gk power capsule for sbi associate assistant 2015

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GK POWERCAPSULE FOR SBI ASSOCIATE ASSISTANT EXAM 2015

Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its fourth bimonthly monetary policy statement kept the key policy rate unchanged.

1. RBI issued guidelines for setting up a trading platform for trade receivables

Medium Enterprises - MSME. The Trade Receivables Discounting System equity capital of 25 crore rupees and non

2. RBI relaxed norms for Pre-paid Payment Instrumentsrupees. Highlights of RBI norms on PPI i. The maximum validity of gift cards has been enhanced from one year to three years. Other prwith respect to gift cards will continue. ii. RBI also allowed issue of multiple PPIs by banks from fullymembers. Only one card can be issued to one beneficiary. The central badenominated PPIs for visiting foreign nationals and NRIs.

3. RBI keeps interest rate unchanged i. RBI in its fifth bi-monthly monetary policy statement kept the policy rates unchanged.ii. The headline inflation has been receding steadily, and current readings are below the January 2015 target of 8 per cent as well as the January 2016 target of 6 per cent,'' the RBI said.

4. RBI eased gold imports and scrapped 20:80gold and raise legal shipments into India.

5. Government needs to infuse as much as Rs 2.4 lakh crore ($38.78 billion) into statemeet different kinds of capital requirements including Basel III, provisioning fcentral bank Deputy Governor SS Mundra

6. RBI tightens norms for NBFCs: Tightening norms for nonIndia raised the capital adequacy requirement and the netrisks in the sector. Note: i. At present, the net owned fund (NOF)required to raise it to Rs.1 crore by March, 2016, and toiii. Also, NBFCs primarily engaged in lending against gold jewellery, will have to maintain a minimum Tier I capital (or equity capital) of 12 per cent with effective from April 1 as against existing requirement o

This GK Capsule has been prepared by

document consists of all important news and events of last few

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Current RBI Policy & Reserve Rates:

Repo Rate 8% (Unchanged)

Reverse Repo 7% (Unchanged)

CRR 4% (Unchanged)

SLR 22% (Unchanged)

MSF 9% (Unchanged) Bank Rate 9% (Unchanged)

Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its fourth bimonthly monetary policy statement kept the

News related to RBI

RBI issued guidelines for setting up a trading platform for trade receivables and bills of exchanges of Micro and Small and The Trade Receivables Discounting System - TReDS should have a minimum paid up

equity capital of 25 crore rupees and non-promoters would not hold over 10 per cent of the equity capitaPayment Instruments (PPIs) and doubled the limit to one lakh rupees

has been enhanced from one year to three years. Other pr

RBI also allowed issue of multiple PPIs by banks from fully-KYC compliant bank accounts for dependent or family members. Only one card can be issued to one beneficiary. The central bank also permitted banks to issue rupee denominated PPIs for visiting foreign nationals and NRIs.

monthly monetary policy statement kept the policy rates unchanged.receding steadily, and current readings are below the January 2015 target of 8 per cent

as well as the January 2016 target of 6 per cent,'' the RBI said. 20:80 schemes. The decision to withdraw the 20:80 schemes will c

gold and raise legal shipments into India. Government needs to infuse as much as Rs 2.4 lakh crore ($38.78 billion) into state-owned banks by endmeet different kinds of capital requirements including Basel III, provisioning for asset quality, and additional risks, said a central bank Deputy Governor SS Mundra.

Tightening norms for non-banking financial companies (NBFCs), the Reserve Bank of India raised the capital adequacy requirement and the net owned fund limit, among others, with an objective to mitigate

net owned fund (NOF) requirement is at Rs.25 lakh. In a phased manner, the NBFCs would be required to raise it to Rs.1 crore by March, 2016, and to further double it to Rs.2 crore by 2017.

Also, NBFCs primarily engaged in lending against gold jewellery, will have to maintain a minimum Tier I capital (or equity capital) of 12 per cent with effective from April 1 as against existing requirement o

This GK Capsule has been prepared by Career Power Institute Delhi (Formerly Known as Bank Power). This

document consists of all important news and events of last few months which can come in

Assistant Exam.

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Note: As on 30, Sept, 2014, RBI (Reserve Bank of India) in its fourth bimonthly monetary policy statement kept the

and bills of exchanges of Micro and Small and should have a minimum paid up

promoters would not hold over 10 per cent of the equity capital of TReDS. (PPIs) and doubled the limit to one lakh rupees from 50000

has been enhanced from one year to three years. Other provisions of PPI guidelines

KYC compliant bank accounts for dependent or family nk also permitted banks to issue rupee

monthly monetary policy statement kept the policy rates unchanged. receding steadily, and current readings are below the January 2015 target of 8 per cent

schemes. The decision to withdraw the 20:80 schemes will cut smuggling of

owned banks by end-March 2019 to or asset quality, and additional risks, said a

banking financial companies (NBFCs), the Reserve Bank of owned fund limit, among others, with an objective to mitigate

requirement is at Rs.25 lakh. In a phased manner, the NBFCs would be further double it to Rs.2 crore by 2017.

Also, NBFCs primarily engaged in lending against gold jewellery, will have to maintain a minimum Tier I capital (or equity capital) of 12 per cent with effective from April 1 as against existing requirement of 10 per cent.

(Formerly Known as Bank Power). This

months which can come in SBI Associate

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iv. For deposit and non-deposit taking NBFCs, Capital to Risk (Weighted) Assets Ratio or CRAR, which includes Tier I capital of 7.5 per cent, which have to be raise the Tier I capital to 8.5 per cent by end of March 2016 and 10 per cent by March, 31, 2017.

7. The Reserve Bank has signed a pact with Central Bank of Kenya for exchange of information and supervisory cooperation.

8. RBI Draft Guidelines for Licensing of New Banks in the Private Sector Key points: i. Minimum capital requirement will be Rs 500 crore. ii. Aggregate foreign shareholding in the new bank should not exceed 49 per cent for the first five years. iii. The new bank should open at least 25 per cent of its branches in unbanked rural centres.

9. Non-Banking Financial Company (NBFC): A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold abanking license. Difference between banks & NBFCs: i. NBFC cannot accept demand deposits; ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself; iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks. Key Points i. Minimum capital requirement will be Rs 500 crore. ii. Aggregate foreign shareholding in the new bank should not exceed 49 per cent for the first five years. iii. The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand. iv. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. v. The deposits with NBFCs are not insured.

10. RBI Draft Guidelines for Licensing of Foreign Banks - Foreign banks that want to set up operations in India will have to do so through an independent subsidiary. This means they cannot operate as a branch of the parent bank. Key Points: i. The initial minimum capital for a WoS will be Rs. 500 crore. ii. RBI said that the WoS (wholly-owned subsidiary) will be required to meet Basel-III requirements (9 per cent Tier-I capital) right from Day One. For the first three years, the WoS will have to maintain Tier-I capital at 10 per cent. iii. The Priority Sector Lending (PSL) requirement will be 40 per cent for WoSs, such as domestic scheduled commercial banks iv. The new bank should open at least 25 per cent of its branches in unbanked rural centres.

11. Reserve Bank of India reduced free usage of other bank automated teller machines (ATMs) to 3 per month from 5: Frequent withdrawal of money from ATMs will become expensive from November, with the RBI imposing a limit of 3 transactions per month from ATMs of other banks and 5 from the same bank in six metropolitan cities. Note: A customer will be required to pay a fee of up to Rs 20 for using Automated Teller Machines (ATMs) beyond the permitted numbers of transactions in Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.

12. RBI issued two new categories of banksSmall and Payments which can improve financial inclusion. Important Points: i. The idea of small and payments banks was first proposed by the Nachiket Mor committee on financial inclusion. ii. The minimum paid-up capital requirement of both small banks and payments banks is Rs. 100 crore. iii. The payments bank will have to invest in government securities with a maturity of up to one year. iv. Small banks will offer both deposits as well as loan products. ii. Payments banks will be used only for transaction and deposits purposes. Unlike small banks, payments banks cant lend money to people.


iii. Payments Banks cannot set up subsidiaries to undertakeiv. Hence, payments banks will offer only a limited range of products such as acceptance of demand deposits and remittance of funds. v. Those eligible to set up a small bank include resident indfinance, companies and societies, NBFCs, microfinance institutions and local area banks. v. Of the minimum capital, the guidelines said, the promoters' initial minimum contribution will be be locked in for a period of 5 years. vi. The Reserve Bank of India has issued final norms for payment banks and small finance banks that would allow mobile firms and supermarket chains, to enter the banking arena to cater to individuals and smvii. The move aims at deepening financial inclusion and boost saving habits.Services, Magma Fincorp and Muthoot Financesmall banks. viii. The Department of Posts, Bharti Airtel, Vodafone India, Tata Teleservices, Western Union and online digital payment players such as Paytm, Oxigen and MobiKwikwill have to apply by January 16, 2015

Key activities i. The small bank will primarily undertake basic banking activities of and under-served sections, including small business units, small and margunorganised sector entities. ii. Small banks will be required to maintain a minimum capital adequacy ratio of 15 per cent of the loans on a continuous basis. iii. In the draft guidelines, the RBI had suggested tcontiguous districts in a homogenous States). However, in the final guidelines, these restrictions have been removed. The small bank will be required to extend 75 per cent of its credit tPayment Banks: i. Payments banks can accept depositsentities but cannot provide loans. However, they cannot accept non-resident Indian deposits. ii. The payment bank will initially be restricted to holding a maximum balance of Rs1 lakh per individual customer.iii. While the bank can issue ATM/debit cards, it cannot issue credit cards.It can contract outside liabilities (deposits) but not exceeding 33.33 times (against 20 times in the draft guidelines) its net worth.

13. RBI issues guidelines for NBFCs on lending against shares. Note: According to the guidelines applicable to NBFCs with assetto maintain a loan-to-value (of shares pledged) of 50 per cent and accept only Grouploans of a value more than Rs. 5 lakh.

14. RBI notified the increase in deposit money under Public Provident Fund, PPF15. The Reserve Bank of India (RBI) issued draft guidelines for implementation of

an 'anytime anywhere' bill payment system: Note: i. Bharat Bill Payment System is intended for the implementation of a unified bill payment system acroscountry. This integrated bill payment system will comprise of two entities:i. Entity operating at Bharat Bill Payment System (BBPS) will be setting up the standards related to payments, clearance and settlement process ii. Second entity would be Bharat Bill Payment Operating Units (BBPOUs). It will be carrying out the operations in adherence to the standards fixed by BBPS.iii. Authorised entities such as agents, banks, service providers, payment gateways would be the participants at the Bharat Bill Payment System.

16. Raghuram Rajan, the Governor of the Reserve Bank of India (RBI) announced in 2015 after field trials.

17. Reserve Bank of India (RBI) issued the guidelines to allow the minors of age above 10 years toperate savings bank accounts and use other facilities like ATM and cheque books.

SBI in news - SBI to raise Rs.4,000 cr for BPCL's petrochemical plan

i. State-run Bharat Petroleum Corporation Ltd (BPCL) is planning to raise Rs.refinery and to fund its petrochemicals venture, said three banking sources aware of the development.


cannot set up subsidiaries to undertake NBFC business. Hence, payments banks will offer only a limited range of products such as acceptance of demand deposits and

Those eligible to set up a small bank include resident individuals with 10 years of experiencecompanies and societies, NBFCs, microfinance institutions and local area banks.

Of the minimum capital, the guidelines said, the promoters' initial minimum contribution will be

The Reserve Bank of India has issued final norms for payment banks and small finance banks that would allow mobile firms and supermarket chains, to enter the banking arena to cater to individuals and sm

The move aims at deepening financial inclusion and boost saving habits. Shriram Capital, Janalakshmi Financial Services, Magma Fincorp and Muthoot Finance, among others, are expected to throw their hats into the ring to set up

The Department of Posts, Bharti Airtel, Vodafone India, Tata Teleservices, Western Union and online digital payment players such as Paytm, Oxigen and MobiKwik have expressed interest in floating payment banks. Companies

uary 16, 2015, for licences in both categories.

The small bank will primarily undertake basic banking activities of acceptance of deposits and lending to un, including small business units, small and marginal farmers, micro and small industries and

Small banks will be required to maintain a minimum capital adequacy ratio of 15 per cent of the loans on a continuous

In the draft guidelines, the RBI had suggested that small banks would have a restricted area of operations (possibly contiguous districts in a homogenous States). However, in the final guidelines, these restrictions have been removed. The small bank will be required to extend 75 per cent of its credit to the priority sector

accept deposits current and savings bank from individuals, small businesses and other loans. However, they cannot

nt bank will initially be restricted to holding a maximum balance of Rs1 lakh per individual customer.

While the bank can issue ATM/debit cards, it cannot issue credit cards.It can contract outside liabilities (deposits) but not

(against 20 times in the draft

for NBFCs on lending against shares. According to the guidelines applicable to NBFCs with asset size of Rs. 100 crore and above

lue (of shares pledged) of 50 per cent and accept only Group

RBI notified the increase in deposit money under Public Provident Fund, PPF to 1.5 lakh rupees from 1 lakh rupees.e Bank of India (RBI) issued draft guidelines for implementation of Bharat Bill Payment System (BPPS),

'anytime anywhere' bill payment system: Bharat Bill Payment System is intended for the implementation of a unified bill payment system acros

This integrated bill payment system will comprise of two entities: Entity operating at Bharat Bill Payment System (BBPS) will be setting up the standards related to payments, clearance

rat Bill Payment Operating Units (BBPOUs). It will be carrying out the operations in adherence to the standards fixed by BBPS.

Authorised entities such as agents, banks, service providers, payment gateways would be the participants at the Bharat

Raghuram Rajan, the Governor of the Reserve Bank of India (RBI) announced that plastic currency notes will be launched

Reserve Bank of India (RBI) issued the guidelines to allow the minors of age above 10 years toperate savings bank accounts and use other facilities like ATM and cheque books.

SBI to raise Rs.4,000 cr for BPCL's petrochemical plan run Bharat Petroleum Corporation Ltd (BPCL) is planning to raise Rs.4,000crore for the expansion of its Kochi

refinery and to fund its petrochemicals venture, said three banking sources aware of the development.


Hence, payments banks will offer only a limited range of products such as acceptance of demand deposits and

with 10 years of experience in banking and companies and societies, NBFCs, microfinance institutions and local area banks.

Of the minimum capital, the guidelines said, the promoters' initial minimum contribution will be at least 40 per cent, to

The Reserve Bank of India has issued final norms for payment banks and small finance banks that would allow mobile firms and supermarket chains, to enter the banking arena to cater to individuals and small businesses.

Shriram Capital, Janalakshmi Financial , among others, are expected to throw their hats into the ring to set up

The Department of Posts, Bharti Airtel, Vodafone India, Tata Teleservices, Western Union and online digital have expressed interest in floating payment banks. Companies

acceptance of deposits and lending to un-served inal farmers, micro and small industries and

Small banks will be required to maintain a minimum capital adequacy ratio of 15 per cent of the loans on a continuous

hat small banks would have a restricted area of operations (possibly contiguous districts in a homogenous States). However, in the final guidelines, these restrictions have been removed. The

from individuals, small businesses and other

100 crore and above, the NBFCs have lue (of shares pledged) of 50 per cent and accept only Group 1 securities as collateral for

to 1.5 lakh rupees from 1 lakh rupees. Bharat Bill Payment System (BPPS),

Bharat Bill Payment System is intended for the implementation of a unified bill payment system across the

Entity operating at Bharat Bill Payment System (BBPS) will be setting up the standards related to payments, clearance

rat Bill Payment Operating Units (BBPOUs). It will be carrying out the operations in

Authorised entities such as agents, banks, service providers, payment gateways would be the participants at the Bharat

that plastic currency notes will be launched

Reserve Bank of India (RBI) issued the guidelines to allow the minors of age above 10 years to independently open and

4,000crore for the expansion of its Kochi refinery and to fund its petrochemicals venture, said three banking sources aware of the development.


Ii. BPCL is planning to diversify into downstream petrochemicals with an investment of Rs.4,588crore by using pr State Bank of India to launch Islamic equity fund

i. State-owned bank will launch an Islamic equity fund next month aimed primarily at the country's 170 million Muslims.SEBI recently allowed the governmentSharia funds. Note:India is only the second country outside the Islamic world where a stateSharia-compliant fund. The U.K. issued sovereign Islamic bonds in June.

SBI launches first homegrown economicIndex that will primarily track manufacturing activity and offer a forward

SBI Online were among the three most searched words on the internet search engine in SBI signed 500 million dollar Line of Credit with Export SBI, celebrated 150 years of its operations in Sri Lanka SBI launches mPassBook facility on its smartphone application anywhere' mobil SBI lend $ 1 billion to Adani Group to build Australian coal mine which it aims to build by end

Group Gautam Adani. SBI Cards ties up with Future Group company Fashion at Big Bazaar (FB

Styleup.

ICICI Bank was the first Indian Bank to provide

facility. ICICI Bank was the first Bank to provide Bank of Baroda has the maximum number of overseas bra SBI (State Bank of India) has the total number of maximum branches

and holds 2nd position in the world. India's first "talking" Automated Teller Machine (ATM) launched by

was launched in Ahmedabad (Gujarat). RBI to issue Rs 10 plastic currency notes in 5 cities:

Note: First plastic notes issued by Australia in 1988. RuPay is an Indian domestic card scheme conceived and launched by the National Payments

RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa in India.

India's first non-bank owned ATM (White Label ATMs) opens in Maharashtra: Solutions Ltd, a wholly owned subsidiary of Tata Communications Ltd, opened first White Label ATM at Chandrapada in Thane district, in Maharashtra.

Banking topics in news

NPAs (Non Performing Assets): i. A mortgage in default would be considered nonii. The lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets werepledged, the lenders might write-off the asset as a b

Debt recovery tribunal (DRT- A court for such cases) SARFAESI ACT - In 2002, Govt. gave banks a lifeline called as

Financial Assets and Enforcement of security interest Act)i. With this Act bank has the power to take possession of the owners mortgaged property or can transfer this to some other ownership.

What bank will do with the acquired propei. Bank can use this for their own purpose like , opening a new branch on it, installing of ATMs etc.ii. Bank can advertise in newspapers for the auction of the property acquired and could auction them on any pre decided day.iii.Bank can sell the property to ARC (Asset Reconstruction Company), these are registsuch assets from banks and sell them at higher prices to gain profits.

Goods and Services Tax - i. It is an indirect tax that will lead to the abolition ofservice tax, and value-added tax (VAT). Both the stateservices produced in India or imported into the coii. Exports will not be subject to GST. Direct taxes, such as income tax, corporate tax and capital gains


Ii. BPCL is planning to diversify into downstream petrochemicals with an investment of Rs.4,588crore by using prState Bank of India to launch Islamic equity fund

owned bank will launch an Islamic equity fund next month aimed primarily at the country's 170 million Muslims.SEBI recently allowed the government-owned State Bank of India BSE 0.41 % and

India is only the second country outside the Islamic world where a statecompliant fund. The U.K. issued sovereign Islamic bonds in June.

SBI launches first homegrown economic indicator the SBI Monthly Composite Indexthat will primarily track manufacturing activity and offer a forward-looking economic trends.

SBI Online were among the three most searched words on the internet search engine inSBI signed 500 million dollar Line of Credit with Export-Import Bank of Korea (Korea Eximbank). SBI, celebrated 150 years of its operations in Sri Lanka on 13/Sept/2014.

facility on its smartphone application anywhere' mobile application, for its retail banking users.to Adani Group to build Australian coal mine which it aims to build by end

company Fashion at Big Bazaar (FBB) to offer a co

Modern Banking Facts:

was the first Indian Bank to provide internet banking

was the first Bank to provide Mobile ATM. has the maximum number of overseas branches.

SBI (State Bank of India) has the total number of maximum branches

Teller Machine (ATM) launched by Union Bank of India

RBI to issue Rs 10 plastic currency notes in 5 cities: Kochi, Mysore, Jaipur, Bhubhaneswar and Shimla.Australia in 1988.

is an Indian domestic card scheme conceived and launched by the National Payments RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa

bank owned ATM (White Label ATMs) opens in Maharashtra: Tata CommunicationsSolutions Ltd, a wholly owned subsidiary of Tata Communications Ltd, opened first White Label ATM at Chandrapada in

idered non-performing, after a prolonged period of nonThe lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets were

off the asset as a bad debt and then sell it at a discount to a collections agency.

A court for such cases) A person whose account is declared as NPA

, Govt. gave banks a lifeline called as SARFAESI Act (Securitization aFinancial Assets and Enforcement of security interest Act)

With this Act bank has the power to take possession of the owners mortgaged property or can transfer this to some

What bank will do with the acquired property? Bank can use this for their own purpose like , opening a new branch on it, installing of ATMs etc.Bank can advertise in newspapers for the auction of the property acquired and could auction them on any pre decided day.

(Asset Reconstruction Company), these are registered companies under RBI, they such assets from banks and sell them at higher prices to gain profits.

It is an indirect tax that will lead to the abolition of all other taxes such as, central sales tax, stateadded tax (VAT). Both the state and the central governments will impose GST on almost all goods and

services produced in India or imported into the country. GST. Direct taxes, such as income tax, corporate tax and capital gains


Ii. BPCL is planning to diversify into downstream petrochemicals with an investment of Rs.4,588crore by using propylene.

owned bank will launch an Islamic equity fund next month aimed primarily at the country's 170 million owned State Bank of India BSE 0.41 % and three mutual funds to launch

India is only the second country outside the Islamic world where a state-owned bank is offering a

SBI Monthly Composite Index and the SBI Yearly Composite looking economic trends.

SBI Online were among the three most searched words on the internet search engine in 2014. Import Bank of Korea (Korea Eximbank).

e application, for its retail banking users. to Adani Group to build Australian coal mine which it aims to build by end-2017. Founder of Adani

B) to offer a co-branded CREDIT CARD,

Union Bank of India (UBI) for visually impaired

Kochi, Mysore, Jaipur, Bhubhaneswar and Shimla.

is an Indian domestic card scheme conceived and launched by the National Payments Corporation of India (NPCI). RuPay facilitates electronic payment at all Indian banks and financial institutions, and competes with MasterCard and Visa

Tata Communications Payments Solutions Ltd, a wholly owned subsidiary of Tata Communications Ltd, opened first White Label ATM at Chandrapada in

performing, after a prolonged period of non-payment(90 days). The lender will force the borrower to liquidate any assets that were pledged as part of the debt agreement. If no assets were

ad debt and then sell it at a discount to a collections agency.

A person whose account is declared as NPA

(Securitization and Reconstruction of

With this Act bank has the power to take possession of the owners mortgaged property or can transfer this to some

Bank can use this for their own purpose like , opening a new branch on it, installing of ATMs etc. Bank can advertise in newspapers for the auction of the property acquired and could auction them on any pre decided day.

ered companies under RBI, they buy

all other taxes such as, central sales tax, state-level sales tax, excise duty, and the central governments will impose GST on almost all goods and

GST. Direct taxes, such as income tax, corporate tax and capital gains tax will not be affected.


It will simplify India's tax structure, broaden the tax base, and create a common market across states. This will lead to increased compliance and increase India's tax-to-gross domestic product ratio. iii. The highest rate of taxation under GST will be around 15 per cent in the first year, and eventually come down to 12 per cent in the second year. By comparison, the current rate of the various indirect taxes levied in India amounts to roughly 20 per cent. Goods deemed necessary or of basic importance will be taxed at a lower rate. iv. The GST can be implemented only through a Constitutional Amendment Bill, which means it needs to be approved by not less than two-thirds of the members present and voting in each House of Parliament. The GST must also be ratified by the legislatures of at least one-half of the states. v. States will get one-year time to implement the provisions of Goods and Services Tax (GST) after introduction of the new indirect tax regime from 1st April 2016.

Types of Bank Accounts in India (Deposit Accounts) Traditionally banks in India have four types of deposit accounts, namely Saving Banking Accounts, Current Accounts, Recurring Deposits and, Fixed Deposits. 1. Saving Account - Saving accounts are opened to encourage the people to save money and collect their savings. The saving account holder is allowed to withdraw money from the account as and when required. The interest on Saving Bank Accounts was fixed by RBI and it was fixed at 4.00% on daily balance basis. RBI has deregulated Saving Fund account interest rates and now banks are free to decide the same within certain conditions imposed by RBI. Features of Saving Accounts 1. There is no restriction on the number and amount of deposits. However, in India, mandatory PAN (Permanent Account

Number) details are required to be furnished for doing cash transactions exceeding 50,000.

2. Withdrawals are allowed subject to certain restrictions. 3. A minimum amount has to be kept on saving account to keep it functioning. 2. Current Account - Current Accounts are basically meant for businessmen and are never used for the purpose of investment or savings. Features of Current Accounts (1) The main objective of Current Account holders in opening these account is to enable them (mostly businessmen) to conduct their business transactions smoothly. (2) There are no restrictions on the number of times deposit in cash / cheque can be made or the amount of such deposits; (3) Usually banks do not pay any interest on such current accounts. (4) The current accounts do not have any fixed maturity as these are on continuous basis accounts. (5) Cheque book facility is provided and the account holder can deposit all types of the cheques and drafts in their name or endorsed in their favour by third parties. 3. Recurring Desposit Account: Recurring Deposit is a special kind of Term Deposit offered by banks in India popularly known as RD accounts which help people with regular incomes to deposit a fixed amount every month into their Recurring Deposit account and earn interest at the rate applicable to Fixed Deposits. Features of RD Accounts 1. Recurring Deposit accounts are normally allowed for maturities ranging from 6 months to 120 months 2. These accounts can be opened in single or joint names. Nomination facility is also available. 3. Rate of Interest offered is similar to that in Fixed Deposits. 4. Interest is compounded on quarterly basis in recurring deposits. 4. Fixed Deposit Account (FD) - The account which is opened for a particular fixed period (time) by depositing particular amount (money) is known as Fixed (Term) Deposit Account. The term 'fixed deposit' means that the deposit is fixed and is repayable only after a specific period is over. Under fixed deposit account, money is deposited for a fixed period say six months, one year, five years or even ten years. The money deposited in this account can not be withdrawn before the expiry of period. Features of FD Accounts 1. The main purpose of fixed deposit account is to enable the individuals to earn a higher rate of interest on their surplus funds (extra money). 2. The amount can be deposited only once. For further such deposits, separate accounts need to be opened. 3. Fixed Deposit Account may be opened for a minimum period of 7 days and maximum period of 10 years. 4. The minimum amount required to open a Fixed Deposit is Rs.1000. 5. Withdrawals are not allowed. However, in case of emergency, banks allow to close the fixed account prior to maturity date. In such cases, the bank deducts 1% (deduction percentage many vary) from the interest payable as on that date.


About (BASIC SAVING BANK DEPOSIT ACCOUNT): Under the guidelines issued on August 10, 2012 by RBI: Any individual, including poor or those from weaker section of the society, can open zero balance account in any bank. BSBDA guidelines are applicable to "all scheduled commercial banks in India, including foreign banks having branches in India". ii. The aim of introducing 'Basic Savings Bank Deposit Account' is very much part of the efforts of RBI for furthering Financial Inclusion objectives.

Main Points of BSBDA-Small Accounts:

i. In BSBDA, banks are required to provide free of charge minimum 4 withdrawals, through ATMs ii. Total credits in such accounts should not exceed 1 lakh rupees in a year. iii. Maximum balance in the account should not exceed 50,000 Rs at any time iv. The total of debits by way of cash withdrawals and transfers will not exceed 10,000 rupees in a month v. Foreign remittances cannot be credited to Small Accounts without completing normal KYC formalities v. Small accounts are valid for a period of 12 months initially which may be extended by another 12 months if the person provides proof of having applied for an Officially Valid Document.

ATMs: (Automated Teller Machine): The ATM debit cards, credit cards and prepaid cards (that permit cash withdrawal)

issued by banks can be used at ATMs for various transactions. Use of ATMs of Other Banks:

i. 5 free transactions are permitted per month (inclusive of financial and/or non-financial) at other bank ATMs for Savings Bank Account holders. ii. For transaction beyond this minimum number of transactions, banks charge maximum of Rs 20/ - per transaction. iii. Reserve Bank of India reduced free usage of other bank automated teller machines (ATMs) to 3 per month from 5 from November, in six metropolitan cities - Delhi, Mumbai, Chennai, Bangalore, Kolkata and Hyderabad.

WHITE Label ATMs: ATMs which are owned and operated by non-banking companies are called White Label ATMs.

Note: RBI authorised four entities to operate as WLAs namely Tata Communications Payment Solutions, Prizm Payment Services Pvt. Ltd, Muthoot Finance Limited and Vakrangee Ltd.

Personal Identification Number (PIN) : A Personal Identification Number is a secret numeric password shared between

user and a system that can be use to authenticate the user to the system. 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. ii. 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. iii. IFSC is used by the NEFT system to identify the originating / destination banks / branches and also to route the messages appropriately to the concerned banks / branches. For ex: SBIN0015986 : i. First 4 character SBIN refers to State Bank of India. ii. 0 is a control number. iii. last six characters (015986) represents the SBI branch Jail Road, Hari Nagar New Delhi.

MICR (Magnetic Ink Character Recognition): MICR stands for Magnetic Ink Character Recognition. MICR Code is a 9 numeric digit code which uniquely identifies a bank branch participating in the ECS Credit scheme. MICR code consists of 9 digits e.g 400229128 i. First 3 digits represent the city (400) ii. Next 3 digits represent the bank (229) iii. Last 3 digits represent the branch (128) Note: The MICR Code allotted to a bank branch is printed on the MICR band of cheque leaves issued by bank branches.

Cheque Truncation: i. Truncation is the process of stopping the flow of the physical cheque issued by a drawer at some point with the presenting bank en-route to


the drawee bank branch. ii. In its place an electronic image of the cheque is transmitted to the drawee branch byrelevant information like data on the MICR band, date of presentation, presenting bank, etc.iii. Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the scope for clearing-related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes reconciliation-related and logistics-related problems, thus benefitting the system as a whole.

Bancassurance: The sale of insurance situations; for example, when a bank requirescould purchase the insurance directly from the bank.

Banking Ombudsman Scheme 2006: i. The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of complaints relating to certain services rendered by banks.ii. The Banking Ombudsman is a senior official appointed by the Reserve Baagainst deficiency in certain banking services.iii. All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Cothe Scheme. Other Important Points:

The Banking Ombudsman does not charge any fee The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the

complainant is limited to the amount arising directly out olower.

The Banking Ombudsman may award compensation complaints relating to credit card operations for mental agony and harassment.

If a complaint is not settled by an agreement within a period pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant and the bank, to present their case.

If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmens decision. Appellate Authority is vested with a

If one is aggrieved by the decision, one before the appellate authority.

Deposit insurance and credit guarantee corporation (DICGC)

All commercial banks including branches of foreign banks finsured by the DICGC. Note: Primary cooperative societies

Maximum deposit amount insured by the DICGC (Rupees One Lakh).

Credit Information Bureau (India) Limited: CIBIL collects and maintains records of an individuals payments pertaining to loans and credit cards.Headquarter Mumbai

Coins: The Government of India has the sole right to mint coinsDenominations: Coins in India are presently being issued in denominations of one rupee, two rupees, five rupees and ten rupees.

Currency: Banknotes in India are currently being issued in the denomination ofand Rs1000. These notes are called banknotes as they

Bank Notes in IndiaContemporary Currency notes have 15 languageswhich appear on the reverse of the note. Soiled Notes: Soiled notes are those which have become dirty

and slightly cut. Mutilated Notes: Notes which are in pieces and/or of which


In its place an electronic image of the cheque is transmitted to the drawee branch byrelevant information like data on the MICR band, date of presentation, presenting bank, etc.

Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes

related problems, thus benefitting the system as a whole.

and other similar products through a bank. This can help therequires life insurance for those receiving a mortgagefrom the bank.

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of

complaints relating to certain services rendered by banks. . The Banking Ombudsman is a senior official appointed by the Reserve Bank of India to redress customer complaints

against deficiency in certain banking services. . All Scheduled Commercial Banks, Regional Rural Banks and Scheduled Primary Co-operative Banks are covered under

does not charge any fee for filing and resolving customers complaints.The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the complainant is limited to the amount arising directly out of the act or omission of the bank or Rs 10 lakhs

The Banking Ombudsman may award compensation not exceeding Rs 1 lakh to the complainant only in the case of complaints relating to credit card operations for mental agony and harassment. If 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

If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority against the Banking Ombudsmens decision. Appellate Authority is vested with a Deputy Governor of the RBI.

may, within 30 days of the date of receipt of the award, appeal against the award


All commercial banks including branches of foreign banks functioning in India, local area banks and regional rural banks are Primary cooperative societies are not insured by the DICGC.

Maximum deposit amount insured by the DICGC - Each depositor in a bank is insured upto a maximum of

Credit Information Bureau (India) Limited: is Indias first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individuals payments pertaining to loans and credit cards.

Coins in India

sole right to mint coins. Coins in India are presently being issued in denominations of one rupee, two rupees, five rupees and ten

Currency in India Banknotes in India are currently being issued in the denomination of Rs 10, Rs 20,

Rs1000. These notes are called banknotes as they are issued by the Reserve Bank of India

Bank Notes in India 15 languages on the panel

Soiled notes are those which have become dirty

Notes which are in pieces and/or of which


In its place an electronic image of the cheque is transmitted to the drawee branch by the clearing house, along with relevant information like data on the MICR band, date of presentation, presenting bank, etc.

Cheque Truncation speeds up the process of collection of cheques resulting in better service to customers, reduces the related frauds or loss of instruments in transit, lowers the cost of collection of cheques, and removes

related problems, thus benefitting the system as a whole.

. This can help the consumer in some mortgage loan the consumer

The Banking Ombudsman Scheme enables an expeditious and inexpensive forum to bank customers for resolution of

nk of India to redress customer complaints

operative Banks are covered under

for filing and resolving customers complaints. The amount, if any, to be paid by the bank to the complainant by way of compensation for any loss suffered by the

of the bank or Rs 10 lakhs, whichever is

to the complainant only in the case of

, the Banking Ombudsman proceeds further to pass an award. Before passing an award, the Banking Ombudsman provides reasonable opportunity to the complainant

If one is not satisfied with the decision passed by the Banking Ombudsman, one can approach the appellate authority Deputy Governor of the RBI.

of the date of receipt of the award, appeal against the award


unctioning in India, local area banks and regional rural banks are

Each depositor in a bank is insured upto a maximum of Rs.1,00,000

is Indias first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individuals payments pertaining to loans and credit cards.

Coins in India are presently being issued in denominations of one rupee, two rupees, five rupees and ten

Rs 20, Rs 50, Rs 100, Rs500, are issued by the Reserve Bank of India (Reserve Bank).


the essential portions are missing can also be exchanged. Imperfect banknotes: Imperfect banknote means any banknote, which is wholly or partially, obliterated, shrunk, washed,

altered or indecipherable but does not include a mutilated banknote. The deadline for exchanging pre-2005 currency notes of various denominations, including Rs 500 and Rs 1,000, has been

extended by another six months till June, 30, 2015. i. The Reserve Bank of India has stated that the public can do so till June 30, 2015. Earlier in March 2014, it had set the last date for public to exchange these notes was January 1, 2015. ii. Post-2005 notes have added security features and help in curbing the menace of fake currency.

Security Features of Indian Banknotes Watermark Security Thread Latent Image Microlettering Intaglio Identification Mark Fluorescence Optically Variable Ink See through Register Legal provisions against counterfeiting

Important Banking Terminology:

1. Basis points: It is the increase in interest rates in percentage terms. For instance, if the interest rate increases by 50 basis

points (bsp), then it means that interest rate has been increase by 0.50%. One percentage point is broken down into 100 basis points. Therefore, an increase from 2% to 3% is an increase of one percentage point or 100 basis points.

2. Bank Rate: Bank Rate is the rate at which central bank of the country (in India it is RBI) allows finance to commercial banks. Bank Rate is a tool, which central bank uses for short-term purposes. Any upward revision in Bank Rate by central bank is an indication that banks should also increase deposit rates as well as Base Rate / Benchmark Prime Lending Rate. Thus any revision in the Bank rate indicates that it is likely that interest rates on your deposits are likely to either go up or go down, and it can also indicate an increase or decrease in your EMI.

3. Liquidity adjustment facility (LAF) is a monetary policy tool which allows banks to borrow money through repurchase agreements. LAF is used to aid banks in adjusting the day to day mismatches in liquidity. LAF consists of repo and reverse repo operations.

4. Repo Rate: Whenever the banks have any shortage of funds they can borrow it form RBI. Repo rate is the rate at which commercial banks borrows rupees from RBI. A reduction in the repo rate will help banks to get money at cheaper rate. When the repo rate increases borrowing form RBI becomes more expensive.

5. Reverse Repo Rate: Reverse Repo rate is the rate at which RBI borrows money from commercial banks. Banks are always happy to lend money to 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 this attractive interest rates. One factor which encourages an organisation to enter into reverse repo is that it earns some extra income on its otherwise idle cash.

6. CRR (Cash Reverse Ratio): CRR is the amount of funds that the banks have to keep with RBI. If RBI increases CRR, the available amount with the banks comes down. RBI is using this method (increase of CRR), to drain out the excessive money from the banks.

7. SLR (Statutory Liquidity Ratio): SLR is the amount a commercial banks needs to maintain in the form of cash, or gold, or govt. approved securities (Bonds) before providing credit to its customers. SLR rate is determined and maintained by RBI in order to control the expansion of the bank credit. Need of SLR: With the SLR, the RBI can ensure the solvency of a commercial banks. It is also helpful to control the expansion of the Bank credits. By changing SLR rates, RBI can increase or decrease bank credit expansion. Also through SLR, RBI compels the commercial banks to invest in the government securities like govt. bonds. Main use of SLR: SLR is used to control inflation and propel growth. Through SLR rate the money supply in the system can be controlled effectively.

8. Marginal Standing Facility (MSF): MSF rate is the rate at which banks borrow funds overnight from the Reserve Bank of India (RBI) against approved government securities.

9. NEFT (National Electronic Fund Transfer): NEFT enables funds transfer from one bank to another but works a bit differently than RTGS. NEFT is slower than RTGS. The transfer is not direct and RBI acts as the service provider to transfer the money from one account to another. You can transfer any amount through NEFT, even a rupee.


Note: Rs 50,000 is a limit in a NEFT to 10. RTGS (Real time gross settlement ): RTGS system is funds transfer systems where transfer of money or sec

place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. Minimum & Maximum L

11. Fiscal Deficit: A deficit in the government budget of a country and represents the excess of expenditure over income. So this is the amount of borrowed funds require by the government to meet its expenditures comple

12. Direct Tax: A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an examples of direct tax. They are not shifted to somebody else.

13. Indirect Tax: This type of tax is not paid by someone to the auof increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment tax are indirect taxes.

14. Foreign Exchange Market : Foreign exchange macome and exchange the currencies in a defined manner and set rates. In forex market the deals of currencies are done and in turn it defines the value of one currency in comparison toforeign currency in India.

15. NOSTRO Account: A Nostro account is maintained by an Indian Bank in the foreign countries.16. VOSTRO Account: A Vostro account is maintained by a foreign bank in India17. SDR (Special Drawing Rights): SDR are new form of International reserve assets, created by the International Monetary

Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained entries and not as hard currency or physical assets like Gold.

18. BOND: Publicly traded ling term debt securities issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time

19. CRAR(Capital to Risk Weighted Assets Ratio): the bank with aggregated risk weighted assets for credit risk, market risk and o

20. Non Performing Assets (NPA): An asset (loan), including a leased asset, becomes non performing when it stops generatig income for the bank. Note: Once the borrower has failed to make interest or principle payments considered to be a non-performing asset.

21. Inflation: inflation is a rise in the generalthe general price level rises, each unit ofreduction in the purchasing power per unit of money within the economy.

22. GDP - An estimated value of the total worth of a countrys production and services,and foreigners, calculated over the course on one year.Note: GDP = consumption + investment + (government spending) + (exports produced within the territorial boundary o

23. GNP - An estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign land, calculated over the course on one year.Note: GNP = GDP + NR (Net income inflow from assets abroad or Net Incomeforeign assets). Total value of Goods and Services produced by all nationals of a country (whether within or outside the country).

Indian credit rating industry mainly comprises CRISIL - Credit Rating Information Services of India Limited, Headquarter ICRA - Investment information and credit rating agency CARE - Credit Analysis and Research Headquarters ONICRA - Headquarter - Gurgaon, India SMERA - Headquarters Mumbai Fitch (India Ratings & Research) - Headquarters Note: CRISIL is the largest credit rating agency in India, with a market share of g

Leading Credit Rating Agency in World

1. Standard & Poor's (S&P) Headquarter 2. Moody's Headquarter - New York, US 3. Fitch - Headquarter - New York, US


is a limit in a NEFT to NEPAL in a single day. ): RTGS system is funds transfer systems where transfer of money or sec

place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as

Minimum & Maximum Limit of RTGS: 2 lakh and no upper limit.A deficit in the government budget of a country and represents the excess of expenditure over income. So

this is the amount of borrowed funds require by the government to meet its expenditures compleA direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an

examples of direct tax. They are not shifted to somebody else. This type of tax is not paid by someone to the authorities and it is actually passed on to the other in the form

of increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment

: Foreign exchange market is the place where the financial institutions of different countries come and exchange the currencies in a defined manner and set rates. In forex market the deals of currencies are done and in turn it defines the value of one currency in comparison to the other. A foreign investor (FII or FDI) is a major source of

A Nostro account is maintained by an Indian Bank in the foreign countries.A Vostro account is maintained by a foreign bank in India with their corresponding bank.

SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained entries and not as hard currency or physical assets like Gold.

: Publicly traded ling term debt securities issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal maturity.CRAR(Capital to Risk Weighted Assets Ratio): Capital to risk weighted assets ratio is arrived at by dividing the capital of the bank with aggregated risk weighted assets for credit risk, market risk and operational risk.

An asset (loan), including a leased asset, becomes non performing when it stops generatig : Once the borrower has failed to make interest or principle payments

performing asset. is a rise in the general level of prices of goods and services in an economy

the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a per unit of money a loss of real value in the medium of exchange and unit of account

An estimated value of the total worth of a countrys production and services, within its boundary, by its nationals and foreigners, calculated over the course on one year.

GDP = consumption + investment + (government spending) + (exports imports). Total value of products & Services produced within the territorial boundary of a country.

An estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign land, calculated over the course on one year.

GNP = GDP + NR (Net income inflow from assets abroad or Net Income Receipts) foreign assets). Total value of Goods and Services produced by all nationals of a country (whether within or outside the

Credit Rating Agency in India & World

Indian credit rating industry mainly comprises of CRISIL, ICRA, CARE, ONICRA, FITCH (India Ratings & Research) & SMERA.Credit Rating Information Services of India Limited, Headquarter Mumbai

Investment information and credit rating agency Headquarter - Gurgaon, India t Analysis and Research Headquarters Mumbai

India

Headquarters Mumbai is the largest credit rating agency in India, with a market share of greater than 60%.

New York, US


): RTGS system is funds transfer systems where transfer of money or securities takes

Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as imit of RTGS: 2 lakh and no upper limit.

A deficit in the government budget of a country and represents the excess of expenditure over income. So this is the amount of borrowed funds require by the government to meet its expenditures completely.

A direct tax is that which is paid directly by someone to taxing authority. Income tax and property tax are an

thorities and it is actually passed on to the other in the form of increased cost. They are levied on goods and services produced or purchased. Excise Tax, Sales Tax, Vat, Entertainment

rket is the place where the financial institutions of different countries come and exchange the currencies in a defined manner and set rates. In forex market the deals of currencies are done and

the other. A foreign investor (FII or FDI) is a major source of

A Nostro account is maintained by an Indian Bank in the foreign countries. with their corresponding bank.

SDR are new form of International reserve assets, created by the International Monetary Fund in 1967. The value of SDR is based on the portfolio of widely used countries and they are maintained as accounting

: Publicly traded ling term debt securities issued by corporations and governments, whereby the issuer agrees to and to repay a fixed amount of principal maturity.

Capital to risk weighted assets ratio is arrived at by dividing the capital of perational risk.

An asset (loan), including a leased asset, becomes non performing when it stops generatig : Once the borrower has failed to make interest or principle payments for 90 days the loan is

economy over a period of time. When equently, inflation reflects a

a loss of real value in the medium of exchange and unit of account

within its boundary, by its nationals

imports). Total value of products & Services

An estimated value of the total worth of production and services, by citizens of a country, on its land or on foreign

Receipts) - NP (Net payment outflow to foreign assets). Total value of Goods and Services produced by all nationals of a country (whether within or outside the

(India Ratings & Research) & SMERA.

reater than 60%.


Regulators in India:

Regulator Sectors Chairman Headquarter

Reserve Bank of India (RBI) Financial system and monetary policy, Money Market Raghuram Rajan

Mumbai

Securities and Exchange Board of India (SEBI)

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

U.K. Sinha Mumbai

Insurance Regulatory and Development Authority (IRDA)

Insurance industry T. S. Vijayan Hyderabad

Telecom Regulatory Authority of India (TRAI)

Telecommunication Industry Rahul Khullar New Delhi

Forward Markets Commission Commodity Market Ramesh Abhishek

Mumbai

Pension Fund Regulatory and Development Authority (PFRDA)

Pension sector Hemant Contractor

New Delhi

Money Market in India

Money Market: Money Market is the part of financial market where instruments with high liquidity and very short-term maturities are traded. It's the place where large financial institutions, dealers and government participate and meet out their short-term cash needs. Due to highly liquid nature of securities and their short-term maturities, money market is treated as safe place. Role of Reserve Bank of India:The Reserve Bank of India (RBI) plays a key role of regulator and controller of money

market. The intervention of RBI is varied curbing crisis situations by reducing key policy rates or curbing inflationary situations by rising key policy rates such as Repo, Reverse Repo, CRR etc.

Short Term Deposit: In deposit terminology, the term Short Term Deposit refers to an amount of money placed in a bank

or financial institution for a term no longer than one year. A Short Term Deposit will usually earn a fixed rate of interest. Note: Short Term Deposits are also known as time or term deposits, with perhaps the most popular name being short term certificates of deposit or CDs.

Call Money: Call Money is the borrowing or lending of funds for 1day. Notice Money: Money borrowed or lend for period between 2 days and 14

days it is known as Notice Money Term Money: Term Money refers to borrowing/lending of funds for

period exceeding 14 days

Money Market Instruments: Money Market Instruments provide the tools by which one can operate in the money market. Money market instrument meets short term requirements of the borrowers and provides liquidity to the lenders. The most common money market instruments are Treasury Bills, Certificate of Deposits, Commercial Papers, Repurchase Agreements and Banker's Acceptance.

1. Treasury Bills (T-Bills): Treasury Bills are one of the safest money market instruments as they are issued by Central Government. At present, the Government of India issues three types of treasury bills through auctions, namely, 91-day, 182-day and 364-day. There are no treasury bills issued by State Governments. Amount: Treasury bills are available for a minimum amount of Rs.25,000 and in multiples of Rs. 25,000. Treasury bills are issued at a discount and are redeemed at par


2. Commercial Paper (CP) - Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. Who can issue CP - Corporates, primary dealers (PDs) and the All-India Financial Institutions (FIs) are eligible to issue CP.Minimum and maximum period of maturity for CP: be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. However,to which the credit rating of the issuer is valid.In what denominations a CP that can be issued: Who can invest in CP: Individuals, banking companies, otunincorporated bodies, Non-Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs.

3. Certificate of Deposit (CD) is a negotiable money market instrumentPromissory Note against funds deposited at a bank or other eligible financial institution for a specified time period.Who can issue CD: CDs can be issued by (i) scheduled commercial banks {excluding Regional RuraBanks}; and (ii) select All-India Financial Institutions (FIs) that have been permitted by RBI to raise shortwithin the umbrella limit fixed by RBI. Minimum and maximum period of maturity for CD: 7 days and not more than one year, from the date of issue.Note: The FIs (Financial Institutions) can issue CDs for a period not less than 1 year and not exceeding 3 years from the date of issue. Minimum Size of Issue and Denominations: that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter.

4. Repurchase Agreements (Repo): Repurchase Agreements which are also called asloans that buyers and sellers agree upon for selling and repurchasing. Repo or Reverse Repo transactions can be done only between the parties approved by RBI and allowed onlygovernment securities, T-Bills, PSU bonds and corporate bonds. They are usually used for overnight borrowing.

5. Banker's Acceptance: Banker's Acceptance is like a short term investment plan created bguarantee from the bank. It's like a bill of exchange stating a buyer's promise to pay to the seller a certain specified amouat a certain date. And, the bank guarantees that the buyer will pay the seller at a future datcan draw such bill. These securities come with the maturities between 30 and 180 days and the most common term for these instruments is 90 days.

Capital market deals with medium term and long terborrowing and lending term funds (medium term and long term). The demand for long term funds comes from private business corporations, public corporations and the government. The sinstitutional investors, banks and special industrial financial institutions and Government. Capital market is classified in two ways: 1. Gilt Edged Market refers to the market for government and semiinterest. RBI plays an important role in this market.2. Industrial Securities Market: It deals with equities and debentures in which shares and debentures of existing companies are traded and shares and debentures of new companies are bought and sold.3. Development Financial Institutions (DFIs): Development financial institutions were set up to meet the medium and longterm requirements of industry, trade and agriculture. These are IFCI, ICICI, IDBI, SIDBI,institutions have been called Public Sector Financial Institutions.4. Financial intermediaries: Financial Intermediaries include merchant banks, Mutual Fund, Leasing companies etc. they help in mobilizing savings and supplying funds to capital market. The Second way in which capital market is classified is as follows :1. Primary market: Primary market is the new issue market of shares, preference shares and debentures of nonpublic limited companies and issue of public sector bonds.2. Secondary market: This refers to old or already issued securities. It is composed of industrial security market or stock exchange market and gilt-edged market. Banks and Their Tag Lines -

1. SBI - With you all the way,


Commercial Paper (CP) is an instrument issued in the form of a

Corporates, primary dealers (PDs) and the Financial Institutions (FIs) are eligible to issue CP.

Minimum and maximum period of maturity for CP: CP can be issued for maturities between a minimum of 7 days and a maximum of up to one year from the date of issue. However, the maturity date of the CP to which the credit rating of the issuer is valid. In what denominations a CP that can be issued: CP can be issued in denominations of Rs.5 lakh or multiples thereof.

Individuals, banking companies, other corporate bodies (registered or incorporated in India) and Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs.is a negotiable money market instrument and issued in dematerialised form or as a Usance

Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period.CDs can be issued by (i) scheduled commercial banks {excluding Regional Rura

India Financial Institutions (FIs) that have been permitted by RBI to raise short

Minimum and maximum period of maturity for CD: The maturity period of CDs issued by banks should not be less than , from the date of issue.

The FIs (Financial Institutions) can issue CDs for a period not less than 1 year and not exceeding 3 years from the

of Issue and Denominations: Minimum amount of a CD should be Rs.1 lakh, i.ethat could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter.

epurchase Agreements which are also called as Repoloans that buyers and sellers agree upon for selling and repurchasing. Repo or Reverse Repo transactions can be done only between the parties approved by RBI and allowed only between RBI-approved securities such as state and central

Bills, PSU bonds and corporate bonds. They are usually used for overnight borrowing.Banker's Acceptance is like a short term investment plan created b

guarantee from the bank. It's like a bill of exchange stating a buyer's promise to pay to the seller a certain specified amouat a certain date. And, the bank guarantees that the buyer will pay the seller at a future datcan draw such bill. These securities come with the maturities between 30 and 180 days and the most common term for

Capital Market in India: medium term and long term funds. It refers to all facilities and the institutional arrangements for

borrowing and lending term funds (medium term and long term). The demand for long term funds comes from private business corporations, public corporations and the government. The supply of funds comes largely from individual and institutional investors, banks and special industrial financial institutions and Government.

Capital market is classified in two ways: refers to the market for government and semi-government securities, which carry fixed rates of

interest. RBI plays an important role in this market. Market: It deals with equities and debentures in which shares and debentures of existing companies

entures of new companies are bought and sold. (DFIs): Development financial institutions were set up to meet the medium and long

term requirements of industry, trade and agriculture. These are IFCI, ICICI, IDBI, SIDBI, IRBI, UTI, LIC, GIC etc. All These institutions have been called Public Sector Financial Institutions.

: Financial Intermediaries include merchant banks, Mutual Fund, Leasing companies etc. they pplying funds to capital market.

The Second way in which capital market is classified is as follows :- : Primary market is the new issue market of shares, preference shares and debentures of non

ue of public sector bonds. : This refers to old or already issued securities. It is composed of industrial security market or stock

With you all the way, Pure Banking Nothing Else, The Nations banks on us


the maturity date of the CP should not go beyond the date up

CP can be issued in denominations of Rs.5 lakh or multiples thereof. her corporate bodies (registered or incorporated in India) and

Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) etc. can invest in CPs. ued in dematerialised form or as a Usance

Promissory Note against funds deposited at a bank or other eligible financial institution for a specified time period. CDs can be issued by (i) scheduled commercial banks {excluding Regional Rural Banks and Local Area

India Financial Institutions (FIs) that have been permitted by RBI to raise short-term resources

of CDs issued by banks should not be less than

The FIs (Financial Institutions) can issue CDs for a period not less than 1 year and not exceeding 3 years from the

be Rs.1 lakh, i.e., the minimum deposit that could be accepted from a single subscriber should not be less than Rs.1 lakh, and in multiples of Rs. 1 lakh thereafter.

Repo or Reverse Repo are short term loans that buyers and sellers agree upon for selling and repurchasing. Repo or Reverse Repo transactions can be done only

approved securities such as state and central Bills, PSU bonds and corporate bonds. They are usually used for overnight borrowing.

Banker's Acceptance is like a short term investment plan created by non-financial firm, backed by a guarantee from the bank. It's like a bill of exchange stating a buyer's promise to pay to the seller a certain specified amount at a certain date. And, the bank guarantees that the buyer will pay the seller at a future date. Firm with strong credit rating can draw such bill. These securities come with the maturities between 30 and 180 days and the most common term for

. It refers to all facilities and the institutional arrangements for borrowing and lending term funds (medium term and long term). The demand for long term funds comes from private

upply of funds comes largely from individual and

vernment securities, which carry fixed rates of

Market: It deals with equities and debentures in which shares and debentures of existing companies

(DFIs): Development financial institutions were set up to meet the medium and long-IRBI, UTI, LIC, GIC etc. All These

: Financial Intermediaries include merchant banks, Mutual Fund, Leasing companies etc. they

: Primary market is the new issue market of shares, preference shares and debentures of non-government

: This refers to old or already issued securities. It is composed of industrial security market or stock

Pure Banking Nothing Else, The Nations banks on us


2. State Bank of Hyderabad You can always bank on us.3. State Bank of Mysore - Working for a better tomorrow4. State Bank of Patiala Blending Modernity with Tradition5. State Bank of Travancore - A lo6. Allahabad Bank - A Tradition of Trust7. Andhra Bank Where India Banks8. Bank of Baroda - Indias International Bank9. Bank of India - Relationship beyond banking10. Bhartiya Mahila Bank Empowering Women11. Bank of Maharashtra - One family one bank12. Canara Bank Together We Can13. Central Bank of India Central To you Since 191114. Corporation Bank A Premier Public Sector Bank15. Dena Bank - Trusted Family Bank16. ECGC Bank You focus on exports. We cover the risks17. IDBI Bank Banking For All, Aao Sochein Bada18. Indian Bank Your Tech19. Indian Overseas Bank Good people to grow with20. Punjab National Bank - The name you can bank upon21. Punjab & Sind Bank Where service is a way of life22. Oriental Bank of Commerce Where every individual is committed23. UCO Bank Honours Your Trust24. Union Bank of India Good People to Bank with25. United Bank of India The Bank that begins with U26. Vijaya Bank - A friend you can bank on27. Axis Bank Badhti Ka naa28. ICICI Bank Hum Hai Na, Khyal Apka29. HDFC Bank - We understand your world indeed30. Yes Bank Experience our Expertise31. HSBC - The worlds local bank

Headquarters of Nationalised & Public Sectors Bank in India 1. SBI Mumbai 2. State Bank of Bikaner and Jaipur Jaipur3. State Bank of Travancore Thiruvananthapuram4. State Bank of Mysore Bangalore5. State Bank of Patiala Patiala6. State Bank of Hyderabad Hyderabad7. Union Bank of India Mumbai8. Bank of India Mumbai9. Central Bank of India Mumbai10. Dena Bank Mumbai11. IDBI Bank Mumbai12. Allahabad Bank Kolkata13. UCO Bank Kolkata14. United Bank of India Kolkata15. Punjab National Bank New Delhi16. Oriental Bank of Commerce New Delhi17. Punjab and Sind Bank New Delhi18. Bhartiya Mahila Bank New Delhi19. Canara Bank Bangalore20. Vijaya Bank Bangalore21. Indian Bank Chennai22. Indian Overseas Bank Chenna23. Bank of Baroda Vadodara24. Syndicate Bank Manipal(Karnataka)25. Corporation Bank Mangalore26. Andhra Bank Hyd27. Bank of Maharashtra Pune


You can always bank on us. Working for a better tomorrow Blending Modernity with Tradition A long Tradition of Trust A Tradition of Trust Where India Banks Indias International Bank Relationship beyond banking Empowering Women One family one bank Together We Can Central To you Since 1911 A Premier Public Sector Bank Trusted Family Bank You focus on exports. We cover the risks Banking For All, Aao Sochein Bada Your Tech- Friendly Bank Good people to grow with The name you can bank upon Where service is a way of life Where every individual is committed Honours Your Trust Good People to Bank with The Bank that begins with U A friend you can bank on Badhti Ka naam Zindagi Hum Hai Na, Khyal Apka We understand your world indeed Experience our Expertise The worlds local bank

Headquarters of Nationalised & Public Sectors Bank in India

Jaipur Thiruvananthapuram Bangalore Patiala Hyderabad Mumbai Mumbai Mumbai Mumbai Mumbai Kolkata Kolkata Kolkata New Delhi New Delhi New Delhi New Delhi Bangalore Bangalore Chennai Chennai Vadodara Manipal(Karnataka) Mangalore Hyderabad Pune



Note: There are a total of 27 PSBs in India [21 Nationalised banks + 6 State bank group (SBI + 5 associates) ] ii. At present there are 23 Private Banks functioning in India iii. At present there are 56 RRBs (Regional Rural Banks ) functioning in India. iv. At present there are 41 Foreign Banks functioning in India

FDI Limits

List of Limits in Various Sectors (In %)

1. Defence 49

2. Pension 49

3. Insurance 49

4. Print Media 26

5. Civil Aviation 49

6. Public Sec. Banks 20 7. Private Sec. Banks 74

8. Multi Brand 51

9. Single Brand 100

10. Tourism 100 Indias GDP Forecast: India's economic growth has declined to 5.3 per cent during July to September, from the previous quarter's 5.7 per cent. Fitch expects real GDP growth to pick up to 5.6 per cent in FY15 and 6.5 per cent in FY16 Domestic ratings agency India Ratings revised down its economic growth estimate for 2014-15 fiscal to 5.6 per cent. Organisation for Economic Co-operation and Development, OECD has projected 5.4 percent growth for the Indian

economy for 2014 -15 year. RBI pegged 2014-15 GDP growth at a central estimate of 5.5 % will improve to 6.3 per cent in 2015-16. World Bank estimates 5.6% growth for current fiscal i.e. 2014-15 and 6.4 per cent in 2015-16 and 7 per cent in 2016-17. IMF projected GDP growth for India in 2014-15 at - 5.6 % & 6.4 % in 2015 ADB pegs India GDP growth rate for 2014-15 at 5.5 % & 6.3 % in 2015 JP Morgan cut India 2014-15 growth forecast to 5.1 percent from 5.3 percent Economic and Social Commission for Asia and the Pacific,(ESCAP) - Indian economy to grow at 5.5 percent in current

fiscal Moody (Credit Rating Agency) projected India growth rate expected to accelerate to 5.2 % in 2014 and 6.5 % by end of

2015. FICCIs Economic Outlook Survey estimated Indias GDP growth rate at

5.6 percent in 2014-15 According to a UN report Indian economy expected to grow by 5.5% in

current fiscal. According to United Nations Conference on Trade and Development

(UNCTAD) Indian economy will grow at a rate of 5.6 per cent in 2014 India ranking in different Indexes: 1. Transparency International India (TII) Corruption Index India ranked

85th among 175(Denmark topped) 2. World Bank - Ease of Doing Business" report - India ranked 142 among

the 189 countries (Singapore top) 3. Political empowerment sub index 15 (Iceland top the list, US ranked

20) 4. World Economic 5. Forum's 2014 Gender gap index 114 (Iceland top the list followed by

Finland & Norway) 6. Global Hunger Index Report 2014: 55 (Mauritius top followed by

Thailand and Albania) 7. Human Development Index 2014 135 (Norway top followed by

Australia). 8. Global Environment Performance Index 2014 155 (Switzerland

followed by Luxembourg, Australia) 9. Intellectual property (IP) environment 2014 25 (US ranked on the top


followed by UK and France) 10. World Press Freedom Index 2014 - 140 in the list of 180 countries 11. World's best countries for doing business 2014 134 12. Global Peace Index 2014 143 (Iceland top the list while Syria the most violent place) 13. Global Innovation Index 2014 - 76 14. Global Competitiveness Index 2014 -71 (Switzerland is the most competitive economy, followed by Singapore).

Index/Reports Issued by different organizations in World:

1. World Economic Outlook is published by: International Monetary Fund (IMF). 2. Global Hunger Index is issued by: International Food Policy Research Institute 3. Global Peace Index is issued by: Institute for Economics and Peace 4. Global Corruption Index is issued by: Transparency International 5. Global Competitiveness Index is issued by: World Economic Forum 6. Human Development Report is issued by: United Nations Development Programme (UNDP) 7. Gender Inequality Index is issued by: United Nations Development Programme (UNDP)

News Related to Banking & Finance

1. Anil Ambani led Reliance Group has sold its multiplex business to South India-based Carnival Group in the largest ever

deal in this space. 2. Wholesale inflation hits zero, lowest in over 5 years.The Wholesale Price Index (WPI) based inflation was at 1.77 per

cent in October and 7.52 per cent in November 2013. 3. Indias Forex reserves down $1.64 billion.The value of special drawing rights (SDRs) was lower by $21.6 million at

$4.20 billion.Gold reserves for the week under review were down by $753.2 million at $18.98 billion. 4. ONGC declares interim dividend, notifies 3 discoveries in Krishan Godavari Basin and Mumbai offshore and it will pay

its shareholders an interim dividend of 100 per cent. 5. Delhi HC banned Xiaomi to sell phones in India over patent issue with Ericcson. 6. Tata Power acquired 540 MW thermal power plant for 3000 crore rupees in Maharashtra.With this deal, Tata Power

aimed to increase its total capacity to 8885 MW. 7. India forex reserves up $ 1.432 billion to $ 316.311 billion 8. i. India's forex reserves surged by 1.432 billion US dollar to 316.311 billion dollar in the week ended 28th November.The

country's gold reserves remained unchanged at 19.738 billion dollar. The Special Drawing Rights increased by 6.4 million dollar to 4.229 billion dollar, while the country's reserve position with the IMF also rose by 2.5 million dollar to 1.521 billion dollar during the week.

9. Mandatory for PSUs from 1st April, 2015 to procure 20 percent of products manufactured by MSME: Govt. 10. Kotak Mahindra Bank launches savings bank account for customers of 55 years and above. According to the release,

customers will earn 6 per cent pa on savings balance of over Rs 1 lakh and 5 per cent on balances up to Rs 1 lakh.To earn higher return on their balances, they can sign up for the Kotak ActivMoney facility, which converts savings account balance above a certain amount into term deposits.

11. ICICI Bank ties up with price comparison app Zopper for offline and online. 12. ICICI Bank sells Russian subsidiary - ICICI Bank Eurasia to Sovcombank. 13. PSU bank ATMs will be able to print in Hindi soon. 14. Central Bank to raise Rs. 626.23 cr from preferential issue to LIC.The capital raising committee of the board approved

raising of additional equity capital by issuance of up to 8.28 crore shares at Rs. 75.55 a equity, Central Bank of India said in a statement.

15. Punjab National Bank (PNB) on Wednesday said it will continue giving free transactions to all saving bank account cardholders using PNB ATMs, irrespective of the number of transactions.

16. Canara Bank has signed a memorandum of understanding with Micro Energy Credits Corporation to finance bank customers buying energy efficient green products such as cook stoves, solar home systems, biogas digestors and water purifiers.The partnership has identified Chitradurga district in Karnataka to promote such green products on a pilot basis.

17. Kotak Mahindra Bank is the first bank to fully own an insurance business i. Kotak Mahindra Bank BSE 0.07 % on Tuesday became the first bank to get the Reserve Bank of India's (RBI's) permission to set up a wholly-owned non-life insurance company. ii. The bank is already the promoter of a life insurance company in partnership with Old Mutual of South Africa. Note: i. RBI guidelines allow a bank to hold max 50 per cent in insurance joint venture. However, RBI allowed some exceptions, like SBI and ICICI Bank. In both these partnerships, the banks hold 74 per cent.ii. Kotak General Insurance will be the 29th non-life company in the country. The last non-life insurer to get permission from the regulator was Cigna TTK a health insurance company.ii. The last company to set up a full-fledged general insurance business was Liberty Videocon General Insurance.


18. China beats India in November FII inflows: HSBCi. According to the global financial services major, after two consecutive months of sell-offs, FIIs have warmeequities and all markets have received positive flows in November as the region recorded net inflows of $5.3 billion, out of which India attracted $1.4 billion.ii. Among Asian economies, China regained the topas the most loved market, pushing India down to second position in the region, while Thailand was placed at the third spot.

19. GMR Infrastructure has received the Securities and Exchange Board of India approval to raise up tothrough rights issue. Note - In a rights issue, shares are issued to existing investors as per their holding at a pre

20. E-retailing firm Snapdeal.com launched the online Agri storelaunched on the occasion of National Farmer's Day (24i. The Agri Store aims to offer wide variety of farm items from seeds to fertilisers, farming tools and irrigatio

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