capsule for sbi po mainsrrbrbi assistant 2015 updated

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GENERAL AWARENESS CAPSULE FOR SBI PO MAINS/LIC/RBI ASSISTANT/IBPS RRB and other Entrances. BANKING AWARENESS CAPSULE

RBI Current Reserve Ratios and Policy Rates

1 Bank Rate 8.25%

2 Repo Rate 7.25%

3 Reverse Repo Rate 6.25%

4 CRR 4%

5 SLR 21.5%

6 MSF 8.25%

The Structure of Indian Banking The structure of the Indian banking system can be categorized in two ways. The first divides the banks into three categories: the Reserve Bank of India, commercial banks and cooperative banks. The second divides the banks into two categories: scheduled banks and non-scheduled banks. In both of these systems of categorization, the Reserve Bank of India, or RBI, is at the center of the banking structure. It holds the reserve capital of all commercial and scheduled banks in the country. Scheduled Banks The eligibility criteria exist for scheduled banks: a) The first of which entails carrying on the business of banking in India. b) All scheduled banks must maintain a reserve capital of 5 lakhs rupees in the Reserve Bank of India. c) These are registered under the second schedule of RBI Act, 1934. Commericial Banks vs. Cooperative Banks Scheduled banks in India fall into two categories: commercial banks and cooperative banks. Commercial banks constitute those banks driven by profit. These banks exist for no other reason than generating capital. Cooperative banks technically constitute cooperative institutions with an elected managing committee, provisions for the protection of members' rights and a set of communally developed and approved by laws and amendments.

RBI AND ITS ROLES 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 or corrections to discipline the economy. It is also known as the bank of last resort.


Establishment: The reserve bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of India Act, 1934. The Central Office of the Reserve Bank of India was initially established in Calcutta but was permanently moved to Mumbai in 1937. Though originally privately owned, since nationalization in 1949, the Reserve Bank is fully owned by the Government of India. Main Functions 1) Monetary Authority: Formulate, implements and monitors the monetary policy. 2) Regulator and supervisor of the financial system: Prescribes broad parameters of banking operations within which the countrys banking and financial system functions. 3) Manager of Foreign Exchange: Manages the Foreign Exchange Management Act, 1999. 4) Issuer of Currency: Issues and exchanges or destroys currency and coins not fit for circulations. 5) Development role: Performs a wide range of promotional functions to support national objectives. 6) Bankers to the Government: performs merchant banking function for the central and the state governments; also acts as their banker. 7) Bankers to banks: maintains banking accounts of all scheduled banks. Cheque It is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of certain person or to the bearer of instrument." Types of Cheque 1. Bearer Cheque or open Cheque When the words "or bearer" appearing on the face of the cheque are not cancelled, the cheque is called a bearer cheque. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. 2. Order Cheque When the word "bearer" appearing on the face of a cheque is cancelled and when in its place the word "or order" is written on the face of the cheque, the cheque is called an order cheque. Such a cheque is payable to the person specified therein as the payee, or to any one else to whom it is endorsed (transferred).

3. Crossed Cheque Crossing of cheque means drawing two parallel lines on the face of the cheque with or without additional words like "& CO." or "Account Payee" or "Not Negotiable". A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee's account. 4. Ante-Dated Cheque If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as "ante-dated cheque". Such a cheque is valid upto 3 months from the date of the cheque. 5. Post-Dated Cheque If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque. 6. Stale Cheque If a cheque is presented for payment after 3 months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank. 7. A self cheque A self cheque is written by the account holder as pay self to receive the money in the physical form from the branch where he holds his account. Terms in reference to BANKING Repo Rate Repo rate is the rate of interest which is levied on Short-Term loans taken by commercial banks from RBI. Whenever the banks have any shortage of funds they can borrow it from RBI. A reduction in the repo rate will help banks to get money at a cheaper rate. When the repo rate increases, borrowing from RBI becomes more expensive. Reverse Repo Rate This is exact opposite of Repo rate. Reverse repo rate is the rate at which commercial banks CHARGE on their surplus funds with RBI. RBI uses this tool when it feels there is too much money floating in the banking system. Banks are always happy to keep money with RBI since their money is in the safe hands with a good interest. An increase in Reverse repo rate can cause the banks to transfer more funds to RBI due to these attractive interest rates.


CRR Rate Cash reserve Ratio (CRR) is the amount of cash funds that the banks have to maintain with RBI. If RBI decides to increase the percent of this, the available amount with the banks comes down. RBI is using this method (increase of CRR rate), to drain out the excessive money from the banks. SLR Rate SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in the form of cash, or gold or government approved securities (Bonds) before providing credit to its customers. SLR is determined and maintained by the RBI in order to control the expansion of bank credit. SLR is determined as the percentage of total demand and time liabilities. Time Liabilities are the liabilities a commercial bank is liable to pay to the customers after a specific time period. SLR is used to control inflation and proper growth. Through SLR tuning, the money supply in the system can be controlled efficiently. 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. MSF Rate:-MSF (Marginal Standing Facility Rate) is the rate at which banks can borrow overnight from RBI. This was introduced in the monetary policy of RBI for the year 2011-2012. Banks can borrow funds through MSF when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-term asset liability mismatches more effectively. Base Rate:-The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except for DRI advances, loans to bank's own employees and loan to banks' depositors against their own deposits. (i.e. cases allowed by RBI). Bridge Loan:- A loan made by a bank for a short period to make up for a temporary shortage of cash. Bridge loan covers this period between the buying the new and disposing of the old one. Credit Authorization Scheme:-Credit Authorization Scheme was introduced in November, 1965 when P C

Bhattacharya was the chairman of RBI. Under this instrument of credit regulation RBI as per the guideline authorizes the banks to advance loans to desired sectors Open Market Operations:-An open market operation is an instrument of monetary policy which involves buying or selling of government securities from or to the public and banks. Moral Suasion:-Moral Suasion is just as a request by the RBI to the commercial banks to take so and so action and measures in so and so trend of the economy. RBI may request commercial banks not to give loans for unproductive purpose which does not add to economic growth but increases inflation. Special Drawing Rights (SDRs):-It is a reserve asset (known as Paper Gold) created within the framework of the International Monetary Fund in an attempt to increase international liquidity, and now forming a part of countries official forex reserves along with gold, reserve positions in the IMF and convertible foreign currencies. ATM: ATMs are Automatic Teller Machines, which do the job of a teller in a bank through Computer Network. ATMs are located on the branch premises or off branch premises. ATMs are useful to dispense cash, receive cash, accept cheques, give balances in the accounts and also give mini-statements to the customers. Bouncing of a cheque: Where an account does not have sufficient balance to honour the cheque issued by the customer, the cheque is returned by the bank with the reason "funds insufficient" or "Exceeds arrangement". This is known as 'Bouncing of a cheque'. Demat Account: The term "demat", in India, refers to a dematerialised account for individual Indian citizens to trade in listed stocks or debentures. Endorsement: When a Negotiable Instrument contains, on the back of the instrument an endorsement, signed by the holder or payee of an order instrument, transferring the title to the other person, it is called endorsement. Merchant Banking : When a bank provides to a customer various types of financial services like


accepting bills arising out of trade, arranging and providing underwriting, new issues, providing advice, information or assistance on starting new business, acquisitions, mergers and foreign exchange. Money Laundering The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source. Mortgage: Transfer of an interest in specific immovable property for the purpose of offering a security for taking a loan or advance from another. It may be existing or future debt or performance of an agreement which may create monetary obligation for the transferor (mortgagor). NABARD: National Bank for Agriculture & Rural Development was setup in 1982 under the Act of 1981. NABARD finances and regulates rural financing and also is responsible for development agriculture and rural industries. NABARD is an apex Development Bank that facilitates credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts.

GAAR: The full form of GAAR is : General Anti-Avoidance Rules. Tax Avoidance is an area of concern across the world. The rules are framed in different countries to minimize such avoidance of tax. It is a set of general rules enacted so as to check the tax avoidance. BPLR: In banking parlance, the BPLR means the Benchmark Prime Lending Rate. However, with the introduction of Base Rate (explained below), BPLR has now lost its importance and is made applicable normally only on the loans which have been sanctioned before the introduction of Base Rate (i.e. July 2010). Prime Lending Rate (PLR): The rate at which banks lend to their best (prime) customers. It is usually less than normal interest rate. Wholesale Banking: Wholesale banking is different from Retail Banking as its focus is on providing for financial needs of industry and institutional clients. National Electronic Funds Transfer System (NEFT): RBI introduced an electronic funds transfer system to facilitate an efficient, secure, economical,

reliable and expeditious system of funds transfer and clearing in the banking sector throughout India, and to relieve the stress on the existing paper-based funds transfer and clearing system called National Electronic Funds Transfer System (NEFT System).

RTGS: RTGS is an acronym that stands for Real Time Gross Settlement. RTGS is a funds transfer system where money is moved from one bank to another in real-time, and on gross basis. When using the banking method, RTGS is the fastest possible way to transfer money. Real-time means that the payment transaction isnt subject to any waiting period. The transaction will be completed as soon as the processing is done, and gross settlement means that the money transfer is completed on a one to one basis without clustering with another transaction. This system is maintained by the RBI, and is available during working days for a given number of hours. Banks using RTGS need to have Core banking to be able to initiate RTGS transactions. Money Market - The money market is a wholesale debt market for low-risk, highly-liquid, short-term instrument. Funds are available in this market for periods ranging from a single day up to a year. This market is dominated mostly by government, banks and financial institutions. Capital Market - The capital market is designed to finance the long-term investments. The transactions taking place in this market will be for periods over a year. Forex Market - The Forex market deals with the multicurrency requirements, which are met by the exchange of currencies. Depending on the exchange


rate that is applicable, the transfer of funds takes place in this market. Financial Inclusion: Financial inclusion or inclusive financing is the delivery of financial services, at affordable costs, to sections of disadvantaged and low income segments of society. 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 upto 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:-1.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 "Call Money".

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 transactions. 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 same 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 instruments 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 states the (1) amount deposited, (2) rate of interest, and (3) minimum period for which the deposit should be maintained without incurring early withdrawal 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 wide range of denominations, can be either discounted or interest-bearing, and usually have a limited or nonexistent secondary market.

Other Financial Terminology Personal Identification Number (PIN):-An account holder has a secret number or code to authorize a transaction or obtain information regarding his or her account often used in conjunction with a plastic card


(ATM or Debit Card), online account access or with a telephone voice response system. Foreign Exchange Reserves:- Foreign-exchange reserves currency central banks gold, special drawing rights International Monetary Fund (also called forex reserves or FX reserves) in a strict sense are 'only' the foreign deposits and bonds held by and monetary authorities. However, the term in popular usage commonly includes foreign exchange and (SDRs), and (IMF) reserve positions. NRI Banking:- Banks allow NRIs to open an NRI account when they complete the account opening formalities. A customer for this purchase a form has to be filled up in which the information soughtly the bank is provided. They can have a NRI Saving Bank Account, Current Account, Fixed Deposits in Indian Rupees, Fixed Deposits in foreign currency, NRO account (Rupee account for crediting income in India) Capital Adequacy Ratio (CAR):- Capital adequacy ratio measures the amount of a banks capital expressed as a percentage of its credit exposure. Globally, the capital adequacy ratio has been developed to ensure banks can absorb a reasonable level of losses before becoming insolvent. Indian banks are expected to maintain a minimum capital adequacy ratio of 9 per cent (Rs 9 as capital for every Rs 100 in loan or asset) Asset Liability Mismatch:-In finance, an assets liabilities assetliability mismatch occurs when the financial terms of an institution's and do not correspond. Initial Public Offerings (IPOs): When a company opens to investments from the public by offering shares for the first time it is known as initial public offer. Application Supported by Blocked Accounts (ASBA) ASBA is an investor friendly service introduced for subscribing to IPOs. Through this facility, the investors funds remain in his account till allotment of shares. Then, the amount equivalent to the shares allotted is deducted from the blocked amount for remitting to the company issuing the shares and the balance amount is available to the investor. Follow on Public Offer (FPO) When a listed company makes another public issue to raise further capital it is known as follow on public offer.

MONEY AND ITS TYPES Money is a thing that is usually accepted as payment for goods and services as well as for the repayment of debts. Money originated as commodity money, but almost all contemporary money systems are based on concept of fiat money. Commodity Money - Commodity money value is derived from the commodity out of which it is made. The commodity itself represents money, and the money is the commodity. For instance, commodities that have been used a Medium of exchange include gold, silver, copper, salt, peppercorns, rice, large stones, etc. Representative Money - is money that includes token coins, or any other physical tokens like certificates, that can be reliably exchanged for a fixed amount/quantity of a commodity like gold or silver. Fiat Money - Fiat money, also known as fiat currency is the money whose value is not derived from any intrinsic value or any guarantee that it can be converted into valuable commodity (like gold). Instead, it derives value only based On government order (fiat) Commercial Bank Money - Commercial bank money or the demand deposits are claims against financial institutions which can be used for purchasing goods and services Mutual Funds Mutual Fund is a company which collects the savings of a large number of investors for investment purposes. Mutual Funds invest in capital markets like stocks and other securities. The professional fund manager selects appropriate securities based on company profile and market conditions for capital appreciation.

Non Banking Financial Companies (NBFCs) Non Banking Financial Company (NBFC) is a company registered under the Companies Act 1956, and is


engaged in the business of loans and advances, acquisition of stocks, debentures, hire purchase. NEGOTIABLE INSTRUMENTS DEFINITION OF NEGOTIABLE INSTRUMENT According to section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument means promissory note, bill of exchange, or cheque, payable either to order or to bearer. TYPES OF NEGOTIABLE INSTRUMENTS There are three types of negotiable instruments which are: 1. Promissory Note 2. Bill of Exchange 3. Cheques 1. Promissory Note: A Promissory Note is a written promise by the debtor to pay a certain amount to the creditor. Section 4 of the Negotiable Instrument Act has defined Promissory Note as an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to or to the order of a certain person. 2. Bill of Exchange: An instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. 3. Cheques: Cheque is a very common form of negotiable instrument. If you have a savings bank account or current account in a bank, you can issue a cheque in your own name or in favor of others, thereby directing the bank to pay the specified amount to the person named in the cheque. Foreign Accounts in India a) NRO A/c (Foreign Tourist) Can foreign tourists open a bank account in India during their short visit? Yes. Foreign tourists during their short visit to India can open a Non-Resident (Ordinary) Rupee (NRO) account (Current / Savings) with any Authorised Dealer bank dealing in foreign exchange. Such account can be opened up to a maximum period of 6 months. What are the documents required for opening such accounts?

Passports and other valid identification proofs are required for opening the accounts. Authorised Dealer banks are also required to follow the Know Your Customer norms while opening of the accounts. What credits can be made to such accounts? Funds remitted from outside India through banking channel or those obtained by sale of foreign exchange brought by the tourists to India can be credited to the NRO account. Can the NRO account be used for making local payments? Yes. Tourists can freely make local payments through the NRO account. All payments to residents exceeding INR 50,000 can be made only by means of cheques / pay orders / demand drafts. b) EEFC A/c What is an EEFC Account and what are its benefits? Ans. Exchange Earners' Foreign Currency Account (EEFC) is an account maintained in foreign currency with an Authorised Dealer i.e. a bank dealing in foreign exchange. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account, so that the account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimizing the transaction costs. Who can open an EEFC account? Ans. All categories of foreign exchange earners, such as individuals, companies, etc. who are resident in India, may open EEFC accounts. What are the different types of EEFC accounts? Can interest be paid on these accounts? Ans. An EEFC account can be held only in the form of a current account. No interest is payable on EEFC accounts. Accounts for NRI/PIO What are the different types of accounts which can be maintained by an NRI/PIO in India? Types of accounts which can be maintained by an NRI / PIO in India:


A. Non-Resident Ordinary Rupee Account (NRO Account) NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. Interest rates offered by banks on NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits. Account should be denominated in Indian Rupees. Permissible credits to NRO account are transfers from rupee accounts of non-resident banks, remittances received in permitted currency from outside India through normal banking channels, permitted currency tendered by account holder during his temporary visit to India, legitimate dues in India of the account holder like current income like rent, dividend, pension, interest, etc., sale proceeds of assets including immovable property acquired out of rupee/foreign currency funds or by way of legacy/ inheritance. NRI/PIO may remit from the balances held in NRO account an amount not exceeding USD one million per financial year, subject to payment of applicable taxes. The limit of USD 1 million per financial year includes sale proceeds of immovable properties held by NRIs/PIOs. B. Non-Resident (External) Rupee Account (NRE Account) 1) NRE account may be in the form of savings, current, recurring or fixed deposit accounts. 2) Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney. 3) Account will be maintained in Indian Rupees. 4) Accrued interest income and balances held in NRE accounts are exempt from Income tax. 5) Authorised dealers/authorised banks may at their discretion allow for a period of not more than two weeks, overdrawings in NRE savings bank accounts, up to a limit of Rs.50,000. 6) Loans up to Rs.100 lakh can be extended against security of funds held in NRE Account either to the depositors or third parties. C. Foreign Currency Non Resident (Bank) Account FCNR (B) Account FCNR (B) accounts are only in the form of term deposits of 1 to 5 years Account can be in any freely convertible currency.

Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B) deposit either to the depositors or third parties. The interest rates are stipulated by the Department of Banking Operations and Development, Reserve Bank of India. DICGC Which banks are insured by the DICGC? Commercial Banks: All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are insured by the DICGC.

What does the DICGC insure? In the event of a bank failure, DICGC protects bank deposits that are payable in India. The DICGC insures all deposits such as savings, fixed, current, recurring, etc. except the following types of deposits. (i) Deposits of foreign Governments; (ii) Deposits of Central/State Governments; (iii)Inter-bank deposits; (iv) Deposits of the State Land Development Banks with the State co-operative bank; (v) Any amount due on account of any deposit received outside India (vi) Any amount, which has been specifically exempted by the corporation with the previous approval of Reserve Bank of India. What is the maximum deposit amount insured by the DICGC? Each depositor in a bank is insured upto a maximum of Rs.1,00,000 (Rupees One Lakh) for both principal and interest amount held by him in the same capacity. Does the DICGC insure just the principal on an account or both principal and accrued interest? The DICGC insures principal and interest upto a maximum amount of Rs. One lakh. Are deposits in different banks separately insured? Yes. If you have deposits with more than one bank, deposit insurance coverage limit is applied separately to the deposits in each bank.


Can the bank deduct the amount of dues payable by the depositor? Yes. Banks have the right to set off their dues from the amount of deposits. The deposit insurance is available after netting of such dues. Can any insured bank withdraw from the DICGC coverage? No. The deposit insurance scheme is compulsory and no bank can withdraw from it. ATM What is an Automated Teller Machine (ATM)? Automated Teller Machine is a computerized machine that provides the customers of banks the facility of accessing their account for dispensing cash and to carry out other financial & non-financial transactions without the need to actually visit their bank branch. What type of cards can be used at an ATM? The ATM debit cards, credit cards and prepaid cards (that permit cash withdrawal) issued by banks can be used at ATMs for various transactions. What are the services/facilities available at ATMs? In addition to cash dispensing ATMs may have many services/facilities enabled by the bank owning the ATM such as: Account information Cash Deposit Regular bills payment Purchase of Re-load Vouchers for Mobiles Mini/Short Statement Loan account enquiry etc. How can one transact at an ATM? For transacting at an ATM, the customer inserts /swipes his/her Card in the ATM and enters his/her Personal Identification Number(PIN) issued by his/her bank. What is Personal Identification Number (PIN)? PIN is the numeric password which is separately mailed / handed over to the customer by the bank while issuing the card. Most banks require the customers to change the PIN on the first use. Can these cards be used at any bank ATM in the country? Is the customer charged for the same? Yes. The cards issued by banks in India may be used at any bank ATM within India. However the savings bank

account holders can transact a maximum of five transactions free at other bank ATMs in a month, which is inclusive of all types of transactions, financial and non-financial, beyond which the customer can be charged by his/her bank. Is there any minimum and maximum cash withdrawal limit per day? Yes, broadly the withdrawal limits are set by the card issuing banks. This limit is displayed at the respective ATM locations.

What steps should a customer take in case of failed ATM transaction at other bank ATMs, where his account is debited? The customer should lodge a complaint with the card issuing bank at the earliest. This process is applicable even if the transaction was carried out at another banks ATM. Is there any time limit for the card issuing banks for re-crediting the customers account for a failed ATM transaction? As per the RBI instructions, banks have been mandated to resolve customer complaints by re-crediting the customers account within 7 working days from the date of complaint. Are the customers eligible for compensation for delays beyond 7 working days? Yes. Effective from July 1, 2011, banks have to pay customers Rs. 100/- per day for delays beyond 7 working days. The compensation has to be credited to the account of the customer without any claim being made by the customer.


BANKING OMBUDSMAN SCHEME 2006 i. The Banking Ombudsman Scheme enables a bank customer for filing of complaints relating to certain services rendered by banks. ii. The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints against deficiency in certain banking services. iii. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under the Scheme. Other Important Points: 4) The Banking Ombudsman does not charge any fee for filing and resolving customers complaints. 5) The maximum compensation which a BO can help a complainant to get is Rs. 10 lakhs. 6) If a complaint is not settled by an agreement within a period of one month, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case. 7) If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority who is the Deputy Governor of the RBI. BANKS IN INDIA AS ON April 2015 1) There are a total of 27 PSBs in India [21 NationaliZed banks + 6 State bank group (SBI + 5 associates)] 2) At present there are 22 Private Banks functioning in India 3) At present there are 56 RRBs (Regional Rural Banks ) functioning in India. 4) At present there are 41 Foreign Banks functioning in India PRIORITY SECTOR LENDING

The salient features of the guidelines are as under:-

(i) Categories of the priority sector: Medium Enterprises,

Social Infrastructure and Renewable Energy will form part

of priority sector, in addition to the existing categories.

(ii) Agriculture: The distinction between direct and indirect

agriculture is dispensed with.

(iii) Small and Marginal Farmers: A target of 8 percent of

ANBC or Credit Equivalent Amount of Off-Balance Sheet

Exposure, whichever is higher, has been prescribed for

Small and Marginal Farmers within agriculture, to be

achieved in a phased manner i.e., 7 percent by March

2016 and 8 percent by March 2017.

(iv) Micro Enterprises: A target of 7.5 percent of ANBC or

Credit Equivalent Amount of Off-Balance Sheet Exposure,

whichever is higher, has been prescribed for Micro

Enterprises, to be achieved in a phased manner i.e. 7

percent by March 2016 and 7.5 percent by March 2017.

(v) There is no change in the target of 10 percent of ANBC

or Credit Equivalent Amount of Off-Balance Sheet

Exposure, whichever is higher, for Weaker Sections.

(vi) Target for Foreign Banks: Foreign Banks with 20

branches and above already have priority sector targets

and sub-targets for Agriculture and Weaker Sections,

which are to be achieved by March 31, 2018 as per the

action plans submitted by them and approved by RBI.

Foreign banks with less than 20 branches will move to

Total Priority Sector Target of 40 percent of ANBC or

Credit Equivalent Amount of Off-Balance Sheet Exposure,

whichever is higher, on par with other banks by 2019-20,

and the sub-targets for these banks, if to be made

applicable post 2020, would be decided in due course.

(vii) Bank loans to food and agro processing units will form

part of Agriculture.

(viii) Export credit: Export credit upto 32 percent of ANBC

or Credit Equivalent Amount of Off-Balance Sheet

Exposure, whichever is higher, will be eligible as part of

priority sector for foreign banks with less than 20

branches. PSL in detail

1. What is meant by Priority Sector? Priority sector refers to those sectors of the economy which may not get timely and adequate credit in the absence of this special dispensation. Typically, these are small value loans to farmers for agriculture and allied activities, micro and small enterprises, poor people for housing, students for education and other low income groups and weaker sections. 2. What are the different categories under priority sector? Priority Sector includes the following categories:

Agriculture Micro, Small and Medium Enterprises Export Credit Education Housing Social Infrastructure Renewable Energy Others


3. What are the Targets and Sub-targets for banks under priority sector?

Categories

Domestic scheduled

commercial banks and

Foreign banks with 20

branches and above

Foreign

banks

with less

than 20

branches

Total

Priority

Sector

40 percent of Adjusted

Net Bank Credit or Credit

Equivalent Amount of

Off-Balance Sheet

Exposure, whichever is

higher.

40 percent

of Adjusted

Net Bank

Credit or

Credit

Equivalent

Amount of

Off-Balance

Sheet

Exposure,

whichever

is higher; to

be achieved

in a phased

manner by

2020

Agriculture 18 percent of ANBC or

Credit Equivalent Amount

of Off-Balance Sheet


higher.

Within the 18 percent

target for agriculture, a

target of 8 percent of

ANBC or Credit

Equivalent Amount of

Off-Balance Sheet

Exposure, to be achieved

in a phased manner

i.e., 7 per cent by

March 2016 and 8 per

cent by March 2017.

Not

applicable

Micro

Enterprises

7.5 percent of ANBC or




higher to be achieved in

Not

Applicable

a phased manner i.e. 7

per cent by March

2016 and 7.5 per cent

by March 2017.

The sub-target for Micro

Enterprises for foreign

banks with 20 branches

and above would be

made applicable post

2018 after a review in

2017.

Advances

to Weaker

Sections

10 percent of ANBC or




higher.

Not

Applicable

(ii) The Total Priority Sector target of 40 percent for

foreign banks with less than 20 branches has to be

achieved in a phased manner as under:-

Financial

Year

The Total Priority

Sector as

percentage of ANBC

or Credit Equivalent

Amount of Off-

Balance Sheet

Exposure,

whichever is higher

2015-16 32

2016-17 34

2017-18 36

2018-19 38

2019-20 40

4. What constitutes Micro and Small Enterprises under priority sector? Bank loans to Micro and Small Manufacturing and Service Enterprises, provided these units satisfy the criteria for investment in plant machinery/equipment as per MSMED Act 2006.


Manufacturing sector

Enterprises Investment in plant and machinery

Micro Enterprises Do not exceed twenty five lakh rupees

Small Enterprises More than twenty fivelakh rupees but does not exceed five crore rupees

Enterprises Investment in equipment

Micro Enterprises Does not exceed ten lakh rupees

Small Enterprises More than ten lakh rupees but does not exceed two crore rupees

5. What is the loan limit for education under priority sector? Loans to individuals for educational purposes including vocational courses upto `10 lakh for studies in India and `20 lakh for studies abroad are included under priority sector.

6. What is the limit for housing loans under priority sector? Loans to individuals up to 28 lakh in metropolitan centres (with population of ten lakh and above) and loans up to 20 lakh in other centres for purchase/construction of a dwelling unit per family provided the overall cost of the dwelling unit in the metropolitan centre and at other

centres should not exceed 35 lakh and 25 lakh respectively.

7. Limits under Social infrastructure

Bank loans up to a limit of 5 crore per borrower for

building social infrastructure for activities namely schools,

health care facilities, drinking water facilities and sanitation

facilities in Tier II to Tier VI centres.

8. Limits under Renewable Energy

Bank loans up to a limit of 15 crore to borrowers for

purposes like solar based power generators, biomass

based power generators, wind mills, micro-hydel plants

and for non-conventional energy based public utilities viz.

street lighting systems, and remote village electrification.

For individual households, the loan limit will be 10 lakh

per borrower.

Miscellaneous Banking Topics What is Asset Management Companies? A company that invests its clients' pooled fund into securities that match its declared financial objectives. Asset management companies provide investors with

more diversification and investing options than they would have by themselves. Mutual funds, hedge funds and pension plans are all run by asset management companies. These companies earn income by charging service fees to their clients. What is Liquidity Adjustment Facility(LAF)? A tool used in monetary policy that allows banks to borrow money through repurchase agreements. This arrangement allows banks to respond to liquidity pressures and is used by governments to assure basic stability in the financial markets. What is Bancassurance? It is the term used to describe the partnership or relationship between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products. Balance of Trade: The value of a countrys exports minus the value of its imports. Unless specified as the balance of merchandise trade, it normally incorporates trade in services, including earnings (interest, dividends, etc.) on financial assets. Balance of Payments: A list of all of a countrys international transactions for a given time period, usually one year. Payments into the country (receipts) are entered as positive numbers, called credits; Payments out of the country (payments) are entered as negative numbers called debits. A single numbers summarize all of a countrys international transactions: the balance of payments surplus. NOSTRO Account: A Nostro account is maintained by an Indian Bank in the foreign countries. VOSTRO Account: A Vostro account is maintained by a foreign bank in India with their corresponding bank. Lead Banking Scheme: Under this scheme all the nationalized banks and few private sector banks were allowed specially and were asked to play the Lead Role. The lead banks act as a leader to bring about co-ordination of cooperative banks, commercial banks and


other financial institutions in their respective demises to bring about rapid economic development. CAMELS: Capital Adequacy, Asset Quality, Management, Earnings Liquidity and Systems. Nationalization of Banks How many banks were nationalized during the first stage in our country? Nineteen banks were nationalized during the first stage on 19.07.1969 A separate act namely Banking companies acquisition and undertakings act 1970 was promulgated in order to commence the banks as nationalized banks The following banks were nationalized during the first stage: a) Central Bank of India; b) Bank of Maharashtra; c) Dena Bank; d) Punjab National Bank; e) Syndicate Bank; f) Canara Bank; g) Indian Bank; h) Indian Overseas Bank; i) Bank of Baroda; j) Union Bank of India; k) Allahabad Bank; l) United Bank of India; m) United Commercial Bank; n) Bank of India. What do you mean by the second stage of bank nationalisation? While fourteen banks were nationalized on 19.7.1969, six banks were once again nationalized during the year 1980 on 15.4.1980 with an objective to achieve the social objectives The following are the banks which were nationalized during 1980: Andhra Bank, Punjab and Sind Bank, New Bank of India, Vijaya Bank, Corporation Bank, Oriental Bank of Commerce New Bank of India subsequently merged with Punjab National Bank

NPA-Non-Performing Asset& SARFAESI It means once the borrower has failed to make interest or principal payments for 90 days, the loan is considered to be a non-performing asset. SARFAESI Act and Rules 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 transferby 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 thesecured creditor, and d) require any person, who has acquired any of the secured assets from the borrower andfrom 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. Other points IMPS: Immediate Payment Service. It is an instant interbank electronic fund transfer service through mobile phones. Both the customers must have MMID (Mobile Money Identifier Number). For this service, we dont need any GPS-enabled cell phones. BCBS: Basel Committee on Banking Supervision is an institution created by the Central Bank governors of the Group of Ten nations. IFSC code: Indian Financial System Code. The code consists of 11 characters for identifying the bank and branch where the account in actually held. The IFSC code is used both by the RTGS and NEFT transfer systems.


MICR Code: Magnetic ink character recognition (MICR) is a character-recognition technology used mainly by the banking industry to ease the processing and clearance of cheques and other documents. It is at the bottom of cheques and other vouchers and typically includes the document-type indicator, bank code, bank account number, cheque number, cheque amount, and a control indicator. MSME and SME: Micro Small and Medium Enterprises (MSME), and SME stands for Small and Medium Enterprises. This is an initiative of the government to drive and encourage small manufacturers to enjoy facilities from banks at concessional rates.

LIBOR: London InterBank Offered Rate. An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. LIBID: London Interbank Bid Rate. The average interest rate at which major London banks borrow Eurocurrency deposits from other banks. ECGC: Export Credit Guarantee Corporation of India. This organisation provides risk as well as insurance cover to the Indian exporters.

SWIFT: Society for Worldwide Interbank Financial Telecommunication. It operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions. STRIPS: Separate Trading for Registered Interest & Principal Securities. CIBIL: Credit Information Bureau of India Limited. CIBIL is Indias first credit information bureau. Whenever a person applies for new loans or credit card(s) to a financial institution, they generate the CIBIL report of the said person or concern to judge the credit worthiness of the person and also to verify their existing track record. CIBIL actually maintains the borrowers history. CRISIL: Credit Rating Information Services of India Limited. Crisil is a global analytical company providing ratings, research, and risk and policy advisory services. Financial inclusion Financial inclusion involves 1) Give formal banking services to poor people in

urban & rural areas. 2) Promote habit of money-savings, insurance,

pension-investment among poor-people. 3) Help them get loans at reasonable rates from

normal banks. So they dont become victims in the hands of local moneylender.

Three important initiatives taken by RBI for financial inclusion: 1) Lead banking scheme (LBS). RBI asked every bank to choose a particular district. That Bank will be responsible for promoting banking services and financial literacy, in that district. 2) No frills account replaced in 2012 by BSBDA- Poor people can open bank accounts with ZERO balance on 10th august 2012 no frills replaced by basic saving bank account 3) Business Correspondents (BC) system. Business correspondents are bank representatives. they personally goes to the area allotted to them and carry out banking. They help villagers to open bank accounts. They help villagers in banking transactions. (deposit

money, take money out of savings account, loans etc.)


The Business Correspondent carries a mobile device.

The villager gives his thumb impression or electronic signature, and get the money.

Business Correspondents get commission from bank for every new account opened, every transection made via them, every loan-application processed etc.

KISAN CREDIT CARD KCC is a credit facility given to the farmers based on the total yield capacity of their agriculture land. The money withdrawn is to be paid back in 1 year attracting 7% interest rate but if the individual pays the credit in time then 3% of interest is paid back to his amount, but this facility is available only for those KCC which has a annual limit of less than or upto 3 lakh. What is Self Help Group(SHG) Self Help Group is a homogeneous group of micro entrepreneurs with affinity among themselves, voluntarily formed to save whatever amount they can conveniently save out of their earnings and mutually agree to contribute to a common fund of the group from which small loans are given to the members for meeting their productive and emergent credit needs at such rate of interest, period of loan and other terms as the group may decide. What do you know by currency chest? Currency chests are operated by RBI so that they can provide good quality currency notes to the public. However, RBI has appointed commercial banks to open and monitor currency chests on behalf of RBI. The cash kept in currency chests is considered to be kept in RBI. What do you mean by narrow banking? It is the system of banking under which the bank accepts deposits from the public and places the funds accepted in 100 percent risk free assets with maturity matching for its liabilities. The bank takes no risk of lending at all. What is a small coin depot? Some bank branches are also authorised to establish Small Coin Depots to stock small coins. The Small Coin Depots also distribute small coins to other bank branches in their area of operation.

What are soiled, mutilated and imperfect banknotes? (i) "soiled note:" means a note which, has become dirty due to usage and also includes a two piece note pasted together wherein both the pieces presented belong to the same note, and form the entire note. (ii) Mutilated banknote is a banknote, of which a portion is missing or which is composed of more than two pieces. (iii) Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed, altered or indecipherable but does not include a mutilated banknote. Unclaimed Deposits and Inoperative/ Dormant Accounts 1. UCBs should carry out an annual review of accounts in which there are no operations (i.e. no credit or debit other than crediting of periodic interest or debiting of service charges) for more than one year. The banks may approach the customers and inform them in writing that there has been no operation in their accounts and ascertain the reasons for the same. 2. If the letters are returned undelivered, they may immediately be put on enquiry to find out the whereabouts of customers or their legal heirs in case they are deceased. 3. A savings as well as current account should be treated as inoperative / dormant if there are no transactions in the account for over a period of two years. REVERSE MORTGAGE LOAN The scheme of reverse mortgage has been introduced for the benefit of senior citizens owning a house but


having inadequate income to meet their needs. Some important features of reverse mortgage are: a) A homeowner who is above 60 years of age is eligible for reverse mortgage loan. It allows him to turn the equity in his home into one lump sum or periodic payments mutually agreed by the borrower and the banker. b) NO REPAYMENT is required as long as the borrower lives, Borrower should pay all taxes relating to the house and maintain the property as his primary residence. c) The amount of loan is based on several factors: borrowers age, value of the property, current interest rates and the specific plan chosen. The valuation of the residential property is done at periodic intervals and it shall be clearly specified to the borrowers upfront. The banks shall have the option to revise the periodic / lump sum amount at such frequency or intervals based on revaluation of property. Settlement--The loan shall become due and payable only when the last surviving borrower dies or would like to sell the home, or permanently moves out. On death of the home owner, the legal heirs have the choice of keeping or selling the house. If they decide to sell the house, the proceeds of the sale would be used to repay the mortgage, with the remainder going to the heirs. As per the scheme formulated by National Housing Bank (NHB), the maximum period of the loan period is 15 years. The residual life of the property should be at least 20 years. Where the borrower lives longer than 15 years, periodic payments will not be made by lender. However, the borrower can continue to occupy. Other Banks which were established- REGIONAL RURAL BANK (RRB): 1) REGIONAL RURAL BANK were set up by an ordinance in 1975, later replaced by RRBs Act, 1976 as pre Banking Commission recommendation in 1975. 2) Father of RRB is M.Swaminathan. 3) The Govt. of India had appointed a Working Group on rural Banks under the chairmanship of Mr. M. Narasimham in 1975. First 5 RRBs were set up on 2 nd Oct.,

4) At the end of June 1985, 183 RRBS with the network of 10,245branches have opened in the states of the Indian union.. 5) SHARE HOLDER CONTRIBUTION IN %: Government of India 50% Sponsor Bank 35% State Government 15% Total 100%. EXIM BANK: The Export-Import (EXIM) Bank of India is the principal financial institution in India for coordinating the working of institution engaged in financing export and import trade. It is a statutory corporation wholly owned by the Government of India. It was established on January 1, 1982 for the purpose of financing, facilitating and promoting foreign trade of India. Capital: The authorised capital of the EXIM Bank is Rs. 200 crore and paid up capital is Rs. 100 crore, wholly subscribed by the Central Government. SIDBI: The Small Industries Development Bank of India (SIDBI) was established as a principal financial institution for the promotion, financing and development of industries in the small scale sector. SIDBI started its operations from 2 April 1990. NATIONAL HOUSING BANK (NHB): 1) The National Housing Bank (NHB), the apex institution of housing finance in India, was set up as wholly owned subsidiary of the Reserve Bank of India. 2) The bank started its operations from July 1988. 3) NHB is a subsidiary bank of Reserve Bank of India. 4) National Housing Bank was established under section 6 of National Housing Bank Act(1987). 5) The headquarters of NHB is in New Delhi.

BASEL-3 NORMS The Basel Committee is the primary global standard-setter for the prudential regulation of banks and provides a forum for cooperation on banking supervisory matters. Its mandate is to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. Stefan Ingves, Governor of Sveriges


Riksbank(SWEDEN), is the chairman CHAIRMAN of the Basel Committee. Basel III Accord - Basel 3 Norms Basel III or Basel 3 released in December, 2010 is the third in the series of Basel Accords. These accords deal with risk management aspects for the banking sector. What does Basel III is all About ? According to Basel Committee on Banking Supervision "Basel III is a comprehensive set of reform measures, developed by the Basel Committee on Banking Supervision, to strengthen the regulation, supervision and risk management of the banking sector". What are the objectives / aims of the Basel III measures ? Basel 3 measures aim to: improve the banking sector's ability to absorb shocks arising from financial and economic stress, whatever the source improve risk management and governance strengthen banks' transparency and disclosures. What are Three Pillars of Basel III Norms? Pillar 1: Minimum Regulatory Capital Requirements based on Risk Weighted Assets (RWAs) : Maintaining capital calculated through credit, market and operational risk areas.(MAINLY THAT CAPITAL WHICH CAN ABSORB RISK.) Pillar 2 : Supervisory Review Process : Regulating tools and frameworks for dealing with peripheral(OUTER) risks that banks face. Pillar 3: Market Discipline : Increasing the disclosures that banks must provide to increase the transparency of banks

What are the Major Features of Basel III ? (a) Better Capital Quality : One of the key elements of Basel 3 is the introduction of much stricter definition of capital. It means capital with the higher loss-absorbing capacity. This in turn will mean that banks will be stronger, allowing them to better withstand periods of stress. (b) Capital Conservation Buffer: Another key feature of Basel iii is that now banks will be required to hold a capital conservation buffer of 2.5% of RWAs. CCB-aims to conserve the capital of banks by making a buffer/reserve FOR CRISIS situation . The aim of asking to build conservation buffer is to ensure that banks maintain a cushion of capital that can be used to

absorb losses during periods of financial and economic stress. (c) Countercyclical Buffer: The countercyclical buffer has been introduced with the objective to increase capital requirements in good times and decrease the same in bad times. The buffer will slow banking activity when it overheats and will encourage lending when times are tough i.e. in bad times. The buffer will range from 0% to 2.5% of RWAs, consisting of common equity/shares or other fully loss-absorbing capital. (d) Minimum Common Equity and Tier 1 Capital Requirements : The minimum requirement for common equity, the highest form of loss-absorbing capital, has been Minimum Common Equity(the highest form of loss-absorbing capital) raised under Basel III from 2% to 4.5% of total risk-weighted assets. The overall Tier 1 capital requirement, consisting of not only common equity but also other qualifying financial instruments, will also increase from the current minimum of 4% to 6%. Although the minimum total capital requirement will remain at the current 8% level. (e) Leverage Ratio: A leverage ratio is the relative amount of capital to total assets (not risk-weighted). This aims to put a cap on swelling of leverage in the banking sector on a global basis. 3% leverage ratio of Tier 1 will be tested before a mandatory leverage ratio is introduced in January 2018. (f) Liquidity Ratios: Under Basel III, a framework for liquidity risk management will be created. A new Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) are to be introduced in 2015 and 2018, respectively. TAGLINES OF DIFFERENT BANKS 1. Allahabad Bank A tradition of trust 2. Andhra bank For all your needs 3. Bank of Baroda Indias international bank 4. Bank of India Relationships beyond banking 5. Bank of Maharashtra One family one bank 6. Canara Bank Together We Can 7. Central bank Central to you since 1911 8. Dena Bank Trusted Family Bank 9. Indian Bank Taking banking technology to the

common man 10. Oriental bank of Commerce Where every

individual is committed


11. Punjab National Bank The name you can bank on

12. State bank of India With you all the way 13. Syndicate bank Your faithful & friendly financial

partner 14. Vijaya Bank A friend you can bank on

RUPAY CARD a) RuPay is the Indian domestic card payment network set up by National Payments Corporation of India (NPCI) at the behest of banks in India. The RuPay project had been conceived by Indian Banks Association (IBA) and had the approval of Reserve Bank of India (RBI). b) National Payments Corporation of India (NPCI) has a plan to provide a full range of card payment services including the RuPay ATM, RuPay Micro-ATM, Debit, Prepaid and Credit Cards which will be accepted in India and abroad, across various channels like POS, Internet, IVR and mobile etc. c) All Public Sector Undertakings (PSU) banks set to join RuPay system by the end of year 2012. d) The government of India had launched Indias first domestic payment card network, RuPay, to compete with Visa Inc and Mastercard Inc. Objectives of RuPay: The Main Objective of the RuPay payment network project is to reduce the overall transaction cost and develop products appropriate for financial inclusion. Headquarters of NATIONALIZED BANKS Allahabad Bank Kolkata Bank of India Mumbai Bank of Maharashtra Pune Canara Bank Bangalore Central Bank of India Mumbai Corporation Bank Mangalore Dena Bank Mumbai Indian Bank Chennai

Indian Overseas Bank Chennai Oriental Bank of Commerce New Delhi Punjab National Bank New Delhi Punjab & Sind Bank New Delhi State Bank of India Mumbai Syndicate Bank Manipal UCO Bank Kolkata Union Bank of India Mumbai United Bank of India Kolkata Vijaya Bank Bangalore Andhra Bank Hyderabad

Bank of Baroda Vadodra

BANKING ABBREVIATIONS 1. PSBs: PUBLIC SECTOR BANKS 2. SNBCs: SCHEDULE NON COMMERCIAL BANKS 3. SENSEX: SENSITIVE INDEX OF STOCK EXCHANGE 4. GNP: GROSS NATIONAL PRODUCT 5. KYC: KNOW YOUR CUSTOMER 6. RTGS: REAL TIME GROSS SETTLEMENT 7. NEFT: NATIONAL ELECTRONIC MONEY TRANSFER 8. EFT: ELECTRONIC FUND TRANSFER 9. CBS: CORE BANKING SOLUTIONS 10. LIBOR: LONDON INTERBANK OFFERED RATE 11. MIBOR: MUMBAI INTERBANK OFFERED RATE 12. MIBID: MUMBAI INTERBANK BID RATE 13. SARFAESI: SECURITISATION AND

RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST

14. CAMELS: CAPITAL ADEQUECY RATIO, ASSET QUALITY, MANAGEMENT OF EFFECTIVENESS, EARNING OF PROFITABILITY, LIQUIDITY, SYSTEM AND CONTROLS

15. CAR: CAPITAL ADEQUECY RATIO 16. FIIs: FOREIGN INSTITUTIONAL INVESTMENTS 17. FDI: FOREIGN DIRECT INVESTMENT 18. IPO: INITIAL PUBLIC OFFERING 19. MICR: MAGNETIC INK CHARACTER READER 20. BIRD: BANKERS INSTITUTE OF RURAL

DEVELOPMENT 21. IBA: INDIAN BANK ASSOCIATION 22. BPLR: BENCHMARK PRIME LENDING RATE 23. ICICI: INDUSTRIAL CREDIT AND INVESTMENT

CORPORATION OF INDIA 24. HDFC: HOUSING DEVELOPMENT FINANCE

CORPORATION 25. IRDA: INSURANCE REGULATORY AND

DEVELOPMENT AUTHORITY 26. SWOT: STRENGETH, WEEKNESSES,

OPPORTUNITIES AND THREATS 27. SWIFT: SOCIETY FOR WORLDWIDE INTERBANK

FINANCIAL TELECOMMUNICATION 28. FERA: FOREIGN EXCHANGE REGULATORY ACT 29. FEMA: FOREIGN EXCHANGE MANAGEMENT ACT 30. CASA: CURRENT AND SAVING ACCOUNT 31. NDTL: NET DEMAND & TIME LIABILITIES 32. NASDAQ: NATIONAL ASSOCIATION FOR

SECURITIES DEALERS AUTOMATED QUOTATIONS 33. CIBIL: CREDIT INFORMATION BUREAU OF INDIA

LIMITED 34. NAV: NET ASSET VALUE 35. ICRA: INDIAN CREDIT RATING AGENCY


36. CARE: CREDIT ANALYSIS AND RESEARCH LIMITED 37. WMAs: WAYS AND MEANS ADVANCES 38. ALM: ASSET LIABILITY MANAGEMENT 39. INFINET INDIAN FINANCIAL NETWORK CURRENT AFFAIRS CAPSULE FINANCIAL & BANKING NEWS 1. RBI approves the merger of Kotak Mahindra-ING

Vysya. 2. Bharti AXA General Insurance launched Smart

Traveller. 3. Dena Bank on 6 April 2015 signed a Memorandum

of Understanding (MoU) with Life Insurance Corporation (LIC) of India to provide insurance cover to all Aadhaar-linked savings account holders of the bank in the age group of 18 to 50 years.

4. PM Narendra Modi launched the Rs 20,000 cr Micro Units Development Refinance Agency (MUDRA) Bank and said , the aim of the bank is to fund the unfunded small entrepreneurs and to strengthen savings habit in the country.

5. IFCI Ltd has now become a state- owned firm with

the government increasing its stake in the infrastructure financing firm to 51.04 per cent.

6. The Reserve Bank notified government's decision to raise foreign direct investment (FDI) limit in the

insurance sector to 49 per cent from the present 26 percent.

7. IndusInd Bank entered into an agreement to acquire Royal Bank of Scotland's Diamond & Jewellery Financing business in India and related deposit portfolio.

8. ICICI Bank in collaboration with Tech Mahindra launched a payment service Tap-n-Pay based on the near-field communications (NFC) technology, enabling customers make over-the-counter payments without using cash.

9. Bharatiya Mahila Bank Ltd has entered into MoUs with New India Assurance Company Ltd and Life Insurance Corporation of India to provide insurance cover to its accountholders.

10. RBI has modulated PSL norms which stipulate that banks operating in India must offer 40% of all loans to farmers, small entrepreneurs and so-called weaker sections of society.

11. Bank of India has partnered with insurance companies New India Assurance Co and Star Union Dai-ichi Life Insurance to roll out the governments social security insurance schemes.

12. Bank of Baroda, a leading Indian public sector bank, has tied up with UAE Exchange to offer an instant cash transfer facility to NRI customers.

13. Bharatiya Mahila Bank (BMB) has won The Asian Banker Achievement Award 2015.

14. The government has raised the limit of foreign direct investment in pension sector to 49 per cent in line with the FDI cap in the insurance sector.

15. Corporation Bank and New India Assurance Company Ltd signed a memorandum of understanding (MoU) for implementing Pradhan Mantri Suraksha Bima Yojana [PMSBY], central government`s scheme to provide security against personal accidental risk and permanent or partial disability.

16. Insurance Australia Group (IAG) has decided to increase its stake in State Bank of Indias general insurance arm to 49 per cent from 26 per cent.

17. IndusInd Bank has agreed to buy Royal Bank of Scotlands diamond and jewellery financing business in India.

18. Country's second largest private sector lender HDFC Bank launched '30-min auto' and '15-min 2-wheeler' loan schemes, for which customers have to provide only their biometric details.

19. Private insurer Bajaj Allianz has launched a weather-based crop insurance scheme for orange


crops in Nagpur, Hingoli and Washim districts of Maharashtra.

20. Government is likely to infuse additional USD 1.8 billion (about Rs 11,500 crore) in public sector banks this fiscal.

21. HDFC Securities, a subsidiary of HDFC BankBSE -0.23 % has launched its mobile trading app in 11 different regional languages.

22. The Reserve Bank of India (RBI) has extended the date to exchange pre-2005 bank notes till December 31, 2015 for third time.

23. Export-Import (Exim) Bank has extended a line of credit of $268.35 million to Tanzania for financing extension of Lake Victoria pipeline.

24. The Reserve Bank of India (RBI) issued the final guidelines for the 6-year and 13-year cash settled Interest Rate Futures (IRF) on government securities with residual maturity of 4-8 years and 11-15 years respectively under the Interest Rate Futures.

25. To help investors and companies in IPOs, SEBI halved the listing time to six days from the date of the public offer and also allowed a larger number of firms to tap the fasttrack route for raising funds.

26. India Brand Equity Foundation (IBEF) in the third week of June 2015 released a report on Intellectual Property Rights (IPRs) filing in India during 2013-14. While Maharashtra topped the list of states and Union Territories (UTs), Bengaluru was the top city in IPR filing.

27. Odisha State Co-op Bank launches Bank on Wheels.

28. The stock of Kaveri Seed Company will see some buying interest as the Reserve Bank of India said foreign portfolio investors could now invest up to 49 per cent of the companys equity base.

29. Bills for postpaid mobile service, piped gas and water supply can now be submitted as proof of address for opening account with banks or other financial institutions.

30. Service tax increased to 14%. 31. RBI lowers repo rate to 7.25 per cent. 32. Non-repatriable investments by NRIs, OCIs and

PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps.

33. EPFO to invest 5% of funds in equity market. 34. The Reserve Bank of India (RBI) has permitted

banks to take control of 51 percent of stake in a company that has failed to recover financial health

even after a period of financial restructuring, typically due to management inefficiency or other factors.

35. ICICI Bank Appoints MK Sharma As Non-Executive Chairman.

36. The Reserve Bank of India (RBI) said that Indian corporates, eligible to raise external commercial borrowings (ECBs), are permitted to issue rupee- linked bonds overseas.

37. Reserve Bank of Indian has allowed non-resident Indians (NRIs) to invest in chit fund to encourage flow of capital into the country.

38. The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of 50 lakh on Future Generali Life Insurance Company.

39. State Bank of India (SBI), the countrys largest bank, has launched SBI eforex, an Internet-based platform that enables customers to book their foreign exchange transactions online.

40. Canara Bank has entered into a memorandum of understanding with Life Insurance Corporation of India for offering the Pradhan Mantri Jeevan Jyoti Bima Yojanainsurance cover to all its eligible customers.

41. An extremely simplified income tax return form will soon replace the controversial 14-page ITR that sought information like all bank accounts and foreign trip details.As it stands, the new ITR forms, including the ITR-1 and ITR-2, require an assessee to furnish the number of bank accounts held by the individual.

42. MoneyGram Ready to Handle Electronic-Mode Remittances in India.

43. The RBI put in place a new framework to check loan fraud including by way of early warning signals at banks and red flagging of accounts, while swindlers will have no access to further banking finance.

44. The Centre's new appointment norms for public sector bank chiefs capping the age at 55 years and mandatory three-year board level experience has come under judicial scrutiny with the Supreme Court.

45. Axis Bank, the country's third largest private sector bank now facilitates instant transfer of money on various social media channels like Whatsapp, Facebook, Twitter, Email list and phone contact list.


46. KV Kamath appointed BRICS bank president. 47. State Bank of India joined its private sector rivals

to launch contactless cards using latest near field technology (NFC).

48. In a move that will promote 'tap and pay' electronic payments, the Reserve Bank of India (RBI) said that bank can allow customers to transact with contactless card upto Rs 2000 without customers punching a separate PIN for authentication.

49. Arun Shrivastava assumed charge as Managing Director & CEO of Syndicate Bank.

50. Top private sector lender ICICI Bank opened its first branch in China, which was inaugurated by Prime Minister Narendra Modi.

51. HDFC Bank has launched 'HDFC Bank Apollo Medical Benefits Card'.

52. As part of Make in India, Finance Minister Arun Jaitely inaugurates Indigenous New Bank Note printing lines at Security Paper Mill in Hoshangabad.

53. ICICI Launches Voice Password Facility for Phone Banking.

54. State-run Corporation Bank cut base rate or minimum lending rate by 0.25 percentage point to 10 per cent, a move which will lead to lower EMIs for its customers.

55. Micro Units Development Refinance Agency (MUDRA) Bank has partnered with 19 state and regional level coordinators to reach those small entrepreneurs who are often cut off from the banking system because of a limited branch presence.

56. State-run lender Bank of India tied up with MasterCard to launch three new cards and also two new banking solutions for its card holders.

57. Aiming to attract overseas funds, government decided that non-repatriable investments by NRIs, OCIs and PIOs will be treated as domestic investments and will not be subject to foreign direct investment caps.

58. The country's largest bank announced a partnership with digital payments firm, PayPal so that the Customers of State Bank of India (SBI) can now use their debit cards on PayPal for buying products from overseas websites.

59. Markets regulator SEBI simplified norms for domestic mutual funds to manage offshore pooled assets, dropping its "20-25 rule" which requires a minimum of 20 investors and a cap of 25 percent on investment by an individual, for funds from low-risk foreign investors.

60. IDBI Bank has decided to roll out e-huts to connect with the rural populace.

INDIA GDP FORECAST 1. The World Bank has predicted a GDP growth rate of

8 per cent for India by 2017 and said that a strong expansion in the country, coupled with favourable oil prices.

2. Moodys, a global ratings agency, raised Indias rating outlook to positive from stable, but retained the Baa3 rating.

3. India's economic growth is projected to surpass that of China's, with the GDP expected to zoom by 7.7 per cent in 2016, according to a UN report.

4. The Asian Development Bank projected India's growth rate to surpass China and improve to 7.8 per cent in next fiscal and further to 8.2 per cent in 2016-17.

5. India pegs 2014-15 GDP growth at 7.4 per cent

6. Indias growth to reach 6.3 per cent in 2016:United Nations World Economic Situation and Prospects (WESP)

7. International Monetary Fund (IMF) projected that India will grow 6.5 per cent in 2016, overtaking China which, it projected, will slowdown to 6.3 per cent.

8. Fitch expects real GDP growth to pick up to 8 per cent in FY16 and 8.3 per cent in FY17.

9. IMF projected GDP growth for India in 2014-15 at - 5.6 % & 6.4 % in 2015

India ranking in different Indexes: 1. India ranks 119 on 2015 FM Global Resilience

Index. 2. India ranked 143rd in Global Peace Index.


3. India is home to the highest number of hungry people in the world, at 194 million, surpassing China, according to United Nations annual hunger report.

4. Indias consumer confidence score rose to 130 followed by Indonesia (123) and Philippines (115).

5. India has emerged as the second-most trusted country in the world in terms of faith reposed on its institutions. The list is topped by UAE with 84 per cent trust.

6. Transparency International India (TII) Corruption Index India ranked 85th among 175(Denmark topped)

7. World Bank - Ease of Doing Business" report - India ranked 142 among the 189 countries (Singapore top)

8. World Economic Forum's 2015 Gender gap index 114 (Iceland top the list followed by Finland & Norway)

9. Global Hunger Index Report 2014: 55 (Mauritius top followed by Thailand and Albania)

10. Human Development Index 2014 135 (Norway top followed by Australia).

11. Intellectual property (IP) environment 2015 29 (US ranked on the top, Thiland last)

12. World Press Freedom Index 2015 - 136 in the list of 180 countries

13. World's best countries for doing business 2014 134

14. Global Peace Index 2014 143 (Iceland top the list while Syria the most violent place)

15. Global Innovation Index 2014 - 76

16. Global Competitiveness Index 2014 -71 (Switzerland is the most competitive economy, followed by Singapore).

Important Committees in News: 1. Bibek Debroy Committee on restructuring of Indian

Railways. 2. The government has set up a high level panel,

headed by former Home Secretary Anil Baijal to suggest a framework to assess CSR activities done by corporates under the companies law.

3. Union Finance Ministry constituted High Level Committee to interact with trade and industry to give recommendations to the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) for issuance of appropriate clarifications by way of circulars, on tax-related issues on a regular basis. The high

level committee will be headed by former Chief Economic Advisor (CEA) Ashok Lahiri.

4. TSR Subramaniam Committee: to review the processes, laws and Acts of the Ministry of Environment, Forests and Climate Change

5. Pratyush Sinha committee: to assess compensation for coal blocks.

6. The former Union Minister Jairam Ramesh designated as the head of Future Earth Engagement Committee, a global research platform panel on sustainable development.

7. T.K. Vishwanathan committee: to provide Bankruptcy code for small and medium enterprises (SMEs).

8. Justice Prabha Sridevan committee: to function as a think-tank to help draft a new National Intellectual Property Rights Policy (National IPR Policy)

9. K.V. Kamath panel: to examine the financial architecture for Micro, Small and Medium Enterprises (MSME) sector.

10. Gopalakrishna Committee: on Capacity Building in Banks and non-Banks

11. G N Bajpai Committee: to review the investment guidelines for national pension system (NPS) schemes in private sector.

12. Scientist Raghunath Anant Mashelkar panel: to recommend best technologies for Prime Minister Narendra Modi's "Swachh Bharat" national sanitation campaign.

13. T S R Subramanian Committee: to review five key green laws concerning protection and conservation of environment, forest, wildlife, water and air among others.

14. H R Khan Committee: to examine the un-claimed amount in PPF, Post Office and Savings Schemes.

15. H Devaraj Committee: reported that most of the deemed universities are not fit for being a university.

16. Sivaramakrishnan Committee: to suggest the place to build the capital city of Andhra Prades

17. Former RBI Governor Bimal Jalan to head the Expenditure Management Commission. The purpose of setting up the commission is to cut-off the spending and review government expenditure to get maximum output.

18. Justice CS Dharmadhikari Committee: recommended complete ban on dance bars in hotels and restaurants.


19. R. Ramanujam Committee - to review, identify and recommend amendment in obsolete laws to further smoothen and simplify the governance.

Important News (India & World): 1. A massive 7.9-magnitude earthquake struck east of

Pokhara in Nepal, causing widespread damage to buildings in the capital Kathmandu.

2. China has hosted the signing ceremony of the Asian Infrastructure Investment Bank (AIIB), a new international financial institution set to rival the World Bank and Asian Development Bank.

3. A ranking of destinations for attractiveness to foreign investors has placed India at the top among 110 countries. China has secured the 65th position and the U.S.

4. As per recently released report by British Petroleum (BP) Energy Company, United States (US) became the worlds largest oil producer in 2014 surpassing Saudi Arabia.

5. Minister of State (MoS) for External Affairs V K Singh inaugurated first India-China Yoga College at Yunnan Minzu University in Kunming, China.

6. India leads regional inflow of Foreign Direct Investment (FDI) in South Asia accounting for $34 billion investment during 2014 and the upward trend is likely to continue this year also, according to a UN report which placed China as the world's largest FDI recipient.

7. India has emerged as the third largest Foreign Direct Investment (FDI) source for United Kingdom (UK) in 2014-15.

8. India has set two Guinness world records (GWR) in Rajpath yoga event held on the eve of first International Yoga Day led by Prime Minister Narendra Modi. First record is the largest number of participants- 35,985 people had participated in largest yoga demonstration at a single venue i.e. Rajpath yoga event.

9. China launched a freight train service between its northeastern city of Harbin and Europe, opening a new trade route to Europe covering a distance of nearly 10,000 kms.

10. The Senate passed the USA Freedom Act, marking the first time in over thirty years that both houses of Congress have approved a bill placing real restrictions and oversight on the National Security Agencys surveillance powers.

11. 26 African countries create TFTA (The Tripartite Free Trade Area): Cape Town to Cairo free-trade

zone that facilitates creation of Africas largest free-trade zone.

12. Seychelles becomes 161st member of World Trade Organisation.

13. David Cameron has returned to Downing Street with the Tories having defied polls and won the general election.

14. President Pranab Mukherjee, on his visit to Russia, has inaugurated a festival of Indian Culture 'Namaste Russia' in Moscow.

15. China overtook the United States as the world's top importer of crude oil for the first time in April 2015.

16. A major earthquake has struck eastern Nepal, near Mount Everest, two weeks after more than 8,000 died in a devastating quake.

17. Prime Minister Narendra Modi announced that India will grant e-visas to Chinese tourists.

18. Minister of State for Information and Broadcasting Rajyavardhan Singh Rathore inaugurated the India Pavilion at the 68th Cannes International Film Festival.

19. Brushing aside objections, Prime Minister Narendra Modi announced granting of e-visa (electronic visa also called visa on arrival) facility to the Chinese nationals in Beijing.

20. India announced a US$ one billion credit line to Mongolia for infrastructure development as they upgraded their ties to Strategic Partnership and agreed to deepen defense cooperation besides exploring potential for tie ups in areas like the civil nuclear sector.

21. Prime Minister Narendra Modi and Bangladesh premier Sheikh Hasina will jointly inaugurate a border 'haat' (market) at Kamalasagar in Tripura's Sipahijala district, which borders Brahmanbaria district of Bangladesh.


Important News States 1. Odisha Government launches Aahar scheme. 2. Andhra Pradesh Cabinet approved Amaravathi as

capital of the State. 3. Punjab Government launches Padho Punjab- Khedo

Punjab Mission. 4. The BJP government in Haryana has decided to give

the status of cabinet minister to yoga guru Ramdev, who was earlier made the states brand ambassador to promote yoga and ayurveda.

5. The Kerala government launched a major campaign "Subodham" to help people in the state overcome alcohol, drug and other substance abuse.

6. The Delhi government gave approval for the setting up of a farmer compensation scheme to be named after Gajender Singh, who allegedly committed suicide during an AAP rally on April 22.

7. West Bengal Chief Minister Mamata Banerjee declared Nadia as the first Open Defecation Free (ODF) district in the country.

8. Nadia district in West Bengal has won the United Nations Public Service Award 2015 in the category of improving delivery of public services for or eliminating open defecation in the district.

9. First phase of Chennai Metro service was inaugurated by Tamil Nadu Chief Minister J Jayalalithaa after she flagged off inaugural train.

10. Tennis legend Steffi Graf was appointed the Ayurveda brand ambassador of Kerala.

11. Indian Railways names Haridwar Mail as Yoga Express.

12. The Andhra Pradesh government has launched `Mee Bhoomi', a digital depository of land records.The portal, http://meebhoomi.ap.gov.in/, makes all land details along with Adangal/Pahani and 1-B details, available to the people.

13. Tamil Nadu chief minister J Jayalalithaa announced a financial aid of Rs 41 crore for farmers in the Cauvery delta region to improve the kuruvai cultivation (short-term cultivation).

14. Essel, Rajasthan government ink Rs 4k crore pact for solar parks.

15. Mahindra World City Jaipur (MWCJ), spread across 3,000 acres on the Delhi-Mumbai corridor, has become the first project in Asia and sixth in the world to commit to a carbon-positive road map as part of the C40 Cities Climate Leadership Group.

16. Chief Minister N. Chandrababu Naidu and his wife Bhuvaneswari performed bhoomi pooja for the new capital Amaravati at Mandadam village in Guntur district.

17. Kapil Mishra to Succeed Jitender Tomar as Delhi's Law Minister.

18. In Haryana's Bibipur village, contest of selfies with daughter to save girl child was organised.

19. In a bid to make Arunachal Pradesh a hundred per cent organic state, the State government decided to launch State Soil Health Mission.The programme aims at proper documentation of soil health and preparation of soil map.

20. Jitan Ram Manjhi announces new party as Hindustani Awam Morcha (HAM).

21. MoUs worth Rs 24,000 cr signed during PM Narendra Modi's visit to Chattisgarh.

22. Punjab becomes first state to issue Soil Health Cards to farmers. Union Ministry of Human Resource Development (MHRD) gave an in-principle approval for setting up an IIIT (Indian Institute of Information Technology) in Nagpur, Maharashtra. It will be the first IIIT to be set up in the state.

23. Mega Food Park Inaugurated at Nalbari, Assam.


New Appointment in India 1. Gulshan Rai takes charge as Indias first cyber

security chief. 2. K.N. Tripathi sworn in as Governor of Mizoram. 3. Mayilsamy Annadurai appointed as Director of ISRO

Satellite Centre (ISAC). 4. President Pranab Mukherjee has appointed the

senior-most Election Commissioner, Dr Nasim Zaidi, as the next Chief Election Commissioner (CEC).

5. Sumit Mazumder, Chairman & Managing Director, TIL Limited, has been elected as the President of CII for the year 2015-16. He succeeds Mr Ajay Shriram as the new President.

6. Arun Kumar Jha was appointed as Chief Executive Officer of Khadi and Village Industries Commission (KVIC), Mumbai.

7. Meenakshi Madan Rai sworn in as the first lady judge of the Sikkim High Court. Her oath of the office was administered by the Governor Srinivas Patil at Ashirwad Hall at Raj Bhavan in Gangtok.

8. Senior diplomat Mohan Kumar, c

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