1.

The First Bank in India Bank of Hindustan

2. First Governor of RBI Mr. Osborne Smith

3. First Indian governor of RBI Mr. C D Deshmukh

4. First Bank to Introduce ATM in India HSBC

5. First Bank to introduce saving Bank in India Presidency bank in 1830

6. First Bank to Introduce Cheque system in India Bengal Bank 1784

7. First Bank to introduce Internet Banking ICICI BANK

8. First Bank to introduce Mutual Fund State Bank of India

9. First Bank to introduce Credit Card in India Central Bank of India

10. First Foreign Bank in India Comptoire dEscompte de Paris of France in 1860

11. First Joint Stock Bank of India Allahabad Bank

12. First Indian bank to open branch outside India in London in 1946 Bank of
India

13. First Indian Bank started with Indian capital Punjab National Bank

14. First Regional Rural Bank name Prathama Grameen Bank was started by
Syndicate Bank

15. First Universal Bank in India ICICI Bank

16. First bank in India listed in New York Stock Exchange (NYSE) ICICI Bank

17. First Bank in India to launch Talking ATMs for differently able person Union
Bank of India

18. First Bank in India to launch its own Payment Aggregators State Bank of India.
(SBIePay)

19. Countrys first all woman bank Bhartiya Mahila Bank

20. First India bank Got ISO Canara Bank

A Brief on CURRENCY SYSTEM IN INDIA

Dear Readers,
Today we are providing you all some important points on our Currency system as
this is one of the important topic within Banking Awareness. We are expecting
questions from this portion. So, enjoy the post.

Present Denomination of Bank Notes:

At present, banknotes in India are issued in the denomination of Re.1, Rs.5 Rs.10,
Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1000. These notes are called banknotes as
they are issued by the Reserve Bank of India (Reserve Bank).
Denomination of Bank Notes & Coins:
The Reserve Bank can also issue banknotes in the denominations of five thousand
rupees and ten thousand rupees, or any other denomination that the Central
Government may specify. There cannot, though, be banknotes in denominations
higher than ten thousand rupees in terms of the current provisions of the Reserve
Bank of India of Act, 1934. Coins can be issued up to the denomination of Rs.1000.

Role of Government of India in Currency System:

In terms of Section 25 of RBI Act, 1934 the design of banknotes is required to be
approved by the Central Government on the recommendations of the Central
Board of the Reserve Bank of India. The responsibility for coinage vests with the
Government of India on the basis of the Coinage Act, 1906 as amended from time
to time. The Government of India also attends to the designing and minting of
coins in various denominations.

How much currency to be produced?

The Reserve Bank decides the volume and value of banknotes except Re. 1 note to
be printed each year. The quantum of banknotes that needs to be printed, broadly
depends on the requirement for meeting the demand for banknotes due to
inflation, GDP growth, replacement of soiled banknotes and reserve stock
requirements.

Who decides the coins issue?

The Government of India decides the quantity of coins to be minted on the basis of
indents( official order) received from the Reserve Bank.

How does the Reserve Bank estimate the demand for banknotes?
The Reserve Bank estimates the demand for banknotes on the basis of the growth
rate of the economy, the replacement demand and reserve stock requirements by
using statistical models/techniques.

What is a currency chest?

To facilitate the distribution of banknotes and rupee coins, the Reserve Bank has
authorized select branches of scheduled banks to establish Currency Chests. These
are actually storehouses where banknotes and rupee coins are stocked on behalf of
the Reserve Bank.

What is a small coin depot?

Some bank branches are also authorized to establish Small Coin Depots to stock
small coins. The Small Coin Depots also distribute small coins to other bank
branches in their area of operation.

What are soiled, mutilated and imperfect banknotes?

(i) "soiled note:" means a note which, has become dirty due to usage and also
includes a two piece note pasted together wherein both the pieces presented
belong to the same note, and form the entire note.
(ii) Mutilated banknote is a banknote, of which a portion is missing or which is
composed of more than two pieces.
(iii) Imperfect banknote means any banknote, which is wholly or partially,
obliterated, shrunk, washed, altered or indecipherable but does not include a
mutilated banknote.

Can soiled and mutilated banknotes be exchanged for value?

Yes. Such banknotes can be exchanged for value.

Clean Note Policy:

Reserve Bank of India has been continuously making efforts to make good quality
banknotes available to the members of public. To help RBI and banking system,
the members of public are requested to ensure the following:
a) Not to staple the banknotes
b) Not to write / put rubber stamp or any other mark on the banknotes
c) Store the banknotes safely to prevent any damage

Note:
1) Seeking to spread awareness among public about fake notes, the Reserve Bank
has launched a website explaining ways to detect counterfeit notes. With a tagline
'Pehchano Paise Ki Boli, Kyunki Paisa Bolta Hai', the website-
www.paisaboltahai.rbi.org.in -- gives visual presentation with pointers on currency
notes of 10, 20, 50, 100, 500 and 1,000 rupee denominations.

2) MINIMUM RESERVE SYSTEM

The Reserve Bank has the sole right to issue currency notes, except one rupee
notes which are issued by the Ministry of Finance. The RBI follows a minimum
reserve system in the note issue. Initially, it used to keep 40 per cent of gold
reserves in its total assets. But, since 1957, it has to maintain only Rs. 200 crores
of gold and foreign exchange reserves, of which gold reserves should be of the
value of Rs. 115 crores.

3) After a gap of over 20 years, Re 1 note has been released in the country and it
bears the signature of Finance Secretary Rajiv Mehrishi. Incidentally, the note was
released at Shrinathji temple in Nathdwara, Rajasthan, on March 6 by Mehrishi.

A Brief on FOREIGN EXCHANGE RESERVES

Dear Readers,

Today we are providing you the notes on one of the most important financial terms
FOREIGN EXCHANGE RESERVES. This is important as it can be asked in the General
Awareness section in the upcoming exams.

As it was in the news that, our country's foreign exchange reserves rose by $321.7
million to $353.648 billion in the week to July 24 on account of increase in foreign
currency assets. The country's gold reserves remained unchanged at $19.074
billion. The special drawing rights with the International Monetary Fund were up by
$5.8 million to $4.024 billion in the week under review, while the country's reserve
position with the Fund also rose by $1.8 million to $1.304 billion.
 As on July 24, 2015
Components of Forex
Bn. US$ Mn.
1 2
Total Reserves 22,551.8 353,648.1
1.1 Foreign Currency Assets 20,995.3 329,245.4
1.2 Gold 1,216.1 19,074.3
1.3 SDRs 257.1 4,024.2
1.4 Reserve Position in the IMF 83.3 1,304.3

Lets discuss What actually is FOREX?

Reserves are maintained by countries for meeting their international payment

obligations both short and long terms, including sovereign and commercial
debts, financing of imports, for intervention in the foreign currency markets during
periods of volatility, besides helping to boost the confidence of the market in the
ability of a country to meet its external obligations and to absorb any unforseen
external shocks, contingencies or unexpected capital movements.

India's foreign exchange reserves comprise foreign currency assets, gold and
special drawing rights allocated to it by the International Monetary Fund (IMF) in
addition to the reserves it has parked with the fund. Foreign exchange reserves are
held and managed by the RBI.

The Foreign currency assets are investment mainly in instruments abroad which
have the highest credit rating and which do not pose any credit risk. These include
sovereign bonds, treasury bills and short-term deposits in top-rated global banks
besides cash accounts.

The Special Drawing Right (SDR) is an interest-bearing international reserve

asset created by the IMF in 1969 to supplement other reserve assets of member
countries. The SDR is based on a basket of international currencies comprising the
U.S. dollar, Japanese yen, euro and pound sterling. It is not a currency, nor a claim
on the IMF, but is potentially a claim on freely usable currencies of IMF members. It
can be held and used by member countries, the IMF, and certain designated
official entities called "prescribed holders"but it can not be held, for example, by
private entities or individuals.

FINANCIAL INCLUSION
It is the delivery of financial services at affordable costs to vast sections of
disadvantaged and low income groups
Financial inclusion involves
1) Give formal banking services to poor people in urban & rural areas.
2) Promote habit of money-savings, insurance, pension-investment among poor-
people.
3) Help them get loans at reasonable rates from normal banks. So they dont become
victims in the hands of local moneylender.

Some Important initiatives for financial inclusion:

1) Lead banking scheme (LBS).
2) No frills account.
3) BSBDA
4) Business Correspondents (BC) system.
5) Swabhiman Campaign
6) PMJDY

Lead Bank Scheme

The Lead Bank Scheme, introduced towards the end of 1969, envisages assignment of
lead roles to individual banks (both in public sector and private sector) for the districts
allotted to them. A bank having a relatively large network of branches in the rural
areas of a given district and endowed with adequate financial and manpower resources
has generally been entrusted with the lead responsibility for that district. Accordingly,
all the districts in the country have been allotted to various banks. The lead bank acts
as a leader for coordinating the efforts of all credit institutions in the allotted districts
to increase the flow of credit to agriculture, small-scale industries and other economic
activities included in the priority sector in the rural and semi-urban areas, with the
district being the basic unit in terms of geographical area.

No Frill Account
'No Frills 'account is a basic banking account. Such account requires either nil
minimum balance or very low minimum balance. Charges applicable to such accounts
are low. Services available to such account is limited. In what can be described as a
watershed Annual Policy Statement, the RBI in 2005-06 called upon Indian banks to
design a no frills account a no precondition, low minimum balance maintenance
account with simplified KYC (Know Your Customer) norms. But All the existing No-frills
accounts opened were converted into BSBDA in compliance with the guidelines issued
by RBI in 2012 .

BSBDA
RBI in 2012 came out with fresh guidelines and asked banks to offer a Basic Savings
Bank Deposit Account which will offer following minimum common facilities to all their
customers. These guidelines includes:-
(a) This account shall not have the requirement of any minimum balance.
(b) The services available in the account will include deposit and withdrawal of cash at
bank branch as well as ATMs; receipt/credit of money through electronic payment
channels or by means of deposit/collection of cheques drawn by Central/State
Government agencies and departments;
(c ) While there will be no limit on the number of deposits that can be made in a
month, account holders will be allowed a maximum of four withdrawals in a month,
including ATM withdrawals; and
(d) Facility of ATM card or ATM-cum-Debit Card.

Business Correspondent
Business correspondents are bank representatives. They personally goes to the area
allotted to them and carry out banking.
 They help villagers to open bank accounts.
They help villagers in banking transactions. (deposit money, take money out of
savings account, loans etc.)
The Business Correspondent carries a mobile device.
The villager gives his thumb impression or electronic signature, and get the
money.
Business Correspondents get commission from bank for every new account
opened, every transaction made via them, every loan-application processed etc.

Recently on Financial Inclusion

The Reserve Bank of India (RBI) has constituted a committee with the objective of
working out a medium-term (five-year) measurable action plan for financial inclusion.
The terms of reference will include reviewing the existing policy of financial inclusion,
including supportive payment system and customer protection framework, taking into
account the recommendations made by various committees set up earlier.
It will also study the cross-country experience in financial inclusion to identify key
learnings, particularly in the area of technology-based delivery models, that could
inform policies and practices. The committee will also suggest a monitorable medium-
term plan for financial inclusion in terms of its various components like payments,
deposit, credit, social security transfers, pension and insurance.
Deepak Mohanty, RBI executive director, will chair the committee.

BANKING PATHWAY 2015: MONEY MARKET

Dear Readers,
Today we are providing you the important brief of Money Market, as this is always
asked in the General awareness section in all banking exams.
We hope that this will help you scoring well in your exams.

"Money Market" refers to the market for short-term requirement and deployment of
funds. Money market instruments are those instruments, which have a maturity period
of less than one year.
The most active part of the money market is the market for overnight call and term
money between banks and institutions and repo transactions. Money Market is
regulated by RBI.

Money Market can be further divided into 3 parts. These are:

a) Call Money Market
b) Term Money Market
c) Notice Money Market

The market to get funds for 1 day only is called as Call Money Market. The market to
get funds for 2 days to 14 days is called as Notice Money Market. The market to get
funds for 15 days to 1 year is called as Term Money Market.

Some of the Money Market instruments are:

1) Commercial Paper
2) Certificate of Deposit
3) T-bills
4) Cash Management Bills

Commercial Papers-
a) A CP is a short term security (7 days to 365 days) issued by a corporate entity (other
than a bank), at a discount to the face value.
b) Commercial Paper (CP) is an unsecured money market instrument issued in the form
of a promissory note.
c) CPs normally give a higher return than fixed deposits & CDs.
d) CP can be issued in denominations of Rs. 5 lakh or multiples thereof. Amount
invested by a single investor should not be less than Rs. 5 lakh (face value).
e) Only corporates who get an investment grade rating can issue CPs, as per RBI rules.
It is issued at a discount to face value.
f) Bank and FIs are prohibited from issuance and underwriting of CPs.

Certificates of Deposit
a) CDs are negotiable money market instrument issued in demat form or as a Usance
Promissory Notes.
b) CDs issued by banks should not have the maturity less than seven days and not
more than one year.
c) Financial Institutions are allowed to issue CDs for a period between 1 year and up to
3 years.
d) CDs are like bank term deposits but unlike traditional time deposits these are freely
negotiable and are often referred to as Negotiable Certificates of Deposit.
e) CDs normally give a higher return than Bank term deposit.
f) All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs.
g) CDs are issued in denominations of Rs. 1 Lac and in the multiples of Rs. 1 Lac
thereafter.
h) Discount/Coupon rate of CD is determined by the issuing bank/FI.
i) Loans cannot be granted against CDs and Banks/FIs cannot buy back their own CDs
before maturity

Treasury bills
a) Treasury Bills are short term (up to one year) borrowing instruments of the
Government of India which enable investors to park their short term surplus funds
while reducing their market risk.
b) They are auctioned by Reserve Bank of India at regular intervals and issued at a
discount to face value.
c) Any person in India including Individuals, Firms, Companies, Corporate bodies, Trusts
and Institutions can purchase Treasury Bills.
d) Treasury Bills are eligible securities for SLR purposes.
e) Treasury Bills are available for a minimum amount of Rs. 25,000 and in multiples of
Rs. 25,000 thereafter.
f) At present, RBI issues T-Bills for three different maturities: 91 days, 182 days and
364 days.

Cash Management Bills (CMBs)

a) Government of India, in consultation with the Reserve Bank of India, has decided to
issue a new short-term instrument, known as Cash Management Bills (CMBs), to meet
the temporary mismatches in the cash flow of the Government.
b) The CMBs have the generic character of T-bills but are issued for maturities less
than 91 days.
c) Like T-bills, they are also issued at a discount and redeemed at face value at
maturity.
d) The tenure, notified amount and date of issue of the CMBs depends upon the
temporary cash requirement of the Government.

Banking Pathway 2015 - Cheques and Types

Good Morning Readers,
Today we are starting the day with one of the most important topics of general
awareness where 1-2 questions can be expected related to cheques.

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

Types of Cheque

1. Bearer Cheque or open Cheque

When the words "or bearer" appearing on the face of the cheque are not cancelled, the
cheque is called a bearer cheque. The bearer cheque is payable to the person specified
therein or to any other else who presents it to the bank for payment. However, such
cheques are risky, this is because if such cheques are lost, the finder of the cheque can
collect payment from the bank.

2. Order Cheque
When the word "bearer" appearing on the face of a cheque is cancelled and when in its
place the word "or order" is written on the face of the cheque, the cheque is called an
order cheque. Such a cheque is payable to the person specified therein as the payee,
or to any one else to whom it is endorsed (transferred).

3. Crossed Cheque
Crossing of cheque means drawing two parallel lines on the face of the cheque with or
without additional words like "& CO." or "Account Payee" or "Not Negotiable". A crossed
cheque cannot be encashed at the cash counter of a bank but it can only be credited
to the payee's account.

4. Ante-Dated Cheque
If a cheque bears a date earlier than the date on which it is presented to the bank, it is
called as "anti-dated cheque". Such a cheque is valid upto three months from the date
of the cheque.

5. Post-Dated Cheque
If a cheque bears a date which is yet to come (future date) then it is known as post-
dated cheque. A post dated cheque cannot be honoured earlier than the date on the
cheque.

6. Stale Cheque
If a cheque is presented for payment after 3 months from the date of the cheque it is
called stale cheque. A stale cheque is not honoured by the bank.

7. A self cheque
A self cheque is written by the account holder as pay self to receive the money in the
physical form from the branch where he holds his account.

TYPES OF BANK A/C

Good Morning Readers,

Today we are posting the types of accounts in Banks. There are very frequent
questions from this part asked in many exams earlier. Just have an overview and read
it with a light mind.

Types of Bank Accounts

A bank account can be a time deposit account or a term deposit account or a no frill
account ie BSBDA .
TYPES OF BANK ACCOUNTS
a. Savings Bank Account
b. Current Deposit Account
c. Fixed Deposit Account
d. Recurring Deposit Account.
e. No-Frill Account

a. Savings Bank Account

This type of account can be opened with a minimum initial deposit that varies from
bank to bank. Money can be deposited any time in this account. Withdrawals can be
made either by signing a withdrawal form or by issuing a cheque or by using ATM card.
Normally banks put some restriction on the number of withdrawal from this account.
Interest is allowed on the balance of deposit in the account. The rate of interest on
savings bank account varies from bank to bank and also changes from time to time. A
minimum balance has to be maintained in the account as prescribed by the bank.
Interest rate is paid to the account holders on daily balance basis.

b. Current Deposit Account

Big businessmen, companies and institutions such as schools, colleges, and hospitals
have to make payment through their bank accounts. Since there are restrictions on
number of withdrawals from savings bank account, that type of account is not suitable
for them. They need to have an account from which withdrawal can be made any
number of times. Banks open current account for them. On this deposit bank does not
pay any interest on the balances. Rather the account holder pays certain amount each
year as operational charge. For the convenience of the account holders banks also
allow withdrawal of amounts in excess of the balance of deposit. This facility is known
as overdraft facility.

c. Fixed Deposit Account (also known as Term Deposit Account)

Many a time people want to save money for long period. If money is deposited in
savings bank account, banks allow a lower rate of interest. Therefore, money is
deposited in a fixed deposit account to earn interest at a higher rate.

d. Recurring Deposit Account

This type of account is suitable for those who can save regularly and expect to earn a
fair return on the deposits over a period of time. While opening the account a person
has to agree to deposit a fixed amount once in a month for a certain period. The total
deposit along with the interest therein is payable on maturity. However, the depositor
can also be allowed to close the account before its maturity and get back the money
along with the interest till that period. The rate of interest allowed on the deposits is
higher than that on a savings bank deposit but lower than the rate allowed on a fixed
deposit for the same period.

e. No Frill Account, ie BSBDA

The Basic Savings Bank Deposit Account allows you to bank with a zero minimum
balance requirement. All the existing Nofrills accounts opened by the banks are now
converted into BSBDA in compliance with the guidelines issued on August 22, 2012 by
the Reserve Bank of India (RBI). BSBDA guidelines are applicable to all scheduled
commercial banks in India, including foreign banks having branches in India. No
charge will be levied for nonoperation/activation of inoperative Basic Savings Bank
Deposit Account.

Notes:
a) Minimum age to open a bank account is now 10 years.
b) Maximum Interest rate is given on FD A/c.
c) The maximum period of an FD is 10 years & for RD is 5 years.

Short notes on Accounts for NRI/PIO in India

What are the different types of accounts which can be maintained by an
NRI/PIO in India?

Types of accounts which can be maintained by an NRI / PIO in India:

A. Non-Resident Ordinary Rupee Account (NRO Account)

NRO accounts may be opened / maintained in the form of current, savings, recurring or
fixed deposit accounts. Interest rates offered by banks on NRO deposits cannot be
higher than those offered by them on comparable domestic rupee deposits.
Account should be denominated in Indian Rupees.
Permissible credits to NRO account are transfers from rupee accounts of non-
resident banks, remittances received in permitted currency from outside India through
normal banking channels, permitted currency tendered by account holder during his
temporary visit to India, legitimate dues in India of the account holder like current
income like rent, dividend, pension, interest, etc., sale proceeds of assets including
immovable property acquired out of rupee/foreign currency funds or by way of legacy/
inheritance.
NRI/PIO may remit from the balances held in NRO account an amount not exceeding
USD one million per financial year, subject to payment of applicable taxes.
The limit of USD 1 million per financial year includes sale proceeds of immovable
properties held by NRIs/PIOs.

B. Non-Resident (External) Rupee Account (NRE Account)

1) NRE account may be in the form of savings, current, recurring or fixed deposit
accounts.
2) Such accounts can be opened only by the non-resident himself and not through the
holder of the power of attorney.
3) Account will be maintained in Indian Rupees.
4) Accrued interest income and balances held in NRE accounts are exempt from
Income tax.
5) Authorised dealers/authorised banks may at their discretion allow for a period of not
more than two weeks, overdrawings in NRE savings bank accounts, up to a limit of
Rs.50,000.
6) Loans up to Rs.100 lakh can be extended against security of funds held in NRE
Account either to the depositors or third parties.
C. Foreign Currency Non Resident (Bank) Account FCNR (B) Account
FCNR (B) accounts are only in the form of term deposits of 1 to 5 years
Account can be in any freely convertible currency.
Loans up to Rs.100 lakh can be extended against security of funds held in FCNR (B)
deposit either to the depositors or third parties.
The interest rates are stipulated by the Department of Banking Operations and
Development, Reserve Bank of India.

Banking Awareness: All About NPAs

Hello Readers,

On the account of upcoming SBI PO Exam for the post of Probationary Officer,
here we are providing you all a post on All About NPAs, which is Re-post for
all the new readers of BankersAdda. Hope you all like the post!!
What are NPAs (Non Performing Assets):
A mortgage in default would be considered non-performing, after a prolonged period of
non-payment(90 days).

The lender will force the borrower to liquidate any assets that were pledged as part of
the debt agreement. If no assets were pledged, the lenders might write-off the asset as
a bad debt and then sell it at a discount to a collections agency.

Here is an example to help you understand what NPAs are and how Banks
counter it-

Mr. X decided to start a business for that he needed money (the fuel) , X had 25% of
the money in his pocket, he decided to go through the route of Initial Public
Offering(IPO) to generate 25% more by offering his company shares to public , the
remaining 50% he borrowed from Lena bank by mortgaging his papas land.

Days passed and the company started to do badly then to worse and the loan
installments lapsed month on month, Lena bank issued warning but X continued the
bad practice for more than 90 days (condition for NPA) and the bank labeled X as
defaulter and the loan as a Non Performing Asset.

Now what X will do?

He could take his case against the bank to Debt recovery tribunal (DRT- A court for
such cases).

What are Lena banks options?

In 2002, Govt. gave banks a lifeline called as SARFAESI Act (Securitization and
Reconstruction of Financial Assets and Enforcement of security interest Act)
With this Act Lena bank has the power to take possession of Mr.Xs property or can
transfer this to some other ownership.

What bank will do with the acquired property?

Bank can use this for their own purpose like , opening a new branch on it, installing
of ATMs etc.
Bank can advertise in newspapers for the auction of the property acquired and
could auction them on any pre decided day.
Bank can sell the property to ARC (Asset Reconstruction Company), these are
registered companies under RBI, they buy such assets from banks and sell them at
higher prices to gain profits.

NOTE- Total amount of NPAs are around 4.4% of the total assets of banks in
India and expected to increase to 4.7% till the end of FY15

ANY TIME MONEY provide karta hai- ATMs & WLAs

Dear Readers,
First of all Good Morning to all of you. Today we are posting
some questions out of which you can expect at least one or two questions in
upcoming bank exams. It is Important for you to understand what to read out
of thousand topics from book. But we will provide you handpicked topics and
will present to you in such a manner that it will stay forever in your mind.

Q.1. What is an Automated Teller Machine (ATM)?

Ans 1. Automated Teller Machine is a computerized machine that provides the
customers of banks the facility of accessing their account for dispensing cash and to
carry out other financial & non-financial transactions without the need to actually visit
their bank branch.

Q.2. What are White Label ATMs (WLAs)?

Ans 2. ATMs set up, owned and operated by non-banks are called White Label ATMs.
Non-bank ATM operators are authorized under Payment & Settlement Systems Act,
2007 by the Reserve Bank of India.

Q.3. What has been the rationale of allowing non-bank entities for setting up
of WLAs ?
Ans 3. The rationale of allowing non-bank entity to set up White Label ATMs has been
to increase the geographical spread of ATM fsor increased / enhanced customer
service.

Q.4. What type of cards can be used at an ATM/WLA?

Ans 4. The ATM/ATM cum debit cards, credit cards and open prepaid cards (that permit
cash withdrawal) issued by banks can be used at ATMs/WLAs for various transactions.

Q.5. What are the services/facilities available at ATMs/WLAs?

Ans 5. In addition to cash dispensing, ATMs/WLAs may offer many other
services/facilities to bank customers. Some of these services include:
Account Information
Cash Deposit (Acceptance of deposits are not permitted at WLAs)
Regular Bills Payment (not permitted at WLAs)
Purchase of Re-load Vouchers for Mobiles (not permitted at WLAs)
Mini/Short Statement
PIN change
Request for Cheque Book

Q.6. What is Personal Identification Number (PIN)?

Ans 6. PIN is the numeric password which is separately mailed / handed over to the
customer by the bank while issuing the card. Most banks require the customers to
change the PIN on the first use. Customer should not disclose PIN to anybody,
including to bank officials. Customers should change the PIN at regular intervals.

Q.7. Can these cards be used at any bank/non-bank ATM (WLA) in the
country?
Ans 7. Yes. The cards issued by banks in India may be used at any bank / white label
ATM in the country.

Q.8. Is the customer charged for ATM transactions?

Ans.8. With effect from November 01, 2014, Savings bank account holders can do
a minimum of three transactions (including both financial and non-financial
transactions) free of charge in a month at other bank ATMs in case of ATMs located in
six metro locations, viz. Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and
Hyderabad. At other locations, the savings bank account holders can transact
a minimum of five transactions (including both financial and non-financial
transactions) free of charge in a month at other bank ATMs. Similarly, Basic Savings
Bank Deposit Account holders will continue to get five free transactions. Banks on
their own can decide to offer more number of transactions free of cost to their
customers. In case of charges to be levied on customers, the customer can be charged
a maximum of Rs. 20/- per transaction (plus service tax, if any) by his/her bank.

Q.9. What steps should a customer take in case of failed ATM transaction at
other bank/white label ATMs, when his / her account is debited?
Ans 9. The customer should lodge a complaint with the card issuing bank at the
earliest. This process is applicable even if the transaction was carried out at another
banks/non-banks ATM. In case of WLAs, the contact number/toll free numbers are also
available for lodging complaints regarding failed transactions at their ATMs.

Q.10. Is there any time limit for the card issuing banks for recrediting the
customers account for a failed ATM/WLA transaction indicated under Q. No.
9?
Ans 10. As per the RBI instructions, banks have been mandated to resolve customer
complaints by re-crediting the customers account within 7 working days from the date
of complaint.

Q.11. Are the customers eligible for compensation for delays beyond 7
working days?
Ans 11. Yes. Effective from July 1, 2011, banks have to pay compensation of Rs. 100/-
per day for delays in re-crediting the amount beyond 7 working days from the date of
receipt of complaint for failed ATM transactions. The compensation has to be credited
to the account of the customer without any claim being made by the customer. If the
complaint is not lodged within 30 days of transaction, the customer is not entitled for
any compensation for delay in resolving his / her complaint.

Q.12. What is the course of action for the customer if the complaint is not
addressed by his/her bank within the stipulated time / not addressed to his
satisfaction?
Ans 12. The customer can take recourse to the Banking Ombudsman, if the grievance
is not redressed by the his/her card issuing bank.

Important Banking Terms

Hello Readers,

On the account of upcoming SBI PO Exam, here we are providing you all the
Important Banking Terms. Hope you all like the post!!!

Accrued interest: Interest due from issue date or from the last coupon payment date
to the settlement date. Accrued interest on bonds must be added to their purchase
price.

Arbitrage: Buying a financial instrument in one market in order to sell the same
instrument at a higher price in another market.

Ask Price: The lowest price at which a dealer is willing to sell a given security.

Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank

loans, leases, and other assets. Most ABS are backed by auto loans and credit cards
these issues are very similar to mortgage-backed securities.

At-the-money: The exercise price of a derivative that is closest to the market price of
the underlying instrument.

Basis Point: One hundredth of 1%. A measure normally used in the statement of
interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points.

Bear Markets: Unfavorable markets associated with falling prices and investor
pessimism.
Bid-ask Spread: The difference between a dealers bid and ask price.

Bid Price: The highest price offered by a dealer to purchase a given security.

Blue Chips: Blue chips are unsurpassed in quality and have a long and stable record
of earnings and dividends. They are issued by large and well-established firms that
have impeccable financial credentials.

Bond: Publicly traded long-term debt securities, issued by corporations and

governments, whereby the issuer agrees to pay a fixed amount of interest over a
specified period of time and to repay a fixed amount of principal at maturity.

Book Value: The amount of stockholders equity in a firm equals the amount of the
firms assets minus the firms liabilities and preferred stock

Broker: Individuals licensed by stock exchanges to enable investors to buy and sell
securities.

Brokerage Fee: The commission charged by a broker.

Bull Markets: Favorable markets associated with rising prices and investor optimism.

Call Option: The right to buy the underlying securities at a specified exercise price on
or before a specified expiration date.

Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their
stated maturity.

Capital Gain: The amount by which the proceeds from the sale of a capital asset
exceed its original purchase price.

Capital Markets: The market in which long-term securities such as stocks and bonds
are bought and sold.

Certificate of Deposits (CDs): Savings instrument in which funds must remain on

deposit for a specified period, and premature withdrawals incur interest penalties.

Closed-end (Mutual) Fund: A fund with a fixed number of shares issued, and all
trading is done between investors in the open market. The share prices are determined
by market prices instead of their net asset value.

Collateral: A specific asset pledged against possible default on a bond. Mortgage

bonds are backed by claims on property. Collateral trusts bonds are backed by claims
on other securities. Equipment obligation bonds are backed by claims on equipment.

Commercial Paper: Short-term and unsecured promissory notes issued by

corporations with very high credit standings.

Common Stock: Equity investment representing ownership in a corporation; each

share represents a fractional ownership interest in the firm.

Compound Interest: Interest paid not only on the initial deposit but also on any
interest accumulated from one period to the next.
Contract Note: A note which must accompany every security transaction which
contains information such as the dealers name (whether he is acting as principal or
agent) and the date of contract.

Controlling Shareholder: Any person who is, or group of persons who together are,
entitled to exercise or control the exercise of a certain amount of shares in a company
at a level (which differs by jurisdiction) that triggers a mandatory general offer, or
more of the voting power at general meetings of the issuer, or who is or are in a
position to control the composition of a majority of the board of directors of the issuer.

Convertible Bond: A bond with an option, allowing the bondholder to exchange the
bond for a specified number of shares of common stock in the firm. A conversion price
is the specified value of the shares for which the bond may be exchanged. The
conversion premium is the excess of the bonds value over the conversion price.

Corporate Bond: Long-term debt issued by private corporations.

Coupon: The feature on a bond that defines the amount of annual interest income.

Coupon Frequency: The number of coupon payments per year.

Coupon Rate: The annual rate of interest on the bonds face value that a bonds
issuer promises to pay the bondholder. It is the bonds interest payment per dollar of
par value.

Covered Warrants: Derivative call warrants on shares which have been separately
deposited by the issuer so that they are available for delivery upon exercise.

Credit Rating: An assessment of the likelihood of an individual or business being able

to meet its financial obligations. Credit ratings are provided by credit agencies or
rating agencies to verify the financial strength of the issuer for investors.

Currency Board: A monetary system in which the monetary base is fully backed by
foreign reserves. Any changes in the size of the monetary base has to be fully matched
by corresponding changes in the foreign reserves.

Current Yield: A return measure that indicates the amount of current income a bond
provides relative to its market price. It is shown as: Coupon Rate divided by Price
multiplied by 100%.

Custody of Securities: Registration of securities in the name of the person to whom

a bank is accountable, or in the name of the banks nominee; plus deposition of
securities in a designated account with the banks bankers or with any other institution
providing custodial services.

Default Risk: The possibility that a bond issuer will default ie, fail to repay principal
and interest in a timely manner.

Derivative Call (Put) Warrants: Warrants issued by a third party which grant the
holder the right to buy (sell) the shares of a listed company at a specified price.

Derivative Instrument: Financial instrument whose value depends on the value of

another asset.

Discount Bond: A bond selling below par, as interest in-lieu to the bondholders.
Diversification: The inclusion of a number of different investment vehicles in a
portfolio in order to increase returns or be exposed to less risk.

Duration: A measure of bond price volatility, it captures both price and reinvestment
risks to indicate how a bond will react to different interest rate environments.

Earnings: The total profits of a company after taxation and interest.

Earnings per Share (EPS): The amount of annual earnings available to common
stockholders as stated on a per share basis.

Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings
ratio (P/E).

Equity: Ownership of the company in the form of shares of common stock.

Equity Call Warrants: Warrants issued by a company which give the holder the right
to acquire new shares in that company at a specified price and for a specified period of
time.

Ex-dividend (XD): A security which no longer carries the right to the most recently
declared dividend or the period of time between the announcement of the dividend
and the payment (usually two days before the record date). For transactions during the
ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend
status is usually indicated in newspapers with an (x) next to the stocks or unit trusts
name.

Face Value/ Nominal Value: The value of a financial instrument as stated on the
instrument. Interest is calculated on face/nominal value.

Fixed-income Securities: Investment vehicles that offer a fixed periodic return.

Fixed Rate Bonds: Bonds bearing fixed interest payments until maturity date.

Floating Rate Bonds: Bonds bearing interest payments that are tied to current
interest rates.

Fundamental Analysis: Research to predict stock value that focuses on such

determinants as earnings and dividends prospects, expectations for future interest
rates and risk evaluation of the firm.

Future Value: The amount to which a current deposit will grow over a period of time
when it is placed in an account paying compound interest.

Future Value of an Annuity: The amount to which a stream of equal cash flows that
occur in equal intervals will grow over a period of time when it is placed in an account
paying compound interest.

Futures Contract: A commitment to deliver a certain amount of some specified item

at some specified date in the future.

Hedge: A combination of two or more securities into a single investment position for
the purpose of reducing or eliminating risk.

Income: The amount of money an individual receives in a particular time period.

Index Fund: A mutual fund that holds shares in proportion to their representation in a
market index, such as the S&P 500.

Initial Public Offering (IPO): An event where a company sells its shares to the public
for the first time. The company can be referred to as an IPO for a period of time after
the event.

Inside Information: Non-public knowledge about a company possessed by its

officers, major owners, or other individuals with privileged access to information.

Insider Trading: The illegal use of non-public information about a company to make
profitable securities transactions

Intrinsic Value: The difference of the exercise price over the market price of the
underlying asset.

Investment: A vehicle for funds expected to increase its value and/or generate
positive returns.

Investment Adviser: A person who carries on a business which provides investment

advice with respect to securities and is registered with the relevant regulator as an
investment adviser.

IPO price: The price of share set before being traded on the stock exchange. Once the
company has gone Initial Public Offering, the stock price is determined by supply and
demand.

Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poors
BBB rating or below; or Moodys BBB rating or below) and as such, produce high yields,
so long as they do not go into default.

Leverage Ratio: Financial ratios that measure the amount of debt being used to
support operations and the ability of the firm to service its debt.

Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on
the interest rates at which banks offer to lend unsecured funds to other banks in the
London wholesale money market (or interbank market). The LIBOR rate is published
daily by the British Bankers Association and will be slightly higher than the London
Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.

Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price
at which the order is to be transacted.

Limited Company: The passive investors in a partnership, who supply most of the
capital and have liability limited to the amount of their capital contributions.

Liquidity: The ability to convert an investment into cash quickly and with little or no
loss in value.

Listing: Quotation of the Initial Public Offering companys shares on the stock
exchange for public trading.

Listing Date: The date on which Initial Public Offering stocks are first traded on the
stock exchange by the public
Margin Call: A notice to a client that it must provide money to satisfy a minimum
margin requirement set by an Exchange or by a bank / broking firm.

Market Capitalization: The product of the number of the companys outstanding

ordinary shares and the market price of each share.

Market Maker: A dealer who maintains an inventory in one or more stocks and
undertakes to make continuous two-sided quotes.

Market Order: An order to buy or an order to sell securities which is to be executed at

the prevailing market price.

Money Market: Market in which short-term securities are bought and sold.

Mutual Fund: A company that invests in and professionally manages a diversified

portfolio of securities and sells shares of the portfolio to investors.

Net Asset Value: The underlying value of a share of stock in a particular mutual fund;
also used with preferred stock.

Offer for Sale: An offer to the public by, or on behalf of, the holders of securities
already in issue.

Offer for Subscription: The offer of new securities to the public by the issuer or by
someone on behalf of the issuer.

Open-end (Mutual) Fund: There is no limit to the number of shares the fund can
issue. The fund issues new shares of stock and fills the purchase order with those new
shares. Investors buy their shares from, and sell them back to, the mutual fund itself.
The share prices are determined by their net asset value.

Open Offer: An offer to current holders of securities to subscribe for securities

whether or not in proportion to their existing holdings.

Option: A security that gives the holder the right to buy or sell a certain amount of an
underlying financial asset at a specified price for a specified period of time.

Oversubscribed: When an Initial Public Offering has more applications than actual
shares available. Investors will often apply for more shares than required in
anticipation of only receiving a fraction of the requested number. Investors and
underwriters will often look to see if an IPO is oversubscribed as an indication of the
publics perception of the business potential of the IPO company.

Par Bond: A bond selling at par (i.e. at its face value).

Par Value: The face value of a security.

Perpetual Bonds: Bonds which have no maturity date.

Placing: Obtaining subscriptions for, or the sale of, primary market, where the new
securities of issuing companies are initially sold.

Portfolio: A collection of investment vehicles assembled to meet one or more

investment goals.
Preference Shares: A corporate security that pays a fixed dividend each period. It is
senior to ordinary shares but junior to bonds in its claims on corporate income and
assets in case of bankruptcy.

Premium (Warrants): The difference of the market price of a warrant over its
intrinsic value.

Premium Bond: Bond selling above par.

Present Value: The amount to which a future deposit will discount back to present
when it is depreciated in an account paying compound interest.

Present Value of an Annuity: The amount to which a stream of equal cash flows
that occur in equal intervals will discount back to present when it is depreciated in an
account paying compound interest.

Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the
companys common stock. The price/earnings (P/E) ratio relates the companys
earnings per share (EPS) to the market price of its stock.

Privatization: The sale of government-owned equity in nationalized industry or other

commercial enterprises to private investors.

Prospectus: A detailed report published by the Initial Public Offering company, which
includes all terms and conditions, application procedures, IPO prices etc, for the IPO

Put Option: The right to sell the underlying securities at a specified exercise price on
of before a specified expiration date.

Rate of Return: A percentage showing the amount of investment gain or loss against
the initial investment.

Real Interest Rate: The net interest rate over the inflation rate. The growth rate of
purchasing power derived from an investment.

Redemption Value: The value of a bond when redeemed.

Reinvestment Value: The rate at which an investor assumes interest payments

made on a bond which can be reinvested over the life of that security.

Relative Strength Index (RSI): A stocks price that changes over a period of time
relative to that of a market index such as the Standard & Poors 500, usually measured
on a scale from 1 to 100, 1 being the worst and 100 being the best.

Repurchase Agreement: An arrangement in which a security is sold and later bought

back at an agreed price and time.

Resistance Level: A price at which sellers consistently outnumber buyers, preventing

further price rises.

Return: Amount of investment gain or loss.

Rights Issue: An offer by way of rights to current holders of securities that allows
them to subscribe for securities in proportion to their existing holdings.

Risk-Averse, Risk-Neutral, Risk-Taking:

 Risk-averse describes an investor who requires greater return in exchange for
greater risk.
Risk-neutral describes an investor who does not require greater return in
exchange for greater risk.
Risk-taking describes an investor who will accept a lower return in exchange for
greater risk.

Senior Bond: A bond that has priority over other bonds in claiming assets and
dividends.

Short Hedge: A transaction that protects the value of an asset held by taking a short
position in a futures contract.

Settlement: Conclusion of a securities transaction when a customer pays a

broker/dealer for securities purchased or delivered, securities sold, and receives from
the broker the proceeds of a sale.

Short Position: Investors sell securities in the hope that they will decrease in value
and can be bought at a later date for profit.

Short Selling: The sale of borrowed securities, their eventual repurchase by the short
seller at a lower price and their return to the lender.

Speculation: The process of buying investment vehicles in which the future value and
level of expected earnings are highly uncertain.

Stock Splits: Wholesale changes in the number of shares. For example, a two for one
split doubles the number of shares but does not change the share capital.

Subordinated Bond: An issue that ranks after secured debt, debenture, and other
bonds, and after some general creditors in its claim on assets and earnings. Owners of
this kind of bond stand last in line among creditors, but before equity holders, when an
issuer fails financially.

Substantial Shareholder: A person acquires an interest in relevant share capital

equal to, or exceeding, 10% of the share capital.

Support Level: A price at which buyers consistently outnumber sellers, preventing

further price falls.

Technical Analysis: A method of evaluating securities by relying on the assumption

that market data, such as charts of price, volume, and open interest, can help predict
future (usually short-term) market trends. Contrasted with fundamental analysis which
involves the study of financial accounts and other information about the company. (It is
an attempt to predict movements in security prices from their trading volume history.)

Time Horizon: The duration of time an investment is intended for.

Trading Rules: Stipulation of parameters for opening and intra-day quotations,

permissible spreads according to the prices of securities available for trading and
board lot sizes for each security.

Trust Deed: A formal document that creates a trust. It states the purpose and terms
of the name of the trustees and beneficiaries.
Underlying Security: The security subject to being purchased or sold upon exercise
of the option contract.

Valuation: Process by which an investor determines the worth of a security using risk
and return concept.

Warrant: An option for a longer period of time giving the buyer the right to buy a
number of shares of common stock in company at a specified price for a specified
period of time.

Window Dressing: Financial adjustments made solely for the purpose of accounting
presentation, normally at the time of auditing of company accounts.

Yield (Internal rate of Return): The compound annual rate of return earned by an
investment

Yield to Maturity: The rate of return yield by a bond held to maturity when both
compound interest payments and the investors capital gain or loss on the security are
taken into account.

Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par
value.

Banking Awareness: Monetary Policy of India

Monetary policy is the process by which monetary authority of a country i.e. RBI
controls the supply of money in the economy by its control over interest rates in order
to maintain price stability and achieve high economic growth. In India, the central
monetary authority is the Reserve Bank of India (RBI) is so designed as to maintain the
price stability in the economy.

MEASURES OF MONETARY POLICY:

Quantitative measures to control amount of credit.
Qualitative measures to control the allocation to different sections of economy.

TOOLS OF QUANTITATIVE MEASURES :

BANK RATE: The bank rate also known as the discount rate, is the rate of
interest charged by the RBI for providing funds or loans to the Banking system
in india. It also signals the medium-term stance of monetary policy.
OPEN MARKET OPERTIONS(OMO): The buying and selling of government
securities in the open market in order to expand or contract the amount of
money in the banking system. Purchases inject money into the banking system
and stimulate growth while sales of securities do the opposite.
LIQUIDITY ADJUCTMENT FACILITY(LAF): Liquidity Adjustment Facility is the
primary instrument of Reserve Bank of India for modulating liquidity and
transmitting interest rate signals to the market. Under the scheme, repo
auctions (for absorption of liquidity) and reverse repo auctions (for injection of
liquidity) are conducted on a daily basis (except Saturdays). It is same-day
transactions, with interest rates decided on a cut-off basis and derived from
auctions on uniform price basis.
REPO/REVERSE REPO RATE: These rates under the Liquidity Adjustment
Facility (LAF) determine the corridor for short-term money market interest rates.
In turn, this is expected to trigger movement in other segments of the financial
market and the real economy.
 MARKET STABLISATION SCHEME (MSS): This instrument for monetary
management was introduced in 2004. Liquidity of a more enduring nature
arising from large capital flows is absorbed through sale of short-dated
government securities and treasury bills. The mobilised cash is held in a
separate government account with the Reserve Bank.

TOOLS OF QUALITATIVE MEASURES:

CREDIT CEILING: In this operation RBI issues prior information or direction that
loans to the commercial banks will be given up to a certain limit. In this case
commercial bank will be tight in advancing loans to the public. They will allocate
loans to limited sectors. Few example of ceiling are agriculture sector advances,
priority sector lending.
MORAL SUASION: Moral Suasions are suggestion and guidelines by the RBI to
the commercial banks to take so and so action and measures in so and so trend
of the economy. RBI may request commercial banks not to give loans for
unproductive purpose which does not add to economic growth but increases
inflation in the economy.
CREDIT AUTHORIZATION SCHEME: Credit Authorization Scheme was
introduced in November, 1965 when P C Bhattacharya was the chairman of RBI.
Under this instrument of credit regulation RBI as per the guideline authorizes
the banks to advance loans to desired sectors

The term CORE means - Centralized Online Real-time Exchange.

What is CBS?
CBS refers to the software applications for recording transactions, storing customer
information, calculating interest and completing the process of passing entries in a
single database.

What CBS does?

CBS enables accessing of complete customer account details centrally. It makes it
possible for a bank customer to access his bank account through whichever channel he
prefers like internet banking, mobile banking, ATM etc.

CBS in India
This initiative was taken by the banks on the basis of First Rangarajan Committee
report on bank computerisation submitted in the year 1984.

The committee was constituted under the chairmanship of Dr. C. Rangarajan (Then
deputy governor of RBI).

Old generation banks initially were hesitant about this but with the advent of new
generation private sector banks in India during 1994-1996, the real era of bank
marketing started and these banks started to offer any-where and any-time banking
facilities to its customers.

Syndicate Bank was the first among the Public Sector Banks to implement Core
Banking.
First CBS branch of Syndicate bank was Jayanagar Branch in Bangalore.

Benefits of CBS

A. Benefits for the customers

 Through CBS a bank customer can avail banking facilities (transactions) 24x7.
It is time saving, convenient and efficient.

B. Benefits for the banks

This paradigm shift in banking has revolutionised the speed, efficiency and
reach of the delivery systems. It gives greater customer satisfaction which is
essential for every bank in this day an age.
Since it offers alternate channels than brick and mortar banking, it is a viable
alternative to opening new branches, therefore reduces a banks operational
costs.
Alternative for extended working hours.
Reduces long queues in bank cash counters.

ALL ABOUT NBFC'S

Dear Readers,
You all must have heard that the Reserve Bank of India is entrusted with the
responsibility of regulating and supervising the Non-Banking Financial Companies. So,
lets discuss about what actually NBFCs are.

About the term NBFC:

A Non-Banking Financial Company (NBFC) is a company registered under the
Companies Act, 1956 engaged in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government or local authority or
other marketable securities of a like nature, leasing, hire-purchase, insurance business,
chit fund business.

Difference between BANK & NBFC:

NBFCs lend and make investments and hence their activities are akin to that of banks;
however there are a few differences as given below:
i. NBFC cannot accept demand deposits;
ii. NBFCs do not form part of the payment and settlement system and cannot issue
cheques drawn on itself;
iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is
not available to depositors of NBFCs, unlike in case of banks.

Different types/categories of NBFCs registered with RBI:

NBFCs are categorized
a) In terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs,
b) Non deposit taking NBFCs by their size into systemically important and other non-
deposit holding companies (NBFC-NDSI and NBFC-ND) and
c) By the kind of activity they conduct.
Within this broad categorization the different types of NBFCs are as follows:

i. Asset Finance Company(AFC) : An AFC is a company which is a financial

institution carrying on as its principal business the financing of physical assets
supporting productive/economic activity, such as automobiles, tractors, lathe
machines, generator sets, earth moving and material handling equipments, moving on
own power and general purpose industrial machines.

ii. Investment Company (IC) : IC means any company which is a financial institution
carrying on as its principal business the acquisition of securities.

iii. Loan Company (LC): LC means any company which is a financial institution
carrying on as its principal business the providing of finance whether by making loans
or advances or otherwise for any activity other than its own but does not include an
Asset Finance Company.

iv. Infrastructure Finance Company (IFC): IFC is a non-banking finance company

a) which deploys at least 75 per cent of its total assets in infrastructure loans,
b) has a minimum Net Owned Funds of Rs. 300 crore,
c) has a minimum credit rating of A or equivalent d) and a CRAR of 15%.

v. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC) : IDF-NBFC

is a company registered as NBFC to facilitate the flow of long term debt into
infrastructure projects. IDF-NBFC raise resources through issue of Rupee or Dollar
denominated bonds of minimum 5 year maturity. Only Infrastructure Finance
Companies (IFC) can sponsor IDF-NBFCs.

vi. Non-Banking Financial Company - Micro Finance Institution (NBFC-

MFI): NBFC-MFI is a non-deposit taking NBFC having not less than 85%of its assets in
the nature of qualifying assets which satisfy the following criteria:
a. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income
not exceeding Rs. 60,000 or urban and semi-urban household income not exceeding
Rs. 1,20,000.
b. tenure of the loan not to be less than 24 months for loan amount in excess of Rs.
15,000 with prepayment without penalty;

vii. Non-Banking Financial Company Factors (NBFC-Factors): NBFC-Factor is a

non-deposit taking NBFC engaged in the principal business of factoring. The financial
assets in the factoring business should constitute at least 75 percent of its total assets
and its income derived from factoring business should not be less than 75 percent of
its gross income.

Register with RBI:

A company incorporated under the Companies Act, 1956 and desirous of commencing
business of non-banking financial institution as defined under Section 45 I(a) of the RBI
Act, 1934 should comply with the following:
i. it should be a company registered under Section 3 of the companies Act, 1954
ii. It should have a minimum net owned fund of Rs 200 lakh.

Deposits in NBFC:
a) Presently, the maximum rate of interest an NBFC can offer is 12.5%. The interest
may be paid or compounded at rests not shorter than monthly rests.
b) The NBFCs are allowed to accept/renew public deposits for a minimum period of 12
months and maximum period of 60 months. They cannot accept deposits repayable on
demand.
c) The deposits with NBFCs are not insured.
d) The repayment of deposits by NBFCs is not guaranteed by RBI.

Brief about RNBC

a) Residuary Non-Banking Company is a class of NBFC which is a company and has as
its principal business the receiving of deposits, under any scheme or arrangement or in
any other manner and not being Investment, Asset Financing, Loan Company.
b) These companies are required to maintain investments as per directions of RBI, in
addition to liquid assets.
c) The amount payable by way of interest, premium, bonus or other advantage, by
whatever name called by a RNBC in respect of deposits received shall not be less than
the amount calculated at the rate of 5% (to be compounded annually) on the amount
deposited in lump sum or at monthly or longer intervals; and at the rate of 3.5% (to be
compounded annually) on the amount deposited under daily deposit scheme.
d) Further, a RNBC can accept deposits for a minimum period of 12 months and
maximum period of 84 months from the date of receipt of such deposit. They cannot
accept deposits repayable on demand.

Some other regulators:

Category of Companies Regulator
Chit Funds Respective State Governments
Insurance companies IRDA
Housing Finance Companies NHB
Venture Capital Fund / SEBI
Merchant Banking companies SEBI
Stock broking companies SEBI
Nidhi Companies Ministry of corporate affairs, Government of
India

Today in the study Notes we Discuss about SEBI

The Securities and Exchange Board of India

The Securities and Exchange Board of India (SEBI) is the regulator for the securities
market in India
"Its Basic function is to protect the interests of investors in securities and to promote
the development, and to regulate the securities market and for matters connected
there with or incidental there to"
The Securities and Exchange Board of India was established on April 12, 1992 in
accordance with the provisions of the Securities and Exchange Board of India Act,
1992.
SEBI has to be responsive to the needs of three groups, which constitute the market:
The issuers of securities
The investors
The market intermediaries.

Headquarters
Its headquarters at the business district of Bandra Kurla Complex in
Mumbai (Maharashtra), and has Northern, Eastern, Southern and Western Regional
Offices in New Delhi, Kolkata, Chennai and Ahmedabad respectively. It has
opened local offices at Jaipur and Bangalore.
Management of the Board.
The Board shall consist of the following members, namely: -
(a) A Chairman;
(b) Two members from amongst the officials of the [Ministry] of the Central
Government dealing with Finance
(c) One member from amongst the officials of [the Reserve Bank];
(d) Five other members of whom at least three shall be the whole-time members to be
appointed by the central Government.

Chairman- Upendra Kumar Sinha

Powers
For the discharge of its functions efficiently, SEBI has been vested with the following
powers:
- To approve bylaws of stock exchanges.
- To require the stock exchange to amend their bylaws.
- Inspect the books of accounts and call for periodical returns from recognized stock
exchanges.
- Inspect the books of accounts of financial intermediaries.
- Compel certain companies to list their shares in one or more stock exchanges.

The Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB) is a multilateral development bank

(MDB) conceived for the 21st century. The Bank's foundation is built on the lessons of
experience of existing MDBs and the private sector. Its modus operandi will be lean,
clean and green:

Lean- with a small efficient management team and highly skilled staff;

Clean- an ethical organization with zero tolerance for corruption;

Green- an institution built on respect for the environment.

The AIIB, a modern knowledge-based institution, will focus on the development of

infrastructure and other productive sectors in Asia, including energy and power,
transportation and telecommunications, rural infrastructure and agriculture
development, water supply and sanitation, environmental protection, urban
development and logistics, etc.
The AIIB will complement and cooperate with the existing MDBs to jointly address the
daunting infrastructure needs in Asia. AIIB welcomes all regional and non-regional
countries, developing and developed countries, that seek to contribute to Asian
infrastructure development and regional connectivity.

Headquarters- Beijing, China

Official language - English

President- Jin Liqun

Main organ- Board of Governors

Board of Directors
HISTORY
Representatives from 22 countries signed the October 2014 Memorandum of
Understanding (MOU) to establish the AIIB and Beijing was selected to host Bank
headquarters. Mr. Jin Liqun was appointed as the Secretary General of the Multilateral
Interim Secretariat. By the deadline of March 31st for submission of membership
applications, the Prospective Founding Members had increased to 57.
The bank started operation after the agreement entered into force on 25 December
2015.
Major economies that did not become PFM (Prospective Founding Members) include
the G7/G8 members' Japan and the United States

Share Holders
The capital of the bank is $100 billion, equivalent to 23 of the capital of the Asian
Development Bank and about half that of the World Bank.
Asian countries will contribute up to 75 per cent of the total capital and be allocated a
share of the quota based on their economic size.
BRICS members China, India and Russia are the three largest shareholders, with a
voting share of 26.06 per cent, 7.5 per cent and 5.92 per cent, respectively.

Current News about AIIB

- AIIB 1st Annual Meeting to be held in Beijing on June 25-26, 2016.
- Asian Infrastructure Investment Bank and European Investment Bank agree
to strengthen cooperation
-The Asian Infrastructure Investment Banks Board of Directors approved its first 4
loans totaling $509 million to finance 4 projects. Three of the 4 projects are co-
financing operations with multilateral development bank (MDB) partners. The approved
loans are:
$165 million loan for a Power Distribution System Upgrade and Expansion Project in
Bangladesh;
$216.5 million loan for a National Slum Upgrading Project in Indonesia, expected to
be co-financed with the World Bank;
$100 million loan to finance the Shorkot-Khanewal Section of National Motorway M-
4 in Pakistan, co-financed with the Asian Development Bank (ADB) and the United
Kingdoms Department for International Development (DFID); and
$ 27.5 million loan for the Dushanbe-Uzbekistan Border Road Improvement Project in
Tajikistan, co-financed with the European Bank for Reconstruction and Development
(EBRD).
- Former IAS officer DJ Pandian has been appointed as vice president and CIO of
AIIB
- Indias Dinesh Sharma has been elected to the board of directors of the Asian
Infrastructure Investment Bank (AIIB). He has been elected to the 12-member board
through a secret ballot. This is the first board of directors of AIIB.

(ASIAN DEVELOPMENT BANK)

ADB
The Asian Development Bank was conceived in the early 1960s as a financial
institution that would be Asian in character and foster economic growth and
cooperation in one of the poorest regions in the world.
A resolution passed at the first Ministerial Conference on Asian Economic
Cooperation held by the United Nations Economic Commission for Asia and the Far
East in 1963 set that vision on the way to becoming reality.

Headquarters
The Philippines capital of Manila was chosen to host the new institution, which opened
on 19 December 1966, with 31 members that came together to serve a
predominantly agricultural region. Takeshi Watanabe was ADB's first President.
From 31 members at its establishment in 1966, ADB has grown to encompass 67
members - of which 48 are from within Asia and the Pacific and 19 outside.
Georgia is the last member to join the ADB group in 2007.
During the 1960s, ADB focused much of its assistance on food production and rural
development.
At the end of 2014, Japan holds the largest proportion of shares at 15.7%. The
United States holds 15.6%, China holds 6.5%, India holds 6.4%, and Australia holds
5.8%

President & Main organ

The highest policy-making body of the bank is the Board of Governors, composed of
one representative from each member state. The Board of Governors, in turn, elect
among themselves the twelve members of the Board of Directors and their deputies.
Eight of the twelve members come from regional (Asia-Pacific) members while the
others come from non-regional members.
The Board of Governors also elect the bank's president, who is the chairperson of the
Board of Directors and manages ADB. The president has a term of office lasting five
years, and may be reelected. Traditionally, and because Japan is one of the largest
shareholders of the bank, the president has always been Japanese.
The current president was Takehiko Nakao, who succeeded Haruhiko Kuroda in
2013

Areas of Focus and Results

ADB operations are designed to support the three complementary agendas of inclusive
economic growth, environmentally sustainable growth, and regional integration. ADB
employs its limited resources in its areas of comparative strengththe core areas of:
Infrastructure (water, energy, transport, urban development, information and
communications technology)
Environment
Regional cooperation and integration
Finance sector development
Education
ADB also operates on a limited scale in other areas, including
Health
Agriculture and natural resources
Public sector management

As a multilateral development finance institution, ADB provides:

Loans
Technical assistance
Grants

Current news about ADB

Asian Development Bank(ADB) retained Indias GDP growth forecast at 7.4% for the
current fiscal and forecast the economy would grow at 7.8% in 2017-18.
The Asian Development Bank (ADB) has approved a project loan of $300 million to
upgrade over 400 kilometers (km) of major district roads in Uttar Pradesh
The Asian Development Bank (ADB) approved a $500 million loan to build a bridge
across Indias Ganges River. The 9.8 kilometer (km) road bridge in the northeastern
state of Bihar will be Indias longest river bridge and will provide vital transport links
between the northern and southern parts of the state and with neighboring Nepal.
ADB's 50th Annual Meeting:
Fumiko Hayashi, Mayor of Yokohama, extends a warm welcome to delegates
attending the 50th Annual Meeting of the ADB Board of Governors, to be held in the
Japanese city from 4 to 7 May 2017.

(INTERNATIONAL MONETARY FUND)

The International Monetary Fund (IMF) is an organization of 189 countries, working

to foster global monetary cooperation, secure financial stability, facilitate
international trade, promote high employment and sustainable economic
growth, and reduce poverty around the world.

Created in 1945, the IMF is governed by and accountable to the 189 countries that
make up its near-global membership.
April 12, 2016 -- IMF Survey : Nauru Joins the IMF as 189th Member

Each country or region is represented by a member on the Fund's Executive Board and
numerous staff members. The ratio of board members from each country is based on
the country's global financial position, so that the most powerful countries in the
global economy have the heaviest representation. The United States has the
highest voting power, followed by Asian countries such as Japan and China and
Western European countries such as Britain, Germany, France, and Italy

Headquarters -Washington, D.C., United States

Managing Director- Christine Lagarde

Main organ- Board of governors

Board of Governors
The Board of Governors consists of one governor and one alternate governor for each
member country. Each member country appoints its two governors. The Board
normally meets once a year and is responsible for electing or appointing executive
directors to the Executive Board. While the Board of Governors is officially responsible
for approving quota increases, Special Drawing Right allocations, the admittance of
new members, compulsory withdrawal of members, and amendments to the Articles of
Agreement and By-Laws, in practice it has delegated most of its powers to the IMF's
Executive Board

Why the IMF was created and how it works

The IMF, also known as the Fund, was conceived at a UN conference in Bretton Woods,
New Hampshire, United States, in July 1944. The 44 countries at that conference
sought to build a framework for economic cooperation to avoid a repetition of the
competitive devaluations that had contributed to the Great Depression of the 1930s.

The IMF's responsibilities:

The IMF's primary purpose is to ensure the stability of the international
monetary systemthe system of exchange rates and international payments that
enables countries (and their citizens) to transact with each other. The Fund's mandate
was updated in 2012 to include all macroeconomic and financial sector issues that
bear on global stability.

The IMF vs. the World Bank

The IMF works hand-in-hand with the World Bank, and although they are two separate
entities, their interests are aligned, and they were created together. While the IMF
provides only shorter-term loans that are funded by member quotas, the World
Bank focuses on long-term economic solutions and the reduction of poverty and is
funded by both member contributions and bonds. The IMF is more focused on
economic policy solutions, while the World Bank offers assistance in such
programs as building necessary public facilities and preventing disease.

Special Drawing Right SDR

The SDR (Also known as the Paper Gold) was redefined as a basket of currencies.
Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, and pound
sterling. Effective October 1, 2016, the basket will be expanded to include the
Chinese renminbi.
The respective weights of the U.S. dollar, euro, Chinese renminbi, Japanese yen, and
pound sterling are 41.73 percent, 30.93 percent, 10.92 percent, 8.33 percent, and 8.09
percent.1 These weights will be used to determine the amounts of each of the five
currencies to be included in the new SDR valuation basket that will take effect on
October 1, 2016

How a Country Can Join the IMF

Countries must apply to be a part of the IMF, although any country can apply. Over
time, the stipulations of being a member have changed, with membership
requirements being more relaxed when the Fund was in its early stages. Countries are
required to make membership payments, or quotas, which are assigned to individual
countries based on their economic size and stipulate how much they contribute. These
quotas are larger for more powerful economies, and they form a pool from which
countries in need can take loans. Member countries are also required to adhere to the
Code of Conduct, and stricter regulations may be imposed on those countries who
apply in hopes of financial aid.
(NABARD)

(National Bank for Agriculture and Rural Development) set up as an apex Development
Bank by the Government of India with a mandate for facilitating credit flow for
promotion and development of agriculture, cottage and village industries etc.

CHAIRMAN
Dr. Harsh Kumar Bhanwala, Chairman, NABARD, is a Post Graduate in Management
from IIM, Ahmedabad

HEAD OFFICE-
NABARD has its head office at Mumbai, India.

HISTORY
At the instance of Government of India and Reserve Bank of India (RBI), constituted a
committee to review the arrangements for institutional credit for agriculture and
rural development (CRAFICARD) on 30 March 1979, under the Chairmanship of
Shri B.Sivaraman, former member of Planning Commission, Government of India to
review the arrangements for institutional credit for agriculture and rural development.

The Committee, in its interim report, submitted on 28 November 1979, felt the need
for a new organisational device for providing undivided attention, forceful direction and
pointed focus to the credit problems arising out of integrated rural development
and recommended the formation of National Bank for Agriculture and Rural
Development(NABARD).

The Parliament, through Act,61 of 1981, approved the setting up of NABARD.

The bank came into existence on 12 July 1982 by transferring the agricultural credit
functions of RBI and refinance functions of the then Agricultural Refinance and
Development Corporation (ARDC). NABARD was dedicated to the service of the nation
by the late Prime Minister Smt. Indira Gandhi on 05 November 1982.

NABARD was set up with an initial capital of 100 crore. Consequent to the revision
in the composition of share capital between Government of India and RBI, the paid up
capital as on 31 March 2015, stood at 5000 crore with Government of India holding
4,980 crore (99.60%) and Reserve Bank of India 20.00 crore (0.40%).

It has 336 District Offices across the country, one special cell at Srinagar. It also
has 6 training establishments.

MISSION
Promote sustainable and equitable agriculture and rural prosperity through effective
credit support, related services, institution development and other innovative
initiatives.

ROLE
It works as an institution which looks after the development of the cottage industry,
small industry and village industry, and other rural industries.

NABARD Refinance Available to-

- State co-operative agriculture and rural development banks (SCARDBs),
- State co-operative banks (SCBs),
- Regional rural banks (RRBs),
- Commercial banks (CBs) and other financial institutions approved by RBI.

While the ultimate beneficiaries of investment credit can be individuals, partnership

concerns, companies, State-owned corporations or co-operative societies,
production credit is generally given to individuals.

NABARD is also known for its 'SHG Bank Linkage Programme' which encourages
India's banks to lend to self-help groups (SHGs). Largely because SHGs are composed
mainly of poor women, this has evolved into an important Indian tool for microfinance.
By March 2006, 22 lakh SHGs representing 3.3 core members had to be linked to credit
through this programme.

NABARD also has a portfolio of Natural Resource Management

Programmes involving diverse fields like Watershed Development, Tribal
Development and Farm Innovation through dedicated funds set up for the purpose

IMPORTANT SCHEME Under NABARD

-Solar Scheme

-Capital Subsidy Schemes for Promoting Solar Photovoltaic Water Pumping Systems for
Irrigation Purpose

-Capital Subsidy/Refinance Scheme for Installation of Solar Off Grid under Jawaharlal
Nehru-National Solar Mission (JNNSM) of the Ministry of New and Renewable Energy

-Solar Water Heating System

-Agricultural Marketing Infrastructure, Grading and Standardization scheme

-Rural Godowns Scheme

-Dairy Enterpreneurship Development Scheme.

What is MUDRA Bank?

Micro Units Development and Refinance Agency Bank (MUDRA Bank), is a new
institution setup by the Government of India for development of micro units and
refinance of MFIs to encourage entrepreneurship in India & provide the funding to the
non-corporate small business sector.

MUDRA Bank will need two type of product like refinance for the micro units having
loan requirement from Rs 50 thousands to 10 lakhs and support to Micro Finance
Institutions (MFI) for landing. MUDRA will refinance to micro business under the
scheme of Pradhan Mantri MUDRA Yojana.

Types of Loan provided by MUDRA Bank

MUDRA SHISHU Yojana

Under Mudra Shishu Yojana banks are providing loan upto 50,000/-. It is basic scheme
and banks are charging very nominal interest rate which is around 10% to 12%.

MUDRA KISHOR Yojana

Under Mudra Kishor Yojana bank are providing loan between 50,001 to 5,00, 000/-
rupee.
It is middle scheme & comes in category of unsecured loan & its Interest rate is high
from14% to 17% depends on bank to bank.

MUDRA TARUN Yojana

Mudra Tarun Yojana is the last scheme of government of India. Under MUDRA Tarun
Scheme applicant can apply loan between 5,00,001 to 10,00,000/-. It is also an
unsecured Loan and its rate of interest rate is high and starts from 16% and very bank
to bank.

It would be ensured that more focus is given to Shishu Category Units and then
Kishor and Tarun Categories.

Recently Central Government decides to provide an additional fund of One Lakh

crore to the market and it will be allocate according to below list.
40,000 Crore Rupee for Mudra Bank Shishu Loan Scheme.
35, 000 Crore Rupee for Mudra Bank Kishor Loan Scheme.
25, 000 Crore Rupee for Mudra Bank Tarun Loan Scheme.

The funding support from MUDRA are of four types :

Micro Credit Scheme (MCS) for loans upto 1 lakh finance through MFIs.
Refinance Scheme for Commercial Banks / Regional Rural Banks (RRBs) / Scheduled
Co-operative Banks
Women Enterprise programme
Securitization of loan portfolio
Purpose of MUDRA loan
Mudra loan is extended for a variety of purposes which provide income generation and
employment creation. The loans are extended mainly for:
(i) Business loan for Vendors, Traders, Shopkeepers and other Service Sector
activities.
(ii) Working capital loan through MUDRA Cards.
(iii) Equipment Finance for Micro Units.
(iv) Transport Vehicle loans.

Following is an illustrative list of the activities that can be covered under MUDRA loans:

1 Transport Vehicle
Purchase of transport vehicles for goods and personal transport such as auto rickshaw,
small goods transport vehicle, 3 wheelers, e-rickshaw, passenger cars, taxis, etc.

2 Community, Social & Personal Service Activities

Saloons, beauty parlours, gymnasium, boutiques, tailoring shops, dry cleaning, cycle
and motorcycle repair shop, DTP and Photocopying Facilities, Medicine Shops, Courier
Agents, etc.

3 Food Products Sector

Activities such as papad making, achaar making, jam / jelly making, agricultural
produce preservation at rural level, sweet shops, small service food stalls and day to
day catering / canteen services, cold chain vehicles, cold storages, ice making units,
ice cream making units, biscuit, bread and bun making, etc.

4 Textile Products Sector / Activity

Handloom, powerloom, khadi activity, chikan work, zari and zardozi work, traditional
embroidery and hand work, traditional dyeing and printing, apparel design, knitting,
cotton ginning, computerized embroidery, stitching and other textile non garment
products such as bags, vehicle accessories, furnishing accessories, etc.

5 Business loans for Traders and Shopkeepers

Financial support for on lending to individuals for running their shops / trading &
business activities / service enterprises and non-farm income generating activities with
beneficiary loan size of upto 10 lakh per enterprise / borrower.

6 Equipment Finance Scheme for Micro Units

Setting up micro enterprises by purchasing necessary machinery / equipments with per
beneficiary loan size of upto 10 lakh.

MUDRA Card
MUDRA Card is a debit card issued against the MUDRA loan account, for working
capital portion of the loan. The borrower can make use of MUDRA Card in multiple
withdrawal and credit, so as to manage the working capital limit in a most efficient
manner and keep the interest burden minimum. MUDRA Card will also help in
digitalization of MUDRA transactions and creating credit history for the borrower.

Chairman of MUDRA bank:-

Dr. Kshatrapati Shivaji - IAS

Formation of New Development Bank (NDB)

The idea for creation of the New Development Bank was first mooted in the Fourth
BRICS Summit at New Delhi on March 29, 2012 to meet the development funding
requirements of the five founding countries namely Brazil, Russia, India, China & South
Africa (BRICS) and other emerging economies and developing countries as well.

On July 15, 2014 at the sixth summit in Fortaleza, Brazil the member countries
signed the Articles for the New Development Bank with an Authorized Capital of
USD 100 billion. The founders established the Bank with a purpose of mobilizing
resources for infrastructure and sustainable development projects in BRICS and other
emerging economies and developing countries, complementing the existing efforts of
multilateral and regional financial institutions for global growth and development.To
fulfill its purpose, the Bank was envisaged to support public or private projects through
loans, guarantees, equity participation and other financial instruments. It shall also
cooperate with international organizations and other financial entities, and provide
technical assistance for projects to be supported by the Bank.
The first Board of Governors meeting of the Bank was held in Moscow, Russia on
July 7, 2015 where the Bank formally came into existence as a legal entity. Mr. K.V.
Kamath was elected the first President of the Bank and the Vice-Presidents were
appointed by the Governors.

Sustainable Development of NDB:

The 21st century has brought with it tremendous development. However, this progress
has been skewed, insufficient & often harmful to our environment. We are committed
to be a partner in bringing about sustainable development. We are looking forward to
partner with initiatives that drive growth and employment while ensuring
environmental protection.

Infrastructure of NDB:

Infrastructure development is the key driver of economic and social growth. In the
context of developing nations, infrastructural deficiencies are a matter of concern. We,
at NDB, strive to identify the gaps between needs and funding. Our mission is to
bridge these gaps and be a partner in bringing about truly holistic development.

Changing the course of development

The New Development Bank is instituted with a vision to support and foster
infrastructure and sustainable development initiatives in emerging economies. The
Bank will also complement the efforts of other existing financial institutions to realize
the common goal of global growth. To accomplish our holistic objectives we work with
an attitude to listen, learn, collaborate, innovate.

Difference
The New Development Bank comes with a very open mindset. Like the economies we
look forward to partner with, we too are on the development curve. We understand the
challenges and needs of borrowing partners. This gives us the ability to structure our
offerings and processes accordingly. We aim at addressing the needs of developing
economies in todays context and partner with them.

Today in the study Notes we are Discuss about World Bank Group

Since inception in 1944, the World Bank has expanded from a single institution to a
closely associated group of five development institutions. Our mission evolved from
the International Bank for Reconstruction and Development (IBRD) as facilitator of
post-war reconstruction and development to the present-day mandate of worldwide
poverty alleviation in close coordination with our affiliate, the International
Development Association (IDA) and other members of the World Bank Group, the
International Finance Corporation (IFC), the Multilateral Guarantee Agency (MIGA),
and the International Centre for the Settlement of Investment Disputes (ICSID).

President- Jim Yong Kim became the 12th president of the World Bank Group on July
1, 2012.
Headquarters- Washington, DC USA
Nauru became the 189th member country of World Bank on 12th April, 2016

The World Bank is like a cooperative, made up of 189 member countries. These
member countries, or shareholders, are represented by a Board of Governors, who are
the ultimate policymakers at the World Bank. Generally, the governors are member
countries' ministers of finance or ministers of development. They meet once a year at
the Annual Meetings of the Boards of Governors of the World Bank Group and the
International Monetary Fund.

The World Bank Group consists of five organizations:

1. International Bank for Reconstruction and Development

The International Bank for Reconstruction and Development was created in 1944 to
help Europe rebuild after World War II. Today, IBRD provides loans and other assistance
primarily to middle income countries. IBRD is the original World Bank institution. It
works closely with the rest of the World Bank Group to help developing countries
reduce poverty, promote economic growth, and build prosperity.

IBRD is owned by the governments of its 189 member countries, which are
represented by a 25-member board of 5 appointed and 20 elected Executive Directors.
The institution provides a combination of financial resources, knowledge and technical
services, and strategic advice to developing countries, including middle income and
credit-worthy lower income countries.

2. International Development Association (IDA)

The International Development Association (IDA) is the part of the World Bank that
helps the worlds poorest countries. Overseen by 173 shareholder nations, IDA aims to
reduce poverty by providing loans (called credits) and grants for programs that boost
economic growth, reduce inequalities, and improve peoples living conditions.

IDA complements the World Banks original lending armthe International Bank for
Reconstruction and Development (IBRD). IBRD was established to function as a self-
sustaining business and provides loans and advice to middle-income and credit-worthy
poor countries. IBRD and IDA share the same staff and headquarters and evaluate
projects with the same rigorous standards.

3. International Finance Corporation (IFC)

Established in 1956, IFC is owned by 184 member countries, a group that

collectively determines our policies. Through a Board of Governors and a Board of
Directors, our member countries guide IFC's programs and activities.

Each of our member countries appoints one governor and one alternate. Corporate
powers are vested in the Board of Governors, which delegates most powers to a board
of 25 directors. Voting power on issues brought before them is weighted according to
the share capital each director represents.
The directors meet regularly at World Bank Group headquarters in Washington, D.C.,
where they review and decide on investments and provide overall strategic guidance
to IFC management.

4. Multilateral Investment Guarantee Agency (MIGA)

MIGA is a member of the World Bank Group. The mission of MIGA is to promote foreign
direct investment (FDI) into developing countries to help support economic growth,
reduce poverty, and improve people's lives. MIGAs operational strategy plays to
foremost strength in the marketplaceattracting investors and private insurers into
difficult operating environments. We focus on insuring investments in the areas where
we can make the greatest difference.

5. International Centre for Settlement of Investment Disputes (ICSID)

ICSID is the worlds leading institution devoted to international investment dispute

settlement. It has extensive experience in this field, having administered the majority
of all international investment cases. States have agreed on ICSID as a forum for
investor-State dispute settlement in most international investment treaties and in
numerous investment laws and contracts.

ICSID was established in 1966 by the Convention on the Settlement of Investment

Disputes between States and Nationals of Other States (the ICSID Convention). The
ICSID Convention is a multilateral treaty formulated by the Executive Directors of the
World Bank to further the Banks objective of promoting international investment.
ICSID is an independent, depoliticized and effective dispute-settlement institution. Its
availability to investors and States helps to promote international investment by
providing confidence in the dispute resolution process. It is also available for state-
state disputes under investment treaties and free trade agreements, and as an
administrative registry.

Today in the study Notes we are Discuss about India's Central Bank (Reserve Bank of
India) and its policy Rates

Reserve Bank of India (RBI)

I. RBI established on April 1, 1935 under RBI Act 1934 (recommendations of John
Hilton Young Commission 1926 called Royal Commission on Indian Currency and
Finance), is the central bank of the country and was nationalised w.e.f Jan 01,1949.
II. Originally it was a shareholders bank which was taken over by the Central Govt.
under Reserve Bank (Transfer of Public Ownership) Act 1948 (paid up capital Rs. 5 cr).
III. RBIs central office is in Mumbai.
IV. Urjit R. Patel is the current and 24th Governor of Reserve Bank of India.
V. Presently, 3 Deputy Governors of RBI. These are-
a) R. Gandhi
b) SS Mundra
c) N.S Vishwanathan

Functions of RBI:

Issuance of currency: RBI is the authority in India to issue currency notes (called
bank notes) under signatures of Governor. (One rupee note called currency note is
issued by the Central Govt. and signed by Finance Secretary). The stock of currency is
distributed with the help of currency chests spread all over the country.
Banker to Govt.: RBI transacts govt. business and manages public debt. SBI or any
other bank is appointed Agent where RBI does not have office. It provides Ways &
Means advances to Govt.

Bankers bank: It keeps a part of deposits of commercial banks (as CRR) and acts as
lender of last resort by providing financial assistance to banks. It provides export credit
refinance, Liquidity Adjustment Facility and Marginal Standing Facility.

Controller of Banks: An entity which is to conduct banking business in India has to

obtain license from RBI. It acts as controller of banks by including the banks in 2nd
Schedule of the Act. It issues directions, carries inspection (on-site as well as off-site)
and exercises management control.

Controller of credit: RBI can fix interest rates (including Bank Rate) and exercise
selective credit controls. Various tools such as change in cash reserve ratio, stipulation
of margin on securities, directed credit guidelines etc. are used for this purpose. It also
carries sale and purchase of securities which are known as open market operations.

Maintenance of external value: RBI is responsible also for maintaining external

value of Indian currency as well as the internal value. Foreign exchange reserves are
held by RBI and it has a wide power to regulate foreign exchange transactions under
Foreign Exchange Management Act (FEMA).

POLICY RATES

Repo Rate
Repo rate is the rate of interest which is levied on Short-Term loans taken by
commercial banks from RBI. Whenever the banks have any shortage of funds they can
borrow it from RBI.

Reverse Repo Rate

This is exact opposite of Repo rate. Reverse repo rate is the rate at which commercial
banks charge on their surplus funds with RBI. RBI uses this tool when it feels there is
too much money floating in the banking system.

SLR Rate
SLR (Statutory Liquidity Ratio) is the amount a commercial bank needs to maintain in
the form of cash, or gold or government approved securities (Bonds) before providing
credit to its customers.
It is determined as the percentage of total Net Demand and Time Liabilities (NDTL).

Bank Rate
It is defined in Sec 49 of RBI Act 1934 as the standard rate at which RBI is prepared to
buy or rediscount bills of exchange or other commercial papers eligible for purchase
under this act.

Cash Reserve Ratio (CRR)

CRR refers to the ratio of banks cash reserve balances with RBI with reference to the
banks net demand and time liabilities to ensure the liquidity and solvency of the
scheduled banks.

Current Reserve Ratios and Policy Rates

Bank Rate: 7.00%

Repo Rate: 6.50%
Reverse Repo Rate: 6.00%
CRR: 4%
SLR: 21.00%
MSF: 7.00%
Today in the study Notes we Discuss about SEZ

Special Economic Zone

This policy intended to make SEZs an engine for economic growth supported by quality
infrastructure complemented by an attractive fiscal package, both at the Centre and
the State level, with the minimum possible regulations.
India was one of the first in Asia to recognize the effectiveness of the Export
Processing Zone (EPZ) model in promoting exports, with Asia's first EPZ set up in
Kandla in 1965. With a view to overcome the shortcomings experienced on account
of the multiplicity of controls and clearances; absence of world-class infrastructure,
and an unstable fiscal regime and with a view to attract larger foreign investments in
India, the Special Economic Zones (SEZs) Policy was announced in April 2000.

Facilities and Incentives offered to the SEZs

The incentives and facilities offered to the units in SEZs for attracting investments into
the SEZs, including foreign investment include:-
- Duty free import/domestic procurement of goods for development, operation and
maintenance of SEZ units
- 100% Income Tax exemption on export income for SEZ units under Section 10AA
of the Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the
ploughed back export profit for next 5 years.
- Exemption from minimum alternate tax
- External commercial borrowing by SEZ units upto US $ 500 million in a year
without any maturity restriction through recognized banking channels.
- Exemption from Central Sales Tax.
- Exemption from Service Tax.
- Single window clearance for Central and State level approvals.
- Exemption from State sales tax and other levies as extended by the respective State
Governments.

Types
The term special economic zone can also include:
Free trade zones (FTZ)
Export processing zones (EPZ)
Free zones/ Free economic zones (FZ/ FEZ)
Industrial parks/ industrial estates (IE)
Free ports
Bonded logistics parks (BLP
Urban enterprise zones

Objective
The Government of India announced the introduction of Special Economic Zones in
April 2000 to achieve the following objectives:
Generation of additional economic activity
promotion of exports of goods and services
Promotion of investment from domestic and foreign sources
Creation of employment opportunities
Development of infrastructure facilities

Administrative Set Up
The functioning of the SEZs is governed by a three tier administrative set up. The
Board of Approval is the apex body and is headed by the Secretary, Department of
Commerce. The Approval Committee at the Zone level deals with approval of units in
the SEZs and other related issues. Each Zone is headed by a Development
Commissioner, who is ex-officio chairperson of the Approval Committee

FDI Policy on SEZ

FDI up to 100% is allowed through the automatic route for all manufacturing
activities in Special Economic Zones (SEZs), except for the following activities:
Arms and ammunition, explosives and allied items of defence equipment, defence
aircraft and warships
Atomic substances
Narcotics and psychotropic substances and hazardous chemicals
Distillation and brewing of alcoholic drinks
Cigarettes/cigars and manufactured tobacco substitutes
Sectoral norm as notified by Government shall apply to foreign investment in services

Important SEZs in INDIA

1. Kandla Special Economic Zone Kandla, Gujarat
2. SEEPZ Special Economic Zone Mumbai, Maharashtra
3. Noida Special Economic Zone Uttar Pradesh
4. MEPZ Special Economic Zone Chennai, Tamil Nadu
5. Cochin Special Economic Zone Cochin, Kerala
6. Falta Special Economic Zone Falta, West Bengal
7. Visakhapatnam SEZ Vishakhapatnam, Andhra Pradesh

Today in the study Notes we Discuss about Benami Property

What is Benami?
Benami essentially means property without a name. In this kind of transaction the
person who pays for the property does not buys it under his/her own name. The person
on whose name the property has been purchased is called the benamdar and the
property so purchased is called the benami property. The person who finances the
deal is the real owner. ' The property is held for the benefit - direct or indirect - of the
person paying the amount.

What constitutes Benami property?

Property that does not stick to the following criteria:
a) Property held in the name of spouse or child for which the amount is paid out of
known sources of income
b) A joint property with brother, sister or other relatives for which the amount is paid
out of known sources of income
c) Property held by someone in a fiduciary capacity

This means, by law, if you buy a property in name of your parents, too, can be
declared as benami.
In August, Parliament had passed the Benami Transactions (Prohibition) Act, with
the assurance from Finance Minister Arun Jaitley that genuine religious trusts would be
kept out of the purview of this new legislation.
The new legislation will make a provision of seven year imprisonment and fine,
replacing the three-year jail term, or fine, or both.

Here is all you want to know about Benami Act and how it will affect you:

What is Benami Act?

First, a benami transaction is one where a property is held by one person and the
amount for it is paid by another person. Therefore, in a benami transaction, the name
of the person who paid the money is not mentioned. Directly or indirectly, the benami
transaction is done to benefit the one who pays.

What isnt a benami transaction?

1. Property held under the name of spouse or child, for which the amount is being paid
through a known source of income.
2. A joint property with brother, sister or other relatives for which the amount is paid
out of known sources of income.
3. Property held by someone in a fiduciary capacity; that is, transaction involving a
trustee and a beneficiary.

What falls under benami transaction?

Assets of any kind movable, immovable, tangible, intangible, any right or interest, or
legal documents. As such, even gold or financial securities could qualify to be benami.

How it affects the people?

It is being done to curb on black money. People with unaccounted income will sure
have a tough time ahead. As for the general public, it wont be much of an issue if their
transactions are legal.
Today in the study Notes we are Discuss about India's RRBs (Regional Rural Banks)

Regional Rural Banks (RRBs) were established in 1975 under the provisions of
the Ordinance promulgated on the 26th September 1975 and followed by Regional
Rural Banks Act, 1976 with a view to develop the rural economy and to create a
supplementary channel to the 'Cooperative Credit Structure' with a view to enlarge
institutional credit for the rural and agriculture sector.

The Government of India, the concerned State Government and the bank, which had
sponsored the RRB contributed to the share capital of RRBs in the proportion of 50%,
15% and 35%, respectively. The area of operation of the RRBs is limited to notified
few districts in a State. The RRBs mobilise deposits primarily from rural/semi-urban
areas and provide loans and advances mostly to small and marginal farmers,
agricultural labourers , rural artisans and other segments of priority sector.

The RBI in 2001 constituted a Committee under the Chairmanship of Dr V S Vyas on

Flow of Credit to Agriculture and Related Activities from the Banking System which
examined relevance of RRBs in the rural credit system and the alternatives for making
it viable. The consolidation process thus was initiated in the year 2005 as an off-shoot
of Dr Vyas Committee Recommendations. First phase of amalgamation was initiated
Sponsor Bank-wise within a State in 2005 and the second phase was across the
Sponsor banks within a State in 2012. The process was initiated with a view to provide
better customer service by having better infrastructure, computerization, experienced
work force, common publicity and marketing efforts etc. The amalgamated RRBs also
benefit from larger area of operation, enhanced credit exposure limits for high value
and diverse banking activities. As a result of amalgamation, number of the RRBs has
been reduced from 196 to 64 as on 31 March 2013. The number of branches of RRBs
increased to 17856 as on 31 March 2013 covering 635 districts throughout the country.

Sources of Funds

The sources of funds of RRBs comprise of owned fund, deposits, borrowings from
NABARD, Sponsor Banks and other sources including SIDBI and National Housing Bank.

Owned Funds
The owned funds of RRBs comprising of share capital, share capital deposits received
from the shareholders and the reserves stood at 19304 crore as on 31 March 2013 as
against 16462 crore as on 31 March 2012; registering a growth of 17.26%. The
increase in owned funds to the tune of 2842 crore was mainly on account of accretion
to reserves by the profit making RRBs. The share capital and share capital deposits
together amounted to 6174 crore of total owned fund while the balance amount of
13130 crore represented reserves.

Recapitalisation of RRBs

(a) The Chakrabarty Committee reviewed the financial position of all RRBs in 2010 and
recommended for recapitalisation of 40 out of 82 RRBs for strengthening their CRAR to
the level of 9 per cent by 31 March 2012. According to the Committee, the remaining
RRBs are in a position to achieve the desired level of CRAR on their own. Accepting the
recommendations of the committee, the GOI along with other shareholders decided to
recapitalise the RRBs by infusing funds to the extent of 2200 Crore. The shareholder
wise proportion (GOI/Sponsor Banks/State Governments) is 50:35:15 respectively.

(b) As on 31 March 2013, an amount of 2015.86 crore has been released to 37 RRBs in
20 States. The released amount includes GoIs contribution of 1003.92 crore, State
Govt's contribution of 303.59 crore and Sponsor bank's contribution of 708.35 crore.
The recapitalisation is complete in respect of 35 RRBs (5 in Odisha , 3 in MP, 2 in
Uttarakhand, 2 in Jharkhand, 2 in Chhatisgarh, 2 in Bihar, 2 in Maharashtra, 3 in West
Bengal, 5 in Rajasthan and one each in Assam, Arunachal Pradesh, Nagaland, Tripura,
J&K, Karnataka, Tamil Nadu, Gujarat & UT of Puducherry). GoI share 7.99 cr. is pending
in respect of Manipur Rural Bank. Mizoram State Government has partially released
0.50 crore in respect of Mizoram Rural Bank and 2.80 crore is pending. Two State
Govts. viz. UP(2 RRBs), & J&K (1 RRB) have not released any amount in respect of 3
RRBs operating in their states. Out of 35 fully recapitalised RRBs, 3 RRBs viz. Central
Madhya Pradesh GB, Manipur Rural Bank and Mizoram GB have not achieved CRAR of 9
per cent as on 31.3.2013.

Deposits
Deposits of RRBs increased from 186336 crore to 211458 crore during the year
registering growth rate of 13.48 %. There are Thirty three (33) RRBs having deposits of
more than 3000 crore each.

The Regional Rural Banks (Amendment) Bill, 2014

The Regional Rural Banks (Amendment) Bill, 2014 was introduced by the Minister of
Finance, Mr. Arun Jaitley, in Lok Sabha on December 18, 2014. The Bill seeks to amend
the Regional Rural Banks Act, 1976.
The Regional Rural Banks Act, 1976 mainly provides for the incorporation, regulation
and winding up of Regional Rural Banks (RRBs).

Sponsor banks: The Act provides for RRBs to be sponsored by banks. These sponsor
banks are required to (i) subscribe to the share capital of RRBs, (ii) train their
personnel, and (iii) provide managerial and financial assistance for the first five years.
The Bill removes the five year limit, thus allowing such assistance to continue beyond
this duration.
Authorised capital: The Act provides for the authorised capital of each RRB to be Rs
five crore. It does not permit the authorised capital to be reduced below Rs 25 lakh.
The Bill seeks to raise the amount of authorised capital to Rs 2,000 crore and states
that it cannot be reduced below Rs one crore.
Issued capital: The Act allows the central government to specify the capital issued
by a RRB, between Rs 25 lakh and Rs one crore. The Bill requires that the capital
issued should be at least Rs one crore.

Shareholding: The Act mandates that of the capital issued by a RRB, 50% shall be
held by the central government, 15% by the concerned state government and 35% by
the sponsor bank. The Bill allows RRBs to raise their capital from sources other than
the central and state governments, and sponsor banks. In such a case, the combined
shareholding of the central government and the sponsor bank cannot be less than
51%. Additionally, if the shareholding of the state government in the RRB is reduced
below 15%, the central government would have to consult the concerned state
government.
The Bill states that the central government may by notification raise or reduce the limit
of shareholding of the central government, state government or the sponsor bank in
the RRB. In doing so, the central government may consult the state government and
the sponsor bank. The central government is required to consult the concerned state
government when reducing the limit of shareholding of the state government in the
RRB.

Board of directors: The Act specifies the composition of the Board of Directors of
the RRB to include a Chairman and directors to be appointed through the central
government, NABARD, sponsor bank, Reserve Bank of India, etc. The Bill states that
any person who is a director of an RRB is not eligible to be on the Board of Directors of
another RRB.
The Bill also adds a provision for directors to be elected by shareholders based on the
total amount of equity share capital issued to such shareholders. If the equity share
capital issued to shareholders is 10% or less, one director shall be elected by such
shareholders. Two directors shall be elected by shareholders where the equity share
capital issued to them is from 10% to 25%. Three directors shall be elected in case of
equity share capital issued being 25% or above. If required, the central government
can also appoint an officer to the board of directors to ensure effective functioning of
the RRB.

The Act specifies the term of office of a director (excluding the Chairman) to be not
more than two years. The Bill raises this tenure to three years. The Bill also states
that no director can hold office for a total period exceeding six years.

Closure and balancing of books: As per the Act, the books of a RRB should be
closed and balanced as on December 31 every year. The Bill changes this date to
March 31 to bring the Act in uniformity with the financial year.

At present there are 56 RRBs in India (There is no RRBs working in Goa and Sikkim)
Name of the RRBs Present Head Office State / UT
1. Allahabad UP Gramin Bank Banda, Uttar Pradesh
2. Andhra Pradesh Grameena Vikas Bank Warangal, Telangana
3. Andhra Pragathi Grameena Bank Kadapa, Andhra Pradesh
4. Arunachal Pradesh Rural Bank Naharlagun (Papumpare), Arunachal
Pradesh
5. Assam Gramin Vikash Bank Guwahati, Assam
6. Bangiya Gramin Vikash Bank Murshidabad, West Bengal
7. Baroda Gujarat Gramin Bank Bharuch, Gujarat
8. Baroda Rajasthan Kshetriya Gramin Bank Ajmer, Rajasthan
9. Baroda UP Gramin Bank Raibareilly, Uttar Pradesh
10. Bihar Gramin Bank Begusarai, Bihar