Banking Awareness

The RBI was established on april 1, 1935 under RBI act 1934 .RBI is the central bank of country and was nationalized on jan 1st,1949. RBI’S central office is in Mumbai.RBI is the central bank of india and controls the entire money issue, circulation the entire money issue, circulation and control  by its monetary policies and lending policies by periodical updates.RBI is managed by a central board of directors with 4 local board at Mumbai, Kolkata, Delhi and Chennai. It has one governor, provision for 4 deputy governors and 15 other directors.

FUNCTIONS OF RBI :

Bankers to the government : RBI acts as a merchant between central and state governments and manages business and public debts.

Bankers to bankes : RBI maintains banking accounts of all commercial banks and acts as lender by providing financial assistance to banks.

Issuance of currency : Issues currency notes under signatures of governor. one rupee note is issued by central govt. signed by finance minister.

Maintenance of foreign currency :RBI manages the foreign exchange management act 1999,foreign exchange reserves are held by rbi and it has wide powers to regulate foreign exchange transactions under FEMA.

Controller of banks : RBI acts as controller of all banks it issues directions and controls money flowing in scheduled and commercial banks.

INTEREST RATES DECIDED BY RBI :

Repo rate: repo rate is the rate of interest which is short term loan taken by commercial banks from the rbi. Whenever tha banks have any shortage of money they can borrow it from rbi. A reduction in the repo rate will help banks  to get more money from rbi.

Reverse repo rate : This reverse repo rate is opposite of repo rate.That means rbi can borrow money from commercial banks.rbi uses this tool when it feels there is too much money floating in the banking system.Banks are always very happy  to keep money with rbi.An increase in reverse repo rate can cause the banks to transfer more money to rbi due to these attractive interest rates.

Cash reserve ratio (crr): It means every bank has to maintain certain percentage in the form of cash over its deposits and liabilities with the rbi .if rbi decides to increase the percent of this the available amount with the banks comes down.

Statutory liquidity ratio (slr) : Slr means every bank has to maintain certain percentage in the form of securities over it’s deposits and term liabilities with the rbi.

Marginal standing facility rate(msf rate) :  Msf is the rate at which banks can borrow money overnight from rbi.this is introduced by rbi to regulate short term asset liability.

Bank rate : Bank rate is the rate of interest which is levied on long term loans and advances taken by commercial banks from rbi. Changes in the bank rate are often used by central banks to control the money supply.  

REMEMBER :

  • Rbi Generally Reviews The Monetary Policy Every Three Months
  • The Rbi Was Nationalized In Jan 1st 1949
  • Rbi Functions Are Governed By Rbi Act 1934
  • Rbi Has Its Head Quarters In Mumbai
  • Rbi regulates the money market
  • Maintains the reserve funds and foreign currencies
  • Primary Leding Rate Is Not Decided By Rbi
  • Iti S Not Taken Depositd By The Public
  • Primary Lending Rate Is Decided By Individual Banks
  • Rbi Decide Slr,Repo,Reverse Repo ,Crr And Bank Rate
  • The Quantitative Instruments Of Rbi Are Bank Rate Policy,Crr And Slr.

MAJOR ROLES OF RESERVE BANK OF INDIA:-

  • In every country there is one organization which works as the Central Bank.
  • The function of the central bank of a country is to control and monitor the banking and financial system of the country
  • In, India the Reserve Bank of India (RBI) is the Central Bank.
  • RBI is the Regulator of Financial System. The objectives of these regulation include:
  • Controlling money supply in the system,
  • Monitoring different key indicators.
  • Maintaining people’s confidence in banking and financial system.
  • RBI is the Controller and Supervisor of Banking systems. These banks may be:
  • Public sector banks
  • Private sector banks
  • Foreign banks
  • Co-Operative banks, or
  • Regional rural banks

IMPORTANT RBI ACTS AND ITS FUNCTIONS

Umbrella Act:

  • Public Debt Act, 1944/Government Securities Act, 1956: It regulates the government securities market.
  • Indian Coinage Act, 2011: Governs laws related to currency and coins.
  • Foreign Exchange Regulation Act, 1973/ Foreign Exchange Management Act, 1999: Governs Foreign Exchange market.
  • Payment and Settlement System Act, 2007: Provides for regulation and supervision of payment systems in india.
  • Government Securities Regulations, 2007.

Acts Governing Banking Operations:

  • Companies Act, 2013: Governs banks as companies.
  • Banking Companies (Acquisition and Transfer of Undertakings)Act 1970/1980:onNationalization of Banks.
  • Bankers Books Evidence Act.
  • Banking Secrecy Act.
  • Negotiable Instruments Act, 1881

Acts Governing Individual Institutions:

  • State Bank of India Act, 1954.
  • The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003.
  • The Industrial Finance Corporation (Transfer of Undertaking and Repeal) Act, 1993.
  • National Bank for Agriculture and Rural Development Act.
  • National Housing Bank Act.
  • Deposit Insurance and Credit Guarantee Corporation Act

Priority Sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation

  • Priority Sector Lending is an important role given by RBI to the banks for providng a specified portion of the bank lending to few specific sectors like agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections
  • The following are the categories of the priority Sector
  • Agriculture and Allied Activities (Direct and Indirect finance) – Direct finance to agriculture shall include short, medium and long term loans given for agriculture and allied activities directly to individual farmers, Self – Help Groups (SHGs) or Joint Liability Groups (JLGs) of individual farmers without limit and to others (such as corporate, partnership firms and institutions) up to Rs.20 lakh, for taking up agriculture/allied activities
  • Small Scale Industries (Direct and Indirect Finance)– Direct finace to small scale industries (SSI) shall include all loans given to SSI units which are engaged in manufacture, processing or preservation of goods and whose investment in plant and machinery (original cost) excluding land and building
  • Small business / Service Enterprises – shall include small business, retail trade, professional & self- employed persons, small road & water transport operators and other service enterprises
  • Micro Credit – Provision of credit and other financial services and products of very small amounts not exceeding Rs.50.000 per borrower to the poor in rural, semi-urban and urban areas, either directly or through a group mechanism, for enabling them to improve their living standards, will constitute micro credit
  • Education Loans : Education Loans include loans and advances granted to only individuals for educational puposes up to Rs. 10 lakh for studies in India and Rs.20 lakh for studies abroad, and do not include those granted to institutions
  • Housing loans : Loans up to Rs.28 lakh in metropolitan cities where population is above Rs.10 lakh and Rs. 20 lakh at other center s for construction / purchase of a dwelling unit per family provided total cost of the unit in metropolitan centres and at other centres does not exceed Rs. 35 lacs and Rs.25 Lacs respectively

SELF –HELP GROUPS :

Self-Help Group (SHG) is a small voluntary association of poor people, preferably from the same socio-economic background. They come together for the purpose of solving their common problems through self-help and mutual help. The SHG promotes small savings among its members. The savings are kept with a bank.

This common fund is in the name of the SHG. SHG is a group formed by the community, which has specific number of members like 15 or 20. Usually, the number of members in one SHG does not exceed twenty. In such a group the poorest would come together for emergency, disaster, social reasons, economic support to each other  have ease of conversation, social interaction and economic interactions.

OBJECTIVES OF SHGS                                                            

  • To sensitize people of target area for the need of SHG and its relevance in their empowerment process.
  • To enhance the confidence and capabilities of members.
  • To develop collective decision making among members.
  • To encourage habit of saving among members and facilitate the accumulation of their own capital resource base.
  • To motivate members taking up social responsibilities particularly related to development.

NATIONAL MINORITIES DEVELOPMENT AND FINANCE CORPORATION(NMDFC)

The National Minorities Development & Finance Corporation (NMDFC) was incorporated on 30th September 1994, as a company not for profit, under Section 25 of the Companies Act 1956. It is a National Level Apex Body for the benefit of Minorities as defined under the National Commission for Minorities Act 1992.

The prime mandate of NMDFC is to provide concessional finance to the Minorities for self employment/ income generation activities. As per the National Commission for Minorities Act, 1992, the notified Minorities are Muslims, Christians, Sikhs, Buddhists & Parsis. Subsequently, Jain community was also added into the list of notified Minority Communities in January 2014. Under NMDFC programme, preference is given to Artisans & Women.

CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES                         (CGTMSE)

  • CGTMSE is a fund which provides guarantee for loans given to MSEs i.e. in case borrowers fails to give back loans, bank will get their money from this fund.
  • It is Central Government program to promote MSMEs.
  • all scheduled commercial banks and specified RRBS, NSIC, NEDFI, SIDBI.
  • ADVANTAGES :  Augmentation of the corpus of the fund will facilitate larger flow of credit to MSEs. This in turn, will lead to increase output and employment and thereby promote equity and inclusiveness. Start-ups will also be encouraged to set up enterprises based on innovation and new ideas as the scheme provides credit without collateral and third-party guarantee.

NATIONAL EQUITY FUND  (NEF)

The objective of NEF Scheme is to provide equity type support to entrepreneurs for setting up new projects in tiny/small scale sector, for undertaking expansion, modernization, technology up-gradation and diversification by existing tiny, SSI and service enterprises and for rehabilitation of viable sick units in the SSI sector which fulfill the specified eligibility criteria, irrespective of location.

Assistance from NEF helps the small-scale units in strengthening their equity base and thereby improving their acceptability for term financing by primary lending institutions (plis).

NON- BANKING  FINANCIAL  COMPANIES (NBFC’S)

  • Non banking financial company is a company  registered under  the companies act 1956. these  are financial  institutions  that  provide  certain  types  of  banking  services, but  do  not hold  a  banking license. Thease  are  offer   banking  services  like  such  as loans, credit facilities, retairment planing, money markets  and  merger activities.
  • According to the RBI (Amendment Act) 1997, a NBFC is an institution which can be defined as
  • A financial institution which is a company
  • A non-banking institution which has its principle business as the receiving of deposits

Ex: mutual funds, insurance, factoring,  Project financing  and  d-mat account.  Mutual funds are controlled by SEBI. Insuraces are controlled by IRDAI

 DIFFERENCE  BETWEEN  BANK  AND  NBFC  :

Nbfc’s  lend  and make investments and  hence their activities are akin to that of banks, however there are a few differences as given below:

  • Nbfc cannot accept demand deposits
  • Nbfcs do not form part of  the  payment and settlement sysytem  and  cannot issue cheques drawn on self
  • Deposit insurance facility  of  deposit  insurance  and  credit  guarantee  corporation  is  not available to depositors  of nbfcs, unlike  in  case of banks.
  • The NBFC is a financial institution which carries out the following operations as their principle business
  • Hire purchase finance
  • Housing finance
  • Investment
  • Loan and Equipment leasing
  • The Reserve Bank of India (Amendment Act) 1997 demands compulsory registration with the RBI of all the NBFCs irrespective of their public deposits for commencing and carrying out business
  • Norms to be followed by the NBFCs operating in India
  • They should maintain a portion of their deposits in liquid assets
  • They should create a Reserve Fund and transfer 20% of profit after tax annually to the fund
  • No NBFC can carry on business without obtaining a Certificate of Registration (COR) from the RBI
  • A new NBFC seeking registration with the RBI should satisfy the entry point norm of Rs. 2 crores as the minimum Net Owned Fund (NOF)

Based on their Liability Structure NBFCs are divided into 2 categories as follows

  • Category A – NBFCs accepting public deposits (NBFCs-D)
  • Category B – NBFCs not accepting public deposits (NBFCs-ND)

 NBFCs operating in India fall under the following categories based on their businesses

  • Hire Purchase Finance Company – a company which carries on hire purchase transactions as its principle business where loans for purchase of goods and services are provided under an installment plan
  • Housing Finance Company – a company which provides finance for acquisition of houses and plots. It also helps in construction of houses and development of plots
  • Investment Company – a company which carries out acquisition of securities as its principle business. They provide finance mainly to companies associated with business organizations
  • Loan Company – a small partnership company which obtain funds in the form of deposits from the public and give loans to wholesale, retail traders, small scale industries and self-employed individuals
  • Equipment Leasing company – a company which lease out equipments or provide finaces for leasing business. They raise fund from other companies, banks and the financial institutions in addition to their NOF
  • Mutual Benefit Finance Company – any company that comes under the Section 620A of the Companies Act 1956. The main source of funds are share capital and deposits from their members and public
  • Chit Fund Company – a company which collects subscriptions from the public periodically and in turn distributes the same as prizes back to them. These companies are governed by Chit Fund Act 1982

Some important NBFCs operational  in India are as follows

  • HDFC – established in 1977 provides mortgages, life insurance, mutual funds and Micro Finance
  • Power Finance Company – established in 1986 provides financial consulting, investment banking and loan management
  • Reliance capital – 1986 – provides asset management, insurance, broking and distribution, commercial finance and mutual funds
  • Infrastructure Development Finance Company-1997-provides consumer vehicle finance, city union finance and micro finance
  • Bajaj Holdings-2007-Asset management, loans and micro finance
  • M & M financial-1991- financial services, micro finance and asset management

DEPOSITS IN NBFC :

  • The nbfc’s are allowed  to  accept  or  renew  public  deposits  for  a  minimum period of 12 months  and  maximum  period of 60 months.they  cannot  accept  deposits   repayable on demand.
  • The deposits with nbfcs are not isured.
  • The repament of deposits by nbfc’s is not guaranteed by rbi.

1).The World Bank is an international financial institution that provides loans to developing countries for capital programs

2). It comprises of 2- institutions

  • International Bank for Reconstruction and Development (IBRD) -188 countries
  • International Development Association (IDA)-172 countries

3). The World Bank’s official goal is the reduction of poverty

4). It was established in 1944

5). Headquartes –Washington DC, United States

6). Founders- Lord Keynes and Harry Dexter White – Fathers of both the World Bank and the International Monetary Fund

7). Parent Organization – World Bank Group (WBG)

8). President –same as the President of WBG- presently Jim Yong Kim

9). Objectives of World Bank

  • To provide guarantee for loans granted to small and large units and other projects of member countries
  • To ensure the implementation of development projects so as to bring about a smoothtransference from a war –time to peace economy

10). It has 2- types of members:

  1. Founder members b. General members

11). India is a founder member

12). Voting right of every member is based on the member country’s share in the total capital of the bank

13).Every member of the IMF is automatically a member of World Bank

14). Any member can be debarred from World Bank under the following conditions

  • By written notice to the bank, but such country has to repay the granted loans on terms and conditions decided at the time of sanctioning the loan
  • Any country working against the guidelines of bank can be debarred by the Board of Governors

15). Top 5-member countries with voting powers are as follows:

  • United states-15.85%
  • Japan-6.84%
  • China-4.42%
  • Germany-4%
  • United Kingdom-3.75%

16). The initial authorized capital of the world Bank was 10,000 million which was divided into 1 lakh shares each

17). The authorized capital of the bank has been increased from time to time with the approval of the member countries. The member countries repay the share amount to the world Bank in the following ways:

  • 2% allotted share are repaid in gold, US dollar or SDR
  • 18% of the country’s capital share in its own currency
  • Remaining 80% share is deposited by the member country on the demand of World Bank

18). World Bank can grant loans up to 20% of the member country’s share paid up as capital

19). World Bank takes guidance of the following international institutions

  • FAO
  • WHO
  • UNESCO
  • UNIDO

20). 75% of its total loans are sanctioned to developing countries while 25% to developed countries

BANK : Bank is an institution which attracts deposits from the public and lends the money to the needy persons at varied interest rates.

  • TYPES OF BANKING
  • RBI
  • COMMERCIAL BANKS
  • COOPERATIVE

Commercial Banking :

  • Commercial banks, or divisions of banks, provide banking services to businesses, form small companies through to corporate banking directed at large corporations
  • They help companies raise finance to expand their businesses and to maintain their cash-flow by lending them money.
  • Co-operative Banks:

In India, Cooperative Banks are registered under the Cooperative Societies Act 1912. They generally give credit facilities to small farmers, salaried employees, small scale industries, etc. Cooperative Banks are in rural as well as in urban areas. The functions of these banks are just similar to that of Commercial Banks.

                 Commercial banks constitute those banks driven by profit.These banks are exists for generating  capital. cooperative banks constitute those banks developed by laws and amendments. These both commercial and cooperative banks called as scheduled banks.

Foreign Banks:             

Standard Chartered Banks, City Bank, HSBC are the examples of Foreign Banks working in india. These banks are mainly concerned with financial foreign trade. Following are the various functions of Exchange Banks.

  • Remitting money from one country to another country
  • Discounting of Foreign bills.
  • Buying and selling gold and silver
  • Helping import and export trade

Industrial Banks/ Development Banks:

Development Banks are those financial institutions engaged in the promotion and Development  of industry, agriculture and other key sectors. These banks react to the socio-economic needs

Indigenous Banks:

Indigenous Banks means money lenders and sahukars. They collect deposits from general public and grant loans to the needy persons out of their own funds as well

as from deposits. These Indigenous Banks are popular in villages and small towns. They perform combined functions of trading and banking activities. Certain well-known Indian communities like Marwaries and Multanis even today run specialized Indigenous Banks.

FUNCTIONS OF BANK

  • Attracts deposits from public
  • Lends money to the customers
  • Issues dd’s,fd’s,tmt banking
  • Banks increases the saving habit among the public

Implementing the innovative schemes like merchant banking, mutual funds, housing finance other services.

  • Saving bank account
  • Fixed deposit account
  • Current deposit account
  • Recurring deposit account

 SAVING BANK ACCOUNT :

This SB account can be opened with a minimum initial deposit that varies from one bank to another  bank. Money  can be deposited at any time in this sb account. we can withdraw money  by using withdrawl form or cheque or by using atm.The rate of interest on savings bank account varies from bank to bank.Recently Banks Are Put Some Restrictions On The Number Of Withdrawls.

FIXED DEPOSIT ACCOUNT :

This deposit  also called  as term deposit account.in this people want to save money for long period.Banks are given high interest rates for this depends on certain period,it may be 1yr,3yr,5yr upto 10yrs.if money is deposited in savings bank account,banks allow lower interest rates.the maximum period of an fd is 10yrs.

CURRENT DEPOSIT ACCOUNT :

These accounts are given to companies, bussiness  persons, institutions such  as schools , colleges  and hospitals have  to make  payment their  bank  accounts. There is no restrictions  for  withdrawls. on this deposit  account  bank  does not pay any interest  on  the balances. Banks  also  allow  withdrawal of amounts in excess of the balance of deposit. This Facility Is Also Known As Overdraft Facility.

RECURRING DEPOSIT ACCOUNT :

In  this  recurrring  deposit account  a  person has to agree to deposit a fixed amount once in a month for a certain period. The  total  deposit  along  with  the  interest  therein  is  payable  on  maturity.However,the depositor  can  also be  allowed to close  the  account  before  its  maturity  and  get back the money along till that period.  The  rate  of  interest  allowed  on  the  deposits is higher  than  that  on  a  savings bank deposit  but  lower  than  the  rate  allowed  on  a  fixed  deposit  for  the  same  period. The maximum period of an rd is 10yrs.

CHEQUE

It  is an  instrument in writing  containing  an  unconditional order, addressed to a banker, sigh  by  the  person  who  has  deposited  money  with  the banker, requiring  to him pay on demand a certain  sum of money only to or the order of certain person or to the bearer of instrument.

Classification  of CHEQUE :

1).Open Cheque:  A cheque is called “Open” when it is possible to get cash over the counter at the bank. The holder of an open cheque can do the following,

  • Receive its payment over the counter at the bank
  • Deposit the cheque in his own account
  • Pass it to someone else by signing on the back of a cheque.

2). Crossed Cheque:

Since, open cheque is subject to risk of theft; it is dangerous to issue such cheques. This risk can be avoided by issuing another type of cheque called “Crossed Cheque”. The payment of such cheque is not made over the counter at the bank. It is only credited to the bank account of the payee. A cheque can be crossed by drawing two transverse parallel lines across the cheque, with or without the writing ‘Account Payee’ or ‘Not Negotiable’. These lines are usually drawn on the upper left hand corner of the cheque.

  1. Bearer Cheque:

A Cheque which is payable to any person who presents it for payment at the bank counter is called ‘Bearer Cheque’. A bearer cheque can be transferred by mere delivery and requires no endorsement.

  1. Order Cheque:

An order cheque is one which is payable to a particular person. In such a cheque the word ‘bearer’ may be cut out or cancelled and the word ‘order’ may be written. The payee can transfer an order cheque to someone else by signing his or her name on the back of it.

Categorization of Cheques:

  • Ante- Dated cheques: Cheque in which the drawer mentions the date earlier to the date of presenting it for payment. For example a cheque issued on 20th August, 2014 may bear a date 5th August 2014.
  • Stale cheque: A cheque which is issued today must be presented to the bank for payment within a stipulated period. After expiry of that period, on payment will be made and it is then called ‘stalecheque’.
  • Multilated Cheque: In case a cheque is torn into two or more pieces and presented for payment, such cheque is called Multilated Cheque. The bank will not make payment against such a cheque without getting confirmation of the drawer. But it is a cheque is torn at the corners and no material fact is erased or cancelled, the bank may make payment against such a cheque.
  • Post-date Cheque: Cheque on which drawer mentions a date which is subsequent to the date on which it is presented, is called ‘Post-date Cheque.’ For example, if a cheque presented on 5th April 2015 bears a date of 20th April 2015, is a post dated cheque. The bank will make payment only mon or after 20th April 2015.

A TRUNCATED CHEQUE : (CHEQUE TRUNCATION)

Cheque truncation  is the conversion of a physical  cheque  into  a  substitute  electronic form for transmission  to  the  paying  bank. Cheque truncation  reduces  or  eliminates  the  physical  movement  of  cheques  and  reduces  the  time  and  cost  of  processing  the  chequeclearance system.                          

There  are  three  parties  to  the  cheque

1). Drawer or maker

2).the bank – on whom the cheque is drawn

3).payee—payee is the person whose name is mentioned on the cheque to whom or to whose order the money is directed to be paid.

Types of Loans:

  • Cash Credit
  • Overdraft
  • Loans and Advances
  • Discounting of the Bill of Exchange
  • Investment in Government Securities

OPERATIONS OF LOANS :

Cash Credit:

The debtor is allowed to withdraw a certain amount against a given security. The debtor withdraws the amount within this limit, as per his requirement and also repays it. Interest is charged by the bank on the actually withdrawn.

Overdraft:         

Clients who have current account with the bank get the sanction to withdraw more money than is lying in the said account. It is called Overdraft. This facility is availability for short term to reliable parties.

Loans and Advances:

These loans are given in the form of a fixed amount. Bank credits the amount of loan in the account books of the debtor. The latter can withdraw it any time. The interest is chargeable on the whole amount from the day; the loan is disbursed irrespective of the fact that the debtor withdraws the whole amount or part of it.

Discounting of the Bill of Exchange

Under this, banks give advance to their clients on the basis of their bills of exchange before the maturity of such bills. (A deduction is made out of the net clear face value of the bill of the period the bill is yet to run). This deduction is called Discounting to the Bill.

Investment in Government Securities:

Purchasing of government securities  by the banks  tanta

Types of Loans:

  • Cash Credit
  • Overdraft
  • Loans and Advances
  • Discounting of the Bill of Exchange
  • Investment in Government Securities

OPERATIONS OF LOANS :

Cash Credit:

The debtor is allowed to withdraw a certain amount against a given security. The debtor withdraws the amount within this limit, as per his requirement and also repays it. Interest is charged by the bank on the actually withdrawn.

Overdraft:         

Clients who have current account with the bank get the sanction to withdraw more money than is lying in the said account. It is called Overdraft. This facility is availability for short term to reliable parties.

Loans and Advances:

These loans are given in the form of a fixed amount. Bank credits the amount of loan in the account books of the debtor. The latter can withdraw it any time. The interest is chargeable on the whole amount from the day; the loan is disbursed irrespective of the fact that the debtor withdraws the whole amount or part of it.

Discounting of the Bill of Exchange

Under this, banks give advance to their clients on the basis of their bills of exchange before the maturity of such bills. (A deduction is made out of the net clear face value of the bill of the period the bill is yet to run). This deduction is called Discounting to the Bill.

Investment in Government Securities:

Purchasing of government securities  by the banks  tantamount to advancing  loans by  them  to the government. Banks prefer to buy government securities as these are considered to be the safest investment.

mount to advancing  loans by  them  to the government. Banks prefer to buy government securities as these are considered to be the safest investment.

The assets of the bank is classified as

(1) Standard assets (2)sub-standard asstes

 (3) doubtful asstes and   (4) loss assets

STANDARD  ASSETS : standard asset  is a asset in which  bank  have  to  maintain  15%  of  its reserves.

SUB-STANDARD ASSETS : an asset which has been classified as  Non performing Asset upto 90 days is called sub –standard assets.

DOUBTFUL  ASSETS : these assets which are considered as non performing asset for period of more than 12 months are  called as doubtful assets.

LOSS ASSETS :  all those assets which cannot  be recovered and  for period of above 24 months are called as loss assets.

Provisioning :

Setting aside of money from Profits to compensate a probable loss caused on lending a loan is called Provisioning. Provisioning is done to cover risk. It is like  writing your money under different headings.

There  are  various percentages  of  Provisioning  to  the  value  of  loan  based on the duration the account  has  been  out  of  order. If  an  account  stays for  a  prolonged  period  of  time, the account is eventually  written off  and  the  account  is  closed  (the amount set aside as the provisioned money is used to close the account).

Provisioning   coverage  ratio :

In NPA   SECURED  – 15%   UNSECURED – 40%

In doubtful     SECURED – 40%   UNSECURED – 100%

In loss   –100%

Negotiable Instruments:

There are certain Documents used for payment in business transaction and are transferred freely from one person to another. According to section 13 of the negotiable instruments act 1881, Negotiable Instruments like  Cheque, Bank Draft, bill of exchange, Promissory notes, etc.

Features of Negotiable Instruments:

  • It is a written document.
  • A Negotiable Instrument payable to bearer is transferable merely by delivery, whereas a Negotiable Instrument payable to orderis transferable by endorsement and delivery.
  • The holder of a Negotiable Instrument can sue upon it in his own name.
  • The consideration is not mentioned on the Negotiable Instrument. It is presumed that the Negotiable Instruments has been drawn for a valuable consideration.
  • It works in the same manner as money and like money; it may also be transferred from one person to another.
  • The transferor does not need to give notice to any person at the time of transferring the instrument.
  • It is the simplest and most convenient mode of assignment of a debt.
  • The title to the instrument received by a bonafide transferee is not affected by any defected in the title of the transferor.
  • Types of Negotiable Instruments:
  • Promissory Note
  • Bill of Exchange
  • Cheque
  • Exchequer Bill
  • Circular Note
  • Dividend Warrant
  • Share Warrant, Bearer Debenture
  • Bank Note and  Bank draft

BILL OF EXCHANGE

A bill of exchange is a non-interest-bearing written order used primarily in international trade that binds one party to pay a fixed sum of money to another party at a predetermined future date.
PROMISORY NOTE

promissory note is a financial instrument that contains a written promise by one party (the note’s issuer or maker) to pay another party (the note’s payee) a definite sum of money, either on demand or at a specified future date.

BANK DRAFT

bank draft is a payment on behalf of a payer that is guaranteed by the issuing bank. A draft ensures the payee a secure form of payment.  During a payer’s reconciliation  of  his  bank  account,  he  notices  a  decrease  in  the  account  balance  because of  the  money  withdrawn  from  the  account.

BANK NOTE

banknote (often known as a bill, paper money, or simply a note) is a type of negotiable instrument known as a promissory note, made by a bank, payable to the bearer on demand.

Financial inclusion means gives formal banking services to poor people in urban and rural areas. Promot  habit of  money-savings, insurance, pension investments among poor people.

1). Financial Inclusion or inclusive financing is the provision of financial services to low income and disadvantaged sections of the society at affordable costs. Financial Inclusion Committee is headed by Deepak Mohanty.

2). Globally about 2 billion working age adults have no access to any type of formal financial services delivered by the financial institutions

3).  The goals of Financial inclusion as defined by the United nations is as follows

  • To provide sound and safe institutions governed by clear regulation and industry performance standard
  • To provide financial services like savings, deposit, payments, transfer, credit and insurance services at a reasonable cost to all
  • To facilitate financial and institutional sustainability
  • To ensure continuity and certainty of investments

4). Alliance for Financial Inclusion (AFI) – world’s largest and most prominent network of financial inclusion

  • AFI was founded in 2008
  • It is a Bill & Melinda Gates foundation funded project supported by AusAid to speed up the development of smart financial inclusion policy in developing countries
  • Its main aim is to adopt and expand effective inclusive financial policies in developing nations to uplift 2.5 billion impoverished and unbanked citizens
  • AFI has over 105 institutions in 88 countries
  • It hosts annual Global Policy Forum (GPF) as an event for membership
  • In 2011 GPF, AFI adopted Maya Declaration-a set of principles and goals for financial inclusion policy development
  • AFI uses Polylateral Development model – to contrast and compare successful financial inclusion

5). In partnership with NABARD the United Nations aims to increase financial inclusion of the poor by developing appropriate financial products

6). UN’s financial inclusion is financed by United Nations Development Program

7). In India the term financial inclusion was 1st used in the Annual Policy Statement presented by Y. Venugopal Reddy former Governor of RBI

8). Some of the services provided under the term Finacial Inclusion in India

  • Mangalam – 1st village in India where all households were provided banking facilities
  • Norms of banks were relaxed for people intending to open accounts with annual deposits less than Rs. 50,000
  • General Credit Cards (GCC) were issued to poor and the disadvantaged to help them with easy access to credit
  • RBI asked the commericial banks in different regions to start 100% financial inclusion campaign
  • Pondicherry, Himachalpradesh and Kerala announced 100% financial inclusion
  • Pradhan Mantri Jan Dhan Yojana – a national financial inclusion mission which aims to provide bank accounts to low income people

9). Deposit Penetration – key driver of financial inclusion, the number of savings account – 624 million, is 4 times the number of loan accounts-160 million

10).The top three states/ union territories which tops in financial inclusion are as follows

   1) Pondicherry 2) Chandigarh       3) Kerala

11). Top 3 Districts are as follows

  • Pathanamthitta – Kerala
  • Karaikal – Pondicherry
  • Thiruvananthapuram – Kerala

BANK : Bank is an institution which attracts deposits from the public and lends the money to the needy persons at varied interest rates.

  • TYPES OF BANKING
  • RBI
  • COMMERCIAL BANKS
  • COOPERATIVE

Commercial Banking :

  • Commercial banks, or divisions of banks, provide banking services to businesses, form small companies through to corporate banking directed at large corporations
  • They help companies raise finance to expand their businesses and to maintain their cash-flow by lending them money.
  • Co-operative Banks:

In India, Cooperative Banks are registered under the Cooperative Societies Act 1912. They generally give credit facilities to small farmers, salaried employees, small scale industries, etc. Cooperative Banks are in rural as well as in urban areas. The functions of these banks are just similar to that of Commercial Banks.

                 Commercial banks constitute those banks driven by profit.These banks are exists for generating  capital. cooperative banks constitute those banks developed by laws and amendments. These both commercial and cooperative banks called as scheduled banks.

Foreign Banks:             

Standard Chartered Banks, City Bank, HSBC are the examples of Foreign Banks working in india. These banks are mainly concerned with financial foreign trade. Following are the various functions of Exchange Banks.

  • Remitting money from one country to another country
  • Discounting of Foreign bills.
  • Buying and selling gold and silver
  • Helping import and export trade

Industrial Banks/ Development Banks:

Development Banks are those financial institutions engaged in the promotion and Development  of industry, agriculture and other key sectors. These banks react to the socio-economic needs

Indigenous Banks:

Indigenous Banks means money lenders and sahukars. They collect deposits from general public and grant loans to the needy persons out of their own funds as well

as from deposits. These Indigenous Banks are popular in villages and small towns. They perform combined functions of trading and banking activities. Certain well-known Indian communities like Marwaries and Multanis even today run specialized Indigenous Banks.

FUNCTIONS OF BANK

  • Attracts deposits from public
  • Lends money to the customers
  • Issues dd’s,fd’s,tmt banking
  • Banks increases the saving habit among the public

Implementing the innovative schemes like merchant banking, mutual funds, housing finance other services.

  • SARFAESI Act (The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002) was enacted to regulate securitization and reconstruction of financial assets and enforcement of security interest created in respect of Financial Assets to enable realization of such assets.

The SARFAESI Act provides for the manner for enforcement of security interests by a secured creditor without the intervention of a court or tribunal. If any borrower fails to discharge his liability in repayment of any secured debt within 60 days of notice from the date of notice by the secured creditor, the secured creditor is conferred with powers under the SARFAESI Act to 

a) take possession of the secured assets of the borrower, including transfer by way of lease, assignment or sale, for realizing the secured assets 

b) takeover of the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realizing the secured assets, 

c) appoint any person to manage the secured assets possession of which is taken by the secured creditor, and

d) require any person, who has acquired any of the secured assets from the borrower and from whom money is due to the borrower, to pay the secured creditor so much of the money as if sufficient to pay the secured debt.

Basel 1,2 and 3 committee:

1). On 26 June 1974 a number of banks had released Deutschmarks (the German currency) to the Herstatt Bank in exchange for dollar payments deliverable in New York

2). Due to differences in the time zones, Herstatt Bank ceased operatins between the times of the respective payments and before the dollar payments could be effected in New York, the Hersatt Bank was liquidated by German regulators

3). The G-10 nations responded to this incident by forming the Basel Committee Supervision in late 1974, under the Bank for International Settlements (BIS) located in Basel, Switcherland BASEL-I

1). In 1988 the Basel Committee on Banking Supervision (BCBS) in Basel published a set of minimum capital requirements for banks known as Basel I norms

2). Features of Basel I

  • It mainly focused on credit or default risk i.e., the risk of counter party failure
  • It defined the capital requirement and structure of risk weights for banks

3). Assets of banks were classified and grouped in five categoris according to credit risk, carrying the following risk weights

  • 0% – cash, bullion, home country debt like Treasuries
  • 20% – securitizations such as mortgage-backed securities (MBS) with the highest AAA rating
  • 50% – municipal revenue bonds, residential mortgages
  • 100% – most corporate debt

4). Banks with an international presence are required to hold capital equal to 8% of their risk-weighted assets (RWA).

  • At least 4% in Tier I capital
  • More than 4% in Tier I and Tier II capital

5). From 1988 this framework was introduced within the G-10 nations initially and then ver 100 countries adopted the rules prescribed by the Basel 

  BASEL II

1). Basel II was introduced in 2004 with more refined definations for capital adequacy, risk management and disclosure requirements

2). It used external rating agencies to set the risk weights for corporate and banks

3). Disclosure requirements allowed market participants to access the capital adequacy of the institution based on information on the following aspects

  • Scope of application
  • Capital
  • Risk exposure
  • Risk assessment processes

4). In Basel II norms Operational Riskhas been defined as the risk of loss resulting from inadequate or failed internal processes, people and systems

5). Basel II uses a “three pillars” concept namely

  • Minimum capital requirements
  1. The credit risk component can be calculated in three different ways of varying degree of sophistication, namely standardized approach, Foundation IRB, Advanced IRB and General IB2 Restriction. IRB stands for “Internal Rating-Based Approach”
  2. For operational risk, there are the three different approaches – basic indicator approach or BIA, standardized approach or TSA, and the internal measurement approach
  3. For market risk the preferred output its value at risk
  • Supervisory review
  1. This is a regulatory response to the first pillar, giving regulators better ‘tools’ over those previously available
  2. It also provides a framework for dealing with systemic risk, pension risk, concentration risk, strategic risk, reputational risk, liquidity risk and legal risk, which the accord combines under the title of residual risk
  3. Banks can review their risk management system
  4. The Internal Capital Adequacy Assessment Process (ICAAP) is a result of pillar 2 of Basel II accords
  • Market discipline – It supplements regulation as sharing of information facilitates assessment of the bank by others, including investors, analysts, customers, other banks, and rating agencies, which leads to good corporate governance

BASEL III

1). The Basel II regulations did not have any explicit norm on the debt that banks could take but focused on financial institutional ignoring the systematic risks

2). Therefore to ensure that banks don’t take excessive debt and not rely on short term funds the Basel III norms were proposed in 2010

3). Basel III promoted a more resilient banking system on the following 4 important banking parameters namely

  • Capital
  • Leverage
  • Funding
  • Liquidity

4). Requirements of common equity and Tier 1 capital will be 4.5% and 6% respectively

5). Leverage ratio calculated by dividing Tier I capital by the bank’s average total consolidated assets will be greater than 3% ,in other words is the ratio of relative amount of caital to total assets.

6). The minimum Liquidity Coverage Ratio (LCR) will reach upto 100% by 1st January 2019 to prevent situations like Bank Run.

MARKET : market refers  to a place  which  provides  potential  exchange. The total exchange  process  is called money market.

MARKETTING RESEARCH : it refers to is a process of identifying the needs and wants of the customers ,identifying the market problems and developing different alternative solutions for that perticular  marketting  problems.

MARKRTTING :  marketting is a performance  of business activity that directs the flow of goods and services from  producer to the end user.

FOUR PILLERS OF MARKETTING

They are  

1)product        2)price       3)distribution            4)promotion

PRODUCT

In a marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are bought as raw materials and sold as finished goods.

PRICE  Pricing strategy in marketing is the pursuit of identifying the optimum price for a product.

DISTRIBUTION(PLACE):  the process of moving products from the producer to the intended user is called place.

PROMOTION :  In marketingpromotion is advertising a product or brand, generating sales, and creating brand loyalty. 

Market concept is a process of a customer accepting the product.

There are different concepts in marketing

  • Product concept
  • Production concept
  • Market concept
  • Consumer concept
  • Social concept

Money Market Instruments

The money market can be defined as a market for short-term money and financial assets that are near substitutes for money.

The term short-term means generally a period up to one year and near substitutes to money is used to denote any financial asset which can be quickly converted into money with minimum transaction cost.

Some of the important money market instruments are briefly discussed below;

  1. Call/Notice Money
  2. Treasury Bills
  3. Term Money
  4. Certificate of Deposit
  5. Commercial papers                                                 

1.)Call/Notice Money Market:

Call/Notice Money is the money borrowed or lent on demand for a very short period. When money is borrowed or lent for a day, it is known as Call(Overnight) Money. Intervening holidays and/or Sunday are excluded for this purpose. Thus money, borrowed on a day and repaid on the next working day, (irrespective of the number of intervening holidays)is “CallMoney”. Notice Money: When money is borrowed or lent for more than a day and up to 14 days, it is “Notice Money”. No collateral security is required to cover these transaction.

2.) Inter-Bank Term Money: Inter-bank market for deposits of maturity beyond 14 days is referred to as the term money market. The entry restrictions are the sae as those for Call/Notice Money except that, as per existing regulations, the specified entities are not allowed to lend beyond 14 days.

3.)Treasury Bills: Treasury Bills are short term (up to one year) borrowing instrument of the union government. It is a promise by the Government to pay a stated sum after expiry of the stated period from the date of issue (14/91/182/364 days i.e. less than one year). They are issued at a discount to the face value, and on maturity the face value is paid to the holder. The rate of discount and the corresponding issue price are determined at each auction.

4.)Certificate of Deposits: Receipt issued by a depository institution (such as a bank, credit union, or a finance or insurance company) to a depositor who opens a certificate account or time deposit account.Issued in a negotiable or non-negotiable form, it sales the (1) amount deposited, (2) rate of interest, and (3) minimum period for which the deposit should be maintained without incurring early withdrawl penalties.

5.)Commercial Paper: An unsecured obligation issued by a corporation or bank to finance its short-term credit needs, such as accounts receivable and inventory- Commercial paper is available in a available in a wide range of denominations, can be either discounted or interest-bearing, and usually have a limited have or nonexistent secondary market.

CAPITAL MARKET

Capital market is a market where buyers and sellers engage in trade of financial securities like bonds, stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions.

 There is two types of capital market

  1. PRIMARY MARKET

The primary market is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue.

Methods of issuing securities in the primary market are:

Initial public offering

Rights issue (for existing companies)

Preferential issue

Initial public offering

SECONDARY MARKET :

The term “secondary market” is also used to refer to the market for any used goods or assets, or an alternative use for an existing product or asset where the customer base is the second market .

National Bank for Agriculture and Rural Development(NABARD)

1). National Bank for Agriculture and Rural Development (NABARD) is an apex development bank in India

2). Headquarters-Mumbai

3). It was established by the Committee set up by RBI to Review Arrangements for Institutional Credit for Agriculture and Rural Development (CRAFICARD) under the Chairman Shri. B. Sivaraman on 12th July 1982.

4). Its main aim is to uplift rural india by increasing the credit flow for evaluation of agricultural and rural farm sector

5). Chairman – Dr. Harsh Kumar Bhanwala

6). The government of India now holds 99% of NABARD’s shares which were sold by RBI

7). NABARD is active member of Alliance for Financial Inclusion

8). NABARD replaced the following organizations

  • Agricultural Credit Department
  • Rural Planning and Credit Cell
  • Agricultural Refinance and Development Corporation

9). The initial capital of NABARD was Rs. 100 crore

10). Present share details of NABARD are as follows

  • Government of India – Rs. 4680 crore -99%
  • RBI – Rs. 20 crore – 1%

11). NABARD takes measures towards institutions which help in improving absorptive capacity of the credit delivery system including

  • Monitoring
  • Formulating rehabilitation schemes
  • Restructuring of credit institutions
  • Training of personnel

12). It coordinates the rural financing activities of the

  • Government of India
  • State Governments
  • Reserve Bank oof India
  • Other national institutions concerned with policy formulation

13). NABARD refinances financial institutions which finance the rural sector. These refinances are availed by the following organizations

  • State Co-operative Agriculture and Rural Development Bank (SCARDB)
  • State Co-operative Banks(SCB)
  • Regional Rural Banks (SCBs)
  • Commercial Banks (CB)
  • Other financial institutions approved by RBI

14). It has 336 District offices across the country including 1-sub office at Port Blair and one special cell at Srinagar

15). It has 6 training establishments

16). NABARD is also known as Self Help Group (SHG) Bank Linkage Programme. About 22 lakh SGHs were credited through this programme

17). NABARD has a portfolio of Natural Resource Management Programmes in the following fields

  • Watershed development
  • Tribal development
  • Farm innovation

18). The RBI and NABARD has laid out guidelines for commercial, Regional Rural and Cooperative banks to provide data regarding loans given by banks to the microfinance  institutions

Enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by bans. The Banking Ombudsman Scheme is introduced under Section 35A of the Banking Regulation Act, 1949 by RBI with effect from 1995.

  • To facilitate the resolution  of  complaints  relating  to  banking  services  through concillation  and mediation  between  the  bank  the  aggrieved  parties  or  by  passing  an 
  • The banking ombudsman is a seniour official appointed by the rbi to redress customer complaints against  deficiency  in  certain  banking 
  • All scheduled commercial banks,regional rural banks and  scheduled  primary co operative banks are covered unde the scheme.

As on date, fifteen Banking Ombudsman have been appointed with their offices located mostly in the state capitals.

There are 4 important credits are

       1)character   2)capacity  3)capital   4)coletral(security)

         Credit Cards and its Types

  • A credit card is a payment card issued to users as a system of payment which allows the card holder to pay for goods and services based on the holder’s promise to pay for them
  • The size of most of the credit cards are 85.60 х98 mm according to the ISO/IEC 7810 ID-1 standard
  • The front of a typical credit card consists of the following parts:
  • Issuing bank logo
  • EMV chip
  • Hologram
  • Card number
  • Card Network Logo
  • Expiration Date
  • Card Holder name
  • Contactless Chip
  • Similarly the reverse side of a credit card consists of the following parts:
  • Magnetic Strip
  • Signature Strip
  • Card Security Code

Types of Credit Cards

  • Business credit cards –– specialized credit cards issued in the name of a registered business and can only be used typically for business purposes
  • Secured credit cards –– it’s a card that is secured by a deposit account owned by the cardholder. The cardholder must deposit between 100% to 200% of the total amount of credit needed
  1. Advantages of credit card system to the banks
  • Scope and potential for better profitability ou of share earned from the merchant’s income
  • Helps in banking relationship with new customers
  • Provides additional customer service to the existing clients
  • Savings of expenses on manpower to handle clearing transactions
  1. Advantages of credit card system to the merchants
  • Systematic accounting since sale receipts are routed through banking channels
  • Assured and immediate settlement
  • Avoids all costs and security problems involved in handling cash
  • Development of a prestigious clientele base
  • Increase in sale because of increased purchasing power of the cardholder due to the unbilled credit available to him
  • Advertising and promotional support on a national scale                           
  1. Advantages of credit card system to the cardholder
  • It incorporates a sense of financial discipline in him/her
  • Allows the cardholder to delegate spending powers to add-on members
  • It extends additional facilities like insurance cover and discounts

Important Banking Terminology

ATM(Automatic teller Machines)

They are machines that dispense cash, receive cash, accept cheques, give balance details and mini statements to the customers through Computer network

Bancaassurance

It is the distribution of insurance products and the insurance policies of insurance companies by banks as corporate agents through their branches. Banks charge a fee for this service from insurance companies

TREASURY BILLS

These are the instruments of short term borrowing by the central/state govt.teey are promissory notes issued at discount and for a fixed period.these were first issued in india in 1917.

Minimum amount value rs.1 lac and in multiples there of,maturity of these billa 91 days, 182 days and 364 days

Bouncing of a cheque

When an account has insufficient funds the cheque is not payable and is returned by the bank with a reason “Exceeds arrangement” or “funds insufficient”.

Bank Account

It is account of nominal interest which can only be used for personal purpose and which has some restrictions on withdrawl

Bank Rate

It is the rate of interest charged by a central bank to commercial banks on the advances and the loans it extends

 

Base rate

It is the rate of interest on which banks base their lending rates. Usually loans are given at a rate higher than the base rates and saving rate is below the base rate

Basis point

One-hundredth of 1% point normally used for indicating cost of finance

Call Money

It is a loan that is made for a very short period of a few days only with a low rate of interest

Cheque

It is written by an individual to transfer amount between two accounts of the same bank or a different bank and the money is withdrawn from the account.

Core Banking

It is a general term used to describe the services provided by a group of networked bank branches

Core Banking Solutions (CBS)

In this all the branches of the bank are connected together and the customer can access his/her funds or transactions from any other branch.

CRR(Cash Reverse Ratio)

The amount of funds that a bank keep with the RBI. If the percentage of CRR increases then the amount with the bank comes down.

Current Account

It is an account that can be opened generally for business purposes with no restrictions on withdrawls and no interest paid

Debit Card

It is a card issued by the bank so the customers can withdraw their money from their account electronically.

Demat Account

The way in which a bank keeps money in a deposit account in the same way the Depository company converts share certificates into electronic form and keep them in a Demat Account.

Dishonour of Cheque

Non-payment of a cheque by the paying banker with a return memo giving reasons for the non-payment.

E-Banking

It is a type of banking in which we can conduct financial transactions electronically. RTGS, Credit cards, Debit cards etc come under this category.

EFT-(Electronic Fund Transfer)

In this we use Automatic teller machine, wire transfer and computers to move funds between different accounts in different or same bank.

Fiscal Deficit

It is the amount of Funds borrowed by the government to meet the expenditures.

Inflation

It is an increase in the quantity of money in circulation without any corresponding increase in goods thus leading to an abnormal rise in the price level

Initial Publc Offering(IPO)

It is the time when a company makes the first offering of the shares to the public.

Kiosk Banking

Doing banking from a cubicle from which food, newspapers, tickets, etc are also sold

Leverage Ratio

It is a financial ratio which gives us an idea or a measure of a company’s ability to meet its financial losses.

Liquidity

It is the ability of converting an investment quickly into cash with no loss in value.

Market Capitalization

The product of the share price and number of the company’s outstanding ordinary shares

Mortgage

It is a kind of security which one offers for taking an advance or loan from someone.

Mutual Fund

These are investment schemes. It pools money from various investors in order to purchase securities.

FOREIGN DIRECT INVESTMENT (FDI)

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company.

FOREIGN INSTITUTIONAL INVESTMENT (FII)

A  foreign  institutional investor (FII)  is an investor or investment  fund  registered  in  a country outside of the  one  in  which  it  is  investing. Institutional   investors  most notably include hedge funds, insurance companies,  pension funds and mutual funds.

Monetary Policy

It refers to the Central Government policy with respect to the quantity of money in the economy, the rate of interest and the exchange rate

Non-bank ATM/ White labeled ATM

An ATM or cash machine that does not prominently display a bank’s name or logo. A fee will be charged for cash withdrawls in these ATMs and they don’t accept deposits

Non-performing Assets (NPAs)

NPA or non-performing loans are loans given by a bank on which repayments or interest payments are not being made on time

Permanent Account Number(PAN)

PAN is a number issued by the Income Tax Department to their tax payers.

Plastic Money

Plastic Money is a name iven to Credit cards, Debit cards, ATM cards and International cards issued by banks

Point of Sale (poS)

poS refers to a location at which a bank gives loan to its most reliable customer i.e., customer with ‘zero risk’Pass Book .It is a book where all the bank transactions are recorded. They are mainly issued to Current or Savings Bank account holders.

CASA RATIO (CURRENT AND SAVINGS ACCOUNT)

The CASA ratio is the ratio of deposits in the current and savings accounts of a bank  to its total deposits.

Repo Rate

Commercial banks borrow funds by the RBI if there is any shortage in the form of rupees. If this rate increases it becomes expensive to borrow money from RBI and vice versa.

Reverse Repo Rate

It is the exact opposite of repo rate. It is the rate at which RBI borrows money from banks when it feels there istoo much money floating in the banking system

Special Drawing Rights(SDR)

It is a reserve asset (Paper Gold) created within the framework of the International Monetary Fund in an attempt to increase international liquidity

SLR(Statutory Liquidity Ratio)

It is amount that a commercial bank should have before giving credits to its customers which should be either in the form of gold, money or bonds.

WAYS AND MEANS ADVANCES

These are temporary extended  by rbi to the govt.section 17(5) of rbi act allows rbi to make wma both to the central and state govt.the interest rate on wma is at around bank rate and overfrdrafting if any carries 2% higher interest.

INFLATION : an increase in the price of a standardized good/service or a basket of goods/services over a specific period of time.

DEFLATION : decrease in prices,often caused by a reduction in the supply of money or credit.

BSBDA (basic saving s bank deposit account)

The ‘Basic Savings Bank Deposit Account’ would be subject to provisions of PML Act and Rules  and  RBI instructions  on  Know Your Customer (KYC) / Anti-Money Laundering (AML) for opening of bank accounts issued from time to time. BSBDA can also be opened with simplified KYC norms. BSBDA is launched  by the rbi.

Following are the main features of BSDBA

 The ‘Basic Savings Bank Deposit Account’ should be considered as a normal banking service available to all customers, through branches. BSBDA is applicable to all scheduled commercial banks in India including Foreign Banks having branches in India.

 The services available free in the ‘Basic Savings Bank Deposit Account’ includes deposit and withdrawal of cash; receipt / credit of money through electronic payment channels or by means of deposit / collection of cheques at bank branches as well as atms.

Banks are advised not to impose restrictions like age and income criteria of the individual for opening BSBDA. An individual is eligible to have only one ‘Basic Savings Bank Deposit Account’ in one bank.

MUTUAL FUNDS

A mutual fund is a type of professionally managed collective investment vehicle that pools money from many investors to purchase securities.

                                                                    OR

A small funds pooling from the public and again re-invest in the stock markets.

 NOTE : First in 1964  india  enters into the mutual fund business.

THE MAIN FEATURES OF MUTUAL FUND’S :

  • LOW INVESTMENT
  • STUDY RETURNS
  • LOW RISK OF FUNDS
  • CAPITAL APPRECIATION IN LONG TERM

INTERNATIONAL BANK ACCOUNTS FOR BANKERS

  • NOSTRO ACCOUNT : A nostro account is maintained by an indian bank in foreighn countries
  • VOSTRO ACCOUNT : A vostro account is maintained by a foreign bank in india with their corresponding bank

CAPITAL ADEQUACY RATIO :  Capital Adequacy Ratio (CAR) is also known as Capital to Risk (Weighted) Assets Ratio (CRAR), is the ratio of a bank’s capital to its risk. National regulators track a bank’s CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements.

PRIMARY INTEREST RATE (PIR)  The primary interest rate is the interest rate changed  by  banks  to their most credit worthy customers.

SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL TELECOMPUNICATIONS (SWIFT)

A cooperative society that provides highly secure message communications  between banks. It does not transfer money or any other financial materials but provides only information. Founded in 1973 and HQ is in Belgium.

Teller

He/she is a staff member of the bank who cashes cheques, accepts deposits and perform different banking services for the general mass.

Universal Banking

When financial institutions and banks undertake activities related to banking like investment, issue of debit and credit card etc then it is known as universal banking.

Virtual Banking

Internet banking is sometimes known as virtual banking. It is called so because it has no bricks and boundaries. It is controlled by the world wide web.

Wholesale Banking

It is similar to retail banking with a slight difference that it mainly focuses on the financial needs of the institutional clients and the industry.

Zero Coupon Bond

It is a bond that is sold at good discount as it has no coupon.

LIQUIDITY ADJUSTMENT FACILITY

A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This agreement allows banks to respond to liquidity pressures and is used by govt to assure basic stability in the financial markets.

PLEDGE  : Transfer of asstes that means movable  properties  called  pledge

HYPOTHICATION  :  Loan  against  movable  and  immovable properties possession of the goods  held  by  the customer.

STOCK EXCHANGE :  A stock exchange is a form of exchange which provides services for stock brokers and traders to trade stocks, bonds, and other securities.

CREDIT BUREAU  :  This is a company that collects information from various sources  and  provides  customer  credit  information  on  individual consumers  for  a variety of uses.

GENERAL ANTI—AVOIDANCE RULES (GAAR)

The gaar proposed bt the union finance minister PRANAB  MUKHERJEE  during the annual budget 2012-13is anti-tax avoidance rule, drafted bt the union govt of india,which prevents tax evaders, from  routing  investments  through  tax  havens  like maturities, luxemburg, switzerland. From april  1st 2013 GAAR  came  into effect.

Letter of Credit (LC)

Letter of Credit (LC) is a document from a bankguaranteeing that a seller will receive payments in full as long as certain delivery conditions have been met. If the buyer is unable to make payments on the purchase then the bank will cover the remaining amount. Lc are often used in international transactions where buyer and seller  may not know each other and are from different countries.

  1. Types of documents required by the LC are as follows
  • Financial documents

a.Bill of exchange

  1. Co- accepted draft
  • Commercial documents
  1. Invoice
  2. Packing list
  • Shipping documents
  1. Transport document
  2. Insurance certificate
  3. Commercial, official or legal papers
  • Official documents
  1. License embassy legalization
  2. Origin certificate
  3. Inspection certificate
  4. Phytosanitary certificate
  • Transport documents
  1. Bill of Lading
  2. Airway bill
  3. Lorry/truck receipt
  4. Railway receipt
  • Insurance documents
  1. Insurance policy/certificate
  • Back to Back LC
  1. A pair of LCs in which one is to the benefit of a seller who is not able to provide the corresponding goods for unspecified reasons
  2. In that situation a second credit is opened for another seller to provide the desired goods
  3. It is issued to facilitate intermediary trade

PRIVATE BANKING

Private banking is banking, investment and other financial services provided by banks to private individuals who invest sizable assets.

COMMODITY

A commodity is a marketable item produced to satisfy wants or needs. Economic  commodities comprise goods and services

SHARE

In financial markets, a share is a unit of account for various financial instruments including stocks and real estate investments trusts.

GROSS DOMESTIC PRODUCT (GDP)

Gross domestic product is the market value of all officially recognized final goods and services produced within a country in a given period of time.

NET DOMESTIC PRODUCT (GNP)

The NDP equals the gross domestic product mines depreciation on a countrys  capital goods.

PER CAPITA INCOME 

It is also known as income per person,is the mean income of the people in an economic unit such as a country or city.

 DORMAT ACOUNT :  Inoperate acount upto 2yrs  or account block

FROZEN ACCOUNT : Restricted account

BUSSINESS CORRESPONDENTS :  Mediator between banks and customers for boosting direct sales

IMPS (IMMEDIATE PAYMENT SERVICE)

It is an instant interbank electronic fund transfer service through mobile phones.both the customers must have mobile money identifier number

BSBS :   Basel committee on banking supervision is an institution created by the central governors of the group of ten nations.

LIBOR : (LONDON INTERBANK OFFERED RATE )

An interest rate at which banks can borrow funds in market size from ohter banks in the London   Interbank Market.

LEASING  : Is an agreement under which a company or form acquires a right to amke use of capital assets.

FORFAITING :  Is Discounting Of Export Bills

KNOW YOUR CUSTOMER

 The kyc principles, were  issued  by  rbi augest 2002 under section 35 A of  the  banking  regulation  act 1949. These  related  to  identification  and  verifivation  of  depositors  with the  objective to prevent banks from  being  used, intentionally  or  unintentionally , by  criminal elements for  money laundering activities. The guidelines  are  applicable  to  all  accounts  including  foreign  currency accounts/trasactions.

REVIEW OF GUIDELINES KYC : the guidelines  were revised nov 29,2004 in line with reommendations made by the financial action task  force (fatf) on anti  money laundering (aml)standards and on combating  financing of terrorism(cft).

BANCASSURANCE  : Its stands for  distribution of insurance policies through the bank as corporate agents. On the recommendations of R  N Malhotra  commitee, the banks in india can undertake insurance business either on risk participation basis  by setting up insurance joint  ventures or undertake insurance agnts  of  insurance companies on fee basis  without any risk participation.

Benefits : it offers an opportunity for banks to increase fee based business for improving their profits and make utilisation of their branch network and customer base optimally,to increase the fee based income.

Rbi parameters for under taking insurance business

  1. Net worth is not less than rs.500 crore
  2. There is a three year track record of continuous profits
  3. Non-performing assets are at reasonable levels
  4. Capital to risk weighted asset adequacy ratio of is not below 10%.

Under this parameters ,banks are required to obtain approval of IRDAI for acting as corporate agent with insurance companies.  Banks should also enter into an agreement with the insurance company.

RETAIL BANKING :

  • Retail banks are the high street banks
  • They take deposits form individuals, provide saving facilities and pay interest on these accounts
  • They also lend money to individuals, in the form of loans and overdrafts, and charge interest on the money they lend
  • They provide a range of other financial services.

UNIVERSAL BANKING

R h khan committee  had recommended the concept of universal banking.

When  financial institutions and banks undertake all activities related to banking like investment, issue of debit and credit card etc then it is known as universal banking.

VIRTUAL BANKING

Internet banking is sometimes known as virtual banking. It is called  so because it has no bricks and boundaries. It is controlled by the world wide web.

WHOLESALE BANKING

It is similar to retail banking with a slight difference that it mainly focuses on the financial needs of the institutional clients and the industry.

E-Banking Systems

1). E-Banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on a website operated by a bank or financial institution

2). E-Banking is also refrred to as

  • Internet banking
  • Virtual Banking
  • Online banking

3). A customer with internet access would need to register with the bank or financial institution to access its online banking facilities

4). They should set up some password for customer verification

5). To access e-banking a customer should log-in to the online banking facility using the customer number and password given to him/her by the bank

A customer can carry out banking tasks through online banking like

  1. Funds transfer between the customer linked accounts
  2. Paying 3rd parties like bill payments
  3. Investment purchase or sale
  4. Loan applications and transactions
  5. Credit card applications
  6. Register utility billers and make bill payment

CROSS SELLING

Cross selling refers to offering to existing and new customers , some additional banking products to expand banking business, reduce the per customer cost of operations and provide more value to the customer.

ISLAMIC BANKING

An islamic bank is a deposit taking banking institution whose scope of activities includes all banking activities,excluding borrowing and lending on the basis of interest.

Note  : in this type of banking there is NO PROFIT NO LOSS.

ZERO COUPON BOND

      It  is a bond that is sold at good  discount as it has no coupon.

NARROW BANKING

A narrow bank in its narrow sense, is the system of banking under which a bank places its funds in risk-free assets with maturity period matching its liability maturity profile.

This narrow banking concept introduced by Tarapore committee on capital account convertibility.

OUTSOURCING BY BANKS

Outsourcing refers to use of services of  third party to perform certain operations,like credit card selling, kyc operations, etc…

DOOR STEP BANKING SERVICES

Rbi  had advised banks on apr 30,2005 under  section 23  of  banking  regulation act 1949 to formulate  the scheme, for  providing services at the premises of a customer and submit it to  rbi  for approval.

The service can be delivered by the banks either through own employees or through the agents.

AUTOMATED TELLER MACHINES

An automated teller machine (ATM) is an electronic banking outlet, which allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit card or debit card can access most ATMs. The first ATM appeared in London in 1967, and in less than 50 years, ATMs spread around the globe, securing a presence in every major country .

There are mainly two types of atms

1) WHITE LABELD ATMS  : RBI- it provides license to open white label ATMs under the payment and Settlement System Act, 2007

White Label ATMs are those ATMs which set up, owned and operated by non-bank entities, which have been incorporated under Companies Act 1956, and after obtaining RBI’s approval. 

Features of a white label ATM are as follows

  • Any customer belonging to any bank can carry out transactions in white label ATMs
  • Every month the 1st 5 transactions are free of cost
  • Users can withdraw a maximum amount of Rs.10,000 per transaction
  • Value added services like mobile recharge and utility bill payments can also be done

Some important non-bank companies that own and operate white label ATMs in india are as follows

  • Muthoot Finance
  • Srei Infrastructure
  • Vakrangee Software
  • Prizm payments

2) BROWN LABELD ATMS :  These ATMs are owned and maintained by service provider whereas bank whose brand is used on ATM takes care of cash management and network connectivity
  the remaining atms are online atms, off line atms, stand alone atm’s  etc…

MONEY LAUNDERING

Money  laundering  means  acquiring  owning, possessing  or transferring  any  proceeds of money  of crime  or knowingly entering into any transaction related to proceeds of the crime either directly or indirectly  or concealing or aiding in the concealment of the proceeds or gains of crime, within or outside india.

Sometimes used more generally to include misuse of the financial system  involving things such as securities, digital currencies, credit cards, and traditional currency.

Legal set up in india  indian  parliment passed “the prevention of money laundering act 2002”during sep 2002 for prevention of money laundering.

CENTRAL BOARD OF DIRECT TAXES (CBDT)

The Central Board of Direct Taxes (CBDT) is a part of Department of Revenue in the Ministry of Finance. The CBDT provides inputs for policy and planning of direct taxes in India, and is also responsible for administration of direct tax laws through the IT Department .

The Chairman and members of the CBDT are selected from the Indian Revenue Service (IRS), whose members constitute the top management of the IT Department. The Chairman and every member of CBDT are responsible for exercising supervisory control over definite areas of field offices of IT Department, known as Zones. 

A compulsory contribution to state revenue, levied by the government on workers’ income and business profits, or added to the cost of some goods, services, and transactions.

THERE ARE MAINLY TWO TYPES OF TAXES

1)DIRECT TAX      2) INDIRECT TAX

DIRECT TAX

direct tax is a tax imposed upon a person or property as distinct from a tax imposed upon a transaction, which is described as an indirect tax. 

Direct taxes are listed below 

INCOME TAX :  Tax levied directly on personal  income is called as income tax.

WEALTH TAX  : A wealth tax (capital tax or equity tax) is a levy on the total value of personal assets, including  bank deposits, real estate, assets in insurance and pension plans, ownership of unincorporated businesses, financial securities, and personal trusts. 

Typically liabilities (primarily mortgages and other loans) are deducted, hence it is sometimes called a net wealth tax .

PROPERTY TAX/CAPITAL GAINS TAX : This is levied on the capital gains arrived by selling property and stocks. Tax rates are different for long term and short term capital gains.

GIFT TAX  : The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The gift tax applies to the transfer by gift of any property.

CORPORATE TAX : A corporate tax, also called corporation tax or company tax, is a direct tax imposed by a jurisdiction on the income or capital of corporations or analogous legal entities. 

INDIRECT TAX 

A tax levied on goods and services rather than on income or profits . An indirect tax such as sales tax, per unit tax, value added tax (VAT), or goods and services tax (GST) is a tax collected by an intermediary  such as a retail  store from the person who bears the ultimate economic burden of the tax (such as the consumer).                                       

Various types of indirect taxes are

SERVICE TAX  :  Service Tax is a tax which is levied on the Services provided by an entity. services like leasing, internet, transport etc…

Excise Duty in India :  this taxes which  are levied on goods manufactured in india for domestic consumption.

Customs Duty in India :  which are lecied on goods imported to/exported from india.government keeps on changing these rates so as to promote import/export of specific goods.

Securities Transaction Tax (STT)  :  Is a tax payable in India on the value of securities (excluding commodities and currency) transacted through a recognized stock exchange.

Value-added taxation in India was introduced as an indirect value added tax(VAT) into the Indian taxation system from 1 April 2005. The existing general sales tax laws were replaced with the Value Added Tax Act (2005) and associated VAT rules

Stamp Duty. …Entertainment Tax…. these are also indirect taxes.

IFSC CODE

IFSC (Indian Financial System Code):

  • Indian Financial System Code is an alpha-numeric code that uniquely identifies a bank-branch participating in the NEFT system
  • This is an 11 digit code with the first 4 alpha characters representing the bank, the 5th character is 0 (zero) and the last 6 characters representing the bank branch
  • IFSC is used by the NEFT system to identify the distination banks and also to route the messages appropriately to concerned bank

MICR – Magnetic ink character Recognition :

MICR is 9 digit numeric code that uniquely identifies a bank branch participating in electronic clearing scheme

  • It is used to identify the location of a bank branch
  • City (3 digits), Bank (3 digits) and branch (3 digits)
  • The MICR code is allotted to a bank branch is printed on the MICR band of cheques
  • MICR used for electronic credit system

SWIFT Code 

  • Society for worldwide Interbank financial tele-communication
  • India was 74th nation to join SWIFT Network
  • SWIFT Code is a standard format of bank Identifier code
  • This code is used particularly in International transfer of money between banks
  • A majority of FOREX related message are sent to correspondent banks abroad through SWIFT
  • SWIFT Code consist 8 or 11 character when code is 8 digit, It is referred to primary office
  • 4 digits – bank code, 2 digits- country code, 2 digits-location code and 3- branch code (optional

NEFT AND RTGS :

NATIONAL ELECTRONIC FUND TRANSFER :(NEFT)

National Electronic Funds Transfer (NEFT) system  is  a  nationwide funds transfer system to facilitate transfer  of  funds  form  any  bank  branch  to  any  other  bank  branch. This is intra bank payment system.

 Rbi introduced an electronic funds transfer system to facilitate  an  efficient, secure,economical, reliable  funds transfer  and  clearing  in the  banking  sector  throughout  india. There is no minimum and  maximum  limit  for  NEFT. Banks cannot levy any charges for inward NEFT.

For outward neft up  to  rs.10000=rs 2.50,above 10000 to 1 lac = rs5.above rs 1 lac to rs 2 lac = max 15 rs. Above 25 lac = max 25 rs.

  • REAL TIME GROSS SETTLEMENT (RTGS) :

Real Time Gross Settlement (RTGS) – The continuous (real-time) settlement of funds transfers individually on an order by order basis

  • Real Time – The processing of instructions at the time they are received rather than at some later time
  • Gross Settlement- the Settlement of funds transfer instructions occurs individually

       RTGS is a funds  transfer system  where  money  is  moved  from  on  bank  to  another  in  real  time and on  gross  basis. When  using  the  banking  method, the  RTGS  is  the  fastest  possible  way  to transfer money. Minimum  amount  needed  for  RTGS  is  2 lakhs  and there  is  no  maximum  limit for RTGS. This was implemented on march 26,2004.RTGS  is  inter  bank  payment system.

  • The Differences between NEFT and RTGS are as follows
  • The fundamental difference between RTGS and NEFT, is that while RTGS is based on gross settlement, NEFT is based on net- settlement
  • Gross settlement is where a transaction is  completed on a one-to-one basis without bunching with other transactions. As  for a  Deffered Net Basis(DNS) , or net – settlement, this is where transactions  are  completed  in batches at specific times. Here, all transfers  will  be  held up until a specific time. RTGS transactions  are  processed  throughout  the  working  hours  of  the 
  • RTGS transactions  involve  large  amounts  of  cash, basically  only  funds  above  Rs 100,000 may be  transferred  using  this  For NEFT, any  amount  below Rs 100,000 may  be transferred, and this system  is  generally  for smaller  value  transactions  involving  smaller  amounts of money
  • RTGS processes  in  real-time (‘push’ transfer), while NEFT processes  in  cycles  during  the  given working day. This  causes  a  NEFT  transaction  that  is  initiated  later  than  the  last  cycle  to  be completed  the  next  day .

ADHAR ENABLED SYSTEMS

Aadhaar Enabled Payment System is a way to get money from the bank account. This system of getting money neither requires your signature nor Debit card. You don’t even need to visit a bank branch for getting money through the Aadhaar Enabled Payment System. Rather, it uses Aadhaar data for the authentication. Like UPI and USSD, this is another initiative by the NPCI.

  • You can perform financial and non-financial transaction through the banking correspondent.
  • A banking correspondent of any bank can do the specified transaction of any bank.
  • There is no need of signature or debit card.
  • It is fast and secure. No one can forge your fingerprint.
  • Banking correspondent can reach to the distant rural place with the micro POS.

Transactions Through the AEPS

The Aadhaar Enabled Payment System gives you banking facility on the go. However, It gives you only basic services. These 4 services can be done through the AEPS.

  • Balance Check
  • Cash Deposit
  • Cash Withdrawal
  • Aadhaar to Aadhaar Fund Transfer

Unstructured Supplementary Service Data (USSD)

  • USSD (Unstructured Supplementary Service Data) is a Global System for Mobile(GSM) communication technology that is used to send text between a mobile phone and an application program in the network. Applications may include prepaid roaming or mobile chatting.
  • USSD is similar to Short Messaging Service (SMS), but,unlike SMS, USSD transactions occur during the session only. With SMS, message scan be sent to a mobile phone and stored for several days if the phone is not activated or within range.
  • The Wireless Application Protocol (WAP) supports USSD. 

UNIFIED PAYMENT INTERFACE (UPI)

  • Unified Payments Interface(UPI) is an instant real-time payment system developed by National Payments Corporation of India facilitating inter-bank transactions.
  • The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform.
  • UPI is built over Immediate Payment Service(IMPS) for transferring funds. Being a digital payment system it is available 24*7 and across public holidays.
  • Unlike traditional mobile wallets, which takes a specified amount of money from user and stores it in its own accounts, UPI withdraws and deposits funds directly from the bank account whenever a transaction is requested.
  • It uses Virtual Payment Address (a unique ID provided by the bank), Account Number with IFS Code,Mobile Number with MMID (Mobile Money Identifier), AadhaarNumber, or a one-time use Virtual ID. An MPIN (Mobile banking Personal Identification number) is required to confirm each payment.

NATIONAL PAYMENT CORPORATION OF INDIA  (NPCI)

NPCI is the umbrella organisation for all retail payment systems in India, which aims to allow all Indian citizens to have unrestricted access to e-payment services.

Founded in 2008, NPCI is a not-for-profit organisation registered under section 8 of the Companies Act 2013. The organisation is owned by a consortium of major banks, and has been promoted by the country’s central bank, the Reserve Bank of India. Its recent work of developing Unified Payments Interface aims to move India to a cashless society  with only digital transactions.

NPCI would function as a hub in all electronic retail payment systems which is evergrowing in terms of varieties of products, delivery channels, number of service providers and diverse technology solutions.

HQ :  MUMBAI

PAYMENT BANK

1). A Payment bank is a type of non-full service niche bank in india

2). On 23rd September 2013, RBI formed a committee on Comprehensive Financial Services for Small Business and Low Income Households under the chairmanship of Nachiket Mor

3). The Nachiket Mor Committee submitted its report on 7th January 2014 recommending the formation of a new category of bank called payments bank

4).On 27th November 2014 RBI released the final guidelines for payments banks

5). 41 entities had applied ot the RBI for payments bank license and an External AdvisoryCommittee (EAC) headed by Nachiket Mor evaluated the applications

6). During the presentation of the Union Budget it was announced that the India Post will use its large network to run payments bank

7). On 19th August 2015 RBI gave in-principle  licenses to 11-entities to establish payments bank with a validity period of 18 months. The following are the 11-entities which were granted licenses

  • Aditya Birla Nuvo
  • Airtel M Commerce Service
  • Cholamandalam Distribution Services
  • Department of Posts
  • FINO pay Tech
  • National Securities Depository
  • Reliance Industries
  • Dilip Shanghvi – founder of sun pharmaceuticals
  • Vijay Shekhar Sharma – CEO of paytm
  • Vodafone M-Pesa, Tech Mahindra

8). The RBI will consider to grant full licenses under Section 22 of the Banking Regulation Act 1949  after it is satisfied that all the conditions have been satisfied the above entities

9). Payments bank can only receive deposits and provide remittances

10). It cannot carry out lending activities

11). The payments bank targets at

  • Migrant labourers
  • Low income households
  • Small businesses
  • Unorganized sector entities

12). The minimum capital requirement to establish a payments bank is Rs.100 crore

13). For the 1st 5 years the stake of the promoter should be 40% minimum

14). The voting rights in payments bank are regulated by the Banking Regulation Act 1949

15). The voting right of any shareholders is capped at 10%, it can be increased to 26% by the Reserve Bank of India (RBI)

16). RBI also regulates any acquisition over than 5%

17). Foreign investments will be allowed in these banks as per the rules of FDI in private banks of India

18). Payments bank can accept utility bills but cannot form subsidiaries to undertake non-banking activities

19).Initially the deposits will be capped at Rs. 1,00,000 per customer but can be raised by the RBI based on the performance of the bank

20). 25% of branches of payments banks should be in the unbanked rural areas

21). A bank will be registered as Public Limited Company under the Companies Act 2013

Bandhan Bank appoints its Chairman, Boards of Directors:

Bandhan Bank Ltd on 9 July 2015 appointed its chairman and Board of Directors. The bank will commence its operations in India from 23 August 2015. It will be the first bank to be established in Eastern India post Independence. Ashok Kumar Lahiri , former Chief Economic Advisor to the Union Government, was appointed as the Chairman of the bank. While, Chandra Shekhar Ghosh, Founder of Bandhan Financial Services Ltd, was appointed as the Managing Director and Chief Executive Officer of the bank. They both will be in the board of directors as well.

Bandhan Bank Logo of Bandhan Bank Ltd

Apart from appointing the directors, the bank unveiled its logo as well, an image of the traditional Indian ‘Diya’. The extensive use of the colour red in the logo is associated with all that’s suspicious. The flame or the Diya symbolizes a ray of hope, a new morning.

Between the red colour and the flame, the Bandhan Bank logo holds the promise of good things to look forward to.

About Bandhan Bank Ltd

Micro-lender Bandhan Financial Services in June 2015 received approval from the Reserve Bank of India to set up a universal bank. ‘BandhanBank will have 630 branches across 27 states. Nearly 247 of these new branches are expected to be in West Bengal.

The bank will have two distinct wings. One will cater to the micro-banking segment, targeting the rural and un-banked areas. The other will look at general banking.

MOBILE BANKING

Mobile banking is a service provided by a bank or other financial  institution that allows its customers  to conduct financial transactions  remotely  using  a mobile device such as a  smartphone  or tablet. Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions on which accounts may be accessed through mobile banking, as well as a limit on the amount that can be transacted.

Transactions through mobile banking  may include obtaining  account  balances and lists of latest transactions, electronic bill payments, and funds transfers between a customer’s or another’s accounts. Banks  may also fix monthly  transaction limit depending on the bank’s own risk perception of  the customer. In atms max value shall be rs.5000 per transaction.

Banks may cap the velocity of such transactions, subject to a maximum value of s.25000 per month, per customer.

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Important Points

1

Allahabad Bank is the oldest bank to start Joint Stock in India.

2

Central Bank of India is the first Indian bank to be fully owned by Indians.

3

Bank of India is the First bank to open its branch outside the india (at London, 1946).

4

Bank of Baroda has the largest number of branches in the abroad.

5

ICICI Bank is the largest Private Sector Bank in India to have Rs. One Trillion Market value. It is the first Universal Bank in India.

6

Punjab National Bank is the first Indian Bank to have unlimited liability.

7

Union Bank of India was inaugurated by Mahatma Gandhi in 1919.

8

Canara Bank has received ISO 9002 certificate to its one of the branch.

9

SBI is the largest commercial bank in India, and Government holds 51% of shares of the SBI.

10

Indian Postal Department has launched a Stamp in the name of the Central Bank of India celeb0rating its 100 years in 2011.

ORGANISATIONS RELATING TO BANKING , FINANCE AND ECONOMY

List of Credit Rating Agencies:

Name

Headquarters

Crisil Limited

Mumbai, Maharashtra

Credit Information Bureau India Limited-(CIBIL)

Mumbai, Maharashtra

Fitch Ratings India Private Ltd.

New York, USA

Equifax

Atlanta, United States

Credit Analysis & Research Ltd. (CARE)

Mumbai, Maharashtra

ICRA Limited

Gurgaon, Haryana

ONICRA

Gurgaon, Haryana

High Mark Credit Information Services

Mumbai, Maharashtra

SME Rating Agency of India Ltd. (SMERA)

Mumbai, Maharashtra

Brickwork Ratings India Private Ltd

Bengaluru, Karnataka

 

INTERNATIONAL MONETARY FUND  (IMF)

This is a international organization  headquartered in Washington, D.C., 189 countries working to foster global monetary cooperation.

 Formed in 1944 at the Bretton Woods Conference  primarily by the ideas of Harry Dexter White  and John Maynard Keynes, it came into formal existence in 1945 with 29 member countries and the goal of reconstructing the international payment system.

It now plays a central role in the management of balance of payments difficulties and international financial crises. 

Countries contribute funds to a pool through a quota system from which countries experiencing balance of payments problems can borrow money. 

1). The International Monetary Fund (IMF) is an international organization of 188 countries working together to

  • Foster global monetary co-operation
  • Secure financial stability
  • Facilitate international trade
  • Promote high employment and sustainable economic growth
  • Reduce poverty around the world

2). It was formed in 1944 at the Bretton Woods Conference

3). Established on 27th December 1945, with 29 member countries initially

4). Headquarters – Washington DC

5). Managing Director – Christine Lagarde

6). Regional offices – Paris and Geneva

7). It was formed with the following objectives

  • To stabilize exchange rates
  • Assist the reconstruction of the world’s international payment system post the World War II

8).Now the role of IMF is much more active managing the economic policy instead of just exchange rates

9). Low income countries can borrow on concessional terms i.e., there is a period of time with no interest rates through the

  • Extended Credit Facility (ECF)
  • Standby Credit Facility (SCF)
  • Rapid Credit Facility (RCF)

10). IMF also provides non-concessional loans which has interest rates as follows

  • Standby Arrangements (SBA)
  • Flexible Credit Line (FCL)
  • Precautionary and Liquidity Line (PLL)
  • Extended Fund Facility (EFF)

11). IMF provides emergency assistance to all its members facing urgent balance of payment needs through the newly introduced Rapid Financing Instrument(RFI)

12).To become a member of IMF, a country must apply and then be accepted by a majority of the existing 188 members

  • Each member is assigned a quota based on its relatve size of their economy upon joining
  • A member’s quota determines the maximum amount of finanacial resources
  • A member must pay its subscription – 25% and the remaining 75% in the member’s own currency called as special Drawing Rights (SDR) and the remaining 75%in the member’s own currency

NEW DEVELOPMENT BANK (BRICS BANK)

1). New Development Bank or the BRICS Development Bank is a multilateral development bank operated by the BRICS states

2). An alternative to the existing

  • World Bank
  • International Monetary Fund

3). Aims to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries

4). Headquarters in Shanghai, China

5). Participant countries:

  • Brazil
  • Russia
  • India
  • China
  • South Africa

6). None of the above country has veto power

7). Each country holds equal number of shares and equal voting rights

8). Idea for detting up NDB-4th BRICS summit 2012, Delhi

9). Leaders agreed to setup NDB -5th BRICS summit 2013, Durban,South Africa

10). BRICS states signed the Agreement of Articles for NDB -6th BRICS summit 2014, Brazil

11). Initial capital for NDB – 100 billion, of which 12.5% to be paid by each member in 1st 7 years

12). Separate agreement for 100 billion reserve currency pool was also signed

13). 1st president of NDB from india – K>V. Kamath –former non-executive chairman of ICICI bank

14). Main organs of Articles of Agreement:

  • Number of shares
  • Shareholding capacity-20%
  • Voting right – 20%
  • Authorized capital – 10 billion USD

ASIAN DEVELOPMENT BANK  (ADB)

The ASIAN development bank is a regional development bank established on 22nd august 1966 to facilitate economic  development of countries in ASIA. which is headquartered in the Ortigas  Center located in Mandaluyong , Metro Manila, Philippine.

The company also maintains 31 field offices  around  the world  to promote social and economic development in Asia. The bank admits the members of the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP, formerly the Economic Commission for Asia and the Far East or ECAFE) and  non-regional  developed  countries. ADB now has 67 members.

  • 48- countries within Asia and the Pacific
  • 19- outside Asia-Pacific region

6). Major Organs of bank

  • Board of Governors
  • Board of Directors and Managers
  • President

7). President – Takehiko Nakao from 2013

PRESIDENTS

 

Takeshi Watanabe

1966-1972

Shiro Inoue

1972-1976

Taroichi Yoshida

1976-1981

Masao Fujioka

1981-1989

Kimimasa Tarumizu

1989-1993

Mitsuo Sato

1993-1999

Tadao Chino

1999-2005

Haruhiko Kuroda

2005-2013

8). Important projects undertaken by Asian Development Bank Afghan Diaspora project.

  • Earthquake and Tsunami Emergency Support Project in Indonesia.
  • Greater Mekong Subregional Program.
  • ROC Ping Hu Offshore Oil and Gas Development.
  • Colombo Harbour Expansion Project.
  • Trans-Afghanistan Gas pipeline Feasibility Assessment.

ASIAN INFRASTRUCTURE INVESTMENT BANK (AIIB)

Important points to know

1). Asian Infrastructure Investment Bank(AIIB) is an international financial institution focused on crediting infrastructure construction in the Asian-Pacific region

2). Was proposed by China in 2013, supported by

  • 37- regional members
  • 20- non- regional members

3). AIIB to compete with

  • World Bank of India
  • Asian Development Bank

4). AIIB headquarters in Beijing, China

5). Initially consisted of

  • 1- Founding member (FM)-Burma
  • 56- Prospected Founding Members(PFM)

6). General Secretary- Jin Liqun-former Finance Minister of China

7). On july 2015, 57 PFMs were supposed to become FMs by

  • Signing the 60-Articles of Agreement in 2015
  • Ratifying the 60- Articles of Agreement in 2015

8). 7-countries from the PFM did not sign the Articles of agreement. They are

  • Denmark
  • Malaysia
  • Kuwait
  • Holland
  • Philippines
  • South-Africa
  • Thailand

9). Shares are based on the size of each member country’s economy

10). 3-categories of votes exist:

  • Basic votes: equal for all members and constitute 18% of the total votes
  • Share votes: equal to the number of shares
  • Founding Member votes:each FM gets 600 votes

11). China is the highest holder with 30.34% and voting share 26.06%

12). India 2nd highest share holder with 8.52% and voting share of 7.5%

 13). Russia 3rd highest share holder with 6.66% and voting share of 5.92%

14). Maldives is the smallest PFM

SHANGHAI COOPERATION ORGANIZATION  (SCO)

  • Shanghai cooperation is a political economic and military organization.
  • Currently it has a 6 members formed as shanghai 5 group except uzbekistan on 26th april 1996.in 2001 after joining of uzbekistan sco accepts india and pakistan as full time members on 9 june 2017 in astana,kazakhastan.
  • SCO to promot  cooperation  in politics ,trade, economy, culture.
  • Countries in sco : now total 8 countries are
  1. RUSSIA
  2. CHINA
  3. TAJAKISTAN
  4. KAZAKHASTAN,                
  5. KYRGYZSTAN,
  6. UZBEKISTAN 7) INDIA   AND   8)  

             HQ  :  BEIJING,CHINA

          SECRETARY GENERAL : RASHID ALIMOV

ASSOCIATION OF SOUTH EAST ASIAN NATIONS (ASEAN)

This association of south east asian nations is a economic and political organization

Aim : Accelerating economic growth, social progress among it’s members,formed

On  8th augest 1967

It has total 10 countries. They are

  • LAOS 6)SINGPORE
  • CAMBODIA 7) THAILAND
  • MALAYSIA 8)INDONESIA
  • MYANMAR 9)BRUNEI
  • PHILLIPPINES 10)VIETNAM

HQ : JAKARTHA,INDONESIA

CHAIRMAN : LEE HSEIN LOONG

SECRETARY GENERAL  :  LE LUONG MINH

SOUTH ASIAN ASSOCIATION OF REGIONAL COOPERATION (SAARC )

This saarc is the regional intergovernmet organization and geopolitical union of nations in south asia,established in 8 th december 1985, in south asia

First summit held in dhaka in  december 1985.

ITS OBJECTIVES ARE

1)to develop economics,collective,self reliance in s. A countries

2)to step up the social and cultural development in s.a countries

It has 8 members

  • INDIA 5)BHUTAN
  • MALDIVES 6)PAKISTAN
  • NEPAL 7)AFGHANISTAN
  • SRILANKA 8) BANGLADESH

HQ :  KATHMANDU, NEPAL

SECRETARY GENERAL : AMJAD B. HUSSAIN

NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT (NABARD)

This  is a apex bank  in  india having headquarters based in Mumbai and all other branches are all over the country.It is set up by the rbi under the chairmanship of shri B.Shivaraman committee. The Bank has been entrusted with “matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India”. NABARD is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion.It was established on 12 july 1982 by a special act by the parliment and its main focus was to uplift rural india by increasing the credit flow for elevation of agriculture and rural non farm sector and completed its 25 yrs on 12 july 2007.

The initial corpus of NABARD was Rs.100 crores. Consequent to the revision in the composition of share capital between Government of India and RBI, the paid up capital as on 31 May 2017, stood at Rs.30,000 crore with Government of India holding Rs.30,000 crore (100% share)

INSURANCE  REGULATORY  AND  DEVELOPMENT  AUTHORITY  (IRDAI)

Insurance  regulatory  and  development  authority  (irdai) is an autonomous apex statutory body which regulates and develops the insurance industry in india.It  was  instituted by a parliment  of india act called IRDAI act  1999  and  duly  passes by  the govt of india.

HQ : HYDERABAD,TELANGANA  where it moved from Delhi in 2001.

IRDAI is a 10-member body including the chairman, five full-time and four part-time members appointed by the government of India.

The functions of the IRDAI are defined in Section 14 of the IRDAI Act, 1999,[2] and include:

  • Issuing, renewing, modifying, withdrawing, suspending or cancelling registrations
  • Protecting policyholder interests
  • Specifying qualifications, the code of conduct and training for intermediaries and agents
  • Specifying the code of conduct for surveyors and loss assessors
  • Promoting efficiency
  • Promoting and regulating professional organisations connected with the insurance and re-insurance industry
  • Levying fees and other charges
  • Inspecting and investigating insurers, intermediaries and other relevant organisations
  • Regulating rates, advantages, terms and conditions which may be offered by insurers not covered by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938)
  • Specifying how books should be kept
  • Regulating company investment of funds

INDIAN BANKS ASSOCIATION (IBA)

Indian Banks’ Association (IBA), formed on 26 September 1946 as a representative body of management of banking in India operating in India – an association of Indian banks and financial institutions based in Mumbai. With an initial membership representing 22 banks in India in 1946, IBA currently represents 237 banking companies operating in India. IBA was formed for development, coordination and strengthening of Indian banking, and assist the member banks in various ways including implementation of new systems and adoption of standards among the members.

Indian Banks’ Association is managed by a managing committee, and the current managing committee consists of one chairman, 3 deputy chairmen, 1 honorary secretary and 26 members. IBA currently represents 173 banking companies operating in india.

 

EXIM BANK

Export–Import Bank of India is the premier export finance institution in India, established in 1982 under Export-Import Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other export credit agencies in the world, Exim Bank India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalisation efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment .

Exim bank is managed by board of directors, which has reprasentatives from the govt,rbi,export credit guarantee corporation of india,a financial institution,public sector banks.

HQ :MUMBAI

INDUSTRIAL DEVELOPMENT BANK OF INDIA (IDBA)

The Industrial Development Bank of India (IDBI) was established in 1964 under an Act of Parliament as a wholly owned subsidiary of the Reserve Bank of India. In 1976, the ownership of IDBI was transferred to the Government of India and it was made the principal financial institution for coordinating the activities of institutions engaged in financing, promoting and developing industry in India. IDBI provided financial assistance, both in rupee and foreign currencies, for green-field projects as also for expansion, modernisation and diversification purposes.

It is currently has 3817 ATMs, 1995 branches, including one overseas branch at Dubai, and 1382 centers.

   DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION (DICGC)

Deposit insurance and credit guarantee corporation (DICGC) is a subsidiary of RBI.It was established on 1961 under DICGC act 1961 for the purpose  of  providing  insurance  of  deposits  and  guaranteeing of credit facilities.DICGC insures all bank  deposits, such as  saving, fixed, current , recurring deposits   for to the limit of rs. 1,00,000 .

All  commercial  banks  including  branches  of  foreign  banks functioning  in  india, local  area  banks and regional  rural  banks  are  insured  by  the  DICGC.

Each  deposit or  in a  bank  is  insured  upto  a  maximum of rs.1,00,000 for both  principal  and  interest amount  held  by  him  in  the  same  capacity.

  • Deposit Insurance and Credit Guarantee Corporation (DICGC) is a subsidiary of Reserve Bank of India (RBI) established on July 15, 1979 under Deposit Insurance and Credit Guarantee Corporation Act, 1961 for the purpose of providing insurance of deposits and guaranteeing of credit facilities.
  • Objective – to provide for the benefit of depositors in bank, insurance against the loss of all of their deposits in all branches of a bank to a maximum of Rs. 100,000
  • Head Office – Mumbai
  • It has four branches in Delhi, Chennai, Kolkata and Nagpur
  • The management of the Corporation consists of a Board of Directors, of which a Deputy Governor of the RBI is the Chairman. The Board consist o fthe following members besides the Chairman
  • One Officer (normally in the rank of Executive Director) of the RBI
  • One Officer from the Central Government
  • Five Directors nominated by the Central Government in consultation with the RBI
  1. Three of whom are persons having special knowledge of commercial banking, insurance, commerce, industry or finance
  2. Two of whom shall be persons having special knowledge of, or experience in co- operative banking or co-operative movement
  • Four Directors, nominated by the Central Government in consultation with the RBI, having special knowledge or practical experience in respect of accountancy, agriculture and rural economy, banking, co-operation, economics, finance, law or small scale industry or any other matter which may be considered to be useful to the Corporation
  • The Corporations maintains the following 2 separate funds which are funded by the premium and guarantee fees received
  • Deposit Insurance Fund
  • Credit Guarantee Fund
  • One more fund called General Fund is maintained which holds the capital of the Corporation, the staff establishment and administrative expenses
  • The following are the types of deposits covered DICGC insures all bank deposits
  • Saving
  • Fixed
  • Current
  • Recurring

           The following are the deposits which are not covered by DICGC

  • Deposits of foreign Governments
  • Deposits of Central / State Governments
  • Inter-bank deposits
  • Deposits of the State Land Development Banks with the State co – operative banks
  • Any amount due on account of and deposit received outside India
  • Any amount which has been specifically exempted by the corporation with the previous approval of the RBI

SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)

Securities and Exchange Board of India (SEBI)

1). The Securities and Exchange Board of India (SEBI) is the regulator for the securities market in India

2). It was established by the Government of India in 1988 as a replacement of the Controller of Capital Issues (CCI) which was the regulatory authority before SEBI

3). CCI acquired its authority from the Capital Issues (Control) Act, 1947

4).Initially SEBI was a non-statutory body without any statutory power but in 1995 the government added statutory power to SEBI through the Securities and Exchange Board of India Act,1992

5).SEBI Headquarters – Bandra Kurla Complex, Mumbai, Maharashtra

6). Chairman – Upendra Kumar Sinha

7). The main objectives of SEBI are as follows

  • Regulating activities of stock exchange
  • To protect the rights of investors and ensure the safety of their investment
  • To prevent malpractices by balancing its self regulating business and statutory regulations
  • To regulate and develop a code of conduct for intermediaries

8). SEBI is responsible for the needs of the following three groups

  • Issuers – SEBI provides a market place in which the issuers can raise finance fairly
  • Investors – SEBI provides protection and supply of accurate and correct information
  • Intermediaries – SEBI provides a competitive professional market

9). The SEBI is managed by its following members

  • The Chairman nominated by Union Government – Upendra Kumar Sinha
  • 2 members – Officers from the Union Finance Ministry
  1. Prakash Chandra – Joint Secretary, Ministry of finance
  2. Naved Masood – Secretary, Ministry of Corporate Affairs
  • 1 member from the Reserve Bank of India – Anand Sinha (Deputy Governor, RBI)
  • 5 members nominated by the government out of them at least 3 shall be full-time members
  1. Nishant Rathi – full-time member
  2. Rajeev Kumar Agarwal – full-time member
  3. Raman – full – time member
  4. K. Jairath Magya- part-time member
  5. Raje Kumar- past-time member

10). Functions of SEBI are as follows

  • Protective Functions are performed to protect the interest of investors and provide safety for their investment
  1. It involves to keep a check on price Rigging i.e., manipulation of prices of securities with the main objective of creating inflation
  2. It involves prevention of insider trading i.e., a person from the company with sensitive information that can affect the prices of securities uses that information to make profit
  3. To prohibit Fraudulent and Unfair Trade Practices i.e., not allowing the companies to make misleading statements which will induce the sale of purchase of securities by any other person
  • Developmental Functions are performed by the SEBI to promote and develop the activities of the stock exchange and increase its business
  1. It promotes training of intermediaries of the securities market
  2. SEBI promotes the activities of the stock exchange by adopting flexible and adoptable ways like internet trading and initial public offer of primary market
  • Regulatory Functions are performed by SEBI to regulate the business in stock exchange
  1. SEBI regulates the working of mutual funds and takeover of companies
  2. It conducts inquiries and audit of stock exchanges
  3. It frames rules and regulations and a code of conduct to regulate the intermediaries

11). The committees formed by SEBI for its functioning are as follows

  • Technical Advisory Committee
  • Committee for review of structure of market infrastructure institutions
  • Advisory Committee for the SEBI Investor Protection and Education Fund
  • Takeover Regulations Advisory Committee
  • Primary Market Advisory Committee (PMAC)
  • Secondary Market Advisory Committee (SMAC)
  • Mutual Fund Advisory committee
  • Corporate Bonds and Securitization Advisory Committee

CRISIL (formerly Credit Rating Information Services of India Limited) is a global analytical company providing ratings, research, emerging trends, forecasts and risk and policy advisory services. CRISIL’s majority shareholder is Standard & Poor’s, a division of mcgraw Hill Financial and provider of financial market intelligence.

HQ: MUMBAI

SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA (SIDBI)

Small Industries Development Bank of India (SIDBI), set up on April 2, 1990 under an Act of Indian Parliament, acts as the Principal Financial Institution for the Promotion, Financing and Development of the Micro, Small and Medium Enterprise (MSME) sector and for Co-ordination of the functions of the institutions engaged in similar activities.

HQ : LUCKNOW,UTTERPRADESH

INVESTMENT INFORMATION AND VREDIT RATING AGENCY LIMITED(ICRA)

ICRA Limited (ICRA) is an Indian independent and professional investment information and credit rating agency. It was established in 1991, and was originally named Investment Information and Credit Rating Agency of India Limited (IICRA India).  It was a joint-venture between Moody’s and various Indian commercial banks and financial services companies. The company changed its name to ICRA Limited, and went public on 13 April 2007, with a listing on the Bombay Stock Exchange and the National Stock Exchange .

HQ : Gurgaon, Haryana

CREDIT INFORMATION BUREAU INDIA  LIMITED (CIBIL)

CIBIL Limited is a credit information company operating in India. It maintains credit files and loans  on 600 million individuals and 32 million businesses. TransUnion is one of four credit bureaus operating in India and is part of TransUnion, an American multinational group .IT WAS FOUNDED IN AUGEST 2000.

HQ : MUMBAI

ASSET RECONSTRACTION COMPANY  INDIA LIMITED (ARCIL)

Asset Reconstruction Company (India) Limited, an asset reconstruction company, offers services for the resolution of non-performing assets upon acquisition from banks and financial institutions in India.

It also offers outsourced business services, such as valuation, legal and technical due diligence, documentation relating to transfer of debt, preparation of resolution strategies, preparation of feasibility/market studies, implementation of resolution strategy and monitoring, identification of strategic investors/buyers for business, enforcement/sale of underlying securities, raising of additional funds for borrowers, integration and maintenance of loan accounts of the borrower,  protection .

HQ : MUMBAI

BOMBAY  STOCK EXCHANGE (BSE)

Established in 1875, the BSE is Asia’s first stock exchange, It claims to be the world’s fastest stock exchange, with a median trade speed of 6 microseconds .The BSE is the world’s 11th largest stock exchange with an overall market capitalization of more than $ 2 Trillion as of July, 2017.ASIA’S  first  stock exchange and one of indias leading exchange group.

HQ :MUMBAI

NATIONAL STOCK EXCHAGE (NSE)

The National Stock Exchange (NSE) is the leading stock exchange in India and the fourth largest in the world  by  equity trading volume in 2015, established in the mid 1990s.according  to  World  Federation  of Exchanges (WFE).It  began  operations  in 1994 and  is ranked  as the largest stock exchange in  India in terms of total and average  daily  turnover for equity shares  every  year since 1995, based  on  annual  reports of SEBI.

HQ :MUMBAI

ASSOCIATED CHAMBERS OF COMMERCE AND INDUSTRY OF INDIA (ASSOCHAM)

The Associated Chambers of Commerce and Industry of India(ASSOCHAM) is one of the apex trade associations of India. The organisation represents the interests of trade and commerce in India, and acts as an interface between industry, government and other relevant stakeholders on policy issues and initiatives. The goal of this organisation is to promote both domestic and international trade, and reduce trade barriers while fostering conducive  environment  for the growth of trade and industry of India.

HQ : NEW DELHI

FEDERATION OF INDIAN CHAMBERS OF COMMERCE AND INDUSTRY (FICCI)

Established in 1927, FICCI is the largest and oldest apex business organisation in India.  Its history is closely interwoven with India’s struggle for independence, its industrialization, and its emergence as one of the most rapidly growing global economies.

A non-government, not-for-profit organisation, FICCI is the voice of India’s business and industry. From influencing policy to encouraging debate, engaging with policy makers and civil society, FICCI articulates the views and concerns of industry. It serves its members from the Indian private and public corporate sectors and multinational companies .

HQ :  NEW DELHI

EXPORT CREDIT GUARANTEE CORPORATION OF INDIA(ECGC)

The ECGC Limited (Formerly Export Credit Guarantee Corporation of India Ltd) is a company wholly owned by the Government of India based in Mumbai, Maharashtra.

 It provides export credit insurance support to Indian exporters and is controlled by the Ministry of Commerce. Government of India had initially set up Export Risks Insurance Corporation (ERIC) in July 1957.

 It was transformed into Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to Export Credit Guarantee Corporation of India in 1983.

ECGC is the fifth largest credit insurer of the world in terms of coverage of national exports

HQ :  MUMBAI

The  central govt.  Launched  three  gold  related  schemes to empowerment of woman. under this three schemes are

  • GOLD MONETIZATION SCHEME
  • SOVEREIGN GOLD BOND SCHEME
  • GOLD COIN AND BULLION SCHEME

GOLD MONETIZATION SCHEME

  • The union Finance Minister Arun Jaitley announced several steps for monetizing gold in the Budget 2015-16 speech, one of them being Gold Monetization Scheme (GMS)
  • As per the Budget speech the stocks of gold in India were estimated to be over 20,000 tonnes but most of this gold is neither traded nor monetized
  • The Gold Monetization Scheme will replace the already existing Gold Deposit and Gold Metal Loan Schemes
  • Objectives of the Gold Monetization Scheme are as follows
  • To mobilize the gold held by households and institution in the country
  • To provide a push up to the gems and jewellery sector in the country by making gold available as raw material on loan from the banks
  • To be able to reduce the dependency on import of gold over time to meet the domestic demand

 Features of GMS are as follows

  • It facilitates the depositors of gold to earn interest on their metal accounts
  • Once the gold is deposited in metal account, it will start earning interest on the same
  • The banks would also be able to monetize the gold under this scheme
  • When a customer takes gold to deposit in a specified bank or agency the purity of the gold is determined by a preliminary test which includes melting the gold and checking with the consent of the customer
  • The minimum quantity of gold that can be deposited by a customer is set as 30 gms to encourage even small depositors
  • The deposited gold will lent by the banks to jewelers at an interest rate little higher than the interest paid to the customers
  • The tenure of gold deposits is likely to be for a minimum of 1 year. The customers will have a choice to take cash or gold on redemption as per the preference stated at the time of deposit

SOVEREIGN GOLD BOND SCHEME :

The government of India recently launched a Sovereign Gold Scheme to provide an alternate option when it comes to owning gold. This scheme aims to reduce the demand for physical gold, thereby keeping a tab on gold imports and utilising resources effectively.

With the Reserve Bank of India issuing these gold bonds, it brings in transparency and trust, providing an avenue wherein people can own gold without having to worry about its storage or safety.

  • Under the Sovereign Gold Bond Scheme, the Reserve Bank of India will issue the bonds on behalf of the Government of India.
  • The bonds will be sold at post offices and banks and issued in denomination of gram. They will issue these bonds on payment of money.
  • Later on, the bonds will be connected to the price of gold. Investors have to pay the bond price in cash.
  • From one person, the Sovereign Gold Bond Scheme would accept a minimum investment of 2 gm gold and a maximum investment of 500 gm in a single fiscal year.
  • The bonds will pay a yearly interest of 2.75% to investors. Interest would be paid semi-annually based on the initial value of investments issued for the year 2015-16.

Eligibility for Sovereign Gold Bond Scheme

Individuals who are keen to participate in the Sovereign Gold Bond Scheme need to satisfy the following simple eligibility criteria.

  • Indian resident– This scheme is open only to Indian residents, with the Foreign Exchange Management Act of 1999 formulating the eligibility criteria.
  • Individuals/groups– Individuals, associations, trusts, HUFs, etc. are all eligible to invest in this scheme, provided they are Indian residents. Under the scheme, one can jointly invest in bonds with other eligible members.
  • Minors – This bond can be purchased by guardians or parents on behalf of minors.

GOLD COIN AND BULLION SCHEME :

Under  this  Gold Coin and Bullion Scheme, the government will issue gold coins, the first ever national  gold coins, which will  have the Ashok  Chakra engraved on them.

Initially, coins  of  5 grams and 10 grams will  be available, soon  to  be  followed by a 20 gram bar.

The  government will make available 15,000 coins of 5 gm, 20,000 coins of 10 gm and 3,750 gold bars. “The Indian Gold coin is unique  in many aspects and will carry advanced anti-counterfeit  features   and  tamper proof  packaging  that  will aid easy re-cycling,” the government said.

These schemes are aimed at bringing the gold lying with citizens into the economy, and at reducing India’s dependence on gold imports.

MUDRA YOJANA SCHEME (MICRO UNITS DEVELOPMENT REFINANACE AGENCY BANK)

Micro Units Development and Refinance Agency Bank (or MUDRA Bank) is a public sector financial institution in India. It provides loans at low rates to micro-finance institutions and non-banking financial institutions which then provide credit to MSMEs. It was launched by Prime Minister Narendra Modi on 8 April 2015.

The bank will classify its clients into three categories and the maximum allowed loan sums will be based on the category:

  • Shishu :  Allowed loans up to rs. 50,000 
  • Kishore:  Allowed loans up to rs. 5 lakh 
  • Tarun :  Allowed loans up to rs. 10 lakh 

Government  has  decided  to  provide an additional  fund  of 1 trillion (US$16 billion) to the market and will be allocated as

  • 40% to shishu
  • 35% to kishor
  • 25% to Tarun

BHIM APP  (Bharat Interface for Money)

 BHIM APP is a mobile app developed by  National Payments Corporation of India (NPCI), based on the Unified Payment Interface(UPI). It was launched by Narendra Modi, the Prime Minister of India, at a Digi Dhan mela at Talkatora Stadium in New Delhi on 30 December 2016. It was named after Dr. Bhimrao R. Ambedkar and is intended to facilitate e-payments directly through banks as part of the 2016 Indian banknote demonetisation and drive towards cashless transactions.

The app supports all Indian banks which use that platform, which is built over the Immediate Payment Service infrastructure and allows the user to instantly transfer money between bank accounts of any two parties.It can be used on all mobile devices.

  • Citi Bank launched instant chat services for its customers named Citibank Online, First such customer support service in India by a Bank.
  • Paytm launched Paytm Mall as a mobile app and online shopping portal
  • HDFC life launched life insurance plan Pragati for low income group families.
  • Dena Bank introduced Radio Frequency Identification Card (RFID) enabled banking cards. It enables branch manager to identify a valued client entering a branch with the card.
  • Airtel Payments Bank and Mastercard launched India’s first online debit card along with a prepaid card, accessible via Myairtel App
  • The State Bank of India has launched a new wealth management product named ‘SBI Exclusif’ in Kochi, Kerala.
  • the Bharat Interface for Money (BHIM) an app, has been finally launched on the iOS platform by NPCI
  • Karnataka VikasGrameen Banks (KVGB) has come up with ‘Bank Sakhi’ innovative scheme for employing women in villages to promote & improve the cashless transactions in rural areas.
  • Kerala Gramin Bank launched FI@School Program to propagate financial literacy among school children
  • HDFC Bank launched chatbot service OnChat to allow users to make payments through Facebook Messenger.
  • HDFC Bank launched IRA (Intelligent Robotic Assistant), a ‘humanoid’ at its Mumbai branch
  • Citi Bank India introduced voice biometrics authentication system for its phone banking clients, replacing current practice of interactive voice response.
  • Indian e­commerce Firm Paytm launched toll­free number 1800­1800­1234 to enable transaction through mobile phones without internet connection
  • ICICI Bank launched EazyPay mobile application for merchants that allows all ­in ­one acceptance payments platform
  • RBL Bank launched ‘Aadhaar Payment Bridge System’ (APBS) for small ticket micro­finance loan disbursement
  • Railways launched IRCTC Rail Connect ­ a new ticketing App to facilitate booking of train tickets in a faster and easier way.
  • Yes Bank launched “Yes Mobile 2.0” as new mobile banking app with multiple more features and support for banking transactions on Apple and Android­based SmartWatches
  • Yes Bank launched SIMsePAY service that allows any account holder to do money transfers, pay utility bills and other mobile banking services, without need for smart phones or internet, based on sim­sleeve technology
  • State Bank of India (SBI) launched State Bank MobiCash Mobile Wallet, in association with Bharat Sanchar Nigam Limited (BSNL).
  • South Indian Bank introduced NRI ­focused mobile banking application SIB Mirror+
  • DCB Bank launched mVisa, a mobile­based payment solution that will make payments at retail outlets much easier
  • India’s first banking robot Lakshmi launched by Kumbakonam based City Union Bank (CUB) in Chennai (Tamil Nadu). Lakshmi will be first on­site huamanoid (robot) in India.
  • Airtel launched India’s First Payments Bank services (in name of Airtel Payment Bank Limited) in Rajasthan.
  • ICICI Bank became first Indian Bank to deploy ‘Software Robotics’
  • Vijaya Bank launched 3 innovative apps ­ VPAYQWIK, Vijaya *99# and V­eConnect+.
  • MobiKwik launched Bubble Pin as an one­step offline payments mode, which allows users to make payments without data connection

AXIS BANK

  • KISAN CARD
  • LIME APP
  • ASHA HOME LOAN

AIRTEL MONEY – AXIS BANK + AIRTEL

STATE BANK OF INDIA

  • EFOREX
  • E-KYC
  • FIRST HOME GROWN INDEX “COMPOSITE INDEX”
  • STATE BANK FREEDOM APP
  • TWITTER HANDLE ACCOUNT
  • YOUTH OF INDIA

“SBI QUEUE” MOBILE APP & IMP APP (INSTANT MONEY TRANSFER

HDFC BANK

  • payZ APP
  • awareness initiative ‘DHANCHAYAT’
  • DDA HOUSING SCHEME 2014
  • CHILLAR

ICICI  BANK

  • DIGITAL BANKING “POCKET”
  • EMI ON DEBIT CARD
  • I-MOBILE APP FOR WINDOWS PHONES
  • INDIAS FIRST TRANSPARENT CREDIT CARD IN ASSOCIATION WITH AMERICAN EXPRESS
  • ICICI APATHON APP—DEVELOPMENT CHANGE
  • TAP AND PAY
  • STUDENT TRAVEL CARD
  • First bank –‘SOFRWARE ROBOTICS’ over 200 robots are performing over

 10 lakh  banking  transactions every working day

UCOPAY WALLET—UCO BANK

ANANYA PROJECT — SYNDICATE BANK

LVB MOBILE APP—LAKSHMI VILAS BANK

UPI APP that Turns Tour Smart Phone Ino A Bank For Easy Transfers—RBI

Kotak bharat mobile banking app—KOTAK MAHINDRA BANK

Instant money transfer — BANK OF INDIA

India’s first credit card exclusively for golf—RBL BANK

Video conferencing — INDUSLND & FEDERAL BANK

M-pesa  — ICICI + VODAPHONE

“Maha  Millionaire”, ”Maha Lakhpathi”—BANK OF MAHARASHTRA

M-WALLET – CANARA BANK

China’s first online banking”webank”—TANCET HOLDINGS

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Abbreviations

Full Forms

1

NABARD

National Bank for Agricultural & Rural Development

2

RTGS        

Real Time Gross Settlement

3

NEFT

National Electronic Fund Transfer

4

NAV

Net Asset Value

5

NPA

Non Performing Asset

6

ASBA

Account Supported by Blocked Amount

7

BIFR

Board of Industrial and Financial Reconstruction

8

CAMELS

Capital Adequacy, Asset Quality, Management Earnings, Liquidity, Systems & Controls

9

BCSBI

Banking Codes & Standard Board of India

10

BIS

Bank for International Settlement

11

BCBS

Basel Committee on Banking Supervision

12

BOP

Balance of Payment

13

BOT

Balance of Trade

14

BPLR

Benchmark Prime Lending Rate

15

CCIL

Clearing Corporation of India Ltd

16

CIBIL

Credit Information Bureau of India Ltd

17

CRISIL

Credit Rating Information Services of India Ltd

18

CBLO

Collateralised Borrowing & Lending Obligation

19

CPI

Consumer Price Index

20

ADR

American Depository Receipts

21

GDR

Global Depository Receipts

22

ALM

Asset Liability Management

23

ARC

Asset Reconstruction Companies

24

FINO

Financial Inclusion Network Operation

25

CTT

Commodities Transaction Tax

26

CRM

Customer Relationship Management

27

KYC

Know Your Customer

28

SLR

Statutory Liquidity Ratio

29

CRR

Cash Reserve Ratio

30

MSF

Marginal Standing Facility

31

REPO

Repurchase Option

32

NBFC

Non Banking Finance Companies

33

OSMOS

Off-Site Monitoring and Surveillance

34

IFSC

Indian Financial System Code

35

BSE

Bombay Stock Exchange

36

NSE

National Stock Exchange

37

SWIFT

Society for Worldwide Interbank Financial Tele Communication

38

FSLRC

Financial Sector Legislative Reforms Commission

39

LAF

Liquidity Adjustment Facility

40

DRT

Debt Recovery Tribunals

41

REER

Real Effective Exchange Rate

42

PPP

Public Private partnership & Purchasing Power Parity

43

QFI

Qualified Foreign Investors

44

AMFI

Association of Mutual Fund in India

45

TIEA

Tax Information Exchange Agreement

46

FTA

Free Trade Agreement

47

GAAR

General Anti Avoidance rue

48

FEMA

Foreign Exchange Management Act

49

FII

Foreign Institutional Investors

50

FINO

Financial Inclusion Network Operation

51

FRBMA

Fiscal Responsibility and Budget

52

GIRO

Government Internal Revenue Order

53

CRAR

Capital to Risk-Weighted Assets Ratio

54

DICGC

Deposit Insurance and Credit Guarantee Corporation

55

FIPB

Foreign Investment Promotion Board

56

EFSF

European Financial Stability Facility

57

DTAA

Double Taxation Avoidance Agreement

58

TIN

Tax Information Network

59

CAD

Capital Account Deficit

60

AML

Anti Money Laundering

61

ALM

Asset Liability Maagement

62

ASBA

Application Supported by Blocked Amount

63

CBS

Core Banking Solution

64

MSF

Marginal Standing Facility

65

OLTAS

Online Tax Accounting System

66

InvITs

Infrastructure Investment Trusts

67

CDR

Corporate Debt Restructuring

 

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Bank name

Headquarters

Heads                 

Taglines

1

Allahabad bank

Kolkata

Rakesh sethi

A tradition of trust

2

Andhra bank

Hyderabad

C.V.R.Rajendran

For all your needs

3

Bank of Baroda

Vadodara

P.S.Jayakumar

India’s international bank

4

Bank of India

Mumbai

M.O.Rego

Relationships beyond banking

5

Bank of Maharashtra

Pune

Sushil Muhnot

One family one bank

6

Bharatiya Mahila Bank

New Delhi

S.M. Swathi

Empowering Women, Empowering India

7

Canara bank

Bangalore

Rakesh Sharma

Together we can

8

Central Bank of India

Mumbai

Rajiv Rishi

‘CENTRAL’ to you since 1911

9

Corporation bank

Mangalore

Sadhu Ram Bansal

Prosperity for all

10

Dena bank

Mumbai

Ashwani kumar

Trusted family bank

11

IDBI

Mumbai

Kishore Kharat

12

Indian bank

Chennai

Mahesh Kumar Jain

Taking banking technology to the Common man

13

Indian overseas bank

Chennai

R. Koteeswaran

Good people to grow with

14

Oriental bank of commerce

Gurgaon

Animesh Chauhan

Where every individual is committed

15

Punjab and Sind bank

Delhi

Jatinder Bir Singh

Where service is a way of life

16

Punjab National Bank

Delhi

Usha Ananthasubramaniam

The name you can bank upon

17

Syndicate bank

Manipal

Arun Srivastava

Faithful friendly

18

UCO BANK

Kolkata

Arun Kaul

Honours your trust

19

Union Bank of India

Mumbai

Arun Tiwari

Good people to bank with

20

United bank of India

Kolkata

P. Srinivas

The bank that begins with you

21

Vijaya bank

Bangalore

Kishore Kumar Sansi

A friend you can bank upon

22

State bank of India

Mumbai

Arundhati Battacharya

Pure banking nothing else

23

State bank of Bikaner and Jaipur

Jaipur

Arundhati Battacharya

The bank with a vision

24

State bank of Hyderabad

Jaipur

Arundhati Battacharya

You can always bank on us

25

State bank of Mysore

Bangalore

Arundhati Battacharya

Working for a better tomorrow

26

State bank of Patiala

Patiala

Arundhati Battacharya

Blending modernity with tradition

27

State bank of Travancore

Tiruvananthapuram

Arundhati Battacharya

A long tradition of Trust

S no

Bank name

CMD

Taglines

Head Quarters

1

Axis Bank

Smt. Shikha Sharma

Everything is the same except the name

Mumbai

2

Catholic Syrian Bank

Mr. Anand Krishnamurthy

Supporrt all the way

Thrissur

3

Bandhan Bank

Shri Chandra Shekhar Ghosh

AapkaBhala, SabkiBhalai

Kolkata

4

City Union Bank

N. Kamakodi

Trust and Excellence since 1904

Kumbakonam, Tamilnadu

5

Dhanalakshmi Bank

Mr.G. Sreeram

Tann. Mann. Dhan

Thrissur

6

Federal Bank

Shri Shyam Srinivasan

Your perfect banking partner

Kochi

7

HDFC Bank

Shri AdityaPuri

We nderstand your world

Mumbai

8

ICICI Bank

Smt. ChandaKochhar

Hum hainna!!

Mumbai

9

Indusind Bank

ShriRomeshSobti

We Make you feel Richer

Mumbai

10

ING Vysya Bank

Shailendra Bhandari

Jiyo easy

Bengaluru

11

Jammu & Kashmir Bank

Parvaiz Ahmad

Serving to Empower

Srinagar

12

Karnataka Bank

Mr. p. JayaramaBhat

Your family bank across India

Mangalore

13

Karur Vysya Bank

Shri k. Venkataraman

Smart way to bank

Karur, Tamilnadu

14

Kotak Mahindra Bank

Shri UdayKotak

Lets make money simple

Mumbai

15

Laxmi Vilas Bank

Parthasarathi Mukherjee

The Changing Face of Prosperity

Karur, Tamilnadu

16

Nainital Bank

Mr. Mukesh Sharma

Banking with personal touch

Nainital, Uttarakhand

17

Saraswat Bank

Shri. S. K. Banerji

Service to the Common Man

Mumbai

18

South Indian Bank

Shri V.G. Mathew

Experience Next Generation Banking

Thrissur

19

Yes Bank

Shri RanaKapoor

Experience our expertise

Mumbai

 

S no

Bank name

Headquarters

Country

Heads

Taglines

1

ABN-AMRO Bank N. V.

Amsterdam

Netherland

Gerrit Zalm

Making more possible

2

American Express Bank

New York

United States

Kenneth Chenault

Do more

3

Bank of Ceylon

Colombo

Sri Lanka

Ronald perera

Bankers to the Nation

4

Bank of NovaScotia

Toranto

Canada

Brian J. porter

You are richer than your think

5

Barclays Bank

London

United Kingdom

John McFarlane

Fluent in Finance

6

BNP Paribas

Paris

France

Jean-Laurent Bonnafe

The Bank for a Changing World

 

RRB  regulated by  –NABARD

DICGC  regulated by—RBI

MICRO-FINANCE  regulated by—RBI

NHB  regulated by—RBI

MSME  regulated by – SIDBI

MUDRA  regulated by  –SIDBI

NBFC regulated by –RBI

BRBNMPL regulated by –RBI

P-notes  regulated (ISSUED BY FII)  by  – SEBI

Credit rating agency regulated by – SEBI

CAPITAL MARKET —SEBI

PAYMENT BANKS—NPCI

NATIONAL BANKS regulated by — OFFICE OF THE COMPTROLLER OF THE CURRENCY (OCC).

Export – Import Bank of India (Exim Bank) — RBI

National Bank for Agriculture and Rural Development (NABARD) — RBI

Small Industries Development Bank of India (SIDBI)–RBI