.

limited company. * ICRA’s majority shareholder is Moody’s

service credit rating agency exclusively set up for micro, small and medium enterprises (MSME) in India.

sector agency set up by Onida Finance

Rating of Banks in India As per the recommendations of Padmanabhan Committee the banks in India should be rated on a 5 point scale of A to E, based on international CAMELS rating model. Upon this guidelines RBI has evolved the model for rating banks based on CAMELS. Each of the 6 components would be weighed on a scale of 1 to 100 and would contain several parameters with individual weightage. •

CAMELS Rating for Domestic Banks C Capital adequacy ratio A Asset quality

Rating parameters for foreign banks C Capital adequacy ratio

A

A Asset quality

B

M

Management Effectiveness

L Liquidity

C

E

Earning

C Compliance

D

L

Liquidity (assetliability) System and controls

S System and controls

E

S

Rating Scale in India

Sound in every respect Fundamentally sound, but with moderate weaknesses Financial, operational and/or compliance weaknesses that give cause for supervisory concern Serious or moderate financial, operational and/or managerial weaknesses that could impair future viability Critical financial weaknesses that render the possibility of failure in the near term

Know Your Customer Guidelines KYC means “Know Your Customer”. It is a process by which banks obtain information about the identity and address of the customers. This process helps to ensure that banks’ services are not misused. The KYC procedure is to be completed by the banks while opening accounts. Banks are also required to periodically update their customers’ KYC details. To open a bank account, one needs to submit a ‘proof of identity and proof of address’ together with a recent photograph. You can still open a bank account known as ‘Small Account’ by submitting your recent photograph and putting your signature or thumb impression in the presence of the bank official. •

•

•

However ‘Small Accounts’ have certain limitations such as:    

Balance in such accounts at any point of time should not exceed Rs.50,000 Total credits in one year should not exceed Rs.1,00,000 Total withdrawal and transfers in a month should not exceed Rs.10,000 Foreign remittances cannot be credited to such accounts .

E-KYC -Electronic KYC. E-KYC is possible only for those who have Aadhaar numbers. While using e-KYC service, you have to authorise the Unique Identification Authority of India (UIDAI), by explicit consent, to release your identity/address through biometric authentication to the bank branches/business correspondent correspondent (BC). The UIDAI then transfers your data comprising your name, age, gender, and photograph electronically to the bank. Information thus provided through e-KYC process is permitted to be treated as an ‘Officially Valid Document’ under PML Rules and is a valid process for KYC verification . •

•

19 | P a g e


Types of Accounts, Deposits, Cheques, DDs & BSBDS Bank Accounts are Accounts are classified into four different types. They are, 1) Current Account 2) Savings Account 3) Recurring Deposit Account 4) Fixed Deposit Account 1) Current account For business persons, firms, companies, public enterprises etcand are never used for the purpose of investment or savings. These deposits are the most liquid deposits and there are no limits for number of transactions or the amount of transactions in a day. No interest paid on amount held in the account, banks bank s charges certain service charges, on such su ch accounts. Do not have any fixed maturity as these are on continuous basis accounts. 2) Savings Account •

•

•

•

• •

•

• •

For saving purposes Any individual either single or jointly can open a savings account. Most of the salaried persons, pensioners and students use Savings Account. Advantage of having Savings Account is Banks pay interest for the savings. The saving account holder is allowed to withdraw money from the account as and when required. Rate of interest ranges between 4% to 6% per annum in India. There is no restriction on the number and amount of deposits. But withdrawals are subjected to certain restrictions. Some banks recommend to maintain a minimum amount to keep it functioning.

3) Recurring deposit account or RD account is opened by those who want to save certain amount of money regularly for a certain period of time and earn a higher interest rate. A fixed amount is deposited every month for a specified period and the total amount is repaid with interest at the end of the particular fixed period. Period of deposit is minimum six months and maximum ten years. Interest rates vary for different plans based on the amount one saves and the period of time and also on banks. No withdrawals are allowed from the RD account. acco unt. However, the bank may allow allo w to close the account before the maturity period. per iod. Can be opened in single or joint names. Banks are also providing the Nomination facility to the RD account holders. 4) Fixed Deposit Account (FD) A particular sum of money is deposited in a bank for specific period of time. In some other countries these are known as "Term Deposits" or even called "Bond". •

• •

•

•

It’s one time deposit and one time take away (withdraw) account. The money deposited in this account can not be withdrawn before the expiry of period. period. In case of need, the depositor can ask for closing the fixed deposit prematurely by paying a penalty(usually of 1%, but some banks either charge less or no penalty) The penalty amount varies with banks. A high interest rate is paid on fixed deposits. The rate of interest paid for fixed deposit vary according to amount, period and also from bank to bank. •

•

•

Demat account Demat account is an account in which the shares and securities are held in dematerialized form i.e. electronically without any physical papers held. To carry out transactions in the stock market, one should get open a demat account. Multiple demat accounts can be opened. Demat accounts are held by a single person i.e. no joint accounts can be operated. 20 | P a g e

Banking Awareness Capsule CASA Deposits It refers to Current Account Saving Account Deposits.

Low interest deposits for the Banks compared to other types of the deposits. So banks tend to increase the CASA deposits and for this they offer various services such as salary accounts to companies and encouraging merchants to open current accounts also use their cash-management facilities. The Bank is High CASA ratio(CASA deposits as % of total deposits) are in a more comfortable position than the Banks with low CASA ratios , which are more dependent on term deposits for their funding, and are vulnerable to interest rate shocks in the economy, plus lower spread they earn. Term Deposits are of three kinds 1. Fixed deposits: A fixed rate of interest is paid at fixed, regular intervals. 2. Re-investment deposits: Interest is compounded quarterly and paid on maturity, along with the principal amount of the deposit. In the Flexi Deposits amount in savings deposit accounts beyond a fixed limit is automatically converted into term-deposits. 3. Recurring deposits: Fixed amount is deposited at regular intervals for a fixed term and the repayment of principal and accumulated interest is made at the end of the term. These deposits are usually targeted at persons who are salaried or receive other regular income. A Recurring Deposit can usually be opened for any period from 6 months to 120 months. •

•

Cheque and its Types A cheque is an agreement between two individuals or organizations to make a payment. In simple words Cheque is an order to a bank to pay a stated sum from the drawer’s account, written on a specially printed form. Cheque is used to make safe and convenient payment. It is less risky and the danger of loss is minimized. Drawer: The person writing the cheque , who has a transaction banking account where their money is held. The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the Drawee, to pay that person or company the amount of money stated. Bearer Cheque Bearer Cheque refer to a cheque that is payable to whoever presents the cheque, rather than to a designated payee. Uncrossed/Open Cheque When a cheque is not crossed, it is known as an “Open Cheque” or an “Uncrossed Cheque”. The payment of such a cheque can be obtained at the counter of the bank. Crossed Cheque Crossing of cheque means drawing two parallel lines on the face of the cheque. A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account. Anti-Dated Cheque If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as “anti-dated cheque”. Such a cheque is valid upto three months from the date of the cheque. Post-Dated Cheque If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A postdated cheque cannot be honoured earlier than the date on the cheque. Stale Cheque If a cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale st ale cheque is not honoured by the bank. Demand Draft: DD, it is kind of a pre-paid negotiable instrument that is used to direct payments from one bank to another bank or one of its own branches to pay a certain sum to the specified party • •

21 | P a g e


Types of Payments & Money Transfer Automatic Teller Machine Automated Teller Machine is a computerized machine that provides the customers of banks the facility of accessing their account for dispensing cash and to carry out other financial & non-financial transactions without the need to actually visit their bank branch. Various types of ATMs On Site ATM: This type of Atm-Is situated either within the branch premises or in very close proximity of the branch. Offsite ATM:Is not situated within the branch premises but is located at other places, such as malls, airports and petrol stations etc... Worksite ATM: It is located within the premises of an organisation and is generally meant only for the employees of the organisation. White Label ATMs (WLAs): ATMs set up, owned and operated by non-banks are called White Label ATMs. Non bank ATM operators are authorized under Payment & Settlement Systems Syste ms Act, 2007 by the RBI. However in White Label ATMs acceptance of cash deposits at the WLAs is not permitted at p resent.

Brown Label ATM: 'Brown label' ATM are those Automated Teller Machines where hardware and the lease of the ATM machine is owned by a service provider, but cash management and connectivity to banking networks i s provided by a sponsor bank whose brand is used on the ATM. ATM.

Free transactions at ATMs With effect from November 01, 2014, a bank must offer to its savings bank account holders a minimum number of free transactions at ATMs, However It is not applicable to Basic Savings Bank Deposit Accounts (BSBDA) as withdrawals from BSBDA are subject to the conditions associated wi th such accounts. Bank’s own ATMs at any location: location : Banks must offer their savings bank account holders a minimum of five free transactions (including both financial and non-financial) in a month. Transactions at any other banks’ ATMs at Metro locations: In case of ATMs located in six metro locations, viz. Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad, banks must offer their savings bank account holders a minimum of three free transactions (including both financial and non-financial transactions) in a month. Failed ATM/WLA transaction: The customer should lodge a complaint with the card issuing bank at the earliest. This process is applicable even if the transaction was carried out at another bank’s/non-bank’s ATM. Banks have been mandated to resolve customer complaints by re-crediting the customer’s account within 7 working days from the date of complaint. However if the complaint raised but the customer is not resolved Banks have to pay compensation of Rs. 100/- per day for delays in re-crediting the amount beyond 7 working days from the date of receipt of complaint for failed ATM transactions. The compensation has to be credited to the account of the customer without any claim being made by the customer. If the complaint is not lodged within 30 days of transaction, the customer is not entitled for any compensation for delay in resolving his / her complaint. •

•

22 | P a g e

Banking Awareness Capsule Credit Card A credit card is a Plastic card issued by Banks to enable the cardholder to pay a merchant for goods and services, based on the cardholder's promise to the card issuer to pay them for the amounts so paid plus other agreed agreed charges.Central Bank of India was the first public bank to introduce Credit card. Banks in India can undertake credit card business either departmentally or through a subsidiary company set up for the purpose. They can also undertake domestic credit card business by entering into tie-up arrangement with one of the banks already having arrangements for issue of credit cards. Prior approval of the Reserve Bank is not necessary for banks desirous of undertaking credit card business either independently or in tie-up arrangement with other card issuing banks. Banks can do so with the approval of their Boards. However, only banks with net worth of `100 crore and above should undertake credit card business. •

•

•

Prepaid cards A prepaid card works a bit like a gift card – you top it up with money, and you can only spend up to that amount. Often used by travellers to carry holiday money, and by anyone without a normal bank account – generally kids, teens teen s and people with poor credit cr edit ratings. Smart card: It contains an electronic chip which is used to store cash. This is most useful when you have to pay for small purchases. For example bus bu s fares and coffee. No identification, identi fication, signature or payment pa yment authorisation is required for using this card. The exact amount of purchase is deducted from the smart card during payment and is collected by smart card reading machines. No change is given. Co-branded cards are credit cards issued by card companies that have tied up with a popular brand for the purpose of offering certain exclusive benefits to the consumer. For example, the Citi-Times card gives you all the benefits of a Citibank credit card along with a special discount on Times Music cassettes, free entry to Times Music events, etc. Rupay Card: RuPay is the Indian version of the card network which is started by National Payment Corporation of India on 26th March, 2012. Rupay primarily provides debit cards. Apart from this , Rupay also issues ‘Kisan Credit Cards’ for farmers. RuPay competes with other card based payment system providers such as MasterCard, Visa and Amex in India.RuPay has over 36% of market share in Indian card payment scheme behind Visa which has over 50% of the market share. India is now the sixth country in the world to have domestic payment gateway system (the other five countries are US, Japan, China, Singapore and Brazil ). RuPayis the combination of two terms Rupee and Payment . The RuPay Visual Identity is a modern and dynamic unit. The orange and green -nation on the move and a service that matches its pace. The color blue - feeling of tranquility which is the people must get while owning a card of the brand ‘RuPay’. •

•

•

• •

Kisan Credit Card The Kisan Credit Card (KCC) was introduced by the NDA Government in August 1998 has emerged as an innovative credit delivery mechanism to meet the production credit requirements of the farmers in a timely and hassle-free manner. The card is valid for five years and subject to annual renewals. This KCC card offering Credit to the farmers in Two types viz,  Cash Credit  Term Credit (For allied activities such as pump sets, land development, plantation, drip irrigation) The scheme is under implementation in the entire country by the vast institutional credit framework involving Commercial Banks, RRBs and Cooperatives and has received wide acceptability amongst bankers and farmers. •

•

23 | P a g e

Banking Awareness Capsule •

•

It was first proposed in the Budget 1998-99 by then Finance Fi nance Minister Yashwant Sinha. In the Subsequenttimes NABARD had prepared a Model Kisan Credit Card Scheme in consultation with the Major Banks on the recommendations of R V Gupta Committee . Repayment:  Cash Credit : Crop loans as well as working capital for agriculture and allied activities to be provided as revolving cash credit limit repayable in 12 months. .  Term Loan: Repayable within a maximum period of 5 years, depending on the type of activity / investment and repayment capacity.

Point of Sale Machine A point-of-sale (POS) terminal is a computerised replacement for a cash register which can process credit and debit cards. A customer needs to enter a card PIN to complete the transaction using the PoS terminal. Merchant Discount Rate (MDR): MDR is capped for debit cards but not for credit cards. Effective July 1, 2012, RBI capped the MDR for debit cards at 0.75 per cent of the transaction amount for value up to Rs.2,000 and 1 per cent for a transaction amount for value above Rs.2,000. For credit cards, the MDR varies between 1.5 per cent to 2.5 per cent. Electronic Funds Transfer at Point of Sale–(EFTPOS) EFTPOSis an electronic payment system involving electronic funds transfers based on the use of payment cards, such as debit or credit cards, at payment terminals located at points of sale.

MICR(Magnetic Ink Character Recognition) MICR(Magnetic It is a technology which allows machines to read and process cheques enabling thousands of cheque transactions in a short time. MICR code is usually a nine digit code First three digits: Represent the city code that is the city in which the bank branch is located. Next three digits: Bank code Last three digits: Bank branch code e.g. For example, if you have an account with Axis Bank,New Delhi (Defence Colony) then its nine digit MICR code will be 110211004 where: 110, the first three digits representing the city code for New Delhi; 211, the next three digits representing the bank code for Axis bank; And 004, the last three digits representing the bank branch code for Defence Colony. IFSC(Indian Financial System Code) The Payment Systems such as National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) & Centralized Funds Management System (CFMS) used IFS Codes. IFSC developed by the Reserve Bank of India.

The code consists of 11 Characters: First 4 characters represent the entity Fifth position has been defaulted with a 0 (Zero) for future use Last 6 characters denotes the branch identity e.g ICIC0000438

Code Name IFSC(Indian Financial System Code) MICR (Magnetic Ink Character Recognition) SWIFT (Society for Worldwide Interbank Financial Telecommunication (SWIFT)) PAN (Permanent Account Number) UID ( Unique Identification Number) UAN (Universal Account Number) PIN (Postal Index Number) CIN (Cheque Identification Number) BIC (Bank Identification Code)

Digits 11 9 11 10 12 12 6 7 8

SWIFT Code: It is a unique identification code for both financial and non-financial institutions approved by the International Organization for Standardization (ISO). SWIFT Standards, a division of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), handles the registration of these codes. SWIFT Codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks. •

24 | P a g e


Bharat Bill Payment System (BBPS) Bharat Bill Payment System (BBPS) is an integrated bill payment system which will offer interoperable bill payment service to customers online as well as through a network of agents on the ground. The system will provide multiple payment modes and instant confirmation of payment. payment. With a need of bill payments system, various organizations decided to provide a single platform to make all these payments. So an integrated bill payment system called BBPS was proposed for which the policy guidelines were issued by the Reserve Bank of India on November 28, 2014. National Payment Corporation (NPCI) had been been identified to act as Bharat Bill Payment Central Unit (BBPCU) which will be a single authorized entity for operating the BBPS. The biggest advantage is that the bill can be paid anywhere and anytime. The system will provide multiple payment modes and instant confirmation of payment. payment. Payments may be made through the BBPS using cash, transfer cheques, and electronic modes. The BBPS outlets would include banks, ATMs, business correspondents, kiosks etc.s •

•

•

Electronic Clearing Service (ECS) The Reserve Bank of India offers the Electronic Clearing System (ECS) for faster payments and collections. ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. By repetitive and periodic, it is meant that the transactions occur repetitively and after a fixed time interval. ECS is used by institutions for making bulk payment of amounts or for bulk collection of amounts. Examples for bulk payment of amounts include paying of interest, salary, pension, etc. Examples for bulk collection of amounts includes telephone / electricity / water bills, cess / tax collections, loan installment repayments, periodic investments in mutual funds, insurance premium, etc. ECS is used for faster payments and collections. It is used for either making bulk payment of amounts or for bulk collection of amounts. The institutions who apply for ECS can initiate the process, no need to go to bank branch again and a nd again. Two variants: ECS Credit: ECS Credit is for making bulk payment of amounts. Under this scheme, a single account is debited and then multiple accounts are credited. Example: A company has 50 employees and at the start of month it gives salary to all the employees so instead of crediting each account separately, the company can use the ECS Credit Scheme. ECS Debit: ECS Debit is for bulk collection of amounts. Under this scheme, multiple accounts are debited and then a single account is credited. Example: Many people go for insurance policies and they have allowed the payment of their premiums from their account. Now it is possible that on a single day, many many customer accounts are to be debited to have the premium from them. Here ECS Debit scheme can be used. •

•

•

•

Block Chain Technology ICICI Bank is the first bank in the country and among the first few globally to exchange and authenticate remittance transaction messages as well as original international trade documents related to purchase order, invoice, shipping & insurance, among others, electronically on block chain in real time. The usage of block chain technology simplifies the process and makes it almost instant—to only a few minutes. Typically, this process takes a few days. The block chain application co-created by ICICI Bank replicates the paper-intensive international trade finance process as an electronic de centralised ledger, that gives all the participating entities including banks the ability to access a single source of information. •

•

25 | P a g e

Banking Awareness Capsule NEFT, IMPS & RTGS (National Electronic Funds Transfer (NEFT) Real Time Gross Settlement (RTGS) NEFT and RTGS are settlement systems by RBI while IMPS is settlement mechanism introduced by National Payment Corporation in 2010. There is no limit – either minimum or maximum – on (RBI has not fixed the maximum amount. It has given the amount of funds that could be transferred using liberty to the bank to decide the maximum amount.) NEFT. However, maximum amount per transaction is The minimum amount to be remitted through RTGS is ` 2 limited to Rs.50, 000/- for cash-based remittances lakh. There is no upper ceiling for RTGS transactions. within India and also for remittances to Nepal under the Indo-Nepal Remittance Facility Scheme. NEFT operates in hourly batches - there are twelve The RTGS service window for customer's transactions is settlements from 8 am to 7 pm on week days (Monday available to banks from 9.00 hours to 16.30 hours on week through Friday) and six settlements from 8 am to 1 pm days and from 9.00 hours to 14:00 hours on Saturdays for on Saturdays. settlement at the RBI end. a) Inward transactions – Free, no charge to be levied. a) Inward transactions – Free, no charge to be levied. b) Outward transactions at originating bank branches – charges applicable for the remitter b) Outward transactions – ` 2 lakh to ` 5 lakh - not - For transactions up to Rs 10,000 ---Rs 2.50 (+ Service exceeding ` 30.00 per transaction; Tax) Above ` 5 lakh – not exceeding ` 55.00 per transaction. - For transactions above Rs 10,000 up to Rs 1 lakh: not exceeding Rs 5 (+ Service Tax) - For transactions above Rs 1 lakh and up to Rs 2 lakhs: not exceeding Rs 15 (+ Service Tax) - For transactions above Rs 2 lakhs: not exceeding Rs 25 (+ Service Tax)

IMPS: Immediate Payment Service (IMPS) is an instant interbank electronic fund transfer service through mobile phones. Immediate transfer (24 x 7) Upper limit : 50k per day. Total 2.5 lac per month. • •

Unified Payment Interface Unified Payment Interface have officially launched by National Payments Corporation of India (NPCI), under RBI for instant inter-bank real time transactions using android apps. UPI is a payment system that allows money transfer between any two bank accounts by using a smartphone. UPI allows a customer to pay directly from a bank account to different merchants, both online and offline, without the hassle of typing credit card details, IFSC code, or net banking/wallet passwords. • •

Banks Live on UPI (App Name) 1. Andhra Bank (Andhra Bank One ) 3. Allahabad Bank(Allahabad Bank UPI) 5. Axis Bank(Axis Pay) 7. Bank of Maharashtra (MAHAUPI) 9. Bank of Bardoda (Baroda MPay) 11. Bhartiya Mahila Bank 13. 15. 17. 19.

Canara Bank (Empower) Central Bank of India Catholic Syrian Bank(CSB UPI) DCB Bank

ICICI Bank (Pockets- ICICI Bank) 4. IDBI Bank

Non-Bank UPI App

2.

6. IDFC Bank (IDFC Bank UPI App) 8. IndusInd Bank (Indus Pay) 10. TJSB Sahakari Bank 12. Oriental Bank of Commerce (OBCUPI PSP) 14. Karnataka Bank (KBL Smartz) 16. Kodak Mahindra Bank (KayPay) 18. RBL Bank Ltd 20. UCO Bank (UCO UPI) 26 | P a g e

Nupay Alphapay Finmo Jugnoo Pay Mypoolin Paysay PhonePe Splitkart Trupay

Banking Awareness Capsule 21. Federal Bank (Lotza) 23. HDFC Bank(HDFC Bank MobileBanking) 25. HSBC Bank 27. South Indian Bank (SIB M-Pay (UPI Pay)) 29. State Bank of India (SBI Pay) 31. YES Bank (Yes Pay)

22. Union Bank of India (Union Bank UPI) 24. United Bank of India (United UPI) 26. Punjab National Bank (PNB UPI) 28. Standard Chartered Bank 30. Vijaya Bank (Vijaya UPI App) 32. Dena Bank

Aadhaar Enabled Payment System: AEPS is to further speed track Financial Inclusion in the country, it is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of any bank using the Aadhaar authentication. The four Aadhaar enabled basic types of banking transactions are as follows:Balance Enquiry Cash Withdrawal Cash Deposit Aadhaar to Aadhaar Funds Transfer 1. The only inputs required for a customer to do a transaction under this scenario are:2. IIN (Identifying the Bank to which the customer is associated) 3. Aadhaar Number 4. Fingerprint captured during their enrollment • • •

*99# Service NPCI launched *99# service, which works on Unstructured Unstructured Supplementary Service Data (USSD) channel. This service was launched envisioning the potential of Mobile Banking and the need for immediate low value remittances which will help in financial deepening and inclusion of under banked society in the mainstream banking services. *99# service was dedicated to the nation by Prime Minister of India Narendra Modi on 28th August 2014 as part of Pradhan Mantri Jan Dhan Yojana (PMJDY). Banking customers can avail this service by dialing *99#, a “Common number across all Telecom Service Providers (TSPs)” on their mobile phone and transact through an interactive menu displayed on the mobile screen. Key services offered under *99# service include, interbank account to account fund transfer, balance enquiry, mini statement besides host of other services. This service offered by 43 leading banks & all GSM service s ervice providers and can be accessed in 12 different languages including Hindi & English. Currently, following Financial (Fund Transfer (P2P), (P2A), (P2U)) and, Non-financial and Value Added Services (VAS) are offered through *99# service.(P2P- Person to Person ), (P2Account ), (P2U- Aadhaar Number(UID)). Number(UID)). •

•

•

•

•

National Automated Clearing House (NACH): NPCI has implemented “National Automated Clearing House (NACH)” with an aim to consolidate multiple ECS systems running across India and provides a framework for the harmonization of standard & practices. This system has been launched for Banks, Financial Institutions, Corporates and Government a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature. NACH’s Aadhaar Payment Bridge (APB) System, developed by by NPCI has been helping the Government and Government Agencies in making the Direct Benefit Transfer scheme a success •

•

.

Balance Sheet A balance sheet is a snapshot of a business' financial position on one particular day. •

It provides a summary of what a business owns or is i s owed. It states what assets the business owns and what liabilities it owes, at a particular date. 27 | P a g e


The balance sheet is used to show how the business is being funded and how those funds are being used.

Why it is called Balance Sheet? Because there is a debit entry and a credit entry for everything, so the total value of the assets is always the same value as the total of the liabilities. Contents ● Fixed assets:: Long-term ● Current assets : Short-term ● Current liabilities: What the business owes and must repay in the short term ● Long-term liabilities: Owner's or shareholders' capital Fixed assets Tangible assets - e.g. buildings, land, machinery, computers, fixtures and fittings. Intangible assets - e.g. goodwill, intellectual property rights (such as patents, trademarks and long-term investments. Current assets e.g. stock, work in progress, money owed by customers, cash in hand or at the bank, shortterm investments, pre-payments Current liabilities These are amounts owed to you and due within one year. ● money owed to suppliers ● short-term loans, overdrafts or other finance ● taxes due within the year Long-term liabilities Creditors due after one year: Amounts due to be repaid in loans or financing after one year, eg bank or directors' loans, finance agreements Capital and reserves: Share capital and retained profits, after dividends (if your business is a limited company), or proprietors capital invested in business (if you are an unincorporated business) What does a balance sheet show? ● How solvent the business is ● How liquid its assets are - how much is in the form of cash or can ● Be easily converted into cash, i.e. stocks and shares ● How the business is financed ● How much capital is being used

NPA and Recovering NPA Non-performing asset (NPA) : Non-performing asset (NPA) is defined as a credit facility in respect of which the interest interest and/or installment of principal has remained ‘past due’ for a specified period of time when it ceases to generate income for the lender. According to the Bank for International Settlements (BIS), India’s corporate-debt-to-GDP ratio stood at 515 of GDP as of March 31, 2016. The size of India’s corporate debt, relative to GDP, is much lower than other major economies such as the US (72%) and the EU (105%). •

Recovering NPA: For recovery of NPA there are different tools are available. The important purpose of these tools are to recover the loan amount from borrower. These tools can because according to Loan amount.

Securitization Act: The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) aims to empower banks as secured creditors to take possession, manage and sell the securities without the intervention of court/tribunal. It also aims at Asset Reconstruction by securitization or Reconstruction Company. However, loan with balance below Rs.1 lakh unsecured loans and loans loans against collateral of agricultural land are exempted from the purview of this act. After the amendment of the SARFAESI Act in August 2016, the law now allows secured creditors to take •

•

28 | P a g e

Banking Awareness Capsule possession over a collateral, against which a loan had been provided, provided, upon a default in repayment. repayment. This process is undertaken with the assistance of the District Magistrate, and does not require the intervention intervention of courts or tribunals. The Bill provides that this process will have to be completed within 30 days by the District Magistrate.

ARC: ARCs specialized in resolution of stressed assets. They acquire stressed assets from banking sector and use their expertise to resolve these cases. They in-turn issue security receipts against acquired assets to Qualified Institutional Borrowers (which also includes banks).

Lok Adalats: LokAdalat is for the recovery of small loans. According to RBI guidelines issued in 2001, they cover NPA up to Rs. 5 lakhs, both suit filed and non-suit filed are covered.

Debt Recovery Tribunals: The debt recovery tribunal act was passed by Indian Parliament in 1993 with the objective of facilitating the banks and financial institutions for speedy recovery of dues in cases where the loan amount is Rs. 10 lakhs and above. GOI has constituted 33 Debt Recovery Tribunals and 5 Debt Recovery Appellate Tribunal across the country.

Basel Accords The Basel Accords refer to the banking supervision Accords (recommendations on banking regulations) issued by the Basel Committee on Banking Supervision (BCBS). They are called the Basel Accords as the BCBS maintains its secretariat at the Bank the Bank for International Settlements (BIS) in Basel, Switzerland and the committee normally meets there. The Basel Accords is a set of recommendations for regulations in the banking industry. Upto now three accords have been published – BASEL I Basel I norms were published in 1988 which asked to set a minimum capital requirements for banks. It defined capital requirement and structure of risk weights for banks. The goal was to minimize credit risk i.e. the defaults on a credit or loan when the borrower is unable to pay back to the bank. The 1988 Accord called for a minimum capital ratio of capital to risk-weighted assets of 8% to be implemented by the end of 1992. Ultimately, this framework was introduced not only in member countries but also in virtually all other countries with active international banks. BASEL II After Basel I, Basel II norms were published in 2004. Unlike the goal of Basel I norms, Basel II focused on how much of the bank’s capital, bank must keep aside in order to reduce their credit risks. So in case if a bank is exposed to a greater risk, it needs to keep aside a greater capital to guard against the risks. Basel II was to be implemented in early 2008. The revised framework comprised three pillars, namely: Minimum capital requirements, which sought to develop and expand the standardised rules set out in the 1988 Accord; Supervisory review of an institution’s capital adequacy and internal assessment process; and Effective use of disclosure as a lever to strengthen market discipline and encourage sound banking practices. BASEL III After Basel II, Basel III norms were published in 2010. They have been designed to address the shortcomings of Basel II after the 2008 financial crisis that the world faced. In September 2010, the Group of Governors and Heads of Supervision announced higher global minimum capital standards for commercial banks. According to Basel Committee, “Basel III” is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector. These measures aim to: Improve the banking sector’s ability to absorb shocks arising from financial and economic stress, whatever the source Improve risk management and governance •

•

•

•

•

29 | P a g e


• •

Strengthen banks’ transparency and disclosures. The three pillars of Basel Norms are unchanged in Basel III also. Basel III was to be implemented until 31 March 2018 which is extended to 31 March 2019. Basel III is not to be succeeded by Basel II, rather Basel III will work alongside Basel I and Basel II.

Various Types Of Risks Financial Risk Financial Risk develops from the business transactions done by the Banks which is exposed to potential Loss. Market Risk: Market Risk is a type of risk in which losses in on- or off-balance sheet positions that arise from movement in market prices. Market risk is the most prominent for banks present in investment investment banking. Credit Risk: Credit Risk is the potential that a bank borrower/counter party fails to meet the obligations on agreed terms. There is always scope for the borrower to default from his commitments for one or the other reason resulting in crystalisation of credit risk to the bank. Credit risk is inherent to the business of lending funds to the operations linked closely to market risk variables Interest Rate Risk Interest Rate Risk is the type of risk arises due to fluctuation in interest rate. Changes in interest rate affect earnings, value of assets, liability off-balance sheet items and cash flow. Earnings side involves analyzing the impact of changes in interest rates on accrual or reported earnings in the near term. Liquidity risk This kind of Risk arises due to inability of bank to meet its obligations when any asset may not be realized into cash. Also, we can say that, it is a mismatch of assets and liabilities. l iabilities. Liquidity is the ability to efficiently accommodate deposit as also reduction in liabilities and to fund the loan growth and possible funding of the off-balance sheet claims. Foreign Exchange Risk Forex risk is the risk that a bank may suffer loss as a result of adverse exchange rate movement during a period in which it has an open position, either spot or forward or both in same foreign currency. Capital Risk This type of risk arises where the capital comes under risk partially or the whole in some cases emergencies. Operational Risk This risks arises due to failure of day to day activities, system or people. It includes both internal and external frauds like failures related to policies, laws, regulations, documentation or any technological risks. It is defined as any risk that is not categorized as market or credit risk, is the risk of loss arising from inadequate or failed internal processes, people and systems or from external events.

Inflation and its types Inflation is a rise in the general level of prices of goods and services in an economy over a period of time

Types of Inflation: Demand pull inflation: inflation : This type of inflation occurs when total demand for goods and services in an economy exceeds the supply of the same. Cost-push Inflation: Inflation : If there is increase in the cost of production of goods and services, due to increase of wages and raw materials cost, there is likely to be a consequent increase in the prices of finished goods and services. Stagflation:: It is a situation in which the inflation rate is high and the economic growth rate is low. Stagflation Reflation: It is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is an act of pumping money in the market to increase the circulation so that economy can be stipulated again. Disinflation: It is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and services in a nation’s gross domestic product over time. Deflation: It is a decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below 0% (a negative inflation rate). Hyper inflation: inflation: It is the extremely rapid escalation of prices (typically more than 50% per month) for goods and services. 30 | P a g e

Banking Awareness Capsule How to Measure Inflation : CPI(Consumer CPI(Consumer Price Index): A consumer price index (CPI) measures changes in the price level of consumer goods and services purchased by households or consumer. Wholesale price index: The Wholesale Price Index or WPI is the price of a representative basket of wholesale goods .

Financial Inclusion Schemes Financial inclusion is the delivery of financial services at affordable costs to vast sections of disadvantaged and low income groups. accountholders makes No-frills account – These accounts provide basic facilities of deposit and withdrawal to accountholders banking affordable by cutting down on extra frills that are no use for the lower section of the society. These These accounts are expected to provide a low-cost mode to access BANK ACCOUNTS. ACCOUNTS. RBI also eased KYC (Know Your customer) norms for opening of such accounts. The banking systems have started to Banking service reaches homes through business correspondents – The adopt the business correspondent mechanism to facilitate banking services in those areas where banks are unable to open brick and mortar branches for cost considerations. Business Correspondents provide affordability and easy accessibility to this unbanked population. Armed with suitable technology, the business correspondents help in taking the banks to the doorsteps of rural households.

Lead Bank Scheme-1969 aimed at forming a coordinated approach for providing banking facilities. To enable banks to assume their lead role in an effective and systematic manner, all districts in the country country (excepting the metropolitan cities of Mumbai, Kolkata, Chennai and certain Union Territories) were allotted among Public Sector Banks and a few Private Sector Banks The Lead bank role is to act as a consortium leader for co-coordinating the efforts of all credit institutions in each of the allotted districts for expansion of branch banking facilities and for meeting the credit needs of the rural economy. For the preparation of District Credit Plans and monitoring their implementation a Lead bank Officer (LBO) now designated as Lead District Manager was appointed in 1979 habitations with minimum population atleast through Swabhiman Scheme – Opening of Bank accounts covering the habitations Business correspondent model providing cash services.Habitations with population more than 1600 in plain areas and 1000 in north-eastern and hilly states as per 2001 census are covered . Indo-Nepal Remittance Facility scheme Indo-Nepal Remittance Facility is a cross-border remittance scheme to transfer funds from India to Nepal, enabled under the NEFT Scheme. The scheme was launched to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal. A remitter can transfer funds up to Indian Rupees 50,000 (maximum permissible amount) from any of the NEFT-enabled branches in India. The beneficiary would receive funds in Nepalese Rupees. Under the Scheme, even a walk-in customer can transfer funds upto Rs 50,000 by depositing the cash at the remitting bank branch. In Nepal, the Indo-Nepal Remittance Facility Scheme is handled by Nepal SBI Ltd. (NSBL). If the beneficiary does not have a bank account with NSBL or resides in a locality/ area in Nepal not serviced by a NSBL bank branch, an arrangement has been entered entered into by NSBL with a money transfer company in Nepal Nepal (called Prabhu Money Transfer) who would make arrangements for delivery of cash (in Nepalese Rupees) to the beneficiary. The bank branches originating the Indo-Nepal remittance transactions under the NEFT will process it like any other NEFT transaction, However an originator in India is allowed to remit a maximum of 12 remittances in a year under the scheme. In case of complaints relating to non-credit or delay in credit to the beneficiary account or for complaints of any other nature, the NEFT Customer Facilitation Centre (CFC) of the respective bank (the originating bank and / or SBI) can be contacted. •

• •

•

•

• •

31 | P a g e

Banking Awareness Capsule Lead Bank Scheme The Lead Bank Scheme was introduced in 1969 to provide lead roles to individual banks (both in public sector and private sector) for the districts allotted to them. Commercial banks did not have adequate presence in rural areas and also lacked the required rural orientation and so the rural areas were not able to enjoy the benefits of banking. So a bank (public or private) was given some area in which that bank had to play a lead role in providing financial services to the people, making them aware about the banks and various benefits of banks and also generating trust among people so that they deposit their money without any fear of loss or fraud. So this bank was the lead bank of area. •

•

Kisan Vikas Patra KisanVikas Patra is a saving certificate scheme which was first launched in 1988 by India Post. KVP was closed in 2011 and the new government relaunched it in 2014. It is regulated by KVP Rules 2014, Scheme is available through Post Offices and those banks that are authorized to operate PPF scheme.  Amount Invested matures in 112 months.  Rate of Interest 7.7%.  Certificate can be purchased by an adult for himself or on behalf of a minor or by two adults.  KVP can be purchased from any Departmental Post office.  Facility of nomination is available(pledge for loan facility and 3. pre-mature payment after 2 years and 6 months subject to certain conditions, is eligible).  Certificate can be transferred from one person to another and from one post office to another.  Certificate can be encashed after 2 & 1/2 years from the date of issue.  Denomination: Rs.1000, Rs.5000, Rs.10000 and Rs.50000 and there is no maximum Limit.  Types of certificates: Category Single, Joint A-Type and Joint B-Type (E/S). Pradhan Mantri Jan-Dhan Yojana Pradhan Mantri Jan-Dhan Yojana is India's National Mission for Financial Inclusion Scheme which was launched by the Prime Minister of India Narendra Modi on 28 August 2014. PMJDY accounts are being opened with Zero balance. Benefits under PMJDY Scheme  Interest on deposit.  Accidental insurance cover of Rs. 1 lac  The scheme provide life cover of Rs. 30,000/- payable on death of the beneficiary, subject to fulfillment of the eligibility condition.  After satisfactory operation of the account for 6 months, an overdraft facility will be permitted  The Claim under Personal Accidental Insurance under PMJDY shall be payable if the Rupay Card holder have performed minimum one successful financial or non-financial non-financial customer induced transaction at any Bank Branch, Bank Mitra, ATM, POS, E-COM etc.  Overdraft facility upto Rs.5000/- is available in only one account per household, preferably lady of the household.

Basic Savings Bank Deposit Account(BSBDA Account(BSBDA)) The aim of introducing BSBDA is part of the efforts of RBI for furthering financial inclusion objectives. The Basic Savings Bank Deposit Account allows you to bank with a zero minimum balance requirement. All the existing ‘No-frills’ accounts opened by the banks are now converted into BSBDA in compliance with the guidelines issued in 2012 by the Reserve Bank of India as well as fresh accounts opened under the said circular should be treated as BSBDA. •

RBI guidelines: •

•

•

Basic Savings Bank Deposit Account should be considered as as a normal banking service available to all customers (Any individual, including poor or those from weaker section of the society), through branches. BSBDA guidelines are applicable to “all scheduled commercial banks in India, India, including foreign banks having branches in India”. The services available in the account will include deposit and withdrawal of cash cash at bank branch as well as Free ATMscumDebit Card; Receipt/credit of money through electronic payment channels or by means of deposit/collection of cheques drawn by Central/State Government agencies and departments. 32 | P a g e


•

•

•

•

There will be no limit on the number of deposits that can be made in a month, account holders will be allowed a maximum of four withdrawals in a month, including ATM withdrawals. No charge will be levied for nonoperation/activation of of inoperative ‘Basic Savings Bank Deposit Account’. Holders of ‘Basic Savings Bank Deposit Account’ will not be eligible for opening any other savings bank deposit account in that bank. If a customer has any other existing savings bank deposit account in that bank, he/she will be required to close it within 30 days from the date of opening a ‘Basic Savings Bank Deposit Account’. One can have Term/Fixed Deposit, Recurring Deposit etc., and accounts in the bank where one holds ‘Basic Savings Bank Deposit Account’. In the BSBDA Accounts with introduction/ Small Accounts aggregate of all credits in a financial year does not exceed Rs.1.00 lac. The aggregate of all withdrawals and transfers in a month does not exceed Rs.10,000/ Balance Balance at any point of time does not exceed Rs.50,000/.

Others Strategic Debt Restructuring Scheme The Scheme has been enacted with a view to revive stressed companies and provide lending institutions with a way to initiate change of management in companies which fail to achieve the milestones under Corporate Debt Restructuring. The Strategic Debt Restructuring (SDR) has been introduced with a view to ensuring more stake of promoters in reviving stressed accounts and providing banks with enhanced capabilities to initiate change of ownership, where necessary, in accounts which fail to achieve the agreed critical conditions and viability milestones. Therefore, banks should consider using SDR only in cases where change in ownership is likely to improve the economic value of the loan asset and the prospects of recovery of their dues. Conversion of outstanding debts can be done by a consortium of lending institutions. Such a consortium is known as the Joint Lenders Forum (JLF) which may include banks and other financial institutions such as NBFCs.The Scheme will not be applicable to a single lender. •

•

•

Scheme for Sustainable Structuring of Stressed Assets The Reserve Bank of India has introduced “Scheme for Sustainable Structuring of Stressed Assets (S4A)” for resolution of bad loans of large projects in Jun 2016. The scheme aimed to strengthen the lenders’ ability to deal with stressed assets, Reserve Bank of India has been issuing, from time to time, guidelines and prudential prudential norms on stressed assets resolution by regulated lenders. The aggregate exposure ( including accrued interest ) of all institutional lenders in the account is more than Rs.500 crore (including Rupee loans, Foreign Currency loans/External Commercial Borrowings. •

•

Financial Market Financial market are divided in two types depends on duration for which they need money. They are Money and

Capital Market. Money Market Money Market is a short-term credit market. The Money Market is regulated by the Reserve Bank of India. It is the centre in which short-term funds are borrowed and lent. It consists of borrowers and lenders of shortterm funds. The lenders are commercial banks, insurance companies, finance companies and the central bank. The money market brings together the lenders and the borrowers. •

•

•

Money and its Types Money: Money is anything that is widely accepted in exchange for goods and services . Commodity Money - Commodity money is the type of Money that's in the form of a commodity with intrinsic value which means it has value outside of its use as money. The commodity itself represents money, and the money is the commodity. Example: Gold silver, copper, salt, peppercorns, rice, large stones, etc. commodity.. Representative Money –It is actually represents Money. It is exchangeable for a commodity •

•

33 | P a g e

Banking Awareness Capsule Example: Token coins, or any other physical tokens like certificates. Fiat Money whose value is not derived from any intrinsic value or any guarantee that i t can be converted into valuable commodity (like gold). It has value as money because a government decreed that it has value for that purpose. RBI approach of money supply Reserve Money (M 0): Notes and coins + reserves of banks with central bank M1= currency with the public + demand deposits+ other deposit held with the R.B.I. M2= M1 + savings deposits with post office savings banks M3 = M1 + time deposit M4= M3 + total deposits with the post office savings organization . Money Market Instruments 1. Treasury Bills 2. Commercial Papers 3. Certificate of Deposit 4. Bankers Acceptance 5. Repurchase Agreement •

• •

• •

Treasury Bills: Treasury bills (T-bills) offer short-term investment opportunities, generally up to one year. They are thus useful in managing short-term liquidity. At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments. Minimum Price: Treasury bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000. Treasury bills are issued at a discount and are redeemed at par. Treasury bills are also issued under the Market Stabilization Scheme (MSS).

Government Securities Government securities, also called the gilt edged securities or G-secs, are not only free from default risk but also provide reasonable returns and, therefore, offer offer the most suitable investment opportunity to provident provident funds. The Government securities comprise dated securities issued by the Government of India and state governments as also, treasury bills issued by the Government of India. Reserve Bank of India manages and services these securities through its public debt offices located in various places as an agent of the Government. •

•

Mutual Fund A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The first introduction of a mutual fund in India occurred in 1963, when the Government of India launched Unit Trust of India. The regulator of mutual mutual funds in India - SEBI. The first private sector fund to operate in India was Kothari Pioneer, which later merged with Franklin Templeton. •

• •

Commercial Paper and Certificates of Deposits Certificate of Deposit Certificate of Deposit (CD) is a negotiable money market instrument and issued in demat form or as a Usance Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural Banks and Local Area Banks}; and (ii) select All-India Financial Institutions (FIs) that have been permitted by RBI Minimum amount of a CD should be Rs.1 lakh, i.e., the minimum deposit that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter. The maturity period of CDs issued by banks should not be

Commercial Paper (CP) Commercial Paper (CP) is an unsecured money market instrument issued in the form form of a promissory promissory note. It was introduced in India in 1990with a view to enabling highly rated corporate borrowers. Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP. (the tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs. 4 crore) CP can be issued in denominations of Rs.5 lakh or multiples thereof.

CP can be issued for maturities between a minimum of

34 | P a g e

Banking Awareness Capsule less than 7 days and not more than one year, from the date of 7days and a maximum of up to one year from the date of issue. The FIs can issue CDs for a period not less than 1 issue. However, the maturity date of the CP should not go year and not exceeding 3 years from the date of issue. beyond the date up to which the credit credit rating of the issuer is valid. CDs can be issued to individuals, corporations, companies Individuals, banking companies, other corporate bodies (including banks and PDs), trusts, funds, associations, etc. (registered or incorporated in India) and unincorporated Non-Resident Indians (NRIs) may also subscribe to CDs, bodies, NRIs and Foreign Institutional Investors (FIIs) etc. but only on non-repatriable basis, which should be clearly clearly can invest in CPs. However, investment by FIIs would be stated on the Certificate. Such CDs cannot be endorsed to within the limits set for them by Securities and Exchange another NRI in the secondary market. Board of India (SEBI) from time-to-time.

Call and Notice Money Market The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of a money market instrument is that it is liquid and can be turned into money quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers. Call Money” means deals in overnight funds. “Notice Money” means deals in funds for 2 – 14 days. “Term Money” means deals in funds for 15 days-1 year. Participants Scheduled commercial banks (excluding RRBs), co-operative banks (other than Land Development Banks) and Primary Dealers (PDs), are permitted to participate in call/notice money market both as borrowers and lenders. •

• •

Commercial Paper: Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. CP, as a privately placed instrument, was introduced in India in 1990 with a view to enable highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide an additional instrument to investors. Individuals, banking companies, other corporate bodies (registered or incorporated in India) and unincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs. However, investment by FIIs would be within the li mits set for them by SEBI from time-to-time. Who is permitted to issue CP: Subsequently, primary dealers (PDs) and all-India financial institutions (FIs) were also permitted to issue CP to enable them to meet their short-term funding requirements. However the corporate issuing CP should meet the following conditions 1. The tangible net worth of the company, as per the latest audited balance sheet, is not less than Rs.4 crore; 2. The company has been sanctioned working capital limit by bank/s or FIs; and 3. The borrowal account of the company is classified as a Standard Asset by the financing bank/institution. 4. The minimum credit rating shall be ‘A3’ as per rating symbol and definition prescribed by SEBI . •

•

Minimum and maximum period of maturity: CP can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. Denomination: CP can be issued in denominations of Rs.5 lakh or multiples thereof. Other Conditions: Only a scheduled bank can act as an IPA for issuance of CP. CP can be issued either in the form of a promissory note or in a dematerialised form through any of the depositories approved by and registered with SEBI. Banks, FIs and PDs can hold CP only in dematerialized form. • •

Capital Market Capital Market are institutional arrangements for facilitating the borrowing and lending of long-term funds. Usually, stress is laid on the markets for long-term debt and equity claims, government securities, bonds, mortgages, and other instruments of long-term debts.

35 | P a g e


•

•

•

This capital market encircles the system through which the public takes up long-term securities, either directly or through intermediaries. It also to be noted that Risk is much greater in capital market unlike Money Market which has small risk. This instruments consists of a series of channels through which the savings of the community are mobilised and made available to the entrepreneurs for undertaking investment activities. Regulator: Stock Exchange Board of India setup guidelines, and supervise and regulate the working of capital market. SEBI in consultation with the Government has taken a number of steps to introduce improved practices and greater transperancy in the capital markets in the interest interest of the investing public and the healthy development of the capital markets. Capital Market Instruments 1. Shares 2. Debentures 3. Bonds

Masala Bonds Masala bonds are the rupee-denominated bonds which can be issued by the Indian entities to raise money from overseas markets. By rupee-denominated bonds, it means that the money borrowed will be in Indian rupees and not any foreign currency Amount

Maturity Who Can Issue

Where can these bonds be issued?

Under the automatic route the amount will be equivalent to INR 50 billion ( Rs 5,000 crore)per annum through Automatic Approval, beyond Rs 5,000 crore in a financial year will require prior approval of the Reserve Bank Minimum maturity period of 3 years. However they can be issued for three or five or seven-year maturities. >>Any corporate or body corporate as well as Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) can issue such off-shore rupee denominated bonds. >>>Indian banks can issue these bonds in the forms of (i) Perpetual Debt Instruments (PDI) qualifying for inclusion as Additional Tier 1 capital and debt capital instruments qualifying for inclusion as Tier 2 capital, and (ii) Long term Rupee Denominated Bonds overseas for financing infrastructure and affordable housing. The Rupee denominated bonds can only be issued in a country and can only be subscribed by a resident of a country: 1. that is a member of Financial Action Task Force (FATF) or a member of a FATF-Style Regional body; and 2. whose securities market regulator is a signatory to the International Organization of Securities Commission's (IOSCO’s) Multilateral Memorandum of Understanding (Appendix A Signatories) or a signatory to bilateral Memorandum of Understanding with the SEBI for information sharing arrangements;

Key Facts:  Masala bonds are a step to help internationalize the Indian rupee and also deepen the Indian financial system.The advantage is that that of the currency risk .  IFC issued an Rs 1,000 crore bond to fund infrastructure projects in India. These bonds were listed on the London Stock Exchange (LSE).  IFC then named them Masala bonds to give a local flavour by calling to mind Indian culture and cuisine.  They are the first rupee bonds listed on the London Stock Exchange.  They can be issued for three or five or seven-year maturities.  The first Masala bonds were issued on 10 November 2014 under IFC’s $2 billi on offshore rupee program. from External Commercial Borrowings (ECB) in a way that in ECB the currency risk lies  They are different from External with the Indian issuer while in case of masala bonds, the currency risk lies with the overseas investor.  In the first ever 'masala bond' issue, housing finance major HDFC has raised Rs 3,000 crore.

36 | P a g e


Priority Sector Lending Priority sector lending is an important role by the RBI in banking. Which provides lending to the few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education.

There are eight Categories. (i) Agriculture (ii) Micro, Small and Medium Enterprises (iii) Export Credit (iv) Education

(v) Housing (vi) Social Infrastructure (vii) Renewable Energy (viii) Others

Total Priority Sector and Sub Target Total Target for Domestic scheduled commercial banks and foreign banks (above 20 branches) 40 percent of Adjusted Net Bank Credit or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher. The said banks have to achieve the Target within a maximum period of five years starting from April 1, 2013 and ending on March 31, 2018

The same target has to be achieved in a phased manner by 2020 by foreign banks with less than 20 branches.

Sub-targets for Priority sector:

2015-16 2016-17 2017-18 2018-19 2019-20

32 34 36 38 40

Sector Agriculture

Target 18 percent of ANBC (Within this 18 % target prescribed for Small and Marginal Farmers, to be achieved in a phased manner i.e., 7 per cent by March 2016 and 8 per cent by March 2017) Micro Enterprises 7.5 percent of ANBC (In a phased manner i.e. 7 per cent by March 2016 and 7.5 per cent by March 2017.) Advances to Weaker 10 percent of ANBC Sections

Agriculture Farm credit: Loans to individual farmers up to Rs.50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) for a period not exceeding 12 months. Loans to corporate farmers, farmers' producer organizations/companies Farmers directly engaged in Agriculture and Allied Activities, viz., dairy, fishery, animal husbandry, poultry, bee-keeping and sericulture up to an aggregate aggregate limit of Rs.2 crore per borrower. Loans up to Rs.50 lakh against pledge/hypothecation of agricultural produce (including warehouse receipts) • for a period not exceeding 12 months. •

•

Agricultureinfrastructure Loans for construction of storage facilities (warehouses, market yards, godowns and silos) including cold storage units/ cold storage chains designed to store agriculture produce/products, irrespective of their location an aggregate sanctioned limit of Rs.100 crore per borrower from the banking system, will apply. For the purpose of Ancillary activities loans up to Rs.5 crore to co-operative societies of farmers for disposing of the produce of members.Loans for Food and Agro-processing up to an aggregate sanctioned limit of Rs.100 crore per borrower from the banking system. For the purpose of computation of 7 percent/ 8 percent target, Small and Marginal Farmers: Farmers with landholding of up to 1 hectare are considered as Marginal Farmers. Farmers with a landholding • of more than 1 hectare and upto 2 hectares are considered as Small Farmers. •

37 | P a g e

Banking Awareness Capsule Micro, Small and Medium Enterprises Enterprises Micro Enterprises Small Enterprises

Medium Enterprises Enterprises Micro Enterprises Small Enterprises

Medium Enterprises

Manufacturing Sector The Micro, Small and Medium Enterprises Investment in plant and machinery engaged in the manufacture or production of Does not exceed twenty five lakh rupees More than twenty twenty five five lakh lakh rupees but does not goods to any industry specified in the first schedule to the Industries (Development and exceed five crore rupees More than five crore rupees but does not Regulation) Act, 1951 and as notified by the Government from time to time. exceed ten crore rupees Service Sector Bank loans up to Rs. 5 crore per unit to Micro Investment in equipment and Small Enterprises and Rs. 10 crore to Does not exceed ten lakh rupees More than ten lakh rupees but does not exceed Medium Enterprises engaged in providing or rendering of services and defined in terms of two crore rupees More than two crore rupees but does not exceed investment in equipment under MSMED Act, 2006. five crore rupees

Export Credit Domestic banks

Foreign banks with 20 branches and above Export credit over corresponding date Incremental export credit over of the preceding year, up to 2 percent corresponding date of the preceding year, up of ANBC. Effective from April 1, to 2 percent of ANBC or Credit Equivalent 2015 subject to a sanctioned limit of Amount of Off-Balance Sheet Exposure, Rs.25 crore per borrower to units whichever is higher, effective from April 1, having turnover of up to Rs.100 crore. 2017 (As per their approved plans, foreign banks with 20 branches and above are allowed to count certain percentage of export credit limit as priority sector till March 2016).

Foreign banks with less than 20 branches Export credit will be allowed up to 32 percent of ANBC or Credit Equivalent Amount of OffBalance Sheet Exposure, whichever is higher.

Education Loans to individuals for educational purposes including vocational courses upto Rs. 10 lakh irrespective of the sanctioned amount will be considered as eligible for priority sector.

Housing (i) Loans to individuals up to Rs. 28 lakh in metropolitan centres (with population of ten lakh and above) and loans up to Rs. 20 lakh in other centres for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit in the metropolitan centre and at other centres should not exceed Rs. 35 lakh and Rs. 25 lakh respectively. The housing loans to banks’ own employees will be excluded. (ii) Loans for repairs to damaged dwelling units of families up to Rs. 5 lakh in metropolitan centres and up to Rs. 2 lakh in other centres.

Social infrastructure Bank loans up to a limit of Rs. 5 crore per borrower for building social infrastructure for activities namely schools, health care facilities, drinking water facilities and sanitation facilities in Tier II to Tier VI centres.

Renewable Energy Bank loans up to a limit of Rs. 15 crore to borrowers for purposes like solar based power generators, biomass based power generators, wind mills, micro-hydel plants and for non-conventional energy based public utilities viz. street lighting systems, and remote village electrification. For individual households, the loan limit will be Rs. 10 lakh per borrower.

38 | P a g e


Miscellaneous Assets Vs. Liabilities Assets are the ones which are useful or valuable things a person/organization has like goods, property, vehicles, equipment, machinery, etc. If we talk about bank’s assets: They are those which the bank has and can be readily converted to cash whenever bank requires money. Liabilities are the ones for which an amount of money is owed like in a company the salaries of employees are to be given, etc. If we talk about bank’s liabilities: They are those which the bank has from the customer deposits and borrowed money for bank’s purpose. purpose. Letter of credit Vs. Bank Guarantee These are given by buyers to their sellers both in India and outside India. When products are imported from a foreign company, how the company will assure that they will get the payment in time ans full amount? So the solution is Letter of credit and Bank Guarantee A letter of credit is a letter issued by bank which guarantees buyer’s payment on time and in correct amount up to the time the services will be delivered to the buyer. Unlike in letter of credit, in a bank guarantee the payment is done only when the buyer is not able to pay the required amount of money to the seller. So the difference between the two is that if you give letter of credit to seller, that will ensure that bank will pay on your behalf up to the day the services are being provided to you by the seller and if you give bank guarantee to seller, that will ensure that bank will pay on your behalf if you are not able to pay the amount. •

•

•

Insolvency Vs Bankruptcy When a person/organization is unable to pay their debts when they become due and payable, it is called insolvency. When a person/organization is unable to pay their debts when they become due and payable and is also declared as bankrupt by court, it is called bankruptcy.All bankruptcy.All bankrupts will be called insolvent, but not vice-versa. FDI Vs FII Foreign Direct Investment (FDI) as the name suggests is investing directly in another country. A foreign company which is based in some other country like France invests in India either by setting up a wholly owned subsidiary or getting into a joint venture with some company based in India and then conducts its business in India. Examples: IBM India, Maruti Suzuki, SBI life insurance, etc Foreign Institutional Investor (FII) is similar to FDI in a way that this is also direct investment but investment in only financial assets such as stocks, bonds etc. of a company located in another country. Example: Any foreign company invests in the shares of Infosys (based in India).

Foreign Direct Investment in India Sector

FDI Limit

Entry Route

Agriculture & Animal Husbandry Plantation Sector Mining Defence Manufacturing

100% 100% 100% 100%

Automatic Automatic Automatic Automatic up to 49% Above 49% under Government route in

39 | P a g e


Broadcasting Broadcasting Content Services Print Media Publishing/printing of scientific and technical magazines/specialty journals/ periodicals. Publication of facsimile edition of foreign newspapers Civil Aviation – Airports Green Field Projects & Existing Projects Civil Aviation – Air Transport Services • Scheduled Air Transport Service/ Domestic Scheduled Passenger Airline • Regional Air Transport Service Civil Aviation Construction Development: Townships, Housing, Built-up Infrastructure Industrial Parks Satellites- establishment and operation, subject to the sectoral guidelines of Department of Space/ISRO Private Security Agencies

100% 49% 26% 100%

cases resulting in access to modern technology in the country Automatic Government Government Government

100%

Government

100%

Automatic

100%

Automatic up to 49% Above 49% under Government route 100% Automatic for NRIs

100% 100%

Automatic Automatic

100% 100%

Automatic Government

74%

Telecom Services

100%

Cash & Carry Wholesale Trading E-commerce activities (e-commerce entities would engage only in Business to Business (B2B) ecommerce and not in Business to Consumer (B2C) ecommerce.) Single Brand retail trading

100% 100%

Automatic up to 49% Above 49% & up to 74% under Government route Automatic up to 49% Above 49% under Government route Automatic Automatic

Multi Brand Retail Trading Duty Free Shops Railway Infrastructure Asset Reconstruction Companies Banking- Private Sector

51% 100% 100% 100% 74%

Banking- Public Sector Credit Information Companies (CIC) Infrastructure Company in the Securities Market Pension Sector Power Exchanges White Label ATM Operations Non-Banking Finance Companies (NBFC) Pharmaceuticals(Green Field) Pharmaceuticals(Brown Field)

20% 100% 49% 49% 49% 100% 100% 100% 100%

Food products manufactured or produced in India

100%

100%

Automatic up to 49% Above 49% under Government route Government Automatic Automatic Automatic Automatic up to 49% Above 49% & up to 74% under Government route Government Automatic Automatic Automatic Automatic Automatic Automatic Automatic Automatic up to 74% Above 74% under Government route Government

Dormant account Vs. Frozen account The account which has not been used for 24 months (2 years) by its operator is termed as dormant account while the account in which all the activities have been stopped by the bank is a freezed account. The dormant accounts can be made as operative as per bank policy. According to RBI guidelines, banks •

40 | P a g e


•

cannot charge any money to make dormant or inoperative accounts as operative. The interest on amount of money in saving accounts will be credited in account in case of inoperative account also. Freezing of account means the transactions in such account cannot be performed until further notice. The payments will be stopped in such accounts and even cheques cheques drawn before freezing are also not allowed to be encashed by anyone. Only RBI, SEBI, Income-tax authorities, and court can give orders to freeze account and not the respective banks.

Cross selling Vs. Up Selling Cross selling means selling of products/services to an already existing customer. And then if we talk about banks, when they sell any extra banking products/services products/services to their customer along with the product the customer wants. Like selling a credit card and internet banking to a savings or current account customer, selling their any bancassurance products, etc. Unlike cross selling, up selling means encouraging customers to purchase a higher-end product or we can say a more costly product than the customer has asked for. Like the customer asks for a credit card with overdraft facility of Rs 10,000 but the banking representative tells him benefits of having the card with more facilities, etc. •

•

Consortium Financing Vs.Multiple Banking There are cases in which big businesses require large finances which it cannot get from single lender. In Consortium financing, several banks (or financial institutions) finance a single borrower. In this case there is a common documentation, joint supervision and follow-up exercises between all banks/financial institutions. So the participating banks form a new consortium bank. The whole whole loan amount is divided among those banks forming consortium, so the risk also gets divided. The bank which takes the higher risk (by giving the highest amount of loan) will act as a leader and thus it acts as an intermediary between the consortium and the borrower. Multiple banking is an arrangement where a borrower takes loan amount from several banks. In this case no bank knows that his borrower has taken loan from other banks too. There is no contractual relationship between various banks like that in consortium banking and and each bank holds its individual security and own credit rates. •

•

Moratorium period Vs. Grace period When we take a loan from bank, we do not have to start paying the EMIs immediately. The bank gives some time before start paying EMIs which are generally paid on a monthly basis. This time before start of paying EMIs is called Moratorium period. Unlike moratorium period, during the grace period, interest is not charged. Actually it is a period of time after a payment becomes due. Example: Grace period is given for for paying off the overdraft value of of credit card. If the money is not paid back within the grace period, interest rate is charged according to the lending institution policy. NRO Account Vs. NRE Account Vs. FCNR Account NRO Account: Non Resident Ordinary (NRO) account is a Savings Account or Current Account or Fixed Deposit Account or Recurring Deposit account opened by NRIs and PIOs. It is a rupee denominated account i.e. the amount in the account is maintained in Indian Rupees. NRE Account: Non Resident External (NRE) account is a rupee denominated account which can be Savings Account or Current Account or Fixed Deposit Account or Recurring Deposit account opened by NRIs and PIOs. FCNR Account: Foreign Currency Non Resident (FCNR) account is a term deposit account that can be maintained by NRIs and PIOs in foreign currency. So this means means it is not a savings account. Authorized dealer banks in India can allow deposits in any of the permitted currency (currency freely convertible).

41 | P a g e

Banking Awareness Capsule Negotiable Instruments Negotiable instrument is a document which guarantees the payment of a specific amount of money, either on demand, demand, or at a set time, with the payer named on the document. A negotiable instrument can be transferred from one person to another. According to Section 13 of the Negotiable Instruments Act, 1881, “A Negotiable Instrument means a promissory note, bill of exchange or cheque cheque payable either to order or to bearer.” •

Securities: Pledge, Hypothecation,Mor Hypothecation,Mortgage tgage Pledge is when the property is offered as collateral or security. It is a right to reserve a legal interest in something. Example- a lot of banks and credit unions have what is called "cross collateral." So for instance, if you have a vehicle loan with a bank and also have a checking account with the bank, there is an excellent chance that you've signed a contract provision where you've "pledged" whatever funds you may have in your checking account from time to time as additional security on the loan. Hypothecation: It is used when you(borrower) have the actual possession of the asset, for which you have taken the loan. Generally, this is charged against loans for movable assets, like car, bus, etc. (vehicle loans). Here, the assets (bus, car, etc.) remain with you, and you are hypothecated to the bank for the loan granted. In case you are unable to repay the loan amount, then the bank has the right to sell the asset (bus, car, etc.), (which is possessed by you) and recover the total amount (with interest). Mortgage: It is used when you (borrower) have the actual possession of the assets, for which you are granted loan (e.g., house loan), or against which you are granted loan (e.g., house mortgaged). Mortgages are generally those assets, which are permanently attached with Earth surface, like house, land, factory etc. In case you are unable to repay the loan amount, the bank has the right to seize and sell the mortgage, and recover the loan amount (with interest). Marginal Cost of funds based Lending Rate (MCLR) MCLR got effective after April 1, 2016. How RBI decided to implement MCLR system? Before 2010, there was Benchmark Prime Lending Rate (BPLR) system . Under this banks were allowed to lend loans to their most trust worthy customers at a low rate. But this system was not transparent. After this, banks were advised by RBI to apply the system of base rate i.e. below this rate banks will not be able to lend credits, except in the cases allowed by RBI. Different parameters were used. These parameters include average cost of funds, marginal cost of funds or any other methodology which seemed reasonable. But then banks used to change their methodology as when they wanted. Whenever the RBI cuts the repo rate, same has to be done by banks also in their base rates, but they lower the base rate in small because most banks currently follow average cost of funds based calculation for arriving at respective base rates. This is the main reason for changing the policy to Marginal Cost of Funds based Lending Rates (MCLR). Marginal Cost of Funds : They are the funds which banks have to give to its customers and RBI instead of investing them in other ways. Para banking Para banking activities are the activities carried out by t he bank which are apart from its normal day-to-day activities. Its not that bank can perform any activity other than daily activities, it can perform only those para banking activities which are permitted by RBI. Examples: insurance business, portfolio management services, to become pension fund managers, mutual funds business, money market mutual funds, underwriting of of bonds of PSUs, investment in venture capital funds, etc. Bancassurance Bancassurance as the term suggests is Bank + Insurance. Bancassurance means selling insurance product through banks. It is one of the para banking activity which the RBI has allowed the banks to take up. For selling the

42 | P a g e

Banking Awareness Capsule insurance product, bank and insurance company come up in a partnership where the bank sells the insurance company’s insurance products to its clients. Some examples include: SBI General Insurance Company Limited: joint venture between SBI and Insurance Australia Group (IAG). SBI Life Insurance: joint venture life insurance Company between SBI and BNP Paribas Cardiff of France. E-Lobby E-Lobby is a facility which is now provided by banks so that their customers can do their banking transactions as per their convenience 24×7 i.e. without any time restriction. E-Lobby provides the facility on bank holidays also. Self service facilities which can be done at banking e-lobbies include: ATM withdrawals, cash deposits, card-to-card transfers, mobile phone top-ups, railway booking, passbook printing, NEFT, opening of FD/RD accounts, SMS alerts, cheque drop box, bill payments, mini statements, etc. Clean Note Policy of RBI In order to increase the life of currency notes, Reserve Bank of India (RBI) issued Clean Note Policy in 2001. According to the policy: The note packets should not be stapled, while the banding of packets should be done with paper/polythene bands so that the life of the currency currency notes is increased. Debt Consolidation In simple words Debt Consolidation is going for another loan to pay the existing loan. Technical definition says that Debt Consolidation is a form of debt refinancing that entails taking out one loan to pay off many others. Refinancing means replacement of an existing debt to be paid with another one. Money laundering It is an act of converting illegal money to legal money. A person who is found having money from illegal sources can be made to go to prison, or any other liable liable punishment. So the persons or rather criminals try to convert convert their illegal money to legal money so that their money appears clean which is known as money laundering.The act related is Prevention of Money laundering Act 2002.A step to prevent money laundering is KYC (Know Your Customer) policy. The KYC helps to ensure that banks’ services are not misused. misused. Corporate social responsibility(CSR responsibility(CSR)) Corporate social responsibility policy functions as a self-regulatory mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards and national or international norms. The Ministry of Corporate Affairs has notified Section 135 and Schedule VII of the Companies Act 2013 as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 to come into effect from April 1, 2014. As per this Act Every company, private limited or public limited, which either has a net worth of Rs 500 crore or a turnover of Rs 1,000 crore or net profit of Rs 5 crore, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility activities. The CSR activities should not be undertaken in the normal course of business and must be with respect to any of the activities mentioned in Schedule VII of the 2013 Act. Contribution to any political party is not considered to be a CSR activity and only activities in India would be considered for computing CSR expenditure. expenditure. •

•

•

•

Corporate Debt Restructuring Corporate Debt Restructuring is a voluntary non statutory mechanism under which financial institutions and banks come together to restructure the debt of companies facing financial difficulties due to internal or external factors, in order to provide timely support to such companies. External Commercial Borrowing (ECB) ECB refers to the loans taken from non-resident lenders i.e. the foreign companies to finance commercial activities in India. ECBs cannot be used for investment in stock market or speculation in real estate. At some times, borrowings from external companies can be cheaper than that borrowed within the country. There are two ways in which ECB can be accessed in the country: 43 | P a g e

Banking Awareness Capsule 1.Automatic Route: Under this, the borrower is not to take any permission from RBI or GOI. 2.Approval Route: Under this, the borrower has to take approval from RBI or GOI. Initial Public Offering (IPO): Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It is the first sale of a corporation's common shares to investors on a public public stock exchange. The company which offers its shares, known as an ‘issuer’ • •

Currency Chest : Currency chest is the place where currency is stored. It will be the select branches of scheduled banks, which are authorised by the RBI to facilitate distribution of notes and coins • •

Banks Head Quarters & Taglines Bank Name Canara Bank Vijaya Bank State Bank of Mysore Indian Bank Indian Overseas Bank Oriental Bank of State Bank of Hyderabad Andhra Bank State Bank of Bikaner & Karur Vysya Bank Lakshmi Vilas Bank Federal Bank Ratnakar Bank

HQ Bangalore Bangalore Bengaluru Chennai Chennai Gurgaon,Haryana Hyderabad Hyderabad Jaipur Karur Karur Kerala Kolhapur,Maharashtra

TAGLINE

Together we can. A friend u can bank upon Working for a better tomorrow. Your Tech Friendly Bank Good people to grow with Where every individual is committed Modern.Innovative.Dependable Where India Banks The Nation banks on us. Smart way to Bank The changing face of prosperity Your perfect Banking Partner

Allahabad Bank UCO Bank United bank of India City Union Bank Corporation Bank Karnataka Bank Syndicate Bank SBI Bank of India Central Bank of India Dena Bank Union Bank of India IDBI Bank NABARD Exim Bank ECGC Axis Bank ICICI Bank YES Bank HDFC Bank IndusInd Bank Kotak Mahindra Bank

Kolkata Kolkata Kolkata Kumbakonam Mangalore,Karnataka Mangaluru, Manipal,Karnataka Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai Mumbai

A tradition of trust. Honours Your trust The bank that begins with u Trust and Excellence since 1904 Prosperity for all Your Family Bank across India Faithful and Friendly The banker to every Indian. Relationship beyond banking. Central to you since 1911. Trusted Family Bank Good people to bank with Banking for all”AAo Sochein Bada” Revitalizing rural India Ind ia through urban support supp ort Together towards Tomorrow. You Focus on Exports.We cover the risks. Badhti ka naam Zindagi Hum Hai Na,Khyal Apka Experience our expertise We understand your world We make u feel richer Lets make money simple

44 | P a g e


Nainital Bank Punjab & Sind Bank Punjab National bank Bharatiya Mahila Bank

Nainital, New Delhi New Delhi New Delhi

State Bank of Patiala Bank of Maharashtra Jammu&Kashmir Bank State Bank of Travancore Catholic Syrian Bank Dhanlaxmi Bank South Indian Bank Tamilnad Mercantile Bank Bank of Baroda

Patiala Blending Modernity with Tradition Pune One family One Bank. Srinagar,J&K Serving to Empower Thiruvananthapuram Thiruvananthapura m A long tradition of trust. Thrissur, Support all the way. Thrissur, Tann.Mann.Dhan Thrissur, Experience next generation Banking Tuticorin Be a step ahead of life Vadodara,Gujarat India's International Bank. Small Finance Banks Jaipur Chalo Aage Badhe Jalandhar Vishwas Se Vikas Tak Ahmedabad Chennai Its Fun Banking Thrissur, Kerala Joy of Banking Bangalore Likho Apni Kahaani Guwahati Your Door Step Banker Navi Mumbai A Bank of Smiles Bengaluru Bharosa, Aap ke Bharose Par Varanasi Aapki ummeed Ka khaata Payment Banks New Delhi New Delhi Noida

AU Small Finance Bank Capital Small Finance Fincare Small Finance Equitas Small Finance ESAF Small finance Bank Jana Small Finance Bank North East Small Finance Suryoday Small Finance Ujjivan Small Finance Utkarsh Small Finance India Post Payments Bank Airtel Payment Bank Paytm payment bank

Banking with personal touch touc h Where service is a way of life The name you can bank upon Empowering Women,

Important Banking Abbreviations Acronyms

Abbreviations

ABEDA ACF ACS AD ADB ADF ADR AEPS AFA AFS AGM AIC AIF ALCO ALM

Arab Bank for Economic Development in Africa. Auto Correlation Function. Automated Clearing Systm. Authorized Dealer. Asian Development Bank. Automated Data Flow American Depository Receipt. Aadhaar Enabled Payments Switch Additional Factor Authentication Annual Financial Statement. Annual General Meeting. Agricultural Insurance Company. Alternative Investment Fund Asset Liability Committee Asset Liability Management 45 | P a g e

Banking Awareness Capsule AMFL AML AMRMS ANBC APBS ARC ASBA ASSOCHAM ATM BCBS BCSBI BHIM BIN BIP BIS BOB BOE BOI BOP BOR BOT BR Act BSCS BSE BSR CA CAD CAG CAR CARE CASA CB CBLO CBS CCIL CCL CDB CDBS CDRS CDS CEPA CFRA CGRA CIBIL CMIS CNP COB CP CPFF CPI CRAR

Association of Mutual Funds in India. Anti-Money Laundering Audit and Risk Monitoring Mechanism Adjusted Net Bank Credit Aadhaar Payment Bridge System Asset Reconstruction Companies Applications Supported Bank Accounts Associated Chambers of Commerce and Industry of India. Automated Teller Machine. Basel Committee on Banking Supervision Banking Codes and Standards Board of India Bharat Interface for Money Bank Identification Number Buyer Initiated Payments Bank for International Settlements. Bank of Baroda. Bill of Exchange Bank of India. Balance of Payments. Bank of Rajasthan. Build,Operate and Transfer. Banking Regulations Act, 1949. Basel Committee on Banking Supervision. Bombay Stock Exchange. Basic Statistical Returns. Chartered Accountant. Current Account Deficit Controller and Auditor General. Capital Adequacy Ratio Credit Analysis and Research Limited Current and Savings Accounts Canara Bank. Collateralized Bank Lending Obligations Core Banking Solution. Clearing Corporation of India Limited Cash Credit Limit Caribbean Development Bank. Committee of Direction on Banking Statistics. Corporate Debt Restructuring Credit Default Swap. Comprehensive Economic Partnership Management. Combined Finance and Revenue Accounts. Currency and Gold Revaluation Account. Credit Information Bureau of India Limited Currency Management Information System Card Not Present Corporation Bank. Colombo Plan. Commercial Paper Funding Facility Consumer Price Index. Capital To Risk Weighted Asset Ratio. 46 | P a g e

Banking Awareness Capsule CRILC CRISIL CRMD CRR CSR CTI CTR CTS CUB DB DPG DPN DPO DRAT DRI DSCR DTAA EADB EBRD ECB ECS EDF EDI EDP EEFC EFTPOS EIB ELSS EMI EPFO EPOS EPS ESOP EVA EXIM FCA FCCB FCNR FCNRA FDI FEDAI FERA FICCI FII FIMMDA FINO FIPB FOB FSB FPI FSRASC

Central Repository of Information on Large Credits Credit Rating Information Services Of India Credit Risk Management Department. Cash Reserve Ratio. Corporate Social Responsibility Country Threat Index. Click-Through Rate Cheque Truncation System City Union Bank Dena Bank. Deferred Payment Guarantee Demand Promissory Note Days Payable Outstanding Debt Recovery Appellate Tribunal Differential Rate Of Interest Debt Service Coverage Ratio Double Taxation Avoidance Agreement. East African Development Bank. European Bank for Reconstruction and Development. External Commercial Borrowings. Electronic Clearing System. Export Development Fund Electronic Data Internchange Entrepreneurship Development Programme Exchange Earners’ Foreign Currency Electronic Funds Transfer At Point Of Sale European Investment Bank. Equity Linked Saving Scheme. Equated Monthly Instalments Employees’ Provident Fund Organisation Electronic Point Of Sale Earning per Share Employee Stock Options Electronic Virtual Assistant Export Import Bank of India. Foreign Currency Assets. Foreign Currency Convertible Bond Foreign Currency Non Resident Deposit Accounts Foreign Currency Non resident Account. Foreign Direct Investment. Foreign Exchange Dealers Association Of India Foreign Exchange Regulation Act. Federation of Indian Chambers of Commerce and Industry. Foreign Institutional Investor. Fixed Income Money Markets and Derivatives Association. Financial Information Network and Operation Limited Foreign Investment Promotion Board. Free On Board Financial Stability Board Foreign Portfolio Investment. Financial Sector Regulatory Appointment Search Committee 47 | P a g e

Banking Awareness Capsule FTA GAAR GDP GDR GFD GIRO GMS GNPA GST GSTN GVA HDFC IADB IAS IBBI IBPS IBRD IBRD IBU ICA ICICI ICRA IDB IDBI IDR IDRBT IEPF IFC IIB IIN IIBF IMD IMF IMPS IMT IOB IPO IPO IPPB IRBI IRDA IROs IRR ISCI ISNP KCC KMB KVB KVIC KVP KYC

Free Trade Agreement. General Anti Avoidance Rule. Gross Domestic Product Global Depository Receipt. Gross Fiscal Deficit. Government Internal Revenue Order. Gold Monetisation Scheme Gross Non-Performing Assets Goods and Services Tax Goods and Services Network Gross Value Added Housing Development Finance Corporation. Inter American Development Bank. Integrated Accounting Systems Insolvency and Bankruptcy Board of India Institute of Banking Personnel Selection. International Bank for Reconstruction and Development International Bank For Reconstruction And Development. International Banking Unit Indian Council of Agricultural Research. Industrial Credit and Investment Corporation of India. Investment Information and Credit Rating Agency of India Limited Islamic Development Bank. Industrial Development Bank of India. Indian Depository Receipts. Institute for Development and Research Of Banking Investors Education and Protection Fund International Finance Corporation International Investment Bank. Issuer Identification Number Indian Institute of Banking and Finance. India Millennium Deposits. International Monetary Fund. Immediate Payment Service Instant Money Transfer Indian Overseas Bank. Initial Public Offer Initial Public Offering India Post Payments Bank Industrial Reconstruction Bank Of India. Insurance Regulatory and Development Authority of India Interest rate options Internal Rate Of Return. International Standard Industrial Classification Insurance Self Networking Platform Kisan Credit Card Kotak Mahindra Bank. Karur Vysya Bank. Khadi and Village Industries Corporation Kisan Vikas Patra Know Your Customer Guidelines 48 | P a g e

Banking Awareness Capsule LAB LAF LAMPS LDB LERMS LIBOR LIC LTCG LTN LTO MAB MCA MCLR MFDF MIBOR MICR MIS MMID MSF MSS MTN MUDRA NABARD NACH NAS NAV NBC NBFC NDA NDS NDTL NECS NEFT NFA NFC NFS NHB NIB NOF NPA NPCI NPS NPV NRE NRI NSE NSFDC NSDL OCB ODIs

Local Area Bank. Liquidity Adjustment Facility Large Sized Adivasi Multipurpose Societies Land Development Bank. Liberalized Exchange Rate Management System London Inter Bank Offered Rate. Life Insurance Corporation Of India Long-Term Capital Gains Long Term Note Loan-To-Value Monthly Average Balance Ministry Of Company Affairs Marginal Cost Of Lending Rate Micro Finance Development Fund Mumbai Inter Bank Offer Rate. Magnetic Ink Character Recognition Management Information System Mobile Money Identifier Marginal Standing Facility Market Stabilisation Scheme Medium Term Note Micro Units Development And Refinance Agency National Bank For Agricultural Agricultura l And Rural Development. National Automated Clearing House National Account Statistics. Statistic s. Net Asset Value. Non Banking Companies. Non Banking Finance Companies Net Domestic Asset Negotiated Dealing Systems Net Demand And Time Liability National Electronic Clearing Cleari ng System National Electronic Funds Transfer Tran sfer System. No Frills Account. Non Banking Finance Companies. Companies . National Financial Switch National Housing Bank. Nordic Investment Bank. Net Owned Fund Non Performing Assets. National Payments Corporation Corporati on Of India National Pensions Scheme. Net Present Value Non Resident External Account Accoun t Non Resident Indian National Stock Exchange. National Scheduled Castes Caste s Finance And Development Corporation Corpora tion National Securities Depository Depos itory Limited Overseas Corporate Bodies Offshore/Overseas Derivative Instruments

49 | P a g e


OECD OLTAS OMO OTCEI OTP PACS PAN PCA PDO PFRDA PGS PIN PIS P-Notes POA PoS PPF PPIs PRSF QIB RBI RBS RDBMS RDDBFI REC RFC RIDF RoA RoE RRB RTGS RWA SARFAESI SBI SCB SCC SDBS SDR SEBI SEPA SFMS SGB SHG SIDBI SIDC SIFI Sip

Organisation For Economic Cooperation And Development Online Tax Accounting System Open Market Operations Over the Counter Exchange Of India One-Time Password Primary Agricultural Credit Societies Permanent Account Number Prompt Corrective Action Public Debt Office Pension Fund Regulatory and Development Authority Payment Gateway System Personal Identification Number Portfolio Investment Scheme Participatory Notes Power of Attorney Point of Sale Public Provident Fund Prepaid Payment Instruments Partial Risk Sharing Facility Qualified Institutional Bankers Reserve Bank of India Royal Bank of Scotland. Relational Database Management System Recovery of Debt due to Banks and Financial Institutions Rural Electrification Corporation Resident Foreign Currency Rural Infrastructure Development Fund Return On Assets Return On Equity Regional Rural Bank. Real Time Gross Settlement System. Risk Weighted Assets Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest State Bank of India Scheduled Commercial Bank Selective Credit Control. Service Discharge Benefit Scheme Special Drawing Rights Securities and Exchange Board of India Single Euro Payment Area. Structured Financial Messaging Services Sovereign Gold Bond Self Help Group Small Industries And Development Bank Of India. State Industrial Development Corporation Systematically Important Financial Intermediaries Systematic Investment Plans 50 | P a g e

Banking Awareness Capsule SIPS SJSRY SLR SLRS SME SMERA SMFS SMILE SPNS SSI SSSBE STR SWIFT TDS TIN UAN UBIN UCB UCNs UEBA UIDAI UPI UPIN USB USD USSD UTI VDBS VCF VPA WBCIS WCTL WL ATM WMA WPI YTM

Systemically Important Payment System Swarna Jayanthi Shahari Rozgar Yojana Statutory Reserve Ratio Scheme for Liberation and Rehabilitation of Scavengers Small and Medium Industries SME Rating Agency of India Limited Structured Financial Messaging System SIDBI Make in India Loan for small Enterprises Shared Payment Network System. Small Scale Industries Small Scale Service and Business Enterprises Suspicious Transaction Reports Society For World Wide Inter Bank Financial Telecommunication. Tax Deducted at Source Tax Information Network Universal Account Number Unique Business Identification Number Urban Cooperative Bank. Uniform Code Numbers Universal Electronic Bank Account. Unique Identification Authority of India Unified Payments Interface Unique Property Identification Numbers. Ultra Small Branch. United States Dollar. Unstructured Supplementary Service Data Unit Trust of India Vertically Differentiated Banking System. Venture Capital Funds Virtual Payment Address Weather Based Crop Insurance Scheme. Working Capital Term Loan White Label ATM. Ways and Means Advances Wholesale Price Index Yield to Maturity

Version 1 – Updated on June 2017 Important Banking Insitutues : • • •

Indian Institute of Banking and Finance (IIBF) - Mumbai National Institute of Bank Management-Pune Institute for Development and Research in Banking Technology(IDBRT)- Hyderabad

Banking Ombudsman Scheme, 2006: The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. As on date, 20 Banking Ombudsmen have been appointed with their offices located mostly in state capitals. The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks. The Banking Ombudsman Scheme is introduced under Section 35 A of the Banking Regulation Act, 1949 by RBI with effect from 1995. •

51 | P a g e


All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme.

Grounds for Complaint: The Banking Ombudsman can receive and consider any complaint against deficiency in certain banking

services.

Filing Complaint: One can file a complaint before the Banking Ombudsman if the reply is not received from the bank within a period of one month after the bank concerned has received one’s representation, or the bank rejects the complaint, or if the complainant is not satisfied with the reply given by the bank.

Procedure for filing the complaint: One can file a complaint with the Banking Ombudsman simply by writing on a plain paper. One can also file it online (at “click here to go to Banking Ombudsman scheme” or by sending an email to the Banking Ombudsman. The complainant can be filed by one’s authorized representative (other than an advocate). The Ombudsman does not charge any fee for filing and resolving customers’ complaints. •

Amount of Compensation: The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 10 lakhs, whichever is lower. However Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment. If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmen’s decision. Appellate Authority is vested with a Deputy Governor of the RBI. •

•

Limit for filing an appeal: •

If one is aggrieved by the decision, one may, within 30 days of the date of receipt of the award, appeal against the award before the appellate authority. The appellate authority may, if he/ she is satisfied that the applicant had sufficient cause for not making an application for appeal within time, also allow a further period not exceeding 30 days

Senior Citizens Savings Scheme, 2004 Tenure of the deposit account Rate of interest Frequency of computing interest Taxability Whether TDS is applicable Investment to be in multiples of Maximum investment limit Minimum eligible age for investment

Premature closure/withdrawal facility Transferability Tradability Nomination facility Modes of holding

5 years, which can be extended by 3 years. 9.3 per cent per annum Quarterly Interest is fully taxable. Yes. Tax will be deducted at source. 1000/15 lakh 60 years (55 years for those who have retired on superannuation or under a VRS). The retired personnel of Defence Services (excluding Civilian Defence Employees) will be eligible to invest irrespective of the age limits. Permitted after one year of opening the account but with penalty. Not transferable Not tradable Nomination facility is available. Accounts can be held both in single and joint holding 52 | P a g e

Banking Awareness Capsule modes. Joint holding is allowed only with spouse. Post Offices and designated branches of 24 Nationalised Application forms available with banks and one private sector bank Non Resident Indians (NRIs), Persons of Indian Origin Applicability to NRI, PIO and HUFs (PIO) and Hindu Undivided Family (HUF) are not eligible to open an account under the Scheme. Transfer from one deposit office to Transfer of account from one deposit office to another is permitted. another Salient Features:Under this Scheme Joint Account can be opened only with the spouse. In such case the age of the first applicant / depositor is the only factor to decide the eligibility to invest under the scheme. Tax is to be deducted at source as per the minimum limit prescribed by the Government. A depositor may extend the account for a further period of three years by making an application to the deposit office within a period of one year after maturity. The account will be treated as matured and the depositor will be entitled to close the account at any time subject to the condition that t hat the post maturity interest at the rate as applicable to the deposits under the Post office Savings Accounts from time to time. At present, 24 nationalized banks and one private sector bank (ICICI Bank Ltd), as per list below, are authorized to handle the SCSS, 2004 •

•

•

RBI ACT 1934 •

•

•

Reserve Bank of India Act, 1934 is the legislative act under which the Reserve Bank of India was formed. This act along with the Companies Act, which was amended in 1936, were meant to provide a framework for the supervision of banking firms in India. RBI was set up under the recommendations of the Hilton Young Commission which submitted its report in the year 1926, though the bank was not set up for nine years. The Act defines scheduled banks, as they are mentioned in the 2nd Schedule of the Act. These are banks which were to have paid up capital and reserves above Rs.5 lakh .There are total 61 Sections in the RBI Act 1934.

Important Sections:

Section 45-I (c) Section 45-I(f)

States about the establishment and incorporation of RBI. Defines the capital of the Bank( five crores of rupees) Establishment of Offices, branches and agencies The composition of central board of Reserve Bank of India Defines manner in which the RBI can conduct business. Deals with emergency loans to banks. Defines obligation of the Bank to transact Government business. Bank shall not re-issue bank notes which are torn, defaced or excessively soiled. States the RBI must conduct the banking affairs for the central government and manage public debt. Says that only RBI has the exclusive rights to issue currency notes in India. States that the maximum denomination a note can be Rs.10,000. Describes the legal tender character of Indian bank notes Allows the RBI to form rules regarding the exchange of damaged and imperfect notes Says that in India only the RBI or the central government can issue and accept promissory notes that are payable on demand. demand. However, cheque, that are payable on demand, can be issued by anyone Elaborates about c ash reserves of scheduled banks to be kept with the Bank. Says that every scheduled bank must have an average daily balance with the RBI. The amount of the deposit shall be more that a certain percentage of its net time and demand liabilities in India. defines financial institution Defines non-banking financial company

Section 45(U)

Defines repo, reverse repo, derivative, money market instruments and securities

Section 3 Section 4 Section 6 Section 8 Section 17 Section 18

Section 20 Section 27 Section 21 Section Section Section Section

22 24 26 28

Section 31

Section 42 Section 42(1)

53 | P a g e

Banking Awareness Capsule Banking Regulations Act 1949 Banking Regulation Act, 1949 is all about control and regulation of Banking Sector in India. The law applicable to Banking Companies which include cooperative banks.In 1965, the Act was amended to include cooperative banks under its purview by adding the Section 56. Defines Banking Company- means any company which transacts the business of banking in India. Defines "banking" means the accepting, for the purpose of lending or investment, Section 5(b) of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise. Defines "company" means any company company as defined in Section 3 of the Companies Section 5(d) Act, 1956 and includes a foreign company within the meaning of Section 591 of that Act. Application by RBI for Moratorium Section 45 Amalgamation of Banking Companies Section 44A Winding up of Banking Companies Section 38 to 44 Giving directions to Banking Companies Section 35A Inspection of books of accounts Section 35 Submission of Returns of unclaimed Deposits Section 26 Maintenance of Assets in India Section 25 Maintenance of a percentage of liquid assets (SLR) Section 24 Control on the opening of new business Section 23 Licensing of banking companies Section 22 Sections 20 & 21 Restrictions on loans and advances Restrictions on holding of shares in other companies Section 19 Maintenance of cash reserve by non-scheduled banks Section 18 Transfer to Reserve Fund Section 17 Limiting the payment of dividends Section 15 Sections 11 & 12 Requirements regarding minimum paid up capital and reserves Section 5(c)

Negotiable Instruments Act 1881 Negotiable Instruments Act Ac t 1881 when the British ruled our country and subsequently been passed in 1882 and was modified in 1989 and 2002. This act is applicable in entire India, including Jammu & Kashmir. J & K was brought in the ambit of the act in 1956. Prior to 1881 the transactions governing Negotiable Instruments were regulated under the cover of Indian Contract Act 1872. The act encompasses various provisions of Negotiable Instruments such as Promissory Notes, Checks, Drafts, Bills of exchanges etc. Defines Negotiable instrument means a promissory note, bill of exchange or cheque Section 13 either to order or bearer. Defines promissory note Section 4 Defines bill of Exchange. Section 5 Defines Drawer, Payee, Drawee. Section 7 Defines Cheque Section 6 Where amount is stated differently in figures and words Section 18 Instruments payable on demand. Section 19 When day of maturity is a holiday Section 25 Holder’s right to duplicate of lost bill. Section 45 •

•

Minimum Support Price Minimum Support Price is the price at which Indian government purchase farmers crops irrespective of market price. MSP is may be higher or lower than market price so it an important part of India’s agricultural price policy.

54 | P a g e


•

The Cabinet Committee on Economic Affairs (CCEA), take a call on the Minimum Support Prices (MSP) of various agricultural commodities based on the recommendations of the Commission for Agricultural Cost and Prices (CACP).

Commission for Agricultural Cost and Prices (CACP). •

•

CACP runs under the aegis of Ministry of Agriculture and Farmers Welfare. It came into existence in January 1965. It is based in New Delhi. Vijay Paul Sharma is currently Chairman of the Body. CACP submits its recommendations to the government in the form of Price Policy Reports every year, separately for five groups of commodities namely Kharif crops, Rabi crops, Sugarcane, Raw Jute and Copra.

What is Bad Bank? •

• •

The Bad bank is financial agency that would take over the largest and most difficult stressed loans from public sector banks in order to help clean their balance sheets. This concept permits specialized management to deal with the problem of bad debts. This idea comes in the light of mounting Non Preforming assets. This bank may take politically tough decisions to reduce debt.

Permanent Account Number Permanent Account Number (PAN) is a ten-digit alphanumeric identifier, issued by Income Tax Department. This is unique number for every card holder. Having more than one PAN is against the law and may attract a penalty up to Rs.10, 000.

AADAHR CARD Aadhaar number is a 12 digit random number , issued to the residents of India. It is provided by Unique Identification Authority of India (UIDAI) after obtaining demographic information and biometric information of the citizen. The first UID number was issued on 29 September 2010 to a resident of Nandurbar, Maharashtra.

Unique Identification Authority of India (UIDAI): The Unique Identification Authority of India (UIDAI) is a statutory authority established under the provisions of the Aadhaaron 12 July 2016 by the t he Government, under the Ministry of Electronics and Information Technology (MeitY). The head office of the Authority is in New Delhi.Dr. Ajay Bhushan Pandey is the Chief Executive Officer of UIDAI.

Prompt Corrective Action Prompt Corrective Action (PCA) plan allow the RBI to place certain restrictions such as halting branch expansion and stopping dividend payment.The provisions of the revised PCA framework will be effective from April 1, 2017. The framework would be reviewed after three years. The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like.

Prompt Corrective Action Specificatio ns

Risk Threshold 1

Asset Quality Profitability (Noted by Indicated by Return NPA) on assets (ROA) >=6.0% but Negative ROA for two <9.0% consecutive years

Risk

>=9.0% but <

Negative ROA for

Mandatory actions

Restriction on dividend distribution/remittance of profits. Promoters/owners/parent in the case of foreign banks to bring in capital In addition to mandatory actions of

55 | P a g e

Discretionary actions

Common menu 1.Special Supervisory Interactions 2.Strategy related 3.Governance related

Banking Awareness Capsule Threshold 2

12.0%

three consecutive years

Risk Threshold 3

>=12.0%

Negative ROA for four consecutive years

Threshold 1, Restriction on branch expansion; domestic and/or overseas Higher provisions as part of the coverage regime In addition to mandatory actions of Threshold 1, Restriction on branch expansion; domestic and/or overseas Restriction on management compensation and directors’ fees, as applicable

4.Capital related 5.Credit risk related 6.Market risk related 7.HR related 8.Profitability related 9.Operations related

Line of credit Line of credit is when you can borrow money upon cap is fixed by the bank at which you can get credit. You don’t need to draw the entire amount at once and you can choose to make use of only part of the credit line to suit your needs. Also the interest calculated on the amount they spend, not on the entire credit line. When it comes to paying back (repayment) consumers can also adjust their repayment repayment amounts as needed, based on their budget or cash cash flow. •

BHIM - Bharat Interface for Money The Bharat Interface for Money (BHIM) mobile app was launched by Narendra Modi on 30 December 2016 in New Delhi.The BHIM app is dedicated to Dr. Bhimrao R. Ambedkar Platfotm: Android, iOS and Window mobiles The app is based on the Unified Payments Interface (UPI) . It is an open platform and not a mobile wallet Bank-to-bank payments and Pay and collect money using just Mobile number or Virtual Payment Address (VPA). Developer:The app was developed by the National Payments Corporation of India (NPCI). Available Languages: Now available in 12 languages, it will be updated in other languages in future Process of Transaction: We can send or receive money to different bank accounts with ZERO Transaction charges by using 1.UPI payment addresses by dialling *99# 2.Account number with IFSC(Indian Financial System Code) code or MMID (Mobile Money Identifier) Code 3.QR (Quick Response) code for a fixed amount of money Limits: Transaction limit per day is limited to Rs.20,000 Transaction limit per transaction is Rs.1 to Rs.10,000 USSD(Unstructured Supplementary Service Data) transaction per day set at Rs. 5,000. Mobile operator may charge you up to Rs.1.50 per transaction. Remarks: BHIM app has recorded 18 million downloads till March 2017

Joint Lenders’ Forum (JLF) JLF tackles stressed loans. It has to be formed when the principal or interest payment of an account reported to CRILC is overdue between 61-90 days and if the aggregate exposure (AE) of lenders in that account is Rs 1000 million and above, the lenders should mandatorily form a committee to be called Joint Lenders’ Forum (JLF). Aggregate Exposure is about fund-based and non-fund based exposure of Rs.50 million and above with them and showing signs of stress (accounts where principal or interest payment is overdue for more than 30 days) to Central Repository of Information on Large Credits (CRILC). Lenders also have the option of forming a JLF even when the AE in an account is less than Rs.1000 million and/or when the principal or interest payment is overdue for a period less than 61-90 days. •

•

56 | P a g e

Banking Awareness Capsule Under the JLF framework for revitalizing distressed assets in the economy, even before a loan account turns into an NPA, the new system helped identify the stress by segregating the accounts into three categories — Special Mention Accounts (SMA) 1. SMA-0 ----if <30 days + sign of incipient stress 2. SMA-1 ---- loan overdue for 31-60 days 3. SMA-2----- if >60 days •

Apps launched by Various Various Banks(2016-2017 May) Portal or App Name

Launched by

Purpose

Immediate Payment Service (IMPS)

Andhra Bank

Japan Desk

SBI

Master-Wallets

ePaisa

SBI Mingle

SBI

Elite - Card

SBI

Blockchain-based system for banks sachet.rbi.org.in

Paul Taylor RBI

iMobileSmartKeys KBL-SMATRz

ICICI Bank Karnataka Bank

Yes Pay

Yes Bank

empower

Canara Bank

To makes payments possible within fraction of seconds with all the standards maintained for security First-of-its-kind initiative to facilitate Japanese corporates looking to invest with banking and advisory services. To enable merchants to accept payments from any digital wallet without having to go through the hassle of opening an account with each and every wallet company. To help the customers with a host of banking services on their social media accounts, at their own convenience To enables the customers a contactless payment experience, adding more speed and suave to their wallets Speech recognition software To curb illegal money pooling by firms To make mobile payments easier To perform the transactions on-the-go through this app It does not require that both the transacting parties be registered on it. Unified Payment Interface [UPI] App

YES MOBILE 2.0.

YES BANK

Masterpass QR

Mastercard

SIMsePAY

Yes Bank

Aadhaar Payment (APBS) Cippy Wallet

Bridge

System RBL Bank DCB Bank

57 | P a g e

To provide extensive support for Banking transactions on Apple and Android based Smart Watches to help mobile banking users to safely pay for face-to-face purchases using their th eir smartphones or feature phones without the need to carry Cash or Card. To allows any account holder to do money transfers, pay utility bills and other mobile banking services, without the need for smart phones or internet. For small ticket micro-finance loan disbursements To encourage consumers to experience cash free purchases from the mobile phone for day-today needs.

Banking Awareness Capsule Aallet app ‘State Bank MobiCash’

SBI & BSNL

M Pesa Pay

Vodafone

eazypay

ICICI Bank

SIB Mirror+

South Indian Bank

UCO Suvidha prepaid card

UCO Bank

Humanoid Robot IRA

HDFC Bank, Mumbai

Contactless Credit Card PNB Wave N Pay

Punjab National Bank (PNB)

SBI Exclusif

SBI

Mission FINFIT

Lakshmi Vilas Bank

Citibank Online (CBOL)

Citi Bank

Batuaa

Oriental Bank of Commerce

chatbot Eva Aadhaar Pay

HDFC Bank IDFC Bank

FASTag service

Karur Vysya Bank

Mera iMobile

ICICI Bank

Truecaller Pay’

ICICI Bank & Truecaller 58 | P a g e

To allow users with Feature phone as well as Smartphone to deposit cash and withdraw funds from their account through BSNL retail outlets. To enable merchants and retailers to receive payments from their customers All-in-one acceptance platform for merchants to collect payments from their customers To enables the customers to perform almost all banking bankin g transactions from their smart phones. For cash withdrawals, purchase at Points of Sale (POS) or over the Internet To help the assist the customers in banking activities. To waive the card across the terminal to complete the transaction process, without the need to enter any PIN number for transactions up to Rs 2,000 It offers an electronic wealth center that equips the customers with a convenience and flexibility to track their portfolio, conduct transactions and make investments through digital channels such as internet and mobile To offer the customers of the bank financial planning and personal wealth management services based on Robo advisory India become the first country in Asia Pacific within the Citi network to have this kind of service. CBOL - instant chat services for customers Launched to marks the 75th Foundation Day of the bank. To provide banking services through app.

For customer services India’s first biometric-based payment system Preloaded tags affixed on vehicles are valid at all toll plazas throughout the country To provide agricultural information in 11 Indian languages for rural people without internet inter net connection. To provide quick and easy payment methods to mobile phone users in


'Unnati' credit card

SBI

PoS Saral Nivesh

Edelweiss Tokio

Selfie

Federal Bank

'Code For Bank' - hackathon

SBI

SPOK.

HDFC Life

59 | P a g e

India. It will be issued to the customers with a minimum balance of 25000 It is the first product to be approved by the Insurance Regulatory Regul atory and Development Authority of India's guidelines on point of salelife insurance products. To enables users to trade directly from charts, among others To come up with innovative ideas and solutions for the banking sector. An insurance email bot that can read customer queries within milliseconds and respond to them.

Banking Awareness Capsule by Affairscloud Newww

Recommend Documents