BANKING POLICY UPDATES

BANKING POLICY : 4
Export Credit Intt. subvention

ECB policy amendments
Unique Customer id code
Policy on unclaimed deposits
BANKING FEATURES : 4-8, 20
Bank Supervision Process
Financial Inclusion
White Label ATMs
Banking Problems - Ombudsman cases
Agriculture related Terms
Rupee Depreciation
Diary of events - June, 2012: 9
Policy, Economy
Banking Developments
Capital Markets & Insurance
General Awareness : 13
Multi-Option questions:15-19
Data Bank : 20
The
Journal of
Institute of Banking
Career & Studies,
Chandigarh
Contents of this Issue
Editor - Ms Gurmeet Toor, Executive Editor - S. Chand Singh, Editor in Chief - Sh. N S Toor
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Banking events updatE July 2012 2
(COMPILATION- ARUNDEEP TOOR, in Sydney, Australia - on the basis of information available on RBI Website)
Inspired Youth
"Small aim is crime".
........ Dr. APJ Abdul Kalam, former President of India
March 31, 2012, on pre and post shipment rupee export credit has been
extended by the Govt. till March 31, 2013 on the same conditions to the
following sectors : i. Handicrafts, ii. Carpet, iii. Handlooms, iv. Small and
Medium Enterprises (SMEs), v. Readymade Garments, vi. Processed Agricul-
ture Products, vii. Sport Goods, viii. Toys.
RBI under Sections 21 and 35 A of the Banking Regulation Act, 1949, has
directed (Jun 19, 2012) the banks that they may reduce the interest rate
chargeable to the exporters as per Base Rate system in these sectors by the
amount of subvention available subject to a floor rate of 7%.
The procedure for claiming subvention is as follows :
i) The amount of subvention to be reimbursed on the basis of claim submitted
as at the end of respective quarters within one month from end of quarter.
ii) The amount of subvention will be calculated on the amount of export credit
from the date of disbursement (a) up to the date of repayment; or (b) up to
the date beyond which the outstanding export credit becomes overdue.
iii) The claims should be accompanied by an External Auditors Certificate
certifying that the claims for subvention for the respective quarter is true and
correct. Settlement of the claim will be done only on receipt of this certificate.
iv) If no subvention is paid for a quarter/s, a NIL statement may be submitted.
Export Credit Refinance Facility (ECR): Relaxation
RBI decided (Jun 18, 2012) to enhance the eligible limit of the ECR facility for
scheduled banks (excluding RRBs) from 15% of the outstanding export credit
eligible for refinance to 50%, effective fortnight beginning June 30, 2012
which will provide additional liquidity support to banks of over Rs.300 billion.
ECB for Repayment of Rupee loans
RBI allowed (Jun 25, 2012) Indian companies to avail of ECBs for repayment
of Rupee loans availed from domestic banking system or for fresh Rupee
capital expenditure, under approval route, subject the following conditions:-
i. Only companies in manufacturing and infrastructure sector will be eligible;
ii.These shall be a consistent forex earner during the past 3 financial years;
iii. Such companies are not in the default list/caution list of the RBI.
iv.ECBs shall only be utilized for repayment of the Rupee loan(s) availed of for
capital expenditure incurred earlier and are still outstanding in the books of
the domestic banking system and / or for fresh Rupee capital expenditure.
v.AD banks should ensure that the liability arising out of ECB is extinguished
only out of the forex earnings of the company.
vi. Banks in India cannot provide any form of guarantees.
vii.The companies should draw down the entire facility within a month after
taking the Loan Registration Number from RBI.
Ceiling: The overall ceiling shall be USD 10 (ten) billion. The maximum ECB
that can be availed of by an individual company will be limited to 50% of the
average annual export earnings realised during the past 3 financial years.
Foreign investment in Govt. securities and infrastructure debt
Presently FIIs are allowed to (i) invest in non-convertible debentures / bonds
issued by Indian companies in the infrastructure sector and non-convertible
debentures / bonds issued by Non-Banking Financial Companies categorized
as Infrastructure Finance Companies(IFCs) by RBI within the overall limit of
USD 25 billion; and (ii) invest in Govt. securities within an overall limit of USD 15
billion. Further, the Qualified Foreign Investors (QFIs) are allowed to invest in
units of Mutual Funds debt schemes upto a limit of USD 3 billion within the
overall limit of USD 25 billion for FII investment in non-convertible debentures
/ bonds issued by Indian companies in the infrastructure sector.
On Jun 25, 2012, RBI has decided as under :
Government Securities
i) The limit of USD 15 billion for FII investment in Govt. securities enhanced by
USD 5 billion to USD 20 billion.
ii) Residual maturity of the instrument at the time of first purchase by FIIs and
SEBI registered eligible non- resident investors in IDFs and foreign Central
Banks to be min 3 years (instead of 5 years) for a sub limit of USD 10 billion.
iii)The long term investors like Sovereign Wealth Funds (SWFs), Multilateral
agencies, endowment funds, insurance funds, pension funds and foreign
Central Banks to be registered with SEBI to also allowed to invest in Govt.
securities within this enhanced limit of USD 20 billion.
Infrastructure Debt
ii) The conditions for the limit of USD 22 billion including
the sub-limit of USD 5 billion with one year lock-in/re-
sidual maturity requirement and USD 10 billion for non
resident investment in IDFs (which are all within the over-
all limit of USD 25 billion for investment in infrastructure
corporate bonds) have been changed as under :
The lock-in period uniformly reduced to one year; and
Residual maturity of the instrument at the time of first
purchase would be at least 15 months.
(iii) QFIs can invest in those MF schemes that hold at
least 25% of their assets (either in debt or equity or
both) in the infrastructure sector under the current USD
3 billion sub-limit for investment in mutual funds related
to infrastructure.
Unique Customer Identification Code (UCIC)
for banks customers in India
RBI, has been issuing guidelines on KYC/AML/CFT mea-
sures from time to time. The increasing complexity and
volume of financial transactions necessitate that cus-
tomers do not have multiple identities within a bank,
across the banking system and across the financial sys-
tem. This can be achieved by introducing a unique iden-
tification code for each customer. In this regard, a Work-
ing Group constituted by the Government of India has
proposed the introduction of unique identifiers for cus-
tomers across different banks and Financial Institutions
for setting up a centralized KYC Registry. While setting
up such a system for the entire financial system is likely
to take quite some time, banks can make an immediate
beginning in this regard by having such identification
code for their own customers.
While some banks already use UCICs for their customers
by providing them a relationship number, etc., other banks
have not adopted this practice. Banks have been ad-
vised by RBI (Jun 08, 2012) to initiate steps for allotting
UCIC to all their customers while entering into any new
relationships for individual customers to begin with.
The existing individual customers may also be allotted
unique customer identification code by end-May 2013.
The UCIC will help banks to identify customers, track the
facilities availed, monitor financial transactions in a holis-
tic manner and enable banks to have a better approach
to risk profiling of customers. It would also smoothen
banking operations for the customers.
KYC - Risk Categorization and Updation of
Customer Profiles
As per RBI circular dated Feb 18, 2008, in order to have
an effective implementation of KYC/AML/CFT measures,
the banks were advised to put in place a system of peri-
odic review of risk categorization of customers and
updation of customer identification data.
Banks are aware that risk categorization of customers as
also compilation and periodic updation of customer pro-
files and monitoring and closure of alerts in accounts by
banks, are extremely important for effective implemen-
tation of KYC/AML/CFT measures. The laxities in effec-
tive implementation of RBI guidelines in this area, leave
the banks vulnerable to operational risk.
The banks have been advised by RBI (Jun 08, 2012) to
complete the process of risk categorization and compil-
Export Credit Intt. Subvention
The scheme of interest subvention of 2% available up to
ANKING
POLICY
B
ing/updating profiles of all of their existing customers in a time-bound manner, and
in any case not later than end-March 2013.
Issuance and operation of Prepaid Payment Instruments in India
RBI has carried out the following amendments (Jun 14, 2012):
1) The limit of Rs 1000 (applicable from Apr 27, 2009) for semi-closed prepaid
payment Instrument that can be issued, has been raised to Rs 2000.
2) The issue of semi-closed prepaid payment instrument up to Rs 10,000 without
separate KYC being conducted by the issuer, for payment of utility bills/ essential
services/ air and train travel was permitted on the premise that full KYC of the
customer is already being done by the provider of such services. The control
exercised by the issuer has been on the acceptance side, i.e. utility of the card for
the specific purpose at the specific merchant.
RBI has redefined the merchant categories as: Semi-closed system payment
instruments which permit only payment of utility bills/ essential services / air and
train travel tickets; and recurring payment of college fees, school fees, government
taxes up to a limit of Rs 10,000/- can be issued without separate KYC being
undertaken by the issuer. The persons issuing such instruments may ensure that
these instruments are made acceptable only at institutions which maintain the full
identity of the customers. The utility bills/ essential services shall include only
electricity bills, water bills, telephone/mobile phone bills, insurance premium, cooking
gas payments, rental for Internet/Broadband Connections, Cable/DTH subscriptions
and Citizen Services by Government or Government bodies.
Home Loans-Levy of foreclosure charges/pre-payment penalty
Damodaran Committee on Customer Service in Banks had observed that foreclo-
sure charges levied by banks on prepayment of home loans are resented upon by
home loan borrowers especially since banks were found to be hesitant in passing on
the benefits of lower interest rates to the existing borrowers in a falling interest
rate scenario. As such, foreclosure charges are seen as a restrictive practice
deterring the borrowers from switching over to cheaper available source.
The removal of foreclosure charges/prepayment penalty on home loans leads to
reduction in the discrimination between existing and new borrowers and competi-
tion among banks results in finer pricing of the floating rate home loans.
RBI has decided (Jun 05, 2012) that banks will not charge foreclosure charges/pre-
payment penalties on home loans on floating interest rate basis.
Strengthening the Regulatory Framework for Unclaimed Deposits
On Aug 22, 2008 RBI gave directions to banks regarding inoperative accounts.
These instructions, inter alia, include i) annual review of accounts in which there are
no operations, ii) operations in such accounts to be allowed after due diligence, and
iii) no charge to be levied for activation of inoperative accounts, etc.
As per RBI circular dated Feb 07, 2012, banks are required to display the list of
unclaimed deposits/inoperative accounts which are inactive/ inoperative for 10
years or more on their respective websites by June 30, 2012. The list so displayed
on the websites must contain only the names of the account holder(s) and his/her
address in respect of unclaimed deposits/inoperative accounts, etc.
RBI has now desired (Jun 06, 2012) that with a view to further strengthen the
regulatory framework for inoperative accounts and unclaimed deposits, the banks
should put in place a Board approved policy on classification of unclaimed deposits;
grievance redressal mechanism for quick resolution of complaints; record keeping;
and periodic review of such accounts.
The first periodic review of unclaimed deposits/inoperative accounts should be put
up to their respective bank Boards by September 30, 2012.
Special Deposit Scheme (SDS), 1975 Revision of Rate of Interest
Govt of India notified revision in the interest rates from 8.6% w.e.f. 01.12.11 to
8.8% w.e.f. 01.04.2012, on deposits under SDS for Non-Govt. Provident, Super-
annuation and Gratuity Funds, announced in the Ministry of Finance (Department
of Economic Affairs) Notification dated June 30, 1975.
Return on Foreign Liabilities and Assets by Indian Companies
In its circular dated Mar 15, 2011, RBI had stipulated that the annual return on
Foreign Liabilities and Assets (FLA) is required to be submitted directly by all the
Indian companies which have received FDI and/or made FDI abroad (i.e. overseas
investment) in the previous year(s) including the current year, by July 15 of every
year. The Return has been modified by RBI (Jun 20, 2012) and an easy-to-fill soft
form of the return with guidance to users and in-built validations has been made
available on the RBI website which can be duly filled-in, validated and sent by e-
mail, by July 15 every year.
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Banking events updatE July 2012 4 BANKING FEATURES

Compilation : Arundeep Toor (Sydney - Australia) (Source-RBI Website)
RBI has been entrusted with the responsibility of
supervising the Indian banking system under the Banking
Regulation Act, 1949 and RBI Act, 1934. This is done by
the Department of Banking Supervision (DBS) through 16
Regional Offices of RBI.
Supervisory Set up: The Board for Financial Supervision
(BFS) came into being in Nov 1994 and is the apex body
for Consolidated Supervision of the financial sector
(commercial banks, financial institutions and non-banking
finance companies). The Governor, RBI is the Chairman of
the BFS (Deputy Governor in charge of banking supervision,
is the Vice-Chairman and other deputy governors are ex-
officio members. 4 directors from the Central Board of
the RBI are co-opted as members for a term of 2 years).
DBS acts as the secretariat of the BFS.
The supervisory role of the Department of Banking
Supervision includes planning for and conducting onsite
inspection, off-site surveillance, determining the criteria
for the appointment of statutory auditors and assessing
audit performance and monitoring of major financial sector
frauds and exercising supervisory intervention in the
implementation of regulations, such as recommendation
for removal of managerial and other persons, suspension
of business, amalgamation, merger / winding up, issuance
of directives and imposition of penalties.
Supervisory Processes -Offsite Supervision
An off-site monitoring system (Offsite Surveillance and
Monitoring System - OSMOS) was operationalized in March
1996, as a tool for early warning signals. OSMOS consists
of a set of 28 structured returns that capture prudential
and statistical information of banks at periodical intervals.
The information populated into the OSMOS database. This
enables the offsite supervisor to undertake prudential
analysis of banks Capital, Assets, Earnings, Liquidity, etc.
Onsite Supervision
On-site supervision is a key process in the overall
supervisory framework. It involves an Annual Financial
Inspection (AFI) of banks that is presently modeled around
the CAMEL (Capital Adequacy, Asset classification,
Management, Earnings appraisal, Liquidity) framework with
an additional parameter of Systems and Controls (modified
as CAMELS for Indian commercial banks and CALCS for
Foreign banks). The present CAMELS is a transaction-based
examination with a matrix used for arriving at a rating of
each of the CAMELS components to give a final adjusted
supervisory rating for each bank. Based on the concerns
highlighted by AFI reports and discussions with banks, a
Monitorable Action Plan is drawn for compliance. In
addition to AFI, a few need based targeted inspections
and scrutinies at the banks are also undertaken.
Supervisory Rating
A rating system for domestic and foreign banks based on
the CAMELS model combining financial management,
systems and control elements has been in place since
July 1998. The present rating of banks is done on a 10-
point scale i.e. A+ through D in ascending order.
Proposed Risk Based Supervision Process
A High Level Steering Committee (HLSC) for Review of Supervi-
sory Processes for Commercial Banks was constituted by RBI on
August 3, 2011 (Chairman Dr. K.C. Chakrabarty, Dy Governor).
The Committee submitted its Report to RBI on June 11, 2012.
The recommendations are expected to transform the approach
and processes for supervision bringing them in line with the inter-
national best practices and standards and ensuring safety and
stability of Indian banking system in the coming decade.
Major Recommendations:
1. An implicit overarching objective of RBIs supervisory process
should also be to ensure financial stability and customer protec-
tion, along with protection of depositors interests and ensuring
the financial health of individual banks/FIs.
2. Risk Based Supervision (RBS) which focusses on evaluating
both present and future risks, identifying incipient problems and
facilitates prompt intervention/ early corrective action should re-
place the present compliance-based/transaction-testing CAMELS
approach which is in the nature of a point in time assessment.
3. Under RBS, RBI stance would be determined based on a super-
visory analysis of probability of failure of a bank and the likely
impact on the banking/financial system. The periodicity/intensity
of on-site inspection of a bank would depend upon its position on
the Risk-Impact Index Matrix rather than its volume of business.
4. The success of RBS approach is highly incumbent upon a robust
offsite surveillance system. There is a need to eliminate any manual
intervention in the flow of supervisory data from the banks to RBI
and also ensure quality/integrity of data submitted.
5. Under the proposed RBS, the supervisory rating would be a
reflection on the risk elements (inherent business risks and effec-
tiveness of control) and would not be an exercise in performance
evaluation as under the CAMELS. The rating exercise would aim
at determining the overall probability of failure in light of risks to
which the bank is exposed, strength of control/governance and
oversight framework in place and available capital. Based on the
exercise, the bank would be apprised of the direction of key risk
groups along with overall risk faced by it.
6. RBI intervention including placing a bank under the Prompt
Corrective Action framework, if required, would be based on the
supervisory rating and the risk-impact score of the bank.
7. RBI would increasingly use thematic reviews as a tool of super-
vision. Review of a particular product, market or practice using a
specialized team would be made to assess risks brewing within the
sector or at system level for enabling prompt actions/measures.
8. To facilitate effective consolidated supervision, the supervi-
sion of all group entities under the jurisdiction of RBI has to be
brought under a single supervisory Deptt. instead of fragmented
set up for supervising different entities of the same banking group.
9. The domains of regulation and supervision should be firmly
demarcated and any entity-specific decision should only emanate
from the supervisory department. The communication between
the supervisor and the supervised entity is confidential and should
not be subject to any public scrutiny.
10. A single point interface within RBI in the form of a Supervisory
Relationship Manager(SRM) for each bank within the supervisory
department would ensure efficient and effective communication
between the supervisor and the supervised entity.
11. In view of the need to improve skill sets of supervisors in the
RBI and creating a knowledge pool of specialists with legal, bank-
ing, audit etc. backgrounds, training in specified areas, lateral
induction of specialists and a system of continuous movement of
people from RBI to external organizations and vice versa may be
considered to augment supervisory resources of the RBI.
Bank Supervision Process in India
The banks are required to have the following
committees on cusotmer service:
Committee of Board of Directors
Banks to have a Committee of Board of Direc-
tors with experts and representatives of cus-
tomers. The role of such committee is deposit
policy formulation.
Standing Committee on Customer Service
On the recommendations of Committee on Pro-
cedures and Performance Audit of Public Ser-
vices (CPPAPS) the previous Ad hoc Commit-
tees were converted into Standing Commit-
tees on Customer Service (chaired by CMD or
ED).
It serves as the micro level executive commit-
tee while the Customer Service Committee of
the Board would oversee and review / modify
the initiatives. Thus the two Committees would
be mutually reinforcing with one feeding into
the other.
Branch level Committees
The branch level committee is to submit
quarterly reports giving inputs / suggestions
to the Standing Committee on Customer
Service, enabling the Standing Committee to
examine them and provide relevant feedback
to the Customer Service Committee of the
Board for necessary policy / procedural action.
These committees to have members from all
sections of staff. In addition customers
including senior citizens will be members.
Meeting: The Branch Level Customer Service
Committee may meet at least once a month to
study complaints/ suggestions, cases of delay,
difficulties faced / reported by customers /
members of the Committee and evolve ways
and means of improving customer service.
Committees for Customer Service
RBI had issued guidelines to banks on Sept 16, 2010 regarding the
roadmap for providing banking services through a banking outlet in
every village having a population above 2000, by March 2012. Out of
74414 identified and allocated villages, the banks have opened bank-
ing outlets in 74,199 (99.7 per cent) villages by March 2012.
Govt. of India has emphasized the need for transferring all State ben-
efits including MGNREGA wages and cash subsidies to beneficiaries by
direct credit to their bank accounts by implementing Electronic Ben-
efit Transfers (EBT). The successful implementation of EBT is possible
only if door step banking services are available throughout India.
Directions for SLBCs: The State Level Bankers Committees (SLBCs)
have been mandated by RBI to prepare a roadmap covering all unbanked
villages of population less than 2000 (as per census 2001) and notion-
ally allot these villages to banks for providing banking services, in a
time-bound manner. The notional allotment does not deny or bar any
other bank from operating in these areas.
The lead banks are to constitute a Sub-Committee of the District
Consultative Committees (DCCs) to draw up a roadmap for provision of
banking services in these village. This Sub-Committee will identify such
unbanked villages and allot these villages among Banks (including RRBs)
operating in the district. RBI will monitor the progress in achieve-
ment of the targets.
Conditions - It is to be ensured that there is a brick and mortar
branch to provide support to a cluster of BC units, i.e., about 8-10
BC units at a reasonable distance of 3-4 km. The Sub Committee of
DCC should consider the following while making the allotment :
Existing Brick and Mortar network of banks in the district.
Distance of the village from the nearest bank branch and the ratio
of low cost simple brick and mortar branches to BC outlets to be
maintained by banks as suggested above.
Geographical contiguity to the existing BC outlets.
Avoid allotment of a lone isolated village to any bank.
Priority for BC location or bank branch to be given to villages having
population greater than 1500.
Emphasis to be given in villages of North East States.
Continuous efforts should be made to increase the frequency of
visits by BCs from a fortnightly basis to a more frequent basis.
While in the initial stages, priority may be given to providing door step
services to EBT beneficiaries through regular visits of BCs to the allo-
cated villages, for making it a self sustaining business model, banks
should over a period of time, ensure that all kinds of banking services
viz. remittances, recurring deposit, entrepreneurial credit in the form
of KCC and GCC, insurance (life and non-life) and other banking ser-
vices are available to all the residents of the village through a mix of
brick and mortar branch and BC network.
The finalized roadmap with details of allocated villages to various banks
is required to be submitted to RBI by 31st August 2012.
Monitoring and review : A monitoring and review mechanism is to be
instituted by DCCs and SLBCs to periodically assess and evaluate the
progress made in allotment of villages and achieving the target indi-
cated in the roadmap including the quality of services provided by
the banking outlets. The SLBC Convenor bank is to furnish a quarterly
statement of the district wise and bank wise progress in opening of
banking outlets starting from the quarter ending September 2012 by
10th of the following month to RBI.
The information should be published on the SLBC websites.
Financial Inclusion - Banking Services in places
with population below 2000
TIME NORMS FOR COMPLAINTS
1. Al l compl ai nts/communi cati ons must be
acknowledged immediately but in any case within 10
days by sending interim reply, if final reply is not
possible to be sent within 10 days. All complaints
should be recorded in a complaint register.
2. VIP complaints should be resolved within 15 days
in case of references from PMO, within 3 weeks in
case of communications from Ministers/MPs.
3. Banks should disclose the brief details regarding
the number of complaints along with their financial
results. Where the complaints are redressed within
the next working day, banks need not include the
same in the statement of complaints.
Where the complaints are not redressed within one
month, the concerned branch / controlling office
should forward a copy of the same to the concerned
Nodal Officer under the Banking Ombudsman Scheme.
RBI decided to permit (on Jun 20, 2012), the non-bank

entities incorporated in India under the Companies Act
1956, to set up, own and operate ATMs in India. Non-bank
entities that intend setting up, owning and operating ATMs,
are called White Label ATM Operators (WLAO) and such
ATMs are called White Label ATMs (WLAs). They can set
up WLAs after obtaining RBI authorisation under Payment
and Settlement Systems (PSS) Act 2007. The time for seek-
ing authorisation is available for 4 months from Jun 20.
Eligibility criteria for WLA Operators (WLAO) :
Non-bank entities must have net worth of at least Rs 100
crore as per the last audited balance sheet, which has to
be maintained at all times.
In case of any FDI in the applicant entity, necessary
approval from the competent authority must be submit-
ted while seeking authorization.
Location : The authorised WLAO would have the freedom
to choose the location of the WLA.
Validity : The authorisation would be initially valid for a
period of one year. The scheme and number of WLAs to
be installed, is to be indicated at the time of application.
There are 3 schemes that can be adopted by WLAO:
a. Scheme A
Year -1 : minimum of 1000 WLAs
Year-2: min twice the no. of WLAs installed in Year 1
Year -3 : min 3 times the no. of WLAs installed in Year 2
A ratio of 3:1 would be applicable (i.e. for every 3 WLAs
installed in Tier III to VI centres, 1 WLA can be installed in
Tier I to II centres. Out of the 3 WLAs installed in Tier III
to VI centres, a minimum of 10 % should be installed in
Tier V & VI centres).
b. Scheme B : A min 5000 WLAs every year for 3 years.
The ratio of 2:1 would be applicable, i.e. for every 2 WLAs
installed in Tier III to VI centres, 1 WLA can be installed in
Tier I to II centres. Out of the WLAs installed in Tier III to
VI centres, a minimum of 10 % should be installed in Tier V
& VI centres.
c. Scheme C: A minimum of 25,000 WLAs in the first year
and at least another 25,000 in the next two years.
The ratio of 1:1 would be applied. Out of the WLAs in-
stalled in Tier III to VI centres, a minimum of 10 % should
be installed in Tier V & VI centres.
Other conditions :
1. RBI authorisation cannot be assigned/transferred with-
out prior approval of RBI. The date for determining the
time line for implementation would commence 30 days
after issuance of the authorisation.
2. Switchover of schemes is not permissible.
3. WLAOs need to seek extension of their authorisation,
if required, 3 months prior to the completion of one year
for continued operation of the system.
4. Only cards issued by banks in India (domestic cards)
would be permitted to be used at the WLAs.
5. Acceptance of deposits at WLAs, not to be permitted.
6. The WLAO can display advertisements and offer value
added services. The advertisements would be subject to
the Advertising Standards Council of India (ASCI) codes
and other regulations. The advertisement of financial prod-
ucts should be conforming to the regulatory framework
as laid down by RBI, SEBI, IRDA and PFRDA.
7. The guidelines on 5 monthly free transactions appli-
cable to bank customers for using other bank ATMs, would
be inclusive of the transactions effected at the WLAs.
8. The WLA Operator cannot recover any fee from card
issuer-bank other than the Interchange fee payable to
acquirer bank under the bank owned ATM scenario.
9. The WLA operator can receive a fee from the banks for
the use of ATM resources by their customers. WLAs can-
not charge bank customer directly for the use of WLAs.
10. Regulatory & general guidelines relating to compensa-
tion for failed transactions at bank ATMs would, mutatis
mutandis, apply to the transactions effected at such WLAs.
Roles and Responsibilities of various stakeholders
A. WLA Operator (WLAO)
1. Setting up and operating WLAs can commence only
after authorisation from RBI.
2. Taking over of ATMs from banks is not permitted.
3. WLAO can have more than one Sponsor Bank. All the
transactions of WLAs serviced by this Sponsor Bank would
be settled through it. The Sponsor Bank should be a mem-
ber of the ATM Network Operators/ Card Payment Net-
work Operators authorised by RBI and also be a member
of the RTGS.
4. Cash Management at the WLAs will be the responsibil-
ity of the Sponsor Bank. The cash would be owned by the
WLAO and the responsibility for quality and genuineness
of cash would be that of the Sponsor bank. The WLAO or
his agents will not have access to the cash at the WLAs.
5. WLAO may establish connectivity with any of the
authorised ATM Network Operators/ Card Payment Net-
work Operatorsand ensure that the settlement of all the
transactions at the WLAs shall be done only in the books
of the Sponsor Bank through the ATM Network Opera-
tors/ Card Payment Network Operators with whom the
WLAO has established connectivity.
B. Sponsor Bank - I. A suitable Service Level Agreements
may be drawn up between WLAO and the Sponsor Bank
for adequate supply of genuine and good quality notes.
II. Funds Settlement: Inter-bank funds settlement for WLA
transactions involving the Issuing and Sponsor Banks will,
mutatis mutandis, follow the settlement procedures put
in place by the authorised ATM Network Operators/ Card
Payment Network Operators.
III. Customer Grievance Redressal
1. Primary responsibility to redress grievances of custom-
ers relating to failed transactions will vest with the Issu-
ing Bank. The Sponsor Bank will provide necessary sup-
port in this regard, ensuring that the WLAO makes avail-
able relevant records and information to the Issuing Bank.
2. The directives on the time-lines for resolution of com-
plaints of failed ATM transactions at bank operated ATMs
would also apply to transactions at the WLAs.
General: The relevant provisions of all guidelines/direc-
tives/instructions issued by RBI , with reference to the
services, operations, cash handling, security, etc. at the
bank ATMs, would also apply to the WLAs.
White Label ATMs in India
1. Levying charges without prior notice: The complainant firm approached the BO
when the bank levied charges in their current account without prior notice and requested
for refund of charges from the bank. On taking up the matter with the bank, it was
submitted that the charges were recovered by the system automatically as per the extant
guidelines. The charges were displayed on the notice board of all the branches of the bank.
On perusal, it was observed that the bank did not furnish break-up of charges levied either
to the complainant or to the Office. The bank recovered the charges on quarterly basis
instead of half yearly basis as stipulated. It had also not followed the instructions of RBI
while identifying and designating the account as inoperative. It did not provide a copy of
the account opening form of the subject account and the terms & conditions of account
opening, requisitioned by the BO. The banks deficiency in rendering service to the
complainant was established, as it had acted in a non-transparent manner and also violated
its internal instructions, BCSBI Codes and RBI guidelines. An Award was passed and the
bank was directed to refund the charges levied and also pay a token compensation of Rs.
500 to the complainant firm for the inconvenience caused.
2. Fraudulent withdrawal through lost debit card: A complainant lodged a complaint
for mis-utilisation of his lost debit card, despite reporting its loss to the bank on the same
day by e-mail to the banks branch. The complainant requested for refund of Rs. 20,703
withdrawn by a miscreant by using the lost card before it was blocked by the bank. On
taking up the matter, the bank submitted that the complainant had neither lodged his
complaint through toll free number nor lodged FIR in the local police station as required.
However, on receipt of complainants e-mail, the branch initiated the necessary action to
get his debit card blocked. The banks card company could block the card only on the next
day.The BO observed that the delay in blocking the card by the bank paved the way for the
fraudulent transaction(s) to occur. Further, since the matter involved a fraud, the bank
should have compensated the customer as per the banks policy and extant RBI guidelines
in this regard. Thus, the deficiency in services of the part of the bank was established. An
Award was passed on the bank to credit the disputed amount of Rs. 20,703 with interest
at savings bank interest rate from the date of transaction to the date of credit of the
disputed amount to the customers account.
3. Bankers lien for recovery of dues: A complainant was having a credit card of a
bank and was regular in payment of dues. He approached the BO when the bank informed
him that the bank had exercised the right of bankers lien and debited his savings bank
account held with the bank towards outstanding in his card account. The complainant
submitted that (1) the statements were not sent at proper address of the card holder,
forcing him to make payments with delay, resulting in levying of various charges for delay
in payment on card account; (2) He had made a payment of Rs. 3,000 towards full and final
payment for outstanding balance on his card account and (3) the bank, without verifying its
records, exercised the right of bankers lien on his account for not making payment towards
outstanding balance on the credit card account.
The bank stated that on verifying their settlement records, they found that no such
settlement was updated in their system. However, considering the fact that the complainant
had gone ahead and made payment on the basis of a settlement, the bank refunded an
amount of Rs. 4,562 and cleared his credit card dues by reversing all amount wrongly
charged on the card account, as a service gesture.
The reply submitted by the bank that the settlement offered to the complainant was not
updated in the system but the payments towards the same were reflected in the records,
was not found satisfactory. On taking up the matter, the bank compensated the complainant
by paying an amount of Rs. 5,000.
4. Delay in removal of pledge: A complainant had pledged 17,700 UTI 6.6% Demat
ARS bonds issued by UTI with a bank as security for loan availed. The complainant repaid
the loan on October 01, 2009. However, in spite of repaying the loan, the bonds maturing
on April 01, 2009 were held under pledge by the bank up to March 31, 2010. The complainant
received redemption proceeds of the bonds vide cheque dated May 13, 2010 i.e. late by 13
months from the date of maturity resulting in loss of substantial amount of interest. On
taking up the matter with the bank, the bank submitted that they had not received any
request from the complainant for removing the pledge after the repayment of loan resulting
in delay in receiving the proceeds. On detailed examination of the issue, it was found that
the bank initiated the process of removal of pledge with delay. The bank finally made a
payment of Rs. 1,62,828 to the complainant at FD interest rate as per their compensation
policy for the delay in removal of pledge, once the loan was repaid by the complainant.
Banking Problems based on Ombudsman Decisions
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Features of CDs
There are 2 main agricultural seasons i.e. Kharif season and Rabi season.
Kharif season (or summer season) It begins in June and crops are har-
vested in Sept and October. The main crops are rice, sugar-cane, jute etc.
Rabi Season (or winter season) It begins in the middle of October and crops
are harvested in March and April. The main crops are wheat, barley, gram etc.
Zaid crops Crops grown throughout the year under artificial irrigation and
include melons, groundnut, water melons, cucumber, tuber vegetables etc.
Dry farming : Under this, the farming is carried on in the regions where the
rainfall is scanty i.e. less than 50 Cm annually and where irrigation facilities
are either absent or very little. Crops covered are Jowar and Bajra.
Humid Farming : It is a system of farming practiced in regions with adequate
rainfall i.e. between 100 to 200 Cm without the help of irrigation. Under this,
generally, double cropping (i.e. growing of two crops in a year on the same
land) is followed. Rice, Sugarcane, jute etc. are cultivated under this system.
Irrigation farming : It is a system of farming under which crops are grown with
the help of irrigation sources for cultivation in regions of seasonal or low
rainfall. Under this system, multiple or double cropping is practiced. A large
variety of crops, such as rice, sugarcane, cotton, wheat, tobacco etc. are
grown under this system.
Shifting cultivation : In this system, the land is acquired by cleaning forest and
agriculture is practiced on that till the fertility of the land is exhausted.
There after, another forest is cleared and agriculture is practiced on the land
so cleared. It is practiced mainly by tribal living in forest. It is predominant in
the forest areas of Assam, Meghalaya, Nagaland, Manipur etc.
Subsistence Agriculture: Under this system the farmer and his family produce
cereals for themselves only or for local market. This is practiced in most
parts of India even today.
Plantation farming : It stands for the cultivation of a single cash crop in
plantations or estates on a large scale (tea plantations, coffee plantations or
rubber plantations). It is capital-intensive and the yield is generally obtained
continuously for a number of years. It requires a long growing period.
Organic farming is the form of agriculture that relies on techniques such as
crop rotation, green manure, compost and biological pest control. Organic
farming uses fertilizers and pesticides but excludes or strictly limits the use of
manufactured (synthetic) fertilizers, pesticides.
Arable farming : It is a system under which the land is used only for the
cultivation of crops i.e. food crops and cash crops and not for other purpose.
Mixed farming is a system under which the land is used for cultivation of
crops and also for other purposes, such as stock-raising, poultry farming etc.
Single cropping : Known as mono-cropping or mono-culture, it is a system
under which the cultivators grow one crop during the year.
Double cropping is a system under which 2 crops are raised by the farmers
from the same land during the year.
Multiple cropping is a system under which the farmer grow more than two
crops from the same land during the year.
Crop rotation : A system of farming where different crops are grown on same
land alternatively leading to effective control of weeds, pests & diseases.
Mixed cropping means cultivation of more than one crop simultaneously on
same piece of land. Two crops are sown together but harvested at different
times because the growth period of the plants of the different crop, varies.
Intensive Farming: It aims at maximum possible production on the limited
land with all possible efforts. It is capable of raising more than one crop a
year. It is practiced in most parts of densely populated areas.
Extensive Farming: It is done on large farms (known as mechanical farming
due to extensive use of machines). Employment of labour and capital per
hectare of land is comparatively less. It is practiced in sparsely populated
areas like USA, Canada, Russia and Australia.
Agriculture & Farming Related Terms
Govt. of India Subsidy routed

through NABARD to
areas related to Agro Processing
Rural godowns (subsidy = 15%,
33.33%)
Strengthening of Agricultural Mar-
keting Infrastructure
(subsidy = 25%, 33.33%)
Dairy Entreprenuer Development
Scheme (25%, 33.33%)
Agri Clinic Agri Business (36%, 44%)
Credit linked capital investment Sub-
sidy Scheme (15%)
Poultry Venture Capital Fund (Sub-
sidy) (25%, 33.33%)
Establishment/modernidsation of rural
slaughter houses (A.P., U.P. Meghalaya)
(subsidy = 50%)
Establishment of poultry estates/
mother units for backyard poultry (sub-
sidy = 50%)
Blue Revolution: Fish Production
Black Revolution: Petroleum Production
Brown Revolution: Leather/non-
conventional(India)/Cocoa production
Golden Revolution: Honey Production
Golden Fiber Revolution: Jute Production
Green Revolution: Food grain (Cereals,
Wheat &Leguminous plant) production
Grey Revolution: Fertilizer production
Silver Fiber Revolution: Cotton produc-
tion
Silver Revolution: Egg/Poultry produc-
tion
White Revolution: Milk/Dairy production
(In India - Operation Flood)
Pink Revolution: Prawn Production
Round Revolution: Potato Production
Red Revolution: Meat/Tomato
Production
Silver Revolution: Egg/Poultry
Production
Yellow Revolution: Oil seeds Production
Revolutions
Banking events updatE July 2012 9 Financial Events
RBI ON EXTERNAL VULNERABILITIES: As per the RBIs own administration,
external sector vulnerabilities have been worsening. The reserves cover of
imports, the ratio of short term-debt to total external debt, the ratio of foreign
exchange reserves to total debt and the debt service ratio have deteriorated
over a period. As long as the international prices and the consumption of oil
remain high, the balance of payments position, exchange rate, fiscal deficit can
not be expected to show any considerable improvement in the near term.
RBI AND FINMIN ON RURAL BANK BRANCHES: Recently, the Finance
Ministry told banks that every business correspondent outlet should be converted
into an Ultra Small Branch. So far, business correspondents appointed by the
banks to provide banking services to the financially excluded in rural India-
reached out to account holders on their own and mostly from home. On the
other hand, RBI told banks to set up an ultra branch for 8-10 business
correspondents operating in an area.
RBI TO BANKS AND EXPORTERS FOR LEGAL ACTION: RBI has threatened
the banks and exporters with penal action if they were found violating its
instructions on converting dollar funds into domestic currency in a fortnight.
The RBI had on May 10, cracked down on exporters hoarding dollars and asked
them to sell half the foreign currency in their accounts. It also directed all
exchange earners to surrender 50% of their future earnings for conversion
into rupees.
SEBI ON CONSENT ROUTE IN SERIOUS OFFENCES: SEBI has informed that
insider trading, front running and serious fraudulent or unfair trade practices
can not be settled through the consent route. The consent mechanism enables
entities to settle charges against them without admission or denial of guilt on
payment of settlement charges. In addition they also have to accede to other
terms and conditions recommended by SEBIs High Powered Advisory Committee.
GOVT. DIRECTION TO BANKS ON FINANCIAL INCLUSION: The Finance
Ministry has directed the banks to ensure that every household has at least
savings bank account by end of June as a precursor to direct transfer of
benefits under the governments financial inclusion Plan. The Government claims
that all habitants with population in excess of 2000 now have a bank branch,
which will help it takes its financial inclusion drive to the next level.
GOVERNMENT NEW STEPS TO WOO FOREIGN INVESTORS: In a bid to
attract more dollars into Indian financial markets, the Finance ministry has
allowed Qualified Foreign Investors (QFIs) to keep money as long as they wish
before investing in shares. The Ministry has also decided to create a separate
investment limit of $1 billion for such category of investors to put money in
corporate bonds and mutual fund debt schemes This will be apart from the $20
billion investment limit for FIIs. Along-with the QFIs and FIIs, the Government
has also permitted individual investors and investor associations from the Gulf
countries to invest as QFIs into the Indian Equity Markets.
JAPAN AND CHINA TO START DIRECT CURRENCY TRADING: Japan and
China will start direct currency trading. This is the first time China has let a
major unit , other than the dollar, swap with the Yuan. The move, which will
scrap the greenback as an intermediary unit, comes as China introduces measures
as a part of a long term goal of internationalizing its currency to rival the dollar.
The two way trade will also be allowed to more in a wider range than the narrow
band at which the dollar and Yuan change hands.
GOVERNMENT OKAYS EARLY RECAST OF LOANS TO TEXTILE: The
Government has allowed restructuring of Rs.35, 000 Crore loans to the debt-
ridden Textile Sector. The total debt of the Sector has risen to Rs.1.5 Lakh
Crore, of whi ch Rs.35, 000 Crore needed
immediate relief and the Government would soon
direct the banks to do the same. An Inter-
Ministerial committee would be set up soon to help
fast track the restructuring. Further, it was decided
that the restructuring package would be on a case
to case basis and would be taken up by each bank
separately.
GOVT. DIRECTION ON INTERVIEW PANEL OF
BANKS: The Finance Ministry has issued a circular
to all PSU banks that the interview Panel which
selects candidates for internal promotions, should
have one external member with experience in
banking. The Ministry has also directed banks to
complete the promotions and transfers by June
itself so that officers can be transferred before
the beginning of academic year.
CHINAS BANKS LOWEST RATES SINCE 2010:
Chinas Banks, awash with funds, are paying the
lowest interest rates for Government deposits
since 2010 and boosting holdings of sovereign
bonds as deteriorating economy curbs risk-taking.
The yield on Chinas bench-mark 5-year bonds has
tumbled 46 basis points since April, set for the
Biggest Monthly decline since 2008. Banks are
flush with liquidity as they find it difficult to put
money in their loan portfolio because of weak
demand and creditworthiness of borrowers.
SEBI TO DERECOGNISE EXCHANGES WITH
SUB-RS.1000 CRORE: SEBI will compulsorily
derecognize Exchanges with less than Rs.1000
Crore annual turnover and not applying for exit
within two years. Stock Exchanges with an annual
turnover of less than Rs.1000 Crore are eligible to
exit voluntarily. Derecognised Exchanges need to
file for exit within two months. Failure to do so
would result in their compulsory exit.
INVESTMENT RATE OF INDIA SLUMPS: The
revised estimate of national income for 2011-12
released by the Central Statistics Office (CSO)
revealed that Gross Capital Formation has fallen
to 29.5% of GDP at current prices for that year.
This is the first time that GCF has gone below 30%
since 2004-05, compounding the problems for the
Government, which is already buffeted by such
challenges as reform inertia and criticism over
retroactive changes in income tax law.
FORWARD MARKETS PANEL FINDS
DISPARITY IN TRADING: The forward Markets
Financial Financial Financial Financial Financial
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10 Banking events updatE July 2012 Financial Events
Commission has found huge disparity between the ratio of Open Interest
and the Volume of Trading in some commodities traded on the 5 national
commodity exchanges. In the futures market, Open Interest is the number
of outstanding contracts that are held by market participants at the end of
the trading day. Globally, trading volumes and open interests go hand-in-
hand on exchanges.
CABINET CLEARS NEW TELECOM POLICY: The Union Cabinet has
approved the National Telecom Policy 2012 that aims to do away with roaming
charges, introduce a Pan India mobile permit that will enable mobile phone
firms to offer all communication services, allow operators to share and trade
spectrum and facilitate consolidation in the sector.
GOVERNMENT ANNOUNCED AUSTERITY MEASURES: After the economy
grew slowest in 9 years during 2011-12, the Government announced austerity
measures to cut down its expenditure and instill confidence among investors.
The Finance Ministry asked ministries and departments to cut the non-plan
expenditure by 10%, barred them from conducting conferences in five-star
hotels, buying new vehicles or travelling abroad unless absolutely necessary.
Also, a total ban has been imposed on creation of new Government posts.
INVESTMENT TRACKING SYSTEM FOR MEGA PROJECTS: The Prime
Ministers Office announced the Investment Tracking System for Mega projects.
Under the new investment tracking system, the National Manufacturing
Competitiveness Council (NMCC) will track all public sector projects with an
investment of Rs.1000 Crore and above. The Department of Financial Services
(DFS) will monitor projects with an investment of Rs.1000 Crore and above in
the private sector. Such a system will aim at ensuring speedy implementation
of major investment projects that are faced with delays on multiple fronts.
GOVT. DECISION ON RAJIV GANDHI EQUITY SCHEME: The Rajiv Gandhi
Equity Savings Scheme (RGESS) is a scheme that was announced in this
years budget. Under this scheme, the first time equity investors can invest
up to Rs.50, 000 once, to get a tax rebate. The Government has decided
that equity mutual funds are not going to be permissible investments under
the RGESS. The Government seems to have decided that the scheme will only
permit direct equity investments in the Top 100 companies of the NSE and
BSE. There will a lock-in period of three years.
SUPREME COURT RULING ON AUCTION AMOUNT: The Supreme Court
has ruled that if auction of property to recover public dues fetches more than
the amount payable, the balance should be paid to the owner. Failure to do
so will make the entire auction sale illegal. All consequential proceedings are
liable to be quashed.
SUPREME COURT VERSION ON MERCY FOR CORRUPT OFFICIALS:
The Supreme Court has stated that even if the bribe amount may be small, it
can not be condoned after 18 years because corruption corrodes the spine
of the nation and in the ultimate eventuality makes the economy sterile.
CENTRAL BANKING REGULATOR PROPOSED FOR EUROPE: Under
growing international and financial market pressure to fix the regions bank
problems, European officials took a step towards surrendering a cherished
national prerogative by proposing to shift Banking Regulation to Central
Authority. If endorsed by European leaders, the plan by the European
Commission could spread the cost of bank rescues and demonstrate that
governments are willing to cede power to the strong, centralized institution
to stabilize the currency union.
GOVERNMENT OKAYS FDI FROM PAKISTAN: The Government has
permitted for Foreign Direct Investment (FDI) from Pakistan and treating it
on a par with such investments from Bangladesh. Currently, a Bangladeshi
citizen or an entity incorporated there is allowed to invest in India with the
Foreign Investment Promotion Boards approval. The FDI Policy permits Indian
companies to issue employee stock options to Bangladeshi citizens, also with
the FIPBs nod. These norms for Bangladesh will now be applicable to Pakistan
too. The FIPB clearance is also meant to take care of security concerns.
EURO AREAS GERMAN BANKS SAFEST: As Europes sovereign debt crisis
escalates, Germany is becoming a magnet for depositors keen to stow their
savings in the Euro areas safest market. Deposits in Germany rose 4.4% to
2.17 trillion as of April 30. According to the data of
European Central Bank, deposits in Spain, Greece
and Ireland shrank 6.5% to 1.2 trillion in same
period, including a 16% drop for Greece.
CHINAS SURPRISE RATE CUTS: Chinas surprise
rate cut unveiled recently boosted hopes that cheaper
credit would help combat its faltering economic growth,
and it encouraged global share markets in their belief
that the major economies were stepping up stimulus.
The Peoples Bank of China cut the official one-year
borrowing rate by 25 basis points to 6.31%, and the
one-year deposit rate by a similar amount to 3.25%.
SPAIN FOURTH COUNTRY TO SEEK EUROPEAN
ASSISTANCE: Spain is expected to ask European
help for recapitalizing its stricken banks, becoming
the 4th country to seek assistance since the Euro
Zones debt crisis began. The move comes after Fitch
Ratings cut Madrids sovereign credit rating by 3
notches to BBB from A, highlighting the Spanish
Banking Sectors exposure to bank property loans
and to contagion from Greeces debt crisis.
FINMIN TO BANKS TO BE TOUGH WITH
DEFAULTERS: Concerned with the spurt in bad loans
of public sector banks, the Union Finance Ministry
has asked them to clearly turn down requests for
more loans or facilities from willful defaulters and also
bar promoters of these companies from getting
institutional finance to float new ventures for 5 years.
Banks and other financial institutions should make
formal complaints against auditors found negligent or
deficient in auditing the books of borrowers with the
accounting regulator.
S&P WARNS INDIA OF RATING DOWNGRADE:
Rating Agency S&P warned that India is at risk of
losing its investment grade rating due to slowing GDP
growth and political roadblocks to economic policy
making. According to the Rating Agency, economic
growth has slowed in India in recent months and the
country has suffered mild erosion in its economic
profile, with widening trade and current account
deficits. Among the 4 countries of BRIC, India
currently has the lowest credit rating and is the only
one with a negative outlook.
RBI RAISES INWARD REMITTANCE LIMIT: RBI
has increased the number of times a person in India
can receive remittances from abroad in a year. Now a
person can receive remittances 30 times compared
to 12 earlier. The cap on a single transaction under
Money Transfer Service Scheme (MTSS) is $2, 500.
This means earlier an individual could remit up to $30000
in a year. With the new guidelines, the remittances
could be as much as $75, 000.
SEBI TO QFIs NOT TO TAKE P-NOTE ROUTE: SEBI
has said that the investors who come in through the
newlyformed qualified foreign investor (QFI) route
can not indirectly channelise investments into the
country through any other route. QFIs also can not
issue offshore derivative instruments or participatory
notes to other investors.
SUPREME COURT RULING ON GOVT. RULES: The
Supreme Court has ruled that the Government can
not make rules which are not in consonance with the
statutory provisions while holding as unconstitutional
the Centres decision to appoint part time members
for the Appellate Tribunal for Foreign Exchange. If a Rule goes beyond the rule-
making power conferred by the Statute, the same has to be declared ultra vires.
FINMIN TIGHTEN NORMS ON NPA: According to the guidelines issued by the
Finance Ministry to all PSU Banks, the failure to repay one Bank could result in an
account being classified as a bad loan by all banks. Since the counter party for
all lenders is the same, the status of the borrower across all lenders shall have to
be the same. The Finance Ministry has led it to getting into areas that have been
the domain of the RBI. For instance, RBI does not require all lenders to classify
an account as a bad loan even if the borrower fails to repay one.
FM CAUTIONS 3 PSU BANKS OVER BAD LOANS: The Finance Minister has
said that although most of the 21 State run banks are reeling under the stress of
bad loans, the proportion of such loans to total outstanding credit is the highest
at SBI, Central Bank of India and UCO Bank. While the average ratio of gross
NPA to gross advances of state run banks was 3.10% at the end of March, it
was 5.22% in case of SBI, 3.93% for CBI and 3.73% for UCO Bank. RBI has also
recently advised selected banks to take necessary steps for appropriate NPA
Management.
SUPREME COURT RULING ON SHORT-STAMPING: The Supreme Court has
ruled that when a Post Office accepts bulk mails stamped through franking
machine and delivers them to the addressees without demur, it does not lie in its
mouth to say thereafter that the sender had under-stamped the mails and hold
him accountable for the deficit.
RBI DIRECTIVE ON EROISON OF LOAN COLLATERALS: RBI has instructed
banks to ensure that borrowers have no outstanding statutory dues, such as
EPF, by seeking an auditors certificate for such compliance in their credit appraisal
process. Such checks will be in the interest of banks. These guidelines have been
framed under the Banking Regulation Act, which empowers RBI to issue norms in
the interest of depositors, banking policy and the public at large.
FM TO LIC FOR SPECIFIC SCHEME FOR FARMERS: The Finance Minister has
directed the LIC to design a life insurance scheme a Kisan Bima Yojana- for
farmers. This scheme should be on the lines of the Janshree Bima Yojana, a social
security scheme - where cover can extend up to 65-70 years. The additional
premium could be borne by the farmers covered under the scheme.
INDIAS EXPORTS, IMPORTS AND TRADE DEFICIT POSITION: Exports
during April-May 2012-13 fell 0.7% reaching $50.13 billion over $50.48 billion in
the same period last year. Imports stood at $79.8 billion down 2.42% against
$81.87 billion in April-May 2011-12. The trade deficit during this period of the
fiscal stood at $29.67 billion.
IRDA ISSUES NORMS FOR ORPHAN POLICIES: IRDA has said that the
insurance companies are allowed to allot any of the lapsed Orphan life insurance
policies to other individual insurance agents with valid licence for rendering
effective service to the policy holders. The life insurers should notify the particulars
of the newly-allotted agent to the policy-holders concerned. All policy services
will be rendered by the allottee agent, similar to what the insurance agent was
rendering.
SEBI GUIDELINES ON REDRESS OF GRIEVANCES: According to the guidelines
of SEBI, stock exchanges and depositories will have to use SEBI Complaints
Redress System (SCORES) for complaints lodged against them. SEBI will send
the complaints electronically to them. Exchanges and depositories are required
to redress grievances within 15 days of receipt of complaints on SCORES. They
have 7 days for soliciting additional information from the aggrieved party. The 15
days deadline will start from the date of receipt of such additional information.
RBI LEAVES KEY RATES UNCHANGED: RBI, in
its mid-quarterly Monetary Policy review, kept its
policy rates unchanged-Repo Rate at 8% and CRR
at 4.75%- banks are likely to maintain a status
quo on deposit and lending rates. RBI observed
that it had frontloaded the policy rate reduction in
April with a cut of 50 basis points. This decision
was based on the premise that the process of
fi scal consol i dati on, cri ti cal for i nfl ati on
management, would get under way, along with
other supply-side initiatives.
FITCH REVISES INDIAS OUTLOOK TO
NEGATIVE: Rati ng Agency Fi tch fol l owed
Standard & Poors in changing the rating outlook
on India to Negative from Stable, while retaining
the current rating at BBB-. Indias Sovereign
rating of BBB- is the Lowest Investment Grade
Rating issued by the Agency. The negative outlook
refl ects Indi a s l i mi ted progress on fi scal
consolidation and in particular, on reducing the
Central Government deficit despite improvement
in the financial health of State governments.
FINMIN TO BANKS FOR TIME-BOUND
DISCIPLINARY DECISIONS: The Finance
Ministry has directed all the public sector banks to
complete disciplinary proceedings against their
officials in corruption cases within a specified time
period. The inquiry report should be prepared and
finalised within a period of 3 months. If an
extension is required, it should be given with the
approval of the relevant authority and at most 3
extensions can be given of one month each.
NEW RISK-BASED SUPERVISION FOR BANKS:
The present compliance-based and transaction-
testing approach (CAMELS) is more in the nature
of a point-in-time assessment. As per the
recommendations of the High Level Steering
Committee for review of Supervisory Processes
for commercial banks, the periodicity/ intensity of
onsite inspection of a bank would depend on its
position on the Risk-Impact Index Matrix rather
than its volume of business. Under the proposed
Risk-Based Supervision (RBS) the supervisory
rating would be a reflection on the risk elements
(inherent business risks and effectiveness of
control).
FITCH CUTS OUTLOOK TO NEGATIVE FOR 8
INDIAN BANKS: Fitch Ratings revised the outlook
on 8 banks and 3 financial institutions to Negative
from Stable, while affirming the rating. Fitch
Rating said that there could be further pressure
on banks future asset quality, given Indias
weakening economic and fiscal outlook, slowing
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12 Banking events updatE July 2012
business reforms and inflationary pressures. The revision in
outlook also includes 2 leading private sector lenders- ICICI
Bank and Axis Bank.
RBI ISSUES NORMS TO SET UP ATMs: RBI has issued
final guidelines permitting non-bank entities to set-up, own
and operate ATMs in India. This is to ensure the expansion
of ATMs in smaller centres across the country. It has
prescribed 3 schemes under which the roll-out of White Label
ATMs (WLAs) can happen. RBI has stipulated that no
switchover of schemes is possible. The date for determining
the time line for implementation would commence 30 days
after issuance of the authorisation.
COMPETITION WATCHDOG PENALISE CEMENT FIRMS:
In a first-of-its kind order, the Competition Commission of
India (CCI) announced a penalty of Rs.6307.32 Crore on 11
Top Cement Companies, accusing them of creating a Cartel.
CCI has found cement manufacturers in violation of the
provisions of the Competition Act. 2002, which deals with
anti-competitive agreements, including cartel. Each of the
11 firms will have to pay a fine amounting 50% of their profit
during 2009-10 and 2010-11 within 90 days.
GOVT. CLEARS ADVANCE PRICING SCHEME: The finance
Minister has cleared the Advance Pricing Agreement (APA)
Scheme, pertaining to the transfer pricing regulation. APA is
an ahead of time agreement between a tax payer and the
taxi ng authori ty on an appropri ate transfer pri ci ng
methodology. The applicant has to pay a fee of Rs.10 Lakh
for international transactions not exceeding Rs.100 Crore,
Rs.15 Lakh for transactions upto Rs.200 Crore and Rs.20
Lakh for transactions above Rs.200 Crore.
RBI TO PS OIL COMPANIES TO BUY DOLLARS FROM
ONE BANK: RBI has asked Public sector Oil Marketing
Companies, IOC, HPCL and BPCL, to buy 50% of their dollar
requirements from one Public Sector Bank. This move will
help check the perception of excess dollar demand in the
country amid a sharp decline in rupee value. The rupee hit a
record low of 57 against the dollar.
SBI NOT TO LEVY CHARGES ON INTER-CORE
TRANSACTIONS: State bank of India has decided to make
Inter-Core Transactions At Par. Branches have been told
to ensure manually that no service charge is recovered for
all inter-core transactions till it is enabled in the system. This
is part of a drive for rationalizing service charges launched
by the bank. Earlier, the bank had announced waiver of
charges for non-maintenance of minimum balance.
INDIA TO BECOME 8
TH
LARGEST SHAREHOLDER IN
IMF: India is set to become the Eighth Largest Shareholder
in the IMF after quota reforms which are likely to be finalised.
Once the quota reforms are carried out, Indias share at IMF
is set to rise to 2.75% from 2.44%, making it the Eighth
Largest Shareholder in the IMF from its present 11
th
position.
FINMIN TO BANKS FOR TURNAROUD STRATEGY: All
Public Sector Banks have been directed by the Department
of Financial Services of the Finance Ministry to get their
strategy for turnaround of loss-making branches approved
by their respective Boards. Most banks already have strategy
in place for turnaround of loss-making branches, but theses
have not been approved by their respective Boards.
GOVT. SETS SUBSCRIPTION TARGETS FOR PSBs IN
NPS: The poor subscription garnered by Public Sector Banks
under the New Pension Scheme (NPS) has prompted the
Finance Ministry to set targets for them. The Finance Ministry
said that every rural and urban branch of PSBs will have to
generate 150 and 50 subscriptions, respectively, every year. This is
to ensure that the NPS is available to all citizens in the unorganized
sector and the economically disadvantaged sections of society.
SUPREME COURT VERSION ON FEMA TRIBUNAL: Supreme Court
has ruled that members can not be appointed part-time to the
Appellate Tribunal for Foreign Exchange, nor can the Chairman be
selected from them.
NRIs TO BE ALLOWED TO INVEST THROUGH NEW ROUTE:
SEBI is planning to make clarifications in the Qualified Foreign Investor
(QFI) framework that will enable NRIs to make investments. The
route announced by the Finance Ministry on January 1, 2012, allows
foreigners to invest directly in Indian shares. However concerns
over taxation and the responsibility of qualified Depository
participants has led to some teething issues. SEBI is also likely simplify
the rules governing Know our customer norms for QFIs. .
MORE SOPS FOR AFFORDABLE HOME DEVELOPERS: In a major
push for affordable housing, the Government is set to raise both the
subsidy given to developers as well as the cost ceiling for affordable
housing. The Government is to increase the subsidy (Capital) from
the current Rs.50, 000 to Rs.80, 000 per dwelling unit. This subsidy
will be given to developers building affordable housing meant for
economically weaker sections, The Govt. is also to raise the loan
ceiling for subsidy to Rs.5 Lakh from Rs.1 Lakh for such dwelling
units.
RBI PANEL FOR GRADUALLY RAISING FII LIMIT IN G-SECS:
A Working group of RBI has called for increasing the limit on Foreign
Institutional Investment (FII) in Government securities (G-Secs) to
boost liquidity and higher foreign inflows. The Panel is headed by
the ED, Mr. R. Gandhi. RBI calls for a framework to be prepared for
the next 3-4 years considering the possible effects of sudden exit of
investors on capital flow and on market volatility.
CURRENCY DERIVATIVES VOLUMES DIP ON EXCHANGES: The
rupee lost almost 13% against the dollar between March and May,
yet the currency derivatives turnover on the NSE dipped by around
11% against the same period last year. The NSE is the dominant
exchange for currency trades, handling more than half the
transactions in the currency futures market and almost all the deals
in currency options.
RBIS HOLDINGS OF GILTS RISING: The RBIs holdings in gilts or
Governments bonds have risen by almost two percentage points to
14.4% in the six months ended March 31, 2012. The holdings have
trebled from lows of 4.8% as of March 2008. Buyback operations
done by RBI in 2009 and 2011-12 to infuse liquidity into the market
have increased the holding in gilts. RBI over the six months period
ended March 2012, infused Rs.1.3 Lakh Crore by buying back
Government bonds.
FINMIN FOR UNIFORM GRIEVANCE REDRESS SYSTEM IN
BANKS: Finance Ministry has asked PSU Banks to put in place a
uniform 3-tier public grievance redress system within 3 months. This
is to ensure that all customer complaints are resolved within 21
days. The primary responsibility will be of the branch manager who
will be allowed 10 days to redress customer grievance. If the matter
is not resolved, it will go to the RO/ZO, which will get 5 days to
resolve. If the case is still unresolved, it will go to HO which will get
6 more days to resolve it. The underlying message is that banks
should not make customer go around to resolve their complaints.
REFINANCING OF BAD LOANS OF STATE POWER DISCOMS:
The Finance Ministry and RBI have turned down the Power Ministry's
proposal seeking refinance of Rs.195 Lakh Crore accumulated losses
incurred by state electricity distribution companies. The Finance
Minister and the RBI both have said that refinancing of such debt is
not viable as it will increase NPAs of banks and other financiers. In
the current economic scenario, banks are not in a position to carry
additional NPA burden.
GENERAL AWARENESS
European Union (EU) and India have joined
hands to launch a skills development project.
The EU will invest 6 million over the next four
and a half years in the project.
Finance Ministry has hiked interest rates on
General Provident Fund (GPF) to 8.8% a
year with from April 1 this year.
According to the DIPP, FDI inflows incrreased
by 34.4% to $46.84 billion in 2011-12 as
compared to $34.84 billion in 2010-11
and $37.74 billion in 2009-10.
Government has set up a new Five-member
Expert Panel to identify the poor and revisit
the methodology in the face of widespread
criticism of scaling down of poverty estimates
by the Planning Commission. The group will
be headed by Dr. C. Rangrajan, Chairman
of PMs Economic Advisory Council
According to the Expert Panel, the
Government will have to consider diluting its
sharehol di ng i n publ i c sector banks to
generate the over $1 trillion needed to fund
the country s ambi ti ous i nfrastructure
development over the next five years.
SBI Cards is the 3rd Largest Credit Cards
Company in the market after HDFC Bank and
ICICI Bank.
IRDA has capped the Agents commission,
paid by insurers, for selling policies with a
limited premium payment tenure at 10-25% of
the first years premium.
The countrys gold imports declined 32.4%
in 2011-12, owing to slew of measures taken
by the Government to control the precious
metals flow into the country.
India announced it will provide a $500 million
Line of Credit to Myanmar as the two
countries signed agreements on a range of
sectors, including air services, beginning a
new journey of bilateral cooperation.
Insurance Ombudsman may be allowed to
deal with grievances of individual consumers
involving claims higher than Rs.20 lakh.
A single entrance examination will be held
from 2013 for admission to the IITs, IIITs and
NITs.
According to Anand Sinha, Deputy Governor
of RBI, the burgeoning NPA in the banking
sector was not a systemic issue but only a
reflection of the economic stress being faced.
The government has constituted a committee
under the chairmanship of Dr. C.Rangrajan,
Chairman of PMs Economic Advisory Council,
to review the existing Production Sharing
Contracts (PSC). The Government awards
oil and gas exploration blocks on PSC basis.
To reduce damage of food-grai ns, the
Government has decided to open seven new
Quality Control Cells in the 12
th
Five Year
Plan (2012-2017)
Imports of sensitive items, including fruits,
vegetables and edible oils went up by 40.9%
year-on-year basis to Rs.92, 574 Crore during
April-February last fiscal.
According to the warning of Greece Bank,
an exit from Euro will see Greeks lose more
than half their annual income and prompt a
dramatic rise in unemployment and inflation.
RBI has given an in-principle approval for
a banking licence to Morgan Stanley. The
March 31, 2012.
The Business Confidence Index jumped to
15 month high of 76.7 in May, from 73.8 in the
previous month.
According to the CBDT, Indias Gross Direct
Tax Collection rose by 13.2% to rs.5, 90, 077
Crore in the last fiscal. The collection was Rs.5,
22, 104 Crore in 2010-11.
The Finance Ministry has said that it will
not relax the deadline for maintaining
minimum public shareholding norms. All
listed companies have to bring their minimum
public shareholding to 25% by June 2013.
The US Trade Deficit narrowed in April,
as both imports and exports fell from record
high levels set in March, in a sign of slowing
global demand. The Trade Deficit shrank to
4.9% to 50.1 billion, as imports dropped 1.7%
to $233.0 billion, while exports slipped 0.8%
to $182.9 billion.
Mutual fund agents and their sub-agents
will not have to pay service tax from July 1
from distributing and marketing mutual funds.
The Finance Ministry has made it clear that it
has no intention to levy any service tax on
derivative transactions even in the negative
list regime. From July1, service taxation will be
under a negative list approach whereby all
services except a specified list of 17 services
would attract service tax.
SEBI has tightened the rules governing
Participatory Notes (PN) by cutting the
time lag in reporting these transactions. Now
FIIs will have to report monthly details of
transactions done through P-Notes within 10
days instead of 6 months earlier.
The State Crime Records Bureau (SCRB)
will be First Government Office in Rajasthan
to go paperless under the E-office project
implemented by national information Centre.
Profit growth of public sector banks as a
group slowed in FY12 compared with the
previous year. Net profit of the 26 PSBs put
together grew at a slower rate of 10.3% in
FY12, as against 15.3% in FY11.
The Finance Ministry is working on a new
policy framework for the countrys banking
sector that will provide a clear roadmap for
RRBs, Co-Op. Banks and other Regional
banks.
Indirect Tax collections in May increased
16.1% at $37, 166 Crore, as against Rs.32, 019
Crore in the same month the previous year.
Finance Minister pegged GDP expansion at
7% for 2012-13 substantially lower than 7.6%
assumed in the budget.
European Union is considering a possible
suspension of the Schengeon Agreement along
with limits on withdrawals from ATMs and
capital controls, should Greece opt to leave
the Euro Zone.
FITCH Ratings downgraded 18 Spanish
banks less than a week after the Agency cut
he country s soverei gn debt rati ng,
underscoring the potential for lenders assets
to deteriorate further. Fitch had slashed Spains
rating by three notches to BBB.
United Arab Emirates Market Regulator
has said that the shareholders will have to
disclose purchases that may lead to holdings
bank would now have to put in place its
systems and processes, in terms of
technology and human resources, before
it approaches the RBI for commencement
of operations.
According to the Consulting Firm Boston
Consulting groups global wealth Report,
the number of millionaire households
in India jumped nearly 21% to 1, 62, 000
in 2011 from 1, 34, 000 in 2010.
Governments Fiscal Deficit during 2011-
12 worked out to be 5.7% of the GDP,
lower than 5.9% projected in the revised
estimate in the budget.
Rating agency CRISIL has agreed to buy
UK-based fi nanci al data anal yti cs
company Coalition i n an al l -cash
transaction for about Rs.250 Crore.
Coalition provides high-end analytics and
proprietary research to investment banks
RBI has launched the 28
th
round of its
inflation expectation survey which will
help RBI in formulating the monetary
policy.
Mr. D.K.Malhotra has taken charge as
CMD of LIC of India.
According to the draft guidelines on
IRDA (Health insurance) regulations
2012, IRDA plans to make the settlement
of claim within a month mandatory.
Anshu Jain has taken over as the First
India-born Co-Chief executive of
Deutche Bank, marking the beginning
of a new era in the German lenders 142
year history.
Indias Purchasing Managers Index
(PMI) was lower at 54.8 points in May,
compared with 54.9 points in April. Any
score above signifies growth.
FITCH Ratings has revised Indian Banks
outlook to Negative from Stable, while
affirming its long term foreign currency
issuer default rating at BBB-.
The former Egyptian President, Hosni
Mubarak, 84 years of age, is the First
Arab Leader being tried by his own
people, sentenced to Life Imprisonment
for his involvement in killing some 900
protesters.
Chinese non-manufacturing
industries expanded at a slower pace
for the second month, as export orders
declined and weaknesses in real estate
countered strength in retailing and
leasing. Purchasing Managers Index fell
to 55.2 in May from 56.1.
Government has set up a High-level
Board under Commerce and Industry
Minister, Anand Sharma, reflecting an
urgency to reverse the contraction in
Industrial output.
SBI has outperformed private sector
financial companies, including HSBC
AMC, in providing returns on investments
to the retirement fund body Employees
Provi dent Fund organi sati on. SBI
provided the highest return of 9.31% to
the EPFO during November1, 2011 to
DIARY OF EVENTS
Compilation : SP Sharma & Sapandeep Toor Source : Financial Newspapers, Financial News-Magazines & Financial and Institutional Web-sites
of 30% stakes individually or through a group.

According to the study by Federal Reserve,
the financial crisis wiped out 18 years of gains
for the median US household net worth, with a
38.8% plunge from 2007 to 2010 that was led by
the collapse in home prices.
According to the Global Financial Literacy
Barometer, India ranked 23
rd
among the 28
countries surveyed, with 35% of its population
termed financially literate.
Aided by a sharp decline in refund outgo, the
Centres net direct tax collection surged 172.64
% in April-May 2012 to Rs.35,323 Crore against
Rs.12,956 Crore in the same period of last year.
Refund outgo declined 58.85% in the first two
months of the current fiscal.
The European Central Bank called for Euro
Zone lenders to form a Banking Union to
oversee its big banks, a move that would help
shield countries and their tax payers from the
misfortunes of their troubled lenders.
Government has given RBI Deputy Governor
KC Chakrabarty a three month extension ,
pending two years approval.
The total value of shares pledged by Indian
Promoters as a percentage of the market
capitalisation of their companies has fallen to its
Lowest level since March 2009, indicating
promoters of some large groups have revoked
their shares.
RBI has allowed advanced payments in
rupees for exports to Iran. Indian exporters
for long have been seeking an advance
payment mechanism to facilitate exports to Iran
as they seek to use the conduit in an effort to
alleviate payment problems caused by western
sanctions over Tehrans disputed nuclear
programme.
Switzerland Government has said that the
quantum of money held by Indians in Swiss
Banks stood at Swiss Franks 2.18 billion (About
Rs.12, 740 Crore) at the end of 2011-rising for
the first time in the past five years.
IRDA has appointed Chief Public
Information Officers as per the Right to
Information Act. The officers were appointed
for different departments , including actuaries,
brokers, health accounts, F&I and non-life.
According to IRDA, life insurers will have to
provide an immediate or deferred annuity, even
i n cases where pensi on products are
surrendered before vetting date.
Rati ng Agency MOODYs downgraded
Spains Government bonds another 3 notches,
citing its intention to borrow up to $125 billion
from European Financial Stability Programmes
and its Very limited financial market access.
Moodys dropped the rating from A3 to Baa3,
one notch above the speculative grade.
According to the Hellenic Statistical Authority,
Greeces unemployment rate climbed to a
record in the first quarter amid the countrys
fifth year of recession. The jobless rate rose to
22.6% from 20.7% in the fourth quarter and
15.9% in the same period of 2011.
Gross disbursements of microfinance
institutions declined 38% to Rs.20, 000 Cr in
2011-12, compared with previous financial year.
According to the Rating Agency Moodys,
credit ratings of 5 Dutch Lenders have been
cut, citing a weak Ditch economy, falling
house prices, and the effects of the
European debt crises. Dutch banks will
face di ffi cul t operati on condi ti ons
throughout 2012 and possibly beyond.
Moodys has cut the ratings of 11
European Banks and said that it would
cut again if Greece ditched the Euro,
kicking off a long-awaited round of
downgrades for major European
institutions.
The Finance ministry has asked banks to
ensure that at least one person per
family across the country has a bank
account in the next six months. As per
the 2011 census, only three in five families
have a bank account in the country, or
40% of the families are not in the banking
system.
All India Consumer Price index, which
is the main gauge for retail inflation was
up at 10.36% in May. This was higher
than the 10.26% year-on-year increase
seen in April. Wholesale Price Index (WPI)
based inflation in May stood at 7.55%.
Mr. Alok Mishra, CMD of Bank of India
has been elected as Chairman of the
Indian Banks Association (IBA) for
the current fiscal. Mr Pratip Chaudhry ,
Chairman SBI is the honorary secretary
of the IBA for 2012-13.
Govt. elevated 7 General Managers to the
posts of Executive Director in various
public sector banks. Punjab National Bank
and Bank of India have, for the first time,
got a third ED, while United Bank of India
and Dena Bank have got their second ED
In order to facilitate purchase of crude oil
from Iran, the Finance ministry has issued
a Notification exempting payments
made in Indian Rupees for such imports
from any local tax.
India and 4 other countries of the five-
nation BRICKS block gave a big boost to
IMFs $430 billion bailout fund for the debt-
wracked Euro Zone pl edgi ng to
contri bute $75 bi l l i on wi th Indi a s
contribution being $10 billion.
ONGC has emerged as the No.1 Advance
Taxpayer for the June 15 instalment this
year, dislodging banking behemoth State
Bank of India.
According to the Finance Ministry report,
the filing of first information report (FIR)
by banks when fake currency notes are
detected, may be waived.
According to the Rating Agency S&P,
Italys Third Largest Bank, the Worlds
Oldest, may have to resort to some form
of state intervention if it does not fully
address by the end of June $4.15 billion
capital shortage stemming from its $25
billion exposure to Italian Banks.
According to the report prepared by
Capgemini and RBS Wealth Management,
India is out of the list of Top 12
countries with largest High Networth
Individual (HNI) population as a significant
erosion in equity market in 2011.
Life insurance Industry may be left with
only a handful of products, as IRDA wants
all insurance firms to re-file all existing
products according to its new product design
guidelines by September 30 this year.
United Bank of India has been permitted
by the Central Bank of Myanmar to open a
Representative Office in Yangon. United
Bank of India will be the First Indian Bank to
have its presence in Myanmar.
According to the Credit Suisse, RBI has
become the Least Predictable Central Bank
in Asia surprising the market once in every
fourth rate decision in the last six years.
Rating Agency Moodys downgraded 15
of the Worlds Biggest Banks, lowering
credit ratings by one to three notches to
reflect the risk of losses they face from volatile
capital markets activities, but banks criticized
the move as backward looking.
Advocates or law firms with an annual
turnover up to Rs.10 Lakh and sale of
companies will be exempted from service tax.
These along with 12 other services, figure in
the new list of exemptions, announced by
the Finance Ministry.
Swedish furniture and home accessories
retail giant IKEA became the First Major
Global Retailer to enter India under the new
FDI Rules for Single Brand Retail.
Several banks have tightened the norms
for granting education loans following
rising defaults in this segment. They have
made submission of PAN mandatory this
year along with the loan application.
Business Confidence in Germany dropped
its Lowest levels since March 2010 this June
as companies grow ever gloomier about the
fallout from the debt crises.
The European Unions 27 member countries
have agreed on assigning a role as Banking
Supervisor to the European Central Bank.
According to the Govt. sources, Haryana
will host the World Economic Forum on
India Summit from Nov 6-8 in Gurgaon.
Venture Capital Funding in Indian
companies stood at record Rs.56, 868 Crore
at the end of 2011. According to the latest
SEBI data, this was 18.8% higher than their
cumulative investment of Rs.47, 859 Crore as
of Dec 31, 2010.
A spindly and hairless dog from Britain
called Mugly has been named the Worlds
Ugliest Dog at a competition in the US.
Accordi ng to the Research report by
Economist Intelligence Unit, Delhi has been
named the Most Competitive City in
India for its demonstrated ability to attract
capital, business, talent and tourists.
Bank for International Settlements (BIS) has
warned that Loose gl obal monetary
conditions are stocking credit and asset price
booms in some emerging markets that could
lead to a new financial crises.
The Supreme Court has ruled that a lawyer
who does not file recovery suits entrusted
by a bank as a client is liable for disciplinary
action.
Islamist Mohammad Morsi of the Muslim
Brotherhood has been declared Egypts First
Democratic President.
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MOCK-TEST
PAPER
RBI Latest Policy Based Questions
01 The annual return on Foreign Liabilities
and Assets (FLA) is required to be
submitted directly by all the Indian
companies which have received FDI
and/or made FDI abroad (i.e. overseas
investment) in the previous year(s)
including the current year, to ___ by
____ every year:
a SEBI, July 30
b SEBI, July 15
c RBI, July 15
d RBI, July 30
02 A non-bank while label ATM operator
(WLAO) is required to have a minimum
net worth of :
a Rs.50 cr
b Rs.100 cr
c Rs.200 cr
d Rs.500 cr
03 A while label ATM is an ATM:
a which is installed by banks and non-
bank entities jointly
b which is installed by banks jointly
c which is installed by non-bank entities
d which is stopped for operations due to
some fraud.
04 To install, white label ATMs, there are
following schemes approved by RBI:
a Scheme A only
b Scheme A and Scheme B only
c Scheme A, B and C only
d Scheme A, B, C and D
05 White label ATMs can be established
by:
a partnership firms, proprietary firms,
companies, societies
b societies registered under Societies
Registration Act and companies
incorporated under Companies Act
c compani es i ncorporated under
Companies Act only
d societies registered under Societies
Registration Act only
06 Export credit interest subvention
(subsi dy) i s avai l abl e to sel ect
exporters to the extent of:
a 1%
b 2%
c 3%
d 7%
07 Export credit interest subvention
(subsidy) is available to select
exporters only when minimum
interest rate of ___% is charged from
them, even though it may be less
than base rate:
a 4%
b 5%
c 7%
d bank discretion
08 Banks are required to claim subsidy
from RBI on quarterly basis and lodge
the claim within ____ at the end of
respective quarter:
a 10 days
b 15 days
c one month
d 45 days
09 As per RBI policy, the SLBCs are to
prepare the roadmap for providing
banking services in all unbanked
villages of population less than ___ :
a 500
b 1000
c 2000
d 5000
10 While preparing the roadmap for
providing banking services in all
unbanked villages of population less
than 2000 through a combination of
BC and branches, banks are to
ensure that there is a brick and
mortar branch to provide support
to a cluster of BC units (i.e., about
8-10 BC units) at a reasonable
distance of _____ kilometers.
a 3-4 kms
b 4-5 kms
c 8-10 Kms
d 10-15 KMs
11 Rupee Export credit refinance is
available from RBI to banks at ____
of the outstanding eligible export
credit, w.e.f. Jun 30, 2012:
a 100%
b 50%
c 25%
d 15%
12 Under RBI policy on pre-paid
payment instruments, the Semi-
Closed System Payment Instruments
up to Rs ___ may be issued against
any identity document furnished by
the customer subject to reporting of
annual turnover/suspi ci ous
transactions.
a 2000
b 3000
c 5000
d 10000
13 Under RBI policy on pre-paid payment
instruments, the Semi-closed system
payment instruments which permit
only payment of utility bills/ essential
services / air and train travel tickets;
and recurring payment of college
fees, school fees, government taxes
up to a limit of Rs ____ can be issued
wi thout separate KYC bei ng
undertaken by the issuer.
a 2000
b 3000
c 5000
d 10000
14 The increasing complexity and volume
of financial transactions necessitate
that customers do not have multiple
identities within a bank, across the
banking system and across the
financial system. For this purpose, RBI
has suggested banks to introduce a
_________ for each customer.
a customer identity code
b unique customer identification code
c permanent identification code
d KYC code
15 The banks are required to allot unique
customer identification code (UCIC)
in case of existing customers latest
by:
a 31.12.12
b 31.03.13
c 30.04.13
d 30.06.13
16 What is the interest rate on Special
Deposit Scheme (1975) w.e.f.
1.4.2012:
a 9%
b 8.8%
c 8.6%
d 8%
17 Which of the following is true
regarding unclaimed deposits /
dormant deposit accounts : i) annual
review of accounts in which there are
no operati ons to be done, i i )
operations in such accounts to be
allowed after due diligence, iii) no
Subscription Rates wef 1.1.2012- 1 yr: Rs.250, 2 yrs & Rs.480 Current Copy Rs.30 (Old Issues - Rs.30 per copy. For more than 2 copies add courier charges also). Rs.25 extra if deposited in our account.
charge to be levied for activation of
inoperative accounts (iv) banks to
place name and address of these
depositors on their website.
a i and ii only
b i to iii only
c ii to iv only
d i to iv all
18 As per RBI directions dated Jun 05,
2012, the banks will not be permitted
to charge foreclosure charges/pre-
payment penalties on home loans on
floating interest rate basis, with
immediate effect. This is based on
recommendations of:
a Johal committee
b Burman Committee
c Damodaran Committee
d Mohanty committee
Terms Relating to Agriculture
19 The crop season that starts in June
and crops are harvested i n
September and October is called:
a short duration crop season
b kharif season
c rabi season
d long during crop season
20 The crop season that starts in October
and crops are harvested in March and
April is called:
a short duration crop season
b kharif season
c rabi season
d long during crop season
21 Under _______ the farming is carried
on, in the regions where the rainfall is
scanty i.e. less than 50 Cm annually
a Humid farming
b irrigation farming
c wet land farming
d dry land farming
22 The system of farming practiced in
regions with adequate rainfall i.e.
between 100 Cm to 200 Cm without
the help of irrigation, is called:
a Humid farming
b irrigation farming
c wet land farming
d dry farming
23 The system under which the land is
used only for the cultivation of crops
i.e. food crops and cash crops, is
called:
a mixed farming
b arable farming
c commercial farming
d shifting farming
24 Under _______, a piece of land is
cultivated for a few years and when
the crop yield declines because of soil
exhaustion and the effects of pests
and weeds, it is deserted for another
area.
a mixed farming
b arable farming
c shifting farming
d business farming
Recalled Questions Jun 2012
25. A,B and C are partners i n a
partnership firm. If the partnership
deed is not written, what is the
extent of liability of the partners :
a no liability
b unlimited liability
c equal, joint and several liability
d liability as per Partnership Act
26. What is the relationship between a
bank and the depositor if the cheque
was sent for collection and payment
has been received but not credited
to account of the customer :
a bank debtor, customer creditor
b bank agent, customer principal
c bank trustee, customer beneficiary
d bank creditor, customer debtor
27. The term accrued, in financial
parlance, means :
a what has been received or paid
during a financial period
b what has become due for receipt or
payment during a financial period
c what is outstanding for receipt or
payment during a financial period
d what is due for receipt or payment
during a financial period but not
received or paid
28. The business correspondent is :
a agent for the customer
b trustee for the bank
c agent of the bank
d creditor of the bank
29. If nothing is mentioned in the letter
of credit about insurance, the
insurance will be for:
a no insurance
b equal to the value of goods
c 110% of CIF value
d 100% of FOB value
30. A claused bill of lading means which
of the following?
a a bill of lading issued with a clause
b a bill of lading that indicates
defective condition of goods
c a bill of lading that does not contain
any adverse noting
d a bill of lading which issued as per
clauses in the letter of credit
31. Recently RBI has invited suggestions
on ADF. What is ADF?
a automated data flow
b advanced data flow
c automatically detectable flows
d anticipated data flow
32. Which of the following is not a
recommendation given by PM Office
Hi gh Power Commi ttee (Nai r
committee) on MSE lending:
a MSE advances should grow 20%
annually
b MSE loan account number should
increase by 10% annually
c Micro Enterprise loan account
numbers should increase by 10%
annually
d loans to micro enterprises should be
60% of total MSE loans
33. As per monetary Policy 2012 of RBI,
the deposit growth for the year
2012-13 is assumed at :
a 14%
b 15%
c 16%
d 17%
34. What should be the minimum export
credit turnover for eligibility under
Gold Card Scheme for exporters:
a minimum Rs.10 cr
b minimum Rs.20 cr
c minimum Rs.25 cr
d no condition for minimum or maximum
35. In project financing which of the
following is given importance:
a current ratio
b sensitivity analysis
c collateral security
d all the above
36. Before issuing currency notes to the
public over the counters or through
ATMs, the bank notes i n
denomination of Rs.100 and above
are to be processed :
a through machi nes to check
authenticity
b through manual verification
c through ultra violet lamp
d any of the above
37. Under RTI Act, the maximum penalty
for not providing the information is :
a Rs.5000
b Rs.10000
c Rs.25000
d Rs.50000
38. Under Consumer Protection Act,
what is the limitation period for
lodging complaint wi th Distt.,
Consumer Redressal Forum:
a within 21 days from the date of cause
of action
b within one year from date of
lodgement of complaint with the bank
c within one year from date of cause
of action
d within 2 years from date of cause of
action
39. An account having outstanding of
Rs.8,00,000 as on 31.03.12 is in the
category of Doubtful above one year
but less than 3 years category. The
value of realisable security is
Rs.6,00,000 What should be the
provision:
a Rs.320000
b Rs.200000
c Rs.440000
d Rs.80000
40. The restructuring of loan accounts
by the Banks have helped them to :
a reduce gross NPAs
b reduce net NPAs
c reduce loss assets
d reduce potential NPAs
41. CDR is applicable for which of the
following accounts :
a funded and non fund outstanding
above Rs.10 Crore and a consortium
account only
b corporate account and a consortium
account only
c corporate account and funded and
non fund outstanding above Rs.10
Crore only
d corporate account, funded and non
fund outstanding above Rs.10 Crore
and a consortium account
42. The amount of housing loans of a
bank is Rs.5000 crore of which Rs.
4000 crore is in respect of housing
loans below Rs.30 lacs. There is no
loan above Rs.75 lac. If the LTV ration
is up to 75%, what is the capital
requirement :
a Rs.180 cr
b Rs.67.50 cr
c Rs.247.50 cr
d none of the above
43. Cash Budget method for working
capital assessment is suitable where
:
a there are wide fluctuations in sales
b there are wide fluctuations in profits
c there are wide fluctuations in current
assets
d all the above together
44. Which of the following can be a
partner :
a HUF
b insolvent
c non-bank finance companies
d none ofl the above
45. Which of the following group of
parties can be a partner in Limited
Liability Partnership :
a minor, partnership firm, HUF,
company
b company, HUF, partnership
c company, partnership
d partnership, HUF
46. As per RBI guidelines, the visually
challenged person is to be provided
which of the following
a cheque book facility
b ATM card
c Locker facility
d all the above
47. As per guidelines on financial inclusion
which of the following does not come
under financially excluded category:
a urban salaried class
b urban migrated labour
c rural landless labourers
d all the above
48. Financial literacy means :
a one is able to make both ends meet
comfortably
b one is able to have adequate savings
for old days
c one is able to arrange and use
financial facilities for the benefits of
family members and avoid distress
financial matters.
d one is able to arrange finance when
it is required.
49. The distance between the place of
office of the BC and the base branch
should not be more than 5 km in which
of the following areas:
a rural areas
b semi-urban areas
c metro areas
d urban areas
50. Which of the following DSCR is
correct, when profit after tax is
Rs.100, depreciation is Rs.40,
interest payments are Rs.40 out of
which Rs.10 is for working capital
loan. The term loan instalments are
Rs.40.
a 2.32
b 2.43
c 2.62
d 2.81
51. Certain currency notes were found
counterfeit and were sent to the
police. The police has returned the
same. What is to be done with the
notes :
a To be kept by bank for 3 years and
then sent to RBI. HY verification for
Sep and Mar to be done.
b To be kept by bank for 2 years and
then sent to RBI. HY verification for
Sep and Mar to be done
c To be kept by bank for 1 year and
then sent to RBI.
d to be forward to RBI
52. There are four transactions in an
account of Rs.5,00,000 Rs.3,00,000
Rs.10,00,000 and Rs.40,000. Which
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S
U
B
S
C
R
I
P
T
I
O
N

F
O
R
M
of these will be reported under
Money Laundering Act :
a 400000
b 500000
c 1000000
d none of the above
53. Which of the following statement is
a correct statement about joint
deposit accounts.
a the names can be substituted with
the name of other persons
b there can be maximum 2 nominees
c in case of either or survivor account,
if one expires and pre-mature
payment is to be obtained, it will be
made to survivor and legal heirs of
the deceased account holder
d all the statements are wrong
54. An income tax attachment order for
Rs.125,000/= is received in the name
of Mr. X who is having a joint account
with his wife Mrs. W. The balance in
the joint account is Rs.2,00,000/=.
a attachment in a joint account is not
permitted
b attachment is allowed for an amount
up to Rs.1.25 lac
c attachment is allowed for an amount
up to Rs.1 lac only
d attachment up to full amount is
permitted in attachment order
55. A customer M K Anand, informed the
Bank that a cheque for Rs.1,00,000
was issued by him wherein he has
signed as M K only and has not put
his full signature. The bank found
that the cheque has already been
paid. What is the position of the Bank.
a bank is not liable to refund the
amount to the customer
b bank is liable to refund the entire
amount to the customer
c bank and customer are to share the
loss in equal ratio as both have made
a mistake
d none of the given options are correct.
56. Under which of the following, the
clearing is organised locally wherein
settlement of outstation cheques
takes place :
a speed clearing
b high value clearing
c electronic clearing service
d national clearing
57. Under CTS-2010 Standards for
cheques, which is not the specified
feature:
a Void mark
b Floral
c Bank s Logo
d Paper thickness
e Water mark
58. Two charges were registered over
the property of a company with ROC.
One was created on 01.02.2012 and
registered on 28.02.2012. The other
was created on 07.02.2012 and was
registered on 15.02.2012 :
a charge created on 01.02.12 will have
priority
b charge created on 07.02.12 will have
priority
c charge registered on 15.02.12 will
have priority
d both the charges will have equal
priority
59. Which of the following is the
appropriate in relation to the Rabi
season for crops:
a that starts May
b that is completed in Nov
c that begins October
d that is completed in Jan
60. For comparison of financials of
companies operating in two different
international jurisdictions what is
required to be done out of the
following:
a accounting standards should be
implemented
b IFRS should be implemented
c generally accepted accounting
practices should be implemented
d all the above
61. Which committee was appointed to
examine the floating interest rate
loans and pre-payment penalty.
a K C Chakravarty Committee
b Damodaran Committee
c M S Ahluwalia Committee
d SS Tarapore Committee
62. A foreign tourist having USD5000,
wants to open a deposit account.
What type of account he can open.
a non-resident external
b non-resident ordinary
c FCNR
d he cannot open any account
63. What is the ATM cash withdrawal limit
for single day under RBI ATM access
policy :
a Rs.1000
b Rs.5000
c Rs.10000
d bank discretion
64. Rate of interest on FCNR B
accounts is linked with which of the
following :
a Bank rate
b LIBOR
c Base Rate
d bank discretion
65. ATM card refers to:
a always money
b anywhere banking
c any time money
d all the above
66. A reputed customer has deposited
for collection, for his account, a
cheque in the name of 3
rd
party,
which is endorsed by the 3
rd
party in
the name of the customer.
a it can be collected without any
problem
b cannot be collected as it amounts to
conversion
c i t can be col l ected by usi ng
precaution
d better to avoid
67. Bank has provided cash credit limit
of Rs.25 lac to a drip irrigation
equipment dealer. It will be classified
as :
a retail trade in MSE
b direct agriculture in priority sector
c indirect agriculture in priority sector
d non-priority sector trader advance
68. Bank has allowed a housing loan of
Answers
01 c 02 b 03 c 04 c 05 c
06 b 07 c 08 c 09 c 10 a
11 b 12 a 13 d 14 b 15 c
16 b 17 d 18 c 19 b 20 c
21 d 22 a 23 b 24 c 25 c
26 a 27 b 28 c 29 c 30 b
31 a 32 b 33 c 34 d 35 b
36 a 37 c 38 d 39 c 40 d
41 d 42 c 43 c 44 d 45 c
46 d 47 a 48 c 49 c 50 b
51 a 52 d 53 c 54 c 55 a
56 a 57 b 58 a 59 c 60 b
61 b 62 b 63 c 64 b 65 c
66 c 67 c 68 b 69 a 70 a
71 b 72 c 73 c 74 c 75 b
76 c 77 d 78 d 79 b 80 b
81 a 82 d 83 d 84 d 85 a
86 d
Rs.25 lac. In this connection which of
the following statement is correct:
a risk weight will be 50% if LTV ratio is
above 75%
b risk weight will be 50% if LTV ratio is
up to 75%
c risk weight will be 75% if LTV ratio is
above 75%
d risk weight will be 75% if LTV ratio is
up to 75%
69. Electronic cheque is represented by
which of the following:
a. cheque signed digitally by the
customer
b. Zerox copy of cheque signed manually
c. scanned copy of cheque signed
manually
d. any of the given options
70. In the case the electronic funds
transfer instruction is dishonored for
insufficiency of funds, imprisonment
of 2 years or double amount penalty
or both are provided in which Act :
a Payment and Settlement Systems Act
b Negotiable Instrument Act
c Indian Evidence Act
d Information Technology Act
71. A demand draft of Rs.20000 or above
can be issued with Account Payee
crossing only. It is as per directions
of :
a Income Tax Department
b Reserve Bank of India
c Financial Intelligence Unit India
d Serious Fraud Investigation Office
72. For the purpose of crop loan, the
scale of finance is calculated by :
a State Level Bankers Committee
b Distt. Level Consultative Committee
c Distt. Technical Committee
d Bank concerned
73. In regard to moratorium period in case
of Education Loans, which of the
fol l owi ng statement i s more
appropriate:
a 12 month after completion of course
or 6 months after getting job,
whichever is earlier
b 24 months after completion of course
c 12 month (in exceptional cases 24
months) after completion of course
d 12 month (in exceptional cases 24
months) after completion of course
74. What is the number of digits in UIDAI
number :
a 10
b 11
c 12
d 14
75. No collateral security to be taken for
loan up to Rs.10 lac in which of the
following cases:
a MSE Loan and Agri-clinics and Agro
Business Centres
b MSE Loan and PMEGP Loan
c PMEGP Loan and Agri-clinics and
Agro Business Centres
d MSE Loan, Loans to individual
persons under SGSY, Agri-clinics and
Agro Business Centres
76. Hindi day is observed on :
a Jan 26 b Jun 22
c Sept 14 d Nov 11
77. Under RTGS the transactions time 9
am to 4.30 pm is in respect of which
of the fol l owi ng category of
transactions:
a inter-bank transactions
b intra-bank transactions
c all transactions
d customer transactions
78. What is the ceiling amount for MSE
single window loan with CGTMSE
coverage :
a Rs.25 lac b Rs.50 lac
c Rs.75 lac d Rs.100 lac
79. A monetary ceiling of Rs.20 lac has
been imposed for entertaining cases
by which of the following:
a Consumer Courts
b Lok Adalat
c District Courts
d Ombudsman Scheme
80. What is the extent of interest
subvention on Housing Loan up to
Rs.15 lac :
a 0.5%
b 1%
c 2%
d 3%
81. If Garnishee Order received by the
bank does not mention the amount,
which of the following action is to
taken by the bank :
a entire balance in the account has to
be blocked.
b half of the balance has to be
blocked.
c it is discretion of the bank
d return the order to court to specify
the amount.
82. Which of the following is not a
material alteration :
a crossing of cheque by the payee
b filling the date, which was left blank
c writing name of the bank within the
lines when the cheque is already
crossed
d All the given options
83. In how many days, a public notice is
required to be published in news-
paper, after taking possession of the
i mmovabl e property, under
SARFEASI Act? :
a 7 days
b 30 days
c 60 days
d no time limit
84. What is the target within DRI loans,
for women:
a 40%
b 50%
c 2/3
rd
d no separate target
85. What is the extent of liability of a
partner in the limited liability
partnership :
a limited to the extent of his share
b unlimited like in case of a normal
partnership
c limited to the extent of assets
d limited as per the amount agreed by
him
86. Convertibility in the context of
foreign exchange stands for with of
the following:
a foreign currency can be converted
into local currency only
b one can acquire foreign ventures.
c no licence is required for imports.
d foreign currency can be converted
into local currency and local currency
can be converted into foreign
currency
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OUR PUBLICATIONS : REFER PAGE 11
Impact of Rupee Depreciation on Indian Economy
The exchange rate of the home currency, impacts the financial economy
of a country in various ways. In the recent times, the Indian Rupee has
depreciated against all the major currencies and reached to all time low
level, which can be observed from the following :
Month/year US $ Pound sterling Euro Yen
Jun-11 44.80 72.70 64.50 55.70
Sep-11 47.60 75.20 65.50 62.00
Dec-11 53.10 81.80 70.30 69.20
Mar-12 55.10 85.80 73.70 74.40
Jun-12 57.15 89.11 71.66 71.18
Reasons in fall of value of Indian Rupee : The reasons include (a) uncer-
tainty and fall in the global stock market as a result of which the FIIs are
pulling out their money from Emerging Market Economies and taking them
back to their home countries in order to sustain themselves (b) lower
fresh investments in the form of FII and FDI (c) rising demand for dollars by
oil importing companies (d) lower export earning and higher imports lead-
ing to widening trade deficit and current account deficit.
Impact of depreciation
a) Domestic Inflation: India is structurally an import intensive economy
(import of goods more than export of goods as reflected by our high trade
and current account deficit). The depreciating rupee adds pressure on
the domestic inflation because the domestic cost of imported goods rise
due to rupee depreciation (called imported inflation). This particularly
hits the industrial sector by increasing the cost of its inputs and in turn
making the manufactured goods expensive in the domestic market.
b) Oil imports : India's oil imports consume a major portion of India's
forex accretions. The decline in international prices of oil should have
benefitted India, but the depreciating rupee offsets such benefits. Al-
though in foreign currency terms India pays lesser but due to Rupee de-
preciation, the oil importers have to pay more in Indian currency to pur-
chase the same quantity of oil forcing them to increase oil price in India.
3) External Debt : The rupee depreciation creases the cost of borrowings
for the corporates that borrowed or intend to borrow in foreign curren-
cies through ECB or Foreign Currency Convertible Bonds. Although these
companies may negotiate the foreign currency funds at lower interest
rate, but the benefit is neutralized by weakening of Indian Rupee. As a
result the cost of foreign currency borrowing comes at par with domestic
borrowing cost. Hence profits of companies with high foreign debt and
imported inputs may decline.
Who is benefitted
1. Non-resident Indians remitting funds to India to deposit with Indian
banks or for meeting expenses of their relatives in India.
2. Export oriented companies that earn foreign currency.
3. Foreign tourists who will find it cheaper to travel to india.
Possible measures to augment the Rupee Exchange rate
1. Increase in exports from India, so that the forex earning increases and
the current account deficit is narrowed down.
2. Creation of an environment where the FIIs retain their investment in
Indian stock market or Govt. securities.
3. Attracting foreign investment (FDI) in infrastructure sector and other
sectors such as the aviation industry, retail etc.
The fall in rupee can be seen as a welcome adjustment for our economy
that has been living beyond its means, as reflected by rising fiscal deficit
and current account deficit, which are far more higher than the emerging
market economies.
Business of Banks
(Rs.in cr) Mar25' 11 Jun01'12
Aggregate deposits 5204703 6137770
Cash in hand/RBI 349323 338910
Investments 1500039 1845930
Bank Credit: 3938659 4712190
-Food 64283 112050
-Non-Food 3874376 4600140
Cash-Deposit Ratio 6.71 5.52
Investment-Deposit 28.82 30.07
Credit-Deposit 75.68 76.77
Money Stock
(Rs.in Cr) Mar31' 12 Jun01'12
M3 (Out of which) 7344070 7628420
(a) Currency with public 1026600 1075200
(b) Demand deposits-Banks 700210 670500
(c) Time Deposits - Banks 5614200 5881340
(d) Other deposits with RBI 3060 1370
Sources of Money Supply
(a) Net Bank credit to Govt 2360780 2480390
(b) Bank credit to Comrcl sector 4950280 5055650
(c) Net Forex assets of Banks 1523670 1614870
Important Banking Indicators
Bank rate 09.00% (17.04.2012)
Statutory Liqdity Ratio 24.00% (18.12.2010)
Cash Reserve Ratio 04.75% (12.03.2012)
Base Rate 10.5 - 11.0% (Leading banks)
Reverse Repo Rate 07.00% (17.04.2012)
Repo Rate 08.00% (17.04.2012)
MSF Rate 09.00% (17.04.2012)
Federal Reserve(US) rate: 1.00%
Bank of England Rate : 0.50%
European Comm. Bank 1.25%
Capital & Money Market Indicators
Parameter end-Jun 12 A year back
Call rates (percent) 5.50 7.25
Dollar-spot TT (Rs.) 56.97 45.31
BSE - Sensex (points) 16882 18268
NSE - Nifty(S&P CNX) 5115 5476
Foreign reserves(Million $) 289396 308534
INDIAN ECONOMY-IMPORTANT PARAMETERS
RBI's growth estimate for 2012-13 : 7.3%
GDP growth-2010-11 (revised estimate) : 8.4%
GDP at factor cost 2012-13 (cr) : 10159884
Share of service sector in GDP : 64.5%
Share of manufacturing sector in GDP : 18.2%
Share of agriculture sector in GDP : 17.3%
Current Inflation Rate (Wholesale) : 8.40%
Money Supply (M3) expansion : 14.3%
Exports during 2011-12 : 291.3 bn
Imports during (2011-12) : 347.4 Bn
Export target - 2012-13 (in $) 15% growth : 350 bn
India's share in world merchandise export : 1.45%
Food grain production (2007-08) -Estimate : 227.3
India's currency rating (S&P) : BB Postv
India's external debt (Jun 2011) US $ : 317 Bn
Fiscal Deficit Target (2012-13) 5.1% of GDP : 513590 cr
Revenue Deficit Target (2012-13) 3.4.% of GDP : 350424 cr
Tax-GDP ratio (2008-09) : 11.2%
Apr-May 2012:Export 50.13 bn Imports : 79.1 bn
Poverty line ratio (2004-05) : 27.5%
Per capita Income 2010-11 (Rs.) : 53331
Indian economy's ranking in world in PPP : 3rd
Indian economy's ranking in world in value: 10th

BANKING POLICY UPDATES

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BANKING POLICY UPDATES

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BANKING POLICY : 4

Export Credit Intt. subvention

Banking events updatE July 2012 4 BANKING FEATURES

RBI decided to permit (on Jun 20, 2012), the non-bank

Govt. of India Subsidy routed

of 30% stakes individually or through a group.

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